Goldfine v. Barack, Ferrazzano, Kirschbaum & Perlman
18 N.E.3d 884
Ill.2014Background
- This case concerns calculating damages in a legal malpractice action arising from failure to preserve an Illinois Securities Law claim.
- Plaintiffs Goldfine purchased First Capital Holdings stock in 1987–1990; stock later became worthless after FCH’s 1991 bankruptcy.
- Defendants (Barack, Ferrazzano, Kirschbaum & Perlman) were negligent in preserving the Illinois Securities Law claim, causing loss of remedies.
- Underlying Steinberg litigation settled in 2007 for $3.2 million, with plaintiffs pursuing damages for lost statutory remedies.
- Trial court calculated damages by deducting the Steinberg settlement from purchase prices and applying 10% interest, then awarding fees.
- Appellate court reversed the calculation, prompting the Supreme Court to address proper application of section 13(A) damages and remand for recalculation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether section 13(A) civil remedies apply to legal malpractice damages | Goldfine seeks damages under 13(A) as remedial damages for losses from malpractice | Barack argues 13(A) is punitive and not applicable to lawyers | Yes; 13(A) remedies are remedial, not punitive |
| Whether 13(A) damages are punitive under section 2-1115 | Damages reflect actual losses; not punitive | Damages are punitive damages barred by 2-1115 | No; 13(A) remedies are remedial damages and not barred as punitive |
| Proper calculation of statutory interest timing under 13(A) | Interest should reflect full investment loss up to underlying settlement date | Interest tied to final judgment date in malpractice action | Interest must be calculated to the 2007 Steinberg settlement date, not to the 2011 final judgment |
| Deduction of the Steinberg settlement from damages | Only amounts actually received should be deducted; seek full recovery | The Steinberg settlement should be deducted as an amount received | Settlement deduction appropriate after recalculating interest; entire $3.2M treated as 'other amounts received' |
Key Cases Cited
- Eastman v. Messner, 188 Ill. 2d 404 (1999) (damages in malpractice actions measured by underlying injury's value)
- Tri-G, Inc. v. Burke, Bosselman & Weaver, 222 Ill. 2d 218 (2006) (punitive damages in malpractice actions not recoverable; distinction drawn with 13(A))
- Landis v. Marc Realty, L.L.C., 235 Ill. 2d 1 (2009) (penalty vs. remedial statute; ‘most important indicia’ of penalties)
- BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) (three-factor framework for grossly excessive penalties)
- International Union of Operating Engineers, Local 150 v. Lowe Excavating Co., 225 Ill. 2d 456 (2006) (due process limits on excessive punishments in Illinois)