PRIGNANO v. PRIGNANO

• Decision Date: 09 August 2010
• Docket Number: No. 2-09-0439.,2-09-0439.
• Citation: 934 N.E.2d 89,343 Ill.Dec. 89
• Parties: Nancy PRIGNANO, Individually and as Mother and Next Friend of Marissa L. Prignano, a Minor, and as Trustee of the Trust for the Benefit of Marissa L. Prignano and Danielle L. Prignano, Plaintiff-Appellee, v. Louis H. PRIGNANO, Individually and as Independent Executor of the Estate of George L. Prignano, Deceased, and as Trustee of the Prignano Children's Trusts, Defendant-Appellant (The Estate of Danielle L. Prignano, Deceased, by Nancy Prignano, Administrator, Plaintiff/Intervenor-Appellee).
• Court: United States Appellate Court of Illinois

934 N.E.2d 89

343 Ill.Dec. 89

Nancy PRIGNANO, Individually and as Mother and Next Friend of Marissa L. Prignano, a Minor, and as Trustee of the Trust for the Benefit of Marissa L. Prignano and Danielle L. Prignano, Plaintiff-Appellee,

v.Louis H. PRIGNANO, Individually and as Independent Executor of the Estate of George L. Prignano, Deceased, and as Trustee of the Prignano Children's Trusts, Defendant-Appellant (The Estate of Danielle L. Prignano, Deceased, by Nancy Prignano, Administrator, Plaintiff/Intervenor-Appellee).

No. 2-09-0439.

Appellate Court of Illinois,Second District.

Aug. 9, 2010.

Rehearing Denied Aug. 9, 2010.

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Maxine R. Grief-Bless, Lucas & Apostolopoulos, Ltd., Addison, for Louis H. Prignano.

John B. Kincaid, Mirabella, Kincaid, Frederick & Mirabella, P.C., Wheaton, Lee Phillip Forman, Lee Phillip Forman, Ltd., Oak Brook, for Nancy Prignano.

Justice SCHOSTOK delivered the opinion of the court:

This case concerns the disposition of George Prignano's business and personal interests after his death in July 2000. George owned several businesses with his brother, Louis Prignano, the defendant. George's second wife, Nancy, alleges that George and Louis agreed that, upon the death of either of them, the survivor would buy out the other's share of the businesses from his heirs, using the proceeds from life insurance policies purchased for that purpose. Nancy also alleges that she and Louis had an oral agreement to the same effect, i.e., that Louis would purchase George's share of the companies from her in exchange for the insurance proceeds. However, she alleges that, upon George's death, Louis (who was the executor of George's estate) kept both George's share of the businesses and the insurance proceeds, without telling her. She brought suit against Louis on behalf of herself and her children, asserting the same claim under a variety of legal theories, including fraud, breach of fiduciary duty, breach of contract, and unjust enrichment. After a bench trial, the circuit court of Du Page County found in the plaintiffs' favor on the breach of fiduciary duty, breach of contract, and unjust enrichment claims, and entered judgment in their favor in the amount of $615,324.50 ($450,000 as a unitary recovery on all of those claims, and $165,324.50 in prejudgment interest on that recovery). Louis appealed, arguing that Nancy had not proved her claims for a variety of reasons. We affirm in part and vacate in part.

FACTUAL AND PROCEDURAL BACKGROUND

The brothers were business partners over a period of years. They shared equally the ownership of two corporations, Sunrise Homes and Rainbow Installations, and were equal partners in the 710 Building Partnership. The brothers were customers of Charles Kenny, a self-described “insurance/financial person.” Kenny testified that, in 1985, George and he discussed a buy-sell or “business continuation agreement,” by which he meant an agreement setting the terms on which the business would continue in the event of the death or disability of a partner or shareholder. The agreement could be funded with insurance proceeds, among other things. He gave George a book (provided by an insurance company) containing a blank sample business continuation agreement. In March 1985, the brothers took out two life insurance policies, one on each brother's life. Each policy was for $60,000 and named Rainbow Installations as the beneficiary. It was Kenny's understanding that the proceeds would be used to fund a business continuation agreement. In November 1990, the brothers took out two more policies through Kenny, each in the amount of $50,000. These policies named Sunrise Homes as the beneficiary. Kenny believed that Sunrise Homes paid the premiums on these policies. In 1999, George had a conversation with Kenny in which George said that the brothers' accountant, Ralph Antignoli, had advised them that, in light of the increased value of the companies, they would need substantially more insurance proceeds to fund a buy-sell agreement for the companies. At George's request, Kenny helped the brothers purchase two larger policies from North American in the amount of $500,000 each. Again, both policies named Sunrise Homes as the beneficiary. Kenny was present when both brothers signed the applications, and he witnessed their signatures. Later, 710 Building Partnership was added as a beneficiary of these policies.

Kathleen Steinkuller, a realtor who was close to George for several years, testified that George had a close relationship with his children from his second marriage and wanted to make sure that they were provided for in the event of his death. George told her that he had provided for his children through insurance. George also told her, within a year before his death, that he had a buy-sell agreement with Louis. According to Steinkuller, George said that, if you have a company with partners, you have to protect your partner if something happens to you. As a result, Steinkuller testified, George and Louis “always were talking to an insurance man it seemed.” Vanessa Paladino, the secretary for the brothers' businesses, testified that the brothers discussed the issue of a buy-sell agreement more than once in her presence, and she believed that on one occasion Kenny was present. Antignoli, the accountant for the brothers' businesses, testified that “over the years” he had commented to both brothers that it would probably be a good idea to get a buy-sell agreement and fund it with some insurance.

George died on July 12, 2000. Antignoli testified that, as of shortly before George's death, the net value of Sunrise Homes was approximately $1.2 million.

Louis was appointed the executor of George's estate. George's will benefitted Louis, Nancy, the two children from George's first marriage, and Danielle and Marissa, the two children from his marriage with Nancy. It contained specific bequests of money and property to the children from his first marriage. It bequeathed to Nancy “all my interest” in the home he had shared with her at 445 North Elizabeth in Lombard, along with “any remaining cash or IRA accounts.” It bequeathed the “assets of Sunrise Homes Inc. and any life insurance held by any co[mpany] we may own” to Louis. The will directed that the residue of the estate be distributed 50% to Nancy, 25% to a trust for the children from his first marriage (of which Louis was the trustee), and 25% to a trust for Danielle and Marissa (of which Nancy and Louis were cotrustees). Louis filed an inventory of the estate on August 17, 2000, listing among the assets: a half interest in Sunrise Homes, valued at $200,000; a half interest “cash contribution of Rainbow Insulation [ sic ],” valued at $7,500; and a half interest in 710 Building Partnership, valued at $200,000.

Nancy testified that, in the weeks following George's death, she was upset and confused, and she looked to Louis to manage George's estate and make decisions because he was the executor. She testified that a week or two after George's death she had a telephone conversation with Louis in which Louis stated that he and George had not wanted any wives involved in the businesses, and Nancy stated that she did not want to be involved in the businesses. Nancy testified that Louis told her that that was what the insurance proceeds were for, to buy out her interest in the businesses. Nancy testified that she and Louis agreed during this conversation that she would give Louis the share of the businesses that had belonged to George in return for the proceeds from the insurance.

North American initially rejected the claim for the $500,000 life insurance policy in George's name, apparently on the basis that George had not disclosed that he was a smoker. On July 24, 2000, an insurance claims agent met with Nancy and Louis to interview them. A few days earlier, Kenny had completed a written statement that said that, at the time of the 1999 policy application, George had indicated that he was not a smoker but smoked cigars, and that George had approached Kenny to purchase the policy “on advice from accountant to fund buy and sell agreement.” Nancy told the agent that George smoked only occasionally. During the interview, Louis stated that “at this point” he and Nancy were both partners in the firm that was the beneficiary of the policy, i.e., Sunrise Homes. At trial, Nancy testified that her oral agreement with Louis was why she attended the meeting with the insurance claims agent and that she would not have done so if she had not believed that she had an interest in the insurance proceeds.

Louis and Kenny testified that, about August 21, 2000, Louis came by while Kenny was meeting with Nancy in her home. Nancy's brother was also present. Louis brought with him a blank copy of a sample buy-sell agreement from the book that Kenny had given the brothers years ago. Louis testified that he wanted to reach an agreement with Nancy about the ownership of the companies. He showed her the blank buy-sell agreement and asked her, “if we can do this, do you want to do this?” Nancy read through the agreement and said okay.

Louis testified that he returned to his office and, at some point, directed Paladino to fill in the blank buy-sell agreement he had shown Nancy. He instructed Paladino regarding how to fill in the blanks and gave her the amounts of the insurance proceeds to put in. The document stated that it was an agreement between George and Louis as the “stockholders” of Sunrise Homes, 710 Building Partnership, and Rainbow Installations. The agreement provided that upon the death of either of them, the survivor would have the right to purchase the decedent's half of the companies for $600,000, and that the agreement would be funded by three life insurance policies: two John Hancock policies in the...