Blue Water Partners v. Mason
975 N.E.2d 284
Ill. App. Ct.2012Background
- Putnam formed Blue Water Partners (BWP) with Foley & Lardner as counsel; Mason assisted in corporate formation and Terra Nova registration; Lozman and Putnam pursued Terra Nova as a broker-dealer while BWP sought to receive soft-dollar revenue; Lozman’s ownership in BWP and Terra Nova relations were central; Lozman and Putnam signed a 1995 release settling their claims and Lozman became sole owner of BWP; BWP later sued Mason and Foley & Lardner for legal malpractice asserting Lozman was an intended beneficiary; the circuit court granted summary judgment on multiple bases including lack of attorney-client relationship and laches; the appellate court affirmed, holding no attorney-client relationship to Lozman, accrual occurred by 1995, and the Putnam judgment did not toll or revive the claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lozman owed a duty to Lozman by defendants | Lozman was an intended beneficiary of BWP’s counsel | No direct attorney-client relationship with Lozman | Lozman had no duty to Lozman; no attorney-client relationship existed. |
| Whether Lozman lacked standing to sue for legal malpractice | Lozman was a client-beneficiary of the firm | Lozman not a client; standing fails | Lozman lacked standing; no direct attorney-client relationship. |
| Whether BWP’s malpractice claim was time-barred by the statute of limitations | Claim accrued when Putnam trial verdict occurred (2005) or upon discovery | Claim accrued no later than 1995 or upon the two-year limit | Claim barred; accrual contemporaneous with Putnam events; untimely. |
| Whether the adverse-judgment accrual rule applied to toll the limitations period | Putnam judgment tolls the statute until damages accrue | Adverse-judgment rule does not apply to tolling BWP against these defendants | Adverse-judgment accrual rule does not save BWP; claims time-barred. |
| Whether there were genuine issues of material fact regarding accrual/damages | Facts about discovery and awareness create issues for trial | Facts insufficient for a factual dispute at summary judgment | Summary judgment appropriate; factual disputes precluded; however record supports time-bar. |
Key Cases Cited
- Felty v. Hartweg, 169 Ill. App. 3d 406 (1988) (duty to non-clients requires intentional beneficiary theory to prove a duty)
- Kopka v. Kamensky & Rubenstein, 354 Ill. App. 3d 930 (2004) (to establish duty to a third party, primary purpose to benefit the third party must be shown)
- Pelham v. Griesheimer, 92 Ill. 2d 13 (1982) (intent to benefit or influence a third party required for duty to nonclient)
- Majumdar v. Lurie, 274 Ill. App. 3d 267 (1995) (corporate attorney duty to shareholders limited; not duties to potential competitors absent conflict)
- Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 301 Ill. App. 3d 349 (1998) (adverse judgments toll damages; accrual not until damages appear or are adjudicated)
- Warnock v. Karm Winand & Patterson, 376 Ill. App. 3d 364 (2007) (damages accrual tied to adverse judgment in underlying litigation)
- Learning Curve International, Inc. v. Seyfarth Shaw LLP, 392 Ill. App. 3d 1068 (2009) (adverse-judgment accrual rule applied; timing depends on underlying decision)
- SK Partners I, LP v. Metro Consultants, Inc., 408 Ill. App. 3d 127 (2011) (discovery rule; specifics depend on context of damages and inquiry duty)
- Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294 (2005) (damages discovery rule; accrual when damages attributable to negligence)
- Fox v. Seiden, 382 Ill. App. 3d 288 (2008) (context of malpractice accrual depends on negligence in prosecution/defense; not always immediate)