The opinion of the court was delivered by: Joe Billy McDADE United States Senior District Judge
Tuesday, 21 June, 2011 03:29:43 PM
Clerk, U.S. District Court, ILCD
Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint (Doc. 1-1) and Memorandum in Support (Doc. 7), filed on December 6, 2010. Plaintiff timely filed a Response to Defendant's Motion to Dismiss (Doc. 9). For the following reasons, Defendant's Motion to Dismiss is GRANTED.
William Joseph Palumbo and Sue Frances Palumbo created the Palumbo Children's Trust (the Trust) on December 22, 1984, for the benefit of their children. (Doc. 1-1 ¶ 8). At the time of the execution of the Trust Agreement and at all times thereafter, the Palumbos had a single child, their daughter Mia Anne Palumbo. (Doc. 1-1 ¶ 9). Mia is presently 31 years of age and handicapped with severe epilepsy that cannot be controlled through medicine. (Doc. 1-1 ¶ 9). She experiences seizures on a daily basis and routinely drops to the ground. (Doc. 1-1 ¶ 9). She has health care givers in her home that attend to her daily needs and protect her from physical harm resulting from her seizures and dropping episodes. (Doc. 1-1 ¶ 9). Proceeds from the Trust are and were intended to pay for Mia's costly and lifelong medical care. (Doc. 1-1 ¶ 10).
John Haeffele and Julianne Haeffele became co-trustees*fn2
and opened a checking account with First Financial Bank, now
Associated Bank,*fn3 in the Trust's name on March 31,
1998. (Doc. 1-1 ¶ 14). Mr. and Mrs. Haeffele also had a personal
checking account with this bank. (Doc. 1-1 ¶ 19). Associated Bank
allowed John Haeffele to draw checks in his name from the Trust
account and deposit them into his personal account. (Doc. 1-1 ¶¶
23-24). He did so on at least 186 occasions, drawing funds from the
Trust in the amount of $280,145.00. (Doc. 1-1 ¶ 26). Upon information
and belief, Associated Bank allowed John Haeffele to take an
additional $161,168.00 bringing the total to 441,313.00.*fn4
(Doc. 1-1 ¶¶ 27-28).
Plaintiff, James F. Beedie, in his official capacity as trustee of the Palumbo Children's Trust, now brings this suit against Defendant, Associated Bank Illinois, N.A., under the Uniform Commercial Code as adopted by Illinois Law.*fn5 Plaintiff states claims for payment of unauthorized checks pursuant to 810 ILCS 5/4-401; conversion of instruments pursuant to 810 ILCS 5/3-420; claim to proceeds of instruments pursuant to 810 ILCS 5/3-306; and violation of Illinois Fiduciary Obligations Act (IFOA), 760 ILCS 65/1 et seq. Defendant believes it is shielded from all of Plaintiff's claims by the IFOA and therefore seeks to have them dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 7). Plaintiff has responded that the IFOA does not shield Defendant from liability because 1) the checks drawn by John Haeffele were not properly authorized; and 2) Defendant acted in bad faith. (Doc. 9).
In ruling on Rule 12(b)(6) motions, a court must construe the complaint in light most favorable to the plaintiff. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). To survive a motion to dismiss under 12(b)(6), factual allegations must raise a right to relief above the speculative level. Bell Atlantic Corp v. Twombly, 550 U.S. 554 (2007). In other words, the complaint must describe the claim in sufficient detail to give the defendant "fair notice of what the ... claim is and the grounds upon which it rests." Hughes v. City of Peoria, 2011 WL 284350, at *2 (C.D. Ill. January 24, 2011). Conclusory allegations are "not entitled to be assumed true." Id. A complaint must state sufficient factual matter, accepted as true, to "state a claim that is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw a reasonable inference that defendant is liable for the misconduct alleged. Id.
Plaintiff alleges the following facts in his Complaint: John Haeffele and Julianne Haeffele were appointed as co-trustees of the Palumbo Children's Trust in 1998 and served as such until July 2009. (Doc. 1-1 ¶ 11). On March 31, 1998, John and Julianne Haeffele opened a checking account with Associated Bank in Peoria, Illinois on behalf of the Trust. (Doc. 1-1 ¶ 14). At the time the Trust checking account was opened, Associated Bank required John Haeffele to present the Trust documents to it and he did. (Doc. 1-1 ¶ 15). Pursuant to Colorado law, which was controlling according to the terms of the Trust Agreement, all checks drawn on the Trust checking account required the signature of both co-trustees in order to be properly authorized. (Doc 1-1 ¶ 18).
At all relevant times the Haeffeles also maintained a personal checking account with Associated Bank, a mortgage loan with Associated Bank, and another personal loan*fn6 from Associated Bank. (Doc. 1-1 ¶¶ 19-21). After he was appointed co-trustee, John Haeffele began selling off Trust assets and depositing proceeds into the Trust's Associated Bank Account. (Doc. 1-1 ¶ 22). John Haeffele wrote checks to himself drawn on the Trust checking account and deposited the checks into his and Julianne Haeffele's personal checking account with Associated Bank. (Doc. 1-1 ¶¶ 23-24). Periodically, John Haeffele would receive cash at the time of these deposits. (Doc. 1-1 ¶¶ 24). Once deposited, the Haeffeles made use of those funds for personal expenses unrelated to the Trust. (Doc. 1-1 ¶ 25). Between August 2002 and July 2009, John Haeffele wrote checks to himself on at least 186 occasions totaling $280,145.00 and it is believed he did the same from 1999 through 2001 for an additional $161,168.00, for a total of $441,313.00. (Doc. 1-1 ¶¶ 26-28). Upon information and belief, John and/or Julianne Haeffele on multiple ...