MICHAEL A. DOYLE, as Trustee of the Patricia A. O‘Malley Supplemental Trust, Plaintiff-Appellant, v. THOMAS B. HOOD and THOMAS B. HOOD LAW OFFICES, P.C., Defendants-Appellees.
Docket No. 2-17-1041
Appellate Court of Illinois, Second District
September 28, 2018
2018 IL App (2d) 171041
Appeal from the Circuit Court of Lake County, No. 17-L-308; the Hon. Margaret J. Mullen, Judge, presiding. Affirmed.
Brian R. Holman and Dennis H. Stefanowicz Jr., of Holman & Stefanowicz, LLC, of Chicago, for appellant.
Daniel F. Konicek, Michael P. Hannigan, and Amanda J. Hamilton, of Konicek & Dillon, P.C., of Geneva, for appellees.
OPINION
¶ 1 Plaintiff, Michael A. Doyle, as trustee of the Patricia A. O‘Malley Supplemental Trust (Supplemental Trust), sued defendants, Thomas B. Hood and Thomas B. Hood Law Offices, P.C., alleging legal malpractice in connection with defendants’ preparation of the living trust of his father, Harry G. Doyle Jr. (through which the Supplemental Trust, a special-needs trust, was created), and his will. Defendants moved to dismiss Michael‘s complaint, alleging that it was time-barred under the special repose period in section 13-214.3(d) of the Code of Civil Procedure (Code) (
I. BACKGROUND
¶ 2 In 2011, Harry retained defendants to prepare documents in connection with an estate plan for him and, according to Michael, his wife, Patricia A. O‘Malley.
¶ 3 The Living Trust established the Supplemental Trust, with Patricia as its beneficiary. The Living Trust provided that Patricia
“has a disability which substantially impairs her ability to provide for her own financial and support needs. As a result of said disability, [Patricia] will have the right to receive certain benefits from public programs. Continued full access to the benefits of these programs is essential to meet [Patricia‘s] needs for basic maintenance, support services and medical care. At that same time, these programs may leave gaps in basic services, many provide adequately [sic] in emergencies, and may not provide for needs, wants and opportunities beyond basic necessities.”
¶ 4 The document further provided:
“It is the intent of the Grantor that the Trust assets are to be used to supplement and never supplant benefits of public programs, and that no distribution be made from this trust that would disqualify [Patricia] from receiving the benefits of public programs or that would reduce the level of such benefits. It is expressly provided that no payment should in any way jeopardize a Medicaid payment for care of any type including the care provided in a nursing home facility.”
¶ 5 The Supplemental Trust was intended for Patricia to receive funds while retaining her eligibility for certain federal or state means-tested benefit programs. It was revocable by Harry during his lifetime and is irrevocable as to Patricia and her assigns. The Supplemental Trust will terminate upon Patricia‘s death.
¶ 6 On January 14, 2012, Harry died. Upon his death, Michael became the trustee of the Living Trust and the Supplemental Trust and the assets in the Living Trust were distributed to the Supplemental Trust. Also upon Harry‘s death, Michael became the executor of Harry‘s will.
¶ 7 On March 15, 2012, defendants filed Harry‘s will with the clerk of the circuit court of Lake County (case No. 12-W-312). No letters of office were issued, and Harry‘s will was not admitted to probate.
¶ 8 In late 2013, Patricia was admitted into a long-term-care facility in Wheeling. On July 22, 2014, an application for long-term-care benefits under the Aid to the Aged, Blind, or Disabled program (
¶ 9 On February 25, 2016, according to Michael, the Department of Human Services (DHS) issued a decision, finding that, as of April 1, 2014, the Supplemental Trust contained $238,437.67 to pay for Patricia‘s long-term care.1 The DHS subtracted Patricia‘s asset allowance of $2000 from the $238,437.67 and imposed a spend-down of the remaining $236,437.67.
¶ 10 On May 4, 2016, an appeal was filed with the DHS on Patricia‘s behalf. On August 26, 2016, the DHS issued its final administrative decision (which was confirmed by an analyst recommendation on September 1, 2016, by the Department of Healthcare and Family Services), finding that, instead of requiring a spend-down, the assets held by Harry and transferred upon his death resulted in a penalty to Patricia, who “did not receive fair market
¶ 11 On May 1, 2017, Michael, as trustee of the Supplemental Trust, sued defendants, alleging professional negligence. In a first amended complaint, he alleged that defendants breached the duties they owed to Harry during their attorney-client relationship, in that they created the Supplemental Trust through the Living Trust, failed to create the Supplemental Trust through Harry‘s will, failed to prepare the necessary estate-planning documents to maximize funds available for Patricia‘s care and maintenance, and failed to exercise reasonable and ordinary care and diligence in preparing Harry‘s and Patricia‘s estate plan. Michael claimed that, had defendants created the Supplemental Trust through the will, as opposed to the Living Trust, the transfer of the funds from the Living Trust to the Supplemental Trust upon Harry‘s death would have been exempt and no penalty would have been imposed.
¶ 12 On October 5, 2017, defendants moved to dismiss Michael‘s complaint.
¶ 13 On November 28, 2017, the trial court granted defendants’ motion and dismissed Michael‘s complaint with prejudice.3 Michael appeals.
II. ANALYSIS
¶ 14 Michael argues that the trial court erred in dismissing his complaint as time-barred. For the following reasons, we disagree.
¶ 15 A motion to dismiss under
¶ 16 To prevail on a legal-malpractice claim, a plaintiff must plead and prove that (1) the defendant attorneys owed the plaintiff a duty of due care arising from the attorney-client relationship, (2) the defendants
¶ 17 Section 13-214.3 of the Code contains the limitations and repose periods for actions for legal malpractice. Addressing these concepts in a general sense, the supreme court has explained:
“In contrast to a statute of limitations, which determines the time within which a lawsuit may be brought after a cause of action has accrued, a statute of repose extinguishes the action after a defined period of time, regardless of when the action accrued. DeLuna v. Burciaga, 223 Ill. 2d 49, 61 (2006) (citing Ferguson v. McKenzie, 202 Ill. 2d 304, 311 (2001)). It begins to run when a specific event occurs, ‘regardless of whether an action has accrued or whether any injury has resulted.’ Ferguson, 202 Ill. 2d at 311. Thus, the statute of repose limit is ‘“not related to the accrual of any cause of action; the injury need not have occurred, much less have been discovered.“’ CTS Corp. v. Waldburger, 573 U.S. 1, 7-8, 134 S. Ct. 2175, 2182-83 (2014) (quoting 54 C.J.S. Limitations of Actions § 7, at 24 (2010)). The purpose of a repose period is to terminate the possibility of liability after a defined period of time. After the expiration of the repose period, there is no longer a recognized right of action. Evanston Insurance Co. v. Riseborough, 2014 IL 114271, ¶ 16.” Folta v. Ferro Engineering, 2015 IL 118070, ¶ 33.
¶ 18 Turning to the statutory framework at issue here, section 13-214.3 of the Code states, in relevant part:
“(b) An action for damages based on tort, contract, or otherwise (i) against an attorney arising out of an act or omission in the performance of professional services *** must be commenced within 2 years from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought.
(c) Except as provided in subsection (d), an action described in subsection (b) may not be commenced in any event more than 6 years after the date on which the act or omission occurred.
(d) When the injury caused by the act or omission does not occur until the death of the person for whom the professional services were rendered, the action may be commenced within 2 years after the date of the person‘s death unless letters of office are issued or the person‘s will is admitted to probate within that 2 year period, in which case the action must be commenced within the time for filing claims against the estate or a petition contesting the validity of the will of the deceased person, whichever is later, as provided in the Probate Act of 1975.
(e) If the person entitled to bring the action is under the age of majority or under other legal disability at the time the cause of action accrues, the period of limitations shall not begin to run until majority is attained or the disability is removed.
(f) If the person entitled to bring the action described in this Section is not under a legal disability at the time the cause of action accrues, but becomes under a legal disability before the period of limitations otherwise runs, the period of limitations is stayed until the disability
is removed. This subsection (f) does not invalidate any statute of repose provisions contained in this Section.” (Emphasis added.) 735 ILCS 5/13-214.3(b) -(f) (West 2016).
¶ 19 The limitations period in
¶ 20 The six-year repose period in
¶ 21
“Section 13-214.3(d) *** create[s] an exception to the six-year repose period for attorney malpractice actions where the alleged injury does not occur until the death of the person for whom professional services were rendered. However, that exception is not in addition to the two-year statute of limitations and the six-year statute of repose. Rather, the exception applies instead of the two-year statute of limitations and the six-year statute of repose. As the appellate court in Poullette [v. Silverstein, 328 Ill. App. 3d 791 (2002),] correctly held, ‘[n]othing in the statute conditions the application of subsection (d) on whether the repose period in subsection (c) has expired.’ Poullette, 328 Ill. App. 3d at 795.” (Emphases in original.) Wackrow, 231 Ill. 2d at 427.
¶ 22 The section 13-214.3(d) “exception may shorten the limitation period for legal malpractice complaints and may mean that a plaintiff‘s action is barred before [he or] she
¶ 23 Michael argues that the repose period in subsection (d) does not apply here and that, instead, subsection (c) applies. He contends that, on December 15, 2011, upon Harry‘s execution of his will and the Living Trust, defendants committed their last acts of malpractice. On May 1, 2017, which was within the six-year repose period in subsection (c), Michael timely filed his complaint against defendants. He asserts that the trial court‘s ruling that subsection (d) applied would have required him to file his suit on or before January 14, 2014 (i.e., within two years of Harry‘s death). However, it was not until about 32 months later, on August 26, 2016—when the DHS issued its final decision, imposing a $234,561 penalty on Patricia—that Michael first learned of Patricia‘s injury. Because defendants created the Supplemental Trust through the Living Trust, it was considered not a third-party special-needs trust but instead a special-needs trust that was set up by Patricia. As a result, all asset transfers from Patricia or Harry were subject to a 60-month look-back period from when Patricia applied for medical assistance, on April 1, 2014.
¶ 24 Michael concedes that Wackrow and Snyder are controlling. In Wackrow, the defendant, in 2002, prepared an amendment to a living trust for the plaintiff‘s brother. Under the amendment, the brother gifted his residence, or $300,000, to the plaintiff. Later that year the brother died, and in 2003, the plaintiff made a claim against the estate for the property promised to her under the amendment. In 2003, the probate court denied her claim, and in 2004, the plaintiff filed a legal-malpractice claim against the defendant. The plaintiff alleged that, had the defendant conducted a property title search, it would have revealed that her brother did not own the property individually but that another trust owned it. The trial court granted the defendant‘s motion to dismiss the complaint as untimely under
¶ 25 In Snyder, 2011 IL 111052, ¶ 17, the supreme court held that subsection (c) applied where the defendant attorney, in 1997, prepared a deed conveying the marital home to the plaintiff and her husband as joint tenants with rights of survivorship. About 10 years later the husband died, and afterward, the plaintiff learned that, prior to the alleged malpractice, title to the home was held by a trustee of a land trust and her stepson was the sole beneficiary. Id. ¶¶ 1, 3. In 2008, the plaintiff sued the defendant, alleging legal malpractice (id. ¶ 2), specifically that the defendant negligently prepared a quitclaim deed that failed to convey the property to the plaintiff and her husband as joint tenants with rights of survivorship. The trial court granted the defendant‘s motion to dismiss the claim as untimely under the six-year statute of repose in
¶ 27 We disagree with Michael‘s conclusory assertion that there was no opportunity to fix defendants’ malpractice. Up until his death (and by the Living Trust‘s terms), Harry had the power to revoke or amend the Living Trust. Thus, Patricia‘s label as the creator of the Supplemental Trust could have been erased. Further, the Supplemental Trust was not even funded until Harry‘s death. Michael alleged in his complaint that, on or about the date Harry died, the assets in the Living Trust were distributed to the Supplemental Trust. No assessment of penalties was possible absent trust assets, which were not present until Harry‘s death. Indeed, Michael‘s complaint alleged that it was the transfer of the funds upon Harry‘s death, albeit from an incorrect vehicle, that resulted in the imposition of the penalty. Thus, the injury occurred upon Harry‘s death.
¶ 28 This conclusion is consistent with Wackrow and Snyder, where the supreme court approached the issue by looking at when the relevant documents became effective. In Wackrow, the amendment was intended to take effect only upon the client‘s death, and thus, subsection (d) applied. Wackrow, 231 Ill. 2d at 425. In Snyder, however, the court held that the provision did not apply, because the injury—the failure to realize that the property was in a land trust when the attorney prepared a quitclaim deed to it—occurred when the deed was delivered and recorded, because it became effective at that time. Snyder, 2011 IL 111052, ¶ 14. Here, the injury occurred when the Supplemental Trust could no longer be amended or revoked and was actually funded, both of which occurred upon Harry‘s death.
¶ 29 Next, Michael argues, without citing any authority, that subsection (d) is inapplicable because Patricia was one of defendants’ clients and she is still alive. He notes that he alleged in his complaint that Harry retained defendants to prepare documents in connection with both his and Patricia‘s estate plan. Michael contends that it is illogical to think that defendants could properly prepare the necessary documents for Harry‘s estate plan without considering the needs of Patricia, who was the primary concern, especially considering that Harry was on his deathbed when he first retained and met with defendants. Further, he notes that Patricia‘s Alzheimer‘s disease had advanced to the point that she was considered disabled. The drafting of the Supplemental Trust, he urges, demonstrates that defendants were retained to prepare the
¶ 30 We reject Michael‘s argument that subsection (d) cannot apply here. In Riseborough, 2014 IL 114271, a case addressing the subsection (c) six-year repose period, the supreme court held that section 13-214.3 does not require that the plaintiff be a client of the attorney who rendered the professional services. Id. ¶ 19. The court determined that the phrase “‘arising out of an act or omission in the performance of professional services‘” in subsection (b) (and, we note, the similar reference to “the act or omission” in subsection (c)) is not limited to clients of the attorney. Id. “[U]nder the express language of the statute, it is the nature of the act or omission, rather than the identity of the plaintiff, that determines whether the statute of repose applies to a claim brought against an attorney.” Id. The court also noted that a contrary reading of the statute overlooks “that the repose period applies to claims ‘arising out of an act or omission in the performance of professional services.‘” (Emphasis in original.) Id. ¶ 23 (quoting
¶ 31 Riseborough did not address section 13-214.3(d), which contains different language from that in subsections (b) and (c). The subsection (d) exception applies to situations where “the injury caused by the act or omission does not occur until the death of the person for whom the professional services were rendered.” (Emphasis added.)
¶ 32 Generally, an attorney can be liable in negligence only to his or her client and not to nonclient third parties. Pelham v. Griesheimer, 92 Ill. 2d 13, 19 (1982). “[T]o establish a duty owed by the defendant attorney to the nonclient[,] the nonclient must allege and prove that the intent of the client to benefit the nonclient third party was the primary or direct purpose of the transaction or relationship.” Id. at 20-21. In other words, the nonclient “must prove that the primary purpose and intent of the attorney-client relationship itself was to benefit or influence the third party.” Id. at 21.
¶
¶ 34 Michael next argues that the injury did not occur until Patricia was assessed the penalty in September 2016. Michael relies on Justice Freeman‘s dissenting opinion in Snyder, wherein he criticized the majority‘s analysis of when an injury occurs in legal-malpractice cases, which he believed precedent had established was when the plaintiff suffered a pecuniary injury. Snyder, 2011 IL 111052, ¶¶ 31-32 (Freeman, J., dissenting) (“‘For purposes of a legal malpractice action, a client is not considered to be injured unless and until he [or she] has suffered a loss for which he [or she] may seek monetary damages.‘” (quoting Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294, 306 (2005))); see also Eastman v. Messner, 188 Ill. 2d 404, 411 (1999) (same). In a similar vein, Michael contends that we should follow Landau and Eastman, upon which Justice Freeman relied (Snyder, 2011 IL 111052, ¶ 39), and ignore Wackrow and Snyder, which are “confusing and criticized.” Under Landau and Eastman, Michael argues, Patricia was not injured until she suffered a loss for which she could seek monetary damages against defendants, i.e., until August 26, 2016, when the DHS issued its decision imposing the penalty.
¶ 35 We reject Michael‘s argument. Justice Freeman‘s position in Snyder was in the minority. It is well settled that this court is bound to follow the supreme court‘s precedent, and “when our supreme court has declared law on any point, only [the supreme court] can modify or overrule its previous decisions, and all lower courts are bound to follow supreme court precedent until such precedent is changed by the supreme court.” Rosewood Care Center, Inc. v. Caterpillar, Inc., 366 Ill. App. 3d 730, 734 (2006). Our resolution of this appeal must conform to the majority‘s view. Snyder and Wackrow addressed section 13-214.3 and are, thus, directly relevant to this appeal. The cases upon which Michael relies are not directly relevant to our analysis. Neither Landau nor Eastman addressed section 13-214.3, and therefore they are easily distinguishable. Landau, in which the plaintiff sued the law firm that defended it on an indemnity
¶ 36 Michael argues next that
¶ 37 Michael‘s final argument is that his complaint was timely under
¶ 38 We disagree. The plaintiff in this case is Michael as trustee of the Supplemental Trust, not on Patricia‘s (individual) behalf. He is the only person who can bring an action on the trust‘s behalf, and he is not disabled. The power to bring an action on the trust‘s behalf is explicitly granted to him in the Living Trust, which states that the trustee has the power “[t]o litigate, compromise, settle, or abandon any claim or demand in favor of or against the trust.” Further, under the law, “[a] written trust possesses a distinct legal existence that is recognized by statute (
III. CONCLUSION
¶ 39 For the reasons stated, the judgment of the circuit court of Lake County is affirmed.
¶ 40 Affirmed.