Johnson & Bell Shareholders, Joseph R. Marconi and Victor J. Pioli, successfully defended a Chicago real estate law firm and its partners in a $17 million legal malpractice case. The real estate law firm had represented a local bank in a loan transaction for the acquisition and construction of a residential condominium building at 60 West Erie Street. The borrowers on the loan subsequently submitted fraudulent draw requests on the loan and defrauded the bank out of $17 million.
The bank sued the real estate lawyers claiming that it had been poorly advised about certain requirements in the loan that were unmet at the time the loan was closed. The bank said had it known of these unmet requirements, it would not have closed the loan and sustained the losses it did. Defense countered that the bank was fully appraised and consented to the fact that certain conditions would not be fulfilled at closing and that the conditions were only to be waived for the initial draw for the acquisition of the property under the terms of the construction loan agreement. The defense further argued that had the bank simply followed the terms of the construction loan agreement, it would not have sustained its losses.
The trial court granted the lawyers’ motion for partial summary judgment to limit the damages claimed by the bank to the amount of the initial draw on the loan (i.e., $4.5 million). A three week trial ensued to determine the lawyers’ potential liability on the initial draw. After short deliberations, the jury returned a verdict of “not guilty.”