Collins v. Noltensmeier

• Decision Date: 05 April 2018
• Docket Number: NO. 4–17–0443,4–17–0443
• Citation: 2018 IL App (4th) 170443,103 N.E.3d 495
• Parties: Kenny COLLINS and Linda Richard, Plaintiffs–Appellees, v. Patricia NOLTENSMEIER, Defendant–Appellant.
• Court: United States Appellate Court of Illinois

2018 IL App (4th) 170443

103 N.E.3d 495

Kenny COLLINS and Linda Richard, Plaintiffs–Appellees,

v.Patricia NOLTENSMEIER, Defendant–Appellant.

NO. 4–17–0443

Appellate Court of Illinois, Fourth District.

FILED April 5, 2018

Luke A. Thomas, of McClure, Thomas & Thomas, of Beardstown, for appellant.

Jerry Tice and Bill Siders, of Grosboll, Becker, Tice & Barr, of Petersburg, for appellees.

PRESIDING JUSTICE HARRIS delivered the judgment of the court, with opinion.

¶ 1 Defendant, Patricia Noltensmeier, appeals from the trial court's order granting summary judgment in favor of plaintiffs, Kenny Collins and Linda Richard, who had sued defendant for a breach of fiduciary duty and conversion. Defendant claims she had the authority pursuant to a power of attorney for property to change decedent's beneficiaries from plaintiffs to herself. We affirm.

¶ 2 I. BACKGROUND

¶ 3 Defendant and Billy D. Collins were involved in a long-term romantic relationship when Billy died on January 23, 2011, at his home from a recently diagnosed terminal illness. Defendant had acted as Billy's caretaker. Approximately one week before he died, Billy executed a will and an Illinois Statutory Short Form Power of Attorney for Property. Each document was a preprinted form containing handwritten inserts in the blanks.

¶ 4 Billy's power of attorney, dated January 16, 2011, appointed defendant as his agent. Paragraph three of the document indicated the agent had the following powers, in addition to those listed previously: "power to make gifts, exercise powers of appointment, name or change beneficiaries under any beneficiary form or contractual arrangement."

¶ 5 Billy's will, also dated January 16, 2011, named defendant, his "domestic partner," as the sole beneficiary of his real property, personal property, and the "rest, residue, and remainder" of his estate. He also named defendant as his executor.

¶ 6 Defendant filed Billy's will with the Cass County circuit court in March 2011. In May 2011, plaintiff Kenny Collins, Billy's brother, filed a petition to contest the validity of Billy's will in Cass County case No. 11–P–15, alleging Billy was of unsound mind, subjected to undue influence from defendant, and not told the document he was signing was a will.

¶ 7 Kenny and plaintiff Linda Richard, Billy's niece, filed a three-count complaint in the cause before us, alleging defendant (1) breached her fiduciary duty owed to Billy, (2) wrongfully converted Billy's individual retirement account (IRA) funds to herself, and (3) did so intentionally, willfully and wantonly, and with malice, and therefore was responsible for punitive damages. The case sat dormant for approximately four years.

¶ 8 In April 2015, plaintiffs filed a first amended complaint, alleging the same causes of action with the exception of the claim for punitive damages, which plaintiffs abandoned. Plaintiffs alleged defendant wrongfully and without authorization changed the beneficiary of Billy's IRA, valued at approximately $45,000, from plaintiffs to herself. Defendant had completed the bank's change-of-beneficiary form by using her authority as the agent for Billy.

¶ 9 In May 2016, plaintiffs filed a motion for summary judgment, alleging defendant had engaged in fraudulent self-dealing. Plaintiffs claimed defendant breached her fiduciary duty because the added language in section three of the power of attorney did not authorize her to make the change of beneficiary to herself.

¶ 10 In July 2016, the trial court conducted a hearing on plaintiffs' motion for summary judgment. Both parties represented they had found no Illinois cases on point. Plaintiffs cited Bienash v. Moller , 721 N.W.2d 431 (S.D. 2006), a South Dakota case where, under similar factual circumstances, the court held that a power of attorney failed to specifically include language permitting the agent to name himself as a beneficiary. Therefore, the court held, the agent had breached his fiduciary duty to the principal by engaging in self-dealing. Bienash , 721 N.W.2d at 437.

¶ 11 In August 2016, the trial court entered a written order, granting plaintiffs' motion, finding no disputed facts remained, and holding, as a matter of law, that plaintiffs were entitled to a judgment in their favor. The court held:

"The power of self-dealing, i.e. , to change the beneficiary to herself, was not included in paragraph [three] and defendant was therefore not entitled to make that change. The original designation of beneficiary form * * * remains valid and [plaintiffs] are each 50% beneficiaries of that [IRA] at Petefish, Skiles and Company Bank."

¶ 12 In September 2016, defendant filed a motion to reconsider, claiming the trial court had overlooked or failed to recognize the added language in paragraph three, which, according to her, specifically authorized her to change the beneficiary designation. In December 2016, plaintiffs filed a motion for attorney fees.

¶ 13 In January 2017, the trial court conducted a hearing on the pending motions. After considering the arguments of counsel, the court stated:

"Well, in regard to the motion to reconsider, I am going to deny the motion. There is a duty of someone acting under a power of attorney as agent there has to be a fiduciary duty. The presumption is that, if they are self-dealing, which this is [ ] in my opinion, based upon the cases cited from other jurisdictions, I think they do make sense. Of course, they are not totally on point, exactly on point, but the general tenor and principles of those cases are on point that if the recipient of a power of attorney is going to be able to self-deal, in other words, to make gifts and transfers to himself or herself, then there has to be specific authority, in my opinion, granted in the power of attorney. Here the authority was granted to make gifts and to change beneficiaries, but there was no specific authority for [defendant] to self-deal. In other words, to change beneficiaries under accounts to herself. The presumption is it's fraudulent and it has to be overcome by clear and convincing evidence. I don't think there is. I have not seen any evidence. I would have to assume there is evidence, and I don't think from what we discussed before a little earlier there is any extrinsic evidence that would come in, and I think the motion for summary judgment is appropriate, and I will confirm my ruling from last August."

¶ 14 On May 2, 2017, the trial court entered a written order, denying defendant's motion to reconsider and finding defendant had no authority pursuant to the power of attorney to designate herself as a beneficiary of Billy's IRA. The court awarded plaintiffs attorney fees in the amount of one-third of the value of the IRA as of January 23, 2011, pursuant to their contingency fee agreement with counsel.

¶ 15 This appeal followed.

¶ 16 II. ANALYSIS

¶ 17 The primary issue on appeal is whether plaintiffs are entitled to a judgment as a matter of law. The answer to that question depends on whether the language included in the power of attorney granted defendant the authority to change the beneficiary on Billy's IRA to herself. If it did not, defendant presumably engaged in fraudulent self-dealing. Defendant's act of self-dealing then is invalid unless there is evidence to rebut the presumption of fraud. On appeal, defendant insists the answer lies within the four corners of the document and any analysis of fraudulent self-dealing is irrelevant.

¶ 18 The trial court, finding support from Bienash , held that, in order for defendant to have the authority to change a beneficiary designation to herself, the power of attorney document must have specifically stated such. See Bienash , 721 N.W.2d at 437. We find the trial court's reliance on Bienash was unnecessary. That is, to resolve this case, we need to look no further than the Illinois power-of-attorney statute and our common-law cases addressing an agent's fiduciary duty and the presumption of fraudulent self-dealing.

¶ 19 A. Standard of Review on Summary Judgment

¶ 20 "Summary judgment is appropriate where ‘the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ " Ioerger v. Halverson Construction Co. , 232 Ill.2d 196, 201, 327 Ill.Dec. 524, 902 N.E.2d 645 (2008) (quoting 735 ILCS 5/21005(c) (West 2000) ). "Summary judgment is a drastic remedy and should be allowed only when the right of the moving party is clear and free from doubt." Jones v. Chicago HMO Ltd. , 191 Ill.2d 278, 291, 246 Ill.Dec. 654, 730 N.E.2d 1119 (2000). "Accordingly, where reasonable persons could draw divergent inferences from the undisputed material facts or where there is a dispute as to a material fact, summary judgment should be denied and the issue decided by the trier of fact." Jackson v. TLC Associates, Inc. , 185 Ill.2d 418, 424, 235 Ill.Dec. 905, 706 N.E.2d 460 (1998). "On appeal from a trial court's decision granting a motion for summary judgment, our review is de novo ." Bowles v. Owens–Illinois, Inc. , 2013 IL App (4th) 121072, ¶ 19, 375 Ill.Dec. 211, 996 N.E.2d 1267.

¶ 21 B. Illinois Power of Attorney Act

¶ 22 Defendant contends that the added language in paragraph three of the power of attorney document was sufficient to unequivocally authorize her to "name or change beneficiaries under any beneficiary form or contractual arrangement" to herself included. To the contrary, plaintiffs contend that defendant engaged in fraudulent self-dealing in violation of the fiduciary duty she owed to Billy.

¶ 23 In 1987, the legislature enacted the Illinois Power of Attorney Act (Act) ( 755 ILCS 45/1–1 to 4–12 (West 2010) ). The Act includes article III, the Statutory Short Form Power of Attorney for Property Law ( 755 ILCS 45/3–1 to 3–5 (West 2010) ), which provides a standardized short form power of attorney for individuals to use. The form sets forth optional powers and...