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Central Bank v. Voga

Court of Appeals of Illinois, Second District

June 22, 2017

CENTRUE BANK, Plaintiff,
v.
LYLE L. VOGA, LARRY VOGA, LOIS ENGLERT, SHIRLEY BUSCH, LINDA JOAN FRISBEE, and ROBERT DuFAU, Defendants Lyle L. Voga, Defendant and Counterplaintiff-Appellant; Larry Voga, Lois Englert, and Linda Joan Frisbee, Defendants and Counterdefendants-Appellees.

         Appeal from the Circuit Court of Kendall County. No. 08-CH-871 Honorable Robert P. Pilmer, Judge, Presiding.

          JUSTICE BIRKETT delivered the judgment of the court, with opinion. Presiding Justice Hudson and Justice Hutchinson concurred in the judgment and opinion.

          OPINION

          BIRKETT JUSTICE.

         ¶ 1 Defendant and counterplaintiff, Lyle Voga (Lyle), appeals various rulings of the circuit court of Kendall County in this dispute over a trust established by Lyle's late father, Leroy Voga (Leroy). For the following reasons, we disagree with Lyle that the trial court erred in vacating the judgment in Lyle's favor on counts IX and X of Lyle's original countercomplaint. However, we agree that the trial court erred in granting the motion of defendants and counterdefendants Lois Englert (Lois) and Larry Voga (Larry) to dismiss count X of Lyle's original countercomplaint, which was later repled as count V of his amended countercomplaint. We reverse the trial court's dismissal of that count as well as its judgment, following a bench trial, on the remaining counts of Lyle's amended countercomplaint. We remand for further proceedings consistent with this opinion.

         ¶ 2 I. BACKGROUND

         ¶ 3 Lyle, Larry, Lois, and defendant and counterplaintiff Linda Joan Frisbee (Linda) are the children of Leroy. In January 2003, Leroy executed a revocable living trust (Trust). He designated himself as trustee and Linda as primary successor trustee. At the time, Leroy owned several parcels of real property used as farmland. The Trust contained the following provisions pertinent to this case. Upon Leroy's death, Lyle, Larry, and Linda would each receive a separate parcel of real property, and Shirley Busch (Shirley), Leroy's companion, would receive a life estate in his Arizona residence. No gift of real estate was made for Lois. The Trust directed that the four siblings would each receive a 25% share of the residue of Leroy's estate.

         ¶ 4 Also in January 2003, Leroy executed a durable power of attorney (POA) that designated Linda as agent. Section 9 of the POA gave the agent general power to amend any trust of which Leroy was the trustor, but it did not specifically designate any such trust.

         ¶ 5 On September 25, 2006, Linda executed, as agent under the POA, an amendment to the Trust (Amendment). The Amendment retained the bequests of real property to Lyle, Larry, and Linda. The Amendment also retained, with some qualifications, the life estate to Shirley in the Arizona residence. The Amendment added a bequest that is central to this appeal. The Amendment provided that Lois would receive upon Leroy's death "an amount of cash *** equal to the average fair market value by certified appraisal of the farm real estate gifted to [Linda] *** and the farm real estate gifted to [Larry][.]" The Amendment retained the four siblings' residuary interests of 25% each.

         ¶ 6 In February 2007, the four Voga siblings signed an agreement titled "Agreement Between Primary Beneficiaries to Designate Co-Trustees" (Co-Trustee Agreement), which purported to make the siblings co-trustees of the Trust.

         ¶ 7 In May 2007, plaintiff, Centrue Bank filed an interpleader action (see 735 ILCS 5/2-409 (West 2006)) against the four Voga siblings, Shirley, and Robert DuFau, who was one of the successor trustees under the Trust. Centrue alleged that Lyle and Larry, citing the Co-Trustee Agreement, demanded that Centrue turn over to them certain Trust property it held, namely accounts and the contents of a safe deposit box. Centrue refused their demand out of suspicion that the Co-Trustee Agreement was invalid because it lacked the signature of Shirley, one of the Trust's primary beneficiaries. Centrue sought direction from the court as to the disposition of the property.

         ¶ 8 In August 2010, Lyle filed a 13-count countercomplaint against Larry, Linda, and Lois. Larry and Lois answered the complaint and filed affirmative defenses. Subsequently, Lyle filed an additional count against Linda.

         ¶ 9 In June 2011, Lyle filed a motion under section 2-615(e) of the Code of Civil Procedure (Code) (735 ILCS 5/2-615(e) (West 2010)) for judgment on the pleadings on counts IX and X of his countercomplaint. These counts alleged that the Amendment was void because the POA, Linda's purported authority for executing the Amendment, did not comply with statutory requirements. Count IX alleged that the POA was not in the form authorized by section 3-4 of the Illinois Power of Attorney Act (Act) (755 ILCS 45/3-4 (West 2006)). Count X alleged that the POA did not specifically mention the Trust as an instrument that Linda could modify, as required by section 2-9 of the Act (755 ILCS 45/2-9 (West 2006)). Lyle further alleged in count X that the POA, as "a common law power of attorney, " expired prior to the execution of the Amendment, because of Leroy's mental incapacity. Lyle asked in his section 2-615(e) motion for a finding that the Amendment was void for the reasons stated in counts IX and X. Neither Larry, Linda, nor Lois filed an objection to the motion.

         ¶ 10 At the July 14, 2011, hearing on the motion, Lyle, Larry, and Lois appeared with counsel, but Linda did not appear. The court noted that Linda's nonappearance was anticipated. Counsel for Larry concurred, remarking that Linda did not "have much of any interest" in the proceeding since she had sold to a third party the real property she received under the Trust. After Lyle's counsel presented his arguments, counsel for Lois pointed out that, in October 2010, Larry and Linda executed assignments in favor of Lois (Assignments). In the Assignments, copies of which are in the record, Larry and Linda each assigned to Lois his or her 25% share of the Trust residue, "up to the amount that is equal to one-fourth (¼) of the value of the Special Gift provided for [Lois] in [the Amendment]" (the "Special Gift was the bequest of "cash *** equal to the average fair market value by certified appraisal of the farm real estate gifted to [Linda] *** and the farm real estate gifted to [Larry]"). Each Assignment stated: "This Assignment is made in respect of and pursuant to [the] Amendment, which I believe reflects my father's [Leroy's] wishes, regardless of whether the Amendment is valid."

         ¶ 11 Counsel for Lois commented as follows on the Amendment, the Assignments, and the merits of Lyle's motion:

"I think [counsel for Lyle] is correct technically but I would just like the court to know that in recognition of [the Amendment] and the special gift that was given to Lois, two of the other beneficiaries of [the Trust] have assigned their interests in the residue to Lois. I don't think it affects the invalidity of [the POA] at all, but I just wanted the court to be aware that certain of the beneficiaries in this case would submit to the court that it was truly the intent of [Leroy] to benefit Lois in the way that she was to be benefitted under [the Amendment], that was truly his intent, but there is no question about it technically under the law [that] [the POA] did not properly identify [the Trust] and [Linda] was probably without the power to amend [the Trust]."

         ¶ 12 Counsel for Larry said:

"[F]rom my point of view ***, [counsel for Lois] is absolutely correct. We thought it was [Leroy's] intent and so *** we've assigned our interest in the residue."

         ¶ 13 After the parties concluded their remarks, the trial court noted that it had received from Lyle a proposed order granting his motion for judgment on the pleadings. The order contained several paragraphs of findings that essentially reiterated the allegations of counts IX and X. The court confirmed with opposing counsel that they had seen the order and had no objection "as to the form." The court then granted Lyle's motion and entered the order.

         ¶ 14 Six months later, in January 2012, Linda filed a motion to vacate the July 2011 judgment. Linda alleged as follows:

"2. The [POA and the Amendment] were prepared by [Leroy's] attorney. ***
4.The effect of [the Amendment] would be to deplete the entire Estate, so that there would be no residue to distribute.
5.[Linda and Larry] assigned their share of the Trust residue to [Lois], in respect of [the Amendment], which they believed reflected [Leroy's] wishes.
6.Prior to the Court hearing on July 14, 2011, all parties except [Lyle] determined that it was not cost efficient to litigate the validity of [the POA and the Amendment].
7. The Court did not conduct any hearing on July 14, and the parties did not submit any evidence or present any argument.
8.The Court Order dated July 14 made findings which are not supported by the record.
9.The Court Order was not reviewed by [Linda] or her counsel prior to July 14, and was never served upon them. A copy of the Court Order was obtained from the Court Clerk in November, 2011.
10. In October, 2011, [Lyle] filed a Complaint in federal court, in the Northern District of Illinois, alleging a breach of fiduciary duty by [Linda] as Trustee for [the Trust], based in part on [the POA and the Amendment].
11.Since this Court did not make any determination on the merits of Counts IX and X of Lyle's [countercomplaint], this Court's Order should not be precedential in the federal court litigation."

         In his written response, Lyle claimed that the July 2011 judgment was a final judgment and that Linda failed to meet the requirements of section 2-1401 of the Code (735 ILCS 5/2-1401 (West 2010)) for relief from such a judgment more than 30 days after its entry.

         ¶ 15 At the hearing on the motion to vacate, Linda commented that the July 2011 judgment was "being manipulated in federal court in a different case to establish that [Linda] manipulated [the Trust] and violated her fiduciary duty." Lois stated that she had no objection to Linda's motion to vacate. She added that there was no harm in vacating the order, but that there was the possibility of "serious harm" if the judgment was not vacated. Larry stated that he agreed with Linda and Lois. He observed that the July 2011 judgment "was entered without a hearing at a time ...


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