FERRIS, THOMPSON AND ZWEIG, LTD., Appellee, v. ANTHONY ESPOSITO, Appellant.
No. 117443
Supreme Court of Illinois
January 23, 2015
2015 IL 117443
(Note: This syllabus constitutes no part of the opinion of the court but has been prepared by the Reporter of Decisions for the convenience of the reader.)
The Workers’ Compensation Commission‘s authority over attorney fees did not extend to a common law action for breach of contract arising from defendant attorney‘s refusal to pay over to plaintiff law firm the percentage of Commission-аpproved fees which defendant had agreed to share pursuant to a referral agreement, and his motion to dismiss for lack of subject matter jurisdiction in the circuit court was properly denied.
Decision Under Review
Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Lake County, the Hon. Michael Fusz, Judge, presiding.
Judgment
Affirmed.
Michael D. Furlong and Peter M. Trobe, of Trobe, Babowice & Associates LLC, of Waukegan, for appellant.
Saul M. Ferris, of Ferris, Thompson & Zweig, Ltd., of Gurnee, for appellee.
Lisa Madigan, Attorney General, of Springfield (Carolyn E. Shapiro, Solicitor General, and Stephen M. Sоltanzadeh, Assistant Attorney General, of Chicago, of counsel), for amicus curiae Illinois Workers’ Compensation Commission.
Justices
JUSTICE KILBRIDE delivered the judgment of the court, with opinion.
Chief Justice Garman and Justices Freeman, Thomas, Karmeier, Burke, and Theis concurred in the judgment and opinion.
OPINION
¶ 1 In this case, we consider whether the circuit court has subject matter jurisdiction to resolve a dispute based on a referral agreement apportioning attorney fees earned in a claim filed under the Workers’ Compensation Act (Aсt) (
I. BACKGROUND
¶ 2 Plaintiff, Ferris, Thompson & Zweig, Ltd., filed a complaint in the circuit court of Lake County alleging two counts of breach of contract. Plaintiff alleged that it and defendant, Anthony Esposito, “agreed to act as co-counsel in the legal representation of two women with respect to their workers’ compensation claims. Under the contracts, plaintiff was to receive 45% of the attorney fees recovered in the two cases and defendant would receive the remaining 55% of the fees. After the cases were settled, defendant refused to pay plaintiff its share of the attorney fees.
¶ 3 Plaintiff attached to its complaint a separate аttorney-client agreement for each count. The agreements, signed by plaintiff, defendant, and the clients, stated that the clients had retained plaintiff and understood that plaintiff had “contracted with [defendant] to pursue this workers’ compensation claim on [their] behalf.” The clients understood and agreed that plaintiff would have certain responsibilities and would receive a portion of the attorney fees on the workers’ compensation claims.
¶ 4 Under the agreements, plaintiff was required to: (1) assist defendant with initial interviews and document preparation for the claims; (2) assist defendant with “client contact and
¶ 5 Plaintiff also attached to its complaint a letter it received from defendant in each case. In the letters, defendant confirmed that plaintiff was retained for legal representation in the two workers’ compensation cases. Defendant stated the parties had agreed that the cases were “referred to [defendant‘s] office and [plaintiff] will also undertake representation” of the clients. Defendant also reiterated the responsibilities of each party and the division of attorney fees.
¶ 6 Defendant filed a section 2-619 motion to dismiss the complaint, asserting that the circuit court lacked subject matter jurisdiction to consider plaintiff‘s claims. Defendant stated that under
¶ 7 The circuit court found plaintiff‘s complaint sought recovery based on a referral agreement and that the claims based on that agreement did not fall within
¶ 8 The appellate court held that the Commission has authority under the Act to set the amount of attorney fees awarded in claims filed with the Commission and to hear disputes on the amount of those fees. The Commission‘s authority does not extend, however, to “issues concerning a breach of a referral agreement delineating the percentage of the awarded fee that should be allotted to the attorney who represented the claimant before the Commission and the attorney who referred the claimant to that attorney.” 2014 IL App (2d) 130129, ¶ 17. The Commission‘s statutory authority is limited to hearing attorney fee disputes “concerning the amount of fees to be awarded to those who represent clients before the Commission.” 2014 IL App (2d) 130129, ¶ 20. The appellate court concluded that the circuit court had subject matter jurisdiction to hear this dispute based on a referral agreement. Accordingly, the cirсuit court‘s judgment was affirmed. 2014 IL App (2d) 130129.
¶ 9 We allowed defendant‘s petition for leave to appeal.
¶ 10 II. ANALYSIS
¶ 11 On appeal to this court, defendant contends that under the unambiguous language in
¶ 12 Plaintiff responds that
¶ 13 In this appeal, we must determine whether the circuit court erred in denying defendant‘s motion to dismiss under
¶ 14 Subject matter jurisdiction refers to a court‘s power to hear and decide cases of a general class. In re Luis R., 239 Ill. 2d 295, 300 (2010). With the exception of the power granted by statute to review administrative action, a circuit court‘s subject matter jurisdiction is conferred entirely by the Illinois Constitutiоn.
¶ 15 An administrative agency has no general or common law powers. Alvarado v. Industrial Comm‘n, 216 Ill. 2d 547, 553 (2005). An administrative agency‘s powers are limited to those granted by the legislature and any action taken by an agency must be authorized specifically by statute. Alvarado, 216 Ill. 2d at 553. When an agency acts outside its specific statutory authority, it is said to have acted without “jurisdiction.” Alvarado, 216 Ill. 2d at 553-54.
¶ 16 Accordingly, we must construe the Act to determine whethеr the legislature intended to divest the circuit court of jurisdiction and confer original jurisdiction on the Commission to
¶ 17 The relevant statutory provisions are found in sections 16 and 16a of the Act. Defendant relies heavily on section 16a(J) for his contention that the Commission has exclusive jurisdiction of plaintiff‘s claims.
“(J) Any and all disputes regarding attorneys’ fees, whether such disputes relate to which one or more attorneys represents the claimant or claimants or is entitled to the attorneys’ fees, or a division of attorneys’ fees where the claimant or claimants are or have been represented by more than one attorney, or any other disputes concerning attorneys’ fees or contracts for attorneys’ fees, shall be heard and determined by the Commission after reasonable notice to all interested parties and attorneys.”
820 ILCS 305/16a(J) (West 2012).
¶ 18 While section 16a(J) contains expansive language governing attorney fee disputes in the Commission, that language cannot be read in isolation. Section 16a(J) must be construed in the context of sections 16 and 16a as a whole. Section 16 outlines the Commission‘s general authority to set fees for services providеd under the Act, stating:
“The Commission shall have the power to determine the reasonableness and fix the amount of any fee of compensation charged by any person, including attorneys, physicians, surgeons and hospitals, for any service performed in connection with this Act, or for which payment is to be made under this Act or rendered in securing any right under this Act.”
820 ILCS 305/16 (West 2012).
¶ 19 Section 16a gives specific guidance on the Commission‘s authority to set attorney fees. The first subsection оf section 16a states:
“In the establishment or approval of attorney‘s fees in relation to claims brought under this Act, the Commission shall be guided by the provisions of this Section and by the legislative intent, hereby declared, to encourage settlement and prompt administrative handling of such claims and thereby reduce expenses to claimants for compensation under this Act.”
820 ILCS 305/16a(A) (West 2012).
¶ 20 In section 16a(A), therefore, the legislature plainly states its intent is to encourage prоmpt handling of claims to “reduce expenses to claimants for compensation under this Act.”
¶ 21 The provisions following section 16а(A) set forth specific rules for establishing or approving attorney fees for claims brought under the Act. Section 16a(B) states claims by attorneys “for services rendered in connection with the securing of compensation” generally may not exceed 20% of the amount recovered.
“(C) All attorneys’ fees in connection with the initial or original claim for compensation shall be fixed pursuant to a written contract on forms prescribed by the
Commission between the attorney and the employee or his dependents, and every attorney, whether the disposition of the original claim is by agreement, settlement, award, judgment or otherwise, shall file his contract with the Chairman of the Commission who shall approve the contract only if it is in accordance with all provisions of this Section.” 820 ILCS 305/16a(C) (West 2012).
¶ 22 Sections 16a(D), 16a(E), 16a(F), and 16a(G) set forth specific limitations on attorney fees that may be charged for certain types of compensation recovered.
¶ 23 Section 16a(J), when viewed in the context of section 16a as a whole, sets forth the Commission‘s authority to hear and decide disputes on fees for attorneys representing claimants before the Commission, including division of those fees when more than one attorney represents a claimant before the Commission. Based on the expressed legislative intent and the specific provisions in sections 16 and 16a, we determine that the Commission‘s authority to resolve disputes on attorney fees is limited to the amount and apportionment of fees charged by attorneys representing claimants before the Commission.
¶ 24 In this case, plaintiff alleged the parties “agreed to act as co-counsel” on the workers’ compensation claims. The attorney-client agreements attached to the complaint, however, indicate that plaintiff “contracted with [defendant] to pursue” the workers’ compensation claims. Under the agreements, plaintiff‘s responsibilities were generally limited to assisting defendant with initial interviews and document preparation and assisting defendant with client contact when necessary.
¶ 25 Defendant was required to “[r]epresent the client[s] before the Industrial Commission.” Defendant‘s responsibilities included preparing the documents and obtaining the records necessary to process the claims before the Commission. Defendant was also required to conduct any investigation, negotiation, and processing necessary to resolve the claims and to notify plaintiff periodically on “the handling of the claim[s].”
¶ 26 Plaintiff did not file the claims or represent the claimants before the Commission. The duties involved in pursuing the claims bеfore the Commission were specifically assigned to defendant. Plaintiff‘s minimal role in pursuing the workers’ compensation claims is evidenced by the requirement that defendant notify plaintiff periodically about the “handling of the claim[s].” We agree with the circuit and appellate courts that plaintiff‘s action is for breach of the referral agreements.
¶ 27 Defendant contends that even if plaintiff only referred the cases to him, the Commission still had exclusive jurisdiction of this attorney fee dispute. Defendant argues that the legislature intended for the Commission to hear all disputes on the division of attorney fees. Defendant relies on section 16b of the Act, stating in pertinent part:
“(a) An attorney appearing before the Commission shall not provide compensation or any gift to any person in exchange for the referral of a client involving a matter to be
heard before the Commission except for a division of a fee between lawyers who are not in the same firm in accordance with Rule 1.5 of the Code of Professional Responsibility.” 820 ILCS 305/16b(a) (West 2012).
¶ 28 Section 16b only restricts gifts or compensation for the referral of workers’ compensation clients. While section 16b allows referral agreements under Rule 1.5 of the Code of Professional Responsibility, it does not grant the Commission authority to hear a dispute between attorneys based solely on a referral agreement. The disрute in this case does not require any determination on the amount of fees charged for representing the claimants before the Commission or an apportionment of those fees between attorneys who represented the claimants before the Commission.
¶ 29 Defendant also contends the appellate court‘s holding that the Commission lacks jurisdiction in this case is inconsistent with our decision in Alvarado, 216 Ill. 2d 547. Defendant asserts that in Alvarado, this court held the Commission has broad and continuing jurisdiction of fee disputes between attorneys in workers’ compensation cases when the dispute is collateral to the claimant‘s final award. Defendant contends plaintiff‘s attorney fee claim in this case is collateral to the final award because it involves fees already approved by the Commission.
¶ 30 In Alvarado, the claimant‘s attorney filed an application for adjustment of the workers’ compensation claim. After the matter was assigned to an arbitratоr, the claimant entered into an attorney-client agreement with another attorney. The claimant eventually filed a substitution of attorneys with the Industrial Commission clarifying that he was only represented by the subsequently retained attorney. Several years later, the parties settled the workers’ compensation claim. The settlement agreement provided for attorney fees of $19,413.33. The arbitrator approved the settlement, but the claimant‘s former attornеy was not given notice. Alvarado, 216 Ill. 2d at 549-50.
¶ 31 After learning of the settlement, the claimant‘s former attorney filed a motion for fees under sections 16 and 16a of the Act (
¶ 32 On appeal to this court, the issue was whether the Commission had authority to apportion attorney fees several months after the settlement was approved and the award had become final. Alvarado, 216 Ill. 2d at 553. This court held that although the Commission did not have jurisdiction to reopen thе final award, the fee petition did not require the Commission to reconsider that award. Alvarado, 216 Ill. 2d at 558. The Commission did not reopen or modify the settlement award between the claimant and his employer to order those parties to pay additional attorney fees. Alvarado, 216 Ill. 2d at 558-59. Rather, under section 16a, the Commission ordered the claimant‘s attorney to pay his former attorney $1,350 from the attorney fees already awarded in the settlement. Alvarado, 216 Ill. 2d at 559.
¶ 34 We further noted our holding was consistent with the overriding purpose of the Act to compensate claimants as promptly and thoroughly as possible for work-related injuries. Alvarado, 216 Ill. 2d at 560 (quoting
¶ 35 In Alvarado, we considered the Commission‘s jurisdiction to apportion fees between attorneys who both represented the claimant before the Commission. The dispute in Alvarado fell squarely within the Commission‘s jurisdiction because it involved dividing attorney fees when the claimant had been represented by more than one attorney before the Commission. See
¶ 36 In contrast, the dispute in this case is based entirely on a referral agreement. Plaintiff referred the claimants to defendant, who represented them before the Commission. Unlike Alvarado, this case does not involve the Commission‘s jurisdiction to apportion fees between attorneys who both represented a claimant before the Commission.
¶ 37 Plaintiff‘s claims do not involve any question of establishing, approving, or apportioning fees for services it performed under the Act. The Commission already approved the attorney fees awarded to defendant for representing the clаimants before the Commission. The dispute here only involves the agreement that plaintiff is entitled to a specified percentage of the fees for referring the cases to defendant. Plaintiff‘s complaint does not fall within the Commission‘s authority to resolve disputes on the amount or apportionment of fees charged by attorneys for representing claimants before the Commission.
¶ 38 In sum, we conclude that the Act does not provide the Commission with authority tо hear and determine this dispute based on the referral agreements between plaintiff and defendant. The legislature did not explicitly divest the circuit courts of jurisdiction to consider the claims in plaintiff‘s complaint by enacting a comprehensive administrative scheme. Accordingly, the circuit court did not err in denying defendant‘s motion to dismiss plaintiff‘s complaint for lack of subject matter jurisdiction.
¶ 39 III. CONCLUSION
¶ 40 For the foregoing reasons, the judgments of the circuit court and the appellate court are affirmed.
¶ 41 Affirmed.