Jun
30

Settling Wrongful Death Actions: The Illinois Supreme Court Expands the Rights of Intended Beneficiaries

In re Powell v. Wunsch, the Illinois Supreme Court held that an attorney who brings a wrongful death action owes a legal duty to the decedent’s beneficiaries at the distribution of funds phase of that action. Nos. 115997, 116009, 2014 IL 115997, at *¶20 (Ill. Sup. Ct. June 19, 2014). A broader interpretation of the court’s holding suggests that an attorney’s duty to the decedent’s beneficiaries exists before the distribution of funds phase, namely, at the settlement negotiations phase. The implication of the court’s ruling is that a prudent plaintiff’s attorney needs to obtain consent from all intended third-party beneficiaries under the Wrongful Death Act, not just an administrator, to settle a wrongful death matter.

In Powell, the plaintiff had been adjudicated to be a disabled adult. Id. at *¶3. Subsequently, his father died. The plaintiff’s mother was named as special administratrix of the decedent’s estate and hired attorneys to prosecute the wrongful death case, alleging medical malpractice. Id. at *¶3. The lawsuit was ultimately settled, and this plaintiff’s share, by a check made payable to him and his mother, was placed in a joint account. Id. at *¶5. Notably, the plaintiff did not have a guardian of his estate appointed, nor did the settlement order provide that the amount distributable to him was to be administered by the probate court. Id. at *¶5.

Plaintiff filed claims for legal malpractice against the attorneys for their conduct in handling the lawsuit. Id. at *¶7. The Circuit Court of Cook County dismissed the legal malpractice counts, finding that defendants did not owe plaintiff a duty. Id. at *¶8. The appellate court reversed in part, finding that defendants owed plaintiff a duty as an intended beneficiary. Id. at *¶9.

The Illinois Supreme Court affirmed the decision of the appellate court. Id. at *¶1. The court explained that there exists an exception to the general rule that an attorney is liable only to his client where a non-client is an intended third-party beneficiary of the relationship between the client and the attorney. Id. at *¶14. The court relied on the Section 2 of the Wrongful Death Act, which provides that the amount recovered in a wrongful death action shall be for “the exclusive benefit of the surviving spouse and next of kin” of the deceased person. Id. at *¶16 (citing 740 ILCS 180/0.01 et seq. (2012)). The court reasoned the legislative intent of the Act is that the claims brought in such an action are those of the individual beneficiaries. Id. at *¶19. It emphasized that the personal representative is merely a nominal party, and that the action is to be prosecuted on behalf of the surviving spouse and next of kin, who are the true parties in interest. Id. The court concluded that an attorney’s duty runs to the next of kin because they are intended, rather than merely incidental, beneficiaries of the action. Id. at *¶20.

Accordingly, the court rejected the contention that an attorney prosecuting a wrongful death action owes a duty only to the personal representative of the estate and not to the beneficiaries of the action. Id. at *¶20. The court further rejected the argument that the possibility of a conflict among beneficiaries with potentially adverse interests should negate the imposition of an attorney’s fiduciary duty to all beneficiaries. Id. at *¶21. The court specifically declined to define the scope of the legal duty of a plaintiff’s attorney when a conflict among the beneficiaries exists. Id.

Consequently, the Illinois Supreme Court imposed on plaintiff’s counsel a legal duty to the decedent’s intended beneficiaries at the distribution of funds phase of the wrongful death case. The court’s discussion of this duty seems rooted in an attorney’s fiduciary duty to a client.  Consequently, while some uncertainty remains about the scope of this duty, this legal duty likely arises prior to the distribution of funds. A broader interpretation of the court’s holding extends an attorney’s fiduciary duty to the intended beneficiaries at the settlement negotiations phase of the case. This suggests that intended beneficiaries must be consulted or perhaps even consent to a settlement before a wrongful death claim can be settled.

The issue of the scope of such legal duty remains unresolved in cases where a conflict is specifically alleged among the beneficiaries. The defense bar should become aware of the changing dynamic this ruling may bring to settlement negotiations, which may involve several beneficiaries with conflicting interests. Another possible implication is that a plaintiff’s attorney may be unable to maintain a fiduciary duty of loyalty to the intended beneficiaries with conflicting interests, thereby necessitating separate representation of the beneficiaries for purposes of settlement. A conflict among the intended beneficiaries with interests that are adverse to one another would make the plaintiff’s attorney’s job much more intricate and complicated; and thus, would add further complexities to the art of reaching settlement.

Victoria Shoemaker

Victoria Shoemaker

Victoria Shoemaker is an associate attorney in the firm's Chicago Office. She practices civil litigation, with an emphasis on medical malpractice, product and premises liability defense, and general healthcare law.

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