Chicago Business Litigation Lawyer Blog
When the millionaire owner of a thriving business dies without a will, leaving only a wife and a child from a previous marriage to sort out his possessions, chances are things are going to get ugly.
That’s exactly what they did in a recent case before the Illinois First District Appellate Court, which held that a law firm hired to represent the deceased’s widow and the estate also allegedly owed a duty to the estate itself and can be liable to the estate for alleged legal malpractice if the allegations in the malpractice lawsuit pan out.
The estate case was hotly contested and was ultimately settled. Alma and her counsel denied all of the claims and the court made no finding of wrongdoing.
The appellate decision outlines the disputed facts at issue as follows. Scott H. died intestate in 2005, leaving millions of dollars in assets including the then successful Chicago Minibus Travel, Inc., which became the chief source of dispute between his only heirs, his widow Alma and son, Kyle, from a previous marriage. Alma was appointed the Administrator of Scott’s estate and hired the defendant law firm to represent her.
Kyle and Alma disagreed over the division of ownership in Chicago Minibus Travel. Kyle filed a petition accusing Alma of allegedly: “dissipating” the estate’s assets, withholding assets, and other claimed malfeasance. Additionally, Kyle filed petitions to remove Alma as administrator, alleging mismanagement, waste, and conversion.
During the ensuing proceedings, Alma’s law firm represented themselves in court as counsel for Alma and the estate of Scott H and sought fees from the Estate.
In 2007, Alma resigned as Administrator, and a Successor Administrator was appointed. The defendant firm continued to represent Alma individually, until withdrawing in 2008.
The following year, Kyle and the Estate sued Alma’s former law firm, alleging they committed legal malpractice by allegedly placing themselves in a conflict of interest by representing Alma as both an administrator and in her individual capacity as an heir, particularly with respect to the disputed bus company ownership. Alma also filed a malpractice case against her former lawyers which claims were settled.
The trial court granted summary judgment to the defendant law firm in the legal malpractice case brought by the Estate and Kyle, and the Estate appealed on the grounds that the defendant law firm had owed the Estate a duty of care when they were retained to represent Alma as administrator and to assist in the administration of the estate.
In reversing, the First District found a duty to the estate could exist under the facts presented in the record, as did a question of fact to be resolved at a trial on the merits regarding an alleged breach of the duty.
The court rejected the defendants’ argument that an estate is an intangible, fictitious entity to which a legal duty cannot be owed, because a corporation, which is also a legal fiction, can bring a legal malpractice claim.
The court also rejected analogies with cases where a defendant firm retained to represent an administrator had clearly communicated that it did not represent the estate: “There is no evidence here that defendants ever informed [Alma], Kyle, or both that they did not represent the Estate. In fact, to the contrary, defendants filed pleadings on behalf of the Estate.”
“Based on Illinois case law, which makes clear that an administrator is required to act in the best interest of the estate,” the court continued, “it seems axiomatic … that when an attorney is retained by an administrator for the purpose of administering the estate, its client is in actuality the administrator and the estate due to the symbiotic nature of their concurrent existence. The administrator only acts to serve the estate, and the estate cannot act but through the name of the administrator. Thus, we find the attorney-client relationship between an attorney and an estate to be inherent when the attorney is retained to assist in the administration of the estate.”
The First District concluded its finding was based on the “lack of clarity” regarding the defendant firm’s representation of Alma and other parties. The scope of their representation was undefined in their engagement agreement with Alma, and at various points, they had both advocated for her personal interests and acted on behalf of the estate.
The lesson is clear: An attorney can represent either an individual administrator/heir or an estate, but not both if there is a conflict of interest which cannot be ameliorated through the appointment of a Special Administrator.
You should read the opinion in full for a complete picture of the facts at issue and the rationale of the appellate court ruling. We are providing a link to the decision so you can do that. The case is Estate of Scott G. Hudson v. Douglas C. Tibble, et al., No. 1–16–2469, 2018 IL App (1st) 162469.
Our lawyers have handled a number of contested estate matters and can assist you if you believe that you have such a case.
Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex probate, class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Wheaton and Naperville business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist Chicago and Oak Brook area businesses and business owners who are victims of fraud. You can contact us by calling at 630-333-0333. You can also contact us online here.