Young America's Found. v. Doris A. Pistole Revocable Living Trust

• Decision Date: 20 August 2013
• Docket Number: Docket No. 2–12–1122.
• Citation: 375 Ill.Dec. 802,2013 IL App (2d) 121122,998 N.E.2d 94
• Parties: YOUNG AMERICA'S FOUNDATION, Plaintiff–Appellant, v. The DORIS A. PISTOLE REVOCABLE LIVING TRUST, David Cappello and Mark Cappello as Successor Trustees of the Doris A. Pistole Revocable Living Trust, and Lisa Madigan, Attorney General for the State of Illinois, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

2013 IL App (2d) 121122

998 N.E.2d 94

375 Ill.Dec. 802

YOUNG AMERICA'S FOUNDATION, Plaintiff–Appellant,

v.The DORIS A. PISTOLE REVOCABLE LIVING TRUST, David Cappello and Mark Cappello as Successor Trustees of the Doris A. Pistole Revocable Living Trust, and Lisa Madigan, Attorney General for the State of Illinois, Defendants–Appellees.

Docket No. 2–12–1122.

Appellate Court of Illinois, Second District.

Aug. 20, 2013.

Whitman H. Brisky, Amy J. Parrish, and Noel W. Sterett, all of Mauck & Baker, LLC, of Chicago, for appellant.

Jeffrey J. Kabbe and Natalia Kabbe, both of Kabbe Law Group, LLC, of Naperville, for appellees.

OPINION

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

¶ 1 On February 23, 2013, the circuit court of Du Page County dismissed the first three counts of the complaint filed by the plaintiff, the Young America's Foundation, against the defendants, the Doris A. Pistole Revocable Living Trust, the trustees of that trust (David and Mark Cappello), and the Illinois Attorney General. The dismissal was based on the trial court's finding that these three counts were untimely filed. The plaintiff appealed. We reverse and remand.

¶ 2 I. FACTUAL BACKGROUND

¶ 3 A. The Plaintiff

¶ 4 The plaintiff is a Tennessee not-for-profit corporation. Its main offices are in Virginia and California. At the time in question, it did not maintain an office in Illinois. According to the complaint, “[i]n furtherance of Ronald Reagan's legacy,” the plaintiff is “committed to ensuring that increasing numbers of young Americans understand and are inspired by the ideas of individual freedom, a strong national defense, free enterprise, and traditional values.” To advance this purpose, the plaintiff works with students and student organizations to help them promote conservative ideas, by providing them with “activity ideas” and helping them “implement these ideas on their respective campuses.”

¶ 5 Although the plaintiff provided much of this encouragement and educational material from outside Illinois, the plaintiff also engaged in the following activities within Illinois during the relevant period. In May 2003, two of the plaintiff's staff members met with Doris Pistole and her husband in Chicago regarding a possible bequest. (At this point, the record does not contain any evidence regarding whether the plaintiff's staff has met with other potential donors within Illinois.) Between March 2008 and June 2011, the plaintiff sponsored eight lectures bringing conservative speakers to Illinois colleges and universities. When the plaintiff sponsored such lectures, it typically paid the speakers' travel and lodging expenses and sometimes part of the honoraria. The plaintiff was identified as an event sponsor and its logo appeared in promotional materials and displays on the podium or stage. Members of the plaintiff's staff usually did not attend these lectures, although on one occasion a staff member attended a lecture at Loyola University. In April 2008, the plaintiff held a “Rawhide Retreat” in Springfield, at which 75 attendees from a number of states gathered to hear conservative speakers and honor donors. Eight members of the plaintiff's staff were present at this retreat. In March 2009, the plaintiff and other groups sponsored a “Midwest Conference” in Chicago “to bring together student leaders to promote conservative ideas.” Five staff members were present at this conference. Finally, the plaintiff regularly directs letters, phone calls, and emails aimed at soliciting donations and promoting its purpose into Illinois from its offices outside the state.

¶ 6 According to the complaint, “at all relevant times” the plaintiff was registered with the Illinois Attorney General's Charitable Trust Bureau to solicit donations in Illinois. However, the plaintiff did not obtain a separate certificate of authority to conduct affairs in Illinois from the Secretary of State's office until September 9, 2011. According to the plaintiff, after it received the certificate of authority it began chartering student organizations in Illinois, and it now has three local chapters.

¶ 7 B. The Trust

¶ 8 Doris and her husband had no children. David and Mark Cappello were two of Doris's nephews. In 1996, Doris and her husband executed a trust agreement that created the Doris A. Pistole Revocable Living Trust. The trust was amended once in 2002. At some point during the next few years, Doris's husband died. There were no further amendments to the trust until 2009.

¶ 9 The complaint states that Doris first advised the plaintiff in 2003 that she planned to give the plaintiff a substantial donation upon her death. Doris repeated this intention to members of the plaintiff's staff over the next several years, as late as December 2009, a few months before she died. According to the plaintiff, in 2008 Doris stated that her bequest to the plaintiff would be $2 million.

¶ 10 In January 2009, Doris was diagnosed with lung cancer. Her condition worsened, and by December 2009 she had contracted pneumonia and was bedridden. Doris died on February 22, 2010.

¶ 11 During 2009, Doris contacted an attorney, Alice Wood, to assist her in preparing amendments to the trust. Four successive amendments were prepared during 2009. The terms of the original trust and the first four amendments are not in the record.

¶ 12 The fifth amendment was executed by Doris on January 6, 2010. Under the fifth amendment, various persons, including David and Mark Cappello, received specific bequests of up to $250,000. The remainder was to be split between the plaintiff and another conservative organization, the Heritage Foundation, with the result that each organization would receive approximately $2 million. David and Mark Cappello were named as successor trustees.

¶ 13 Almost immediately after Doris signed the fifth amendment, Wood prepared a sixth amendment. According to the plaintiff, the sixth amendment was the result of improper actions by David and Mark Cappello. The defendants dispute this and assert that the sixth amendment came about because the repeal of all federal and state estate taxes in January 2010 made certain charitable dispositions less attractive. Regardless of the reason, the sixth amendment provided that David and Mark Cappello were to receive almost $1 million each and that other persons also would receive specific bequests. These bequests amounted to 100% of the estate. Charitable organizations, including the plaintiff, were to receive only that portion of the estate which would otherwise be taxable. Doris executed the sixth amendment on January 18, 2010.

¶ 14 The complaint alleges that, by February 12, 2010, Wood “became aware” that the sixth amendment did not reflect Doris's true wishes for her estate, and a seventh amendment was prepared that would have capped the total amount of distributions to individuals at $2 million, with the remainder being divided between the plaintiff and the Heritage Foundation. It appears that Doris did not sign the seventh amendment before her death on February 22, 2010. Shortly thereafter, the plaintiff was advised that, because none of Doris's estate was taxable under the laws then in effect, the plaintiff would receive no distributions from the trust.

¶ 15 II. PROCEDURAL HISTORY

¶ 16 On August 3, 2010, the plaintiff filed suit in case No. 10–CH–4298 (the First Action) against the trust, the trustees, and the Attorney General.¹ The complaint alleged a breach of fiduciary duty and sought to enforce a charitable pledge. After moving unsuccessfully to dismiss on grounds not relevant here, the defendants filed their answer, affirmative defenses, and counterclaim on January 5, 2011. One of the affirmative defenses raised by the defendants was that the plaintiff was barred from bringing suit by section 113.70 of the General Not for Profit Corporation Act of 1986 (Not for Profit Act or Act) ( 805 ILCS 105/113.70 (West 2010)). That provision, which is titled “Conducting affairs without authority,” states:

“No foreign corporation conducting affairs in this state without authority to do so is permitted to maintain a civil action in any court of this State, until such corporation obtains such authority.” 805 ILCS 105/113.70 (West 2010).

The defendants did not move to dismiss the complaint in the First Action on the basis that the plaintiff lacked capacity to sue under section 113.70. Over the next few months, the plaintiff twice amended its complaint, adding claims of undue influence and lack of testamentary capacity.

¶ 17 In August 2011, the plaintiff filed a motion to voluntarily dismiss its suit. On September 7, 2011, before that motion was heard, the plaintiff applied to the Secretary of State for a certificate of authority to conduct affairs in Illinois as a not-for-profit corporation. The application was granted, and the plaintiff received its certificate of authority on September 9, 2011. On September 14, 2011, the trial court granted the plaintiff's motion to voluntarily dismiss the First Action.

¶ 18 On October 12, 2011, the plaintiff refiled its suit as case No. 11–CH–4826 (the Second Action). The complaint in the Second Action, which is the subject of this appeal, contained: (1) a claim to enforce Doris's charitable pledge agreements, brought against all defendants (count I); (2) a claim of undue influence, asserted against the trustees (count II); (3) a claim that Doris lacked testamentary capacity, asserted against the trust and the trustees (count III); and (4) a claim that the trustees breached their fiduciary duty (count IV).

¶ 19 The defendants moved to dismiss the Second Action pursuant to section 2–619 of the Code of Civil Procedure (Code) (735 ILCS 5/2–619 (West 2010)). In their motion, the defendants argued that all of the claims were barred by the applicable statutes of limitations, because the case was filed after the limitations periods had expired. Moreover, the “saving” provision of section...