United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
EDMOND E. CHANG, District Judge.
Money and family politics make for an ugly mix, according to the allegations in this diversity action. Robert Sarvis, proceeding pro se, claims that Defendants BMO Harris Bank, Kenneth Nykiel, and Margaret McElrath violated their fiduciary duties and were negligent in their management of certain trusts set up to benefit Sarvis's late brother, Andrew. Sarvis is the alleged assignee of Andrew's property, including claims to bring lawsuits related to the trusts. Sarvis also claims that Defendants McElrath, Sally Deforest, and Thomas Rodman-who are cousins of the Sarvises-conspired to defraud him and his brother of their rights to expected inheritances. All Defendants have moved to dismiss the complaint on the basis that Sarvis lacks standing and, alternatively, fails to state a claim for relief. BMO also moves for sanctions against Sarvis for bringing meritless claims for the sole sake of harassing the bank. R. 37, 45, 50. For the reasons given below, the motions to dismiss are granted and the motion for sanctions is denied without prejudice.
A. Factual Allegations
The amended complaint's factual allegations, which must be accepted as true for now, are sprawling, covering at least six States, four generations of Sarvis's family, three trusts, two wills, some lake property, and millions of dollars. To make proper sense of the facts that follow, it is first necessary to introduce the cast of players (and who had the money and how much of it) in this family drama.
Helen and Robert Hammond, the progenitors of the line, had three children: James Hammond, Mary Rodman, and Jean Sarvis. See R. 22, Exh. A, Hammond Ancestral Chart. Mary was the mother of Defendants Margaret McElrath (who in turn had one son, Ryan), Sally Deforest, and Thomas Rodman; Jean's children were Robert Sarvis (the Plaintiff) and his siblings, Andrew and Helen Sarvis. R. 22, Am. Compl. ¶¶ 50, 93, 114; see Hammond Ancestral Chart. For clarity's sake, the Court refers to the Plaintiff as Sarvis and his siblings by their given names.
Helen and Robert Hammond left an estate of over $5 million, which was held in a trust in Helen's name. Am. Compl. ¶ 13. Among the trust's assets were two parcels of family-held real estate located in Michigan, called the Glen Lake properties. Id. ¶ 17. Upon Helen's death, her living children, James and Mary, were named trustees. Id. ¶ 14. Defendant BMO Harris Bank was the corporate trustee. Id. ¶ 15. Per the terms of the trust, upon its termination in August 2014, a total of $811, 927 was disbursed in equal parts to five of Helen's grandchildren-each of Mary and Jean's offspring except Robert Sarvis. Id. ¶ 16. Helen's trust specifically excluded Sarvis from any rights to benefit from its provisions. R. 22, Exh. C, Helen Hammond Trust Agreement at 6.
In addition, James Hammond established a life insurance trust in his name for the benefit of his mother Helen, his sister Mary, and his nephew Andrew. Id. ¶ 19. It is alleged that this trust had residual assets of around $230, 600 as late as at Mary's death in 2013. Id. ¶ 24. BMO and Kenneth Nykiel, another Defendant, are trustees of the James Hammond trust. Id. ¶¶ 21, 22.
Finally, Andrew had a trust in his name as well. Id. ¶ 25. Because he was incapable of managing his own affairs, for reasons discussed below, the trustee was designated to make all of his financial decisions. Id. ¶ 26. Margaret McElrath, the Sarvises's cousin, became that trustee in 2008. Id. ¶ 27. Andrew's trust allegedly held close to $60, 000 in 2002 but was eventually depleted to near zero by 2009. Id. ¶ 28.
1. Andrew is Neglected and Manipulated
From young adulthood on, Andrew suffered from chronic and severe mental illness, including bi-polar disorder, schizophrenia, general anxiety, and hallucinations during which he heard voices, and he spent most of his life in and out of mental-health institutions. Am. Compl. ¶ 51. According to Sarvis, Andrew was never able to keep a job and he depended on payments from the family trusts to survive. Id. ¶¶ 52, 55, 56. Sarvis alleges that, in total, Andrew had an inheritance of $1.2 million and that Andrew's aunt Mary Rodman and cousin Margaret McElrath, along with another trustee named Irwin Askow, were responsible for authorizing the payments to Andrew. Id. ¶¶ 20, 56.
In the early 1980s, James Hammond, against the recommendation of Andrew's doctors, moved his nephew Andrew from a Veterans Affairs hospital in Ohio to Chicago, where James lived. Id. ¶ 57. James, as well as Sarvis, provided Andrew with living and medical expenses, but Andrew allegedly was living "hand to mouth with minimal financial resources." Id. ¶ 58. James died in 1986 and Sarvis, who lives in New England, became concerned for Andrew's welfare and sought to become his guardian, but was "prevented" from moving to Chicago to do so by Mary Rodman, McElrath, and Askow (how they prevented Sarvis from moving is not explained). Id. ¶ 59. Sarvis asserts that the three opposed the move in order to keep Sarvis in the dark about the trusts, because Sarvis was likely to make demands for Andrew's increased support that would diminish the principal if the true state of the trusts' finances were discovered. Id. ¶ 60.
There was apparently much to hide. Askow allegedly used his influence over Andrew to become his lawyer, have Andrew sign over his power of attorney to Mary Rodman, and then himself become named trustee of Andrew's trust, with McElrath as successor trustee-all without Andrew understanding what was transpiring. Id. ¶¶ 83-88. After Askow died in 2008, Defendant Nykiel, who Sarvis alleges had been working hand in glove with Askow, became the sole trustee of the James Hammond trust, but "failed to perform any of his duties." Id. ¶¶ 79, 91, 92. At that point, Sarvis alleges, McElrath transferred the remaining $25, 773 in assets in Andrew's trust to BMO. Id. ¶ 30. (That is the extent of the allegations concerning Nykiel and BMO.) By November 2009, virtually all of the money was gone, only $60 having been given to Andrew. Id. ¶ 31.
In the meantime, Andrew's health deteriorated to the point of being confined to a wheelchair, and he was permanently hospitalized in a rehabilitation center in 2003. Id. ¶¶ 61, 62. Sarvis visited Andrew on several occasions at the center and was dissatisfied with his brother's accommodations, but Askow assured Sarvis that they were the best possible in light of Andrew's financial circumstances. Id. ¶ 63. When Sarvis visited again in 2007, Sarvis found that Andrew had been moved from a private room to one he shared with three others, and that Andrew had limited clothes and no books, writing supplies, or access to television and radio. Id. ¶ 64. Sarvis bought Andrew new clothes and supplies, and continued to send those things, as well as food, after he left. Id. But on future visits, Sarvis found Andrew in a similarly deprived state. Id. ¶¶ 66, 68. When Sarvis asked the staff at the center about Andrew's finances, they professed that they knew nothing about any trusts and that, if one had existed, it must have been long depleted. Id. In November 2013, Sarvis communicated with a distant family member whom he mistakenly believed to be Andrew's attorney; this lawyer informed Sarvis that he did not represent Andrew and inaccurately told Sarvis that the James Hammond trust had run out (the source of this lawyer's misinformation is unclear). Id. ¶ 68. Sarvis alleges that, in reality, that trust had assets in excess of $500, 000 at that time. Id. ¶ 69.
On top of this subterfuge about the trusts, Sarvis alleges that McElrath, as well as another lawyer working with Askow, kept the existence of Andrew's will a secret, lying to Sarvis and his sister Helen, who lived in Florida, by representing that no will existed for fear that they would challenge it. Id. ¶¶ 20, 71-73, 107. Sarvis contends that McElrath in fact "engineered its creation and terms, " and Andrew demonstrated no knowledge of any will to Sarvis. Id. ¶¶ 71, 74. McElrath, who lived in Milwaukee, Wisconsin, used her proximity and Andrew's incapacitated mental state "to gain control" over him, developing "a special confidential relationship with him." Id. ¶ 115. With Andrew's confidence won over, McElrath allegedly had Askow draft Andrew's purported will, leaving everything to McElrath's son Ryan and any other future children McElrath might have. Id. ¶¶ 114, 120. Andrew ...