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SIXTH DIVISION
November 7, 2003

No. 1-02-3381

JUSTICE SMITH delivered the opinion of the court:

This case involves an appeal from the grant of a motion to disqualify counsel (see 166 Ill.2d R. 306(a)(7)) in an action for equitable relief in matters relating to the estate of decedentMichael F. Gagliardo.

INTRODUCTION

Upon Michael's death in May 2001, his sister, defendant Paulette Caffrey, became the soletrustee of a revocable trust that was the sole beneficiary of Michael's estate. Paulette was alsoappointed independent executor of Michael's estate. Michael's wife, plaintiff Margaret Gagliardo,and their two minor children, plaintiffs Michael E. Gagliardo and Catherine C. Gagliardo (thechildren), are the sole beneficiaries of the revocable trust.⁽¹⁾

After certain actions by Paulette, Margaret brought the underlying action for injunction,removal of trustee, accounting, and other equitable relief, naming Paulette in various capacitiesincluding as trustee, as executor, and individually. Paulette was represented in her individualcapacity by attorney Christopher Matern. Margaret filed a motion to disqualify counsel, based onMatern's representation of Michael's estate. The circuit court granted the motion and disqualifiedMatern from representing Paulette individually.

Pursuant to Supreme Court Rule 306(a)(7) (166 Ill. 2d R. 306(a)(7)), Paulette petitionedthis court for leave to appeal the disqualification, which was allowed. On appeal, Paulettecontends the court improperly disqualified Matern because Margaret failed to establish either theexistence of an attorney-client relationship between herself and Matern, or that suchrepresentation was substantially related to Matern's representation of Paulette individually. Forthe reasons that follow, we affirm the order disqualifying counsel.

BACKGROUND

Michael F. Gagliardo Estate

The following are undisputed facts concerning the underlying action, which involvesMichael's complex estate.

Michael and Paulette worked for and owned equal interests in various Gagliardo familybusinesses. Of the numerous family businesses, the main one is a cooking oil packaging company,CFC, Inc., d/b/a Columbus Foods Company (CFC). Other businesses include related operatingcompanies and real estate concerns. After Michael's death, Paulette has acted as president ofCFC.

Michael and Paulette each controlled about one half (47.5%) of CFC, for a total of 95%between them, while their mother, Connie Gagliardo, controls 5% of CFC. Both Michael's andPaulette's 47.5% shares of CFC were divided again into two nearly equal shares, so that bothMichael and Paulette would control approximately two quarter-shares of CFC each: a 24.5%share was held in a revocable trust and a 23% share was held in a special trust.

Michael and Paulette had complimentary estate plans. Both of them were trustees of theirown revocable trusts (holding 24.5% of CFC), with the other named as successor trustee; theywere also trustees of the other's special trust (holding 23% of CFC). Upon Michael's death,Paulette became trustee of Michael's revocable trust, whose beneficiaries are Margaret and thechildren; Paulette also continued as trustee of Michael's special trust, whose beneficiaries are thechildren.

Michael died in an accident while participating in an automobile race in Toronto, Ontario. The car Michael was driving was owned or leased by CFC. According to Margaret: after theaccident, she and Paulette, on behalf of CFC, made an agreement (investigation agreement) tohire attorneys to investigate a potential wrongful death claim; according to their agreement, CFCwould pay for the investigation and be reimbursed its costs in the event of a recovery; and CFC infact did pay investigation costs from mid-2001 until May 2002.

Attorney Matern wrote a letter at Paulette's request to respond to a June 26, 2002, letterfrom one of the investigating attorneys. In the letter, Matern identified himself as counsel for bothPaulette and the estate: "I represent Paulette Gagliardo personally and I am also special counsel tothe Estate of Michael F. Gagliardo." The letter referenced a meeting the following day, whichMatern, on the behalf of "my client the Estate," authorized that attorney to attend. It alsoinformed him that "neither my client the Estate nor Paulette" would authorize any furtherinvestigation expenditure.

In July 2002, Matern wrote a second letter to the same attorney in which he referred tocorrespondence from another investigating law firm that sought instruction regarding a Canadianinquest into Michael's death. In that letter, Matern stated that his firm represented Paulette in hercapacity as executor of the estate.

Chancery Action

The underlying action began with Margaret's July 30, 2002, filing of the verifiedcomplaint. The complaint centers upon Paulette's alleged improper "attempt to purchase forherself a substantial portion of the Gagliardo family businesses" from the estate and her furtherattempt to force the sale at an "artificially low price." The allegations are based upon a May 2002letter drafted by Steven Wolf, one of Matern's partners (in the firm Wolf, Moskowitz, Holland &Matern), announcing Paulette's intent to purchase interests in the various family businesses fromthe estate. In the complaint, Margaret alleges that Paulette breached her fiduciary duty as trusteein numerous ways; the proposed transactions between the estate and Paulette demonstrate aserious conflict of interest between Paulette's individual interests and her interests as trustee orexecutor; and the appraised values offered by Paulette for the business interests were improperlycalculated and grossly inaccurate. The complaint names Paulette as a defendant also in hercapacity as president of CFC.

The same day, Margaret also filed an "emergency motion for temporary restraining orderand preliminary injunction and motion for appointment of an interim trustee," which was based onthe same allegations as the complaint and sought to prohibit Paulette from selling any estateassets.

On August 14, 2002, Margaret filed a motion to disqualify Matern and his law firm fromrepresenting Paulette individually. The motion was based upon Rules 1.7 and 1.9 of the IllinoisRules of Professional Conduct prohibiting an attorney from representing one client whoseinterests are adverse to another client or those of a former client. See 134 Ill. 2d Rs. 1.7, 1.9. Issues raised on appeal relate to disqualification under Rule 1.9 only. See 134 Ill. 2d R. 1.9.

In the motion, Margaret alleged that Matern currently represented the estate as well asPaulette individually and he had previously represented CFC and other Gagliardo familybusinesses. Margaret alleged that Matern advised Paulette to "essentially breach" theinvestigation agreement to Paulette's benefit and cause the estate to incur great, unnecessaryexpenses. Margaret supported the motion with copies of the two letters from Matern to theinvestigating attorney and her own affidavit.

The following day, Matern filed an appearance for Paulette in her individual capacity. Another attorney subsequently filed an appearance for Paulette as executor of Michael's estate.

Matern responded to the motion to disqualify, denying that he currently represented theestate or ever had an attorney-client relationship with Margaret. In the response, Matern admittedthat he represented the estate for a limited time and summarized various duties he performedduring that representation. In addition to drafting the two letters to the investigating attorney,Matern also evaluated "the appropriateness of the bills" from the investigating law firm,determined "whether and to what extent the Estate should pay the costs and attorneys' fees," metwith the investigating attorney, and discussed further proceedings with his partner.

Matern supported his response with his own affidavit, in which he characterized hisrepresentation of the estate as limited. Matern stated that he reviewed bills from and sentcorrespondence to the investigating law firm on the estate's behalf and he attended a meeting withthe investigating attorney. Matern further admitted that his partner "had three time entries in thefirst week of August [2002] on behalf of the Estate," but denied that his law firm acted onPaulette's behalf "in her capacity as executor of the estate" since August 7, 2002.

Following a hearing, the trial court entered an order on October 11, 2002, grantingMargaret's motion. Paulette timely filed a petition for leave to appeal the order pursuant toSupreme Court Rule 306(a)(7) (166 Ill. 2d R. 306(a)(7)), which this court allowed. DISCUSSION

Standard of Review

The grant of a motion to disqualify counsel is within the sound discretion of the trial courtand such decision will not be disturbed on review absent an abuse of discretion. Schwartz v.Cortelloni, 177 Ill. 2d 166, 176, 685 N.E.2d 871 (1997); Franzoni v. Hart Schaffner & Marx, 312Ill. App. 3d 394, 399, 726 N.E.2d 719 (2000). An abuse of discretion occurs where noreasonable person would agree with the position taken by the trial court. Schwartz, 177 Ill. 2d at176.

Paulette acknowledges the abuse of discretion standard applied by our supreme court inSchwartz but asserts that it is unclear whether such standard applies in the instant case. Rather,Paulette urges us to review this issue de novo because the trial court considered only affidavitsand other documentary evidence when it ruled on the motion to disqualify counsel. Paulette reliesprimarily upon one Seventh Circuit case, Freeman v. Chicago Musical Instrument Co., 689 F.2d715 (7th Cir. 1982), which she admits is not controlling. Specifically, she cites the following fromFreeman:

"Preliminarily, it is important to note the limits of the scope ofreview by which we are guided. All evidence in the case at barcomes via affidavits. The district court neither held an evidentiaryhearing on the disqualification motion nor did it make findings offact to which we must defer. Under similar circumstances, we havestated and we now reaffirm that district courts enjoy no particularadvantage over appellate courts in their formulation of ethicalnorms." Freeman, 689 F.2d at 721.

Paulette asserts the lack of "oral testimony requiring any credibility determinations" at the hearingon the motion to disqualify Matern amounts to a "procedural posture" of this case similar to thatin Freeman. Paulette concludes that de novo review would be appropriate here because the trialcourt allegedly was in no better position than this court would be to apply the law in ruling on themotion. See Freeman, 689 F.2d at 721.

However, this court has previously considered and rejected this exact argument. Wherethe plaintiffs in an earlier disqualification case also sought a less deferential standard of review andrelied upon the very language from Freeman cited by Paulette, this court stated, "[t]he above-quoted language [from Freeman] *** does not stand for the proposition *** that the standard ofreview is different because the evidence was presented by way of affidavit." Skokie GoldStandard Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 116 Ill. App. 3d 1043, 1054, 452N.E.2d 804 (1983). In rejecting the argument, this court noted that abuse of discretion remainedthe standard of review applied by the Seventh Circuit in cases where all evidence was presentedthrough affidavits. Skokie Gold Standard Liquors, Inc., 116 Ill. App. 3d at 1054, citing LaSalleNational Bank v. County of Lake, 703 F.2d 252 (7th Cir. 1983).

Moreover, the trial court necessarily considered questions about the scope of Matern'srepresentation of the estate and the potential detriment to the estate from Matern's representationof Paulette when it ruled on the motion. Despite Paulette's attempt to cast the issue before us as aquestion of law, factual determinations were necessarily made in resolving such questions. Therefore, we decline Paulette's invitation to do otherwise and apply an abuse of discretionstandard on review. See Schwartz, 177 Ill. 2d at 176.

Disqualification of Counsel

Disqualification of counsel based on former representation is governed by Rule 1.9 of theIllinois Rules of Professional Conduct. 134 Ill. 2d R. 1.9. Specifically, the rule prohibits anattorney who has formerly represented a client in a matter from later representing "another personin the same or a substantially related matter in which that person's interests are materially adverseto the interests of the former client, unless the former client consents after disclosure." 134 Ill. 2dR. 1.9(a)(1).

The party seeking disqualification first must prove the existence of the former attorney-client relationship. Franzoni, 312 Ill. App. 3d at 400. That party must then establish that theformer and present representations are substantially related. Schwartz, 177 Ill. 2d at 177-78;Franzoni, 312 Ill. App. 3d at 400.

To make a determination concerning the alleged substantial relationship between theformer and present representations, the trial court conducts a three-part inquiry: (1) the court firstmakes a factual reconstruction of the scope of the former representation; (2) the court nextdetermines whether it is reasonable to infer that the confidential information allegedly given wouldhave been given to a lawyer representing a client in those matters; and (3) the court considerswhether the information is relevant to the issues raised in the litigation pending against the formerclient. Schwartz, 177 Ill. 2d at 178 (adopting three-part test set forth in LaSalle National Bank,703 F.2d at 256). In each of the three levels of inquiry, deference must be given to the trialcourt's determinations. Schwartz, 177 Ill. 2d at 178.

In the instant case, the court's disqualification order did not set forth the court's reasoning,making implicit the findings of the existence of an attorney-client relationship and a substantialrelationship between the prior representation of the estate and the representation of Pauletteindividually. Although Paulette characterizes the attorney-client relationship as between Maternand her (Paulette) as executor of the estate rather than the estate itself, our review of the recordestablishes that Matern in fact represented the estate.

In his affidavit, Matern admitted such relationship, which he detailed under the heading"THE LIMITED NATURE OF MY REPRESENTATION OF THE ESTATE." Matern statedthat, at some time after the end of April 2002, he became aware of an investigation into Michael'sdeath being conducted by another law firm which purported to represent the estate. Maternadmitted that, on the estate's behalf, he reviewed the bills from that law firm, wrote two letters tothat firm and attended a meeting with an attorney from that firm.

In the affidavit, Matern also referred to his representation of Paulette as executor in thealternative ("My representation of the Estate, or Paulette in her capacity as executor of theEstate"), but he made additional statements further admitting he represented the estate: "[M]yrepresentation of the Estate was focused on *** [the] demand for fees for itself of severalattorneys in Canada who were also purportedly working on the Investigation." Moreover, in atleast the first of the two letters Matern wrote on the estate's behalf, he repeatedly referred to theestate, as distinct from Paulette, as his client. Although Matern characterized his representationof the estate as having been of a "limited nature," for at least several months in 2002, an attorney-client relationship existed between Matern and the estate.

While admitting he was an attorney for the estate, however, Matern denied he ever had anattorney-client relationship with Margaret. Given Matern's admitted relationship with the estate,we must determine what relationship, then, existed between Matern as estate attorney andMargaret, as estate beneficiary.

Paulette contends that Margaret failed to establish the existence of an attorney-clientrelationship, arguing that Margaret's status as an estate beneficiary did not make her (Margaret) aclient of Matern. Paulette relies primarily upon two cases, In re Estate of Vail, 309 Ill. App. 3d435, 722 N.E.2d 248 (1999), and In re Estate of Kirk, 292 Ill. App. 3d 914, 686 N.E.2d 1246(1997), for the proposition that an attorney for the executor of an estate does not have anattorney-client relationship with a beneficiary of the estate. She further argues that an attorney forthe executor is precluded from an attorney-client relationship with the beneficiaries because thereis inherent adversity between the executor and the beneficiaries. Paulette also admits thatMargaret would have the right to bring a legal malpractice action against Matern based on herstatus, as estate beneficiary, as an intended third-party beneficiary of Matern's legal counsel. Sheargues that, nonetheless, such right does not create an attorney-client relationship betweenMargaret and Matern.

Paulette correctly notes that this court has held, in certain circumstances, that the attorneyfor the executor of an estate does not have an attorney-client relationship with the estatebeneficiaries. In re Vail, 309 Ill. App. 3d at 441; In re Kirk, 292 Ill. App. 3d at 919. Thosecircumstances, however, involved challenges to the estate by the beneficiaries.

In Kirk, the estate heirs sought to remove the attorney for the bank-estate executor (whichwas also guardian of the estate of the decedent's minor children) based on an alleged violation offiduciary duty to the beneficiaries by representing the bank in actions concerning the guardianship.There, the court affirmed the denial of disqualification and noted that the attorney's client was thebank-executor, and the executor and its attorney had the sole obligation of upholding thedecedent's wishes as expressed in the will. The court "decline[d] to hold that a conflict of interestarises between an individual heir and the executor's attorney merely because the heir's wishes arecontrary to the terms of the decedent's will." In re Kirk, 292 Ill. App. 3d at 922.

The court articulated the principle that the beneficiaries of an estate are intended to benefitfrom the estate and are owed a fiduciary duty by the executor to act with due care to protect theirinterests. In re Kirk, 292 Ill. App. 3d at 919. They are not, however, owed allegiance by theestate attorney, who does not have an attorney-client relationship with the beneficiaries andwhose "first and only allegiance" is to the estate in such adversarial situations. In re Kirk, 292 Ill.App. 3d at 919.

In Vail, a residuary legatee was joined by other heirs in a contest of the will and trusts; thebank-estate executor, which was also trustee of the trusts, was represented by the same law firmas executor and trustee in the will and trust contests. In re Vail, 309 Ill. App. 3d at 438, 441. There, the court held that the estate has a duty to defend a will contest and may employ anattorney for that purpose. In re Vail, 309 Ill. App. 3d at 441. The court acknowledged that theestate's attorney must act with due care and protect the beneficiaries' interests, but held that, insuch adversarial situation, the attorney for the executor does not have an attorney-clientrelationship with the beneficiaries. In re Vail, 309 Ill. App. 3d at 441.

Here, however, the adversarial situation does not involve a defense of Michael's estatefrom a beneficiary's challenge. Margaret, the sole beneficiary, does not contest the terms of eitherMichael's will or revocable trust. Thus, the situation in the case at bar is unlike that in Kirk orVail, because there is no challenge here to the will or trusts, or actions taken to comply withMichael's testamentary wishes. In those cases, the interests of the executor, or the estate,diverged from those of at least some beneficiaries. Here, however, Margaret is the sole partyintended to benefit from the estate. Therefore, Margaret's interests are, for all practical purposes,coextensive with those of the estate: her interests are aligned with the estate, not against it.

The adversarial situation here arose instead from a divergence of the estate's interests,which cannot be delineated from those of the sole beneficiary, and the interests of one of theGagliardo family businesses, namely, CFC. In fact, at least as far as the investigation costs areconcerned, the interests of the estate and CFC are in direct opposition: if the estate rather thanCFC was caused to bear those costs, CFC would benefit at the estate's detriment. BecausePaulette has a substantial interest in CFC, she too would benefit by shifting the investigation coststo the estate. Therefore, the conflict alleged is between the estate and the executor, whoseindividual interests would benefit from an action detrimental to the estate.

Again, it is established that Matern acted as attorney for the estate. Even if he acted insuch capacity for a limited time, Matern owed a fiduciary duty to the estate and its solebeneficiary, Margaret. See In re Estate of Halas, 159 Ill. App. 3d 818, 825, 512 N.E.2d 1276(1987) (fiduciary relationship exists between attorney for executor and beneficiaries); but seeJewish Hospital of St. Louis, Missouri v. Boatmen's National Bank of Belleville, 261 Ill. App. 3d750, 763, 633 N.E.2d 1267 (1994) (estate attorney has no duty to beneficiary due to "potentiallyadversarial relationship" between estate's and beneficiary's interests). We need not distinguishMargaret's status as estate beneficiary from that of an intended third-party beneficiary. See, e.g.,Pelham v. Griesheimer 92 Ill. 2d 13, 20-21, 440 N.E.2d 96 (1982) (attorney liability extends tointended third-party beneficiaries of attorney-client relationship). As Paulette notes in her replybrief, questions concerning alleged breaches of fiduciary duty by her or Matern are irrelevant tothis appeal and will be decided by the trial court. Here, the point is that Margaret did notchallenge the estate, so there is no adversity between her interests and the estate's interests.

Because representation of the estate essentially means representation of its solebeneficiary, Margaret, under the narrow circumstances of this case, we conclude that, for the timeMatern represented the estate, he represented Margaret. We acknowledge that, under thedistinguishable circumstances discussed earlier, estate beneficiaries were held not to have anattorney-client relationship with the attorney for the executor of the estate. See In re Vail, 309 Ill.App. 3d at 441; In re Kirk, 292 Ill. App. 3d at 919. There, the attorneys defended the estate frombeneficiaries, whereas here, Matern represented the estate in matters concerning payment andevaluation of investigation costs. See, e.g., Jewish Hospital, 261 Ill. App. 3d at 761(representation involving nonadversarial matters makes third-party beneficiary status easier toestablish). Thus, in such representation, Matern in effect represented Margaret.

Again, the conflict alleged here in the chancery action is not between a beneficiary and theestate but, rather, between the executor Paulette, whose business interests in CFC are divergentfrom the estate's interest, and the estate and its sole beneficiary, Margaret. Because Matern oweda fiduciary duty to the estate, he could not, without conflict, represent Paulette, with hersubstantial interest in CFC. Under these particular circumstances, then, we cannot say the trialcourt abused its discretion by implicitly finding the existence of an attorney-client relationshipbetween Matern and the sole estate beneficiary, Margaret.

We must then consider whether the trial court properly found a substantial relationshipbetween Matern's former representation of the estate and his representation of Pauletteindividually in the chancery action. See Schwartz, 177 Ill. 2d at 177-78; Franzoni, 312 Ill. App.3d at 400. Accordingly, we first consider a factual reconstruction of the scope of the formerrepresentation. Paulette makes much of the alleged limited nature of Matern's representation,arguing that Matern represented the estate for a little over two months and only as to the "limitedissue of the appropriateness of the services provided and costs being charged" for theinvestigation. However, neither the short duration nor the purportedly limited nature of therepresentation diminishes the fact that Matern was involved with matters crucial to the estate.

Paulette concedes that Matern reviewed the legal bills and wrote the two letters. Moreover, at least one of Matern's partners also represented the estate. That partner, Wolf,drafted Paulette's letter announcing her intention to purchase estate assets, yet he also representedthe estate in some capacity even after Margaret filed her complaint. Whatever the precise dates ofMatern's representation of the estate were, he and his firm were intimately involved in matters thatare the subject of the pending litigation. See Franzoni, 312 Ill. App. 3d at 403 (several yearduration between representations did not negate inference of communication of confidentialinformation); see also Schwartz, 177 Ill. 2d at 183 (nearly 40-year gap between representationsconcerning unrelated matters did not justify attorney disqualification).

Next, we consider whether it was reasonable to infer that confidential informationallegedly given concerning the estate would have been given to Matern, and whether thatinformation would be directly relevant to Matern's representation of Paulette individually. Matern's involvement with the estate, albeit of limited duration, concerned the payment of legalfees for the investigation, or, in other words, financial matters. In such capacity, it would, then,be reasonable to infer that Matern was given other information concerning estate finances inaddition to the fees sought by the investigating law firm. It would be reasonable to infer also thatan attorney charged with estate finances would have an overview of the estate's value and thevarious assets it contained. Paulette responds that the assets and liabilities of an estate are amatter of public record, and that facts concerning the alleged investigation agreement would beknown to her in her capacity as president of CFC. She concludes that no confidential informationwas communicated to Matern in his representation of the estate.

However, Margaret was not required to prove that confidential information wascommunicated, but merely that it could have been. See Franzoni, 312 Ill. App. 3d at 403 (partyseeking disqualification not required to reveal what exact information was disclosed or how itrelated to present claim); Hasco, Inc. v. Roche, 299 Ill. App. 3d 118, 129, 700 N.E.2d 768 (1998)(relevant question is not whether actual confidences were disclosed but "whether suchconfidences could be revealed, whether intentionally or inadvertently"). Such information couldreasonably include, for example, the valuations of various estate assets. It is clear that suchinformation would be directly relevant to Matern's representation of Paulette individually.

Moreover, given the intertwining nature of the claims and Paulette's admittedly"conflicting capacities," it is reasonable to infer that information, which was pertinent to oneparticular matter, would later become relevant to another, related matter. See Hasco, 299 Ill.App. 3d at 129 (nature and scope of representations "inextricably tied" where present disputeconcerned mutations of same issues and parties). Therefore, the trial court did not abuse itsdiscretion in determining that there was a substantial relationship between Matern's formerrepresentation of the estate and his representation of Paulette in her individual capacity.

CONCLUSION

For the reasons stated, the trial court properly granted Margaret's motion to disqualifyMatern from representing Paulette individually. Accordingly, we affirm the judgment of thecircuit court.

Affirmed.

TULLY and GALLAGHER, JJ., concur.

1. For purposes of this appeal, we will refer to Margaret, who is acting on the children's
    behalf, in the singular, as the sole beneficiary.