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FIRST DIVISION

JULY 29, 2002

No. 1-01-2947

 JUSTICE COUSINS delivered the opinion of the court:

Plaintiff City Colleges of Chicago (City Colleges) sued defendant Coopers& Lybrand, L.L.P. (Coopers), for professional negligence and breach of contractresulting from an audit of City Colleges. The jury returned a verdict in favorof City Colleges for $23 million reduced by 45% for plaintiff's comparativenegligence, and $378,000 for breach of contract. Coopers appeals claimingthat: (1) City Colleges failed to prove causation; (2) it is entitled to a newtrial because the trial court erred in instructing the jury and allowingimproper witness testimony and the verdict was against the manifest weight ofthe evidence; and (3) in the alternative, it is entitled to a setoff for thefull amount of a settlement between City Colleges and another auditor.

City Colleges cross-appeals alleging that this court must set aside thejury's verdict of contributory negligence and the damages verdict for thebreach of contract claim.

We affirm.

BACKGROUND

On November 10, 1992, City Colleges contacted Coopers and requested thatit submit a proposal for auditing City Colleges' books. Coopers submitted aproposal that included a comprehensive audit for the fiscal years of 1993, 1994and 1995. The audit proposal was customized for City Colleges and indicatedCoopers' expertise in auditing governmental entities, especially colleges. Theaudit proposal specifically mentioned that "investments" would be included inits review; however, there were no details related to the procedures to beemployed relative to the investments. City Colleges' fiscal year begins onJuly 1 and ends on June 30. On April 1, 1993, City Colleges' board ofdirectors (Board) resolved that it would retain Coopers as its auditor for 1993to 1995. Coopers began its field work in September of 1993 and completed itsaudit on or about October 15, 1993. Coopers issued and approved City Colleges'financial statements for the period beginning July 1, 1992, and ending June 30,1993.

In February of 1994, the Board's chairman, Ron Gidwitz, testified that hewas made aware of a "financial emergency" arising out of Dr. Philip Luhmann'sinvestment practices. Dr. Luhmann was the treasurer appointed by the Board andlater terminated as a result of his investing practices. The Board contactedCoopers, financial advisors, legal counsel and the Illinois Community CollegeBoard. After analyzing the financial emergency, City Colleges determined thatDr. Luhmann had violated City Colleges' investment policy. Dr. Luhmann hadbeen engaging in a practice known as "pairing off" securities. When Dr.Luhmann paired off the securities, he purchased the security with theexpectation that he could sell the security for a profit before he had settledits purchase. When the interest rates went down, the treasurer couldrepurchase the security at a profit. If the interest rates increased, thetreasurer would have to wait until the rates fell to a level that would allowhim to complete the pair off. The investment policy of City Colleges was tohold securities to maturity to minimize interest rate risks. After discoveringthis investment practice, the Illinois Community College Board instructed CityColleges to sell the securities that did not comport with the investment policyas soon as it was prudent to do so.

City Colleges filed a complaint at law against Arthur Andersen, itsprevious auditor, and Coopers alleging that both auditors were professionallynegligent and in breach of their respective contracts. The compliant statedthat the auditors, inter alia, failed to detect and notify the Board ofillegal, inappropriate and highly risky investments. The complaint furtherstated that if the auditors had exercised their duties of professional duecare, they would have disclosed in their reports and advised the Board of thetreasurer's activity. If so informed, the Board would have taken the necessarysteps to bring the investments into compliance with the investment policy andavoid the losses suffered as a result of the policy violation.

Arthur Andersen settled with City Colleges prior to trial. Cooperselected to proceed to trial. At trial, City Colleges introduced evidence ofDr. Luhmann's investment policy violations and testimony from certain membersof the Board indicating what action they would have taken had they been madeaware of the violations. City Colleges also called experts that testified tothe issue of damages suffered by City Colleges, professional negligence andbreach of contract. Coopers presented evidence and testimony by experts tosupport its position relative to the damages, professional negligence andbreach of contract. The trial lasted nearly a month.

At the conclusion of the trial, the jury returned a verdict in favor ofCity Colleges on the professional negligence count for $23 million. The juryalso assigned negligence on behalf of the plaintiff at 45%, thereby reducingCity Colleges' recovery to $12,650,000. The jury further found in favor ofCity Colleges on the breach of contract claim and awarded City Colleges$378,000.ANALYSIS

I

The defendant claims that it is entitled to judgment n.o.v. because CityColleges failed to prove causation. In support of its claim, Coopers argues:(1) there was no competent evidence of proximate causation; (2) there was nocompetent evidence of loss causation; and (3) collateral estoppel precludes thejury from finding that Coopers' audit caused City Colleges' damages. Insupport of Coopers' first contention, it claims that the limited testimonyoffered regarding causation was far too speculative to prove proximatecausation. Specifically, Coopers cites the testimony of three members of theboard of directors.

James Dyson testified at trial that had he been advised by Coopers thatDr. Luhmann was investing City Colleges' money in violation of the Board'spolicy, he would have made whatever changes that Coopers recommended. RonaldGidwitz testified that if Coopers had informed him of Dr. Luhmann's investmentpractices, the Board would not have tolerated it and that it would have"cleared up" the situation. Terry Newman testified that he would have pursuedany information that indicated improper investment by Dr. Luhmann.

When determining whether a directed verdict or a judgment n.o.v. isproper, the reviewing court must follow established standards. Maple v.Gustafson, 151 Ill. 2d 445, 453, 603 N.E.2d 508 (1992). A directed verdict ora judgment n.o.v. is properly entered in those limited cases where all of theevidence, when viewed in its aspect most favorable to the opponent, sooverwhelmingly favors the movant that no contrary verdict based on thatevidence could ever stand. Maple, 151 Ill. 2d at 453. In ruling on a motionfor a judgment n.o.v., a court does not weigh the evidence, nor is it concernedwith the credibility of the witnesses; rather, it may only consider theevidence, and any inferences therefrom, in the light most favorable to theparty resisting the motion. Mizowek v. DeFranco, 64 Ill. 2d 303, 309-10, 356N.E.2d 32 (1976).

In our view, the testimony as to proximate causation was not toospeculative. The jury in this case heard the testimony of three members ofCity Colleges' Board and two former members of the Board. Michael Mayo was thechairman of the finance committee at the time of the Coopers audit and a formertrustee. Ronald Grzywinski was the trustee responsible for the adoption of theBoard's investment policy. Mayo, Grzywinski and the other members testified asto the action they would have taken if Coopers had indicated any deviation fromthe investment policy. Also, City Colleges presented evidence that it hadacted on other issues brought to its attention by Coopers and made changes inareas such as its purchasing practices.

Coopers further argues that the "courts" have uniformly found thetestimony of board members, in similar situations, insufficient to proveproximate causation, citing In re Hawaii Corp., 567 F. Supp. 609, 627 (D. Haw.1983) and Drabkin v. Alexander Grant & Co., 905 F.2d 453, 456 (D.C. Cir. 1990). We note, however, that In re Hawaii Corp. was a bench trial where the trialcourt determined, as the finder of fact, that the testimony of the board inthat case was unreliable. In re Hawaii Corp, 567 F. Supp. at 627. We do notread that case as holding that such evidence is inadmissible. In the instantcase, the jury determined that the testimony given by the Board was reliable. The Drabkin case is distinguishable because the auditor issued a "goingconcern" and the directors did not act even though reports of its tax problemsappeared in the Wall Street Journal. During that trial, one director testifiedthat the board "could" have declared bankruptcy earlier if it had known about atax delinquency. (Emphasis in original.) Drabkin, 905 F.2d at 456-57.

Although this type of testimony is unusual, courts have allowed thetestimony of board members as to what their actions would have been if auditorshad informed them of certain inadequacies. See Seafirst Corp. v. Jenkins, 644F. Supp. 1152, 1156-57 (W.D. Wash. 1986) (board members' declarations as towhat actions they would have taken if auditors had notified them ofinadequacies were sufficient admissible causation evidence); Fund of Funds,Ltd. v. Arthur Andersen & Co., 545 F. Supp. 1314, 1373 (S.D.N.Y. 1982)(directors' testimony stating what they would have done if auditors hadproperly reported basis for certain transactions was admissible); United Statesv. Isaacs, 493 F.2d 1124, 1162 (7th Cir. 1974) (affirming admissibility ofIllinois Racing Board members' testimony regarding the steps they would havetaken had they known of a concealed interest in certain matters). Coopers alsoargues that testimony by three Board members is insufficient to prove that theBoard would have taken action and that the Board was aware of the investmentpolicy violations, and did nothing to stop them, and thus, a finding by thejury that the damages flowed from Coopers' audit is precluded. We disagree.

City Colleges put forth the testimony of the three board members inaddition to Mayo and Grzywinski. The Board produced circumstantial evidencethat it had previously taken action based upon suggestions given to CityColleges by Coopers in the course of its audit. City Colleges also offeredtestimony and evidence that as soon as the investment policy violation wasdiscovered, immediate action was taken.

Relative to the loss causation issue, Coopers argues that there was nocompetent evidence of loss causation and that it was unreasonable for the juryto conclude that City Colleges' losses were foreseeable. Coopers relies onMartin v. Heinold Commodities, Inc., 163 Ill. 2d 33, 60, 643 N.E.2d 734 (1994),for the proposition that a tort plaintiff must prove that he would not havesuffered a loss if the facts were what he believed them to be or that thenegligent conduct was in some reasonably direct, or proximate, way responsiblefor his loss. Martin, 163 Ill. 2d at 60. Coopers contends that two importantfacts undisputed at trial require that this court grant Coopers' request forjudgment n.o.v. First, City Colleges engaged Coopers to audit its financialstatements until June 30, 1993, and second, City Colleges did not suffer anyout-of-pocket losses on the investments it owned on that date. Coopers'argument is that the composition of City Colleges' portfolio substantiallychanged after the date on which Coopers was obligated to audit the investments,and therefore, the losses were a result of the investment change and notnegligence in conducting the audit. We disagree.

In our review of the record, we find that there was sufficient evidencefor the jury to determine that Coopers' failure to detect the treasurer'sviolation of the investment policy, and City Colleges not acting to correct theviolation, could lead to the financial injury City Colleges alleges. Thequestion of foreseeability of injury is a factual question for the jury todecide. Blue v. St. Clair Country Club, 7 Ill. 2d 359, 364, 131 N.E.2d 31(1955); see also Cereal Byproducts Co. v. Hall, 8 Ill. App. 2d 331, 132 N.E.2d27 (1956). Furthermore, the record indicates that Coopers specificallyproposed that it would identify business risks and ensure that management actedupon such risks. Coopers' proposal to provide professional services states inpertinent part:

"In detail, the principal elements of our audit approach are asfollows:

Risk Assessment and Planning. Our audit approach emphasizes the useof professional judgment. We continually monitor your operations andrevise our audit strategy based on knowledgeable risk assessment. Theapproach provides assurance not only that your financial statements areaccurate and provide a fair representation of your financial position,but that any business opportunities or risks are quickly identified andacted upon by management."

The jury determined that Coopers failed to comply with this provision. It isnot unreasonable that a jury could similarly find that injury resulted fromCoopers' failure.

Next, Coopers argues that collateral estoppel precludes the jury fromfinding that its audit caused City Colleges' damages. City Colleges filed aproof of claim in the United States Bankruptcy Court for the Southern Districtof Texas based on alleged securities violations against Westcap, the brokerthat sold the securities at issue to Dr. Luhmann. The bankruptcy court foundfor City Colleges and Westcap appealed. The court of appeals reversed and heldthat (1) Westcap's representations regarding profitability of bonds did notconstitute material misrepresentation under Texas law; and (2) Westcap'sfailure to inform City Colleges that bonds were unsuitable for its portfolioand investment policy was not material because City Colleges had knowledge ofthe nature of the investments and the associated risk.

The doctrine of collateral estoppel precludes parties from relitigatingissues that have already been resolved in earlier actions. Du Page ForkliftService, Inc. v. Material Handling Services, Inc., 195 Ill. 2d 71, 77, 744N.E.2d 845 (2001). When determining if collateral estoppel applies, Illinoislaw requires that the trial court look to the law of the state where the firstjudgment was entered. Mohn v. International Vermiculite Co., 147 Ill. App. 3d717, 720, 498 N.E.2d 375 (1986). In the instant case, the state that enteredthe judgment was Texas.⁽¹⁾ Under Texas law, a party must show: (1) the factssought to be litigated in the action were fully and fairly litigated in theprior action; (2) those facts were essential to the judgment in the firstaction; and (3) the parties were cast as adversaries in the first action. Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714, 721 (Tex. 1991).

We hold that Coopers has not established the elements necessary to invokethe doctrine of collateral estoppel. The facts sought to be litigated by CityColleges were not fully and fairly litigated. The issue City Colleges arguedwas that Coopers failed to inform the Board that the investments were inviolation of City Colleges' investment policy. That issue differs from theissue decided in In re Westcap Enterprises, 230 F.3d 717, 732 (5th Cir. 2000). We do, however, note that the trial court was mistaken in its belief that sinceCoopers was not a party to the prior action, collateral estoppel cannot apply. The Texas Supreme Court has held that mutuality is not required for theinvocation of the collateral estoppel doctrine, but, rather, it is onlynecessary that the party against whom the plea of collateral estoppel is beingasserted be a party or in privity with a party in the prior litigation. EagleProperties, 807 S.W.2d at 721.

We cannot say that all of the evidence, when viewed in its aspect mostfavorable to the opponent, so overwhelmingly favors Coopers that no contraryverdict based on that evidence could ever stand. Maple, 151 Ill. 2d at 453.

II

In the alternative, Coopers contends that it is entitled to a new trialif this court declines to order judgment n.o.v. Coopers offers the followingfour reasons supporting its entitlement to a new trial: (1) the trial courterroneously instructed the jury by describing the standard of care applicableto plaintiff's professional negligence claim under a statute that only applesto a nonparty; (2) the trial court erroneously admitted speculative andundisclosed testimony by City Colleges' witnesses; (3) the trial courterroneously refused to instruct the jury regarding the conclusive findings ofthe Fifth Circuit Court of Appeals in Westcap; and (4) the jury verdict wascontrary to the manifest weight of the evidence.

The defendant argues that the trial court erred in giving a juryinstruction related to a statutory violation applicable only to the defendant. The instruction given to the jury at trial reads in pertinent part:

"There was in force at the time of the occurrence in question theinvestment policy of the City Colleges which provides as follows:

One, duties of the treasurer: It shall be the treasurer'sresponsibility to determine and evaluate risk of investment alternativesas are permitted under this policy with due regard for prudent financialprincipals and practices, assess potential investments criteria oflegality, financial risk, interest rate risk, liquidity and yield as sosequenced in the order of importance.

***

If you decide that the defendant failed to detect or notify thePlaintiff of violations of these policies on the occasion in question,then you may consider that fact together with all the other facts andcircumstance in evidence in determining whether and to what extent, ifany, Defendant was negligent under the claim of professional negligence" (Emphasis added.)

Coopers contends that the instruction was improper because the instructioncited a provision that governed the conduct of the treasurer and should only beused as proof of his negligence. Second, Coopers claims that the instructioninappropriately describes the standard of care applicable to the defendant inthe instant case.

The criterion used in determining proper submission of jury instructionsis whether the instructions given, taken together, fully and fairly apprise thejury of the relevant principles. Savage v. Martin, 256 Ill. App. 3d 272, 284,628 N.E.2d 606 (1993). The determination of proper jury instructions lieswithin the sound discretion of the trial court, and a reviewing court will notdisturb the trial court's decision absent a clear abuse of that discretion. Linn v. Damilano, 303 Ill. App. 3d 600, 606-07, 708 N.E.2d 533 (1999).

Contrary to the defendant's assertion, the instruction, together with theprovisions cited therein, fully and fairly apprised the jury of the relevantprinciples, especially in deciding what the defendant knew or should haveknown. See Davis v. Marathon Oil Co., 64 Ill. 2d 380, 390-91, 356 N.E.2d 93(1976), citing Darling v. Charleston Community Memorial Hospital, 33 Ill. 2d326, 332, 211 N.E.2d 253 (1965). It is important that the jury understand theapplicable policy provisions so that it may determine whether the auditorfailed to detect a violation of the same. Furthermore, the instruction doesnot imply that the treasurer and the auditor were under the same duty of care. The language of the instruction clearly indicates that "[i]f [the jury]decide[s] that the defendant failed to detect or notify the Plaintiff ofviolations of [the] policies," then it may use that fact along with the otherevidence to determine "to what extent, if any, Defendant was negligent" (Emphasis added.) The instruction, therefore, did not mislead the jury andcause it to apply an incorrect standard of care to the defendant.

Coopers also advances the argument that the trial court erroneouslyallowed improper witness testimony. Coopers takes issue with Mayo's testimony. Mayo served on the Board until August 6, 1993. On August 6, 1993, Coopers hadneither completed its audit field work nor issued its audit report. Cooperscomplains that Mayo's testimony was irrelevant, lacked foundation and wasspeculative as to what he would have done if Coopers had reported violations ofthe investment policy to the Board. We disagree.

We find that Mayo had a sufficient basis to testify in light of hisduties and experience as trustee of City Colleges and former chairman of thefinance committee at the time of Coopers' audit. Evidence was adduced at trialthat Mayo had a significant role in retaining Coopers to monitor compliancewith City Colleges' investment policy. Also, relative to what action he wouldhave taken, the record indicates that evidence was produced to show that theBoard and Mayo had taken timely and appropriate action in past matters whenadvised by an auditor. Mayo's testimony was relevant, supported by the recordand not speculative.

Coopers also argues that Dr. Lisette Cooper was allowed to testifyoutside her area of expertise regarding the hypothetical behavior andcredibility of other witnesses. First, Coopers argues that Dr. Cooper shouldnot have been allowed to opine as to what the Board would have done had it beeninformed of the policy violation. We note, however, that this opinion wasdisclosed in Dr. Cooper's written expert report prior to trial. The trialcourt came to the same conclusion and allowed the testimony. We also find itworthy of mention that the defendant had a full opportunity to cross-examineDr. Cooper regarding her testimony and bring any weaknesses to the attention ofthe jury. In addition, Coopers claims that Dr. Cooper improperly testified asto the credibility of Dr. Luhmann's statements. Our review of the recordreveals, and the trial court found, that Dr. Cooper's testimony was notdirected toward Dr. Luhmann's testimony, but was a response to counsel'sargument that Dr. Luhmann had "lost track" of his investments.

The defendant argues that the trial court allowed undisclosed experttestimony to be admitted into evidence. Harvey Moskowitz, City Colleges'expert on accounting, testified that Coopers should have informed City Collegesthat it did not intend to test City Colleges' compliance with its investmentpolicies. This opinion was disclosed during discovery and Moskowitz gave hisbasis for arriving at that conclusion. At trial, Moskowitz expressed thisopinion and referred to additional bases for support of his opinion. Cooperscontends that an expert cannot offer a basis for an opinion that has not beendisclosed before trial. See Copeland v. Stebco Products Corp., 316 Ill. App.3d 932, 946, 738 N.E.2d 199 (2000).

We, however, find that the defendant waived this issue. Moskowitzspecifically and repeatedly offered the opinion and his bases earlier in thetrial without objection from Coopers. Coopers has, therefore, waived thisissue. Uhrhan v. Union Pacific R.R. Co., 155 Ill. 2d 537, 545, 617 N.E.2d 1182(1993). Furthermore, even if waiver did not apply, the record indicates thatthe opinion was disclosed by Moskowitz at the deposition. Additionally, thebases for the same opinion were disclosed in the deposition.

Coopers seeks a new trial, contending that the verdict was against themanifest weight of the evidence. A judgment is against the manifest weight ofthe evidence when an opposite conclusion is apparent or when the findingsappear to be unreasonable, arbitrary or not based upon the evidence.

Rhodes v.Illinois Central Gulf R.R., 172 Ill. 2d 213, 242, 665 N.E.2d 1260 (1996). Inan appeal from a jury verdict, a reviewing court may not reweigh the evidenceand substitute its judgment for that of the jury. Barton v. Chicago & NorthWestern Transportation Co., 325 Ill. App. 3d 1005, 1036, 757 N.E.2d 533 (2001). Based on the record, we hold that the trial court did not abuse its discretionby allowing the testimony of the expert witnesses. Also, the verdict was notagainst the manifest weight of the evidence.

Coopers also claims that this court should grant a new trial because thetrial court refused to give an instruction that the facts of the Westcap casewere entitled to collateral estoppel effect. However, we have concluded thatCoopers has not satisfied the elements required to invoke the collateralestoppel doctrine. For the same reason, we conclude that Coopers is notentitled to an instruction regarding the facts determined in Westcap.

III

Coopers claims, in the alternative, that it is entitled to a setoff ofthe full amount of City Colleges' settlement with Arthur Andersen. Cooperscites the Joint Tortfeasor Contribution Act (the Act) (740 ILCS 100/2 et seq.(West 2000)). The Act provides:

"[W]here 2 or more persons are subject to liability in tort arisingout of the same injury to person or property, or the same wrongful death,there is a right of contribution among them ***." 740 ILCS 100/2(a)(West 2000).

Coopers also cites Patton v. Carbondale Clinic, S.C., 161 Ill. 2d 357, 372, 641N.E.2d 427 (1994), for the proposition that joint tortfeasors are each liablefor a single injury. City Colleges argues that Arthur Andersen inflicted aninjury separate from Coopers' 1993 audit, namely, the negligent audit for 1991and 1992.

The test for "jointness" is the indivisibility of the injury. Burke v.12 Rothschild's Liquor Mart, Inc., 148 Ill. 2d 429, 438, 593 N.E.2d 522 (1992). Section 433A of the Restatement (Second) of Torts states:

"(1) Damages for harm are to be apportioned among two or more causeswhere

(a) there are distinct harms, or

(b) there is a reasonable basis for determining the contribution of eachcause to a single harm.

(2) Damages for any other harm cannot be apportioned among two or morecauses." Restatement (Second) of Torts