APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION
Ellis, Petitioner-Appellant and Cross-Appellee, v.
Christine D. Halas et al., Respondents- Appellees and
512 N.E.2d 1276, 159 Ill. App. 3d 818, 111 Ill. Dec. 639 1987.IL.1037
Appeal from the Circuit Court of Cook County; the Hon. Henry A. Budzinski, Judge, presiding.
PRESIDING JUSTICE McNAMARA delivered the opinion of the court. WHITE and FREEMAN, JJ., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCNAMARA
Petitioner, the law firm of Kirkland and Ellis, sought $957,099.05 in attorney fees and $24,359.08 in costs for its representation of the executor and trustee for the estate of decedent George S. Halas, Jr. Objections to the petition were filed by respondents A. Gerson Miller, as successor executor of decedent's estate; Christine D. and Stephen G. Halas, decedent's minor children and beneficiaries under decedent's testamentary trusts; and Therese M. Halas, decedent's former spouse, as both an individual and as former guardian of the estates of her children, Christine and Stephen. The trial court found that a reasonable fee for petitioner was $535,000, plus the full amount of costs. Petitioner appeals from that order. Respondents cross-appeal, contending that the court should have denied petitioner all attorney fees and should have imposed a surcharge for costs incurred in defending against the petition. Respondents also appeal from the denial of Christine's request, concurred in by the guardian ad litem acting for Stephen and by Miller, seeking costs and attorney fees incurred in objecting to the attorney fee petition.
In December 1979, decedent died, leaving his wife of 15 months, Patricia N. Halas, and two minor children, Christine and Stephen, from a previous marriage to Therese. The estate was initially valued at $4.2 million, and is currently valued at over $10 million. The estate's principal asset is 30.5 shares, or approximately 20%, of the Chicago Bears Football Club, Inc. The stock was valued for Federal estate tax purposes at $2.4 million and has since increased considerably in value.
Under decedent's will, Patricia received one-third of the residuary estate, along with the residence and certain mineral interests. Therese received nothing under the will, but the balance of her alimony was to be paid out of an insurance trust. Under the will, Christine and Stephen, who were 14 and 12 at the time of their father's death, received two equal trusts consisting of Bears stock and two-thirds of the residuary estate. The residuary estate would include the balance of the insurance trust after their mother's alimony had been paid.
The will named George S. Halas, Sr., as the executor and trustee of the children's testamentary trusts. In the event that he could no longer act in that capacity, decedent's sister, Virginia Halas McCaskey, and a friend, A. Gerson Miller, would act as co-executors and co-trustees.
In January 1980, the will was admitted to probate and Halas, Sr., was appointed executor. Petitioner acted as attorney for the executor and successor executor until its removal as legal counsel on May 22, 1984.
Therese Halas filed various claims in the probate division, totalling $1.267 million, against the estate. These claims remain unresolved. Therese also filed several actions in the circuit court, totalling $1.3 million, in relation to her divorce agreement and child support. Petitioner represented the executor, Halas, Sr., in his defense against these actions on behalf of the estate. Petitioner was successful in almost all respects. The trial court dismissed the three domestic relations actions. This court reversed and remanded to allow amendment of the section 72 petition, but otherwise affirmed dismissal of the two petitions. (Halas v. Executor of Estate of George S. Halas, Jr. (1983) 112 Ill. App. 3d 940, 445 N.E.2d 1264.) In 1984, the supreme court affirmed that decision. In re Support of Christine Halas (1984), 104 Ill. 2d 83, 470 N.E.2d 960.
In early 1980, petitioner began work on the corporate reorganization of the Bears. The organization was completed on December 17, 1981. Originally, the Bears Football Club, Inc., which was incorporated in Illinois, had a single class of common stock without preference. The reorganized corporation, which was incorporated in Delaware, had four classes of common stock. In exchange for its 30.5 shares of Bears stock in the Illinois corporation, the estate received 183 shares of class C Bears stock in the Delaware corporation. The new shares were subordinate with respect to dividend and liquidation rights to classes A and B stock. In addition, the various stockholders transferred their new Bears stock to various personal holding companies.
Unlike the Bears' Illinois stock, the new stock is subject to a right of first refusal and cannot be pledged without the Bears' consent. In addition, the cumulative voting rights were eliminated and consequently the estate can no longer elect a member to the board of directors. The subchapter S tax status of the Illinois corporation was terminated.
In connection with the reorganization, petitioner represented the interests of the Bears; Halas, Sr., individually and as chief executive officer of the Bears; Virginia McCaskey, her husband and her children, some of whom were directors and officers of the Bears; and the estate.
On October 13, 1981, the probate division entered an order requiring the estate's executor to give 30 days' advance written notice to Thomas S. Chuhak, the guardian ad litem for Christine and Stephen, of any decision to convey the shares of stock issued by Bears. The guardian received no notice of the reorganization. In December 1981, petitioner met with the McCaskey family and explained the reorganization plans in detail. The reorganization was not disclosed in the executor's first current account filed August 23, 1982, amended supplemental first current account filed September 3, 1982, or restated first current account filed October 19, 1982.
On November 5, 1982, the guardian ad litem wrote to petitioner asking about voting restrictions or other limitations affecting the value of the stock. Petitioner responded that the 30.5 shares were still assets of the estate and that there were no restrictions affecting value. In April 1983, because of unsatisfactory responses to requests for various documents, the guardian began formal discovery procedures.
On April 26, 1983, without the knowledge or permission of co-trustee Miller, petitioner caused the court to enter an "agreed" order stating that Miller temporarily delegated his rights and powers as co-trustee. When petitioner later asked Miller to delegate his duties ...