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Ely v. Pivar

Court of Appeals of Illinois, First District, Fourth Division

May 24, 2018

PETER SMITH ELY, as Executor and Successor Trustee of the MSA Trust; THE MSB TRUST; THE CADE FAMILY TRUST; and THE MARY CADE SMITH TRUST; PETER SMITH ELY, as Successor Trustee of the Mary Cade Smith Declaration of Trust of 1985; PETER SMITH ELY; BRUCE GRAHAM ELY; SUSAN BURCH; KAREN ANDERSON DAVIS; STEVEN J. ANDERSON; and STANLEY G. CADE, Plaintiffs-Appellants
v.
RUTH PIVAR, DLA PIPER, LLP, UNGARETTI & HARRIS, QUARLES AND BRADY, LLP, ROBERT WILNEFF, CBIZ MHM, LLC, MAYER HOFFMAN MCCAIN, P.C., and WILLIAM PAUL ROGERS Defendants Quarles and Brady, LLP, Defendant-Appellee.

          Appeal from the Circuit Court of Cook County No. 15L8387 Honorable Brigid M. McGrath, Judge Presiding.

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

          OPINION

          BURKE, PRESIDING JUSTICE

         ¶ 1 On August 17, 2015, plaintiffs filed a complaint in the circuit court of Cook County naming, among others, Ruth Pivar and Quarles and Brady, LLP (Quarles and Brady) as defendants. Quarles and Brady filed a motion to dismiss and, in response, plaintiffs filed an amended complaint. The allegations in plaintiffs' first amended complaint (FAC) related to five trusts that were created in 1966 by Wilmuth and Carroll Cade. Plaintiffs are the current executor of the trusts and the beneficiaries of at least one of the five trusts. Mary Cade Smith was an initial beneficiary of each of the five trusts. The gravamen of plaintiffs' first amended complaint relates to misconduct by Philip Rootberg, the initial trustee of the five trusts; Robert Wilneff, who became the trustee of the five trusts in 2001; Pivar, who was retained as counsel for the trusts in 2001; and Cade Smith. Plaintiffs alleged in the complaint that prior to Cade Smith's death in 2014, Wilneff, Pivar, Cade Smith, and defendant William Paul Rogers improperly disbursed the trusts' assets through promissory notes and gifts to Cade Smith. Plaintiffs contended that the entirety of the trusts' assets were disbursed to Cade Smith by 2009, before the other beneficiaries were ever informed of their beneficiary status.

         ¶ 2 Specifically, with regard to Pivar, plaintiffs contended, inter alia, that she failed to disclose the breaches of fiduciary duty by Rootberg and Wilneff, that she failed to advise the other trust beneficiaries of their beneficiary status, that she represented Cade Smith to the detriment of the trusts' other beneficiaries, and that she made false representations regarding the trusts in Cade Smith's will. Plaintiffs contended that Pivar joined Quarles and Brady in 2013, and that the law firm was, therefore, vicariously liable for her misconduct. As such, plaintiffs alleged claims of legal malpractice (count II), breach of fiduciary duty (count III), and conspiracy (count V) against Quarles and Brady.

         ¶ 3 Quarles and Brady filed a motion to dismiss the claims against it in plaintiffs' FAC pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2014)). The court granted that motion with prejudice with regard to plaintiffs' claim for legal malpractice, but without prejudice for plaintiffs' claims for breach of fiduciary duty and conspiracy. The court held, however, that plaintiffs would be required to seek leave of court before repleading its claims for breach of fiduciary duty and conspiracy against Quarles and Brady. Plaintiffs filed a motion for leave to amend the complaint, and attached a proposed second amended complaint (SAC), which included a single claim against Quarles and Brady for breach of fiduciary duty. The circuit court denied plaintiffs' motion for leave to amend, and found that there was "no just reason to delay enforcement or appeal of this order pursuant to Rule 304(a) [(Ill. S.Ct. R. 304 (eff. Mar. 8, 2016))]."

         ¶ 4 On appeal, plaintiffs contend that the court abused its discretion in denying their motion to file the amended claim against Quarles and Brady where the proposed SAC cured the defects of the prior pleading. Plaintiffs also contend that the court erred in granting Quarles and Brady's motion to dismiss the claims against it in the FAC. For the reasons that follow, we find that we lack jurisdiction to consider plaintiffs' claims regarding the dismissal of the FAC and the circuit court's order denying plaintiffs leave to file an amended complaint.

         ¶ 5 I. BACKGROUND

         ¶ 6 A. Plaintiffs' First Amended Complaint[1]

         ¶ 7 In their FAC, plaintiffs contended that, in 1966, five trusts were created with Rootberg as the initial trustee. Cade Smith was named the initial beneficiary in each of the trusts. With the exception of one of the five trusts, each trust had at least one additional initial beneficiary. Plaintiffs asserted that by 1989, Cade Smith, with the assistance of Rootberg, began taking disbursements from the trusts without any notification to the other beneficiaries. Cade Smith continued receiving disbursements from the trust through 2001 when Rootberg retained Pivar as counsel. Plaintiff contended that, after being retained as counsel, Pivar knew that Cade Smith was receiving disbursements from the trusts, knew or should have known of the additional beneficiaries, and knew or should have known that the additional beneficiaries had not been informed of their beneficiary status. Despite this knowledge, Pivar did not notify any of the additional beneficiaries of Cade Smith's receipt of disbursements from the trusts or of their beneficiary status.

         ¶ 8 Later in 2001, Wilneff succeeded Rootberg as trustee. From 2003 to 2009, Cade Smith received more than $1.6 million from the trust. By 2009, the trusts' assets had been exhausted. During this period, neither Wilneff nor Pivar informed any of the other beneficiaries of their rights, or of Cade Smith's receipt of disbursements. In 2007, Pivar drafted a will for Cade Smith, which included an in terrorem clause, which excluded from the trusts any beneficiary who challenged the conduct of the trustees. Plaintiffs alleged that Pivar joined Quarles and Brady as "of counsel" in 2013. On May 1, 2014, Cade Smith passed away.

         ¶ 9 In their allegation for legal malpractice against Quarles and Brady, plaintiffs contended that Pivar-as an attorney for each of the five trusts and as an agent, employee, partner, or apparent agent of Quarles and Brady-had a duty to the beneficiaries. Plaintiffs contended that Pivar breached that duty by failing to disclose the breaches of fiduciary duty by Rootberg and Wilneff, failing to advise the additional beneficiaries of their beneficiary status under the trusts, putting the interests of herself and Quarles and Brady ahead of the interests of the additional beneficiaries, and falsely claiming that the other initial beneficiaries knew of the trusts and their beneficiary status. Plaintiffs contended that one or more of these breaches "were made, and perpetuated through December 23, 2014, so as to fraudulently conceal from the beneficiaries" their causes of action relating to the breaches. Plaintiffs contended that as a "direct and proximate result" of Pivar's breach of duty as an agent of Quarles and Brady, the trusts and the beneficiaries had been deprived the benefits of their status in an amount in excess of $2.8 million.

         ¶ 10 In contending that Quarles and Brady breached its fiduciary duty, plaintiffs contended that Pivar-as attorney for each of the five trusts and an agent or employee of Quarles and Brady-owed a fiduciary duty to the trusts and the intended beneficiaries. Plaintiffs contended that Pivar drafted a will for Cade Smith that included an in terrorem clause, which dissuaded the beneficiaries from challenging the actions of the trustees and also treated any beneficiary who did raise a challenge as having predeceased Cade Smith, which was a breach of her fiduciary duty.

         ¶ 11 Finally, plaintiffs alleged a count of conspiracy, contending that all defendants worked in concert to conceal from plaintiffs that they were the beneficiaries of the trusts and had a right to disbursements therefrom. Plaintiffs contended that Rogers, Pivar, and Wilneff discussed and agreed upon a course of conduct to conceal their improper disbursements to protect defendants from liability. Plaintiffs contended that Pivar knowingly acted in furtherance of that agreement by failing to disclose Rootberg's breach of fiduciary duty, failing to disclose Wilneff's breach of fiduciary duty, failing to advise the additional beneficiaries of their status as beneficiaries, falsely claiming that the other initial beneficiaries knew about the trusts, and failing to notify the additional beneficiaries after Cade Smith's death about the will and trusts. Plaintiffs contended that defendants undertook these illegal acts in furtherance of their conspiracy to conceal their wrongdoing from plaintiffs.

         ¶ 12 B. Quarles And Brady Motion to Dismiss

         ¶ 13 Quarles and Brady filed a motion to dismiss plaintiffs' complaint pursuant to section 2-615 of the Code. Quarles and Brady contended that plaintiffs failed to sufficiently allege facts establishing that an attorney-client relationship existed to support plaintiffs' claim for legal malpractice. Quarles and Brady contended that plaintiffs' complaint alleged that Pivar did not join Quarles and Brady until 2013, years after any of the alleged misconduct took place. Quarles and Brady asserted that, in any event, Pivar's representation of the trusts did not create an attorney-client relationship between her and the ...


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