A Chicago law firm which allegedly initially declined to bring a whistleblower suit against doctors and MRI companies over purportedly illegal leasing agreements, but then later won hundreds of thousands of dollars for a different client in a nearly identical case months later, should not be held liable for the first client’s failure to bring a similar case or collect damages, a state appeals panel has ruled.

The Illinois First District Appellate Court upheld a circuit judge’s decision against plaintiff Jean Kulig, who had sued law firm Ungaretti & Harris LLP, and its attorneys Dean Polales and Anne Haule.

According to court documents, Kulig, an MRI technician, met with Polales and Haule in May 2005 to discuss bringing a whistleblower action regarding illegal leasing agreements between doctors and MRI imaging centers. Haule and Polales allegedly told her they would look into the matter, but Haule warned Kulig that it was not the type of case the firm ordinarily took. She later contacted Kulig and declined to take the case, but suggested she find another attorney.

In her action, Kulig said she was surprised the attorneys did not take the case and, after being turned down by an attorney from a second law firm, assumed she did not have a strong enough case. In 2007, according to court documents, Kulig read a news article about a whistleblower lawsuit regarding leasing agreements between MRI centers and doctors’ offices. The suit had been filed by Ungaretti & Harris on behalf of a longtime client, and though it did not name the companies Kulig was interested in suing, was similar to her case in nearly every respect, according to court documents. The relator in that case, John Donaldson, was awarded $565,665, and the end of his litigation barred anyone else from bringing suit over the same issues.

Court documents indicated Donaldson was represented primarily by other attorneys at the Ungaretti firm, and they testified they had no knowledge of Kulig’s meeting with Haule and Polales until Kulig sued the law firm.

Kulig sued Ungaretti & Harris and the two attorneys for breach of fiduciary duty. The circuit court found, and the appellate court upheld, that the lawyers may have breached their fiduciary duty to Kulig when they failed to tell her they had another client considering a similar action, which might cause a conflict, and failed to tell her the Illinois Attorney General’s office may have an interest in intervening in the case. However, both courts found Kulig had failed to prove she suffered damages from the breach or, even if she did, that Ungaretti & Harris were the actual cause of those damages.

Kulig argued she did suffer harm, because she was unable to ever bring the suit, even though she approached first the lawyers who later litigated the case. The courts maintained that may have been true - had she made any attempt to file her suit once Haule and Polales turned her down.

“After defendants told plaintiff they would not represent her, she had eight months to file her case, but did not do anything for 20 months,” Cook County Circuit Judge Lorna E. Propes wrote in her opinion. “[P]laintiff’s inaction after being told by defendants they would not represent her is fatal to her claim.”

To show proximate cause, the court wrote, Kulig would have had to show that the attorneys’ breach of duty was what prevented her from pursuing the whistleblower action. She was unable to show that the attorneys dissuaded her from pursuing action or that she had any intention of pursuing the action before she learned of the Donaldson case. The court noted that she did not learn of the Donaldson case because she filed a case and was barred; she learned of it through the news media and only afterward pursued any legal action.

Kulig’s actions after being turned down by the Ungaretti lawyers left her case “uncertain and best described as potential or hypothetical,” the appellate justices said in upholding Propes’ ruling.

“Plaintiff failed to present any evidence that she intended or actually attempted to file her proposed whistleblower suit after defendants declined her request to provide her with representation,” the justices wrote. “Defendants even instructed plaintiff to consult another attorney. The record does not show that defendants told plaintiff that her case could not succeed or try to dissuade her from filing suit in any way. 

“Of crucial importance the Plaintiff failed to present any evidence showing that she would have filed a whistleblower action had she not learned of the Donaldson matter.”

Without proof of damages, the court found no liability on the part of the defendants.

The appellate order was authored by Justice Sheldon A. Harris, with justices Joy V. Cunningham and Maureen E. Connors concurring. The order was issued under Supreme Court Rule 23, meaning it can only be cited as precedent under certain circumstances.

Ungaretti & Harris, which has since merged with and assumed the name of the Nixon Peabody firm, was represented in the action by Hinshaw Culbertson, of Chicago.

Kulig was represented by Grasso Law, of Chicago.

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