Mareskas-Palcek v. Schwartz, Wolf & Bernstein, LLP
Mareskas-Palcek v. Schwartz, Wolf & Bernstein, LLP
Opinion
¶ 1 The instant appeal arises from the dismissal of plaintiffs Darren Mareskas-Palcek and David Palcek's complaint for breach of fiduciary duty and conversion, which plaintiffs filed against defendants, the law firm of Schwartz, Wolf & Bernstein, LLP, and Marc Schwartz, individually. The lawsuit was based on defendants' actions during the closing of the sale of Denise E. Mareskas' (decedent) principal residence, which occurred after her death. The trial court dismissed the complaint with prejudice pursuant to section 2-619(a)(9) of the Illinois Code of Civil Procedure (Code) ( 735 ILCS 5/2-619(a)(9) (West 2014)). Plaintiffs appeal, arguing that they have proper standing to bring the lawsuit and that they properly pled sufficient facts to state causes of action for breach of fiduciary duty and conversion against defendants. For the reasons that follow, we affirm the trial court's judgment.
¶ 2 BACKGROUND
¶ 3 On September 15, 2015, plaintiffs Darren Mareskas-Palcek and David Palcek filed a complaint against the law firm of Schwartz, Wolf & Bernstein, LLP, and Marc Schwartz, one of its partners, for breach of fiduciary duty owed to them as beneficiaries of the estate of the late Denise E. Mareskas. 1
¶ 4 The complaint alleged that decedent executed a power of attorney prior to her *466 death so that defendants could represent her at the closing of the sale of her principal residence without being present. The closing was scheduled for August 8, 2013, and decedent died on August 7, 2013. Defendants knew that decedent died but continued with the closing without disclosing her death in the closing documents and without authorization from the beneficiaries of the estate.
¶ 5 The complaint also alleged that decedent died testate and that Darren was a beneficiary of her estate, as well as a beneficiary under a pourover trust established by decedent. Furthermore, plaintiffs alleged that the power of attorney signed by decedent was void due to her death, and that no effort was made by defendants to gain permission from plaintiffs to proceed with the closing. Instead, on August 8, 2013, defendants executed an agency escrow agreement and "HUD-1 Settlement Statement," signing decedent's name to the agreements. The complaint alleged that the HUD-1 settlement statement shows that defendants deducted over $20,000 from the sale proceeds for attorney fees when the fee for closing was $650. 2 The complaint further alleged that neither decedent nor plaintiffs would have agreed to the payment of $20,000 in fees to defendants.
¶ 6 On November 30, 2015, defendants filed a motion to "strike" the complaint in lieu of an answer, in which they alleged that plaintiffs had no common law right in Illinois to recover attorney fees. Therefore, defendants argued that because plaintiffs asked for the return of the attorney fees in the complaint and the return is not recoverable in a common law cause of action, the complaint should be stricken. On January 21, 2016, the trial court granted defendants' motion to strike and granted plaintiffs 30 days to file an amended complaint. On February 17, 2016, plaintiffs filed their amended complaint.
¶ 7 The amended complaint included a second count for conversion. Count I, for breach of fiduciary duty, included allegations that defendants breached the Illinois Rules of Professional Conduct, specifically rules 1.5 and 1.8. Ill. R. Prof'l Conduct (2010) R. 1.5(a) (eff. Jan. 1, 2010) ("A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses."); Ill. R. Prof'l Conduct (2010) R. 1.8(a) (eff. Jan. 1, 2010) ("A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client ***.").
¶ 8 Further, the amended complaint explained plaintiffs' status, alleging that there were two trusts involved-the DeAnna Mareskas-Palcek Discretionary Supplemental Needs Trust (DeAnna trust) and the Denise E.M. Palcek Trust (decedent trust), a pourover trust. The complaint alleged that Darren is a beneficiary of decedent's trust and that David is the trustee of the DeAnna trust. The complaint also alleged that both trusts were beneficiaries of the decedent's estate.
¶ 9 In count II, for conversion, the complaint alleged that, at the time of the real estate closing, plaintiffs were the lawful owners of the property that was conveyed. As a result, plaintiffs alleged that defendants exerted unauthorized control over funds that rightfully belonged to plaintiffs.
¶ 10 On April 27, 2016, defendants moved to dismiss under section 2-619 of the Code ( 735 ILCS 5/2-619 (West 2014) ), claiming first that plaintiffs could not state a cause of action for breach of fiduciary duty because defendants owed no duty to *467 plaintiffs, who were not defendants' clients. As such, defendants claimed that they did not violate the Illinois Rules of Professional Conduct as to plaintiffs because no attorney-client relationship existed. Second, defendants claimed that plaintiffs lacked standing to bring suit because the suit could only be filed by the executor of decedent's estate. Last, defendants claimed that there could not be conversion because plaintiffs had no right to the property and no right to take immediate possession of the property.
¶ 11 On June 2, 2016, plaintiffs filed a response in which they claimed that they had established that defendants owed a duty to them because the trusts were beneficiaries of the estate. Plaintiffs claimed first that as beneficiaries of decedent's estate, they were entitled to reasonable conduct by defendants, which included not taking money from the DeAnna trust. Second, plaintiffs claimed that the attorney-client relationship between defendants and decedent was for the benefit of plaintiffs, thereby establishing that defendants owed them a duty.
¶ 12 Plaintiffs also claimed that they pled facts to establish conversion because their rights in the property vested at the time of decedent's death and, therefore, defendants exercised unauthorized control over their property. Plaintiffs claimed that they alleged all the elements of conversion and that any factual issues concerning conversion were questions of fact to be decided by the trier of fact.
¶ 13 On June 9, 2016, defendants filed a reply in support of their motion to dismiss, in which they argued, first, that plaintiffs failed to allege facts to support their claim that the attorney-client relationship was for their benefit. Defendants argued, second, that plaintiffs lacked standing, as non-trustees, to bring suit and failed to cite case law in support of their claim that defendants owed them a duty. Defendants argued that duty is a question of law, to be decided by the trial court, and that defendants owed no duty to plaintiffs, since they were not their clients.
¶ 14 The four elements of conversion are: (1) an unauthorized and wrongful assumption of control, dominion, or ownership by defendant over plaintiff's personalty; (2) plaintiff's right in the property; (3) plaintiff's right to the immediate possession of the property, absolutely and unconditionally; and (4) a demand for possession of the property.
General Motors Corp. v. Douglass
,
¶ 15 On June 22, 2016, the trial court heard arguments and granted defendants' motion to dismiss. The trial court then granted plaintiffs leave to file a second amended complaint within 21 days. On September 14, 2016, after plaintiffs failed to file a second amended complaint, defendants moved again to dismiss under section 2-619 of the Code ( 735 ILCS 5/2-619 (West 2014) ). On September 26, 2016, after plaintiffs notified the trial court that they intended to stand on their amended complaint, the trial court granted defendants' motion to dismiss with prejudice as a final *468 and appealable order. The September 26, 2016, order stated, in relevant part:
"It is ordered
Counselor for Plaintiff has advised the Court that Plaintiff is standing upon his 1st Amended Complaint previously dismissed without prejudice and intends to appeal the dismissal of the 1st Amended Complaint. As such, this matter is dismissed with prejudice.
This order is final and appealable."
¶ 16 Plaintiffs filed a timely notice of appeal on October 14, 2016.
¶ 17 ANALYSIS
¶ 18 On appeal, plaintiffs argue that the trial court erred in dismissing plaintiffs' amended complaint because plaintiffs properly alleged that defendants owed them a duty and breached that duty, thereby establishing standing to bring suit against defendants for breach of fiduciary duty and conversion. Plaintiffs also argue that they properly alleged a valid cause of action for both counts.
¶ 19 I. Standard of Review
¶ 20 As an initial matter, we note that defendants' motion to dismiss was brought under section 2-619(a)(9) but also argued that plaintiffs failed to state a cause of action for breach of fiduciary duty and conversion. Motions to dismiss for failure to state a cause of action are properly brought under section 2-615. See
Doe v. Psi Upsilon International
,
¶ 21 In the reply in support of their motion to dismiss, defendants claimed to be in compliance with section 2-619.1 because "the headings of [the motion to dismiss] clearly identify where Plaintiffs have failed to state a claim" and assert that plaintiffs lack standing to bring this lawsuit, which is an affirmative matter properly raised under section 2-619(a)(9). However, the Code specifically requires that "[e]ach part shall be limited to and shall specify that it is made under one of Sections 2-615, 2-619, or 2-1005." (Emphasis added.) 735 ILCS 5/2-619.1 (West 2014). Defendants did not cite to section 2-615 anywhere in their motion to dismiss, and the headings did not reference section 2-615 to alert the trial court of separate statutory grounds for dismissal.
¶ 22 Although a movant's failure to specifically designate whether a motion to dismiss
*469
is brought pursuant to section 2-615 or section 2-619 can be fatal, we will not consider it so in this case because no prejudice resulted to the nonmovant.
Northern Trust Co.
,
¶ 23 "A motion to dismiss, pursuant to section 2-619 of the Code, admits the legal sufficiency of the plaintiffs' complaint, but asserts an affirmative defense or other matter that avoids or defeats the plaintiffs' claim."
DeLuna v. Burciaga
,
¶ 24 For a motion to be properly brought under section 2-619, the motion (1) must be filed "within the time for pleading" and (2) must concern one of nine listed grounds. 735 ILCS 5/2-619(a) (West 2014). In the case at bar, the section 2-619 dismissal motion was timely filed, within the time for pleading to plaintiffs' amended complaint. Plaintiffs were given leave to file a second amended complaint; however, they chose to stand on their first amended complaint and to file this appeal instead.
¶ 25 Second, defendants' section 2-619 motion concerned one of the nine listed grounds. A dismissal under section 2-619 is permitted only on the following grounds:
"(1) That the court does not have jurisdiction of the subject matter of the action, provided the defect cannot be removed by a transfer of the case to a court having jurisdiction.
(2) That the plaintiff does not have legal capacity to sue or that the defendant does not have legal capacity to be sued.
(3) That there is another action pending between the same parties for the same cause.
*470 (4) That the cause of action is barred by a prior judgment.
(5) That the action was not commenced within the time limited by law.
(6) That the claim set forth in the plaintiff's pleading has been released, satisfied of record, or discharged in bankruptcy.
(7) That the claim asserted is unenforceable under the provisions of the Statute of Frauds.
(8) That the claim asserted against defendant is unenforceable because of his or her minority or other disability.
(9) That the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." 735 ILCS 5/2-619(a) (West 2014).
¶ 26 In the case at bar, the subject matter of defendants' dismissal motion falls into one of those categories, namely, that plaintiffs had no standing to bring the suit, which shows "[t]hat the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." 735 ILCS 5/2-619(a)(9) (West 2014). Thus, procedurally, this motion was properly brought under section 2-619.
¶ 27 II. Section 2-619(a)(9) : Plaintiffs' Standing to Sue
¶ 28 We first discuss the basis for defendants' 2-619 motion to dismiss, namely, plaintiffs' standing to bring the instant lawsuit. Plaintiffs argue that Darren, as beneficiary of decedent's estate, and David, as trustee of the DeAnna trust, have standing to sue based solely on their titles as such.
¶ 29 A plaintiff's lack of standing is a proper affirmative matter pursuant to section 2-619(a)(9), as it completely defeats the plaintiff's ability to successfully prosecute its claim against the defendants.
Reynolds
,
¶ 30 " 'To have standing, *** the [claimant] must not be merely curious or concerned but must possess some personal claim, status, or right, a distinct and palpable injury which is fairly traceable to the [respondent's] conduct and substantially likely to be redressed by the grant of such relief.' "
In re Estate of Zivin
,
¶ 31 "[S]tanding requires some injury in fact to a legally cognizable interest ***."
Glisson
,
¶ 32 In the case at bar, defendants argue that plaintiffs lack standing to bring the instant lawsuit because neither plaintiff has alleged that he is the executor of decedent's estate. The well established rule in this state is that an estate lacks the capacity to sue or be sued, and any action must be brought by the executor or representative of the estate.
In re Marriage of Schauberger
,
¶ 33 Nowhere in the record does it appear that either plaintiff alleged to be the executor or representative of the estate, nor are there any documents in the record establishing them as such. Plaintiffs argue in their reply brief on appeal that defendants "ultimately converted over $20,000 in attorney fees from [decedent], and after she passed, from her Estate and Trust, which was the property of [plaintiffs] as a beneficiary." This implies that decedent was injured and thus both actions accrued to decedent before death. We note that, in their complaint, plaintiffs do not allege that defendants' actionable conduct occurred before decedent's death and, in fact, the basis of their claims is defendants' conduct after decedent had passed away.
¶ 34 While defendants' alleged wrongful conduct would still be actionable after decedent's death, plaintiffs are not the proper parties to bring suit for either claim, since they claim they are the "ultimate beneficiaries" of the estate. Instead, only the executor of decedent's estate can bring suit on behalf of the decedent. See
Wilmere v. Stibolt
,
¶ 35 Since the alleged conduct occurred after decedent's death, she was not the injured party for whom relief is sought. Pursuant to the Probate Act, a decedent's property belongs to his or her estate upon his or her death and then transfers to the rightful successors in accordance with the Act and decedent's will. 755 ILCS 5/4-13 (West 2014) ; 755 ILCS 5/20-1(a) (West 2014) ("every representative shall take possession, subject to the exempt estate of homestead, of all real estate of the decedent during the period of administration"); see also
Lescher v. Barker
,
¶ 36 Furthermore, according to plaintiffs' amended complaint, the assets of decedent's estate were to be divided, at least, amongst her two children, as beneficiaries, and her own trust. Darren is a beneficiary of decedent's estate, and is therefore benefitted in such capacity, whereas DeAnna, decedent's daughter, is benefitted through her trust because the trust is a beneficiary of the estate. David, decedent's ex-husband, is the trustee of this trust. As such, plaintiffs argue that David, "in his representative capacity as the trustee of the DeAnna Elisabeth Mareskas-Palcek Discretionary Supplemental Trust dated May 26, 1993 *** has standing to sue."
¶ 37 Although in general under Illinois law, trustees have standing to sue third parties on behalf of a trust, this concept is not applicable to the case at hand.
Axelrod v. Giambalvo
,
¶ 38 We find unpersuasive plaintiffs' argument that they have standing because defendants owed them a duty as intended beneficiaries of the real estate transaction. "The traditional, general rule has been that the attorney is liable only to his client, not to third persons."
Pelham v. Griesheimer
,
¶ 39 In the case at bar, the complaint does not allege that decedent entered into *473 an attorney-client relationship primarily to benefit plaintiffs. The complaint merely alleges that "[p]rior to the time of her death, Denise retained the services of [defendants] to represent her for the sum of $650.00 in a real estate transaction involving the sale of her principle [ sic ] residence ***." Thus, the purpose of the attorney-client relationship, as alleged in the complaint, was simply for the sale of decedent's residence, without any reference to the distribution of the proceeds. There is nothing in the complaint to suggest that the primary reason for the real estate closing was to pass the proceeds of the sale to plaintiffs-for instance, while the complaint alleges that plaintiff had been hospitalized "for a period of time prior to her death," the complaint does not allege that plaintiff had arranged to sell her property in anticipation of her death so that the proceeds would be distributed to her children.
¶ 40 Plaintiffs' argument here is similar to the claim of duty to a nonclient rejected by the supreme court in
Pelham
, which found that the attorney in that case "was hired primarily for the purpose of obtaining a divorce, property settlement, and custody of the minor children for [the wife], not to represent her children's interest."
Pelham
,
¶ 41 Plaintiffs attempt to draw an analogy between their situation and that present in
McLane v. Russell
,
¶ 42 We cannot agree with plaintiffs that the situations in
McLane
or
Ogle
are in any way similar to the situation present in the case at bar. Plaintiffs claim that "the proceeds of the sale of the real estate
*474
would have been transferred to the Estate upon [the decedent's] death, thus benefitting the beneficiaries." However, the mere fact that the proceeds would eventually pass to plaintiffs does not render them intended beneficiaries of the real estate closing such that defendants would owe them a duty. See
Gale
,
¶ 43 Since we have found that plaintiffs have no standing to bring suit, we need not decide whether plaintiffs otherwise alleged a valid cause of action for breach of fiduciary duty and conversion. This court is not in a position to comment on the conduct of the defendants under the facts of this cause because their conduct is not before us in this appeal. The merits of plaintiffs' claim can be decided by a suit brought by the executor of the decedent's estate.
¶ 44 CONCLUSION
¶ 45 For the foregoing reasons, we find that plaintiffs lacked standing to sue, and thus affirm the trial court's granting of defendants' motion to dismiss. Since decedent died before defendants sold decedent's real estate property, the proceeds from sale belonged to decedent's estate and so the executor of her estate was the proper party to bring suit.
¶ 46 Affirmed.
Presiding Justice Burke and Justice McBride concurred in the judgment and opinion.
Since plaintiffs and the decedent share the same last name, we will refer to plaintiff Darren Mareskas-Palcek as Darren, plaintiff David Palcek as David, and Denise as decedent.
The $20,000 deduction apparently represented fees owed on another matter.
While
Pelham
involved a claim of legal malpractice and therefore discussed duty in the context of negligence, the
Pelham
court found that a plaintiff alleging such a duty must "allege and prove facts demonstrating that they are in the nature of third-party intended beneficiaries of the relationship between the client and the attorney," thereby analogizing the duty owed in a legal malpractice action to the duty owed to a third-party beneficiary in an action based on contract.
Pelham
,
Case-law data current through December 31, 2025. Source: CourtListener bulk data.