The Rev. Timothy O’Malley and William O’Malley were two of Eileen O’Malley’s sons. In 1996, Eileen O’Malley experienced the first signs of dementia. The same year, Eileen and Timothy opened a joint checking account with First Midwest Bank Corp.
Eileen instructed that the account statements be sent to the Palos Country Club, a family asset managed by William O’Malley. Timothy never saw the account statements and so had no way of knowing that it contained almost $5 million in February 2004 and that by February 2009, there was less than $100,000 in the account. William had withdrawn the rest.
William, with two of his siblings, developed a plan “to defraud their 8 siblings and Eileen so that [they] would control Eileen’s assets.” To accomplish that, they had Eileen sign documents, including “wills, trust agreements and checks which did not reflect Eileen’s wishes.”
As part of this, William was given the Palos Country Club as a gift. Eileen died in 2009, and Timothy was notified of the dissipation of the bank account. He contacted the bank to find out where the money had gone.
William had been authorized at First Midwest to conduct business with Eileen’s bank accounts. First Midwest’s Kathleen O’Connor, who dealt with the account, stated that at one point she transferred as much as $75,000 in a single transaction on William’s instruction. O’Connor had been told that William had the authority to act for Eileen, but nonetheless demanded a power of attorney.
On Jan. 25, 2007, William brought a power of attorney form signed by Eileen. William was given power of attorney and Timothy appointed as successor. On the form, the “certification signatures” by the successor agents were missing and Timothy’s name incorrectly listed “K” as his middle initial.
Timothy filed a lawsuit against the bank claiming that it negligently permitted William to make unauthorized withdrawals from the account. First Midwest moved to dismiss, arguing that the lawsuit was barred by the statute of limitations, which required action by the bank customer within one year except in cases of bad faith on the part of the bank.
Timothy claimed bad faith due to the irregularities in the power of attorney form. The trial judge granted the bank’s motion. Timothy appealed.
In Timothy’s appellate argument, he claimed that the irregularities in the power of attorney and the large withdrawals were sufficient reason to suspect a breach of fiduciary duty was taking place in that the bank then refused to investigate.
If the bank did this, it acted in “bad faith,” which removed the statute of limitations. However, the appeals panel concluded that the evidence, even considered in the light most favorable to Timothy, demonstrated “at most negligence, and not bad faith.”
The appellate court emphasized that First Midwest never benefited from any of the transactions and that O’Connor had seen “no written policy from First Midwest concerning powers of attorney.”
Because there was no evidence that First Midwest acted in bad faith, the appellate court affirmed the trial judge’s order enforcing the one-year statute of limitations and dismissing the lawsuit.
Rev. Timothy O’Malley v. First Midwest Bank Corp. Inc., 2015 IL App (1st) 142916-U (Sept. 15, 2015).
Kreisman Law Offices has been handling commercial litigation matters, estate and probate litigation cases, business disputes and catastrophic injury cases for individuals, families and businesses for more than 40 years, in and around Chicago, Cook County and its surrounding areas including, Lemont, Long Grove, Winfield, South Barrington, Chicago Heights, Grayslake, Chicago (Belmont Harbor, Lincoln Square, Chatham, Lawndale, Hyde Park, Rogers Park, Jefferson Park), Calumet City, Wilmette, Naperville and Elmhurst, Ill.
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