FIRST DIVISION
Filed: 5-29-07
No. 1-05-2329
PAUL B. EPISCOPE, Ltd., an Illinois Professional ) Appeal from the
Corporation; PAUL B. EPISCOPE, Individually; ) Circuit Court of
and JOHN C. ERB, Individually, ) Cook County.
)
Plaintiffs-Appellants, )
)
v. ) No. 97 CH 12492
)
LAW OFFICES OF CAMPBELL AND )
DI VINCENZO, a Partnership; RICHARD P. )
CAMPBELL, Individually; and ANTHONY S. )
DI VINCENZO, Individually, ) Honorable
) Mary Anne Mason,
Defendants-Appellees. ) Judge Presiding.
MODIFIED OPINION UPON DENIAL OF PETITION FOR REHEARING
JUSTICE ROBERT E. GORDON delivered the opinion of the court:
The plaintiffs, attorneys Paul Episcope and John Erb and the Episcope law firm, sued
defendant attorneys to recover fees under a fee-splitting agreement. Plaintiffs allege in their
complaint that their representation agreement (agreement) with defendants, Anthony Di Vincenzo
and Richard Campbell and their law partnership, and the parties’ mutual client, Havoco of
America, Ltd. (client), applies to more than one case. The lawyers agreed in writing to represent
the client jointly and split fees orally in the client’s federal lawsuit for fraud and conspiracy against
Elmer Hill, Hill’s company, Hilco, Inc. (Hilco), and Sumitomo Shoji American, Inc. (Sumitomo),
and for breach of contract against Sumitomo. The damages claimed were the loss of a
multimillion dollar contract. The parties had substituted for the original attorneys who had filed
the action but the defendants actually handled the case.
After a judgment of $15 million against Hill was upheld on appeal, defendants filed a
separate lawsuit on behalf of the same client against the original attorneys for legal malpractice.
No. 1-05-2329
Plaintiffs were not a party to the new representation agreement with the client as to the legal
malpractice suit, which was settled for $8 million prior to trial. Plaintiffs claim that the original
representation contract to represent the client (and split fees) extends to the legal malpractice
action.
In defendants’ first motion for summary judgment, defendants argued that the legal
malpractice case was separate from the parties’ fee agreement in the first case. That motion was
denied. In a second motion for summary judgment, defendants contended that any representation
agreement concerning the legal malpractice case is void and unenforceable under the fee-sharing
requirements in Rules 1.5(f)(2) and (3) of the Illinois Code of Professional Conduct. 134 Ill. 2d
Rs.1.5(f)(2), (f)(3). The trial court granted this motion. Plaintiffs appeal from the court’s
granting of summary judgment. For the reasons set forth below, we affirm.
BACKGROUND
In June 1988, Barry Vandermeulen, the chairman of the board of Havoco, had concerns
about his company’s lawsuit for fraud, conspiracy and breach of contract and contacted his friend,
plaintiff Episcope, for consultation. His original attorneys, Freeman, Alkins and Coleman
(Freeman Firm), had filed the federal action in 1981 and had withdrawn from the case.
Vandermeulen wanted plaintiffs Episcope and Erb to take the case over. Instead, Episcope
recommended defendants Campbell and DiVincenzo, who took over the case, and plaintiffs
Episcope and Erb also filed their appearance at the direction of the client, but the legal work was
performed only by Campbell and DiVincenzo.
The parties and the client, by Vandermeulen, signed a joint representation agreement on
July 5, 1988. The document was titled “Representation Agreement.” In the agreement it states:
“Paul B. Episcope, Ltd., and Campbell & Di Vincenzo agree to represent Havoco,” and Havoco
“agrees to retain” these same lawyers, “this being the complete agreement among them.”
The representation agreement states nothing about how legal fees or the responsibilities
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for the performance of the legal services were divided between the lawyers. It provides that, “In
the event a monetary recovery is obtained by way of judgment, settlement or otherwise, Paul B.
Episcope, Ltd., and Campbell & Di Vincenzo shall receive 33-1/3% of the Net Recovery as a
contingent fee. Net recovery is the total recovery, including any award of attorney’s fees or
expenses, less all expenses and disbursements that you [Havoco] have paid.”
The caption of the agreement (at the left margin directly underneath the title) lists the
“Client” and, under that, the “Matter.” The “Client” is “Havoco of America, Ltd., a Delaware
Corporation.” The “Matter” is Havoco’s federal case against Hill and Hilco: “Havoco of
America, Ltd. a Delaware corporation v. Elmer C. Hill, Hilco, Inc., a Tennessee Corporation,”
and Sumitomo. After this follows the case number of the pending federal action, “Civil Action
No. 81 C 419.”
Defendants tried the case with a jury. In early 1989, before trial, the federal district court
judge dismissed all of Havoco’s tort claims against Sumitomo as barred by the statute of
limitations and only the contract claim remained. The Freeman Firm had added Sumitomo as a
party defendant in November 1981, which was barred by the statute of limitations. At trial, Hilco
was granted a directed verdict in its favor, and the jury found in favor of Sumitomo on the
contract claim. The jury did render a verdict for $15 million on the remaining tort claim against
Hill personally.
Hill filed for bankruptcy prior to the 7th Circuit affirming the judgment. The client was
only able to collect $219,000 on the judgment. Defendants received a third of that amount for
fees and paid Episcope a third of what they received under an oral understanding concerning their
fee-splitting agreement.
Vandermeulen desired to file a legal malpractice action against the Freeman Firm for its
failure to add Sumitomo as a party defendant within the statute of limitations. Initially he asked
the parties to do so, but both defendants and plaintiffs declined. Plaintiffs claim they urged
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defendants to take the case and delivered them research on the issues. Plaintiffs were unable to
show anything more that would indicate that they were representing the interests of the client.
However, defendants did later accept the legal malpractice case. Plaintiffs claim they were
“unaware” of the representation agreement in the legal malpractice case signed on February 2,
1993, and the fact that they were not included. Additionally, plaintiffs were unaware of a
settlement proposal on September 8, 1993, and of the legal malpractice suit that was filed on
November 10, 1993. On June 4, 1997, Erb telephoned DiVincenzo to obtain an "update" and was
told that the case was settled for $8 million in 1996. DiVincenzo refused to discuss fee sharing.
Plaintiffs then brought this action, alleging breach of a fiduciary duty and seeking a third of
the fees received from the settlement. Their claim relies on the initial representation agreement.
They claim it reflects the parties’ joint undertaking of representation and fee sharing, consistent
with an oral agreement. They claim that the legal malpractice case is part of the same
representation as that contained in the original representation agreement, only directed against a
different defendant and as a result the defendants have a duty to share the fees.
Defendants in their motion for summary judgment argue the representation agreement of
February 2, 1993, must be construed as a separate action. They further claim contracts, especially
integrated contracts, are confined to their specific terms and point out that the initial agreement
was specifically limited to the parties’ representation of the client in Havoco v. Elmer Hill, Hilco,
Inc., and Sumitomo, 81 C 419.
The plaintiffs advocate an expansive construction. They claim that the legal malpractice
litigation was part of the “legal dispute as a whole.” As Episcope characterized it, the suit was
just another way to collect the judgment in the underlying case. Plaintiffs argue the parties’ oral
understanding reflected this broader interpretation. The trial court denied the first motion for
summary judgment without written comment.
Defendants then brought their second motion for summary judgment relying on Rule
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1.5(f) of the Illinois Rules of Professional Conduct (134 Ill. 2d R. 1.5(f)). In that motion they
attacked the very validity of the written agreement of July 5, 1988. Rule 1.5(f) requires a lawyer
dividing a fee with another lawyer from a different firm to have the client’s signed, written
consent to the other lawyer’s employment. Defendants emphasized that under Rule 1.5(f)(2) the
writing must disclose the basis for the division of fees, including the economic benefit to the other
lawyer as a result of the division. Defendants also cited Rule 1.5(f)(3) that the writing must
disclose the responsibility to be assumed by the attorney for the performance of the legal services.
Plaintiffs responded that the signed writing is sufficient to prove their case, even under
Rule 1.5(f), if supplemented with the oral agreement providing them with a third of the fees.
They argue, alternatively, that the representation agreement could be read (excising the oral
agreement) with implied joint ventures principles of equal profits, providing them a 50/50 split of
fees. Thirdly, they advanced the claim there was a breach of duty in defendants’ failure to include
the prior oral understanding in the written agreement. Plaintiffs’ counsel argues that the oral
provision for the fees “should have been included by Mr. Di Vincenzo in the written agreement.”
Those arguments are contained in an affidavit in response to the second motion for summary
judgment. In that affidavit plaintiffs aver that plaintiffs “inadvertently overlooked the fact that a
specific division of fees between the lawyers was not contained in the assessment.”
The judge agreed with defendants. The court ruled that the representation agreement
failed to comply with Rule 1.5(f). The judge found it disclosed nothing about the basis for the
division of fees nor of the responsibility for legal services. The court stated: “The Agreement is
clearly silent on the matters which subsections (2) and (3) of Rule 1.5(f) require to be in writing.”
The court declared the agreement void and unenforceable, granting summary judgment for
defendants.
Plaintiffs appeal. We affirm.
ANALYSIS
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"Summary judgment is proper where, when viewed in the light most favorable to the
nonmoving party, the pleadings, depositions, admissions, and affidavits on file reveal that there is
no genuine issue as to any material fact and that the moving party is entitled to judgment as a
matter of law." General Casualty Insurance Co. v. Lacey, 199 Ill. 2d 281, 284 (2002). We
review the granting of a motion for summary judgment de novo. General Casualty, 199 Ill. 2d at
284.
"The reviewing court must construe all evidence strictly against the movant and liberally in
favor of the nonmoving party." Larry Karchmar, Ltd. v. Nevoral, 302 Ill. App. 3d 951, 956
(1999).
"On appeal from a grant of summary judgment, a reviewing court’s function is to
determine whether the trial court properly concluded that there was no genuine issue of material
fact, and if there was not, whether the judgment was correct as a matter of law." People ex rel.
Burris v. Memorial Consultants, Inc., 224 Ill. App. 3d 653, 656 (1992). In other words, where no
genuine issue of material fact exists, the reviewing court’s sole function is to determine whether
judgment for defendant was correct as a matter of law. Cates v. Cates, 156 Ill. 2d 76, 78 (1993).
"Construing the language employed in a contract is a matter of law appropriate for
summary judgment [citations], unless the contract is ambiguous." Memorial Consultants, 224 Ill.
App. 3d at 656. "Whether an ambiguity exists in a document is a question of law." Memorial
Consultants, 224 Ill. App. 3d at 656. "A contract is ambiguous if it is reasonably susceptible to
more than one meaning [citation], but an ambiguity is not created merely because the parties
disagree." Memorial Consultants, 224 Ill. App. 3d at 656.
Plaintiffs claim that the defendants breached their fiduciary obligations of honesty, good
faith and fair dealings arising out of a joint venture agreement with plaintiffs. The joint venture
agreement that plaintiffs refer to is the written retainer agreement of July 5, 1988, signed by the
parties and the client, and the subsequent oral agreement as to the splitting of the fees on the
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federal case referred to in that agreement. That agreement referred only to client Havocos’
federal case number 81 C 419 against Elmer Hill, Hilco, Inc., and Sumitomo. This agreement
does not mention a legal malpractice case against the Freeman Firm. It is plaintiffs’ theory that a
trier of fact could find from Erb’s affidavit that an oral agreement to split fees between the parties
existed prior to the written agreement of July 8, 1988, and that the defendants breached their
fiduciary obligations of honesty, good faith, and fair dealings arising out of a joint venture in their
failure to place that information in the agreement. It is this court’s position that even if the
splitting fee provision was included in the July 5 agreement, it would not extend to the legal
malpractice case because the agreement is not ambiguous and was limited to the federal lawsuit
that was specified in the document.
Plaintiffs further claim that the legal malpractice case was part of the agreement of July 5th,
because the agreement states:
"In the event a monetary recovery is obtained by way of judgment,
settlement, or otherwise, the parties shall receive 33a% of the net
recovery as a contingent fee."
Plaintiffs’ theory is that "otherwise" widens the meaning of the recovery agreed upon to
include a plaintiff’s recovery from a lawyer who was negligent in pursuing recovery. Plaintiffs’
second argument is also not persuasive.
The word "otherwise" does not have the expansive meaning claimed by plaintiffs. "Other"
and "otherwise" are limited to the objects and persons that plaintiffs enumerated, according to
ejusdem generis principles which means "other such like things." E & E Hauling, Inc. v. Ryan,
306 Ill. App. 3d 131, 137 (1999). For the purposes of the ejusdem generis rule, "other" and
"otherwise" are treated identically. E & E Hauling, Inc. v. Ryan, 306 Ill. App. 3d at 137.
In Farley v. Marion Power Shovel Co., 60 Ill. 2d 432, 436 (1975), quoting People v.
Capuzi, 20 Ill. 2d 486, 493-94 (1960), our Illinois Supreme Court stated:
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" Episcope v. Law Offices of Campbell and Di Vincenzo
Combined Opinion