Cook County Record

Tuesday, December 10, 2019

Appeals panel: Attorney's 'fraud' means business owners can't sue ex-lawyers for malpractice

By David Hutton | Oct 13, 2017

General court 07

CHICAGO — For a second time, the Illinois First District Appellate Court has heard an appeal in an ongoing legal malpractice lawsuit. And this time, justices agreed the plaintiffs' lawyer's alleged mishandling of the case should cost them the chance to proceed against the lawyers they blamed for costing them the chance to sue their ex-lawyers for allegedly exposing them to penalties under state regulatory actions.

The latest opinion was filed Sept. 19, with Justice P. Scott Neville Jr. delivering the judgment of the court. Justices Mary Anne Mason and Daniel J. Pierce concurred with the judgment and opinion.

The case revolves around a legal malpractice complaint filed by Derek and Steven Lurie against attorney Philip Wolin and the firm of Wolin, Kelter & Rosen Ltd. 

The malpractice case arose from another case, which involved allegations of embezzlement at American Escrow LLC, a company run by the Luries. In 2003, Derek Lurie asserted he found evidence  American Escrow's financial officer had allegedly embezzled funds from the company.

In the wake of the embezzlement issue, the Luries consulted Wolin about the incident and the appropriate way to address the loss of funds and the amount needed for the company to cover its liabilities.

According to court records, Wolin, Kelter & Rosen represented the Luries until the states of Illinois and Ohio filed suits in 2009 and 2010, alleging American Escrow broke consumer protection laws.

Court records indicate that the states had "entered default judgments against the Luries and their company."

As a result, the Luries hired attorney Richard Zachary to represent them in a potential suit against Wolin for alleged legal malpractice. The Luries claimed that following "Wolin’s advice caused them to violate consumer protection laws."

A Cook County judge dismissed the case, but that decision was reversed by the Illinois First District Appellate Court and sent back to the lower court.

According to court records, the Cook County judge was asked to reconsider whether that court had lost jurisdiction over the case.

It was during an evidentiary hearing, according to court records, that the court discovered Zachary had allegedly filed documents with date stamps that had been misrepresented to mislead the court into believing papers had been filed in a timely manner.

But the circuit court maintained it "lost jurisdiction" in 2011.

It was during their second appeal the Luries contended that "the law of the case doctrine barred relitigation of the jurisdictional issue and that the evidence did not support the finding that the circuit court lost jurisdiction in 2011," according to the appellate court decision.

“We agree with the Luries that the circuit court’s original implicit ruling that it had jurisdiction became the law of the case,” Neville said in the opinion. “However, because the allegations supported a finding that the Luries’ attorney perpetrated a fraud on the court, we find that the law of the case doctrine does not prevent us from considering the jurisdictional issue.”

Neville went on to note that the "circuit court’s finding of fact that the attorney falsified the documents is not contrary to the manifest weight of the evidence, and it supports the ruling that the circuit court lost jurisdiction over the case in 2011 before it entered the order we reviewed in the prior appeal. Accordingly, we affirm the circuit court’s judgment dismissing the Luries’ complaint.”

According to Cook County court records, the Luries were represented in the action by attorneys with the Spellmire Law Firm, of Chicago. 

Wolin and his firm were defended by the firm of Donohue Brown Mathewson & Smyth LLC, of Chicago.

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Organizations in this Story

Donohue Brown Mathewson & Smyth LLCIllinois First District Appellate CourtSpellmire Law FirmWolin, Kelter & Rosen Ltd.