In re Estate of Lis
| Decision Date | 31 March 2006 |
| Docket Number | No. 1-04-1934.,1-04-1934. |
| Citation | 847 N.E.2d 879 |
| Parties | ESTATE OF Shirley A. LIS, Deceased (Owen F. Ward, Robert Dunkleberger, Dolores Messman, Nancy Fischer, Bernice Mankiwicz, and Michael Piamonte, Petitioners-Appellants, v. Kwiatt & Ruben, Ltd., S. Hala Souman, Larry Magill, Levenfeld Perlstein, and Sharon Rudnick, Respondents-Appellees; International Fidelity Insurance Company, Respondents-Appellees and Cross-Appellant, v. Kenneth Rudnick, Respondent-Appellee and Cross-Appellee). |
| Court | United States Appellate Court of Illinois |
Novoselsky Law Offices (David A. Novoselsky, Leslie J. Rosen, of counsel), Chicago; Kogut & Associates (A. Charles Kogut, of counsel), Des Plaines; Mathias M. Mattern, P.C. (Mathias M. Mattern, Stephen J. Dine, of counsel); Timothy D. O'Hara, Chicago, for Appellants.
Dykema Gossett, Rooks Pitts PLLC (Marc D. Ginsberg, Cheryl A. Warzynski, of counsel), Chicago, for Appellees Kwiatt & Ruben and S. Hala Souman.
Donohue Brown Mathewson & Smyth (Robert W. Smyth, Jr., Karen Kies DeGrand, Laurie A. Rompala, of counsel), Chicago, for Appellee Larry Magill.
Chuhak & Tecson, P.C. (Daniel F. Marren, of counsel), Chicago, for Appellees Sharon Rudnick and Kenneth Rudnick.
Hinshaw & Culbertson LLP (Lawrence R. Moelmann, Timothy A. Hickey, of counsel), Chicago, for Appellee International Fidelity Insurance Company.
Petitioners Owen Ward (Owen) and Robert Dunkleberger, Dolores Messman, Nancy Fischer, Bernice Mankiwicz, and Michael Piamonte (Other Heirs)1 appeal from orders of the circuit court granting the motion for summary judgment of respondent, the independent administrator of the Estate of Shirley Lis (Estate), Sharon Rudnick (Sharon), on petitioners' petition to surcharge the administrator for recoupment of a Harris Bank retirement plan (Plan) that was distributed solely to Kenneth Rudnick, Shirley's maternal cousin, which petitioners alleged should have been distributed to the Estate, and granting respondents Kwiatt & Ruben, Ltd., S. Hala Souman, Larry Magill, and Levenfeld Perlstein's (the Attorneys) motions to dismiss petitioners' petition to surcharge the Attorneys on the same basis.2 On appeal, petitioners contend that the trial court erred in granting the Attorneys' motions to dismiss because petitioners set forth sufficient facts to state a cause of action for breach of fiduciary duty and because the Attorneys' arguments in support of dismissal, that the Plan was not part of the Estate, that Harris Bank made its own independent decision with respect to distribution of the Plan, and that petitioners' claim was preempted by ERISA, were not sufficient to support dismissal. Petitioners further contend that the trial court erred in granting summary judgment in favor of Sharon because genuine issues of material fact existed and Sharon's arguments, like the Attorneys, which were essentially the same, were not sufficient to warrant summary judgment. International Fidelity Insurance Company (Fidelity) has filed a cross-appeal contending that the trial court properly granted summary judgment in favor of Sharon and, in the alternative, if we reinstate the petition to surcharge the administrator, its third-party complaint for assumpsit against Kenneth should be reinstated. For the reasons set forth below, we affirm.
This lawsuit arose as a result of the death of Shirley Lis on November 11, 1999. Subsequent to her death, it was discovered that Shirley had a profit sharing plan (Plan) through her former employer Harris Bank. At the time of her death, Agnes Rudnick, Shirley's mother, was designated as the primary beneficiary. Mae Rudnick, Shirley's maternal aunt, was designated as the contingent beneficiary. Both beneficiaries predeceased Shirley, yet Shirley had not changed the designations. On November 16, Rosemary Fuller, an employee of Harris Bank, wrote to Sharon, Shirley's maternal first cousin once removed, with respect to the Plan, indicating that Mae was the named contingent beneficiary and requesting her address. At this time, Harris Bank was unaware that Mae predeceased Shirley.
On January 5, 2001, Sharon filed a petition for letters of administration, identifying her father, Kenneth Rudnick, and her uncle, Stanley Rudnick, as heirs, and valuing the Estate at $234,000. Sharon indicated that other heirs were unknown. On January 18, an attorney for Owen, Shirley's paternal first cousin, faxed a letter to Hala Souman, one of Sharon's attorneys, enclosing a counterpetition for letters of administration. On January 19, Owen's attorney appeared in court to present his counterpetition, at which time, Sharon objected. Sharon then filed her letters of administration which identified Kenneth, herself, her sister Susan and her brother Steven as heirs as well as unknown other heirs. Sharon was appointed independent administrator and an order declaring heirship was entered that identified Kenneth and Stanley (whereabouts unknown) as the maternal heirs, each entitled to one-half of Shirley's estate, and unknown paternal heirs.
On February 13, Souman wrote to Nancy Harrison, a benefits administrator at Harris Bank, asking her to distribute the Plan to Kenneth. Thereafter, Souman wrote to Owen's attorney, requesting that he withdraw the counterpetition so as not to deplete the Estate. The letter further indicated that two retirement accounts had originally been included in the Estate value, which did not belong to the Estate since they had named beneficiaries. According to Souman, the Estate was actually valued at approximately $75,000. On March 28, Souman again wrote to Harrison, requesting disbursement of the Plan to Kenneth. On March 30, Owen's attorney appeared in court on a petition to vacate the appointment of Sharon as the independent administrator and to file a counterpetition to appoint Owen as the independent administrator and to amend the order of heirship. Owen agreed to withdraw the counterpetition and petition to vacate the appointment of administrator. Thereafter, the trial court entered an amended order declaring heirs, vacating its January 19 order, adding Owen as an heir entitled to one-half of Shirley's estate and amending Stanley and Kenneth's share to one-quarter each. Subsequent to the hearing, Owen's counsel wrote to Souman, indicating he had withdrawn the counterpetition and requesting information as to why the Estate had decreased in value.
On April 26, an attorney representing Michael Piamonte, Stanley's grandson, wrote to Larry Magill, another one of Sharon's attorneys, stating that Piamonte was one of Shirley's heirs. On May 17, Harrison wrote to Souman, indicating the Plan was worth $150,638.96, that because Mae predeceased Shirley, the next beneficiary was Kenneth, and that the Plan had been distributed to Kenneth. On May 22, Souman wrote to Owen's attorney, explaining that two retirement accounts had incorrectly been included in the Estate because they had named beneficiaries and their withdrawal from the Estate was the reason it had a lesser value.
On July 31, Owen's attorney met with representatives of Harris Bank. Thereafter, Harris Bank wrote to Owen's attorney, indicating that the Plan had been distributed to Kenneth in accordance with Plan documents. On August 17, Owen moved to remove Sharon as administrator, alleging that she had breached her fiduciary duties to preserve and collect the assets of the Estate and because she failed to advise Harris Bank that other heirs existed. Owen further alleged that the Plan was part of Shirley's estate. On the same day, Bernice Mankiwicz, another maternal cousin of Shirley's, filed a motion to amend the heirship order, identifying herself and six others, as heirs. The trial court then entered a second amended order declaring heirs, adding Bernice and the others as heirs. In this order, the court further stated that the distribution of the Plan to Kenneth was improper and was to be restored to the Estate. On August 29, Sharon filed a motion to reconsider the August 17 order. Thereafter, Fidelity, Sharon's surety, filed an appearance.
On September 5, the trial court held a hearing on Sharon's motion to reconsider the order of August 17. At this hearing, the trial court found that the Plan was an asset of the Estate; Harris Bank failed to take into consideration the Other Heirs in making its distribution decision; and that the money had to come back to the Estate. On October 17, Harris Bank filed a notice that the action had been removed to the federal district court based on ERISA.
On April 15, 2002, Sharon filed a motion to vacate the trial court's order of September 5, 2001, stating that petitioners had acknowledged before the federal district court that the Plan was not part of the Estate. On April 17, the trial court granted Sharon's motion, vacating its August 17 and September 5, 2001, orders on the basis that related issues were pending before the federal district court.
On July 16, a representative of Harris Bank wrote to Kogut, counsel for the Other Heirs, with respect to the federal court case and the heirs' claim for benefits. Harris Bank advised Kogut that the Harris Benefits Administrative Committee (Committee), a committee that reviewed contested claims for benefits and denials of benefits, had considered the heirs' claim under the Plan, particularly their position that the Plan should be paid to the Estate. Harris Bank indicated that, according to the Plan documents, its staff made the determination to distribute the Plan to Kenneth because he was within the class of persons eligible to receive the distribution. Accordingly, the Committee denied the heirs' claim for distribution to the Estate. The letter further advised the heirs that they had a right to appeal the decision and could request, in writing, a review by September 20.
On September 10, the federal district court entered a minute order,...
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