As a matter of first impression, the Fifth District Appellate Court held that punitive damages assessed against a litigant that were proximately caused by an attorney’s professional negligence can be recovered as compensatory damages in a subsequent legal malpractice case. Midwest Sanitary Serv., Inc. v. Sandberg, Phoenix & Von Gontard, P.C., 2021 IL App (5th) 190360. In Midwest, the plaintiff brought a legal malpractice claim against the law firm Sandberg, Phoenix & Von Gontard, P.C. (“Sandberg”) asserting that it negligently managed a wrongful termination case and that “but for” Sandberg’s actions the jury would not have awarded punitive damages. The Court reasoned that Illinois’ prohibition on punitive damages in legal malpractice cases does not apply to these facts. 735 Ill. Comp. Stat. Ann. 5/2-1115. The Court distinguished Tri-G, Inc. v. Burke Bosselman & Weaver, 222 Ill. 2d 218 (2006), in which the Supreme Court held that an unsuccessful plaintiff cannot recover wrongfully “lost” punitive damages in a subsequent malpractice action because the bases for denying lost punitive damages did not apply to wrongfully incurred punitive damages. The court held that allowing recovery of the punitive damages is the only way to compensate the plaintiff for its total out-of-pocket losses and must be permitted.
Midwest Sanitary Services, Inc. v. Sandberg, Phoenix & Von, 2021 IL App (5th) 190360