In re Estate of Klehm

Citation842 N.E.2d 1177
Decision Date24 January 2006
Docket NumberNo. 1-04-3512.,1-04-3512.
PartiesIn re ESTATE OF Lois E. KLEHM, Deceased (Kathleen Klehm-Marinangel, Executor of the Estate of Lois E. Klehm, Petitioner-Appellant, v. Arnold J. Klehm, Roy G. Klehm, and Susan Klehm, individually and as Executor of the Estate of Carl H. Klehm, Respondents-Appellees).
CourtUnited States Appellate Court of Illinois

George B. Collins and Adrian Vuckovich of Collins & Bargione, Chicago, for Appellant.

Morry G. Dyner and Deborah J. Soehlig of Fischel & Kahn, Ltd., Chicago, for Arnold J. Klehm.

John F. Early of Early, Collison, Tousey, Regan, Wlodek & Morrow, Elgin, for Roy G. Klehm.

Paul Lutter of Bryan Cave LLP, Chicago, for Susan Klehm.

Justice HALL delivered the opinion of the court:

The central issue for review is whether the trial court abused its discretion in granting a motion disqualifying attorneys Frederick C. Cappetta (Cappetta) and Ronald E. Shadle (Shadle) and their respective law firms from further representing executor Kathleen Klehm-Marinangel in a citation proceeding she initiated against certain family members and their business entities for the purpose of discovering information and recovering monies and assets allegedly belonging to the estate of her deceased mother, Lois E. Klehm.

Kathleen petitioned this court for review pursuant to Supreme Court Rule 306(a)(7) (166 Ill.2d R. 306(a)(7)). For the reasons that follow, we find that the trial court abused its discretion in this case and therefore we reverse.

While the parties disagree regarding certain specific facts, those that follow are uncontroverted. Lois E. Klehm (Mrs. Klehm) died testate on December 8, 1998. In addition to a number of grandchildren, she was survived by three adult children, Roy G. Klehm, Arnold J. Klehm, and Kathleen Klehm-Marinangel; another son, Carl H. Klehm (Chuck), predeceased her and was survived by his wife Susan Klehm, who is a party to these proceedings.

In January 1999, Kathleen filed a petition to probate her mother's last will and for letters testamentary. The will was drafted by attorneys from the law firm of Sidley & Austin. At the time she filed the petition, Kathleen was represented by the law firm of Cappetta & Shadle, Ltd. On February 4, 1999, the circuit court entered an order admitting the will to probate and appointing Kathleen as executor of her mother's estate.

Mrs. Klehm's will had nominated Roy, Arnold, and Kathleen as coexecutors. The sons, however, declined to act as coexecutors under the will and in August 1999, filed a petition contesting the will based on undue influence.

From January 1999 through 2003, Cappetta and Shadle represented Kathleen in the will contest and in numerous out-of-court negotiations concerning the estate's claims against the sons and their business entities. On August 15, 2003, after negotiations stalled, Kathleen filed a three-count citation petition against Roy, Susan (individually and as administrator of Chuck's estate), Arnold, and their business entities (collectively Klehm movants), for the purpose of discovering and recovering monies and assets allegedly belonging to the estate.

On September 30, 2003, the Klehm movants filed a motion to disqualify Cappetta and Shadle from representing Kathleen in the citation proceedings or, in the alternative, in any estate proceedings other than the will contest. The Klehm movants contended that Cappetta and Shadle had previously represented them in various transactions at issue in the pending citation proceedings and therefore the attorneys' representation of Kathleen in her capacity as executor of their mother's estate violated Rule 1.9 of the Rules of Professional Conduct1 because it constituted involvement in litigation adverse to a former client's interest in a matter substantially related to the former representation.

The Klehm movants also filed a motion requesting the trial court to strike the citation petition on the grounds that: all requested documents and information had already been provided and therefore the citation was moot; the petition was not a proper petition for citation to discover assets because it did not actually seek issuance of a citation but rather attacked the validity of the transfers themselves; and the petition was unsupported by either current law or facts and was therefore sanctionable.

On November 4, 2004, following five days of hearings, the trial court entered an order disqualifying Cappetta and Shadle from further representing Kathleen in the citation proceedings, but not as to any other supplemental proceedings in the estate. Kathleen filed a timely petition for leave to appeal the order on December 6, 2004. On February 3, 2005, the trial court granted Kathleen's petition for leave to appeal.

ANALYSIS
I. Waiver of Right to Seek Disqualification of Counsel

Kathleen first contends that the trial court abused its discretion by failing to find that the Klehm movants waived their right to seek disqualification of attorneys Cappetta and Shadle and their respective law firms, where the movants waited approximately four years before raising the issue. We agree.

Courts have vital interests in "protecting the attorney-client relationship, maintaining public confidence in the legal profession and ensuring the integrity of judicial proceedings." S K Handtool Corp. v. Dresser Industries, Inc., 246 Ill.App.3d 979, 989, 189 Ill.Dec. 233, 619 N.E.2d 1282 (1993). To protect these vital interests, courts have the authority to disqualify an attorney from representing a particular client. See, e.g., LaSalle National Bank v. Triumvera Homeowners Ass'n, 109 Ill. App.3d 654, 664, 65 Ill.Dec. 218, 440 N.E.2d 1073 (1982) (rationale for disqualification "is to enforce the attorney's duty of absolute fidelity and to guard against the danger of inadvertent use of confidential information").

At the same time, however, it is well settled that since disqualification serves to destroy the attorney-client relationship by preventing a party from freely retaining counsel of his choice, it is regarded as a drastic measure that courts should apply only when absolutely necessary. S K Handtool Corp., 246 Ill.App.3d at 989, 189 Ill.Dec. 233, 619 N.E.2d 1282; Schwartz v. Cortelloni, 177 Ill.2d 166, 178, 226 Ill.Dec. 416, 685 N.E.2d 871 (1997). In addition, motions to disqualify are generally viewed with caution since they can be used as a tool to harass opposing counsel. Chemical Waste Management, Inc. v. Sims, 875 F.Supp. 501, 505 (N.D.Ill.1995).

In an effort to discourage tactical gamesmanship, courts have determined that motions to "disqualify should be made with reasonable promptness after a party discovers the facts which [led] to the motion." Kafka v. Truck Insurance Exchange, 19 F.3d 383, 386 (7th Cir.1994), quoting Central Milk Producers Cooperative v. Sentry Food Stores, Inc., 573 F.2d 988, 992 (8th Cir.1978). Consequently, waiver is a valid basis for denying a motion to disqualify. See, e.g., International Insurance Co. v. City of Chicago Heights, 268 Ill.App.3d 289, 302-03, 205 Ill.Dec. 698, 643 N.E.2d 1305 (1994) ("[a] party waives any objection to an alleged attorney conflict of interest if it fails to assert that conflict promptly").

In determining whether a moving party has waived its right to object to an attorney's representation of an adverse party on conflict of interest grounds in civil cases, courts have considered such factors as the length of the delay in bringing the motion to disqualify; when the movant learned of the conflict; whether the movant was represented by counsel during the delay; why the delay occurred; and whether disqualification would result in prejudice to the nonmoving party. See Chemical Waste Management, Inc., 875 F.Supp. at 505.

In this case, the record indicates that the Klehm movants and their counsel knew or should have known of a potential conflict and adverse representation since at least August 1999, when the sons declined to act as coexecutors under their mother's will and instead hired lawyers to contest the will. The Klehm movants, contested, among other things, deletion of the "forgiveness of debt" provision that was contained in Mrs. Klehm's 1984 will2 and reiterated in her 1994 will.

In the 1996 will, the "forgiveness of debt" provision was deleted, and the will that was admitted to probate in February 1999 contained section 5.2, which stated:

"Most of my estate consists of investments made in businesses conducted by my sons and loans made in connection with said businesses. Since these businesses are currently invested in real estate which may be difficult to liquidate, I direct my Executors to grant these businesses sufficient time to raise the cash necessary to meet the obligations to pay the bequests contained in Article 2, so that the value of such businesses will not be unduly sacrificed."

In light of the language contained in section 5.2 directing the executor to recover money/debt from business entities owned by the sons, and the fact that the "forgiveness of debt" provision was deleted from the 1996 will, the Klehm movants evidently realized that their interests were potentially adverse to the estate when they contested the will.

The Klehm movants placed themselves in a potentially conflicting position with the estate when they initiated adversarial proceedings contesting the will. Cappetta and Shadle's defense of the terms of the will resulted in a potentially adversarial relationship between the attorneys and the Klehm movants and their attorneys. See Jewish Hospital of St. Louis, Missouri v. Boatmen's National Bank of Belleville, 261 Ill.App.3d 750, 763, 199 Ill.Dec. 276, 633 N.E.2d 1267 (1994) (noting that defending the terms of the will often results in an adversarial relationship between the estate and a beneficiary of the estate); In re Estate of Kirk, 292 Ill.App.3d 914, 919, 227 Ill.Dec. 90, 686 N.E.2d 1246 (1997) (same); Neal v....

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