Ilhan United Stateskup & Timur United Stateskup v. Johnson

• Decision Date: 31 December 2020
• Docket Number: 1-20-0330
• Citation: 450 Ill.Dec. 724,2020 IL App (1st) 200330,182 N.E.3d 170
• Parties: Ilhan USKUP and Timur Uskup, Plaintiffs-Appellants, v. Joseph C. JOHNSON, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

2020 IL App (1st) 200330

182 N.E.3d 170

450 Ill.Dec. 724

Ilhan USKUP and Timur Uskup, Plaintiffs-Appellants,

v.Joseph C. JOHNSON, Defendant-Appellee.

No. 1-20-0330

Appellate Court of Illinois, First District, Fourth Division.

Filed December 31, 2020

Rehearing denied January 25, 2021

Michael C. Bruck and Timothy J. McInerney, of Spellmire Bruck LLP, of Chicago, for appellants.

Michael J. Meyer and Jeremy N. Boeder, of Tribler Orpett & Meyer, P.C., of Chicago, for appellee.

OPINION

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

¶ 1 Plaintiffs, Ilhan and Timur Uskup, filed a legal malpractice lawsuit against defendant attorney Joseph C. Johnson, based on his involvement in drafting trust documents for their deceased father.

Plaintiffs alleged that attorney Johnson's drafting of the trust documents included ambiguous provisions, which caused the successor trustee to file a petition to interpret the terms of the trust (petition for construction) after the death of plaintiffs' father, incurring approximately $300,000 in legal fees. Plaintiffs alleged that these sums would have otherwise been distributed to the trust's beneficiaries, including plaintiffs. The trial court dismissed plaintiffs' legal malpractice action under section 2-615 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-615 (West 2018) ) for failure to state a cause of action. Plaintiffs appeal, and for the reasons that follow, we affirm the trial court's dismissal but reverse its designation of that dismissal as being "with prejudice."

¶ 2 BACKGROUND

¶ 3 As the instant appeal arises from a motion to dismiss, all facts are taken from the allegations of the complaint and the exhibits attached thereto.

¶ 4 In 1989, Ergin Uskup retained attorney Johnson's services to create the Ergin Uskup Living Trust (trust); attorney Johnson drafted the trust agreement. At the time, Ergin¹ was married to Sezgin Uskup and had three children from a prior marriage, including plaintiffs.² In 2011, at Ergin's request, attorney Johnson drafted a restatement of the trust agreement, which declared that the purpose of the trust included his "wish to control how my property will be left to my beneficiaries after my death." The restatement provided that, upon Ergin's death, the trust estate was to be distributed 40% to Sezgin, if she survived him; 18% to each child, if they survived him, or else to their descendants; and 6% to Ergin's brother, if he survived Ergin. The restatement further provided that, "[t]o the greatest extent possible under applicable law, it is my intention to * * * enable my Trustee to give each trust beneficiary the maximum possible benefit and enjoyment of the trust income and principal to which the beneficiary is entitled."

¶ 5 Section 4.01(d) of the restatement to the trust provided that, during his lifetime, Ergin "shall have the power to amend or revoke my Trust, in whole or in part." However, section 15.04(b) provided that, "[n]otwithstanding my right to amend this agreement, as described in Section 4.01(d), under no circumstances shall I have the right to reduce the percentage of My Trust Property that is provided in this agreement for my spouse, Sezgin, unless Sezgin approves such amendment in writing."

¶ 6 In 2015, Sezgin filed a petition for dissolution of marriage. While the dissolution proceedings were pending, on May 31, 2016, attorney Johnson drafted an amendment to the restatement (2016 amendment), which directed the trustee "to administer the above Trust Agreement in the same manner as if my wife, Sezgin G. Uskup, had died prior to the date of this Amendment." Sezgin did not consent to this amendment. Ergin died on August 7, 2016,³ while the dissolution action was still pending.

¶ 7 On November 30, 2016, the successor trustee filed a petition to interpret the terms of the trust in case No. 2016 CH 15492 (trust litigation). The successor trustee noted the conflicts between section 4.01 of the restatement, which gave Ergin the absolute right to amend or revoke his trust; section 15.04(b), which required Sezgin's consent in order to reduce her percentage interest; and the 2016 amendment, which directed the trustee to treat Sezgin as having predeceased Ergin. The successor trustee alleged that it was unable to distribute the balance of the trust until the ambiguity was resolved.

¶ 8 In the trust litigation, Sezgin's attorneys argued that there was no ambiguity in the trust documents and that the restatement clearly required Sezgin's consent to reduce her interest. Under this interpretation, Sezgin would have received approximately $1.9 million, representing 40% of the trust estate. Plaintiffs retained their own counsel, who took the position that, while the trust documents were ambiguous, it was Ergin's intent to eliminate Sezgin's interest.

¶ 9 The trust litigation continued for nearly two years, until the trial court entered judgment on the pleadings on July 2, 2018. In its 20-page written opinion, the court noted that it had previously determined that section 15.04(b) was ambiguous. The court further noted that there was a lack of Illinois authority on the issue. The court began its analysis by finding that it had previously determined that, at the time the trust was established, Ergin intended to create a revocable trust, as he had expressly reserved the right to revoke the trust during his lifetime without the consent of a beneficiary. Consequently, the court found that the plain language of the restatement meant that prior to his death, Ergin was free to amend or change the trust at any time and for any reason. However, the court further found that it had previously determined that the presence of both section 4.01(d) and 15.04 "gave rise to more than one reasonable interpretation of [Ergin's] power to control the disposition of his Trust while seemingly limiting himself as to one method of amendment." Thus, the court found that the restatement was "patently ambiguous" on its face, reasoning:

"As the Court set forth above, Ergin was able to use his power of revocation to revoke the Trust completely, thereby eliminating Sezgin's interest without ever setting forth such change explicitly as a new provision in the Trust Agreement. Additionally, Ergin could change the Trust Agreement in a way in which Sezgin's beneficiary interest no longer existed. Despite these potential factual circumstances, nowhere in the provisions cited by the parties does it indicate that Ergin contemplated these scenarios."

¶ 10 Examining the language of the restatement, the court found that sections 4.01(d) and 15.04(b) could operate in cohesion, finding that "while Ergin retained the right to amend any part of the Trust at any time or for whatever reason, he also expressly denoted a specific circumstance as to which he required her consent. Additionally, the plain language of section 15.04(b) indicated that the provision was intended to operate as a special exception to his general ability to amend the Trust as he saw fit." Accordingly, since the court found that the provisions of the restatement could be reconciled, it proceeded to determine whether the 2016 amendment was valid.

¶ 11 The court found that the 2016 amendment sought to treat Sezgin as predeceased prior to the date of the amendment's execution. The court found that, "[a]s such, if Sezgin was predeceased at the time of the amendment's execution, Ergin would not have needed her written approval to amend the Trust as to her beneficiary interest, simply because the interest did not exist anymore." The court further noted that the restatement also contemplated the changing of beneficiary interests in a different provision, which provided that Sezgin would be treated as predeceased upon dissolution of their marriage, and nothing in the language of section 15.04(b) prevented Ergin from accelerating this provision, nor did it prevent Ergin from revoking the trust as a whole or any property within the trust. Therefore, the court found that the 2016 amendment was valid and operated to eliminate Sezgin's beneficiary interest.

¶ 12 The trust incurred $304,400.25 in legal expenses as a result of the trust litigation, and plaintiffs additionally incurred $29,525.65 in attorney fees that were not reimbursed by the trust.

¶ 13 On February 1, 2019, plaintiffs filed a complaint for legal malpractice against attorney Johnson. The complaint contained two counts, one for each plaintiff. The complaint alleged that the primary purpose of Ergin's attorney-client relationship with attorney Johnson was to benefit his trust beneficiaries, including plaintiffs, and to distribute to them the maximum benefit and enjoyment of the trust income and principal. As such, attorney Johnson owed Ergin a duty of care to properly advise him in the drafting of documents that would carry out his intent, and that duty extended to plaintiffs, Ergin's directly intended third-party beneficiaries. The complaint alleged that attorney Johnson violated his duty in the following ways:

"a. In order to carry out Ergin's intent to eliminate Sezgin as a beneficiary of the Trust and to provide for the remaining beneficiaries, drafted the Amendment in a manner that made the Trust ‘patently ambiguous’ and subject to litigation;

b. In order to carry out Ergin's intent to eliminate Sezgin as a beneficiary of the Trust and to provide for the remaining beneficiaries, failed to revoke and thereafter restate the Trust;

c. Failed to prepare non-ambiguous estate planning documents that carried out Ergin's intent to eliminate Sezgin as a beneficiary of the Trust and to provide for the remaining beneficiaries;

d. Was otherwise negligent."

The complaint alleged that, as a result of attorney Johnson's conduct, plaintiffs were damaged "in that the Trust, among other things, unnecessarily paid and incurred substantial attorneys' fees and expenses litigating the proper construction of Ergin's Trust and the rights of its beneficiaries that would have otherwise...