In re ESTATE OF PERRY C. POWELL (a/k/a Perry Smith, Jr.), a Disabled Person (Robert F. Harris, Cook County Public Guardian, Appellee, v. John C. Wunsch, P.C., et al., Appellants).
115997, 116009 cons.
Supreme Court of Illinois
June 19, 2014
2014 IL 115997
Illinois Official Reports
(Note: This syllabus constitutes no part of the opinion of the court but has been prepared by the Reporter of Decisions for the convenience of the reader.)
A wrongful death suit is brought in the name of the decedent‘s personal representative, but counsel‘s legal duty when funds are distributed extends to the surviving spouse and next of kin as the statutory beneficiaries of the action, despite the absence of any attorney-client relationship with them—malpractice.
Decision Under Review
Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County, the Hon. Kathy M. Flanagan, Judge, presiding.
Judgment
Appellate court judgment affirmed.
Daniel F. Konicek, Amir R. Tahmassebi and Thomas J. Long, of Konicek & Dillon, P.C., of Geneva, for appellants Phillips Law Offices, Ltd., and Jill M. Webb.
Patricia L. Argentati, Shana A. O‘Grady, and Jessica L. Briney, of Mulherin, Rehfeldt & Varchetto, P.C., of Wheaton, for appellants John C. Wunsch, P.C., et al.
Mark D. Belongia and Harry O. Channon, of Roetzel & Andress, LPA, of Chicago, for appellee.
Justices
JUSTICE FREEMAN delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Thomas, Kilbride, Karmeier, Burke, and Theis concurred in the judgment and opinion.
OPINION
¶ 1 At issue in this appeal is the scope of an attorney‘s duty in an action brought pursuant to the
I. BACKGROUND
¶ 2 Aсcording to plaintiff‘s complaint, as finally amended, Powell was adjudicated a disabled adult due to severe mental disabilities in 1997. Powell‘s parents, Perry and Leona Smith, were appointed to serve as co-guardians of Powell‘s person, but they were not appointed to serve as guardians of his estate. In 1999, Perry died from complications after a surgical procedure. He was survived by his wife Leona and two children, Emma and Powell. Soon thereaftеr, Leona entered into an attorney-client agreement with defendant law firm John C. Wunsch, P.C., to bring a cause of action against the doctors and hospital that treated Perry. Leona was appointed special administratrix of Perry‘s estate and in 2001, Wunsch filed a complaint pursuant to the
¶ 4 Two settlements were ultimately reached in 2005. The first settlement, after attorney fees and costs, amounted to $15,000, which was distributed equally between Leona, Emma and Powell, each of them receiving $5,000. The settlement order provided that Powell‘s share of the settlement was to be paid to Leona on Powell‘s behalf. Leona placed both her and Powell‘s share of the settlement into a joint account. The probate court was not notified that Powell was to receive the settlement or that Leona had accepted thе settlement on his behalf.
¶ 5 Prior to the second settlement, Wunsch referred the action to Jill Webb, an attorney at Phillips Law Offices. Leona executed an attorney-client agreement with Phillips Law Offices and John C. Wunsch, P.C. to continue litigating the action. As a result of the second settlement, Leona and Powell each received about $118,000. Emma waived her right to receive any monies from the second settlement. A check made payable to both Leona and Powell was given to Leona and she placed both her and Powell‘s share of the settlement into a joint account. The settlement order did not provide that the amount distributable to Powell was to be administered and distributed under the supervision of the probate court and Powell did not have a guardian of his estate appointed to receive his share. Wunsch purportedly advised Leona and Emma that it was “too much trouble” to go through the probate court to distribute the settlement funds for Powell because every time Leona needed money for Powell, she would have to ask the probate court to release funds for her.
¶ 6 Sometime in 2008, Emma became concerned about Powell‘s hygiene and well-being after visiting him at Leona‘s home. She petitioned the probate court to remove Leona as guardian of Powell‘s person. The probate court granted the petition and appointed Emma as plenary guardian of Powell‘s person. The probate court also appointed the public guardian as plenary guardian of Powell‘s estate. The assets in the joint account were frozen and it was subsequently discovered that Leona had withdrawn all but approximately $26,000 from the account. No accounting of the expenditures was ever provided by Leona.
¶ 7 The public guardian filed this action against defendants. The complaint alleged: in count I, professional negligence regarding the first settlement, against John C. Wunsch, P.C., John C. Wunsch, and Jeremy L. Dershow (Wunsch defendants); in count II, professional negligence regarding the second settlement, against Phillips Law Offices, Ltd., Jill M. Webb (Phillips defendants), John C. Wunsch, P.C., and John C. Wunsch; in count III, fraud against Leona; in count IV, breach of fiduciary duty against Leona; and, in count V, unjust enrichment against Leona.
¶ 8 The Wunsch and Phillips defendants filed motions to dismiss the counts against them pursuant to
II. ANALYSIS
¶ 11 In this appeal, we determine whether an attorney who brings a wrongful death action owes a legal duty to the decedent‘s beneficiaries at the distribution of funds phase of the action. Defendants contend that the attorney only owes a duty to the named personal representative of the estate and not the beneficiaries of such an action. They argue that plaintiff‘s complaint was properly dismissed because plaintiff cannot establish the duty element in his legal malpractice claim. The Wunsch defendants further argue that plaintiff‘s complaint failed to sufficiently allege proximate cause. Plaintiff maintains that we should uphold the appellate court‘s determination that an attorney owes a duty to the decedent‘s beneficiaries and that his complaint sufficiently alleged the elements of duty and proximate cause.
¶ 12 As noted above, the circuit court granted defendants’ section 2-615 motions to dismiss and dismissed plaintiff‘s complaint with prejudice. A motion to dismiss brought pursuant to
¶ 13 To state a claim for legal malpractice, a plaintiff must plead and prove that the defendant attorneys owed the plaintiff a duty of due care arising from the attorney-client relationship, that the defendants breached that duty, and that as a proximate result, the plaintiff suffered injury. Northern Illinois Emergency Physicians v. Landau, Omahana & Kopka, Ltd., 216 Ill. 2d 294, 306 (2005). The injury in a legal malpractice action is neither a personal injury nor the attorney‘s negligent act. Id. Rather, it is a pecuniary injury to an intangible property interest caused by the lawyer‘s negligent act or omission. Id. For purposes of a legal malpractice action, thе plaintiff is not considered to be injured unless he has suffered a loss for which he may seek monetary damages. Id. Even if the attorney‘s negligence is established, no action will lie against the attorney unless that negligence proximately caused actual damage to the plaintiff. Id. at 306-07. Actual damages are never presumed in a legal malpractice action and the plaintiff must demonstrate that he has sustained a monetary loss as a result of the lawyer‘s negligent act. Id. at 307. Damages are considered speculative only if their existence is uncertain, not if the amount is uncertain or yet to be fully determined. Id.
¶ 14 We first consider whether defendants owed Powell a duty. Whether a legal duty exists is a question of law to be determined by the court. Ward v. K mart Corp., 136 Ill. 2d 132, 140 (1990). Our starting point is the traditional, general rule that an attorney is liable only to his client, not to third persons. Pelham v. Griesheimer, 92 Ill. 2d 13, 19 (1982). However, if a nonclient is an intended third-party beneficiary of the relationship between the client and the attorney, the attorney‘s duty to the client may extend to the nonclient as well. Id. at 20-21. The key consideration is whether the attorney is acting at the direction of or on behalf of the client to benefit or influence a third party. Id. at 21. We concluded in Pelham that “for a nonclient to succeed in a negligence action against an attorney, he must prove that the primary purpose and intent of the attorney-client relationship itself was to benefit or influеnce the third party.” Id. This is referred to as the “intent to directly benefit” test. Id. at 23.
¶ 15 In Pelham, we concluded that an attorney, who was hired by a woman for the primary purpose of obtaining a divorce, did not owe a duty to her children who sued the attorney for legal malpractice after their father removed them as beneficiaries from his insurance policy subsequent to the divorce. Id. We found that the children were, at best, only incidental beneficiaries of the attоrney-client relationship between their mother and her attorney because naming the children as beneficiaries of their father‘s insurance policy was not the primary reason their mother retained her attorney. Id.
¶ 16 With these principles in mind, we turn to the provisions of the Act, which govern our resolution of this case. The Act creates a cause of action for pecuniary losses suffered by the deceased‘s spouse and next of kin by reasоn of the death of the injured person.
¶ 17 Section 2 of the Act also governs the distribution of any recovery and provides that the amount recovered in such an action shall be distributed “to each of the surviving spouse and next of kin of such deceased person” according to their degree of dependency as determined by the court.
¶ 18 Section 2.1 of the Act concerns the distribution of any recovery and provides that “if proceeds in excess of $5,000 are distributable to a minor or person under legal disability, the court shall allow disbursements and fees to the special administrator and his or her attorney and the balance shall be administered and distributed under the supervision of the probate division of the court if the circuit court has a probate division.”
¶ 19 This court‘s prior decisions in DeLuna and Carter are helpful to our determination of the scope of an attorney‘s duty in a wrongful death action. In DeLuna, although primarily concerned with the application of the legal malpractice statute of repose, we determined that an attorney who was hired to bring a medical malpractice and wrongful death action owed plaintiffs, the decedent‘s children, a fiduciary duty. DeLuna, 223 Ill. 2d at 79. We reasoned that since the wrongful death action was “indisputably brought for [the children‘s] benefit,” the attorney owed the children a fiduciary duty. Id. The issue in Carter concerned the enforceability of an arbitration agreement rather than the scope of an attorney‘s duty. However, our opinion examined the provisions of the Act at great length. As previously stated, we recognized that the decedent‘s spouse and next of kin are the true parties in interest in a wrongful death action, rather than the personal representative who is merely a nominal party. Carter, 2012 IL 113204, ¶ 33. Further, we noted that the legislature does not treat a wrongful death action like other assets of the deceased‘s estate. Id. ¶ 38. Rather, amounts recovered in a wrongful death action are not subject to the provisions of the
¶ 20 Considering the language and purpose of the Act, as well as our decisions in Pelham, DeLuna and Carter, we hold thаt an attorney who brings a wrongful death action owes a legal duty to the decedent‘s beneficiaries at the distribution of funds phase of the action. As set forth above, the Act creates a cause of action for pecuniary losses suffered by the deceased‘s spouse and next of kin by reason of the decedent‘s death. Yet, the decedent‘s beneficiaries are precluded from pursuing individual actions since a wrongful death action must be brought by and in the name of the personal representative of the deceased. Nevertheless, the Act makes clear that any amount recovered in such an action shall be for the “exclusive benefit” of the surviving spouse and next of kin. Further, the Act provides for distribution among the beneficiaries pursuant to their degree of dependency rather than distributions subject to the provisions of the Probate Act. Clearly, the underlying purpose of a wrongful dеath action is to compensate those beneficiaries named in the action rather than the decedent‘s estate. Therefore, the primary purpose and intent of an attorney-client relationship between the personal representative of the deceased and the attorney who brings a wrongful death action is to benefit the decedent‘s beneficiaries, as we determined in DeLuna. Since the beneficiaries named in a wrongful dеath action are intended beneficiaries of the action rather than merely incidental beneficiaries, as was the case in Pelham, the attorney‘s duty extends to them. The
¶ 21 Defendants contend that the scope of an attorney‘s duty should not extend to the decedent‘s beneficiaries because of the “potential for conflicts” that can аrise at the distribution phase of the wrongful death action. Defendants maintain that an attorney cannot exercise undivided loyalty to each beneficiary at that stage since each beneficiary‘s interest is potentially adverse to one another. Nevertheless, defendants did not specifically allege in their motions to dismiss that there was any conflict among the beneficiaries in this case. Defendants have only alleged that the “potеntial for conflicts” should negate the imposition of a duty. A motion to dismiss “must specify wherein the pleading or division thereof is insufficient.”
¶ 22 Further, in contrast to defendants’ contention, we do not view the beneficiaries in a wrongful death action the same as individual beneficiaries of a decedent‘s estate, where a potential conflict of interest may arise between the estate‘s interest and the interest of each of the beneficiaries of the estate. A wrongful death action is brought for the exclusive benefit of the beneficiaries who are the true parties in interest as opposed to an action that is brought to benefit the decedent‘s estate. Carter, 2012 IL 113204, ¶ 33.
¶ 23 Having determined that defendants owe Powell a legal duty, we now turn to plaintiff‘s complaint in this case. The complaint alleged negligence against defendants in counts I and II. Specifically, it allegеd that Powell had an attorney-client relationship with defendants or, in the alternative, he was an intended beneficiary of the legal services in the wrongful death action. Plaintiff also alleged that defendants failed to protect Powell‘s interest in the settlement monies when they knew he was unable to act in his own interest and failed to notify the probate court that he was to receive the first and second settlement amounts and that Leona was accepting the settlement monies on his behalf. The complaint further alleged that defendants drafted and filed the petitions to distribute the settlement proceeds, which did not include a provision that Powell‘s share should be distributed in accordance with section 2.1 of the Act. These allegations were sufficient to plead the elements of a duty at the distribution of funds phase of the action as well as a breach of that duty for purposes of a sectiоn 2-615 motion to dismiss.
¶ 24 We next consider whether plaintiff‘s complaint sufficiently alleged defendants’ acts or omissions proximately caused him injury. To satisfy the element of proximate cause, the plaintiff must plead sufficient facts to establish that “but for” the negligence of the attorney, the plaintiff would not have suffered actual damages. See Northern Illinois Emergency Physicians, 216 Ill. 2d at 306-07. Plaintiff‘s complaint alleged that as a direct and proximate result of the careless and negligent acts or omissions of defendants, Powell would have had a guardian appointed for his estate to protect his interest in the settlement proceeds and would not have been deprived of those funds. As the appellate court noted, Powell‘s share of the first settlement totaled $5,000, which did not require the probate court‘s supervision. Section 2.1 of the Act requires the supervision of the probate court only when the proсeeds are in excess of
III. CONCLUSION
¶ 26 For the above reasons, we affirm the appellate court‘s judgment and its remand of the cause to the circuit court.
¶ 27 Appellate court judgment affirmed.