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Illinois State Bar Association Mutual Insurance Co. v. Leighton Legal Group, LLC

Court of Appeals of Illinois, Fourth District

May 22, 2018

ILLINOIS STATE BAR ASSOCIATION MUTUAL INSURANCE COMPANY, Plaintiff-Appellant,
v.
LEIGHTON LEGAL GROUP, LLC, an Illinois Limited Liability Company; G. TIMOTHY LEIGHTON; CAROL M. McCLURE; and CYNTHIA S. McCLURE, Defendants-Appellees.

          Appeal from the Circuit Court of Sangamon County No. 16MR843 Honorable Brian T. Otwell, Judge Presiding.

          JUSTICE STEIGMANN delivered the judgment of the court, with opinion. Justices DeArmond and Turner concurred in the judgment and opinion.

          OPINION

          JUSTICE STEIGMANN

         ¶1 In August 2016, plaintiffs, Carol M. McClure and Cynthia S. McClure, filed a complaint against G. Timothy Leighton and the Leighton Legal Group, LLC (collectively, the insured); Daniel Sanchuk; DPS Consulting, LLC; and other nominal defendants in the Superior Court for the District of Columbia. The insured was an attorney and cotrustee for a trust of which plaintiffs were the remainder beneficiaries.

         ¶2 The complaint (1) sought a declaratory judgment as to the ownership of the trust property, (2) sought restoration of trust property, (3) sought a constructive trust, (4) requested termination of the trust, (5) alleged self-dealing by the insured, (6) alleged breach of good faith and fair dealing, (7) alleged breach of trust for failure to administer the trust, (8) requested the removal of the trustees, and (9) sought the appointment of a special fiduciary to perform an ac- counting of trust property. Throughout the complaint, plaintiffs alleged willful conduct by the insured.

         ¶3 In September 2016, the Illinois State Bar Association Mutual Insurance Company (hereinafter, ISBA) filed a complaint for declaratory judgment, contending it had no duty to de-fend the insured against the aforementioned complaint. ISBA asserted that the insured's actions constituted intentional conduct and was excluded from coverage.

         ¶4 In March 2017, the insured filed a motion for a judgment on the pleadings, argu- ing that the underlying complaint's allegations fall within, or potentially within, the policy's coverage. In May 2017, ISBA filed a motion for judgment on the pleadings, asserting again it did not owe a duty to defend the insured because his actions as alleged in the underlying complaint were intentional. In June 2017, the trial court concluded that ISBA had a duty to defend under the terms of the policy.

         ¶ 5 ISBA appeals, arguing that the trial court erred by granting judgment in favor of the insured because "the underlying [c]omplaint clearly alleged intentional conduct which is ex-pressly excluded from coverage under the ISBA Mutual policy." We conclude that the insured's conduct, as alleged in the underlying complaint, is excluded from coverage.

         ¶6 I. BACKGROUND

         ¶7 A. The Underlying Complaint

         ¶8 1. The Joseph McClure Trust

         ¶9 In August 2016, plaintiffs filed the underlying complaint against the insured in the Superior Court for the District of Columbia. The underlying complaint stated that nearly 40 years earlier, Joseph McClure and James Lundberg formed a variety of business entities to co-own real property and conduct business. The complaint noted that Joseph and James acquired valuable real estate within the District of Columbia. In 1992, James died. On July 7, 1995, Joseph execut-ed his last will and testament. On July 11, 1995, Joseph died.

         ¶10 Joseph's will directed that after satisfying specific bequests, the remainder of his property would be sold to establish an irrevocable trust (hereinafter, the Joseph McClure Trust). The Joseph McClure Trust had specific provisions for nomination of trustees, designation of beneficiaries, use of a qualified financial institution to comanage the trust, and instructions for distribution of the trust corpus to the remainder beneficiaries. The will provided that Joseph's brother, Cecil McClure, would be the income beneficiary of the trust. Upon Cecil's death, the trust corpus was to be distributed to the Lundberg Family Education Fund and to Cecil's chil-dren. Plaintiffs are Cecil's children.

         ¶11 2. The Cecil Q. McClure Irrevocable Trust

         ¶12 The underlying complaint alleged that, in October 1998, Joseph's estate closed without a complete liquidation of his property. The complaint then alleged that the insured draft-ed the Cecil O. McClure Irrevocable Trust (hereinafter, the Cecil McClure Trust). The complaint further alleged that in December 1998, the insured attempted to unlawfully "decant" the Joseph McClure Trust by transferring Joseph's property to the Cecil McClure Trust. (Trust decanting refers to the act of "pouring" the principal of an irrevocable trust into a new trust with different terms. See Ferri v. Powell-Ferri, 72 ...


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