Opinions filed November 15, 2013
In re Karavidas, 2013 IL 115767
CHIEF JUSTICE GARMAN delivered the judgment of the court, with opinion.
Justices Freeman, Kilbride, Burke, and Theis concurred in the judgment and opinion.
Justice Thomas dissented, with opinion, joined by Justice Karmeier.
This Cook County attorney had offices in downtown Chicago. After opening his own practice focusing on personal injury law in 1988, he had no professional experience in probate or trusts.
In 2000, his father died, naming him as executor of that estate. Surviving the decedent were respondent attorney's sister, who managed a family business, and the widow, respondent's mother. The will contemplated that estate assets would be transferred to a trust (then unfunded) of which respondent would be trustee. Respondent retained, to represent him as executor, John Hayes, who specialized in estate and probate matters and his law firm, Pedersen & Houpt. Hayes had drafted the will and the unfunded trust. The will authorized independent administration of the estate, which meant that respondent, as executor, could take actions without court approval.
The respondent would later testify that Hayes never told him he would have to first fund the trust before he took the disputed actions he would later take. Respondent also said he was told he did not have to make an accounting until the estate was closed.
Respondent did not fund the trust as contemplated, and the estate remained open for over five years. Respondent, instead, made withdrawals from the estate assets. Some of the funds were used to benefit his mother and sister; others were used to benefit the respondent. Although they were undocumented and no provision for interest was made, these withdrawals were paid back. No claim is now being made that restitution is owed to the estate.
In 2006, when the sister learned that respondent was attempting to sell the family business, she instituted legal proceedings, which resulted in respondent's resignation. This also brought an end to the representation by Hayes. The Administrator of the Attorney Registration and Disciplinary Commission filed a complaint in 2009.
Finding that the respondent had no legal authority to lend funds to himself and that he had committed a breach of fiduciary duty, the Hearing Board recommended a four-month suspension. However, the Review Board, finding failure to prove a violation of any specific Rule of Professional Conduct, held that the disciplinary proceeding should be dismissed.
In this decision, the Illinois Supreme Court agreed, although it held that the Hearing Board's finding that respondent had breached his fiduciary duty as executor of his father's estate was not against the manifest weight of the evidence. The court declined to determine whether respondent's conduct could be labeled as conversion. The court found that, despite the Administrator's standard way of stating charges, there was a certain lack of clarity in tying any specific alleged misconduct to a specific rule violation. In this case, there was no attorney-client relationship between respondent attorney and the estate or its beneficiaries. An attorney's breach of fiduciary duty or conversion does not, standing alone, warrant the imposition of professional discipline. To do so, there must be a violation of a specific Rule of Professional Conduct, which was not shown here. Mere bad behavior not violating a professional rule is insufficient.
The charges were dismissed.