Appeals panel: Malpractice action too late vs lawyer over failed Prospect Heights arena project

By Scott Holland | Jun 8, 2016

A state appeals court has backed a circuit court’s decision to dismiss a developer’s  malpractice complaint against a lawyer he accused of misconduct in a case involving a collapsed deal to build a sports arena in Chicago’s northwest suburbs, with the appellate justices saying the case was several years too late. 

In an opinion issued May 23, the Illinois First District Appellate Court upheld the ruling of Cook County Circuit Judge John P. Callahan, who dismissed the complaint Prospect Development and a consultant, John G. Wilson, filed against Schiff Hardin and one of its attorneys, Donald Kreger. 

Justice Sheldon A. Harris wrote the opinion; justices Joy V. Cunningham and Maureen E. Connors concurred. 

The issue stems from a collapsed plan to build a sports arena in Prospect Heights. According to the opinion, Wilson — hired in 1994 to conduct an arena feasibility study — and Prospect Development previously filed a breach of contract lawsuit against Prospect Heights. Kreger was general counsel for the city from 1977 until the arena deal fell through in 2003; he and Wilson became close after their sons were on the same hockey team. 

Wilson and the developer successfully proved breach of contract, Harris wrote, but were denied the chance to recover as much as $20 million on account of undisclosed loans the developer made to Kreger. Following that ruling, Prospect Development and Wilson filed the malpractice claim. 

In the original breach of contract complaint, Wilson and his companies said Kreger approached Wilson “on multiple occasions to ‘request’ a $100,000 loan in connection with a personal financial problem.” Wilson said he agreed to lend the money out of fear a refusal would keep Prospect Development from completing the arena project. 

The plaintiffs argued “each time a loan was made from 1997-2001, they inquired as to the propriety of the loans and whether they should be disclosed,” and, each time, Kreger “gave them negligent advice.” They further contend Kreger hid that malpractice until the breach of contract action was finalized on July 23, 2010. 

On July 12, 2012, Wilson and his firm filed their complaint, arguing Kreger’s advice regarding the loans constituted malpractice. Kreger and Schiff Harden moved to dismiss, alleging the six-year statute of repose for legal malpractice barred Wilson’s action. 

In their second amended complaint, filed in 2013, the plaintiffs acknowledged they filed the malpractice complaint after the repose expired, but said Kreger’s statements regarding the propriety of the loans tolled the statute. 

On May 23, 2014, the circuit court denied the motion to dismiss, saying the statute of repose did not begin until the 2010 ruling. But Kreger and Schiff Harden moved for reconsideration, explaining “repose runs from the date of the negligent act, not the date the negligent act causes injury.” The 2010 ruling, they continued, “established that by January 2005, plaintiffs were on notice they could not rely upon the alleged advice from Kreger.” 

The circuit court granted the motion to dismiss on Oct. 20, 2014. Wilson and his firm filed their own motion to reconsider; it was denied with prejudice on Jan. 14, 2015. The First District opinion is on Wilson’s appeal of that denial. 

Harris acknowledged the state’s repose laws can create “a harsh result” and explained why Illinois courts don’t apply equitable estoppel or fraudulent concealment to toll a statute of repose when the act should have been discovered through general diligence and, as in this case, reasonable time remained to lodge a complaint. 

The justices said, even the developers’ suspicion in 2005 that Kreger’s 2001 advice was negligent would have been sufficient to begin the repose clock. 

Prospect Development was represented in the case by attorney Saif R. Kasmikha, of Novi, Mich. 

Kreger and Schiff Hardin were defended by the firm of Miller Shakman & Beem, of Chicago.

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