Shannon v. Ahern

2019 IL App (1st) 181593-U
CourtAppellate Court of Illinois
DecidedNovember 12, 2019
Docket1-18-1593
StatusUnpublished

This text of 2019 IL App (1st) 181593-U (Shannon v. Ahern) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shannon v. Ahern, 2019 IL App (1st) 181593-U (Ill. Ct. App. 2019).

Opinion

2019 IL App (1st) 181593-U

FIRST DIVISION November 12, 2019

No. 1-18-1593

NOTICE: This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).

IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT

MARY SHANNON, as Successor Executor of the Estate ) of Eileen A. O’Malley, ) Appeal from the ) Circuit Court of Plaintiff-Appellant, ) Cook County ) v. ) No. 14 L 5249 ) DESMOND & AHERN; HUGH AHERN; and JOHN ) The Honorable AHERN, ) Brigid M. McGrath ) Judge Presiding. Defendants-Appellees. )

JUSTICE PIERCE delivered the judgment of the court. Justices Connors and Walker concurred in the judgment.

ORDER

¶1 Held: The circuit court’s entry of summary judgment in favor of defendants is reversed, and we remand for further proceedings. The first accounting malpractice claims asserted by the estate related back to the timely-filed accounting malpractice claims filed by individual beneficiaries of the estate, and therefore the estate’s claims were not barred by the statute of limitations.

¶2 I. BACKGROUND

¶3 The history of the litigation between the parties is important to the understanding of the

issues on appeal. On June 15, 2009, the will of Eileen A. O’Malley (Mrs. O’Malley) was No. 1-18-1593

admitted to probate. Marquette Bank was appointed independent executor of Mrs. O’Malley’s

estate. On November 5, 2009, a petition was filed in the probate court challenging Mrs.

O’Malley’s will and a related trust. In February 2011, the probate court terminated Marquette

Bank’s independent administration of Mrs. O’Malley’s estate. In March 2012, the probate

court—after a jury trial on whether Mrs. O’Malley’s will was the result of undue influence—

vacated its order admitting Mrs. O’Malley’s will to probate. In August 2012, Mary Shannon was

appointed special administrator of Mrs. O’Malley’s estate for the limited purpose of prosecuting

two pending lawsuits against defendants Desmond & Ahern, Hugh Ahern, and John Ahern in the

law division. In November 2013, Mary Shannon was appointed successor executor of Mrs.

O’Malley’s estate.

¶4 Relevant to the limitations issue in this appeal, in September 2009, Marquette Bank hired

defendants to prepare Mrs. O’Malley’s 2008 individual tax return, the estate’s tax return, and any

related gift tax returns. Copies of the proposed tax returns were circulated to attorneys for

members of Mrs. O’Malley’s family. An attorney representing a number of Mrs. O’Malley’s

children notified Marquette Bank that there were at least 29 issues that needed to be addressed

before filing Mrs. O’Malley’s estate tax return. Marquette Bank took no action in response and

filed the returns as prepared by defendants in May 2010.

¶5 While the will contest was being litigated in the probate court, two separate groups of

Mrs. O’Malley’s heirs sued defendants in case no. 11 L 10734 and no. 11 L 10760 for alleged

errors in the preparation of Mrs. O’Malley’s tax returns. In September 2012, Mary Shannon, as

special administrator of Mrs. O’Malley’s estate, joined as a party plaintiff in case no. 11 L

10760, under the authority of the August 2012 order. In February 2013, the individual plaintiffs

were dismissed from case no. 11 L 10760, leaving the estate as the only named plaintiff. In

2 No. 1-18-1593

March 2013, the circuit court dismissed the estate’s claims in case no. 11 L 10760 without

prejudice.

¶6 On May 15, 2013, case no. 11 L 10760 and case no. 11 L 10734 were consolidated. In

case no. 11 L 10734, several of Mrs. O’Malley’s heirs sued defendants for aiding and abetting

Marquette Bank’s breach of its fiduciary duties to Mrs. O’Malley’s estate and its beneficiaries. 1

Also on May 15, 2013, the special administrator was allowed to file a third amended complaint,

and was then allowed to voluntary dismiss casno. 11 L 10734.

¶7 On May 15, 2014, Mary Shannon, as successor executor, refiled the consolidated action

in this case, no. 14 L 5249. Attached to the refiled complaint is an affidavit of William

O’Malley, one of Mrs. O’Malley’s children, wherein he admits that he and others sought to assist

in a scheme to defraud Mrs. O’Malley, deplete her assets, and to deplete the plaintiffs’

inheritances. The circuit court stayed the case because of related federal tax court litigation. The

circuit court ultimately granted summary judgment in favor of defendants, finding that plaintiff’s

claims against defendants were barred by the two-year statute of limitations applicable to

accounting malpractice claims.

¶8 On appeal, plaintiff argues that the circuit court erred by entering summary judgment in

favor of defendants because the estate’s claims were timely. Distilled down to its essence, this

appeal involves the following issue: whether the accounting malpractice claims asserted by the

estate when it was added as a party plaintiff to the 2011 lawsuit in September 2012 relate back to

the initial claims for accounting malpractice asserted by the beneficiaries when the 2011 lawsuit

was first filed. For the reasons that follow, we find that it does. Accordingly, we reverse the

1 Because the two complaints were ultimately consolidated, we refer to those complaints below as the 2011 lawsuit.

3 No. 1-18-1593

circuit court’s entry of summary judgment in favor of defendants, and remand for further

proceedings.

¶9 II. THIS LITIGATION

¶ 10 The individual plaintiffs alleged in case no. 11 L 10734, in relevant part, that in

September 2009, Marquette Bank engaged defendants to prepare Mrs. O’Malley’s individual tax

return and estate tax return (estate tax return). In October 2009, some of the children, “in order to

protect their rights and the rights of the estate,” wrote a letter requesting that Marquette Bank

investigate and file a claim for theft loss from Mrs. O’Malley’s personal assets, and included a

proposed individual tax return for Mrs. O’Malley reflecting the theft loss. Marquette Bank

discussed the letter with defendants, but neither Marquette Bank nor defendants made any

adjustments to Mrs. O’Malley’s 2008 individual tax return. Defendants knew that (1) certain

estate assets were improperly valued, (2) millions of dollars were missing from the estate, (3) no

investigation had been done into the missing assets, and (4) “[n]otes due to the O’Malley estate

were [v]alued or [c]alculated by ‘Winging It.’ ” On May 26, 2010, Marquette Bank filed the

estate tax return that was prepared and submitted by defendants.

¶ 11 Further, the plaintiffs asserted two counts of professional negligence: negligent

preparation of Mrs. O’Malley’s individual tax return (count I), and negligent preparation of Mrs.

O’Malley’s estate tax return (count II). Relevant to the issues on appeal, the plaintiffs alleged in

count II that defendants owed duties to Mrs. O’Malley’s estate and the estate’s beneficiaries by

failing to (1) investigate and value the estate’s assets, (2) obtain information about the estate’s

assets and liabilities, (3) investigate the estate’s property, (4) properly investigate the gift tax

return (gift tax return), and (5) prepare an accurate estate tax return.

4 No. 1-18-1593

¶ 12 On July 19, 2012, numerous beneficiaries of Mrs. O’Malley’s estate filed a one-count

first amended complaint in case no. 11 L 10734, asserting that defendants had aided and abetted

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2019 IL App (1st) 181593-U, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shannon-v-ahern-illappct-2019.