McGrath v. Fahey

• Citation: 127 Ill.Dec. 724,533 N.E.2d 806,126 Ill.2d 78
• Decision Date: 06 December 1988
• Docket Number: No. 66346,66346
• Parties: , 127 Ill.Dec. 724 Harold F. McGRATH, Appellee, v. Robert P. FAHEY, et al., Appellants.
• Court: Supreme Court of Illinois

Page 806

533 N.E.2d 806

126 Ill.2d 78, 127 Ill.Dec. 724

Harold F. McGRATH, Appellee, v. Robert P. FAHEY, et al., Appellants.

No. 66346.

Supreme Court of Illinois.

Dec. 6, 1988.

Rehearing Denied Jan. 30, 1989.

Cassiday, Schade & Gloor, Chicago (Michael J. Gallagher, Bruce M. Wall and Judith A. Schieber, of counsel), for appellants.

William J. Harte, Ltd., and Joyce & Kubasiak, P.C., Chicago (William J. Harte and Edward T. Joyce, of counsel), for appellee.

Justice CUNNINGHAM delivered the opinion of the court:

In the circuit court of Cook County, plaintiff, Dr. Harold F. McGrath, filed a complaint against defendants, Robert P. Fahey and First Security Bank of Glendale Heights, now known as Du Page County Bank of Glendale Heights (First Security), alleging the intentional infliction of emotional distress. The circuit court dismissed the complaint for failure to state a cause of action, and plaintiff appealed. The appellate court reversed (163 Ill.App.3d 584, 117 Ill.Dec. 304, 520 N.E.2d 655), stating that a jury could legitimately find defendants' conduct so outrageous as to support the claim. Pursuant to Supreme Court Rule 315 (107 Ill.2d R. 315), we allowed defendants' petition for leave to appeal.

We herein set forth the factual allegations of the complaint. Prior to January 1982, plaintiff and Terrace Management, Inc. (Terrace), constructed and managed 16 six-unit rental apartment buildings. During or after January 1982, plaintiff and Terrace decided to sell the buildings, and their accountant introduced them to James Elliot, who was to attempt to arrange the realty sale. Elliot proposed a sale and financing agreement (realty contract) which was to involve multiple parties, including First Security (in which Elliot acquired a controlling interest in January 1982) and Manning Savings and Loan Association (Manning Savings). At all times relevant to the complaint, Manning Savings, Harold Ticktin (the president, a director and a member of the loan committee of Manning Savings), First Security, Elliot, and Kevin Kehoe (an officer of First Security) were together directly or indirectly engaged in a variety of joint or otherwise related business transactions.

Shortly after plaintiff's accountant introduced Terrace and him to Elliot, Elliot, First Security, Manning Savings, Kehoe and Ticktin developed a scheme to defraud McGrath and Terrace in connection with the realty contract. The scheme to defraud (which allegedly caused plaintiff and Terrace to lose $4 million) was already the subject of separate litigation when the instant complaint was filed, and plaintiff appended portions of his counterclaim, cross-claim and third-party complaint in the other litigation to his complaint in the instant case.

Prior to learning of the scheme to defraud, plaintiff had placed 10 certificates of deposit (CD's) with First Security totaling over $1 million. These CD's were in the names of plaintiff and his wife in their capacities as trustees or fiduciaries under various pension, profit-sharing and trust accounts and in the name of the McGrath Clinic, S.C. None of these funds had any connection whatsoever with the realty contract.

Each of the CD's matured in April 1983. However, when on May 18, 1983, plaintiff sought the partial withdrawal and partial reinvestment of these funds, he was told that no one was available with the authority to handle such transactions. The following day, plaintiff spoke by telephone with Robert P. Fahey, who was president of First Security and acting as an agent thereof. Fahey advised plaintiff that First Security would not permit any of the funds to be withdrawn because of problems that had developed in connection with the realty contract. Fahey said this despite plaintiff's insistence that the CD's had no connection with the realty contract and that the CD's were primarily being held in trust for plaintiff's children and employees.

On Friday, May 20, 1983, plaintiff contacted Wayne Kwiat, an attorney he had retained in connection with the realty contract, and informed Kwiat that First Security had refused to release the CD funds. On May 23, Kwiat, plaintiff and Dunn Glick (an attorney with a private law firm acting as an agent of First Security) met. Plaintiff explained to Glick that the CD's were unrelated to the realty contract and were being wrongly withheld. Plaintiff also told Glick that plaintiff's father had died young from a heart attack, that heart problems ran in his family, that the CD dispute was making him extremely anxious, and that he was concerned about the effect that this anxiety would have on his health.

Glick refused to discuss the CD's, stating that he would discuss only problems that had emerged in the realty contract. Glick did, however, make threats to plaintiff. Glick stated that plaintiff must assign to First Security his interest in certain second mortgages held in connection with the realty contract because if plaintiff refused, First Security not only would refuse to release the CD funds but also would "financially ruin him and his medical practice." Following this meeting, plaintiff became even more concerned about the CD's, and he discussed with Kwiat the possibility of retaining a litigation attorney to handle the matter.

The following day, on May 24, 1983, plaintiff consulted attorney Edward Joyce and described the CD dispute and the anxiety he was experiencing relating to the dispute. Joyce attempted to resolve the matter immediately because plaintiff was becoming physically ill during the meeting. Joyce phoned Glick and asked for assurance that the CD funds would be released, stating that First Security had no legal right to withhold the funds. Glick refused to give any assurance. Joyce then dispatched by messenger a letter (signed by plaintiff and his wife) demanding that the CD funds be transferred to the Northern Trust Company of Chicago.

On May 25, a law partner of Glick messengered a response letter to Joyce concerning the CD's. The letter stated that an immediate release would not take place because First Security would first need "execution of the appropriate documentation and delivery of the original CD's."

That same day, plaintiff suffered a massive heart attack and underwent open-heart surgery. Later that afternoon, a law partner of Joyce telephoned Glick and advised him of the heart attack. Joyce's colleague emphasized that the signatures of plaintiff and his wife on Joyce's May 24 letter were sufficient documentation to permit transfer of the CD funds. Glick responded that the refusal to transfer funds had nothing to do with signatures or documentation. Glick stated that First Security would not transfer the CD funds until plaintiff assigned to First Security certain second mortgages held in connection with the realty contract. Glick also threatened to "tie up the funds for five years" if plaintiff did not assign his interest in the second mortgages.

On May 26, 1983, Joyce spoke with a law partner of Glick. Glick's colleague agreed on behalf of First Security to transfer the CD funds, and the transfer was finally arranged.

After First Security transferred the CD funds as requested, a new problem developed with regard to three other First Security accounts, which accounts had no connection with the realty contract. First Security (through Fahey) refused to permit the transfer of any funds from a checking account owned by him and his wife, a checking account owned by Terrace, and an insured money market fund owned by a trust in which plaintiff had an interest. In particular, First Security refused to honor eight drafts drawn upon the three above-mentioned accounts, despite earlier assurances to the contrary and despite the sufficiency of the funds to cover the drafts.

In August 1983, while plaintiff was home recuperating from open-heart surgery, Fahey telephoned plaintiff several times regarding the dispute between First Security and plaintiff. Plaintiff told Fahey he did not wish to speak to him, but Fahey nevertheless persisted in calling plaintiff during plaintiff's recuperation. Subsequently, Joyce contacted the attorneys for First Security and directed that all future communications from First Security or its agents to plaintiff be made through Joyce's law firm.

On August 16, 1983, First Security filed a lawsuit against plaintiff and Elliot relating to the realty contract. Fahey then advised plaintiff that, based upon the lawsuit, First Security was setting off the three accounts mentioned above against the amounts it was claiming due. First Security refused to alter its position in this regard despite subsequent information that its refusal to release the accounts was placing additional stress upon plaintiff.

In Illinois the tort of intentional infliction of emotional distress was first recognized in Knierim v. Izzo (1961), 22 Ill.2d 73, 174 N.E.2d 157, in which a widow was permitted to maintain such an action against the murderer of her husband. It was not until 1976, however, that this court (relying on Restatement (Second) of Torts § 46 (1965)) outlined the requirements for the tort.

First, the conduct involved must be truly extreme and outrageous. Second, the actor must either intend that his conduct inflict severe emotional distress, or know that there is at least a high probability that his conduct will cause severe emotional distress. Third, the conduct must in fact cause severe emotional distress. (Public Finance Corp. v. Davis (1976), 66 Ill.2d 85, 90, 4 Ill.Dec. 652, 360 N.E.2d 765.) "The law intervenes only where the distress inflicted is so severe that no reasonable man could be expected to endure it. The intensity and duration of the distress are factors to be considered in determining its severity." Restatement (Second) of Torts § 46, comment j, at 77-78 (1965).

It is thus clear that the tort does not extend to "mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities."...