THE SAGA OF THE UNDERTAKER’S FAMILY – PART 2
The Lawsuit – Relief Sought.
Suit was originally filed against Helen, individually and as independent executor of Jozef’s estate. The suit initially contained 4 counts (Count 3 was dismissed and not refiled) and sought several different kinds of relief:
1. To quiet title by declaring both the deed from Jozef to himself which severed the joint tenancy on the record and the lis pendens notice from the guardianship case to be void and of no effect.
2. To impose a constructive trust upon the entire parcel of real estate and to compel the property to be returned to joint tenancy between Jozef and Marlene so that after Jozef’s demise, sole ownership vested in Marlene.
3. For a preliminary injunction. Since Marlene stood a good chance at prevailing on the merits, she asked that the business pay a reasonable rent for the use of the property until the conclusion of the suit. The initial prayer was for the rent to be paid into an escrow account and for the escrow be used to pay the expenses of the property, so as to maintain the status quo and to allow for ultimate disposition of the remainder of the escrowed funds.
Soon after Helen was served, Marlene scheduled a motion for entry of a preliminary injunction. Prior to that hearing, an agreement was reached between Helen and Marlene that Helen would continue to pay all of the expenses for the premises without prejudice to either of the parties to raise the issue of and to decide the parties’ substantive rights at a later date. Helen was also ordered to provide periodic accountings of the expenditures that were so made.
4. For a permanent injunction. The same relief was sought as for the temporary injunction but on a permanent basis. Alternatively, Marlene sought payment by Helen of the reasonable rental value of the business portion of the premises.
5. For an accounting of the business income and expenses. Marlene sought the information to determine the profits of the funeral chapel business from the date of the quit-claim deed through Jozef’s date of death and also after Jozef’s demise.
6. For damages based on the accounting in such sums as should be found due to Marlene. Marlene sought one-half of the profits of the funeral chapel business from the date of the quit-claim deed through Jozef’s date of death or alternatively for the reasonable rental value for one-half of the business premises prior to Jozef’s death, since as a one-half owner, Jozef had used a portion of the premises for his own benefit. Marlene also sought all of the business profits earned after Jozef’s demise or alternatively for the reasonable rental value for the entire premises from the date of Jozef’s death forward based on Marlene’s sole ownership of the premises beginning on that date.
Theories of Recovery .
Count 1 – Breach of §3-4 of Power of Attorney Act.
In Count I, Marlene alleged Helen’s violation of §3-4 of the Power of Attorney Act. As noted in recent articles, §3-4 provides that an agent “will not have power under any of the statutory categories (a) through (o) to make gifts of the principal’s property, to exercise powers to appoint to others or to change any beneficiary whom the principal has designated to take the principal’s interests at death under any will, trust, joint tenancy, beneficiary form or contractual arrangement.” Count 1 alleged that the exercise of the power of attorney was invalid as a result of the violation of §3-4.
Helen’s attorney moved to dismiss Count 1. The Motion to Dismiss alleged that there was no “beneficiary” of a joint tenancy asset, and that thus, even if there was a violation of §3-4, Marlene was not a party who came within the terms of the said statute. Marlene’s response invoked the usual rules of statutory construction and argued that if the word “beneficiary” was interpreted strictly as Helen argued, then the reference in §3-4 to a “joint tenancy” would be meaningless, since there is never a “beneficiary” of any joint tenancy asset. The Motion to Dismiss Count 1 was denied.
Count 2 – Breach of Fiduciary Duty.
In Count 2, Marlene alleged that Helen breached her fiduciary duty to Jozef, and that as a result, Marlene was damaged. A motion to dismiss was brought against Count 2 on three bases. First, the motion argued that there was no allegation (nor could there be) of any fiduciary duty running from Helen to Marlene, and that Marlene could not allege for her benefit any breach of fiduciary duty by Helen to Jozef.
Second, the motion argued that Marlene did not allege that Helen gained from the transaction by preparing and recording the deed in question. Marlene responded that with Jozef in a coma and with his death being imminent, with Helen being the sole legatee of Jozef’s will, and with a one-half interest in the property passing to Jozef’s estate, telescoping the transactions showed clearly that Helen would have benefitted from the transaction.
Third, the motion argued that the complaint did not allege that the conveyance was detrimental to Jozef’s interests.
The Court sustained the Motion to Dismiss Count 2, primarily on the basis of the lack of any fiduciary duty running from Helen to Marlene.
Practical Note: As Illinois case law now stands, there is no action that can be brought by a third-party alleging a breach of fiduciary duty by a first party against a second party. When the suit was filed, I thought that a count for breach of fiduciary duty was self-evident. However, the case law cited by Helen was solid and on point, and the judge’s ruling was correct. Marlene did not attempt to plead any action in the nature of a third-party beneficiary claim, but even if she had, it probably would still not have adequately pleaded a proper cause of action based on a breach of fiduciary duty by Helen to Jozef. Fortunately, there were other theories available.
Count 4 – Tortious Interference With an Expectancy.
Marlene alleged that by improperly acting under the power of attorney, Helen had tortiously interfered with Marlene’s expectancy from the joint tenancy with Jozef and that Marlene would have become the sole owner of the property upon Jozef’s demise had those actions not been taken.
A motion to dismiss was also brought against Count 4 alleging that Helen had not done anything improper so as to meet the requirement that conduct be “tortious,” an essential element of the cause of action. Marlene’s response was that since the use of the power of attorney was wrongful under the Power of Attorney Act, it was also wrongful for purposes of tortious interference with her expectancy. The Motion to Dismiss was denied on Count 4.
Count 5 – Partition.
Once Counts 1 and 4 survived the motions to dismiss, Marlene attempted to compel the sale of the property. Helen was no longer living on the second floor, although her possessions were still there, and it was unlikely because of her physical condition that she would ever be able to return to live there. The business was “operating” on the first floor, but it was essentially limping along and could be run from anywhere. More valuable than the business itself was the telephone listing, and the phones were already being forwarded to Edward’s home. Had people tried to stop by the funeral home, they would have found no one there and would have had to contact Edward by phone to schedule a meeting. The thrust of our position to compel the sale was that Marlene was at least a one-half owner of the property if not a whole owner and, as such, she would be able on one ground or the other to compel sale of the property. The judge, who is an excellent judge and follows the rules to the letter, would not compel the sale without a separate count for partition being filed. Once that was pleaded, the Court could appoint commissioners and otherwise follow the Partition Act to compel the sale.
Count 5 sought partition of the premises as an alternative to Counts 1 and 4. Before any action was taken under Count 5, Helen finally agreed with Marlene to sell the property. The sale closed in early December 2003, and the proceeds were deposited with the Clerk of the Circuit Court. The part of Count 5 which sought sale of the property ended up being moot, but pleading the action ultimately accelerated the sale of the property.
©2004 by Cary A. Lind, all rights reserved.