Mareskas-Palcek v. Schwartz, Wolf & Bernstein, LLP
2017 IL App (1st) 162746
| Ill. App. Ct. | 2017Background
- Denise (decedent) executed a power of attorney to have Schwartz, Wolf & Bernstein (and partner Marc Schwartz) represent her at a real-estate closing scheduled Aug. 8, 2013; she died Aug. 7, 2013.
- Defendants proceeded with the closing the day after her death, allegedly signing documents in her name and withholding about $20,000 in attorney fees on the HUD-1 instead of the $650 closing fee.
- Beneficiaries: Darren is a beneficiary of decedent’s estate and a pourover trust beneficiary; David is trustee of the DeAnna trust (a beneficiary of the estate).
- Plaintiffs sued for breach of fiduciary duty (alleging violations of Rules 1.5 and 1.8) and conversion; defendants moved to dismiss under Ill. S. Ct. rules/735 ILCS 5/2-619(a)(9) arguing lack of standing and failure to state claims.
- Trial court dismissed with leave to amend; plaintiffs stood on their amended complaint and the court dismissed with prejudice. Plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to sue for post-death wrongful acts (estate assets) | Darren (beneficiary) and David (trustee of beneficiary trust) have standing as ultimate beneficiaries / trustee to sue for wrongful taking of proceeds | Only the executor/representative of the decedent’s estate may sue on claims affecting estate assets; beneficiaries/trustee of a beneficiary lack capacity | Held: No standing — only executor/representative may bring suit for post-death injuries to estate assets |
| Duty of attorney to nonclient beneficiaries | Plaintiffs argue attorney-client relationship benefited them as intended beneficiaries, creating a duty | Defendants argue the attorney only owed duties to their client (decedent); nonclients are incidental beneficiaries and no primary intent to benefit them was alleged | Held: Plaintiffs failed to allege they were intended (primary) beneficiaries; only incidental beneficiaries, so no duty owed |
| Conversion (possession/right to immediate possession) | Plaintiffs allege their rights in the property vested at decedent’s death, so defendants wrongfully controlled estate funds | Defendants argue beneficiaries had no legal right to immediate possession and plaintiffs failed to make required demand | Held: Court did not reach merits after resolving standing; dismissal affirmed on standing grounds |
| Whether plaintiffs pleaded actionable fiduciary breach under professional rules | Plaintiffs assert breaches of Rule 1.5 (unreasonable fee) and Rule 1.8 (adverse pecuniary interest) | Defendants argued no attorney-client relationship with plaintiffs and no duty; dismissal proper | Held: Court declined to decide merits because lack of standing was dispositive |
Key Cases Cited
- Pelham v. Griesheimer, 92 Ill.2d 13 (Ill. 1982) (attorney generally liable only to client; nonclient must show client intended attorney engagement primarily to benefit the nonclient)
- McLane v. Russell, 131 Ill.2d 509 (Ill. 1989) (attorney owed duty to nonclients where primary purpose of engagement was to benefit them)
- In re Marriage of Schauberger, 253 Ill. App.3d 595 (Ill. App. Ct. 1993) (estate lacks capacity to sue; actions must be brought by executor/representative)
- Wilmere v. Stibolt, 152 Ill. App.3d 642 (Ill. App. Ct. 1987) (executor/administrator has standing; heirs/legatees do not)
- Gale v. Williams, 299 Ill. App.3d 381 (Ill. App. Ct. 1998) (incidental beneficiaries cannot maintain malpractice claims against attorney for client’s representation)
- General Motors Corp. v. Douglass, 206 Ill. App.3d 881 (Ill. App. Ct. 1990) (elements of conversion)
- Cirrincione v. Johnson, 184 Ill.2d 109 (Ill. 1998) (conversion elements reaffirmed)