Court of Appeals of Illinois, First District, First Division
DANIEL A. DANHAUER and DEBORAH L. SUPIS, as Executors of the Estate of Daniel J. Danhauer, Deceased, Petitioners-Appellants
JEANNE NEWTON DANHAUER, Respondent-Appellee.
Appeal from the Circuit Court of Cook County. No. 10-P-003455 Honorable James G. Riley, Judge Presiding.
Justices Cunningham and Delort concurred in the judgment and opinion.
¶ 1 The petitioners, Daniel A. Danhauer and Deborah L. Supis, as Executors of the Estate of Daniel J. Danhauer, Deceased, appeal the circuit court order which denied their petition to substitute the judge under section 2-1001(a)(3) of the Code of Civil Procedure (Code) (735 ILCS 5/2-1001(a)(3) (West 2012)) and granted summary judgment under section 2-1005 of the Code (735 ILCS 5/2-1005 (West 2012)) in favor of the respondent, Jeanne Newton Danhauer. On appeal, the petitioners argue that the circuit court erred when it: (1) denied their petition for substitution of judge for cause; (2) determined that the 2008 beneficiary designation form was ambiguous and admitted parol evidence; and (3) refused to allow Daniel A. Danhauer to testify during the hearing on the respondent's motion regarding statements made by the decedent. For the following reasons, we affirm in part and reverse in part.
¶ 2 On July 8, 2010, the petitioners filed for probate of the 2004 will of Daniel J. Danhauer, stating the following facts. On February 19, 2010, at the age of 84, Daniel J. Danhauer died from a failure to thrive and advanced dementia. According to the death certificate, the decedent failed to thrive for several months before his death and had suffered from advanced dementia for several years before his death. The decedent's heirs included five children from his first marriage: Susan M. Clark, Kathleen A. Jacobs, Sandra L. Fuelts, and the petitioners; and his second wife, the respondent, whom he married in 1994 following the death of his first wife two years earlier.
¶ 3 The petition states that the decedent left a pour-over will, dated June 3, 2004, which provides that the estate's assets pour over into the Daniel J. Danhauer Trust under trust authority dated November 15, 1991. The decedent's children are named beneficiaries of the trust, but the respondent is not. According to the petition, five months before his death, on September 17, 2009, the decedent signed a second will, an amendment to the trust, and documents assigning power of attorney (POA) for health care and property to the respondent. The beneficiaries of the trust remained unchanged.
¶ 4 According to the petition, on January 21, 2010, the decedent's physician, Dr. Laura Saelinger-Shafer, wrote a letter to the respondent stating that the decedent's dementia had rapidly progressed over the past year, leaving him with impaired memory and judgment, and that he was no longer competent to make financial decisions.
¶ 5 The petitioners further allege that, on February 18, 2010, the day before the decedent died, the respondent signed, as POA, a beneficiary form on the decedent's IRA account held at Morgan Stanley Smith Barney (Morgan Stanley), worth approximately $110, 000. The 2010 beneficiary form changed the beneficiary from the decedent's trust to the respondent
¶ 6 On February 23, 2010, the respondent filed a petition to admit the 2009 will for probate. On December 8, 2010, the circuit court admitted the 2009 will and issued letters of office naming the petitioners supervised co-executors of the decedent's estate.
¶ 7 On March 24, 2011, the petitioners requested that the court issue citations to several financial and medical institutions because they believed that the respondent had unlawfully withdrawn assets from the estate. Morgan Stanley filed more than one motion for leave to file an interpleader complaint and for declaratory judgment, seeking to determine the proper beneficiary to the IRA account. However, the trial court denied Morgan Stanley's motions.
¶ 8 On April 10, 2012, the respondent filed a "Petition for Turnover Order of IRA Account Funds, " alleging the following. In 2002, the decedent named the respondent beneficiary to his IRA account, which was held at Smith Barney at that time. On September 7, 2007, upon Smith Barney's merger with Citibank, the decedent was required to complete a new beneficiary designation form in which he again named the respondent as the beneficiary. In November 2008, upon Citi Smith Barney's merger with Morgan Stanley, the decedent was again required to complete new beneficiary paperwork. According to the petition, the decedent instructed his financial advisor, Mark Ratay, and Ratay's assistant, Chastity Peterson, to transfer his accounts, including the IRA, without making any changes to his listed beneficiaries. As of that date, the trust was the named beneficiary on the decedent's accounts, except the IRA, which listed the respondent as beneficiary. The petition further alleges that Ratay and Peterson made a mistake and changed the beneficiary on the IRA account from the respondent to the trust. On February 4, 2010, the respondent provided Peterson with her POA documents. On February 18, 2010, Peterson faxed an IRA Designation of Beneficiary Form to the respondent to correct the beneficiary information, which the respondent completed and faxed back to Peterson. The respondent attached copies of the various beneficiary forms which substantiate the allegations contained in her petition.
¶ 9 In response, the petitioners argued that the respondent did not have authority as POA to change the beneficiaries on the decedent's accounts under section 3-4 of the Power of Attorney Act (755 ILCS 45/3-4 (West 2010)), which prohibits an agent from changing beneficiaries. They further argued that, based on Dr. Shafer's letter, the decedent was incompetent at the time he signed the POA documents. The petitioners attached the transcripts of the depositions of Ratay and Peterson in support of their argument that the decedent's 2008 beneficiary designation form should be honored. ¶ 10 Ratay testified that he worked as the decedent's financial advisor since 1985. In 2008, Ratay requested the decedent's permission to transfer his accounts from Citi Smith Barney to Morgan Stanley. Ratay's assistant, Peterson, sent paperwork to the decedent, who signed the forms on November 27, 2008. Sometime before the decedent died, his children contacted Ratay to find out the beneficiary information on all of the accounts. At that point, he and Peterson realized a mistake was made because the decedent had always wanted the respondent to inherit the IRA account. Ratay testified that the 2008 beneficiary form did not match what the decedent had "always said he wanted to do." While he admitted it was possible the decedent had changed his mind, Ratay did not believe that the decedent intended to change the IRA beneficiary because he never expressed such an intention.
¶ 11 Peterson testified that she knew the decedent since she began working for Smith Barney in 1998. She knew that the IRA account was the only account with the respondent listed as beneficiary. In 2008, during Citi Smith Barney's merger with Morgan Stanley, Peterson sent account transfer paperwork to the decedent. She testified that she wrote in the decedent's name but that he completed the beneficiary sections. Peterson stated that she made some corrections, including redacting the date of birth because trusts do not generally include one and correcting the relationship to "trustee." She became aware of the beneficiary mistake when the respondent contacted her in February 2010. Peterson recalled informing the respondent that the change was Morgan Stanley's mistake because the decedent had wanted everything to transfer without any changes. She explained that, at the time of the 2008 merger, she called Smith Barney and requested the most recent beneficiary designation for the IRA account and received the wrong information. Peterson passed on the incorrect information to the decedent, who entered the information on the Morgan Stanley documents. She testified that the decedent never indicated that he wanted to change the beneficiaries on any of his accounts and had stated that he wanted the accounts set up in exactly the same manner. Peterson testified that, as of November 2008, the decedent was actively monitoring the performance of his accounts with her and Ratay, and she believed that he was aware of his actions.
¶ 12 The petitioners also attached an affidavit by Daniel A. Danhauer, which states that, during Christmas 2008, the decedent told him that the trust should ...