Blickenstaff v. Blickenstaff (In re Estate of Blickenstaff)

• Decision Date: 18 December 2012
• Docket Number: Docket No. 4–12–0480.
• Citation: 980 N.E.2d 1285
• Parties: In re the ESTATE OF Wyverne BLICKENSTAFF, Deceased, Scott E. Blickenstaff and Kim D. Blickenstaff, Petitioners–Appellees, and Todd A. Blickenstaff, Petitioner, v. Jon M. Blickenstaff, as Executor of the Estate of Wyverne Blickenstaff; and William R. Kohlhase, Respondents–Appellants.
• Court: United States Appellate Court of Illinois

980 N.E.2d 1285

In re the ESTATE OF Wyverne BLICKENSTAFF, Deceased,Scott E. Blickenstaff and Kim D. Blickenstaff, Petitioners–Appellees,andTodd A. Blickenstaff, Petitioner,

v.Jon M. Blickenstaff, as Executor of the Estate of Wyverne Blickenstaff; and William R. Kohlhase, Respondents–Appellants.

Docket No. 4–12–0480.

Appellate Court of Illinois, Fourth District.

Dec. 18, 2012.

William R. Kohlhase (argued), of Miller, Hall & Triggs, of Peoria, for appellants.

Jeffrey Alan Ryva (argued), of Husch Blackwell LLP, of Peoria, and Dean R. Essig, of Washington, for appellees.

Justice APPLETON delivered the judgment of the court, with opinion.

¶ 1 Petitioners, Scott E. Blickenstaff and Kim D. Blickenstaff, are challenging the will of their deceased father, Wyverne A. Blickenstaff. They also have petitioned the trial court to remove their brother, Jon M. Blickenstaff, from the position of executor. During pretrial discovery in this litigation, petitioners requested the executor's personal financial documents as well as the billing statements corresponding to attorney fees he paid, without prior court approval, from the assets of the estate. The executor refused these requests. Later, the executor and his attorney, William R. Kohlhase, refused to comply with a court order to turn over the documents in question. They adhered to their position that, under the law, the documents were exempt from discovery. Consequently, the court found them to be in contempt of court and fined them $100. Respondents, the executor and Kohlhase, appeal.

¶ 2 We find an abuse of discretion in requiring the executor to turn over his personal financial documents (e.g., his individual tax returns, private bank statements, and cancelled checks), because we do not see how those documents are relevant to the issues framed by the pleadings; nor do we see how those documents could reasonably be expected to lead to admissible evidence. We agree, however, that respondents should have to produce the unredacted billing statements corresponding to the attorney fees paid with estate assets. By paying the attorney fees out of the estate, the executor voluntarily injected into this case the issue of whether these attorney fees were reasonable and were for services beneficial to the estate. Production of the unredacted billing statements is necessary to the fair and truthful resolution of that issue, and insomuch as the billing statements come within the attorney-client privilege, that privilege is impliedly waived. Therefore, we affirm the trial court's judgment in part and reverse it in part.

¶ 3 I. BACKGROUND

¶ 4 A. Wyverne A. Blickenstaff's Surviving Offspring

¶ 5 Wyverne A. Blickenstaff (decedent) died in January 2006. A daughter and four sons survived him: Gaylene J. Evans, Todd A. Blickenstaff, the two petitioners, and the executor.

¶ 6 B. The Decedent's Will

¶ 7 The decedent left a will, dated October 21, 2004. In his will, the decedent named Jon M. Blickenstaff to be the executor and also bequeathed to him, individually, enough stock in Blickenstaff Farming Corporation to make him the owner of 67% of the voting shares. The decedent bequeathed the remaining shares and the residue of his estate equally to all five children.

¶ 8 In March 2006, the trial court admitted the will to probate and, in accordance with the will, appointed Jon M. Blickenstaff as executor.

¶ 9 C. The Petition Contesting the Will

¶ 10 In September 2006, petitioners as well as Todd A. Blickenstaff filed a petition contesting the will. The petition alleged, on information and belief, that the decedent had lacked the requisite mental capacity to make the will and that Jon M. Blickenstaff had exerted undue influence over him.

¶ 11 D. The Subpoena Duces Tecum

¶ 12 In March 2010, petitioners obtained the issuance of a subpoena duces tecum, which they caused to be served on the executor, Jon M. Blickenstaff. The subpoena sought documents "pertaining to the Estate of Wyverne A. Blickenstaff," including the following:

"3. Copies of all checks, bank statements, records of accounts, bills paid and bills due from the opening of the Estate to date.

4. All records relating to the Blickenstaff Farm [sic ] Corporation including checks, receipts, bank statements, paid bills and any other financial information."

¶ 13 In April 2010, the executor moved to quash this subpoena. He offered two reasons for quashing the subpoena: (1) discovery in the will contest had closed; and (2) the documentation that the subpoena sought was irrelevant to the issue of whether the will was valid—which, at the time, was the only issue framed by the pleadings.

¶ 14 Petitioners explained, however, that, instead of seeking the documentation for purposes of the will contest, they were merely exercising their statutory right to inspect the books of account of the decedent. See 755 ILCS 5/19–3 (West 2010).

¶ 15 In May 2010, the trial court denied the executor's motion to quash the subpoena duces tecum.

¶ 16 E. The Petition To Remove Jon M. Blickenstaff From the Executorship

¶ 17 In May 2011, petitioners filed a petition to remove Jon M. Blickenstaff from the position of executor of the decedent's will. In their petition, they allege essentially four grounds for removal.

¶ 18 1. As Executor, Using the Estate's Majority Ownership of the Corporation To Cast Votes, and Make Decisions, Unfairly Beneficial to Himself Personally

¶ 19 a. Compensation for the President and the Other Director

¶ 20 Although article III of the will bequeaths enough shares to Jon M. Blickenstaff to give him the majority vote, the will is contested, and those shares have not yet been distributed to him. Therefore, petitioners allege the estate still has majority ownership of the corporation.

¶ 21 According to petitioners, Jon M. Blickenstaff, as executor, used the majority voting power of the estate to reduce the corporation's board of directors from three members to two members, electing himself and their sister, Gaylene J. Evans, as the two board members. In addition to being one of the two board members, Jon M. Blickenstaff is the president of the corporation, a position he has held for several years. Previously, the president and the board members were uncompensated because the farmland was rented out to a tenant farmer, Ron Hastings, who did all the farming work and made all the farming decisions. After the reduction of the board of directors, however, from three members to two members and after the election of Gaylene J. Evans and Jon M. Blickenstaff to those two director positions, they, as directors, voted to pay Jon M. Blickenstaff a salary of $39,600 and a bonus of $12,000 for his services as president—55% of the net income of the corporation for 2010—even though total revenue for the corporation declined 9% from 2009 to 2010. The two directors further resolved that the president's salary would increase in 2011 to $40,800.

¶ 22 In addition, Jon M. Blickenstaff and Gaylene J. Evans, as directors, voted to pay Gaylene J. Evans a director's fee of $5,000. Petitioners regard this fee as excessive relative to the minimal work a director has to do, just as they regard the president's compensation as excessive.

¶ 23 b. Failure To Pay Dividends

¶ 24 Petitioners complain that the executor/director, Jon M. Blickenstaff, has not authorized any payment of dividends during this litigation even though the corporation has almost $600,000 in liquid assets. They suggest that this continued accumulation of earnings further highlights the executor's conflict of interest: refraining from paying dividends serves his own personal interest rather than that of all five children.

¶ 25 2. Buying a New Machine Shed and a Skid–Steer Even Though Equipment Is Solely the Tenant's Responsibility

¶ 26 Petitioners allege that the executor has used estate assets to pay $145,620 for a new machine shed and $36,000 for a skid-steer. According to petitioners, these purchases are a waste of the estate because equipment is solely the tenant farmer's responsibility and, indeed, a primary purpose of renting out the land is to avoid having to buy equipment.

¶ 27 3. Payment of Attorney Fees With Estate Assets, Without Court Approval

¶ 28 Petitioners allege that, as of December 31, 2009, the executor has spent over $115,000 in estate funds to pay attorney fees in the will contest without ever seeking the trial court's approval of this expenditure.

¶ 29 4. Failure To File a Claim Against Donna Wernsman

¶ 30 Petitioners also fault the executor for failing to file a claim against Donna Wernsman. According to petitioners, Wernsman was the hairdresser of the decedent's wife, and she was not related to the decedent, either by blood or marriage. While Wernsman was in her late 30s or early 40s and the decedent was in his mid–80s, Wernsman persuaded him repeatedly to give her large gifts of money. Petitioners allege that these gifts, totaling $143,700, were tantamount to the financial exploitation of an elderly person, even though Wernsman has denied any wrongdoing.

¶ 31 Petitioners also are concerned about the adverse tax consequences the estate might face because of these gifts to Wernsman. They criticize the executor for failing to defuse a potential dispute with the Internal Revenue Service.

¶ 32 F. Petitioners' Motion for a Temporary Restraining Order

¶ 33 In September 2011, petitioners filed a motion for a temporary restraining order, seeking to "preserve the status quo pending the evidentiary hearing on the Petition to Remove [Jon M. Blickenstaff] as Executor." Petitioners were concerned that he "[might] be using or [would] try to use estate or corporate funds to pay his lawyers to defend him in the Petition to Remove proceeding," as he already, without court approval, had spent over $115,000 in estate assets on attorney fees in the will contest. Petitioners also were concerned that, in his capacity as a director of the corporation, the executor would make further imprudent expenditures of corporate assets. Therefore, petiti...