In re Estate of Getz

2023 IL App (3d) 210602-U

• Court: Appellate Court of Illinois
• Decided: July 6, 2023
• Docket: 3-21-0602
• Status: Unpublished

Opinion

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

2023 IL App (3d) 210602-U

Order filed July 6, 2023 ____________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

In re ESTATE OF HENRY A. GETZ, ) Appeal from the Circuit Court ) of the 10th Judicial Circuit, Deceased, ) Tazewell County, Illinois, ) (Jackie Lysengen, ) ) Appeal No. 3-21-0602 Claimant-Appellant, ) Circuit No. 17-P-293 ) v. ) ) Jan Rouse, ) Honorable ) Paul E. Bauer, Executor-Appellee). ) Judge, Presiding. ____________________________________________________________________________

JUSTICE HETTEL delivered the judgment of the court. Justices McDade and Davenport concurred in the judgment. ____________________________________________________________________________

ORDER

¶1 Held: The trial court properly granted motion to dismiss and disallow claim against estate where claimant filed claim beyond six-month and two-year limitations periods under Probate Act.

¶2 Jackie Lysengen filed a claim against the Estate of Henry A. Getz (Estate), seeking to

recover damages based on a pending federal lawsuit in which she alleged that Getz and others

violated the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.). The trial court granted the Estate’s motion to disallow and dismiss, concluding Lysengen’s

claim was time-barred by the six-month and two-year limitations periods under the Probate Act

of 1975 (Probate Act) (755 ILCS 5/18-12(a), (b) (West 2020)). Lysengen appeals, claiming the

trial court erred in dismissing her claim because ERISA’s six-year statute of limitations preempts

the shorter time limits under the Probate Act. We affirm.

¶3 I. BACKGROUND

¶4 On November 3, 2017, Henry A. Getz, a major shareholder in Morton Buildings, Inc.,

died. On November 9, 2017, the executor filed a petition to admit the will and to issue letters of

administration. The trial court issued an order admitting the will on November 13, 2017, opening

the estate for probate. The first notice of claim date was published on January 6, 2018, and

required claims to be filed within six months of the first date of publication.

¶5 Jackie Lysengen was an employee of Morton Buildings from December 28, 1990, to

August 23, 2019, and is a participant in the company’s employee stock ownership plan (ESOP).

In April 2020, she filed suit in federal court under the Employee Retirement Income Security Act

of 1974 (ERISA) (29 U.S.C. § 1001 et seq. (2012)) against Argent Trust Company and two

majority shareholders of Morton Buildings, Rouse and Edward Miller (members of the Getz

family). Lysengen claimed that the defendants violated several ERISA provisions governing

employee pension plans when they agreed to sell all of the company’s shares to the ESOP in

May 2017. Specifically, the federal complaint alleged that the defendants caused the ESOP to

purchase approximately 2 million shares of company stock at a value of $75.25 per share on May

8, 2017, and that the value of the stock fell to $33.78 per share by December 31, 2017. Lysengen

asserted that Argent, as the ESOP’s trustee, and the selling shareholders violated ERISA by

approving the transaction and selling the shares well-above fair market value.

2 ¶6 On June 4, 2021, Lysengen requested leave to add Getz’s estate as a defendant in the

federal case. The federal district court granted Lysengen’s request, and on August 19, 2021, she

filed an amended complaint naming the Estate as a selling shareholder based on Getz’s

participation in the transaction prior to his death. Lysengen asserted the Estate had actual and/or

constructive knowledge of the wrongdoing and received a benefit that violated ERISA. Among

other remedies, she sought to recover the excess consideration the Estate received from the

alleged unlawful stock sale, requesting the Estate “make good to the Plan *** the losses resulting

from the breaches of ERISA and restore any profits [the Estate] has made through use of assets

from the Plan.”1

¶7 On August 31, 2021, Lysengen filed a state claim against the Estate in probate court. The

claim alleged that the Estate was liable to Lysengen based on the ERISA violations asserted in

the federal action. She attached a copy of the amended federal complaint and noted that the

requested award was an amount “to be determined in the pending action” in federal court.

¶8 The Estate filed a motion for disallowance and dismissal of Lysengen’s claim, arguing

that the 6-month and 2-year limitations periods in the Probate Act barred the claim. See 755

ILCS 5/18-12(a)(1), (b) (West 2020). Lysengen opposed the motion, claiming that ERISA’s

preemption provision in section 1144(a) (29 U.S.C. § 1144(a) (2012)) and the six-year statute of

limitations in section 1113 (id. § 1113) preempted the shorter time limits in the Probate Act. The

1 On March 22, 2022, the United States District Court for the Central District of Illinois denied the Estate’s motion to dismiss, holding that: (1) the probate exception did not apply and did not divest the federal court of jurisdiction over Lysengen’s ERISA claim; and (2) ERISA’s six-year statute of limitations (29 U.S.C § 1113) preempted the Illinois Probate Act’s shorter limitations periods. See Lysengen, on Behalf of the Morton Buildings, Inc. Leverage Employee Stock Ownership Plan. v. Argent Trust Co., No. 20-1177 (C.D. Ill. March 22, 2022).

3 trial court entered an order granting the Estate’s motion and disallowing Lysengen’s claim on

November 30, 2021.

¶9 II. ANALYSIS

¶ 10 Lysengen contends that the trial court erred in granting the Estate’s motion to disallow and

dismiss her claim because the federal statute of limitations preempts the Probate Act’s time limits.

She maintains that since Getz participated in the transaction which violated ERISA before his

death and she filed her federal lawsuit against the Estate within the six-year limitations period

allowed under ERISA, her claim is not time-barred by the Probate Act. Determining the

applicability of a statute of limitations to a claim presents a legal question we review de novo.

Travelers Casualty & Surety Co. v. Bowman, 229 Ill. 2d 461, 466 (2008).

¶ 11 “Under the common law of Illinois, a dead person is a nonexistent entity and cannot be

party to a suit.” Relf v. Shatayeva, 2013 IL 114925 (citing Volkmar v. State Farm Mutual

Automobile Insurance Co., 104 Ill. App. 3d 149, 151 (1982)). The Probate Act, however, allows

creditors and other claimants to pursue a claim against an individual posthumously through their

estate. See 755 ILCS 5/18-1 et seq. (West 2020). The administration of a decedent’s estate is a

creature of statute and is governed exclusively by provisions of the Probate Act. In re Estate of

Zagaria, 2013 IL App (1st) 122879, ¶ 15.

¶ 12 Section 18-12(a)(3) of the Probate Act provides:

“(a) Every claim against the estate of a decedent, except expenses of

administration and surviving spouse’s or child’s award, is barred as to all of the

decedent’s estate if :

***

4 (3) The claimant’s address is not known to or reasonably

ascertainable by the representative and the claimant does not file a claim

with the representative or the court on or before the date stated in the

published notice as provided in Section 18-3.” 755 ILCS 5/18-12(a)(3)

(West 2020).

Under section 18-3, notice of publication must state that claims may be filed on or before the

date set forth in the notice, “which date shall be not less than 6 months from the date of the first

publication ***.” Id. § 18-3(a). The date provided in the published notice sets the applicable

period for filing claims. Polly v. Estate of Polly, 385 Ill. App. 3d 300, 304 (2008).

¶ 13 Section 18-12(b) of the Act further provides that “[u]nless sooner barred under subsection

(a) of this Section, all claims which could have been barred under this Section are, in any event,

barred 2 years after decedent’s death, whether or not letters of office are issued upon the estate of

the decedent.” 755 ILCS 5/18-12(b) (West 2020). This section is a grant of jurisdiction. Walstad

v. Klink, 2018 IL App (1st) 170070, ¶ 14; see also In re Marriage of Epsteen, 339 Ill. App. 3d

586, 596 (2003) (“statute providing for a claim against an estate within a prescribed period is a

grant of jurisdiction, not a general statute of limitations”). Consequently, the trial court has no

authority to hear a claim against an estate after the two-year statutory period has passed.

Walstad, 2018 IL App (1st) 170070, ¶ 14.

¶ 14 The Probate Act broadly defines a “claim” to include “any cause of action.” 755 ILCS

5/1–2.05 (West 2020). Thus, the two-year statutory limitations period applies to any claim

regardless of its legal basis. See Rozycki v. Gitchoff, 180 Ill. App. 3d 523, 525 (1989) (claims

based in contract, tort, or any other theory must be filed within the statutory period and cannot be

pursued in a separate proceeding after that period has ended). This inflexible time frame was

5 enacted by the legislature to promote the early settlement of estates. In re Estate of Parker, 2011

IL App (1st) 102871, ¶¶ 57-58. “The time frame cannot be extended even for equitable reasons,

and, once it has expired, courts have no jurisdiction to adjudicate any claim against an estate.” In

re Estate of Zivin, 2015 IL App (1st) 150606, ¶ 10.

¶ 15 Here, the time limitations set forth in the Probate Act are crucial. The executor published

notice on January 6, 2018, and, in accordance with section 18-12(a)(3), it required all claims to

be filed by July 6, 2018. In addition, under section 18-13(b), all claims against the Estate,

regardless of notice or legal basis, were required to be filed by November 3, 2019, two years

after Getz’s death. Lysengen filed her ERISA complaint in federal court on April 30, 2020, and

first requested leave to add the Estate as a defendant on June 4, 2021. Moreover, she did not

formally file a claim in probate court until August 31, 2021. Thus, by any measurement, she

missed the time within which to assert her claim against the Estate. Accordingly, the probate

court lacked jurisdiction under section 18-12 of the Probate Act, and the trial court properly

granted the Estate’s motion to disallow and dismiss her claim.

¶ 16 Lysengen suggests that the March 22, 2022, decision by the federal district court in the

underlying ERISA action requires a different result and controls our disposition. See Lysengen,

on Behalf of Morton Buildings, Inc. Leverage Employee Stock Ownership Plan v. Argent Trust

Co., No. 20-1177, slip op. 3-5 (C.D. Ill. March 22, 2022). In Lysengen’s federal case, the Estate

argued that it lacked the capacity to be sued because the two-year limitations period in the

Probate Act preempted federal jurisdiction. Id. slip op. 2. The federal district court held that

Congress enacted ERISA to establish a uniform set of rules to regulate pension plans and that the

two-year limitations period in section 18-12(b) of Illinois’s Probate Act did not preempt

ERISA’s six-year statute of limitations. It then concluded that the “probate exception” to federal

6 jurisdiction did not bar Lysengen’s federal ERISA claim and denied the Estate’s motion to

dismiss. Id. slip op. 3.

¶ 17 We read the federal case in sync with our ruling today. The “probate exception” is a

narrow, limited doctrine that: (1) “reserves to state probate courts the probate or annulment of a

will and the administration of a decedent’s estate[;]” and (2) “precludes federal court from

endeavoring to dispose of property that is in the custody of a state probate court.” Marshall v.

Marshall, 547 U.S. 293, 311-12 (2006); see also Jones v. Brennan, 465 F.3d 304, 306 (7th Cir.

2006). In rejecting the probate exception in Lysengen’s federal case, the district court held that

“the application of the shorter state period for filing would infringe upon the exclusive federal

concern in uniformity of pension plan regulations and thus would be inappropriate in this

context.” Essentially, the federal district court concluded that it has subject matter jurisdiction

over the federal ERISA claim and that its authority to resolve the ERISA issue was not

controlled by a state probate statute. Likewise, in this case, the probate court’s jurisdiction to

resolve estate matters and dispose of property in the custody of the probate court is not controlled

by the federal statute of limitations.

¶ 18 To be sure, the federal district court appropriately determined that it has authority to

adjudicate the validity of the ERISA claim, leaving Lysengen to assert her federal judgment in

probate court. However, the federal court’s ruling does not interfere with the state court’s

possession of estate property or the administration of the estate. Its ruling in no way limits the

state court’s ability to exercise jurisdiction over the probate claim. See Wilmington Trust,

National Ass’n v. Estate of McClendon, 287 F. Supp. 3d 353, 363 (S.D.N.Y. 2018) (in denying

motion to dismiss and finding probate exception inapplicable, court noted that federal judgment

7 only interpreted guaranty and adjudicated rights under federal law but did not instruct the state

probate court in the probate proceeding how to exercise jurisdiction or distribute the estate).

¶ 19 Nevertheless, Lysengen insists that the six-year statute of limitations should apply, noting

that Congress intended for the ERISA preemption to be broad. See Egelhoff v. Egelhoff ex rel.

Breiner, 532 U.S. 141, 146 (2001) (emphasizing that ERISA preemption provision is deliberately

expansive and designed to establish pension plan regulation as an exclusively federal concern).

Lysengen cites several federal cases holding that ERISA preempts state provisions where

conflicting statute of limitations exist. See, e.g., Hemphill v. Estate of Ryskamp, 619 F. Supp 2d

954, 978-80 (E.D. Cal. 2008); Board of Trustees of Western Conference of Teamsters Pension

Trust Fund v. H.F. Johnson, Inc., 830 F.2d 1009, 1016-17 (9th Cir. 1987). Those case are easily

distinguishable in that they involve the analysis of federal jurisdiction over an ERISA claim. As

the federal district court has ruled in Lysengen’s underlying case, the federal court has

jurisdiction to consider her claim that defendants, including the Estate, violated ERISA when

they sold company stock to the ESOP. However, any federal court judgment against the Estate

would then have to be enforced in state court by filing a claim against the Estate in probate

proceedings. At that point, the same result would be required—dismissal of the claim based on

lack of jurisdiction.

¶ 20 In this case, the six month and two-year limitations periods bar Lysengen’s claim. As the

Estate notes, even if Lysengen were to obtain a judgment against the Estate in federal court, she

could not recover from the Estate. Lysengen asks to stand in line with other claimants in probate

court, but she failed to secure her place in that line under sections 18-12(a) and 18-12(b) of the

Probate Act. A judgment, or the possibility of a judgment, by the federal court does not create a

pathway for Lysengen to assert a claim against the Estate in state court:

8 “While [a claimant] may not be denied his right to prosecute an action or

judgment or a suit to final decree in the federal court, such judgment or decree can

do no more than adjudicate the validity and amount of his claim. The marshalling

of that claim with others, its priority, if any, in distribution, and all similar

questions, are for the probate court upon presentation to it of the judgment or

decree of the federal court. Thus, though a receiver should resort to the United

States District Court he would need to present, in a probate court, any judgment

obtained, if he desired payment from the assets under the control of the latter.”

Pufahl v. Parks’ Estate, 299 U.S. 217, 226 (1936).

At this point, the door for new claims against the Estate is closed, and there is no

mechanism to reopen it.

¶ 21 III. CONCLUSION

¶ 22 The judgment of the circuit court of Tazewell County is affirmed.

¶ 23 Affirmed.