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04/15/94 JEWISH HOSPITAL ST. LOUIS v. BOATMEN'S

April 15, 1994

JEWISH HOSPITAL OF ST. LOUIS, MISSOURI, AND JEWISH CENTER FOR THE AGED, NOT-FOR-PROFIT CORPORATIONS, PLAINTIFFS-APPELLANTS AND CROSS-APPELLEES,
v.
BOATMEN'S NATIONAL BANK OF BELLEVILLE, A NATIONAL BANKING ASSOCIATION, AS COEXECUTOR OF THE ESTATE OF ABE I. SMALL, DECEASED, AND AS COTRUSTEE OF THE TESTAMENTARY TRUST UNDER THE WILL OF ABE I. SMALL, DECEASED, DEFENDANT-APPELLEE AND CROSS-APPELLANT, AND DONALD RICE, INDIVIDUALLY, RICE SULLIVAN & COMPANY, LTD., A CORPORATION, AND ROBERT L. JENNINGS, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of St. Clair County. No. 89-L-457. Honorable Jerome F. Lopinot, Judge Presiding.

Petition for Leave to Appeal Denied October 6, 1994.

Lewis, Welch, Chapman*

The opinion of the court was delivered by: Lewis

PRESIDING JUSTICE LEWIS delivered the opinion of the court:

Plaintiffs appeal from the entry of summary judgment against plaintiffs and in favor of all defendants on all counts of plaintiffs' fourth amended complaint. The primary issues raised in this case are (1) whether an attorney who drafts a will owes a duty in contract or in tort to the remainder beneficiaries of testamentary trusts; (2) whether an attorney for an estate owes a duty in contract or in tort to the beneficiaries of the estate for improperly preparing the Federal estate tax return; (3) whether an attorney for the estate owes a duty in contract or in tort to the beneficiaries to reform the will so as to avoid estate taxes; (4) whether an accountant, hired as a tax expert, owes a duty in contract or in tort to the remainder beneficiaries of testamentary trusts; (5) whether an accountant owes a duty in contract or tort to the beneficiaries of an estate for improperly preparing an estate tax return; (6) whether an executor owes a duty in tort or a fiduciary duty to the beneficiaries for filing an improper estate tax return prepared by the attorney for the estate, failing to timely reform the testator's will so as to avoid estate taxes, failing to hire a competent attorney, and failing to advise the beneficiaries of the tax consequences and possible remedies for avoiding taxes; and (7) whether a testamentary trustee owes a duty in tort or a fiduciary duty to the beneficiaries of the trust to monitor the acts of the executor for improper administration of the estate.

The plaintiffs, Jewish Hospital of St. Louis and the Jewish Center for the Aged, are the remainder beneficiaries of two testamentary trusts established by the last will and testament (the will) of Abe I. Small (the testator). Defendant Boatmen's National Bank of Belleville (the Bank) was named under the will as the coexecutor of the estate, together with the testator's wife, Merla Small (the testator's wife). Both the testator's wife and the Bank were also named as cotrustees of the two testamentary trusts set up under the will.

Defendant Robert Jennings (Jennings) is the attorney who drafted the will, and he also represented the estate during probate of the will and the preparation and filing of the Federal estate tax return. Defendant Donald Rice (Rice) is a certified public accountant and a partner in an accounting firm, defendant Rice Sullivan & Co., Ltd. (the accounting firm). Rice and his accounting firm provided accounting services to the testator and to Jennings in his representation of the testator and the estate. The estate paid $878,709 in estate taxes and interest as a result of a tax deficiency declared by the Internal Revenue Service (IRS). The crux of plaintiffs' claim against all the defendants is that the defendants' negligence caused the estate to unnecessarily pay $878,709 in estate taxes and interest, which reduced the amount plaintiffs will receive.

Plaintiffs filed their action against defendants to recover the tax liability as money damages incurred by the alleged negligence of Jennings and Rice and the accounting firm in the preparation of the testator's will and estate plan. Plaintiffs also claimed that all of the defendants were negligent in their handling of the estate after the testator's death, due to their collective failure to timely reform the will or timely advise the beneficiaries of this option. Additionally, plaintiffs allege that the Bank was negligent in its duties as coexecutor in hiring an unqualified attorney, Jennings, to represent the estate and negligent in its duties as cotrustee of the residual trust in not protecting the interests of the trust and its beneficiaries.

On December 4, 1991, the trial court found that there were no genuine issues of material fact and entered summary judgment in favor of all defendants "for the reasons stated" in each defendant's respective motion for summary judgment. The court ordered each party to bear its own costs. The court denied plaintiffs' motion to vacate and/or to reconsider and denied the Bank's motion to modify, which requested the court to modify its judgment to include an award of attorney fees to the Bank. Plaintiffs appeal from the entry of the summary judgment in favor of defendants, and the Bank cross-appeals from the trial court's denial of its motion for attorney fees. For the reasons stated below, we affirm in part, reverse in part, and remand.

I. LAW REGARDING SUMMARY JUDGMENT

"Pursuant to section 2-1005 of the Code of Civil Procedure, any party 'may move with or without supporting affidavits for a summary judgment in his or her favor for all or any part of the relief sought' against him or her. (Ill. Rev. Stat. 1985, ch. 110, pars. 2-1005(a), (b).) Although the use of a summary judgment procedure is encouraged as an aid in expeditious Disposition of a lawsuit, it is a drastic means of disposing of litigation and should only be allowed when the right of the moving party is clear and free from doubt. [Citation.] 'In determining whether the moving party is entitled to summary judgment, the court must construe the pleadings, depositions, admissions and affidavits strictly against the movant and liberally in favor of the opponent.' ( In re Estate of Whittington (1985), 107 Ill. 2d 169, 177[, 483 N.E.2d 210, 215, 90 Ill. Dec. 892]; Tersavich v. First National Bank & Trust [Co.] (1991), 143 Ill. 2d 74, 80-81[, 571 N.E.2d 733, 156 Ill. Dec. 753].) " Loyola Academy v. S & S Roof Maintenance, Inc. (1992), 146 Ill. 2d 263, 271, 586 N.E.2d 1211, 1214-15, 166 Ill. Dec. 882.

Where, as here, plaintiffs appeal from the trial court's grant of summary judgment to defendants, the only issue before the court on review is whether all the pleadings, depositions, admissions, and affidavits show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. ( Lindenmier v. City of Rockford (1987), 156 Ill. App. 3d 76, 508 N.E.2d 1201, 108 Ill. Dec. 624.) When a defendant files a motion for summary judgment, the plaintiff must then come forward with evidence to support each and every element of each cause of action pled in order to resist the motion for summary judgment. ( Webber v. Armstrong World Industries, Inc. (1992), 235 Ill. App. 3d 790, 601 N.E.2d 286, 175 Ill. Dec. 889; Bakkan v. Vondran (1990), 202 Ill. App. 3d 125, 559 N.E.2d 815, 147 Ill. Dec. 475.) However, the reviewing court's function is not to resolve disputed factual issues but only to determine if disputed factual issues exist. ( Bakkan v. Vondran (1990), 202 Ill. App. 3d 125, 559 N.E.2d 815, 147 Ill. Dec. 475.) If the court of review determines that a genuine issue of material fact exists, then the entry of summary judgment must be overturned. "A fact is material to the claim in issue when the success of the claim is dependent upon the existence of that fact." Lindenmier, 156 Ill. App. 3d at 88, 508 N.E.2d at 1209.

In appeals from summary judgment rulings, the reviewing court conducts a de novo review. (Delaney v. McDonald's Corp. (March 24, 1994), No. 75880; Outboard Marine Corp. v. Liberty Mutual Insurance Co. (1992), 154 Ill. 2d 90, 607 N.E.2d 1204, 180 Ill. Dec. 691.) In reviewing the trial court's ruling on a motion for summary judgment, the court of review should consider anew the facts and law related to the case to determine if the trial court was correct. ( Gresham v. Kirby (1992), 229 Ill. App. 3d 952, 595 N.E.2d 201, 172 Ill. Dec. 138.) The court of review looks at not only the facts alleged but also the reasonable inferences to be derived from those facts, whether the facts are disputed or not. ( Bakkan, 202 Ill. App. 3d at 130, 559 N.E.2d at 818.) If there are no facts in dispute but reasonable minds could draw different inferences from the facts, then a triable issue exists which precludes the entry of summary judgment. ( Loyola Academy, 146 Ill. 2d at 272, 586 N.E.2d at 1215.) Furthermore, facts can be propounded by either direct or circumstantial evidence, but on a motion for summary judgment, a fact will not be considered in dispute if raised by circumstantial evidence alone unless the circumstances or events are so closely related to each other that the Conclusions therefrom are probable, not merely possible. Bakkan, 202 Ill. App. 3d at 130, 559 N.E.2d at 819.

II. SUMMARY JUDGMENT IN FAVOR OF ATTORNEY

Plaintiffs' fourth amended complaint includes four counts against Jennings. Count VIII alleges that Jennings was negligent in drafting the testator's will, in that the testator advised Jennings that "he wished his Last Will and Testament to provide the maximum charitable and marital deductions such that there would be minimal estate tax on the bequest." Count VIII further alleges that Jennings had a duty to plaintiffs "to exercise reasonable care in the performance of professional attorney services, including the drafting of the Last Will and Testament in such a manner as to eliminate or reduce to the extent allowable under the law any taxes, penalties and interest that the Estate would have to pay and including rendering tax advice in preparing the federal estate tax return after the death of Abe I. Small." Count VIII alleges that Jennings breached that duty by negligently drafting the testator's will so that the IRS did not allow the estate to take either the charitable deduction or the marital deduction, and as a direct and proximate result thereof, plaintiffs were damaged by the estate having to pay taxes and interest, which reduced the corpus of the testamentary trusts.

Count IX also alleges negligence by Jennings, but in his capacity as attorney for the estate rather than as attorney for the testator. This count also alleges a duty to reduce or minimize estate taxes and breach of that duty in negligently filing the Federal estate tax return, negligently failing to advise the estate of the steps necessary to reduce or eliminate the tax liability, negligently failing to realize that the will he drafted would result in substantial tax liability to the estate, and negligently failing to advise any or all of the beneficiaries of the tax implications in a timely manner. Damages alleged under count IX are the same as under count VIII, the amount of the taxes and interest actually paid by the estate.

Counts X and XI allege a third-party beneficiary contract in favor of plaintiffs and breach of that contract in essentially the same manner as alleged under the negligence counts, with count X alleging breach during Jennings' representation of the testator and the drafting of his will and count XI alleging breach during his representation of the estate and in the preparation of the Federal estate tax return. Damages sought are the same in all counts of the complaint: the amount of taxes and interest actually paid by the estate, plus prejudgment interest.

A complaint against an attorney for professional malpractice may lie in either contract or tort, and the recovery may be in the alternative. ( Collins v. Reynard (1992), 154 Ill. 2d 48, 607 N.E.2d 1185, 180 Ill. Dec. 672.) Collins does not hold, however, that anybody who is aggrieved by attorney malpractice has a cause of action against the negligent attorney. "It is to be noted that the ruling we announce today is limited to the specific field of lawyer malpractice as an exception to the so-called Moorman doctrine and to the distinctions separating contract from tort. Today's decision neither changes the duties a lawyer owes his client, nor does it change the circumstances under which a lawyer may be sued for malpractice, nor does it change the damages recoverable." (Emphasis added.) ( Collins, 154 Ill. 2d at 52, 607 N.E.2d at 1187.) Therefore, we review the propriety of the entry of summary judgment in favor of Jennings, first, as to his duties during the life of the testator and, second, as to his duties after the testator's death in light of Collins.

A. ATTORNEY'S DUTIES IN DRAFTING WILL

Here, the evidence regarding Jennings' representation of the testator, when considered in the light most favorable to plaintiffs, is, in relevant part, as follows: In 1977, attorney Walter Ackerman drafted a will for the testator. Ackerman retired, so the testator went to Jennings around 1981 to make some minor revisions to his will. Jennings made the requested changes but left the majority of the will as it had been written by Ackerman. The revised will was executed by the testator on May 11, 1981.

On January 7, 1982, after new Federal tax laws were passed, Jennings mailed a letter to the testator. That letter advised the testator about certain changes in the tax laws and suggested that the testator should set up an appointment with Jennings "to review [his] present Will and estate plan." On January 13, 1982, the testator and his wife came to Jennings' office and discussed estate planning "again," according to Jennings' interoffice memo. That same memo, which describes the meeting between Jennings and the testator and his wife, states, inter alia, as follows:

"I told [the testator] I thought it would be well for him to prepare a current list of his assets showing a complete list of everything that he and Mrs. Small owned, the approximate worth, and hwo [sic ] it's owned, and then he shoudl [sic ] authorize me to sit down with Don Rice and prepare an estate plan."

The testator called Jennings on January 19, 1982, to instruct Jennings to set up an appointment with Don Rice. According to Jennings, the purpose of the appointment with Rice was to commence the estate plan for the testator and his wife. On January 20, ...


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