Ward v. Kwiatt & Ruben, Ltd.

FIRST DIVISION
March 31, 2006

No. 1-04-1934

Estate of SHIRLEY A. LIS, ) Appeal from the
) Circuit Court of
Deceased, ) Cook County.
)
OWEN F. WARD, ROBERT DUNKLEBERGER, )
DOLORES MESSMAN, NANCY FISCHER, )
BERNICE MANKIWICZ, and MICHAEL )
PIAMONTE, )
)
Petitioners-Appellants, )
)
v. )
)
KWIATT & RUBEN, LTD., S. HALA SOUMAN, )
LARRY MAGILL, LEVENFELD PERLSTEIN, )
and SHARON RUDNICK, )
)
Respondents-Appellees, )
)
and )
)
INTERNATIONAL FIDELITY INSURANCE )
COMPANY, )
)
Respondents-Appellees and )
Cross-Appellant, )
)
v. )
)
KENNETH RUDNICK, )
) Honorable
Respondent-Appellee and ) Robert E. Cusack,
Cross-Appellee. ) Judge Presiding.

JUSTICE BURKE delivered the opinion of the court:

Petitioners Owen Ward (Owen) and Robert Dunkleberger, Dolores

Messman, Nancy Fischer, Bernice Mankiwicz, and Michael Piamonte
1-04-1934

(Other Heirs)1 appeal from orders of the circuit court granting the

motion for summary judgment of respondent, the independent

administrator of the Estate of Shirley Lis (Estate), Sharon Rudnick

(Sharon), on petitioners' petition to surcharge the administrator

for recoupment of a Harris Bank retirement plan (Plan) that was

distributed solely to Kenneth Rudnick, Shirley's maternal cousin,

which petitioners alleged should have been distributed to the

Estate, and granting respondents Kwiatt & Ruben, Ltd., S. Hala

Souman, Larry Magill, and Levenfeld Perlstein's (the Attorneys)

motions to dismiss petitioners' petition to surcharge the Attorneys
2
on the same basis. On appeal, petitioners contend that the trial

court erred in granting the Attorneys' motions to dismiss because

petitioners set forth sufficient facts to state a cause of action

for breach of fiduciary duty and because the Attorneys' arguments

in support of dismissal, that the Plan was not part of the Estate,

that Harris Bank made its own independent decision with respect to

distribution of the Plan, and that petitioners' claim was preempted

by ERISA, were not sufficient to support dismissal. Petitioners

further contend that the trial court erred in granting summary

judgment in favor of Sharon because genuine issues of material fact

1
At times during the trial court proceedings, Owen proceeded by
himself on matters, the Other Heirs proceeded on their own, and, at
other times, all petitioners filed documents as one. Where Owen
acted alone or the Other Heirs acted alone, we so indicate.
2
On March 4, 2005, we granted petitioners' motion to
voluntarily dismiss the appeal against Levenfeld Perlstein.

2
1-04-1934

existed and Sharon's arguments, like the Attorneys, which were

essentially the same, were not sufficient to warrant summary

judgment. International Fidelity Insurance Company (Fidelity) has

filed a cross-appeal contending that the trial court properly

granted summary judgment in favor of Sharon and, in the

alternative, if we reinstate the petition to surcharge the

administrator, its third-party complaint for assumpsit against

Kenneth should be reinstated. For the reasons set forth below, we

affirm.

STATEMENT OF FACTS

This lawsuit arose as a result of the death of Shirley Lis on

November 11, 1999. Subsequent to her death, it was discovered that

Shirley had a profit sharing plan (Plan) through her former

employer Harris Bank. At the time of her death, Agnes Rudnick,

Shirley's mother, was designated as the primary beneficiary. Mae

Rudnick, Shirley's maternal aunt, was designated as the contingent

beneficiary. Both beneficiaries predeceased Shirley, yet Shirley

had not changed the designations. On November 16, Rosemary Fuller,

an employee of Harris Bank, wrote to Sharon, Shirley's maternal

first cousin once removed, with respect to the Plan, indicating

that Mae was the named contingent beneficiary and requesting her

address. At this time, Harris Bank was unaware that Mae

predeceased Shirley.

On January 5, 2001, Sharon filed a petition for letters of

3
1-04-1934

administration, identifying her father, Kenneth Rudnick, and her

uncle, Stanley Rudnick, as heirs, and valuing the Estate at

$234,000. Sharon indicated that other heirs were unknown. On

January 18, an attorney for Owen, Shirley's paternal first cousin,

faxed a letter to Hala Souman, one of Sharon's attorneys, enclosing

a counterpetition for letters of administration. On January 19,

Owen's attorney appeared in court to present his counterpetition,

at which time, Sharon objected. Sharon then filed her letters of

administration which identified Kenneth, herself, her sister Susan

and her brother Steven as heirs as well as unknown other heirs.

Sharon was appointed independent administrator and an order

declaring heirship was entered that identified Kenneth and Stanley

(whereabouts unknown) as the maternal heirs, each entitled to one-

half of Shirley's estate, and unknown paternal heirs.

On February 13, Souman wrote to Nancy Harrison, a benefits

administrator at Harris Bank, asking her to distribute the Plan to

Kenneth. Thereafter, Souman wrote to Owen's attorney, requesting

that he withdraw the counterpetition so as not to deplete the

Estate. The letter further indicated that two retirement accounts

had originally been included in the Estate value, which did not

belong to the Estate since they had named beneficiaries. According

to Souman, the Estate was actually valued at approximately $75,000.

On March 28, Souman again wrote to Harrison, requesting

disbursement of the Plan to Kenneth. On March 30, Owen's attorney

appeared in court on a petition to vacate the appointment of Sharon

4
1-04-1934

as the independent administrator and to file a counterpetition to

appoint Owen as the independent administrator and to amend the

order of heirship. Owen agreed to withdraw the counterpetition and

petition to vacate the appointment of administrator. Thereafter,

the trial court entered an amended order declaring heirs, vacating

its January 19 order, adding Owen as an heir entitled to one-half

of Shirley's estate and amending Stanley and Kenneth's share to

one-quarter each. Subsequent to the hearing, Owen's counsel wrote

to Souman, indicating he had withdrawn the counterpetition and

requesting information as to why the Estate had decreased in value.

On April 26, an attorney representing Michael Piamonte,

Stanley's grandson, wrote to Larry Magill, another one of Sharon's

attorneys, stating that Piamonte was one of Shirley's heirs. On

May 17, Harrison wrote to Souman, indicating the Plan was worth

$150,638.96, that because Mae predeceased Shirley, the next

beneficiary was Kenneth, and that the Plan had been distributed to

Kenneth. On May 22, Souman wrote to Owen's attorney, explaining

that two retirement accounts had incorrectly been included in the

Estate because they had named beneficiaries and their withdrawal

from the Estate was the reason it had a lesser value.

On July 31, Owen's attorney met with representatives of Harris

Bank. Thereafter, Harris Bank wrote to Owen's attorney, indicating

that the Plan had been distributed to Kenneth in accordance with

Plan documents. On August 17, Owens moved to remove Sharon as

administrator, alleging that she had breached her fiduciary duties

5
1-04-1934

to preserve and collect the assets of the Estate and because she

failed to advise Harris Bank that other heirs existed. Owens

further alleged that the Plan was part of Shirley's estate. On the

same day, Bernice Mankiwicz, another maternal cousin of Shirley's,

filed a motion to amend the heirship order, identifying herself and

six others, as heirs. The trial court then entered a second

amended order declaring heirs, adding Bernice and the others as

heirs. In this order, the court further stated that the

distribution of the Plan to Kenneth was improper and was to be

restored to the Estate. On August 29, Sharon filed a motion to

reconsider the August 17 order. Thereafter, Fidelity, Sharon's

surety, filed an appearance.

On September 5, the trial court held a hearing on Sharon's

motion to reconsider the order of August 17. At this hearing, the

trial court found that the Plan was an asset of the Estate; Harris

Bank failed to take into consideration the Other Heirs in making

its distribution decision; and that the money had to come back to

the Estate. On October 17, Harris Bank filed a notice that the

action had been removed to the federal district court based on

ERISA.

On April 15, 2002, Sharon filed a motion to vacate the trial

court's order of September 5, 2001, stating that petitioners had

acknowledged before the federal district court that the Plan was

not part of the Estate. On April 17, the trial court granted

Sharon's motion, vacating its August 17 and September 5, 2001,

6
1-04-1934

orders on the basis that related issues were pending before the

federal district court.

On July 16, a representative of Harris Bank wrote to Kogut,

counsel for the Other Heirs, with respect to the federal court case

and the heirs' claim for benefits. Harris Bank advised Kogut that

the Harris Benefits Administrative Committee (Committee), a

committee that reviewed contested claims for benefits and denials

of benefits, had considered the heirs' claim under the Plan,

particularly their position that the Plan should be paid to the

Estate. Harris Bank indicated that, according to the Plan

documents, its staff made the determination to distribute the Plan

to Kenneth because he was within the class of persons eligible to

receive the distribution. Accordingly, the Committee denied the

heirs' claim for distribution to the Estate. The letter further

advised the heirs that they had a right to appeal the decision and

could request, in writing, a review by September 20.

On September 10, the federal district court entered a minute

order, indicating that Harris Bank had agreed to withdraw its

complaint for declaratory judgment against the heirs under ERISA

and that petitioners' counterclaim seeking a declaration that the

distribution had been made in error would also be withdrawn by

agreement. The same day, petitioners filed their petition to

surcharge Sharon based on her breach of fiduciary duties to them.

Petitioners alleged that Sharon owed a fiduciary duty to the heirs

to act on behalf of and in the best interest of the Estate, which

7
1-04-1934

duty she had breached by directing that the Plan be paid to

Kenneth, even though it could have been paid to the Estate, and by,

at the same time, misrepresenting to Owen that she was protecting

his interests. Petitioners alleged that they were damaged in that

there was a significant reduction in the value of the Estate.

Thereafter, Fidelity filed a petition for leave to file a

third-party complaint for assumpsit against Kenneth, as well as a

petition for collateral and reimbursement of attorney fees,

expenses, and losses against Sharon. On October 30, Sharon filed a

motion to dismiss the petition to surcharge the administrator.

According to Sharon, she was entitled to a dismissal because the

trial court had already determined she had not acted improperly and

because, by not appealing Harris Bank's Committee review decision

and abandoning their federal claim, petitioners waived their right

to seek reimbursement of the Plan from her. The trial court

entered an order that day, granting Fidelity leave to join Kenneth

as a third-party defendant and to file its third-party complaint,

granting Fidelity leave to file its petition for collateral against

Sharon, and granting Sharon leave to file her motion to dismiss.

Fidelity then filed its third-party complaint for assumpsit against

Kenneth.

On November 20, Owen and the Other Heirs responded to Sharon's

motion to dismiss the petition to surcharge the administrator,

after which Sharon filed a reply in support of her motion. Sharon

also filed a motion to dismiss Fidelity's petition for collateral.

8
1-04-1934

On January 23, 2003, the trial court denied Sharon's motion to

dismiss the petition to surcharge. On April 4, Kenneth filed a

motion to dismiss Fidelity's third-party complaint. Thereafter,

Fidelity filed a response and affirmative defenses to the petition

to surcharge the administrator. In their response, petitioners

stated that the Plan should and could have been an asset of the

Estate but for the wrongful conduct of Sharon.

In May, Sharon filed her first and final accounting,

indicating total assets and receipts in the Estate of $82,399.05

and total disbursements in the same amount, including attorney fees

of $65,814.42, thus leaving no funds to distribute to the heirs.

Petitioners objected to the accounting. On May 28, the trial court

entered an order converting the Estate to a supervised estate.

On July 30, petitioners filed a petition to surcharge the

Attorneys of the Estate, based on their breach of fiduciary duty

and a conflict of interest. Petitioners alleged that, contrary to

their duty owed to the Estate and heirs, the Attorneys requested

that the Plan be distributed to Kenneth even though it could have

been paid to the Estate. Again, petitioners alleged damages in the

reduction in value of the Estate. On November 12, counsel appeared

on behalf of Levenfeld Perlstein and filed a motion to dismiss the

petition to surcharge the Attorneys. On December 5, Sharon filed a

motion for summary judgment on the petition to surcharge the

administrator. Kenneth filed a joint motion to dismiss Fidelity's

third-party complaint pursuant to section 2-619(a)(9) of the Code

9
1-04-1934

of Civil Procedure (Code) (735 ILCS 5/2-619(a)(9) (West 2004)).

The bases of both motions were: (1) petitioners' inability to prove

damages to the Estate; (2) preemption by ERISA; (3) failure to

exhaust administrative remedies; and (4) lack of proximate cause

based on Harris Bank's independent decision on the distribution.

On December 12, counsel appeared on behalf of Magill, on

December 29, counsel appeared on behalf of Kwiatt & Ruben, and on

February 4, 2004, counsel appeared on behalf of Souman.

Thereafter, Kwiatt & Ruben and Souman filed a motion to dismiss the

petition to surcharge the Attorneys pursuant to sections 2-615 and

2-619 of the Code on the bases that: (1) the Plan was not an asset

of the Estate; (2) Harris Bank made an independent decision with

respect to the distribution; and (3) the Attorneys committed no

wrongdoing. Magill followed suit, filing a motion to dismiss

pursuant to sections 2-615 and 2-619. With respect to section 2-

619, Magill adopted Sharon's motion for summary judgment and

argued, with respect to section 2-615, that there was no evidence

of breach of fiduciary duty or conflict of interest. Thereafter,

petitioners filed a response to Sharon's motion for summary

judgment, a response to Kwiatt & Ruben and Souman's motion to

dismiss, and a response to Magill's motion to dismiss. The movants

then filed replies in support of their respective motions. The

discovery depositions of Nancy Harrison and Hala Souman, as well as

"Harris' Benefits Claim Briefing Shirley Lis' Sharing Plan Benefits

Document" were offered in support of the various motions. Because

10
1-04-1934

the contents of these are not vital to our decision, we do not

detail them.

A hearing was held on the various motions on May 10. At the

hearing, the trial court indicated that the conduct of Harris Bank

was not amenable to a finding by the trial court. However, the

trial court denied Sharon's motion for summary judgment, finding

that a hearing was necessary. At a subsequent hearing on the

Attorneys' motions to dismiss, on June 7, the trial court noted

that Levenfeld Perlstein was being dismissed without prejudice by

agreement of the parties. With respect to the remaining motions,

the trial court found that the Plan was subject to federal

regulations and rules and that it was not an asset of the Estate.

Accordingly, the court concluded that it had no jurisdiction to

"touch it." The trial court entered an order granting Kwiatt &

Ruben, Souman, Magill, and Levenfeld Perlstein's motions to dismiss

with prejudice. This order included Rule 304(a) language. Sharon

then orally moved to reconsider the trial court's order of May 10.

On July 2, the trial court entered an order granting Sharon's

motion to reconsider, granting summary judgment in her favor, and

finding that the Plan was "governed by ERISA and therefore not

subject to the purview of this Probate Court." The trial court

also dismissed Fidelity's third-party complaint in assumpsit

against Kenneth. This appeal followed.

ANALYSIS

11
1-04-1934

To state a cause of action for breach of fiduciary duty, a

plaintiff must allege and ultimately prove (1) a fiduciary duty on

the part of the defendant, (2) a breach of that duty, (3) an

injury, and (4) a proximate cause between the breach and the

injury. Prime Leasing, Inc. v. Kendig, 332 Ill. App. 3d 300, 313,

773 N.E.2d 84 (2002).

I. Petition to Surcharge Administrator

A motion for summary judgment is properly granted when the

pleadings, depositions, admissions, and affidavits on file

establish that no genuine issue as to any material fact exists and,

therefore, the moving party is entitled to judgment as a matter of

law. 735 ILCS 5/2-1005(c) (West 2004); Cramer v. Insurance

Exchange Agency, 174 Ill. 2d 513, 530, 675 N.E.2d 897 (1996). The

purpose of summary judgment is to determine whether a fact question

exists, not to try a question of fact. Starr v. Gay, 354 Ill. App.

3d 610, 613, 822 N.E.2d 89 (2004); Gilbert v. Sycamore Municipal

Hospital, 156 Ill. 2d 511, 517, 622 N.E.2d 788 (1993). A defendant

who moves for summary judgment may satisfy its burden of production

in two ways. 4 R. Michael, Illinois Practice '40.3, at 271-72

(1989). First, the defendant can affirmatively show that some

element of the case must be resolved in its favor. McCoy ex rel.

Jones v. Chicago Housing Authority, 333 Ill. App. 3d 305, 308, 775

N.E.2d 168 (2002). Alternatively, the defendant can establish that

the plaintiff cannot prove an essential element of the cause of

12
1-04-1934

action. McCoy, 333 Ill. App. 3d at 308-09. We review the trial

court's granting of a summary judgment motion de novo. McNamee v.

State of Illinois, 173 Ill. 2d 433, 438, 672 N.E.2d 1159 (1996).

Petitioners contend that the trial court erred in granting

summary judgment in favor of Sharon because fact questions existed

as to whether Sharon breached her fiduciary duty to them as well as

to whether there was a proximate cause between Sharon's breach of

fiduciary duty and their injuries. Sharon contends that the trial

court properly granted summary judgment in her favor because

petitioners' claim is preempted by ERISA, petitioners failed to

exhaust their administrative remedies, her alleged breach of

fiduciary duty was not a proximate cause of petitioners' alleged

injury since Harris Bank made an independent decision with respect

to the distribution, and petitioners could not establish damages

since the Plan would never have been distributed to the Estate.

The purposes of administrating an estate are to conserve the

personal assets of the estate, including the collection of all

debts due to the decedent; to pay all debts and taxes owed by the

decedent and her estate; and to properly distribute the residue

among the heirs at law according to the terms of the decedent's

will or, absent a will, the statute of descent and distribution.

19 Ill. Law & Practice Executors and Administrators '2, at 11

(1991); In re George's Estate, 335 Ill. App. 509, 511, 82 N.E.2d

365 (1948). In this regard, generally it is the duty of an

13
1-04-1934

executor or administrator to perform these tasks (In re Estate of

Wallen, 262 Ill. App. 3d 61, 72, 633 N.E.2d 1350 (1994)) and, in so

doing, she should carry out the wishes of the decedent and act in

the best interest of the estate. 19 Ill. Law & Practice Executors

and Administrators '4, at 15. "The relationship between an

executor or administrator and a beneficiary is that of trustee and

cestui que trust, and is fiduciary in character." 19 Ill. Law &

Practice Executors and Administrators '4, at 15; Stoke v. Wheeler,

391 Ill. 429, 434, 63 N.E.2d 492 (1945); Wallen, 262 Ill. App. 3d

at 72; Greene v. First National Bank of Chicago, 162 Ill. App. 3d

914, 921, 516 N.E.2d 311 (1987). However, this fiduciary

relationship "does not extend to all affairs and transactions

between executors or administrators and beneficiaries." 19 Ill.

Law & Practice Executors and Administrators '4, at 17; Stone v.

Stone, 407 Ill. 66, 77, 94 N.E.2d 855 (1950); Stoke, 391 Ill. at

434; Ehrich v. Brunshwiler, 241 Ill. 592, 597, 89 N.E. 799 (1909).

Rather, the relationship is fiduciary only "so far as the

administration of an estate is involved." Stoke, 391 Ill. at 434;

In re Burger's Estate, 16 Ill. App. 2d 510, 514, 149 N.E.2d 105

(1958). See also Brown v. Brown, 62 Ill. App. 3d 328, 333, 379

N.E.2d 634 (1978) (holding there was no question that a fiduciary

relationship existed between the defendant and his mother as to all

transactions concerning the assets of a trust of which he was a

trustee and his mother a beneficiary). Stated differently, the

transaction at issue must fall within the scope of the fiduciary

14
1-04-1934

relationship. Brown, 62 Ill. App. 3d at 333 (the trial court must

ascertain if a fiduciary relationship, broad enough to encompass

the complained of transaction, exists). If the transaction at

issue has no connection or reference to the estate, no fiduciary

relationship exists as to it. Brown, 62 Ill. App. 3d at 333.

"[W]hether a fiduciary relation exists between an administrator and

a beneficiary, apart from the legal relation existing because of

the administration, is a matter of fact, dependent not on the

technical relation of trustee and cestui que trust, but upon the

confidence reposed on one side and resulting superiority on the

other." Stoke, 391 Ill. at 434; Ehrich, 241 Ill. at 597; In re

Kapraun's Estate, 21 Ill. App. 2d 231, 243, 157 N.E.2d 700 (1959).

Two cases are instructive. In In re Kapraun's Estate, Frank

Kapraun died testate on April 1, 1953, leaving five children, Karl,

Bertha, Anna, Edward, and Phillip. Kapraun, 21 Ill. App. 2d at

233-34. Under Frank's will, his estate, after being converted to

cash, was to be divided equally among all of his children.

Kapraun, 21 Ill. App. 2d at 234. Phillip was nominated as

executor. On April 12, 1954, Karl, Bertha, and Anna (the

plaintiffs) filed a complaint to establish a constructive trust on

certain real estate previously owned by Frank. With respect to

this real estate, Frank had conveyed same to Phillip on June 7,

1949. The plaintiffs maintained that Phillip was in a fiduciary

relationship with Frank at the time of the conveyance and that he

purchased it for less than market value. Kapraun, 21 Ill. App. 2d

15
1-04-1934

at 234. In finding that Phillip owed no fiduciary duty to his

siblings with respect to the property, the court stated: "[T]his

real estate at the time of [Frank's] death was ostensibly no part

of his estate that could be or should be inventoried or with which

the executor was concerned." Kapraun, 21 Ill. App. 2d at 239.

More specifically, the court stated that "[u]nless the real estate

was part of the decedent's estate[,] the executor under this will

did not take it, had no power or directions as to it, and the five

children had no interest under the will in the proceeds of any

converting thereof." Kapraun, 21 Ill. App. 2d at 239. The court

then noted the general rule with respect to a fiduciary

relationship, stating: "There existed, of course, as a matter of

law, a normal fiduciary relationship between the executor, Philip

H. Kapraun, and the other beneficiaries, but only so far as the

administration of the estate was concerned," and concluded that "we

do not perceive how, under the circumstances, the executor has been

faithless to the fiduciary relationship so far as the

administration of the estate is concerned." Kapraun, 21 Ill. App.

2d at 243.

Another instructive case is Stone. Frank Stone, who was

married to Amanda Stone (the plaintiff), died on July 13, 1942.

Stone, 407 Ill. at 71. Frank had one son, Elmer (the defendant),

and Amanda was his stepmother. In March 1936 and April 1942, Frank

and Amanda bought two different parcels of property. Upon Frank's

death, Amanda became the sole owner as the joint tenant. Frank's

16
1-04-1934

will provided that everything was to go to Amanda for life, with a

remainder interest in Elmer. Elmer was also the nominated executor

and erroneously included the properties on his first inventory.

Stone, 407 Ill. at 71. On August 21, 1942, Amanda conveyed both

parcels of property to Elmer, reserving a life estate for herself.

Stone, 407 Ill. at 72. Thereafter, she sought to set aside the

conveyances, claiming she did not know she was conveying the

properties to Elmer and that he had fraudulently induced her to do

so. Stone, 407 Ill. at 72. The trial court concluded that Amanda

had not been tricked into conveying the properties to Elmer and,

rather, had done so freely and voluntarily. Stone, 407 Ill. at 76.

On appeal, Amanda maintained that Elmer stood in a fiduciary

relationship with her and had obtained the deeds in violation of

his fiduciary duties. Stone, 407 Ill. at 77. The Illinois Supreme

Court disagreed, reciting the general principles with respect to a

fiduciary relationship between an executor and beneficiary.

According to the Stone court, "[t]he narrow question thus presented

is whether the conveyance to defendant was within the scope of the

bare, legal fiduciary relationship existing between the parties."

Stone, 407 Ill. at 77. In concluding that there was no fiduciary

relationship, the court noted that

"[t]he undisputed evidence shows that

plaintiff acquired her interest in the

[properties] by deeds executed in March, 1936,

and April, 1942, and that she did not take

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1-04-1934

title to these properties as a devisee under

the will of which defendant was executor. The

real estate involved did not constitute any

part of the estate of Frank Stone and the mere

circumstance that the properties were

erroneously listed as assets of the estate in

the inventory filed January 11, 1943, *** does

not change this fact. Furthermore, the record

reveals that the deed of August 21, 1942, was

not given in connection with estate matters

and had nothing to do with the administration

of the estate." Stone, 407 Ill. at 77-78.

Ultimately, the court held that "[t]he conclusion is inescapable

that the plaintiff's deed to defendant was not within the scope of

the fiduciary relation existing between the parties." Stone, 407

Ill. at 78.

In order for petitioners here to succeed, they were required

to show, at the least, that Sharon owed a fiduciary duty to them.

The question then is whether the distribution of the Plan was

within the scope of the fiduciary duty Sharon owed to petitioners,

as Shirley's heirs, in her capacity as administrator. We find that

it was not. As in Kapraun and Stone, the Plan was not part of

Shirley's estate and never would have been. Petitioners concede

this fact. Specifically, there is no dispute that the Plan would

never have been distributed to the Estate, according to Harrison's

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testimony, since at least one living blood relative existed.

Likewise, petitioners conceded both before the federal court and

this court that the Plan was not part of the Estate. As such,

petitioners had no interest in the Plan vis-a-vis Shirley's estate

or Sharon's representation of same as administrator. The fact that

the Plan was erroneously listed on the inventory does not change

the fact that it was not an asset of the Estate. Similarly, as in

Stone, despite the fact Sharon and/or her attorneys were involved

with the distribution in some manner, the distribution was not

connected to Estate matters and had nothing to do with the

administration of Shirley's estate. Accordingly, the conclusion

here is as "inescapable" as it was in Stone; the distribution of

the Plan was not within the scope of the fiduciary relationship

existing between Sharon as administrator and petitioners and, thus,

petitioners could not establish any breach of duty, let alone a

duty. As such, because petitioners could not prove an essential

element of their cause of action, we find that the trial court

properly granted summary judgment in favor of Sharon.

II. Petition to Surcharge Attorneys

A motion to dismiss pursuant to section 2-615 of the Code

challenges the legal sufficiency of a plaintiff's complaint.

Joseph v. Chicago Transit Authority, 306 Ill. App. 3d 927, 930, 715

N.E.2d 733 (1999). When reviewing the sufficiency of a complaint,

the court must accept as true all well-pleaded facts and all

19
1-04-1934

reasonable inferences that can be drawn from those facts. Bryson

v. News America Publications, Inc., 174 Ill. 2d 77, 86, 672 N.E.2d

1207 (1996). The complaint should not be dismissed unless it is

clear that the plaintiffs could prove no set of facts that would

entitle them to relief. Bryson, 174 Ill. 2d at 86-87. We review

the trial court's decision on a motion to dismiss de novo. Neade

v. Portes, 193 Ill. 2d 433, 439, 739 N.E.2d 496 (2000).

Petitioners first contend that they stated a valid cause of

action against the Attorneys and, thus, the trial court erred in

granting the Attorneys' motions to dismiss. According to

petitioners, the Attorneys owed a duty to all of the heirs since

they were hired for the benefit of the Estate. Petitioners

maintain that the Attorneys breached their duty by directing that
3
the Plan proceeds be paid to Kenneth. According to petitioners,

3
Although petitioners maintain before this court that the
Attorneys were negligent in that they failed to protect
petitioners' interests, failed to tell Harris Bank about other
heirs, failed to tell petitioners that the named beneficiaries of
Shirley's Plan predeceased her, thus, there were no named
beneficiaries, and failed to tell petitioners of the details of the
Plan prior to the time it was distributed to Kenneth, as the
Attorneys argue in their briefs to this court, petitioners did not

20
1-04-1934

this breach proximately caused injuries in the loss of the Plan to

the Estate to which they were entitled under the Plan documents.
The Attorneys generally make the same contentions: they

committed no wrongdoing as the trial court determined and,

therefore, there could be no breach of duty; petitioners could not

establish proximate cause because Harris Bank made an independent

decision with respect to the distribution; and petitioners could

not establish damages to the Estate because the Plan would never

have been distributed to it, and, thus, the trial court properly

granted their motions to dismiss. Only Magill addresses the issue

of duty, maintaining that the Attorneys owed no fiduciary duty to

petitioners as potential beneficiaries of the Estate since there

was no evidence that Sharon's relationship with the Attorneys was

intended to confer a benefit on them and because they took a

position adverse to Sharon.

. In order to ascertain the nature of an estate attorney's duty,

"it is necessary *** to examine the purposes of an administrator of

allege a cause of action based on negligence in the trial court and
raise this issue for the first time on appeal. As such, it is not
properly before this court and will not be addressed. In re B.K.,
362 Ill. App. 3d 324, 329, 839 N.E.2d 1111 (2005).

21
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an estate, thereby indicating the role of an administrator's

attorney." People v. Coslet, 67 Ill. 2d 127, 133, 364 N.E.2d 67

(1977). Again, the purposes of administrating an estate is to

marshall the assets of the estate, pay the debts of the decedent

and estate, and to distribute the residue of the estate to the

legal heirs. In re George's Estate, 335 Ill. App. at 511. "[T]he

primary purpose of the attorney's relationship with the executor

[is] to assist the executor in the proper administration of the

estate." Jewish Hospital of St. Louis, Missouri v. Boatmen's

National Bank of Belleville, 261 Ill. App. 3d 750, 763, 633 N.E.2d

1267 (1994).

The leading case on an attorney's duty to a third-party

nonclient, such as the situation presented here, is Pelham v.

Griesheimer, 92 Ill. 2d 13, 440 N.E.2d 96 (1982). In Pelham, the

defendant attorney was retained to represent Loretta Ray in a

divorce proceeding against her husband, George. Pelham, 92 Ill. 2d

at 16. The plaintiffs were the minor children of Loretta and

George. The divorce decree required George to maintain all four

children as primary beneficiaries on his life insurance policies,

including the one he had with his employer. George remarried and

subsequently named his new wife as the primary beneficiary on his

employment life insurance policy. Pelham, 92 Ill. 2d at 16. The

plaintiffs filed a lawsuit against the defendant, alleging that he

was negligent because he failed to advise the employer or the

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insurance carrier of the decree provision. Pelham, 92 Ill. 2d at

16-17. It was the plaintiffs' position that they were third-party

beneficiaries of the contract between the defendant and Loretta.

Pelham, 92 Ill. 2d at 17. The trial court dismissed the

plaintiffs' action, finding there was no attorney-client

relationship between them and the defendant, which was affirmed by

the appellate court. Pelham, 92 Ill. 2d at 16. The Illinois

Supreme Court also affirmed. However, it disagreed with the

appellate court's finding that no attorney-client relationship

existed solely based on a lack of privity between the plaintiffs

and the defendant. Specifically, after noting the general rule

that an attorney is not liable to third-party nonclients, the court

stated that it did not consider privity to be "an indispensable

prerequisite to establishing a duty of care between a non-client

and an attorney in a suit for legal malpractice." Pelham, 92 Ill.

2d at 18. Despite this finding, the court noted:

"While privity of contract has been

abolished in many areas of tort law, the

concern is still that liability for negligence

not extend to an unlimited and unknown number

of potential plaintiffs. In the area of legal

malpractice the attorney's obligations to his

client must remain paramount. In such cases

the best approach is that the plaintiffs must

allege and prove facts demonstrating that they

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are in the nature of third-party intended

beneficiaries of the relationship between the

client and the attorney in order to recover in

tort. [Citations.] By this we mean that to

establish a duty owed by the defendant

attorney to the nonclient the nonclient must

allege and prove that the intent of the client

to benefit the nonclient third party was the

primary or direct purpose of the transaction

or relationship." Pelham, 92 Ill. 2d at 20-

21.

By adopting the "intended to directly benefit" test, the Pelham

court believed that "the purpose of limiting the scope of the duty

owed by an attorney to nonclients" was furthered. Pelham, 92 Ill.

2d at 21. Accordingly, the court held

"that, for a nonclient to succeed in a

negligence action against an attorney, he must

prove that the primary purpose and intent of

the attorney-client relationship itself was to

benefit or influence the third party. Under

such proof, recovery may be allowed, provided

that the other elements of a negligence cause

of action can be proved." Pelham, 92 Ill. 2d

at 21.

However, the Pelham court further found:

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"Where a client's interest is involved in

a proceeding that is adversarial in nature,

the existence of a duty of the attorney to

another person would interfere with the

undivided loyalty which the attorney owes his

client and would detract from achieving the

most advantageous position for his client.

[Citation.] Our code of professional

responsibility requires that a lawyer

represent his client with undivided fidelity

(84 Ill. 2d R. 5-107), and Canon 7 provides

that a lawyer should represent a client

zealously within the boundaries of the law (84

Ill. 2d Canon 7)." Pelham, 92 Ill. 2d at 22-

23.

As such, the court held that "[i]n cases of an adversarial nature,

in order to create a duty on the part of the attorney to one other

than a client, there must be a clear indication that the

representation by the attorney is intended to directly confer a

benefit upon the third party." (Emphasis added.) Pelham, 92 Ill.

2d at 23. Applying the "intent to directly benefit" test to the

facts presented to it, the Pelham court concluded there was no

evidence that the plaintiffs were direct third-party beneficiaries.

Specifically, the court noted:

"The attorney was hired primarily for the

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purpose of obtaining a divorce, property

settlement, and custody of the minor children

for Loretta Ray, not to represent her

children's interest. The plaintiffs herein

are, at best, only incidental beneficiaries in

this situation. That George Ray name the

children as beneficiaries of the policy cannot

be described as the primary reason that

Loretta Ray retained the defendant to be her

attorney." Pelham, 92 Ill. 2d at 23.

Ultimately, the court stated that "[u]nder the facts as pleaded, we

hold that no duty in negligence was owed by the wife's attorney to

his client's children; hence, no cause of action was stated" since

the plaintiffs failed to plead and prove that the relationship

between the attorney and his client was entered into for their

primary and direct benefit." Pelham, 92 Ill. 2d at 24-25.

The Pelham rule was applied in an estate case in Ogle v.

Fuiten, 112 Ill. App. 3d 1048, 445 N.E.2d 1344 (1983), where the

intended beneficiaries of a will sued the testator's attorney,

maintaining that he was negligent in failing to include a

contingency in the will that in fact occurred, which resulted in

intestate devolution. Ogle, 112 Ill. App. 3d at 1049. The bases

for the plaintiffs' claims were negligence and third-party

beneficiary breach of contract. Ogle, 112 Ill. App. 3d at 1049.

After outlining the rule espoused in Pelham, that "a proper

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allegation of duty necessary to sustain a nonclient's action

against an attorney for malpractice requires an allegation that the

intent of the client to benefit the nonclient-third party was the

primary or direct purpose of the transaction or relationship," the

court concluded that the plaintiffs' allegations sufficiently

stated a cause of action under both theories because it was clear

that the testator intended to benefit them and the attorney was

well aware of this. Ogle, 112 Ill. App. 3d at 1052-53.

The Pelham rule was also applied in Neal v. Baker, 194 Ill.

App. 3d 485, 551 N.E.2d 704 (1990), where the sole income

beneficiary for life under a testator's will sued the executor's

attorney, alleging that he had a duty to exercise reasonable skill

and care in advising the executor which duty ran to her as a

beneficiary of the estate; more specifically, the plaintiff

maintained that she was an intended beneficiary of the relationship

between the executor and the defendant. Neal, 194 Ill. App. 3d at

486. The Neal court concluded that no "duty existed on behalf of

the attorney for the estate as to the plaintiff." Neal, 194 Ill.

App. 3d at 487. The court first outlined the principles espoused

in Pelham and found that,

"[a]pplying Pelham's intent to directly

benefit test to the facts alleged in the

amended complaint, it is clear that Anna Neal

was not a direct third-party beneficiary. The

primary purpose of the attorney-client

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relationship between First Trust Bank and

defendant was to assist First Trust Bank in

the proper administration of its duties.

[Citation.] It is obvious that defendant

could not have been hired with the intent to

directly benefit Anna Neal when the

adversarial nature of the relationship between

Anna Neal and the attorney becomes evident.

In this case, for example, Anna Neal contested

the defendant's position that she should pay

the inheritance tax as opposed to the estate.

In such a situation, which is not uncommon in

administering estates, the beneficiary becomes

the opposing party in an adversarial forum.

[Citation.]" Neal, 194 Ill. App. 3d at 488.

The Neal court then noted that neither Pelham, nor McLane v.

Russell, 131 Ill. 2d 509, 546 N.E.2d 499 (1989), a recent Illinois

Supreme Court case addressing a similar issue, "mandate that the

drafters of a will owe fiduciary duties to intended beneficiaries

of a will" in all cases. (Emphasis in original.) Neal, 194 Ill.

App. 3d at 488. See also Schwartz v. Cortelloni, 177 Ill. 2d 166,

174-75, 685 N.E.2d 871 (1997) ("In determining whether a duty is

owed to a third party, the key factor to be considered is whether

the attorney acted at the direction of or on behalf of the client

for the benefit of a third party"); Gagliardo v. Caffrey, 344 Ill.

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App. 3d 219, 228, 800 N.E.2d 489 (2003) ("the beneficiaries of an

estate are intended to benefit from the estate and are owed a

fiduciary duty by the executor to act with due care to protect

their interests," but "[t]hey are not, however, owed allegiance by

the estate attorney, who does not have an attorney-client

relationship with the beneficiaries and whose 'first and only

allegiance' is to the estate in such adversarial situations")

(emphasis added); In re Estate of Vail, 309 Ill. App. 3d 435, 441,

722 N.E.2d 248 (1999) ("The attorney for the executor does not have

an attorney-client relationship with the beneficiaries ***. When

an adversarial situation arises, the attorney for the executor owes

allegiance only to the estate"); In re Estate of Kirk, 292 Ill.

App. 3d 914, 919, 686 N.E.2d 1246 (1997) (" 'An attorney

representing an estate must give his first and only allegiance to

the estate when such an adversarial situation arises. [Citation.]

Even though the beneficiaries of a decedent's estate are intended

to benefit from the estate, an attorney cannot be held to have a

duty to those beneficiaries, due to this potential adversarial

relationship.' [Citation.]"); Jewish Hospital of St. Louis,

Missouri, 261 Ill. App. 3d at 763 ("An attorney representing an

estate must give his first and only allegiance to the estate, in

the event that such an adversarial situation arises. Even though

beneficiaries of a decedent's estate are intended to benefit from

the estate, an attorney for an estate cannot be held to a duty to a

beneficiary of an estate, due to the potentially adversarial

29
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relationship between the estate's interest in administering the

estate and the interests of the beneficiaries of the estate";

finding no duty between the attorney and beneficiaries of estate);

Rutkoski v. Hollis, 235 Ill. App. 3d 744, 751, 600 N.E.2d 1284

(1992) (holding that the attorney for the executor of an estate,

who was also a beneficiary of that same estate, owed no duty based

on the attorney-client relationship between the attorney and

executor to him as a beneficiary: "Defendant's primary duty was to

Charles as executor of the estate and not to the beneficiaries of

the estate, including Charles"; also noting that the plaintiff

failed to cite any case in which an attorney who represented an

estate was found to have an implied duty to the beneficiaries of

that estate).

Based on the foregoing cases, we find that the Attorneys owed

no duty to petitioners. First, to extend such a duty would go

against the concern expressed in Pelham that an attorney's

liability for negligence, or breach of fiduciary duty here, should

"not extend to an unlimited and unknown number of potential

plaintiffs." Pelham, 92 Ill. 2d at 20. In the instant case, at

the time the Plan was distributed, the only other heir known was

Owen. The other petitioners did not surface until two and one-half

months later. Second, there is no "clear indication," as is

necessary when an adversarial situation exists as here, that Sharon

retained the Attorneys with the intent to directly confer a benefit

upon petitioners, let alone any evidence that this was the primary

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purpose for retention of counsel. Rather, Sharon retained counsel

to assist her in the proper administration of Shirley's estate.

See Neal, 194 Ill. App. 3d at 488 ("the primary purpose of the

attorney-client relationship between [the executor] and defendant

[the attorney] was to assist [the executor] in the proper

administration of its duties"). This is particularly true here

given the adversarial nature of petitioners' claim. As in Neal, it

is obvious that Sharon did not retain counsel with the intent to

benefit petitioners, particularly where there is no evidence that

she was even aware of their existence. Accordingly, we find that

the Attorneys owed no duty to petitioners.

Even assuming arguendo that the Attorneys owed petitioners a

duty, that duty would not extend to distribution of the Plan. As

discussed above with respect to Sharon, duty extends only to estate

matters. Here, the Plan was not and never would have been a part

of the Estate and, thus, was not an Estate matter. We see no

reason why this limitation would not apply equally to an attorney

representing an administrator since the sole purpose of the

representation is to administer the estate. Accordingly, because

petitioners could prove no set of facts entitling them to relief,

we find that the trial court properly granted the Attorneys'

motions to dismiss.

We therefore conclude that, because no duty was owed to

petitioners, they could not sustain a cause of action against

either Sharon or the Attorneys, and we thus need not address the

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issues of breach of duty, proximate cause, damages, or any other

issue raised by the parties.

CONCLUSION

For the reasons stated, we affirm the judgment of the circuit

court of Cook County.

Affirmed.

CAHILL, P.J., and GORDON, J., concur.

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