Shriners Hosps. for Children v. Ruggiero

1

2024 IL App (1st) 232316-U

SHRINERS HOSPITALS FOR CHILDREN and THE AMERICAN HEART ASSOCIATION, Plaintiffs-Appellees and Cross Appellants, v. RICHARD M. RUGGIERO, Individually and in his capacity as Successor Trustee of the Lena De Benedetto Revocable Living Trust, dated September 19, 2003, and Amended on November 1, 2005, and September 30, 2011, Defendant-Appellant and Cross Appellee.

No. 1-23-2316

Court of Appeals of Illinois, First District, First Division

August 26, 2024

This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1).

Appeal from the Circuit Court of Cook County No. 20 CH 5255 The Honorable Michael T. Mullen, Judge Presiding.

PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the court. Justices Lavin and Pucinski concurred in the judgment.

ORDER

FITZGERALD SMITH PRESIDING JUSTICE

¶ 1 Held: The appellate court affirms the trial court's granting of the plaintiffs' motion for summary judgment, its entry ofjudgment against the defendant in his individual capacity, its granting of a motion for sanctions, and its denial of punitive damages. The appellate court reverses the trial court's award of only partial attorney fees and costs and remands for entry of an award of full attorney fees and costs.

¶ 2 The plaintiffs, Shriners Hospitals for Children (Shriners) and the American Heart Association, filed this action for accounting and breach of fiduciary duty against the defendant, Richard M. Ruggiero individually and in his capacity as successor trustee of the Lena De Benedetto Revocable Living Trust, dated September 19, 2003, and amended on November 1, 2005, and September 30, 2011 (Trust). The trial court granted the plaintiffs' motion for summary judgment, finding that the defendant wrongfully converted $290,200 in trust assets to himself as unsubstantiated "trustee fees" and ordering him to provide an accounting and to reimburse the trust within 21 days. After the defendant failed to provide an accounting or reimbursement, the trial court entered judgment against the defendant in his individual capacity. The trial court also awarded certain attorney fees and costs in favor of the plaintiffs, and it granted a motion for sanctions against the defendant for failing to comply with discovery.

¶ 3 The defendant appeals the trial court's entry of summary judgment, its denial of his request for additional time to file a response to the motion for summary judgment, its entry of judgment against him individually, its awarding of attorney fees and costs to the plaintiffs, and its granting of a motion for sanctions. The plaintiffs have filed a cross-appeal challenging the amount of attorney fees and costs allowed by the trial court and its denial of their request for an award of punitive damages. We affirm in part, reverse in part, and remand for further proceedings.

¶ 4 I. BACKGROUND

¶ 5 The following facts are established by the pleadings affidavits, admissions, and depositions attached to the plaintiffs' motion for summary judgment, to which the defendant filed no response or counteraffidavit. Following the death of Lena De Benedetto on December 30, 2017, the defendant, who was her nephew and an Illinois licensed attorney, became successor trustee of the Trust. According to the terms of the Trust, the successor trustee was directed to sell Lena De Benedetto's condominium and thereafter to distribute the sale proceeds in monthly installments to her son, Robert De Benedetto. The Trust further provided that if Robert De Benedetto were to die while funds remained in the Trust, "then the trustee shall distribute the then remaining principal and all accrued or undistributed net income of the trust, if any, in equal share to the following four charities: The American Heart Association, the Lupus Foundation, the Pacific Garden Mission, and the Shriners' Hospital for Children." Robert De Benedetto died on August 24, 2018.

¶ 6 Upon assuming the role of successor trustee, the defendant did not inform the plaintiffs that they were residuary beneficiaries of the Trust. Further, the defendant never distributed any money from the Trust to the named plaintiffs, the Lupus Foundation, or the Pacific Garden Mission. In March 2019, anonymous phone calls were made to both plaintiffs, informing them of the Trust and that they were named as residuary beneficiaries in it. Trust documents and the death certificates of both Lena and Robert De Benedetto were also faxed to them. Almost immediately, attorneys on behalf of the plaintiffs began communicating with the defendant, seeking information about the Trust's assets and distribution.

¶ 7 At the time of Robert De Benedetto's death, the Trust owned two certificates of deposit with a combined value of approximately $80,134. In March 2019, the defendant withdrew the balance of one of those certificates of deposit in the amount of $49,740.69, and he deposited that sum into a checking account that he opened in the name of the Trust. In May 2019, the condominium sold, which resulted in an additional $222,782 being deposited into that checking account. Between April and August 2019, the defendant wrote several checks out of that account for payment of real estate taxes, the fee of the condominium land trustee, cleaners' and movers' charges, attorney fees, utilities, and funeral expenses. The total of those payments was $12,492.34.

¶ 8 In addition, between April 5, 2019, and December 22, 2020, the defendant wrote 64 checks out of that account to himself for "trustee's fees," for a total of $259,000. This left a balance of $370 in that first checking account. In January 2021, the defendant opened a second checking account in the name of the Trust, into which he deposited the proceeds of the other certificate of deposit owned by the Trust, which totaled $31,268.96. Between January 29, 2021, and May 24, 2021, the defendant proceeded to write 8 additional checks to himself for "trustee's fees/misc.," for a total of $31,200. This left a balance of $68.96 in the second account.

¶ 9 Between late-March 2019 and the filing of this case on August 4, 2020, substantial communication occurred between the defendant and representatives of the plaintiffs. Most of these communications were between the defendant and representatives of Shriners. In summary, they demonstrate a pattern whereby the defendant would repeatedly state to the plaintiffs' representatives that issues had arisen that prevented him from winding up administration of the Trust and sending the funds to the plaintiffs by the date promised, but that he expected to be able to send the funds sometime within the upcoming month. This pattern continued on approximately a monthly basis through April 2020, when the defendant stated that he would finish his work and send payment "[a]s soon as things lift" from the closures related to COVID-19.

¶ 10 Based upon the above facts, the plaintiffs filed a motion for summary judgment on their claims for accounting and breach of fiduciary duty. As to their claim for accounting, they argued that no genuine issue of material fact existed as to their right as residuary trust beneficiaries to an accounting from the defendant as successor trustee, which the defendant had never given to them. See 760 ILCS 3/813.2 (West 2020). As to their claim for breach of fiduciary duty, they argued that no genuine issue of material fact existed that the defendant, as successor trustee, had breached his duty of loyalty and to administer the trust in good faith. See id. §§ 801, 802. They argued that this was shown by the evidence that, at the same time the defendant was promising the plaintiffs that "the check was literally 'in the mail,'" he was simultaneously writing checks to himself totaling $290,200. Most of these checks were written after his only duty as successor trustee (selling the condominium) had been completed, and some were written even after this litigation had been filed. He neither provided notice to the beneficiaries nor obtained their approval to write these checks to himself, and he had provided no evidence substantiating any work done as trustee.

¶ 11 The plaintiffs' motion for summary judgment was substantiated with the defendant's sworn interrogatory answers and responses to the request for production; sworn affidavits from officers of the two plaintiffs, the Lupus Society of Illinois, and the Pacific Garden Mission; and documents produced in response to subpoenas by Parkway Bank &Trust Co., First Midwest Bank, Stewart Title Company, and Bank of America. The plaintiffs also attached the defendant's discovery deposition, in which the defendant had asserted his Fifth Amendment right against selfincrimination in response to nearly every question relating to his actions as successor trustee of the Trust. The plaintiffs argued that the defendant's repeated invocation of his Fifth Amendment rights in his discovery deposition precluded him from offering any affidavit or testimony to rebut the evidence in the summary judgment record and permitted the court to draw an adverse inference against the defendant.

¶ 12 Prior to the filing of the above motion for summary judgment, the trial court had set a briefing schedule pertaining to it. Thus, on January 26, 2023, the court ordered that the plaintiffs' motion was due by March 2, 2023, and the plaintiffs filed it within that time. It also ordered that the defendant's response was due by March 30, 2023, that the reply brief was due by April 14, 2023, and that a further status hearing was set for April 18, 2023. That same order also provided that all discovery was due by March 15, 2023.

¶ 13 The defendant never filed a response to the plaintiffs' motion for summary...