Luccio v. Rao (In re Estate of Luccio)

• Decision Date: 18 December 2012
• Docket Number: Docket No. 1–12–1153.
• Parties: In re ESTATE OF Benjamin LUCCIO, Deceased (Rocco Lucio, John Lucio, Patricia Chiarello, Danielle Morey, Niccole Morey, Amanda Morey, Beneficiaries Under a Prior Trust, and Tina Norton, as Mother and Legal Guardian of Kaylee Norton, Beneficiary Under a Prior Trust, Plaintiffs–Appellees, v. Khristian Rao, Individually and as Beneficiary Under the Sixth Amendment to the Benjamin Luccio a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001, Defendant–Appellant (St. Jude's Children's Research Hospital, Beneficiary Under the Sixth Amendment to the Benjamin Luccio, a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001, and ATG Trust Company, as Trustee of the Benjamin Luccio, a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001, Defendants)).
• Court: United States Appellate Court of Illinois

2012 IL App (1st) 121153

982 N.E.2d 927

367 Ill.Dec. 777

In re ESTATE OF Benjamin LUCCIO, Deceased (Rocco Lucio, John Lucio, Patricia Chiarello, Danielle Morey, Niccole Morey, Amanda Morey, Beneficiaries Under a Prior Trust, and Tina Norton, as Mother and Legal Guardian of Kaylee Norton, Beneficiary Under a Prior Trust, Plaintiffs–Appellees, v. Khristian Rao, Individually and as Beneficiary Under the Sixth Amendment to the Benjamin Luccio a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001, Defendant–Appellant (St. Jude's Children's Research Hospital, Beneficiary Under the Sixth Amendment to the Benjamin Luccio, a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001, and ATG Trust Company, as Trustee of the Benjamin Luccio, a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001, Defendants)).

Docket No. 1–12–1153.

Appellate Court of Illinois, First District, Second Division.

Dec. 18, 2012.

Andrew T. Hays, of Hays Firm LLC, of Chicago, for appellees.

Peter J. Schmiedel, Robert W. Kaufman, and Amanda M. Byrne, all of Fischel & Kahn, Ltd., of Chicago, for appellant.

OPINION

Justice CONNORS delivered the judgment of the court, with opinion.

[367 Ill.Dec. 778]¶ 1 Plaintiffs filed a complaint in the chancery division against defendant Khristian Rao, among others, for intentional interference with an inheritance expectancy and breach of fiduciary duty in a matter involving a testamentary trust. The case was then transferred to the probate division and consolidated with a pending action involving the estate of the decedent, Benjamin Luccio. Rao moved to dismiss the claims against her as time-barred under section 8–1(f) of the Probate Act of 1975 (Act) (755 ILCS 5/8–1(f) (West 2008)). The circuit court denied the motion to dismiss. After also denying Rao's motion to reconsider, the court certified the following question for interlocutory appeal under Illinois Supreme Court Rule 308 (eff. Feb. 26, 2010):

“Does the six[-]month limitations period of 755 ILCS 5/8–1(f) for bringing a contest to the validity of a trust that receives a legacy from a will admitted to probate apply to a tort action, including an action for [i]ntentional [i]nterference with an [i]nheritance [e]xpectancy where, unlike a will that has been admitted to probate, the trust instrument and amendments thereto are not publicly filed or otherwise made available to tort claimants who were to have received a benefit from a prior version of the trust or an amendment thereto?”

On May 25, 2012, a different division of this court allowed the interlocutory appeal. For the reasons that follow, we answer the certified question in the negative, with qualification.

¶ 2 BACKGROUND

¶ 3 The following facts were taken from plaintiffs' first amended complaint. On January 12, 2001, the decedent executed the “Benjamin Luccio, a/k/a Bernardino Luccio, Declaration of Trust Dated January 12, 2001” (Trust). The second amendment to the decedent's Trust, executed in 2007, gave the balance of a bank account to his nephew, specific monetary gifts to his niece and grandchildren, and the balance of the residuary trust estate to his brother.

¶ 4 In September of 2008, the decedent hired Rao to provide in-home medical care for his ailing wife, Maxine. Rao allegedly accompanied the decedent to his bank to retrieve some financial documents from a safety deposit box before visiting an attorney “in order to amend [the d]ecedent's estate plan.” Rao then transported Maxine to her home in Arkansas against the advice of Maxine's doctors.

¶ 5 Over the next few months, the decedent began to exhibit signs of dementia. Although the decedent had been paying Rao for Maxine's medical care, he also allegedly transferred $130,000 to Rao in December of 2008. In January of 2009, the decedent retained an attorney recommended by Rao to amend his Trust. The third amendment gave the decedent's house to his daughter, Tina Norton,¹ and the balance of his residuary trust estate to Rao. Two weeks later, the decedent executed a fourth amendment to his Trust, adding a monetary bequest to his nephew.

¶ 6 In March of 2009, the decedent was diagnosed with advanced dementia and required around-the-clock medical care. Around the same time, Maxine died. Rao then moved from Arkansas into the decedent's home to provide him with in-home medical care.

¶ 7 A couple of weeks later, the decedent executed a fifth amendment to his Trust. In it, he gave a monetary gift to a children's research hospital, he gave his house to his nephew, and the balance of the residuary trust estate was to be divided equally between Rao and three of the decedent's relatives. In June of 2009, the decedent executed a sixth amendment to his Trust, which gave a monetary gift to the hospital and the balance of the residuary trust estate to Rao.

¶ 8 Shortly thereafter, Rao moved the decedent to her home in Arkansas without telling his family. The decedent's family members located him a couple of months later in Arkansas. Rao allegedly “cut off communications between the [d]ecedent and his relatives, telling the [d]ecedent that they no longer cared for him.” While in Rao's care, the decedent broke his hip and during the surgery to repair it, he suffered a heart attack. Norton tried to make arrangements to visit the decedent, but was told that he had left the hospital. Rao did not return any of Norton's phone calls. Finally, Rao informed Norton by email that the decedent died on November 5, 2009.

¶ 9 Rao later told Norton that the decedent's Trust was being administered by ATG Trust Company, which was represented by attorney James Kash. Norton contacted Kash to get copies of the will and trust documents, but he allegedly refused to provide her with those documents.

¶ 10 On October 28, 2010, plaintiffs filed a lawsuit in the chancery division against Rao, ATG, and the children's hospital. Counts I and II sought to set aside the Trust because the decedent lacked capacity to execute the third, fourth, fifth, and sixth amendments to the Trust and because the amendments were procured through undue influence. Counts III and IV were directed at Rao, alleging that she intentionally interfered with plaintiffs' inheritance expectancy when she induced the decedent to amend the Trust and that she breached her fiduciary duty to the decedent. Count V sought to enjoin ATG from disbursing any funds or assets under the terms of the Trust.

¶ 11 The case was transferred to the probate division and was consolidated with the pending probate matter. The defendants each moved to dismiss the complaint as time barred under section 8–1(f) of the Act. The court dismissed counts I and II with prejudice, but permitted plaintiffs to amend the remaining counts.

¶ 12 Plaintiffs then submitted their first amended complaint, which is at issue in this case. Count I again alleges that Rao intentionally interfered with plaintiffs' inheritance expectancy. Plaintiffs asserted that they were beneficiaries under prior versions of the Trust and that Rao unduly influenced the decedent to “transfer large sums of money and/or stocks to her during [the d]ecedent's lifetime. These transfers included funds from checking accounts, savings accounts, brokerage accounts and certificates of deposit.” They alleged that but for Rao's interference, they would have inherited from an estate worth more than $1.5 million, which was its value before Rao induced the decedent to transfer his assets to her. Count II asserted a claim for breach of fiduciary duty against Rao, alleging that she used her relationshipwith the decedent to force him to execute the third, fourth, fifth, and sixth amendments to the Trust and appropriate his assets for her own benefit. Count III of the amended complaint was directed at ATG, seeking to enjoin it from disbursing any assets under the Trust.

¶ 13 Rao again filed a motion to dismiss the complaint, arguing that the tort claims were barred by section 8–1. After oral argument on the motion, the court issued a written opinion. It recounted that the Trust is the sole legatee of the will that was admitted to probate. It noted that plaintiffs' complaint does not contest the validity of the decedent's will or the Trust; rather, it seeks a personal judgment against Rao for her tortious interference with the plaintiffs' inheritance expectancy. It further noted that although the will had been filed with the court, distributed to all heirs and legatees, and become a public document pursuant to the Act, the Trust had not because Illinois law does not require the same disclosure of trust documents. Accordingly, the court stated, there is “a huge gap in how we treat a will contest versus trust contests yet both are subject to the same six[-]month statute of limitation.” The court also noted that plaintiffs requested copies of the will and Trust from Kash, the estate's attorney, and ATG, the trustee, but the documents were “not forthcoming in a timely manner.”

¶ 14 The court then denied Rao's motion to dismiss and allowed the tort claims to proceed based on the following findings. Plaintiffs were not entitled to a copy of the Trust because they were not named beneficiaries. Under these circumstances, the court concluded that plaintiffs would have to have filed a lawsuit against the trustee to obtain a copy of the Trust in order to discover whether they could have brought suit to challenge the Trust, all within the six-month time frame for filing a trust contest under section 8–1(f) of the Act. The court found that process to be “unduly burdensome” and contrary to the public policy of ensuring “an orderly settlement of estates.” It also concluded that a will contest would not have benefitted plaintiffs because the decedent's will was a “pour over” will that transferred his residual estate into the Trust, as did the prior version of his will; thus, the decedent's residual estate would have been governed by the terms of the Trust...