Deal or No Deal

The recent first district opinion in Tielke v. Auto Owners Insurance Company, et. al. 2019 IL. App. (1st) (181756), filed August 16, 2019, is a must read for members of the bench and bar who are engaged in litigation. The case involves mistakes made by both a trial judge and a plaintiff’s attorney as well as a possible ethical violation by a defense counsel. Those mistakes proved very costly to the plaintiff’s personal injury case, resulting in a loss to the plaintiff of nearly $400,000. It also may lead to a malpractice claim against plaintiff’s counsel.

In Tielke, a plaintiff’s personal injury attorney filed a breach of contract claim against the defendants and their attorney in an underlying slip and fall case after the underlying case went to verdict. In the underlying case, the defendants’ attorney had extended a $700,000 settlement offer during the course of the trial. That evening, defense counsel confirmed in a text message that the offer was still open.  The following day, during a break in testimony, plaintiff’s attorney advised defense counsel that plaintiff accepted the offer. Plaintiff’s counsel followed up with a text message to defense counsel. 

Approximately 15 minutes later and before the court was scheduled to reconvene, defense counsel returned plaintiff’s counsel’s test with a text of her own stating, “Sorry. Offer was withdrawn, we will proceed.” Plaintiff’s attorney demanded that the settlement agreement be honored, but defense counsel refused. (Notably, the settlement offer had no deadline for acceptance or withdrawal; nor was there any evidence that plaintiff’s attorney had rejected the offer as made or countered with a change in its terms.)

Plaintiff’s attorney then brought the settlement matter to the attention of the trial judge who stated:

So the defense is giving you two bites at the apple. So I can’t do anything here. The method for you to do then after the trial, if you get a verdict less than the accepted offer, you file a breach of contract lawsuit

* * * *

So I encourage you to do what you need to do to protect your rights, the only thing for me to do is proceed with the trial. I am denying the Plaintiff any relief.

The trial proceeded and ultimately, the jury returned a verdict in favor of the plaintiff and against one of the defendants, but only in the amount of $332,425.00. The trial court entered judgment on that verdict.  

Two days following the jury verdict, plaintiff issued a written demand on defendant to tender the full amount of $700,000 settlement agreement. To this, defense counsel responded:

We disagree with your representation and no settlement was effectuated. Our settlement offer was withdrawn…

Defendants then brought a motion before the trial judge to enforce a full satisfaction of this verdict tendering the full amount of the judgment of $332,425.00.  Plaintiff’s attorney accepted defendant’s $332,425.00 check, reserving her right to seek the difference owed by the disputed settlement agreement. 

Plaintiff brought a post-trial motion seeking an award of costs and sanctions against the defendants, but did NOT seek reconsideration of the court’s denial of the motion to enforce the settlement agreement. Moreover, plaintiff did NOT file an appeal following a denial of the post-trial motion.

Instead, plaintiff listened to the trial court and filed a separate breach of contract action against the defendants from the slip and fall action, along with their attorney and their liability carrier, Auto Owners. Defendants filed a motion to dismiss pursuant to 735 ILCS 5/2-615 with a memorandum seeking dismissal under Section 2-619 of the court of Civil Procedure, arguing that the breach of contract claim was an improper collateral attack on the judgment entered on the verdict in the underlying case, and was further barred by res judicata, judicial estoppel, and accordant satisfaction. The trial judge agreed that the action was an impermissibe collateral attack on the order in the underlying case. The trial judge denied Plaintiff’s Motion to Enforce the Settlement Agreement and granted defendants’ Section 2-619 motion to dismiss.

On appeal, Justice Rochford delivered the opinion of the court with Justices Hoffman and Hall concurring. In affirming the dismissal of the breach of contact action by the trial court, and relying upon Malone v. Cosentino 99 Ill. 2d 29 (1983), the court affirmed the dismissal, finding that under the collateral attack doctrine, the final judgment rendered by the trial court a court in the underlying slip and fall action could only be challenged through direct appeal or procedure allowed by statute. It remained binding on the parties unless it was reversed through such a preceding, citing Apollo Real Estate Investment Fund, IV, L.P. v. Gelber, 403 IL. App. 3d 179 (2010). The court further cited to Bonhomme v. St. James (2012) Il. 112393 at 26, which stated, “A party should not be excused from following rules intended to preserve issues for review by relying on a trial court’s erroneous belief that an issue was properly reserved for review.” In relying on Bonhomme, the court found that plaintiff erred in relying on the trail court’s erroneous direction to file a separate cause of action for breach of contract in order to collaterally attack the court’s denial of her Motion to Enforce Settlement. Instead, she was required to follow well established Supreme and Appellate court precedent of filing a proper post trial motion. 

Tielke is important and instructive for members of the bench and bar. The trial court issued an imprudent directive—to file a breach of contract action—and the plaintiff’s attorney complied. Both were wrong. This issue that could have easily been preserved and possibly resolved through a post-trial motion and possibly an appeal in the underlying case.   

Based on the available record, it appears that the offer of settlement was properly accepted before it was withdrawn, and that the trial judge erred in failing to conduct further proceedings regarding the circumstances behind the offer and acceptance, before denying plaintiff’s motion to enforce. The judge compounded that error when he erroneously advised plaintiff’s attorney to file a separate breach of contract claim.

According to the record, the offer, when made, did not contain a deadline for its acceptance; it was open-ended and it was never rejected or countered by plaintiff’s attorney. Assuming this to be true, the elements of a contract were satisfied.  City of Burbank v. Illinois State Labor Relations Board, 185 Il App. 3d 997, 1002-3 (1989); CNA International v. Baer, 2012 Il. App. (1st) 112174.

Plaintiff’s attorney dropped the ball by not insisting that the court conduct a full hearing of the circumstances surrounding the purported settlement before the judge threw up his hands and said, “There’s nothing I can do” and proceeding with the trial. By conducting an evidentiary hearing, the court would have been in a better position to determine if the offer was, in fact, accepted prior to being withdrawn before denying the motion outright.  That would have provided a detailed and accurate record in the case of an appeal.  Had the court done so and found, as I believe he should have, that a settlement had been reached, defendant could have appealed.  Had the court denied the motion, and allowed the case to proceed to verdict, plaintiff could have easily appealed. 

In light of the appellate court’s decision, by following the trial judge’s erroneous directive to file the separate breach of contract claim, plaintiff’s attorney is open to a potential malpractice claim. Unfortunately, neither the plaintiff’s attorney nor his or her client had such a remedy against the trial judge for the bad advice.

In conclusion, this case is instructive for members of our judiciary and bar because of its unfortunate but preventable outcome. When in doubt, the trial judge could have and should have taken a short recess in the proceedings and gone down the hall and sought the advice of other trial judges as to how best to handle the situation knowing full well that if a settlement was effectuated, there would be no appeal and any errors occurring prior thereto would be of no moment. 
 
A trial lawyer must follow his or her own instincts, not be intimidated by a trial judge, and insist on making a record, even if it is only an offer of proof instead of an evidentiary hearing.  If in doubt as to how to proceed, the trial attorney should call appellate counsel, who should be on speed dial, to get advice as to how to proceed so that an appropriate record will be made for purposes of a potential appeal. 

This case is a must read for all attorneys and judges who practice in this area.