The Illinois Appellate Court for the 1st District affirmed the decision of a Cook County judge who granted summary judgment. The ruling came in favor of John Gearhart on the declaratory judgment that trust assets were to be distributed by David Gearhart, one of the grantor’s (Lloyd E. Gearhart) sons. Lloyd Gearhart died on Jan. 9, 2012, one week after making the final trust amendments leaving David Gearhart as trustee.
John Gearhart, another son, filed suit against David on Nov. 2, 2015 seeking declaratory judgment that the trust’s principal was to be distributed per stirpes among his children. He also sought an order restoring assets, alleging that David made distributions to the other two children but then insisted that John was only an income beneficiary of the trust and distributed the remaining trust assets to himself.
At trial seeking the order restoring assets, John argued that David had distributed assets to the other two children as though the trust’s assets would be distributed four ways and then denied John his portion of the assets, effectively claiming 50% of the trust’s assets for himself.
The trial court granted summary judgment in favor of John on the declaratory judgment that the assets were to be distributed per stirpes based on clear language in the trust.
Following a bench trial, the court also found in John’s favor on the second count that David had improperly withdrawn as much as $400,000 for himself and ordered the restoration of those funds.
The trial court also found that David’s breach of fiduciary duty as trustee had been willful, and imposed punitive damages, citing the $150,000 paid by John in attorney’s fees and costs in prosecuting the lawsuit and awarded him $250,000, that being the attorney’s fees plus $100,000 as additional punitive damages.
David appealed, claiming that the trial court erred in interpreting the trust documents and, therefore, improperly granted summary judgment and that its holding after trial was against the manifest weight of the evidence, and additionally, challenged the trial court’s assignment of punitive damages.
The appellate court affirmed the trial court’s grant of summary judgment and a final holding against David. On the issue of punitive damages, the appellate court was partially sympathetic. The appeals panel rejected David’s argument that the trial court erred in finding punitive damages inappropriate, emphasizing that David had demonstrably acted in willful breach of his fiduciary duty.
However, the appellate court acknowledged that the trial court had imposed the $150,000 that John had spent on attorney fees, but then without explanation, an additional $100,000. The appellate court found this additional, unexplained amount was against the manifest weight of the evidence and vacated the $100,000 of the punitive damages. But the appellate court affirmed the trial court’s other decisions, including the assessment of $150,000 for attorney’s fees and costs.
Gearhart v. Gearhart, 2019 IL App (1st) 190042 (Nov. 7, 2019).
Kreisman Law Offices has been handling probate litigation, trust and trustee lawsuits, guardianships and civil trials for individuals and families for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Arlington Heights, Bannockburn, Calumet City, Deerfield, Evanston, Flossmoor, Glencoe, Highwood, Inverness, Joliet, Kenilworth, Lansing, Mundelein, Naperville, Orland Park, Palatine, Chicago (Little Village, Back of the Yards, Pilsen, Pullman, Bridgeport, Canaryville, Hegewisch, South Shore, South Chicago, Albany Park, Ravenswood Manor), Winnetka, Wheeling, Blue Island and South Holland, Ill.
Robert D. Kreisman has been an active member of the Illinois and Missouri bars since 1976.
Related blog posts: