Trull v. Taylor (In re Estate of Feinberg)

• Citation: 379 Ill.Dec. 233,2014 IL App (1st) 112219,6 N.E.3d 310
• Decision Date: 14 March 2014
• Docket Number: 1–12–2715.,1–12–2476,Nos. 1–11–2219,1–11–2258,s. 1–11–2219
• Parties: In re ESTATE OF Erla FEINBERG, Deceased (Michele Trull, Plaintiff–Appellant and Cross–Appellee, v. Leila Taylor, Marshall Taylor and Michael Feinberg, Defendants–Appellees and Cross–Appellants). Fifth Third Bank, as Trustee under the Trusts of Erla Feinberg and Max Feinberg, Petitioner–Appellant, v. Leila R. Taylor, Individually and as Coexecutor of the Will of Erla Feinberg, Deceased; Michael B. Feinberg, Individually and as Coexecutor of the Will of Erla Feinberg, Deceased; and Marshall Taylor, Respondents–Appellees.
• Court: United States Appellate Court of Illinois

2014 IL App (1st) 112219
6 N.E.3d 310
379 Ill.Dec. 233

In re ESTATE OF Erla FEINBERG, Deceased (Michele Trull, Plaintiff–Appellant and Cross–Appellee, v. Leila Taylor, Marshall Taylor and Michael Feinberg, Defendants–Appellees and Cross–Appellants).
Fifth Third Bank, as Trustee under the Trusts of Erla Feinberg and Max Feinberg, Petitioner–Appellant,
v.
Leila R. Taylor, Individually and as Coexecutor of the Will of Erla Feinberg, Deceased; Michael B. Feinberg, Individually and as Coexecutor of the Will of Erla Feinberg, Deceased; and Marshall Taylor, Respondents–Appellees.

Nos. 1–11–2219, 1–11–2258, 1–12–2476, 1–12–2715.

Appellate Court of Illinois,
First District, First Division.

Feb. 3, 2014.
Rehearing Denied March 14, 2014.

[6 N.E.3d 314]

Ice Miller, LLP, Chicago (John D. Burke, Douglas A. Henning, Richard C. Johnson, Erin M. Eckhoff, Nicholas A. Casto, of counsel), for appellant Fifth Third Bank.

Ethan E. Trull, Highland Park, Christopher Langone, Ithaca, New York, for appellant Michele Trull.

Thompson Coburn, LLP, Chicago (Robert H. Lang, of counsel), for appellees Leila Taylor and Marshall Taylor.

Dahl & Bonadies, LLC, Chicago (James E. Dahl, William D. Nagel, of counsel), for appellee Michael B. Feinberg.

OPINION
Justice CUNNINGHAM delivered the judgment of the court, with opinion.

¶ 1 Following a bench trial in the circuit court of Cook County, the trial court entered a May 16, 2011 judgment, pursuant to a citation to recover assets filed by petitioner Fifth Third Bank as trustee of the Erla Feinberg Trust, against respondent Michael Feinberg in the amount of $788,957 and against respondents Leila and Marshall Taylor in the amount of $1,911,107. The May 16, 2011 order also found that Fifth Third Bank's recovery of assets to the Erla Feinberg Trust was an adequate remedy to the relief sought by plaintiff Michele Trull in an action alleging misappropriation of funds against defendants Michael Feinberg, Leila Taylor and Marshall Taylor. On August 10, 2012, the trial court entered an order approving Fifth Third Bank's proposed plan of distribution of the assets in the Max Feinberg

[6 N.E.3d 315]

Trust and the Erla Feinberg Trust. On appeal, Leila and Marshall Taylor challenge the trial court's May 16, 2011 order, which ordered them to return $1,911,107 to the Erla Feinberg Trust, and they challenge the trial court's August 10, 2012 order granting Fifth Third Bank's proposed plan of distribution of the assets. Michele Trull also appeals the May 16, 2011 and August 10, 2012 orders. On cross-appeal, Fifth Third Bank argues that the trial court erred in denying its request for prejudgment interest on the recovered assets. Michael Feinberg does not appeal the trial court's May 16, 2011 ruling, which ordered him to return $788,957 to the Erla Feinberg Trust. For the following reasons, we affirm in part and reverse in part the judgment of the circuit court of Cook County.

¶ 2 BACKGROUND

¶ 3 This case involves an extremely complex factual and procedural background, and thus, our recitation of the facts is limited to those that are pertinent to our resolution of this appeal. On December 4, 1986, Max Feinberg (Max) died. Max was survived by his wife, Erla Feinberg (Erla), and their two adult children, Michael Feinberg (Michael) and Leila Taylor (Leila). Michael is married to Marcy Feinberg (Marcy).¹ Michael has two adult children from his prior marriage: Michele Trull (Michele) and Aron Feinberg (Aron). Leila is married to Marshall Taylor (Marshall) (collectively, the Taylors). The Taylors, who have lived in California since 1969, have three adult children: Jon Taylor (Jon), Aimee Taylor Severe (Aimee) and Lisa Taylor Schroeder (Lisa).

¶ 4 At the time of Max's death in 1986, Max and Erla each had a trust (collectively, the Feinberg Trusts), and their estate plans were mirror images of one another. The Max Feinberg Trust (the Max Trust) provided that upon Max's death and after payment of expenses, the trustee shall allocate the trust corpus into two separate trusts for tax reasons—“Trust A” and “Trust B.” Both Trust A and Trust B were designed to provide for the “support, medical care and welfare” of Erla during her lifetime. The Max Trust provided that upon the death of Erla, the assets of Trust A and Trust B would be distributed amongst their children and grandchildren. The Max Trust also granted Erla a limited lifetime power of appointment to distribute the assets of Trust B to her descendants. Both the Max Trust and the Erla Feinberg Trust (the Erla Trust) contained what the parties refer to as the “Jewish clause,” which stated that any descendant, other than Michael and Leila, who married outside of the Jewish faith would be deemed deceased for the purposes of the trust instrument as of the date of the marriage. In September 1984, Max and Erla executed a first amendment to the Feinberg Trusts, which amended the Jewish clause to permit a non-Jewish spouse to convert to Judaism within one year of the marriage.

¶ 5 On June 29, 1994, Erla signed a durable power of attorney naming her children, Michael and Leila, as her agents.

¶ 6 On July 23, 1997, Erla exercised her lifetime power of appointment (the 1997 appointment) over the Max Trust, directing that, upon her death, Michael and Leila and any of her grandchildren who were not deemed deceased under the Max Trust, shall receive $250,000 from the Max Trust. The 1997 appointment specified that “[i]f any of my grandchildren are deemed deceased then the [$250,000 share] shall be paid equally to the parents of that grandchild.” On that same day, July 23,

[6 N.E.3d 316]

1997, Erla executed a second amendment to the Erla Trust (the second amendment), which deleted the Jewish clause from her own trust and directed that, immediately upon her death, a sum of $100,000 be distributed to each of her five grandchildren-Michele, Aron, Jon, Aimee and Lisa.

¶ 7 On October 1, 2003, Erla died. By the time of Erla's death, all five grandchildren had been married for more than one year. Only Marshall and Leila's son, Jon, met the condition of the Jewish clause and was entitled to receive $250,000 from the Max Trust, as directed by Erla's 1997 appointment.

¶ 8 In 2004, Michele filed a lawsuit against Michael and the Taylors in the law division of the circuit court of Cook County, alleging that they misappropriated millions of dollars in assets from Max's and Erla's estates (case No. 04 L 7195).² In the third amended complaint, Michele alleged counts for intentional interference with testamentary expectancy (counts I and II), conspiracy by the Taylors and Michael to intentionally interfere with testamentary expectancy (count III), and requested that a constructive trust be imposed against Michael and the Taylors for assets and funds which they had misappropriated from Erla and from the estates of Max and Erla (count IV). Michael and the Taylors sought to dismiss the lawsuit on the basis that Michele had no interest in Max's estate because she was deemed deceased under the provision of the Jewish clause in the Max Trust. The trial court held that the Jewish clause was invalid on public policy grounds. On June 30, 2008, in an interlocutory appeal, this court affirmed the trial court and held that the Jewish clause in the Max Trust was contrary to public policy and, thus, unenforceable. In re Estate of Feinberg, 383 Ill.App.3d 992, 322 Ill.Dec. 534, 891 N.E.2d 549 (2008). On September 24, 2009, our supreme court reversed the rulings of the appellate and trial courts, holding that Max's estate plan, when assessed in conjunction with Erla's directions for distribution under the 1997 appointment, did not violate public policy. In re Estate of Feinberg, 235 Ill.2d 256, 335 Ill.Dec. 863, 919 N.E.2d 888 (2009). Specifically, the supreme court found the Jewish clause valid.

¶ 9 On May 22, 2007, while the interlocutory appeal was pending, Fifth Third Bank (the Bank), as the corporate trustee of the Feinberg Trusts, filed a petition for citation to recover assets (the recovery citation) against Michael and Leila, as coexecutors of Erla's estate, and against Marshall. The recovery citation sought to recover assets and property which belonged to the corpus of the Feinberg Trusts and which were allegedly misappropriated by Michael and the Taylors: funds withdrawn from Erla's various convenience bank accounts (count I); funds to maintain and improve Erla's condominiums (count II); funds taken from a Vanguard investment account (count III); and cash belonging to Erla in a safe deposit box (count IV). On August 28, 2009, the trial court granted Michele's motion for joinder to the Bank's recovery citation. After joining as a party to the recovery citation, Michele sought leave of court to amend the recovery citation to include the recovery of Erla's Florida condominium, funds taken from Erla's “gifting program,” and a claim for punitive damages. The trial court denied Michele leave to amend the recovery citation to include a claim for punitive damages, but granted her leave to amend the recovery

[6 N.E.3d 317]

citation to include Erla's Florida condominium and funds taken from Erla's “gifting program.”

¶ 10 On remand from the supreme court's 2009 ruling, on February 8, 2010, the Taylors' son, Jon, as a beneficiary of the Feinberg Trusts, filed a motion for summary judgment on the recovery citation. He argued that the 1997 appointment and the second amendment were invalid because they were drafted by his nonattorney father, Marshall. On April 14, 2010, the trial court denied Jon's motion for summary judgment on the recovery citation.

¶ 11 Prior to trial on the recovery citation and Michele's tort action against Michael and the Taylors, the trial court determined that a fiduciary relationship existed as a matter of law between Michael, Leila and Erla as of June 29, 1994, when Erla signed a durable power of attorney naming both Michael and Leila as her agents. From May 24, 2010 to June 3, 2010, a bench trial...