129 N.E.3d 1216 (Ill. 2019), 123264, Smith v. Vanguard Group, Inc.

Docket Nº:123264
Citation:129 N.E.3d 1216, 432 Ill.Dec. 673, 2019 IL 123264
Opinion Judge:JUSTICE GARMAN delivered the judgment of the court, with opinion.
Party Name:JoAnn SMITH, Appellant, v. The VANGUARD GROUP, INC., et al. (Scott Smith et al., Appellees).
Attorney:Phillip H. Hamilton, of Farrell, Hamilton & Julian, P.C., of Godfrey, for appellant. J. William Lucco and Michael J. Hertz, of Lucco, Brown, Threlkeld & Dawson, L.L.P., of Edwardsville, for appellees.
Judge Panel:Chief Justice Karmeier and Justices Thomas, Kilbride, Burke, Theis, and Neville concurred in the judgment and opinion.
Case Date:January 25, 2019
Court:Supreme Court of Illinois

Page 1216

129 N.E.3d 1216 (Ill. 2019)

432 Ill.Dec. 673, 2019 IL 123264

JoAnn SMITH, Appellant,



(Scott Smith et al., Appellees).

No. 123264

Supreme Court of Illinois

January 25, 2019

Page 1217

Phillip H. Hamilton, of Farrell, Hamilton & Julian, P.C., of Godfrey, for appellant.

J. William Lucco and Michael J. Hertz, of Lucco, Brown, Threlkeld & Dawson, L.L.P., of Edwardsville, for appellees.


JUSTICE GARMAN delivered the judgment of the court, with opinion.

[432 Ill.Dec. 674][¶ 1] JoAnn Smith, Donald Smith’s widow, brought an action seeking to be declared the rightful beneficiary of Donald’s individual retirement account after his passing. Donald initially listed no beneficiary who would take any funds remaining in that account at his death. In 2013, he was hospitalized. During his hospitalization, someone designated JoAnn as beneficiary. When Donald was released from the hospital, he filed an action for a temporary restraining order and injunction. The spouses stipulated to an injunction ordering that neither party engage in any transaction regarding the parties’ financial accounts. That injunction action was later combined with a dissolution action. While still bound by the injunction, Donald changed the beneficiary designation to his sons, Scott and Jeffrey Smith. After the combined actions were dismissed, Donald passed away. JoAnn subsequently brought this underlying action, alleging that the beneficiary change was in violation of the injunction and that the change was therefore void. The circuit court granted Scott and Jeffrey’s motion to dismiss, and the appellate court affirmed. We granted JoAnn’s petition for leave to appeal. Ill. S.Ct. R. 315 (eff. Nov. 1, 2017).


[¶ 3] JoAnn and Donald married in 1974. The couple had several individual and joint financial accounts, including retirement accounts. Among those accounts was an individual retirement account with the Vanguard Group (the Vanguard IRA) solely in Donald’s name. Donald had not listed a beneficiary who would receive any funds remaining in that account at his death. In 2013, Donald was hospitalized from July 21 to August 2. On July 31, 2013, someone designated JoAnn as beneficiary.

[¶ 4] On August 6, 2013, Donald filed a petition for issuance of temporary restraining order and for preliminary injunction against JoAnn. Donald alleged that JoAnn would not allow him access to the marital residence and that JoAnn made various unauthorized withdrawals from Donald’s financial accounts during the time Donald was hospitalized, depositing the funds into her personal account. He also alleged that she attempted to liquidate another of his brokerage accounts with an invalid power of attorney. Donald sought the temporary restraining order "to maintain the status quo of the parties prior to the withdrawal[s] and deposits." He also sought return of the withdrawn funds and to prevent JoAnn "from further converting [Donald’s] assets."

[¶ 5] On August 8, 2013, the circuit court entered a stipulated preliminary injunction providing that the funds withdrawn during Donald’s hospitalization would be restored. Donald was to temporarily "reside with his son," Scott. Donald had another adult son, Jeffrey. The record implies that Scott and Jeffrey are not JoAnn’s children but does not definitively so indicate. The injunction further provided that each spouse would [432 Ill.Dec. 675]

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be allowed certain funds for living expenses and that the spouses’ financial accounts were otherwise "closed to any transactions." On September 6, 2013, Donald filed a dissolution action, and the two actions were consolidated. The injunction remained in effect.

[¶ 6] On March 13, 2014, while the combined actions were still pending and the injunction was still in effect, Donald designated Scott and Jeffrey as the primary and only beneficiaries of the Vanguard IRA. On October 29, 2014, Donald and JoAnn stipulated to the dismissal of the dissolution and injunction actions. The injunction was dismissed along with the underlying actions. Donald passed away on March 30, 2015.

[¶ 7] Shortly after Donald’s passing, JoAnn discovered the beneficiary change. She filed this underlying action in the Madison County circuit court seeking a declaratory judgment in the first count and alleging that Donald committed fraud by changing the beneficiary designation in violation of the injunction in the second count. Scott and Jeffrey filed a motion to dismiss under sections 2-615 and 2-619(a)(4) and (9) of the Code of Civil Procedure. 735 ILCS 5/2-615, 2-619(a)(4), (9) (West 2014). The court dismissed the fraud count under section 2-615 with leave to refile and took the declaratory count under advisement. It later dismissed the declaratory count as well, finding that the beneficiary change became effective upon dismissal of the dissolution action, even if it arguably violated the terms of the injunction. JoAnn’s motion to reconsider was denied. A divided appellate court affirmed in an unpublished order, finding that "a mere beneficiary change did not violate the terms of the injunction." 2018 IL App (5th) 160024-U, ¶ 17, 2018 WL 673828. JoAnn did not refile the count alleging fraud. Instead, she petitioned for leave to appeal, and we allowed her petition. See Ill. S.Ct. R. 315 (eff. Nov. 1, 2017).


[¶ 9] The claim at the heart of this appeal was dismissed under section 2-619 of the Code of Civil Procedure. 735 ILCS 5/2-619 (West 2012). This court reviews a section 2-619 dismissal of a cause of action de novo .

King v. First Capital Financial Services Corp., 215 Ill.2d 1, 12, 293 Ill.Dec. 657, 828 N.E.2d 1155 (2005). "A motion to dismiss under section 2-619 admits the legal sufficiency of the plaintiff’s complaint, but asserts affirmative matter that defeats the claim." Id.

[¶ 10] We note first that "[t]he purpose of a preliminary injunction is to preserve the status quo pending a decision on the merits of a cause." Hartlein v. Illinois Power Co., 151 Ill.2d 142, 156, 176 Ill.Dec. 22, 601 N.E.2d 720 (1992). "A party may refuse to obey an order where the court had no jurisdiction to make it, but not on the ground that it was erroneously made." Cummings-Landau Laundry Machinery Co. v. Koplin, 386 Ill. 368, 384, 54 N.E.2d 462 (1944). "An order made in the exercise of jurisdiction, though erroneous, must be obeyed until modified or set aside by the court making it or reversed by an appellate court." Id. Neither party has argued that the circuit court lacked jurisdiction when it issued the injunction. Thus, if the injunction prohibited the change of beneficiary, any change made in violation of that injunction was invalid irrespective of the subsequent dismissal of the combined injunction and dissolution actions.

[¶ 11] Deciding this matter depends on an interpretation of the circuit court’s injunction. That injunction was a stipulation. "The primary rule in the construction of stipulations is that the court must ascertain and give effect to the intent of the parties." [432 Ill.Dec. 676]

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People v. Woods, 214 Ill.2d 455, 468-69, 293 Ill.Dec. 277, 828 N.E.2d 247 (2005) (citing In re Marriage of Galen, 157 Ill.App.3d 341, 344-45, 109 Ill.Dec. 729, 510 N.E.2d 597 (1987) ). "[W]ords therein must be given their natural and ordinary meaning." Galen, 157 Ill.App.3d at 345, 109 Ill.Dec. 729, 510 N.E.2d 597. To decide this case, therefore, we must determine what Donald and JoAnn intended when they stipulated to the injunction, giving the words therein their natural and ordinary meaning.

[¶ 12] The injunction does not mention beneficiaries or beneficiary designations, despite the fact that someone designated JoAnn beneficiary of the Vanguard IRA only eight days prior to its issuance. The record before us does not indicate who made that designation. JoAnn argues that Donald made it. Scott and Jeffrey argue that it was likely JoAnn: the change was made during Donalds...

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