BENTON – Thomas Keefe III and father Tom Keefe settled a St. Clair County suit against Signature Hardware for a sum so staggering that Signature’s insurer seeks to pass the bill to the lawyer it hired.
Ansur America Insurance alleges at U.S. district court that attorney James Borland of Peoria made mistakes that resulted in settlement of a back injury for $11 million.
The complaint describes the amount as “an anomalous, unsupported, and unprecedented settlement for any similar case in the annals of Illinois law.”
Ansur, a subsidiary of Michigan insurer Frankenmuth Mutual, seeks damages from Borland and the Quinn Johnston firm of Springfield.
Robert Sweeney of Chicago filed Ansur’s complaint in January.
“The defense Borland and Quinn Johnston mounted was woeful in a multitude of respects and resulted in an enormous loss to Signature and Ansur,” Sweeney wrote.
Sweeney claims Borland never informed Ansur of possible defenses, or pursued them, or raised any affirmative defenses.
“At every point that a decision went against Ansur, Borland advised that the case was in an extremely plaintiff friendly jurisdiction,” he wrote.
He claimed Borland never advised Ansur that it could have removed the litigation to federal court.
Tom Keefe and Thomas III sued Signature for Helen and Wayne Miles in 2016.
They claimed an adjustable height bamboo shower stool collapsed, ruining Helen’s back surgery and causing other injuries.
Former chief judge John Baricevic assigned current chief judge Andrew Gleeson.
Borland answered the complaint by denying that Signature manufactured the stool.
In a report to Ansur, he valued the claim at $150,000 and estimated the chance of favorable resolution at 66 to 75 percent.
The odds plunged when Signature managers stated in depositions that three consumers complained about stools collapsing before Miles bought one.
Kelly Crosby of the Keefe firm amended the complaint in 2018, to allege negligence and move for summary judgment on strict product liability.
Borland again answered by denying Signature made the stool.
He identified Taizhou Huafei Electrical Company as manufacturer and asserted a third party complaint against it. He denied Signature sold the stool knowing of a defect.
Crosby moved to sanction him for contradicting deposition testimony, and Borland held his position.
“Defendant had no knowledge that when that particular seat left its possession and control it had any defect or was otherwise unreasonably dangerous,” Borland wrote.
“None of the testimony cited before this court concerns the specific seat that was sent to the plaintiff.”
Crosby moved for a case management order and Borland opposed it as premature.
He wrote that the manufacturer is a Chinese corporation and process of service “cannot be completed in the immediate future.”
Gleeson heard argument on summary judgment in May 2018, and granted it.
Keefe and Keefe amended the complaint in July 2018, to claim punitive damages for Borland’s wanton and willful conduct.
Borland responded that his actions in discovery had nothing to do with Signature’s provision of a product to Helen.
“Plaintiff has failed to provide any supporting authority that subsequent acts on the part of a defendant have any relevancy to this inquiry as to wrongful act and causation,” Borland wrote.
Gleeson allowed the claim in September 2018.
He granted the motion for a management order in November 2018, and set trial June 24, 2019.
In April 2019, Thomas Keefe III sent Borland a letter demanding $20 million.
Borland sent it to Ansur parent Frankenmuth Mutual, which responded by reserving a right to decline coverage for punitive damages.
Senior litigation examiner Craig Hebert wrote, “The potential for a punitive damage award creates a conflict of interest between Signature Hardware and Frankenmuth.”
Hebert wrote that Signature could waive the conflict or retain independent counsel at Frankenmuth’s cost.
He also wrote that in light of potential for a judgment in excess of policy limits, Signature might wish to retain independent counsel at its own cost.
Two months before the trial date, and 14 months after Borland filed Signature’s third party complaint against Taizhou Huafei, he achieved service of process.
On June 7, 2019, Frankenmuth counsel John Dalton of Chicago sued for declaratory judgment against Signature at U.S. district court.
“Frankenmuth has no duty under the policy to indemnify Signature Hardware for any settlement or judgment in the Miles litigation in excess of the policy’s limits,” Dalton wrote.
On June 10 and 11, Signature Hardware retained Hepler Broom of Edwardsville and Armstrong Teasdale of St. Louis at its own cost.
Borland remained on the case.
On June 18, Frankenmuth agreed to pay policy limits at $11 million and Gleeson vacated the trial date.
Frankenmuth sought to recover the punitive portion in district court in November 2019, by converting its action against Signature to a claim for contribution.
Donald Flack of Armstrong Teasdale responded by moving for an order to clear Signature of all liability.
Flack wrote that Borland filed a cross claim but failed to serve the manufacturer.
He wrote that Borland failed to have any engineer or expert examine the stool, that Borland disclosed no experts on liability, economics, or damages, that Borland failed to obtain an independent medical examination and that it was ten months after Helen claimed punitive damages until Frankenmuth informed Signature of a potential conflict.
He wrote that Borland offered $500,000 at mediation, effectively foreclosing settlement discussions.
Frankenmuth and Signature also clashed over rights to potential contribution from Taizhou Huafei.
Last April, they advised Senior District Judge Phil Gilbert that they settled.
In May, in Gleeson’s court, Signature counsel Matthew Champlin of Hepler Broom moved for default judgment against Taizhou Huafei.
In November, Borland moved to withdraw and Gleeson granted it.
Ansur’s legal malpractice complaint amplified Flack’s criticisms.
“Despite Borland’s early predictions of a defense verdict or favorable settlement in the very low six figures, an estimate commensurate with the claims in this case and the injuries sustained by the plaintiff, Borland failed to defend the case in a manner that could result in such an outcome,” Sweeney wrote.
He wrote that in May 2019, Borland advised Signature of “a massive increase in potential exposure projections that bore no relation to any reported verdicts or awards in the local jurisdiction or elsewhere.
“Upon receiving Borland’s meteoric exposure projection, Ansur realized on its own the potential conflict of interest it had with Signature, a critical fact that Borland either never understood or that he understood but of which he chose not to advise Ansur.”
Sweeney wrote that Signature retained its own counsel who advised Ansur that it would act in bad faith if it didn’t settle within policy limits.
“Plaintiffs knew they had a significant advantage because Borland had mounted virtually no defense and had no witnesses to call at trial,” he wrote.
He wrote that by the time of trial, Borland’s failures had so prejudiced Signature that Ansur was forced to settle.
He wrote that Borland failed to raise available defenses.
He wrote that communication between Helen Miles and Signature suggested assembly error as opposed to defect.
He wrote that she informed an employee that screws were stripped.
He wrote that if screws were over tightened or otherwise improperly installed, Signature could have defeated strict liability and negligence counts.
He prayed for punitive damages and attorney fees.
Borland and Quinn Johnston retained Robert Stephens of Chicago, who answered the complaint by claiming Ansur breached its duties.
He wrote that Ansur settled for far more than Borland and his firm valued the case and disregarded their advice on exposure.
He wrote that Ansur “deferred to the erroneous advice of independent counsel.”
He moved to strike the prayer for punitive damages and attorney fees.
District Judge Staci Yandle presides.
As of March 5, Gleeson hadn’t ruled on Signature’s default motion against Taizhou Huafei.
He plans a status conference May 17.