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Failed Real Estate Investment Ignites Malpractice Claim. Jalalpour, Sedia and Macksey Extinguish the Dispute.

November 10, 2021

Johnson & Bell Shareholders, Ramses Jalalpour and David M. Macksey, and Associate Attorney, Adam J. Sedia, secured a Second District Appellate Court ruling affirming motion for summary judgment in favor of their client in a legal malpractice dispute.

In this case, the plaintiffs, a real estate investment and management company and its owner, thought they had successfully purchased a property out of foreclosure in November 2013.  They discovered that what had been purchased for $373,000 was a junior mortgage and that a senior mortgage still existed on the real estate property.  At that point, plaintiffs retained a second law firm to pursue a malpractice claim against the law firm that had not uncovered the existence of a lien on the purchased property.  The second law firm also allegedly told plaintiffs that they could help clear up the mortgage issue involving the purchased property. 

In June 2014, plaintiffs were advised by the second law firm not to attend the sheriff’s sale of the foreclosed real estate property.  Ultimately, another bidder purchased the property for $221,000.  A few months later, plaintiffs filed a motion to vacate the sale, which was denied, as was their motion to reconsider.  In late 2014, plaintiffs filed a notice of appeal.  In September 2015, the appellate court dismissed the motion because the sale rendered the appeal moot, as no remedy existed to reverse the sale.

Forty months after the June 2014 sale of the property, plaintiffs filed a malpractice lawsuit in Lake County against Johnson & Bell’s client, the second law firm involved in the property.  In the complaint, plaintiffs alleged that our client negligently failed to advise Plaintiffs to redeem the property at the June 2014 sheriff’s sale and negligently failed to stay the final judgment of the sale during appeal.  Defense countered that plaintiffs’ claims either exceeded the statute of limitations or lacked proximate causation.  In 2019, the Lake County Circuit Court granted defendant’s motion for summary judgment. 

On appeal, the court found that plaintiffs’ loss was the result of a series of unwise decisions. They had purchased the property before ensuring that a proper title search had been conducted, and failed to consult the lis pendens that had already been recorded. Plaintiffs compounded upon these mistakes by failing to appear at the June 2014 sheriff’s sale to redeem the property. As plaintiffs’ losses were the result of their own lack of diligence, the foreclosure court properly rejected plaintiffs’ claims that justice was not otherwise done.  Therefore, any appeal of the foreclosure court’s ruling would have been affirmed, and our client’s alleged failure to preserve the plaintiffs’ appeal did not proximately cause any injury.  The appellate court also found that plaintiffs’ claim as to our client’s failure to resolve the issue of the senior mortgage was time-barred.  Any injury that resulted from this alleged failure occurred when the foreclosure court confirmed the sheriff’s sale on the senior mortgage, i.e., more than two years prior to plaintiffs’ filing of their malpractice suit.

The appellate court affirmed the trial court’s motion for summary judgment in favor of the defense.

Mr. Jalalpour represented the law firm client at trial.  Mr. Sedia drafted the appeal with assistance from Mr. Macksey.

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