A woman who filed a legal malpractice claim in a matter that began more than 20 years ago failed to convince the 7th Circuit Court of Appeals that her complaint over the distribution of a trust was timely.
The federal appellate panel affirmed the Southern District of Indiana’s grant of summary judgment to defendants in Elizabeth G. Ruckelshaus v. Gerald Cowan, et al., 19-2770.
Elizabeth Ruckelshaus and her brother Thomas Ruckelshaus were beneficiaries to equal shares of a trust established by their father, Conrad Ruckelshaus. Terms of the trust provided that if either of the siblings died without children, the other would receive the remainder of the deceased sibling’s share.
Elizabeth said that after Conrad died, Thomas asked her if she would agree to modify the trust so that he might leave a portion to his wife, Polly, upon his death. Elizabeth said she agreed and hired the defendants in 1998 to accomplish that goal.
“The retention letter prepared by the defendants stated that the purpose of the representation was to terminate the trust, but the letter made no mention of a life estate reserved for Polly or a subsequent remainder interest for (Elizabeth) Ruckelshaus,” Judge Amy Coney Barrett wrote. “Nonetheless, Ruckelshaus signed the retention letter and the defendants drew up a settlement agreement to dissolve the trust.
“Like the retention letter, the settlement agreement did not mention Polly or a life estate, nor did it restrict what either sibling could do with the trust funds after the trust was terminated and the funds were disbursed. The settlement agreement contained a liability release and a clause stating that it was the only written or oral agreement among the parties,” Barrett continued. “In 1999, the defendants sent Ruckelshaus the settlement agreement and the petition to dissolve the trust that would be filed in the probate court, both of which she signed. And in 2000, the probate court granted the petition, thereby dissolving the trust, and Ruckelshaus and Thomas each received more than a million dollars.”
After Thomas died in 2009 without children of his own, the court wrote, “It does not appear that Ruckelshaus read his will at the time or inquired into what remained of the former trust funds. Thomas’s will devised his assets to Polly. And when Polly died in 2015, she left her estate to her children. When Ruckelshaus learned that no assets would pass to her, she initiated this suit in 2017 for malpractice against the attorneys who worked to dissolve the trust, alleging that they failed to carry out her instructions.”
The 7th Circuit granted Ruckleshaus no relief from the district court ruling in favor of the defendants, which found the two-year statute of limitations began to run in 2000 when the trust was dissolved.
“… (N)o reasonable jury could conclude that she exercised ‘ordinary diligence’ and still failed to realize that the defendants had not created a trust with a life estate for Polly,” the panel held.
“First, Ruckelshaus signed the retention letter and trust dissolution documents, which stated that her father’s trust was being dissolved and its assets disbursed free and clear. … Ruckelshaus read these documents when she signed them, and she should have realized then that the documents did not accomplish her goal. She did not need to wait for Polly’s death to learn that she would get nothing — that was apparent from the documents themselves. If the documents did not accurately describe what Ruckelshaus asked her attorneys to accomplish, the time to object was no later than two years after those documents dissolved the trust.
“Second, even putting the documents aside, Ruckelshaus should have been on notice that something was amiss when she received the disbursed trust funds. She and Thomas received the principal outright, which indicated that the trust had been dissolved. Thomas apparently understood that no trust or future interests controlled the funds from this disbursement because his will — which Ruckelshaus did not read until Polly’s death — apparently did not reference a trust or otherwise acknowledge any restriction on the funds.”