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Epstein v. Bochko

Court of Appeals of Illinois, First District, Fourth Division

May 11, 2017

DAVID A. EPSTEIN, Cook County Public Administrator, for the Estate of Anna Polchanin, Deceased, Petitioner-Appellant,
v.
IRENE BOCHKO, KATERYNA SZCZUDLO, STEPHEN A. KUBIATOWSKI, and SELFRELIANCE UKRAINIAN AMERICAN FEDERAL CREDIT UNION, Respondents, Selfreliance Ukrainian American Federal Credit Union, Respondent-Appellee.

         Appeal from the Circuit Court of Cook County No. 11P3154 Honorable Mary Ellen Coghlan, Judge Presiding

          JUSTICE BURKE delivered the judgment of the court, with opinion. Justices McBride and Howse concurred in the judgment and opinion.

          OPINION

          BURKE, JUSTICE

         ¶ 1 Irene Bochko (Bochko) and Kateryna Shchudlo[1] were employed as caregivers for an elderly woman, Anna Polachanin (Anna). In April 2008, Shchudlo and Bochko obtained power of attorney for property and health care for Anna. Shortly after obtaining power of attorney, Shchudlo took Anna to Selfreliance Ukrainian American Federal Credit Union ("respondent" or "Selfreliance") and opened a joint bank account, with Anna as the primary account holder. Over the next few months, Shchudlo and Bochko deposited much of Anna's life savings into this joint account from her other bank accounts. Shchudlo then wired the money from the joint account at Selfreliance to bank accounts in Ukraine. In October 2008, a licensed psychiatrist evaluated Anna and concluded that she had dementia and that her dementia had been present for several years. The public guardian petitioned the Cook County circuit court for a citation to recover assets from Bochko, Shchudlo, respondent, and others. Shortly thereafter, Anna died, and the Cook County public administrator (petitioner) was appointed to supervise her estate and continued to pursue the petition. Respondent moved for summary judgment, and after a hearing, the court granted that motion finding that there was no evidence respondent knew or should have known of Anna's mental incapacity at the time she opened the joint bank account. We find the circuit court properly granted respondent's motion for summary judgment where there were no issues of material fact and respondent was not liable for the fraudulently converted funds.

         ¶ 2 I. BACKGROUND

         ¶ 3 According to petitioner's amended petition, Anna, a 95-year-old woman, lived alone until 2008 when she required live-in care while she recovered from surgery. A handyman who worked in Anna's building, Volodymyr Bochko (Volodymyr) told Anna that his daughter, Bochko, would be willing to work as a caregiver for her. Shortly thereafter, Shchudlo began working with Bochko as Anna's caregiver. In April 2008, Bochko and Shchudlo took Anna to attorney Stephen Kubiatowski's office to prepare and execute a power of attorney for Anna.

         ¶ 4 On May 31, 2008, Shchudlo took Anna to Selfreliance to open a joint bank account. As identification to open the account, Shchudlo presented an expired foreign passport. Valentina Sidelnik, the manager at Selfreliance, testified that she did not require further identification from Shchudlo because she already had an account with Selfreliance. Sidelnik further testified that neither Anna nor Shchudlo presented her with the power of attorney form because it was not necessary to open the account. Sidelnik testified that Anna was present, she asked to have the account opened, and she signed her own name on the account agreement. Sidelnik also noted that Anna walked into Selfreliance without assistance and spoke Ukrainian. Sidelnik testified that Anna told her that she wanted to open an account with Selfreliance because it was a Ukrainian institution. The joint account was opened with a check for more than $50, 000 from Anna's account at Hoyne Savings Bank. Sidelnik testified that this was not an unusual amount to be deposited into a new account.

         ¶ 5 Between May and June 2008, more than $300, 000 was transferred or deposited into the joint account at Selfreliance from Anna's accounts at other financial institutions. In July 2008, Bochko and Shchudlo began to wire money from the joint account at Selfreliance to accounts in Ukraine. Between July and October 2008, more than $250, 000 was transferred from the joint account at Selfreliance to bank accounts in Ukraine.

         ¶ 6 Dr. Geoffrey Shaw, a licensed psychiatrist, evaluated Anna on October 30, 2008. After meeting with her, Dr. Shaw concluded that Anna was disabled by dementia and later opined that her dementia had been present for at least several years. Dr. Shaw testified that when Anna went to Selfreliance on May 31, 2008, she was suffering from dementia, but he could not offer an opinion regarding how she presented herself to respondent's employees on that date. Based on Dr. Shaw's report, the circuit court declared Anna a disabled person and appointed the public guardian as plenary guardian of Anna's estate and person.[2]

         ¶ 7 On February 19, 2010, the Public Guardian filed an amended petition for a citation to recover assets from Bochko, Volodymyr, Shchudlo, Kubiatowski, and Selfreliance. Counts V and VI of the eight-count petition were directed at Selfreliance. In count V, the public guardian alleged that respondent breached a duty of care owed to Anna. The allegation stated that "Banks, Savings and Loans, and Credit Unions generally owe their customers a duty of ordinary care to maintain and guard a customer's accounts, and protect the account holder from fraud, abuse and waste." In count VI, the public guardian alleged that the account agreement between Anna and Selfreliance was "a nullity" because Anna was incapable of entering into contracts at the time she signed the account agreement with Selfreliance on May 31, 2008. The public guardian requested that the court rescind the May 31, 2008, account agreement and order Selfreliance to reconvey all of the funds from the fraudulent wire transfers. Anna died on May 7, 2011, and the court appointed the Cook County public administrator as the supervised administrator of her estate.

         ¶ 8 On September 25, 2015, respondent filed a motion for summary judgment on counts V and VI of the amended petition. Respondent contended that it did not owe a duty of ordinary care to maintain and guard a customer's accounts and protect the account holder from fraud, abuse, and waste. Respondent further contended that there was no evidence suggesting that it knew or should have known that Anna was disabled when she came to Selfreliance to open the joint account. In regard to count V, the circuit court found that neither the Uniform Commercial Code nor any Illinois authority imposed a tort duty of ordinary care between a depositor and a bank, except with regard to negotiable instruments. The court determined that since wire transfers are not negotiable instruments, Selfreliance did not breach any duty owed to Anna.

         ¶ 9 With regard to count VI, seeking rescission of the May 31, 2008, account agreement, the court found that there were no material facts to establish that Selfreliance either knew or should have known of Anna's condition at the time she opened the joint account. The court noted that the only facts presented concerning Anna's mental condition on the date the account was opened were contained in Sidelnik's deposition testimony because Dr. Shaw testified that he could not offer an opinion regarding how Anna appeared on that date. Accordingly, the court found that there was no genuine issue of material fact and that respondent was entitled to judgment as a matter of law on counts V and VI. Petitioner now solely appeals the court's dismissal of count VI.

         ¶ 10 III. ANALYSIS

         ¶ 11 On appeal, petitioner contends that the circuit court erred in granting respondent's motion for summary judgment where there was a question of material fact as to whether Anna was mentally competent at the time she opened the joint account and it was irrelevant whether respondent knew or should have known about her incompetency. Petitioner asserts that because Anna lacked the capacity to enter into an account agreement ...


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