Fitch v. Mcdermott

• Decision Date: 28 April 2010
• Docket Number: No. 2-09-0029.,2-09-0029.
• Citation: 929 N.E.2d 1167,341 Ill.Dec. 88,401 Ill.App.3d 1006
• Parties: Thomas FITCH, Virginia West, Heather Haibt, and Thomas Michael Fitch, as Beneficiaries of the Victoria R. Fitch Trust Dated February 3, 1987, as Amended and Restated October 13, 2004, Plaintiffs-Appellants,v.McDERMOTT, WILL AND EMERY, LLP, Dietrich and Dietrich, LLC, Joseph Dietrich, John Dietrich, and Harris Bank, N.A., Defendants-Appellees.
• Court: United States Appellate Court of Illinois

401 Ill.App.3d 1006

929 N.E.2d 1167

341 Ill.Dec. 88

Thomas FITCH, Virginia West, Heather Haibt, and Thomas Michael Fitch, as Beneficiaries of the Victoria R. Fitch Trust Dated February 3, 1987, as Amended and Restated October 13, 2004, Plaintiffs-Appellants,v.McDERMOTT, WILL AND EMERY, LLP, Dietrich and Dietrich, LLC, Joseph Dietrich, John Dietrich, and Harris Bank, N.A., Defendants-Appellees.

No. 2-09-0029.

Appellate Court of Illinois Second District.

April 28, 2010.

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Daniel R. Konicek, Catherine D. Battista, Konicek & Dillon, P.C., Geneva, for Thomas Fitch, Thomas Michael Fitch, Heather Haibt, Virginia West.

Stephan Novack, Mitchell L. Marinello, Melissa B. Pryor, Novack & Macey, LLP, Chicago, IL; James L. Wright, Zanck, Coen & Wright, P.C., Crystal Lake, IL, for McDermott, Will & Every, LLP

Robert Marc Chemers, Richard M. Waris, Matthew F. Tibble, Fretzel & Stouffer, Chartered, Chicago, IL, for John Dietrich, Joseph Dietrich, Dietrich & Dietrich, LLC.

David S. Barritt, Rebecca Wallenfelsz, Carly M. Jones, Chapman & Cutler LLP, Chicago, IL; Tom E. Rausch, Gummerson Rausch Want Gray Wombacher, LLC, Woodstock, IL, for Harris, N.A.

Justice BOWMAN delivered the opinion of the court:

Plaintiffs, Thomas Fitch, Virginia West, Heather Haibt, and Thomas Michael Fitch, as beneficiaries of the Victoria R. Fitch Trust dated February 3, 1987, as amended and restated October 13, 2004, appeal the dismissal of several of their claims against defendants, McDermott, Will & Emery, LLP, Dietrich & Dietrich, LLC, Joseph Dietrich, John Dietrich, and Harris Bank, N.A., for the alleged mishandling of the estate plan of Victoria R. Fitch. We affirm.

I. BACKGROUND

The following general facts are derived from the various pleadings. On May 19, 2005, Victoria died, and her will was admitted to probate on July 8, 2005, making the last day to contest the will January 8, 2006. Also in July 2005, the estate published notice that any claims against the estate had to be filed by January 16, 2006. Prior to May 19, 2005, Victoria hired defendant law firm McDermott, Will & Emery (hereafter McDermott) to handle her estate plan. McDermott, with the assistance of defendant accounting firm Dietrich & Dietrich (hereafter Dietrich), prepared the Victoria R. Fitch Trust and Victoria's will. Around the same time, defendants Joseph Dietrich and John Dietrich (hereafter the Dietrichs), both certified public accountants provided financial and accounting services for estate planning purposes to Victoria and her husband, plaintiff Thomas Fitch. Joseph had been providing accounting and financial services for the Fitch family for over 20 years. McDermott also represented Victoria's husband and her son, Thomas Michael (hereafter Michael), in preparing their estate planning documents. After Victoria's death, Dietrich and the Dietrichs (hereafter the Dietrich defendants) retained McDermott to represent Joseph and Harris Bank as co-executors and co-trustees of Victoria's will and trust. The Fitch family assets were valued in the tens of millions of dollars.

Pursuant to the terms of Victoria's will and trust, upon her death, the trust established and funded the following four trusts: (1) farm preservation trust; (2) family trust; (3) GST exempt trust; and (4) primary marital trust. Joseph and Harris Bank were designated co-trustees of the farm preservation trust, the GST exempt trust, and the primary marital trust. In the will, Victoria exercised her limited testamentary power of appointment over certain trusts by appointing all property to the co-trustees, Joseph and Harris Bank. A series of “appointive trusts” was also created for Victoria's children, and Joseph and Harris Bank were also co-trustees of those trusts. These “appointive trusts” were created for Victoria's children: plaintiffs Virginia West, Heather Haibt, and Michael. Joseph and Harris Bank were also designated co-executors of Victoria's will. In addition to his role as co-executor and co-trustee, Joseph was also appointed as “adviser” under the trust document so that he could direct and control all investments held in the trusts and as corporate trustee “remover” so that he could remove and replace any corporate trustee or co-trustee.

Thomas was the beneficiary of the primary marital trust and the GST exempt trust. Virginia, Heather, and Michael were contingent remainder beneficiaries of the farm preservation trust, the GST exempt trust, the primary marital trust, and the appointive trusts of their respective siblings. They each were also the beneficiaries of the appointive trusts created for them individually.

The farm preservation trust was created for the benefit of Michael for 15 years. The trustees (Joseph and Harris Bank) were directed to allocate $3 million to this trust upon Victoria's death. The trustees had discretion to make distributions to Michael for his support, maintenance, and health. At the end of the 15-year term, the farm preservation trust was to divide into separate trusts for Victoria's children.

The GST exempt trust and the primary marital trust were created for the benefit of Thomas for his lifetime. The trust provided that Thomas receive all of the income of the two trusts and that the trustees had discretion to distribute principal monies for his support, maintenance, and health. Upon Thomas's death, the trust was to divide into separate trusts for Victoria's children.

Other involved entities include Cardwell Farms, LP, a limited partnership created February 28, 2003, pursuant to the advice of McDermott and the Dietrich defendants. The general partner of Cardwell Farms, LP, was Fitch Farm Management, LLC. The Fitch Farm, LLC, was also created February 28, 2003, upon the advice of McDermott and the Dietrich defendants. Victoria and Michael were the initial members of The Fitch Farm, LLC. The limited partners of Cardwell Farms were Victoria, as trustee of the Victoria R. Fitch Trust, and Michael. The purpose of Cardwell Farms, LP, was to acquire, own, and manage property. At the time of Victoria's death, Cardwell Farms, LP, owned the 103-acre Fitch family farm located on Oak Knoll Road in Barrington Hills.

According to the complaint, had Victoria not been advised by the Dietrich defendants and McDermott to exercise a limited power of appointment, the assets in the trusts would have passed directly to her children and not been under the control of the trustees. Initially, plaintiffs took issue with gifts totaling $1.1 million that went to Joseph and John Dietrich under the will and alleged that defendants unduly influenced Victoria in advising her on and preparing her estate plan and were negligent in failing to disclose conflicts of interest that were created after Victoria's death.

Plaintiffs filed an initial complaint on January 25, 2007. A series of motions to dismiss, amended pleadings, and additional motions to dismiss ensued. Plaintiffs stated in the amended pleadings that they were repleading all counts that had been dismissed with prejudice for purposes of appealing. On September 18, 2007, the trial court dismissed with prejudice counts I, II, and III of the complaint. On May 9, 2008, the trial court dismissed with prejudice counts IV and V of the first amended complaint. On December 11, 2008, the trial court dismissed with prejudice counts IV, V, VI, and VIII of the second amended complaint. The trial court included language in accord with Supreme Court Rule 304(a) (210 Ill.2d R. 304(a)), and plaintiffs timely appealed the dismissal of these named counts.

II. ANALYSIS

A motion to dismiss under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2008)) tests the legal sufficiency of a plaintiff's claim; a motion to dismiss under section 2-619 of the Code (735 ILCS 5/2-619 (West 2008)) admits the legal sufficiency of a plaintiff's claim but asserts certain defects or defenses outside the pleading that defeat the claim. Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill.2d 558, 579, 304 Ill.Dec. 369, 852 N.E.2d 825 (2006). Our standard of review under either section is de novo. Solaia, 221 Ill.2d at 579, 304 Ill.Dec. 369, 852 N.E.2d 825. When we review the legal sufficiency of a claim under section 2-615, we take as true all well-pleaded facts in the complaint and determine whether the allegations, construed in the light most favorable to the plaintiff, are sufficient to establish a cause of action upon which relief may be granted. King v. First Capital Financial Services Corp., 215 Ill.2d 1, 11-12, 293 Ill.Dec. 657, 828 N.E.2d 1155 (2005). Using these guidelines, we review plaintiffs' claims on appeal.

A. The Original Complaint

Plaintiffs filed their initial complaint on January 25, 2007. Count I of the complaint requested that the court impose a constructive trust upon the monies received by the Dietrichs under Victoria's will because there was a presumption of undue influence. According to the allegations, Victoria relied heavily on Joseph's advice over the years. Joseph had been paid millions of dollars over the years for his services and was appointed as an “adviser” under the Victoria R. Fitch Trust to approve all investments held in the trusts. Victoria became increasingly reliant upon Joseph for his financial advice. McDermott and Joseph developed a close working relationship while working on the Fitch estate and understood that upon Victoria's death, Joseph would retain McDermott as legal counsel for the co-executors and co-trustees. Under Victoria's will, Joseph received $750,000 and his son, John, received $350,000. As co-executor of Victoria's will, Joseph authorized the payments to himself and John.

Count II of the complaint alleged a conspiracy by McDermott and the Dietrich defendants to unduly influence Victoria. According to this claim, approximately 20 years ago, the Dietrichs introduced McDermott to the Fitch family to provide...