Court of Appeals of Illinois, First District, Sixth Division
BARBARA ADLER, Individually and as Special Representative of the Estate of Orrin Adler, MICHAEL HANNA, and FAYE R. ADLER GRAFTON, Plaintiffs-Appellees,
FRANK M. GREENFIELD and FRANK M. GREENFIELD AND ASSOCIATES, P.C., Defendants-Appellants.
Appeal from the Circuit Court of Cook County. No. 09 L 14343 Honorable Marcia Maras, Judge Presiding.
Justices Hall and Reyes concurred in the judgment and opinion.
¶ 1 The instant appeal concerns a discovery dispute between plaintiffs, the estate of Orrin Adler, Barbara Adler, Michael Hanna, and Faye Adler Grafton, and defendants, Frank M. Greenfield and Frank M. Greenfield & Associates, P.C., which arose during litigation of plaintiffs' legal malpractice action against defendants. Plaintiffs, the third-party beneficiaries of a will prepared by defendants, allege that defendants were negligent in failing to follow the intention of the testator and include a certain provision in a will that would have entitled them to a greater inheritance. During the course of discovery, plaintiffs sought information concerning the testator's testamentary intentions, which defendants claimed was shielded by the attorney-client privilege. The trial court ordered defendants to produce documents and provide deposition testimony concerning communications between defendants and their client.
¶ 2 Defendants moved to reconsider the trial court's ruling or, in the alternative, for entry of a contempt order for purposes of seeking review of the discovery order. On reconsideration, the trial court found that defendants' direct communications with their clients were shielded by privilege, but communications through third parties were not; in an attempt to amicably resolve the issue, the trial court ordered plaintiffs to seek the information directly from the third party, a bank. The bank produced a number of documents but also objected to revealing communications between the bank and defendants on behalf of defendants' clients. The trial court conducted an in camera inspection of the bank's documents, overruled its objections, and ordered defendants to produce documents. Defendants did not comply and, on March 2, 2012, the trial court entered an order holding defendants in civil contempt and entered a monetary penalty of $100. Defendants appeal, arguing that the trial court erred in finding that communications between defendants and the bank were not privileged. For the reasons that follow, we vacate the contempt order, and affirm the trial court's discovery order in part and reverse it in part.
¶ 3 BACKGROUND
¶ 4 I. Greenfield and the Perrys' Estate Planning
¶ 5 The underlying lawsuit in the instant case concerns defendants' actions in preparing estate documents for Leonard and Muriel Perry (collectively, the Perrys). Although the instant appeal concerns the applicability of the attorney-client privilege, for context, we briefly relate the facts as alleged in plaintiffs' complaint and its exhibits.
¶ 6 Defendants, Greenfield and his law firm, represented the Perrys for estate-planning purposes. In connection with the estate planning, Leonard executed a will that poured his assets into a trust known as the "Leonard W. Perry Declaration of Trust"; Muriel did the same with her assets, pouring them into the "Muriel W. Perry Trust Agreement." Leonard died in 2007, and Muriel died on May 2, 2008. Plaintiff Faye Adler Grafton and JP Morgan Chase Bank (JP Morgan) were named as co-executors of Muriel's will and, after Muriel's death, became co-trustees of Muriel's trust.
¶ 7 At the time of Leonard's death, his trust was subdivided into two trusts: a Marital Trust and a Family Trust. The Marital Trust was to provide for Muriel during her life and, upon Muriel's death, any assets remaining in the Marital Trust would be distributed to the Family Trust. The Family Trust was divided into two portions: Portion A and Portion B. Portion A consisted of $99, 500, which was to be used to make specific bequests, and Portion B consisted of the remainder of the trust's assets and was to be equally divided among five named beneficiaries. Leonard's trust granted Muriel the power to appoint the Marital Trust's assets from the Family Trust, provided that Muriel specifically did so in her will. Additionally, Muriel was given the power to appoint and redesignate the remainder beneficiaries of the Family Trust.
¶ 8 After Leonard's death in 2007, Greenfield amended Muriel's will to include language "that directed, pursuant to her Power of Appointment of the Leonard W. Perry Trust dated March 22, 1996, that assets in the Leonard W. Perry Trust dated March 22, 1996 were to be distributed according to the terms of the Muriel Perry Trust." In April 2008, Muriel again amended her will, making changes to certain specific bequests of funds in her trust. In creating this will, Greenfield "knew that Muriel W. Perry intended to change certain monies that were to be distributed from the Leonard W. Perry Trust dated March 22, 1996 under her Power of Appointment in accordance with her designation as set forth in the amended Muriel W. Perry Trust." However, in preparing the will, Greenfield "failed to include language that Muriel W. Perry was exercising her Power of Appointment from her deceased husband's trust." This error remained undiscovered until after Muriel's death on May 2, 2008. As a result, certain beneficiaries received more moneys than Muriel intended to give and others received less.
¶ 9 Approximately a month after Muriel's death, Greenfield disclosed his omission of the power of appointment in the 2008 will in a letter to the beneficiaries of the trust. The letter provided:
"You are receiving this letter because you are named in the Muriel Perry Trust as a beneficiary. The purpose of this letter is to give you the facts regarding the value of Trust assets and the respective amounts of the distributions. As many of you know, for more than ten years I represented the late Leonard Perry and Muriel Perry in connection with their estate plan and during that time I came to know both of them well. I want to extend my sincere condolences to all the members of your family.
During his lifetime, Leonard Perry transferred his assets into the Leonard Perry Trust. The Leonard Perry Trust provided that upon the death of Leonard Perry the trust funds were to be used for the care, comfort and support of Muriel Perry. The Leonard Perry Trust further provided that Muriel Perry had the right to make changes or modifications to the plan of distribution by virtue of what is referred to as a 'Power of Appointment'. Accordingly, after Leonard died, Muriel had the right to 'appoint' the funds in Leonard's Trust as she wished, which is to say she had the right to make changes and modifications to the plan of distribution as she saw fit.
After the death of Leonard Perry, Muriel Perry executed a Will dated November 30, 2007, (the '2007' Will) in which she directed, pursuant to her Power of Appointment, that assets in the Leonard Perry Trust were to be distributed according to the terms of the Muriel Perry Trust. The effect of exercising the Power of Appointment in the 2007 Will was to change the distributions of trust funds as set forth in the Leonard Perry Trust to the distributions set forth in the Muriel Perry Trust.
Over a period of about a year before her death, I, along with Gary Cueno of JP Morgan Chase Bank, met several times with Muriel Perry for the purpose of discussing modifications she wanted to make to her Trust. During the course of these meetings, it was very clear that Muriel Perry had given much thought to these changes and they were the product of her careful and well reasoned consideration.
On April 14, 2008, I met with Muriel Perry and reviewed with her in great detail the changes to her Trust, as she had directed. At that meeting she reiterated her conviction that the changes clearly reflected her desire regarding disposition of her assets upon her death. At that meeting, Muriel Perry executed an amendment to the Muriel Perry Trust and she also executed a Last Will and Testament (the '2008 Will'). The 2008 Will contains what is referred to as a 'scrivener's error'. A scrivener is the somewhat old fashion [sic] word used to describe the person who writes a document, in this case a Will. I drafted the 2008 Will and inadvertently omitted a provision that had been contained in the 2007 Will.
The reason for the omission does not change the facts, but for your information, the 2008 Will was prepared by referring to an earlier computer generated version of the document. That earlier computer generated version of the document did not contain the specific language exercising the Power of Appointment. It was an oversight and there is no question that when Muriel Perry signed the 2008 Will she verily believed that the Trustee of her trust would carry out her specific directions.
The difference between the distribution to each beneficiary using the 2007 Will (which contains the Power of Appointment language) and the distribution to each beneficiary using the 2008 Will (which does not contain the Power of Appointment language), is detailed on the enclosed schedule titled 'Muriel and Leonard Perry Estate Plan Distribution dated June 2008'. It is important to note that the figures used in the enclosed Muriel and Leonard Estate Plan Distribution are not final and were prepared for illustration purposes only.
The Co-Trustees of the Muriel Perry Trust are JP Morgan Chase Bank and Faye R. Grafton. The Co-Trustees have the obligation to carry out the wishes of Muriel Perry as she intended. There are several possibilities with respect to a course of action under these circumstances. The family members could honor the clearly stated intention of Muriel Perry and agree that distributions be made in accordance with Muriel Perry's Wishes as detailed on the enclosed Muriel and Leonard Perry Estate Plan Disposition. If the family members do not agree to honor the 2007 Will, they could agree to submit the matter to binding arbitration. In the absence of a unanimous agreement, the Co-Trustees would be forced to seek a judicial determination to resolve the scrivener's error. A judicial determination would involve all 27 beneficiaries and their respective lawyers and would be a costly and lengthy procedure.
I encourage you to promptly seek the advice of your individual attorney. Both myself and Gary Cueno are available to respond to inquiries from you or your attorney. The decision as to whether there will be a unanimous family agreement is something the Co-Trustees and all of you need to know as soon as possible.
I knew Leonard and Muriel Perry as two of the kindest, most gentle and caring people I have ever met. I am distressed about this situation and I am hopeful it can be resolved in a manner that pays homage to their memory. It should be understood that my position is to honor the wishes of Muriel Perry and I will fully cooperate with her family to achieve this goal.
I look forward to your early response."
The letter included as an enclosure a document that compared the distribution of the trust funds under "Muriel's Wishes" and under the "Current Estate Plan w/Scrivener's Error." Plaintiffs received a total of $863, 900 less under the "Current Estate Plan w/Scrivener's Error" than they would have under "Muriel's Wishes."
¶ 10 II. Procedural Posture
¶ 11 On November 23, 2009, plaintiffs filed a complaint against defendants for legal malpractice, claiming that Greenfield was negligent in failing to include the power of appointment provision in Muriel's will and that as a result of that omission, they "have been deprived of monies for which they were the intended beneficiaries"; the complaint was amended on May 11, 2010, to add an exhibit. On February 1, 2010, defendants filed a motion to strike and dismiss plaintiffs' complaint pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-615, 2-619 (West 2008)), claiming that plaintiffs' ...