For the second time in about two years, the Fifth District Appellate Court has reversed a Madison County ruling in a woman’s case against A.G. Edwards and Sons over her deceased grandmother’s finances.
In an unpublished order issued earlier this month, the appeals panel reversed Circuit Judge William Mudge's denial of A.G. Edwards’ motion to dismiss and remanded the matter with directions for the circuit court to compel arbitration.
The case dates back to 2008, when Carol Hollingshead filed a
complaint against A.G. Edwards and one of its financial advisers as the administrator of her grandmother’s estate.
Hollingshead’s grandmother, Selma Elliott, died in 2003. The suit alleged breach of fiduciary duty, breach of contract and negligence.
In 1998, Elliott and her two daughters opened a joint account with A.G. Edwards, which is where her son-in-law, Leonard Suess, worked as a financial investment adviser. He is also named as a defendant in the suit.
In 2001, assets from the joint account were moved to a transfer-on-death (TOD) account, in which Elliot’s two daughters were named primary beneficiaries with their daughters named as contingent beneficiaries.
After Hollingshead brought her suit, A.G. Edwards filed a motion to dismiss and compel arbitration, pointing to arbitration provisions included in agreements for the 2001 account.
Then Madison County Circuit Judge Daniel Stack denied the motion and the appellate court in late 2009 reversed, saying that the case should be dismissed or brought to arbitration.
Stack retired in December 2010. His docket transferred to Mudge, who was elected to fill Stack's vacancy in November 2010.
Following an evidentiary hearing in 2011, Mudge again denied the defendant’s motion to dismiss and compel arbitration.
The lower court determined that the arbitration provisions were unenforceable because Elliott didn’t appreciate what she was signing and that the 2001 account was the “product of undue influence and procedural unconscionability.”
When the agreement for the account was signed in 2001, Elliott was 99 and living in a nursing home. Huess and Elliot's surviving sister testified that they had to read the contract to Elliott because she had poor eyesight.
On appeal, A.G. Edwards argued that the circuit court erred when it determined Hollingshead failed to show the people who allegedly exerted undue influence over Elliott received a benefit in doing so.
The appellate court agreed and noted that there is nothing in the record that shows Elliot lacked the mental capability to contract.
Justice James Wexstten wrote, “Because we find no evidence of a benefit received or profit gained by Selma's transfer of her assets from the 1988 Joint Account to the 2001 TOD Account, we hold that the circuit court improperly found that a rebuttable presumption of undue influence existed and also improperly shifted the burden of persuasion to the defendants to rebut the presumption."
Wexstten also wrote “even without the showing of a benefit received by the defendants, we are hard-pressed to find that Selma’s will was overpowered to transfer her assets into an account that appears to be of the same nature as her previous account.”
Both her 1988 joint and her 2001 TOD accounts included arbitration provisions, Wexstten noted.
Justices Stephen Spomer and Bruce Stewart concurred in the unpublished order. Spomer delivered the court’s last decision in this case.
The citation for the order is 2012 IL App (5th) 120095-U.