2019 IL App (1st) 181707
Ill. App. Ct.2020Background
- Renata Black’s will divided her estate: two-thirds to a Supplemental Needs Trust for daughter Joanne (who has schizophrenia) and one-third to an Issue Trust for Bernard Black and his children. Several payable‑on‑death (POD) accounts, however, named Joanne directly.
- Bernard, appointed executor and later conservator for Joanne, disclaimed Joanne’s POD interests; funds then passed through Renata’s estate so two‑thirds went to the Supplemental Needs Trust and one‑third to the Issue Trust. Colorado courts found Bernard misled the probate court, breached fiduciary duties, converted about $1.5 million of Joanne’s funds, and awarded treble damages and injunctive relief against him.
- Bernard’s wife, Katherine Litvak, sued three trusts (the Supplemental Needs Trust, the Issue Trust, and a 2013 Trust Bernard established) alleging the trusts owed her roughly $376,465. The trustees did not answer and an agreed judgment was entered in Litvak’s favor against all three trusts without notice to Joanne’s conservator or cotrustee.
- Joanne’s cotrustee (Anthony Dain) and court‑appointed conservator (Jeanette Goodwin) moved to intervene and to vacate the agreed judgment. The circuit court allowed Goodwin to intervene and vacated the judgment as to the two trusts benefiting Joanne but left the judgment intact as to the Issue Trust.
- On appeal the court held the agreed judgment was procured collusively and that vacatur should not have been limited to the two trusts; it vacated the entire agreed judgment and remanded for adjudication on the merits with Goodwin’s full participation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the agreed judgment against all three trusts was collusive and subject to vacatur | Litvak: judgment valid; no collusion; Joanne has no interest in Issue Trust so Goodwin lacks standing there | Goodwin/Dain: judgment was procured by collusion without notice to Joanne and harms her third‑party interests | Court: agreed judgment was presumptively collusive; vacatur appropriate — judgment vacated in full |
| Whether the circuit court erred by vacating the judgment only as to the two Joanne‑benefitting trusts while leaving the Issue Trust judgment intact | Litvak: Colorado rulings and trust structure preclude Joanne’s claim to Issue Trust; partial vacatur justified | Goodwin: funds in Issue Trust were derived from Joanne and could be dissipated; full vacatur needed to protect her interests | Court: partial vacatur was an abuse of discretion; leaving the Issue Trust judgment risked irreparable loss to Joanne; reversed |
| Whether Goodwin could intervene to protect Joanne’s interests in these proceedings | Litvak: Goodwin lacks ability to challenge regarding Issue Trust because Joanne not beneficiary there | Goodwin: as conservator she may intervene to protect Joanne’s interests in all trusts containing funds derived from Joanne | Court: Goodwin made a prima facie showing and intervention was permitted; remand for merits with her full participation |
Key Cases Cited
- Green v. Hutsonville Township High School District No. 201, 356 Ill. 216 (1934) (agreed judgments obtained by fraud or collusion may be attacked by adversely affected third parties)
- Jackson v. Bailey, 384 Ill. App. 3d 546 (2008) (standard for reviewing relief from judgment under section 2‑1301(e) and factors to consider)
- City of Chicago Heights v. Public Service Co. of Northern Illinois, 345 Ill. App. 393 (1952) (judgment that is adversary in form but default/acquiescence in substance is collusive)
- Black v. Black, 422 P.3d 592 (Colo. App. 2018) (Colorado appellate decision affirming probate court’s finding that Bernard converted Joanne’s assets and awarding treble damages)