Burgauer v. Burgauer

• Decision Date: 08 February 2019
• Docket Number: Appeal No. 3-17-0545
• Citation: 127 N.E.3d 941,2019 IL App (3d) 170545,431 Ill.Dec. 408
• Parties: Steven BURGAUER, Personally and as Trustee of Margaret Burgauer Revocable Trust, Plaintiff-Appellant, v. Margaret BURGAUER; James Burgauer; MIS Consulting, an Illinois Corporation; PNC of Illinois, Inc.; and Morgan Stanley Smith Barney, LLC, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

2019 IL App (3d) 170545
127 N.E.3d 941
431 Ill.Dec. 408

Steven BURGAUER, Personally and as Trustee of Margaret Burgauer Revocable Trust, Plaintiff-Appellant,
v.
Margaret BURGAUER; James Burgauer; MIS Consulting, an Illinois Corporation; PNC of Illinois, Inc.; and Morgan Stanley Smith Barney, LLC, Defendants-Appellees.

Appeal No. 3-17-0545

Appellate Court of Illinois, Third District.

Filed February 8, 2019

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

431 Ill.Dec. 410

¶ 1 Plaintiff, Steven Burgauer, filed a complaint seeking declaratory relief against defendants, Margaret Burgauer (Margaret), James Burgauer (James), MIS Consulting, Inc., PNC of Illinois, Inc., and Morgan Stanley Smith Barney, LLC (Morgan Stanley). Margaret, James, and MIS Consulting filed an objection to personal

431 Ill.Dec. 411

127 N.E.3d 944

jurisdiction and motion to dismiss plaintiff's complaint pursuant to section 2-301 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-301 (West 2016) ). Following a motion hearing, the trial court concluded plaintiff did not establish personal jurisdiction over Margaret and James. The court declined to exercise jurisdiction over MIS Consulting. Plaintiff appeals the trial court's final order sustaining defendants' objections and dismissing plaintiff's complaint.

¶ 2 I. BACKGROUND

¶ 3 The court recognizes that this case presents issues of jurisdiction and that jurisdictional facts are most pertinent to this case. However, to provide context for the analysis below, we will not limit our statement of facts to those pertaining to whether the trial court could exercise personal jurisdiction over the defendants. Instead, we will summarize the facts stated in the complaint.

¶ 4 MIS Consulting was a corporation formed in 1984 under the laws of Illinois. James Burgauer was named as an officer of the newly formed corporation.

¶ 5 On May 25, 1987, Margaret, the mother of Steven and James Burgauer, executed a revocable living trust (trust). In 1987, Margaret resided in Libertyville, Illinois, and remained there for nearly three decades before moving to Florida in October 2013.

¶ 6 In the 1987 trust instrument, Margaret named herself trustee and designated plaintiff as the successor trustee in the event Margaret refused, failed, or ceased to act as trustee. The trust provided that Margaret, as "the trustee," was authorized to withdraw net income from the trust and distribute the net income to herself in a monetary amount documented by a written request. The trust provided that if Margaret was no longer able to administer her own written requests for payment, in the opinion of "the trustee," then "the trustee" should determine the amount and distribute funds from the trust as needed for Margaret's benefit.

¶ 7 On October 4, 1995, Margaret executed a document, designating plaintiff to act as her attorney-in-fact under certain circumstances. Those circumstances were described in Margaret's voice in the written agreement, which stated: "effective in the event that I am disabled and unable to handle my own affairs * * * [or] travelling away from my usual residence in Libertyville, Illinois and am not able to communicate with my son, Steven E. Burgauer."

¶ 8 On February 17, 2003, Margaret and plaintiff executed a discretionary authorization over the trust account because Margaret was "unable to handle financial affairs." On September 13, 2003, Margaret executed a trust amendment. The trust amendment kept plaintiff as successor trustee, allowing him to act in the event Margaret refused, failed, or ceased to act as trustee.

¶ 9 On January 1, 2008, Margaret approved a line of credit agreement for James. The agreement was secured by a promissory note, also dated January 1, 2008. James agreed to repay a sum of $ 750,000 at an interest rate of 4%. The agreements were negotiated and formed while Margaret was a resident of Illinois and James was a resident of Florida. Both agreements were prepared by an out-of-state attorney and provided that Florida, rather than Illinois, law would govern.

¶ 10 Plaintiff's complaint alleges that these agreements were "sham" transactions, executed after-the-fact to cover a constructive fraud arising out of the checks Margaret issued to James and MIS Consulting while suffering from a diminished mental capacity. Specifically, plaintiff

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alleges that 296 checks were written to James and MIS Consulting between January 2011 and December 2016.

¶ 11 After July 2013, plaintiff judged Margaret as unable to administer trust payments. On July 7, 2013, and August 10, 2013, plaintiff and Margaret entered joint listing and fee contracts, which plaintiff alleges shows he was acting as Margaret's attorney-in-fact. The complaint alleges that Margaret resided in Florida from October 2013 to December 2016. Also according to the complaint, James resided in Florida from 1999 to 2015, after which he moved to Nevada.

¶ 12 On December 23, 2016, plaintiff and Margaret each allegedly assessed that Margaret had a diminished mental capacity and was unable to manage her estate due to alcoholism and gambling. Plaintiff expressed a desire to take over Margaret's finances, and Margaret allegedly instructed plaintiff to assume the role of her attorney-in-fact and successor trustee of the trust. Margaret allegedly gave plaintiff access to her finances so he could proceed in those capacities.

¶ 13 Upon gaining access to Margaret's accounts, plaintiff discovered that Margaret had issued checks to James, purportedly drawn from trust funds, totaling $ 200,000. Plaintiff also discovered that Margaret had issued checks to MIS Consulting totaling $ 488,000, also purportedly drawn from trust funds. Shortly thereafter, Margaret left her home in Florida and all her belongings to live with James in Nevada, where she continues to reside. Plaintiff has scarcely communicated with Margaret since she directed him to act as her attorney-in-fact and successor trustee of the trust.

¶ 14 On February 8, 2017, Margaret allegedly revoked her durable power of attorney, which designated plaintiff as attorney-in-fact. On February 14, 2017, Morgan Stanley notified Margaret that her accounts had been frozen based on a request by plaintiff. Margaret contacted the Illinois branch of Morgan Stanley and—with the help of private counsel, FINRA, and the Illinois Department of Securities—had the freeze lifted. Margaret again revoked her durable power of attorney on March 28, 2017.

¶ 15 On April 3, 2017, plaintiff filed a complaint, seeking declaratory relief pursuant to section 2-701 of the Code ( 735 ILCS 5/2-701 (West 2016) ), pertaining to the rights of the parties under the trust instruments. On April 7, 2017, Margaret, James, and MIS Consulting were served with the complaint in Nevada. Margaret, as manager, accepted service for MIS Consulting.

¶ 16 In his complaint for declaratory relief, plaintiff summarized the factors giving rise to personal jurisdiction over Margaret, James, and MIS Consulting. First, plaintiff alleged that Margaret executed trust documents and a power of attorney while residing in Illinois, as well as conducted business with Morgan Stanley and PNC Bank in Illinois. Second, plaintiff alleged MIS Consulting is an Illinois corporation. Third, plaintiff alleged James removed money from PNC Bank accounts located in Peoria, Illinois, for the benefit of himself and MIS Consulting.

¶ 17 On April 10, 2017, Margaret amended the trust to replace plaintiff as successor trustee and designate a new succession of successor trustees. A private attorney, whose name is redacted from the record, was appointed successor trustee with Thomas Burnham, who allegedly prepared the promissory note and line of credit agreements, succeeding that individual. Despite Margaret's efforts, Morgan Stanley again froze her accounts on April 27, 2017.

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127 N.E.3d 946

¶ 18 On May 8, 2017, Margaret, James, and MIS Consulting filed an objection to personal jurisdiction and a motion to dismiss plaintiff's complaint under section 2-301 of the Code. See id. § 2-301. On July 6, 2017, the trial court held a hearing on defendants' objection and motion. The trial court found that plaintiff failed to establish personal jurisdiction over Margaret and James, then declined jurisdiction over MIS Consulting. On July 18, 2017, the trial court entered its order, and plaintiff filed a notice of appeal of that order on August 17, 2017.

¶ 19 II. ANALYSIS

¶ 20 The trial court found the allegations in the complaint seeking declaratory relief were not sufficient to establish personal jurisdiction over Margaret and James. In addition, the trial court declined jurisdiction over MIS Consulting, an Illinois corporation. On appeal, plaintiff contends that the trial court erred because the allegations set forth in the complaint for declaratory relief were sufficient for the exercise of personal jurisdiction over Margaret, James, and MIS Consulting.

¶ 21 According to the complaint...