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Terra Foundation for American Art v. DLA Piper LLP
2016 IL App (1st) 153285
| Ill. App. Ct. | 2016
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Background

  • Terra Foundation agreed to sell three Chicago properties; sale terms included a retail-parcel square-footage credit/adjustment formula tied to baseline estimates.
  • A 2005 term sheet contained exclusionary language excluding building common areas from retail rentable area; subsequent agreements (including a May 29, 2007 first amendment) adopted BOMA 96 measurement standards but did not include the exclusionary language.
  • Under BOMA 96 (as pleaded), common areas are allocated pro rata to rentable area unless expressly excluded; disputes over measurements produced arbitration awards (2010, Jan 2013) requiring Terra to pay substantial retail-parcel credits at closing in Feb 2013.
  • Terra sued DLA Piper in 2014 (complaint deemed filed Oct 7, 2014) for legal malpractice, alleging DLA negligently failed to include the exclusionary language and failed to warn that BOMA 96 would include common areas, causing ~$6.45M in damages and arbitration fees.
  • DLA moved to dismiss under section 2-619, arguing the action was time-barred by the two-year limitations period and the six-year statute of repose; the circuit court dismissed with prejudice, finding the repose period began May 29, 2007 (execution of the first amendment).
  • Terra appealed, arguing the repose period should begin at the closing (Feb 2013) or at later acts (March 2010 letter), or that separate post-2007 negligent acts tolled/restarted repose; the appellate court affirmed dismissal.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
When does the 6-year statute of repose begin for transactional malpractice? Repose begins at last affirmative act of representation (closing Feb 2013). Repose begins when the act/omission giving rise to malpractice occurred (May 29, 2007). Held: Repose began May 29, 2007 (execution of first amendment).
Whether ongoing representation or later agreements tolled or restarted repose Later DLA acts (e.g., March 2010 letter, other agreements) were separate negligent acts within repose. Continued representation or failure to correct earlier omission does not toll or restart repose. Held: Continuation of representation and later omissions did not toll or restart repose.
Whether multiple post-2007 omissions create independent actionable acts within repose Post-judgment amendment could plead independent acts within six years. The alleged injuries all flowed from the 2007 act; amendments would not cure repose defect. Held: Proposed amendment would not cure timeliness; denial of leave to amend affirmed.
Whether transactional malpractice is treated differently from litigation malpractice for repose start date Transactional cases require repose start at last act of representation. Statute of repose language is neutral; start date is the act/omission giving rise to the claim regardless of setting. Held: No categorical transactional/litigation distinction—statute runs from the act/omission that gave rise to injury.

Key Cases Cited

  • Fricka v. Bauer, 309 Ill. App. 3d 82 (1999) (statute requires filing within six years of acts/omissions forming basis of complaint)
  • Mauer v. Rubin, 401 Ill. App. 3d 630 (2010) (continuation of attorney-client relationship does not toll repose)
  • Trogi v. Diabri & Vicari, P.C., 362 Ill. App. 3d 93 (2005) (repose begins on last date attorney performed work involved in alleged negligence when tied to last overt act)
  • Snyder v. Heidelberger, 2011 IL 111052 (Ill. 2011) (repose may begin on last act of representation; statute runs from acts/omissions, not from later injury)
  • Feltmeier v. Feltmeier, 207 Ill. 2d 263 (2003) (where there is a single overt act from which damages flow, statute begins to run on that date)
  • Evanston Ins. Co. v. Riseborough, 2014 IL 114271 (Ill. 2014) (statute of repose extinguishes action after defined period regardless of discovery)
  • Carlen v. First State Bank of Beecher City, 367 Ill. App. 3d 1051 (2006) (discusses last date attorney performed the work involved in alleged negligence)
Read the full case

Case Details

Case Name: Terra Foundation for American Art v. DLA Piper LLP
Court Name: Appellate Court of Illinois
Date Published: Oct 28, 2016
Citation: 2016 IL App (1st) 153285
Docket Number: 1-15-3285
Court Abbreviation: Ill. App. Ct.