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Statute of limitations and release doom an Illinois plaintiff’s legal malpractice claim

10/3/23

By: Donald Patrick Eckler and Joshua W. Zhao

Reaffirming the well settled law that a plaintiff’s knowledge that they have been injured commences the statute of limitations even if the plaintiff does not know that the defendant caused the injury is the holding of Malek v. Chuhak & Tecson, P.C., 2023 IL App (1st) 220723. 

In 2009, plaintiff and her then-husband, Michel Malek, separated. Chuhak & Tecson began providing legal services for Malek, including the alleged fraudulent creation of backdated documents to justify Malek’s transfer of $13.6 million to his mother in Lebanon.  

On May 12, 2014, plaintiff filed a petition for dissolution of marriage against Malek. During discovery in these proceedings, plaintiff subpoenaed Chuhak & Tecson for records related to its representation of Malek. These records were supplied to plaintiff on December 10, 2015. Despite this disclosure, plaintiff alleged that she did not learn of Chuhak & Tecson’s involvement in the fraudulent transfer until October 5, 2017, when an attorney gave plaintiff a memorandum stating the firm’s involvement.  

On September 20, 2019, plaintiff sued Chuhak & Tecson, alleging that the firm aided and abetted in the fraudulent transfer. After plaintiff retained counsel and amended her complaint, she voluntarily dismissed the lawsuit. Two years later, plaintiff again sued Chuhak & Tecson, asserting the same claims as her previous lawsuit. On March 25, 2022, the judge in the Malek divorce case entered an amended judgment of dissolution of marriage, which included a release of all claims against, among others, Chuhak & Tecson. 

The circuit court dismissed plaintiff’s lawsuit against Chuhak & Tecson as untimely. Plaintiff appealed. 

In Illinois, pursuant to 735 ILCS 5/13-214.3(b), legal malpractice plaintiffs have two years from the time the plaintiff knew or reasonably should have known of the injury, to bring actions for damages against attorneys.  

On appeal, plaintiff unsuccessfully argued, as so many other plaintiffs have before, relying on Mitsias v. I-Flow Corp., 2011 IL App (1st) 101126, that her case was not time-barred because she could not have known of Chuhak & Tecson’s alleged fraudulent conduct until she received the memorandum on October 5, 2017. She argued that the wrongful conduct was “inherently unknowable” and as a layperson, she could not have been expected to be on notice of potentially sophisticated causes of her injuries. Instead, plaintiff argued that the circuit court should have resolved the factual question regarding whether plaintiff knew or should have known of Chuhak & Tecson’s involvement. 

The appellate court disagreed, finding that plaintiff was on inquiry notice of her injury and the wrongful conduct of Chuhak & Tecson since at least December 2014 when plaintiff’s divorce attorney filed a motion on plaintiff’s behalf alleging Malek’s scheme to deplete the marital estate. The court found that at the time the motion was filed, plaintiff was aware that she was injured, and that the injury resulted from Malek’s attempt to limit the marital property that plaintiff would have received. Although plaintiff may not have known that Chuhak & Tecson was involved, knowledge of the injury was sufficient to cause the statute of limitations to start to run. Moreover, plaintiff admitted in her complaint that Chuhak & Tecson provided documents on December 10, 2015, detailing their involvement and plaintiff admitted that investigation into Malek revealed Chuhak & Tecson’s involvement. 

The court found that the wrongful conduct was not “inherently unknowable,” that plaintiff had failed to take necessary steps to learn of Chuhak & Tecson’s involvement, and that a reasonable investigation would have brought the wrongdoing to light. Since plaintiff had sufficient evidence to know of her injury on December 5, 2014 and did not file suit until 2019, the circuit court’s ruling dismissing her claim was affirmed. 

Separately, the appellate court found that plaintiff released her claims against Chuhak & Tecson in the amended judgment filed in the divorce case. Plaintiff cannot challenge the amended judgment from the divorce case in this appeal because it constituted a collateral proceeding relative to the divorce case. 

This case highlights the importance of the statute of limitations to defendants in professional liability cases, but also the continuing trend of professionals, and especially lawyers, being sued by third-parties for claims other than malpractice, and the need to look for potential defenses in the underlying case to a malpractice action. 

For more information, please contact Donald Patrick Eckler at patrick.eckler@fmglaw.com, Joshua Zhao at Josh.Zhao@fmglaw.com, or your local FMG attorney.