## Facts

- In 1964, Brooks McCormick, Jr. (Junior) created an inter vivos trust funded with assets he received from his grandmother; Junior was both the settlor and the trust’s beneficiary.
- The trust directed the trustees to pay Junior such part of trust income and principal as the trustees considered advisable for Junior’s comfortable maintenance, medical care, and welfare.
- Trustees over time included Junior’s father, Brooks McCormick (Senior), Myron Ratcliffe (a past president of Miami Corporation) from 1964–1977, and Charles E. Schroeder (president of Miami Corporation) from 1978–1980.
- Miami Corporation, a holding company for McCormick family assets, allegedly acted as an agent for the trustees in trust administration and project management.
- In 1977, construction began on a residence for Junior on land Junior had purchased from Senior.
- The trustees negotiated and entered construction contracts for approximately $398,000; Junior approved two change orders that increased the price to $449,542.
- Junior alleged the trustees later authorized additional expenditures without his consent, causing total costs to rise to about $1.9 million while the residence remained incomplete.
- Junior alleged mismanagement and waste of trust assets, including payments for incomplete work, duplicate billings, and work that failed to meet contract specifications.
- Junior also alleged the trustees used an unnecessarily expensive method of financing instead of a conventional mortgage.
- Junior alleged the trustees unlawfully delegated discretionary and judgment-based trust functions to Miami Corporation and its personnel.
- Junior filed an 11-count verified amended complaint against Senior, Schroeder, Ratcliffe, and Miami Corporation seeking relief for breach of trust and related misconduct and requesting an accounting.
- The trial court dismissed six counts with prejudice under section 45 of the Illinois Civil Practice Act for failure to state a cause of action, reasoning that the trustees exercised their best judgment and that Junior was “intimately involved” in the construction.
- On appeal, Junior challenged the dismissal standard used and argued that Ratcliffe had not established the effectiveness and scope of a purported release.

## Issues

1. Did the trial court apply the wrong standard on a section 45 motion by relying on factual conclusions (trustees’ “best judgment” and Junior’s involvement) rather than accepting well-pleaded facts as true?
2. Do allegations of cost escalation, incomplete and nonconforming work, duplicate payments, expensive financing, conflicts, and improper delegation to Miami Corporation state causes of action for breach of trust and waste sufficient to survive a section 45 dismissal?
3. Could Ratcliffe obtain dismissal at the pleading stage based on a purported release, where the applicability and effect of the release were not established from the pleadings?

## Decision

- The appellate court held that a section 45 motion admits all well-pleaded facts and tests only legal sufficiency; it does not allow the court to weigh evidence or accept defendants’ factual explanations.
- The court ruled the trial court erred by dismissing based on its view that the trustees used their best judgment and that Junior was closely involved in the project, because those are factual matters not resolved on a section 45 motion.
- Accepting the complaint’s detailed allegations as true, the court concluded that several dismissed counts adequately alleged breaches of fiduciary duty and waste of trust assets and therefore should not have been dismissed with prejudice.
- The court also addressed Ratcliffe’s reliance on a purported release and concluded dismissal could not rest on the release on this record at the pleading stage.
- Disposition: affirmed in part, reversed in part, and remanded for further proceedings.

## Legal Principles

- A section 45 motion to dismiss for failure to state a cause of action admits as true all well-pleaded facts and raises only a question of law as to the complaint’s legal sufficiency.
- A trial court may not resolve factual disputes, weigh anticipated proof, or accept defendants’ factual defenses (such as “best judgment” or the plaintiff’s involvement) when deciding a section 45 motion.
- Specific factual allegations that trustees authorized excessive expenditures, permitted waste, paid for deficient or duplicative work, or used unnecessarily costly financing can state claims for breach of trust and waste at the pleading stage.
- Trustees may employ agents to assist with administration, but they may not delegate responsibilities that are discretionary and judgment-based; allegations of such delegation can support a breach-of-trust claim.
- A release is an affirmative defense; the party asserting it bears the burden to plead and prove its applicability, and it generally is not a basis for dismissal unless it clearly defeats the claim on the face of the pleadings.

## Conclusion

The Illinois Appellate Court reversed the with-prejudice dismissal of several trust-related counts because the trial court treated disputed factual matters and defenses as settled on a section 45 motion; the complaint’s detailed allegations of waste, mismanagement, and improper delegation were legally sufficient to proceed, and Ratcliffe’s purported release did not warrant dismissal on the pleadings, so the case was remanded after being affirmed in part and reversed in part.


McCormick v. McCormick, 455 N.E.2d 103, 118 Ill. App. 3d 455, 74 Ill. Dec. 73 (1983)