Northern League whiff in suit vs lawyers over league exit fees may help settle key 'transactional question'

By Gabriel Neves | Jan 28, 2019

CHICAGO – A state appeals court's decision in the legal action brought by a Minor League Baseball league against its former lawyers may help to settle a so-called "transactional question" at the heart of certain legal malpractice cases, an attorney who represented the lawyers said.

In late December, a three-justice panel of the Illinois First District Appellate Court upheld a lower court's ruling in favor of the lawyers in the lawsuit brought by the Northern League, which had sued its attorneys over allegations of legal malpractice regarding a failure to assess an exit fee on teams leaving the league under a league agreement.

The ruling favored the firm of Gozdecki, Del Giudice, Americus & Farkas LLP and attorney Steven Leech.

The Northern League requested its lawyers to draft an agreement for the league owners, with drafts prepared and shown for review afterward, as a result of four teams leaving the league.

Peter D. Sullivan   Hinshaw & Culbertson

Attorney Peter Sullivan of Hinshaw & Culbertson, which represented Gozdecki in the action, told the Cook County Record that "many changes were made during the drafting process" that led to the final agreement, and that "final agreement had a liquidated damage clause that applied if any owner was expelled from the league, as well as a process for expulsion," with a fee of $1 million owed by expelled owners.

The Northern League alleged the Gozdecki firm attorneys "negligently drafted" the agreement, Sullivan said.

"Northern League alleged that the attorney should have drafted an exit fee provision that obligated a team that left the league to pay $1 million to the league without the need for an expulsion," Sullivan said. "The attorney defendant denied any error and also denied that the six owners would have agreed to the purported exit fee provision in lieu of the liquidated provision that was in the agreement as drafted."

Sullivan also added that "two of the owners, including Illinois attorney Pat Salvi, testified at trial that they would not have agreed to the exit fee provision," while Northern League attorney Joe Siprut "argued that this testimony should not have been admitted."

A jury ultimately sided with the Gozdecki firm at trial.

Sullivan said the league's case "settles a very important question on causation in a transactional malpractice case – whether the plaintiff has to prove that the other parties to the agreement would have signed the agreement the lawyer allegedly failed to prepare," putting some significant limitations on transactional malpractice.

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Circuit Court of Cook County Gozdecki & Del Giudice Hinshaw & Culberston Illinois First District Appellate Court

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