Capra v. Lipschultz
| Decision Date | 30 June 2020 |
| Docket Number | No. 1-19-2160,1-19-2160 |
| Citation | 2020 IL App (1st) 192160,443 Ill.Dec. 689,162 N.E.3d 323 |
| Parties | Donna CAPRA, Kim Jones, and Douglas Kilman, Individually and As Beneficiaries of the Audrey L. Krone Trust, Plaintiffs-Appellants, v. Marvin G. LIPSCHULTZ, Defendant-Appellee. |
| Court | United States Appellate Court of Illinois |
John D. Galarnyk, Andrew J. Cunniff, and John A. Romanucci, of Galarnyk & Associates, Ltd., of Chicago, for appellants.
Ronald H. Balson, of Stone Pogrund & Korey LLC, of Chicago, for appellee.
¶ 1 Plaintiffs, Donna Capra, Kim Jones, and Douglas Kilman, are beneficiaries of the Audrey L. Krone Trust (trust) and filed suit against defendant Marvin G. Lipschultz, the trustee of the trust, seeking an accounting. Defendant filed a motion to dismiss the complaint, claiming that Illinois courts lacked personal jurisdiction over him, a Nevada resident, and the trial court dismissed the complaint, finding that defendant lacked sufficient contacts with Illinois. On appeal, plaintiffs claim that defendant's actions with respect to the trust were sufficient to confer personal jurisdiction. For the reasons set forth below, we reverse and remand for further proceedings.
¶ 3 On April 30, 2018, plaintiffs filed a verified complaint in the circuit court of Cook County, seeking an accounting from defendant. The complaint alleged that plaintiffs were the nieces and nephew of Audrey Krone and the beneficiaries of her trust; Krone died in 2012 without any descendants, leaving an estate in excess of $3 million. The complaint alleged that the trust provided for annual distributions upon Krone's death and final distributions of the remainder upon a young relative's graduation from college, which occurred in 2017. Subsequently, defendant informed plaintiffs that the trust assets had been nearly depleted. Plaintiffs requested an accounting, with supporting documents, but defendant refused to provide the information, leading plaintiffs to file suit.
¶ 4 Attached to the complaint was a copy of the trust agreement, as well as six amendments to the trust agreement. The original trust agreement was dated October 19, 2000,1 and provided that, upon Krone's death, the successor trustee was to divide the trust among several named beneficiaries; the trust agreement named defendant and the Northern Trust Company as successor cotrustees. The trust agreement further provided that "[t]he powers and duties of the Trustee hereunder and all questions of interpretation of this instrument shall be governed by the laws of the State of Illinois."
¶ 5 The amendments to the trust agreement made various changes to its provisions. As relevant to the instant appeal, the second amendment, dated November 24, 2003, named defendant as sole successor trustee. The sixth amendment,2 dated August 1, 2007, added a provision stating that "[t]he situs of jurisdiction is hereby changed to the State of Nevada, and not Illinois, in every legal respect referred to throughout this Agreement and Amendments." However, the sixth amendment did not expressly remove the provision that "[t]he powers and duties of the Trustee hereunder and all questions of interpretation of this instrument shall be governed by the laws of the State of Illinois."
¶ 6 On August 8, 2018, defendant filed a motion to dismiss the complaint due to a lack of personal jurisdiction, claiming that he was a resident of Nevada and had not resided in Illinois for 34 years, that he had not committed any acts or conducted any business in Illinois, and that he had not established sufficient minimum contacts within Illinois to justify the exercise of personal jurisdiction. Defendant further claimed that the "forum selection clause" contained in the sixth amendment to the trust agreement designated Nevada as the forum for any litigation, making jurisdiction in Illinois improper.
¶ 7 Attached to the motion to dismiss was defendant's affidavit, in which he averred that he was a resident of the state of Nevada, where he had resided continuously for 29 years, and had not resided in Illinois since 1984. Defendant averred that he did not own any real property in Illinois, did not own or maintain a business office in Illinois, and had not conducted any business in Illinois since 1985. Defendant averred that he became acquainted with Krone and her husband in the 1970s and that they lived near each other in San Diego in 1984. At the time of the initial trust agreement in 1986, defendant was residing in California, near Krone and her husband; at the time of the restatement of the trust agreement in 2000, defendant was living in Nevada, where he was also living at the time of the execution of each of the amendments to the trust agreement. Defendant averred that he was not present for the execution of any of the amendments, other than the sixth amendment, which was executed at Krone's home in California.
¶ 8 Defendant averred that, beginning in 2004, he began managing the trust assets from his office in Las Vegas and had continued to manage the assets in Nevada for the past 14 years. Defendant averred that portions of the trust assets were invested at financial institutions including several national banks, but that it was not necessary for him to travel to conduct trust business and all trust business was conducted from Nevada. Defendant further averred that "[n]o physical trust assets were located in Illinois." Defendant also averred that he had not transacted any trust business in the state of Illinois, but that "[f]rom time to time, [he] would prepare accountings in Nevada and send them to beneficiaries wherever they resided."
¶ 9 The parties engaged in discovery on the issue of jurisdiction, and following discovery, plaintiffs filed a response to the motion to dismiss, claiming that Illinois had both general and specific jurisdiction over defendant.3 Plaintiffs argued that, since 2003, defendant had been the sole trustee of a trust created under Illinois law, and that he also held power of attorney over Krone's healthcare and property, both of which were granted pursuant to Illinois law. Plaintiffs further argued that defendant had entered into contracts in connection with Krone's care in Illinois, namely, a contract with an assisted living facility in Carol Stream to provide care and housing for Krone and a contract with a funeral home in Itasca for Krone's funeral. Defendant also made regular payments to the assisted living facility from 2008 until Krone's death, made payments to Illinois healthcare providers for Krone's care, and made payments to two of the plaintiffs to provide care and assistance to Krone in exchange for regular monthly payments from the trust.
¶ 10 Plaintiffs also argued that, at the time that defendant became sole trustee, pursuant to the second amendment to the trust, the trust held over $1 million in assets in Illinois financial institutions, including Harris Bank, La Salle Bank, and Bank One. Plaintiffs claimed that over the following years, defendant transferred all of these Illinois accounts into out-of-state banks or other investment vehicles. Plaintiffs additionally claimed that defendant regularly communicated with Illinois residents regarding the trust, mailed dozens of checks and other payments to plaintiffs in Illinois, and had personally traveled to Illinois on several occasions. Finally, plaintiffs claimed that jurisdiction was proper where a defendant breached a fiduciary duty or committed a tortious act within the state, and claimed that "all available evidence" suggested that defendant lost or misappropriated over $1 million in assets while serving as trustee.
¶ 11 Plaintiffs also challenged defendant's claim that there was a "forum selection clause," arguing that the clause relied on by defendant was not a forum selection clause. Instead, plaintiffs claimed that it was, at best, a "consent to jurisdiction clause," which did not prevent an Illinois court from asserting jurisdiction. Alternatively, if it was considered a forum selection clause, plaintiffs argued that it should not be enforced as against public policy, as Illinois, not Nevada, was the appropriate forum for the instant litigation.
¶ 12 Attached to the response were a number of exhibits, including an affidavit of plaintiff Kim Jones, who averred that the facts set forth in the response were true. Jones further averred that she currently lived in Illinois, and had done so her entire life, and that she regularly communicated with defendant through in-person meetings, telephone conversations, e-mails, and online communications. Jones averred that she had personal knowledge that defendant had visited Illinois on at least seven occasions between 2007 and 2010. Jones averred that Krone had moved to Illinois after her husband's death in 2003, moved to California for a time, then moved back to Illinois in 2007. Jones averred that Krone moved into an assisted living facility due to Alzheimer's disease
, and that defendant asked her and plaintiff Donna Capra to assist with Krone's medical care and other personal needs in exchange for a monthly fee. Defendant sent those fees to Illinois, and plaintiffs received them in Illinois. Jones further averred that she personally met with defendant in Illinois regarding the trust and regarding Krone's care.
¶ 13 Jones averred that all of the current beneficiaries lived in Illinois and that, following Krone's death, defendant mailed distribution checks from the trust to them on at least an annual basis. Jones further averred that, other than the personal care that she and Capra provided, defendant handled all aspects of Krone's care, including paying her medical expenses in Illinois, paying her bills in Illinois, issuing regular payments to the assisted living facility in Illinois, and making payments for Krone's funeral in Illinois.
¶ 14 Also attached to the response were, inter alia , a copy of an...
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