Issue Preclusion and Failure to Mitigate Foreclose Contract Damages After Attorney Withdrawal for Nonpayment

Case: Barbara Simonson v. Thomas M. Olejniczak, et al., No. 25-1417 (7th Cir. Oct. 10, 2025) (nonprecedential, Fed. R. App. P. 32.1). Judges Easterbrook, Hamilton, and Maldonado. Appeal from E.D. Wis. (Griesbach, J.), which granted summary judgment to defendants, 2024 U.S. Dist. LEXIS 148456 (Aug. 20, 2024).

Introduction

This nonprecedential Seventh Circuit decision arises from a dispute between a trustee/personal representative (Barbara Simonson) and her former counsel (Thomas M. Olejniczak and his law firm, Conway, Olejniczak & Jerry, S.C.). The litigation stems from the administration of the estate and living trust of John Hohler, who died in 2013. Simonson was named trustee and personal representative. In 2014, she retained the defendants to represent her, the estate, and the trusts.

By mid-2015 the relationship unraveled over unpaid legal fees. The firm moved to withdraw in the Wisconsin probate court; that motion was granted on August 26, 2015. A deadline to close the estate came and went; Simonson sought extensions but ultimately failed to file required papers or appear at a subsequent hearing. The probate court removed her and imposed surcharges, reducing her sub-trust’s distribution. Her state appeals failed.

Simonson then sued in federal court for breach of the retention contract, seeking damages at least equal to the surcharges. The district court granted summary judgment for the defendants. On appeal, the Seventh Circuit affirmed, holding that issue preclusion prevents re-litigation of the propriety of the state probate court’s withdrawal order and, independently, that Simonson failed to mitigate damages, which defeats her recovery even assuming some breach by the firm.

Judge Maldonado concurred in the judgment, agreeing that failure to mitigate is dispositive but disagreeing with the majority’s view that there was no genuine dispute of material fact on whether Simonson materially breached the agreement or whether the firm waived any claim of materiality by its continued conduct.

Summary of the Opinion

The probate court’s order granting the law firm leave to withdraw—based on nonpayment—precludes Simonson from relitigating whether withdrawal was proper. Issue preclusion, not Rooker-Feldman, applies because Simonson seeks damages for events preceding the state decision. See Gilbank v. Wood County Department of Human Services, 111 F.4th 754 (7th Cir. 2024) (en banc).
Even if a federal court could reach the question independently, the Seventh Circuit agreed with the district court that no reasonable jury could find Simonson kept her contractual promises; her material breach (arrearages) allowed withdrawal under the agreement.
Regardless, Simonson’s claim fails due to her failure to mitigate damages: she obtained more time from the probate court, received explicit instructions on what to file, did not hire new counsel or comply, and failed to appear at the November 9 hearing. Under Kuhlman, Inc. v. G. Heileman Brewing Co., 83 Wis. 2d 749 (1978), this failure bars recovery.
Concurrence: Judge Maldonado would not have found material breach and lack of waiver as a matter of law on summary judgment, citing evidence suggesting (i) nonpayment may not have been material given the trust’s ability to pay, partial payments, and fee disputes; and (ii) the firm’s conduct may have waived any materiality argument. Still, she concurred that failure to mitigate defeats the claim.

Key Factual Timeline

2013: John Hohler dies; assets to be split among two daughters and a grandchild via sub-trusts; Simonson is trustee and personal representative.
June 2014: Simonson retains defendants to represent her, the estate, and the trusts.
Mid-2015: Fee arrearages accumulate (~$80,000); contract allows withdrawal for nonpayment. July 2015: firm tells Simonson it regards representation as concluded; moves to withdraw in probate court.
Aug. 3, 2015: Deadline to close the estate passes. Aug. 26, 2015: Probate court grants withdrawal; firm ceases representation.
Aug.–Oct. 2015: Simonson seeks extension; files insufficient closing statement; court specifies needed documents and a new date (Oct. 5). She neither files the required materials nor seeks additional time.
Nov. 9, 2015: Simonson fails to appear at hearing; probate court removes her and imposes surcharges, reducing her sub-trust’s distribution. State appeals unsuccessful.
2023: Simonson sues in diversity for breach of the retention agreement. 2024: Summary judgment for defendants. 2025: Seventh Circuit affirms.

Analysis

Precedents and Authorities Cited

Gilbank v. Wood County Department of Human Services, 111 F.4th 754 (7th Cir. 2024) (en banc): Clarifies the narrow scope of the Rooker-Feldman doctrine. When a federal plaintiff seeks redress for injuries caused by pre-existing events rather than the state judgment itself, the correct lens is preclusion, not jurisdictional dismissal. The panel relies on Gilbank to reject defendants’ Rooker-Feldman argument and proceed under issue preclusion.
Kuhlman, Inc. v. G. Heileman Brewing Co., 83 Wis. 2d 749 (1978): Wisconsin’s doctrine of mitigation of damages. A nonbreaching party must take reasonable steps to minimize losses. The majority deems Simonson’s failure to act—despite extensions and clear guidance from the probate court—fatal to her damages claim.
Ranes v. American Family Mutual Insurance Co., 219 Wis. 2d 49 (1998) and Appleton State Bank v. Lee, 33 Wis. 2d 690 (1967): Cited in concurrence on material breach—whether the breach “destroy[s] the essential object” of the agreement is the touchstone.
Ash Park, LLC v. Alexander & Bishop, Ltd., 317 Wis. 2d 772 (Ct. App. 2009), aff’d, 324 Wis. 2d 703 (2010): Generally, whether a breach is material is a jury question except in clear cases—invoked by the concurrence to argue summary judgment was improper on materiality.
Management Computer Services, Inc. v. Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158 (1996); Entzminger v. Ford Motor Co., 47 Wis. 2d 751 (1970): Concurrence cites these for waiver—continued performance and delay in invoking contractual rights can waive the materiality of the other party’s breach.
Waldridge v. American Hoechst Corp., 24 F.3d 918 (7th Cir. 1994): Summary judgment standard—courts should not weigh credibility or resolve factual disputes; the concurrence invokes this to caution against resolving competing narratives on a paper record.
Wis. Stat. § 701.0805: Trustee’s duty to incur only reasonable costs in administration; relevant to Simonson’s fee dispute posture.
Wis. Stat. § 701.1004: Cited in the concurrence for the proposition that attorney’s fees may be paid from trust assets (with interest), underscoring that the trust had ample funds and that delayed payment might not be “material.”

Legal Reasoning

The court’s reasoning proceeds in three layers, any of which supports affirmance.

1) Issue Preclusion Bars Relitigation of Withdrawal

The retention agreement authorized withdrawal for nonpayment. The law firm notified Simonson in July 2015 and moved the probate court for leave to withdraw, expressly on nonpayment grounds. The probate court granted the motion on August 26, 2015. That order necessarily resolved the justification for withdrawal. Under principles of issue preclusion, Simonson cannot relitigate in federal court whether the firm properly withdrew. The panel also clarifies that Rooker-Feldman is inapplicable because Simonson seeks damages for the firm’s alleged earlier failure to close the estate; she is not inviting the federal courts to overturn the state order.

2) Independent Federal Assessment: Material Breach Allowed Withdrawal

Even if the federal court could revisit the merits, the majority concludes that a reasonable jury could not find that Simonson “kept her part of the bargain.” The contract called for timely, monthly payment; Simonson’s arrearages reached roughly $80,000, and she did not substantiate her disputes with specifics. The firm chose not to continue on open-ended credit, which the agreement did not require. The majority thus views the nonpayment as a material breach excusing performance and justifying withdrawal.

Concurrence’s counterpoint: There is record evidence from which a jury could find the nonpayment was not material—e.g., the trust’s undisputed ability to pay with statutory interest; Simonson’s prior timely payments and partial progress payments; her articulated fee concerns and the firm’s discounts; and the firm’s continued work despite threatened cessation, which could also constitute waiver. On this view, summary judgment on the “material breach” question was improper.

3) Failure to Mitigate Cuts Off Damages

The dispositive ground for both the majority and the concurrence is Simonson’s failure to mitigate after withdrawal:

She obtained more time from the probate court and later received a detailed list of what remained to close the estate.
She did not promptly retain new counsel or comply with the court’s instructions.
She did not seek a continuance of the November 9 hearing and failed to appear.

Under Wisconsin law (Kuhlman), a plaintiff must take reasonable steps to limit losses; failure to do so breaks the causal chain for damages. Even if the firm should have closed the estate in early August before withdrawal, the court held that Simonson’s subsequent inaction and nonappearance—despite opportunities to cure—foreclose recovery of the surcharge as contract damages.

Impact and Practical Implications

Although designated nonprecedential, the decision provides clear guidance at the intersection of attorney withdrawal, preclusion, and damages mitigation in Wisconsin-law contract disputes.

Preclusion First: When a state court has granted counsel’s motion to withdraw based on a specified ground (nonpayment), that determination may preclude later collateral attacks in federal breach-of-contract suits. Parties must use the state appellate process to challenge such orders, not relitigate in federal court.
Mitigation Is Often Outcome-Determinative: Even where a client plausibly alleges pre-withdrawal missteps by counsel, post-withdrawal inaction can sever causation and bar damages. Extensions, explicit judicial guidance, and scheduled hearings present clear opportunities to mitigate.
Materiality and Waiver Are Fact-Intensive: The concurrence underscores the risk for law firms that continue performing, accept partial payments, or send mixed messages while threatening withdrawal. That conduct may support a jury finding of waiver or undercut materiality arguments.
Clarity in Withdrawal: Firms should provide unmistakable notice, promptly move to withdraw, and avoid continued substantive actions after signaling termination. Maintaining an appearance on file while declaring “we are done” can blur lines.
Trustee Fee Disputes: Trustees have statutory duties to scrutinize fees and incur only reasonable costs, while trusts may be a source for fee payment (with interest). Both sides should document fee disputes and resolution efforts; partial payments and discount offers could matter in materiality/waiver analyses.
Rooker-Feldman vs. Preclusion: Litigants and courts should check Gilbank’s reminder—jurisdictional dismissals are rare; preclusion principles generally govern when prior state decisions bear on federal claims.

Complex Concepts Simplified

Issue Preclusion (Collateral Estoppel): If a court has already decided a specific issue essential to a judgment after the parties had a fair chance to litigate it, that issue cannot be relitigated in a later case between them. Here, the probate court’s order allowing withdrawal for nonpayment resolved that issue.
Rooker-Feldman Doctrine: A narrow rule barring federal district courts from acting as appellate courts over state judgments. It does not apply when a plaintiff seeks damages for earlier conduct rather than reversal of the state decision. That is why preclusion—not jurisdiction—controls here.
Material Breach: A serious failure to perform that defeats the essential purpose of a contract and excuses the other side from further performance. The majority found nonpayment material; the concurrence thought the evidence allowed a jury to find otherwise.
Waiver of Materiality: Even when one party materially breaches, the other can waive the right to treat the contract as terminated by continuing to perform, accepting benefits (like partial payments), delaying enforcement, or sending mixed messages.
Mitigation of Damages: The injured party must take reasonable steps to reduce losses. Failing to act on extensions, court instructions, or hearing dates typically undermines causation and damages.
Summary Judgment: A mechanism to resolve cases without trial when there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Courts cannot weigh credibility or choose between reasonable factual inferences at this stage.

Conclusion

The Seventh Circuit’s decision—while nonprecedential—delivers two decisive lessons. First, a state court’s withdrawal order, granted on specified grounds, can have preclusive effect in later federal litigation, foreclosing relitigation of the propriety of counsel’s withdrawal. Second, and independently dispositive here, the duty to mitigate damages is a powerful limitation on recovery: extensions and explicit guidance from a court create clear opportunities to avert or reduce losses, and failure to seize them will defeat damages claims even where earlier missteps by counsel are alleged.

The concurrence highlights a third, practice-oriented lesson: materiality of nonpayment and waiver can be jury questions. Law firms that continue working, accept partial payments, and delay formal withdrawal risk undermining their own position. Clients disputing fees should document objections, pursue timely state remedies (including appeals of withdrawal orders), and ensure compliance with court instructions to protect against avoidable harm.

In the broader legal context, the opinion reinforces that preclusion doctrines and mitigation principles often determine outcomes in attorney-client contract disputes, and that careful procedural steps at the state-court level—by both clients and counsel—are critical to preserving or foreclosing civil remedies down the line.