Rush Univ. Med. Ctr. v. Sessions

• Decision Date: 05 August 2011
• Docket Number: No. 1–10–1136.,1–10–1136.
• Citation: 956 N.E.2d 490,2011 IL App (1st) 101136,353 Ill.Dec. 628
• Parties: RUSH UNIVERSITY MEDICAL CENTER, Plaintiff–Appellee,v.Roger SESSIONS and James L. Arnold, as Trustees of the Sessions Family Trust, u/a dated February 1, 1994; and Roger Sessions, as Trustee of the Robert W. Sessions Revocable Living Trust, u/a dated April 1, 2005, Defendants–Appellants.
• Court: United States Appellate Court of Illinois

2011 IL App (1st) 101,136

956 N.E.2d 490

353 Ill.Dec. 628

RUSH UNIVERSITY MEDICAL CENTER, Plaintiff–Appellee,

v.Roger SESSIONS and James L. Arnold, as Trustees of the Sessions Family Trust, u/a dated February 1, 1994; and Roger Sessions, as Trustee of the Robert W. Sessions Revocable Living Trust, u/a dated April 1, 2005, Defendants–Appellants.

No. 1–10–1136.

Appellate Court of Illinois, First District, Sixth Division.

Aug. 5, 2011.

Edward T. Joyce, Jennifer L. Doherty, Edward T. Joyce & Associates, P.C., Chicago, for Appellant.James R. Hellige, John T. Brooks, Samantha E. Weissbluth, Foley & Lardner, LLP, Chicago, for Appellee.Lisa Madigan, Attorney General, State of Illinois, Evan Siegel, Assistant Attorney General, for Intervening Appellee.

OPINION

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

¶ 1 Defendants Roger Sessions and James L. Arnold (trustees) appeal orders of summary judgment entered against them and in favor of plaintiff Rush University Medical Center (Rush). Defendants also appeal the court's refusal to order the recusal of Judge Budzinski. We affirm in part, dismiss in part and reverse and remand in part.

¶ 2 In 1994, Robert W. Sessions (decedent) created the Sessions Family Trust, maintained in an offshore account in the Cook Islands. In 1995, decedent made an irrevocable pledge to Rush by letter for $1.5 million to build a new president's house. In 1996, decedent sent Rush another letter, confirming the pledge:

“I agree to provide in my will, living trust and other estate planning document* * * that (1) this pledge, if unfulfilled at the time of my death, shall be paid in cash upon my death as a debt and (2) that if this pledge is unenforceable for any reason, a cash distribution shall be made under such will, living trust or other document to Rush University in an amount equal to the unpaid portion of such pledge at the time of my death.”

Decedent executed successive codicils to his will, providing that any amount remaining unpaid on his $1.5 million pledge as of his death would be given to Rush on his death. In reliance on decedent's pledge, Rush built a president's house on the Rush University campus in 1996 at a cost in excess of $1.5 million.

¶ 3 In February 2005, decedent was diagnosed with cancer. He then executed the Robert W. Sessions Revocable Living Trust. On March 10, 2005, decedent executed a new will, revoking all previous wills and codicils. Decedent died on April 25, 2005. Before his death, decedent had made no payments toward the $1.5 million pledge to Rush.

¶ 4 Rush filed a claim against the Sessions estate (estate) to enforce the $1.5 million pledge. The estate contested Rush's claim to the $1.5 million and litigation ensued. Rush moved for summary judgment against the estate on it's claim, which was granted on August 31, 2005. The estate appealed, and we affirmed the circuit court in a summary order ( In re Estate of Sessions, No. 1–07–0202, 377 Ill.App.3d 1146, 352 Ill.Dec. 148, 953 N.E.2d 84 (2007) (unpublished order under Supreme Court Rule 23)).

¶ 5 The Sessions estate was found to contain less than $100,000. On April 4, 2006, Rush filed a supplementary claim against the Sessions Family Trust and the Robert W. Sessions Revocable Living Trust (trusts). Count I alleged that decedent transferred assets to the trusts with the actual intent to hinder, delay and defraud Rush in the collection of its claim against the estate. Count I was based on section 5(a)(1) of the Illinois Uniform Fraudulent Transfer Act (Fraudulent Transfer Act) (740 ILCS 160/1 et seq. (West 2006)). Count II alleged that decedent's pledge to Rush was a valid, binding and enforceable contract that bound decedent as well as his “assigns” and sought to reach the assets of the trusts.

¶ 6 Count III alleged that decedent's transfer of assets to his self-settled trust was per se fraudulent under the holdings in Crane v. Illinois Merchants Trust Co., 238 Ill.App. 257 (1925), and Barash v. McReady (In re Morris), 151 B.R. 900, 906–07 (Bankr.C.D.Ill.1993), and that Rush should be entitled to reach the assets of the trusts to satisfy the $1.5 million pledge.

¶ 7 The trusts filed motions for summary judgment on counts II and III of Rush's complaint. Rush filed a cross-motion for partial summary judgment on count II. The supplemental proceeding was stayed pending the outcome of the estate's appeal. Rush later added a fourth count to its amended complaint, alleging constructive fraud under section 5(a)(2) of the Fraudulent Transfer Act. Counts I and IV were not part of the parties' motions for summary judgment.

¶ 8 As a result of the estate's appeal decided in favor of Rush, Rush became a creditor of the estate. After mediation failed, the court set a hearing date for the trusts' motion for summary judgment on counts II and III and Rush's cross-motion for partial summary judgment on count II.

¶ 9 On October 21, 2008, the trial court, with Judge Budzinski presiding, heard oral argument on the parties' cross-motions for summary judgment. The court granted Rush's cross-motion for summary judgment on count II, finding that the pledge bound decedent's “assigns.” The court explained that “[t]he language is clear * * * that in [decedent's] letter to the hospital he indicated that [the] pledge was binding on his heirs, successors and assigns. And even the trust provides the payment of the pledge if it hasn't been satisfied.” The court denied the trusts' motion for summary judgment on counts II and III.

¶ 10 On November 25, 2008, the trusts filed a petition under section 2–1001(a)(3) of the Code of Civil Procedure (735 ILCS 5/2–1001(a)(3) (West 2006)) to substitute judge for cause. The trusts argued that allowing Judge Budzinski to continue hearing the matter would prejudice defendants because he appeared to have reached a conclusion on counts I and IV of Rush's complaint without having heard evidence on those issues or allowing defendants to complete discovery. The trusts pointed to Judge Budzinski's finding at the October 21 proceeding that decedent had intended to defraud Rush, though counts II and III do not contain fraud elements. The trusts also argued Judge Budzinski's findings were contrary to the evidence and demonstrated bias in favor of Rush.

¶ 11 The petition to substitute Judge Budzinski for cause was transferred to Judge James Kennedy for a hearing. On May 5, 2009, Judge Kennedy denied the petition, finding that “[o]pinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceeding or prior proceeding do not constitute a basis for a partiality motion unless they display a deep-seated favoritism or antagonism that would make fair judgement impossible. * * * I don't think Judge Budzinski displayed a deep-seated favoritism or antagonism that would make fair judgment impossible.”

¶ 12 On May 15, 2009, the trusts asked Judge Kennedy for a finding under Illinois Supreme Court Rule 304(a) (Ill.S.Ct. R. 304(a) (eff.Feb.26, 2010)) or, in the alternative, for certification under Supreme Court Rule 308 (Ill. S.Ct. R. 308 (eff. Feb. 26, 2010)). The trusts contended that: (1) if this court overturned the circuit court's denial of the petition, all orders entered by Judge Budzinski after May 5, 2009, would be null and void; and (2) there was no just reason for delaying appeal. Judge Kennedy denied the trusts' motion and remanded the matter to Judge Budzinski.

¶ 13 Rush then filed a motion for summary judgment on count III of its complaint. On March 24, 2010, Judge Budzinski granted the motion, finding the trusts void as to Rush's $1.5 million judgment on its claim against decedent's estate, plus statutory interest, and the trusts liable for payment to Rush on the pledge.

¶ 14 On appeal, defendants contend that: (1) the court erred in denying the trusts' motion for summary judgment on counts II and III; (2) the court erred in granting Rush's motion for summary judgment on count III; (3) Judge Kennedy erred in not recusing Judge Budzinski because Judge Budzinski prejudged the counts involving decedent's fraudulent intent where such counts were not before the court; and (4) the orders entered by Judge Budzinski since May 5, 2009, should be determined null and void.

¶ 15 We first address defendants' claim that the court erred in refusing to grant their motion to substitute Judge Budzinski for cause.

¶ 16 A trial judge is presumed to be impartial, and the burden is on the party alleging partiality to overcome this presumption. Eychaner v. Gross, 202 Ill.2d 228, 280, 269 Ill.Dec. 80, 779 N.E.2d 1115 (2002). The party making the charge of prejudice must present evidence of prejudicial trial conduct and evidence of the judge's personal bias. Eychaner, 202 Ill.2d at 280, 269 Ill.Dec. 80, 779 N.E.2d 1115.

¶ 17 “Where bias or prejudice is invoked as the basis for seeking substitution, it must normally stem from an extrajudicial source, i.e., from a source other than from what the judge learned from her participation in the case before her.” In re Estate of Wilson, 238 Ill.2d 519, 554, 345 Ill.Dec. 583, 939 N.E.2d 426 (2010).

[4] ¶ 18 “ ‘[O]pinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings * * * do not constitute a basis for a bias or partiality motion unless they display a deep-seated favoritism or antagonism that would make fair judgment impossible.’ ” (Emphasis added.) Eychaner, 202 Ill.2d at 281, 269 Ill.Dec. 80, 779 N.E.2d 1115 (quoting Liteky v. United States, 510 U.S. 540, 555, 114 S.Ct. 1147, 127 L.Ed.2d 474 (1994)).

¶ 19 “ ‘A reviewing court will not reverse a determination on allegations of judicial prejudice unless the finding is against the manifest weight of the evidence.’ ” Barth v. State Farm Fire & Casualty Co., 371 Ill.App.3d 498, 506, 311 Ill.Dec. 123, 867 N.E.2d 1109 (2007) (quoting Jacobs v. Union Pacific R.R. Co., 291 Ill.App.3d 239, 244, 225...