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STATE |
TYPE |
CASE LAW |
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ALABAMA |
STRICT PRIVITY |
Robinson v. Benton, 2002 Ala. LEXIS 159: An
estate beneficiary filed an action against his
deceased mother's attorney, claiming that the attorney failed to follow his
mother's instructions to destroy her will and to draft a new will, which left
her estate to her children and excluded children her husband had by another
woman. The beneficiary claimed that, because the
attorney failed to follow the mother's instructions, he received only a
one-fourth interest in his mother's estate, whereas he would have received
one-half of the estate, if the attorney followed his mother's instructions.
The attorney admitted that the beneficiary's mother
instructed him to destroy the will she signed in April 1991, but he failed to
do so. The state supreme court noted that state courts in the United States
were divided on the issue of whether a beneficiary
or potential beneficiary can sue an attorney who did
not follow a testator's instructions, but declined to change the rule of law
in Alabama that barred an action for legal malpractice by a person for whom
the lawyer had not undertaken a duty, either by contract or gratuitously. |
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ALASKA |
STRICT PRIVITY |
Linck v. Barokas & Martin, 667 P.2d
171 (Alaska 1983). The
Supreme Court of Alaska held that a complaint alleging that an
attorney-client relationship existed between family members of the decedent
and the defendant lawyers and that the lawyers had negligently failed to
advise the surviving spouse and her children with respect to the availability
and consequences of the surviving spouse's right to disclaim her interest in
the estate as a result of which the surviving spouse incurred gift taxes and
fees in connection with certain gifts made to her children in lieu of a
disclaimer stated a cause of action for professional negligence. |
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ARIZONA |
BALANCING OF FACTORS |
Capitol Indem. Corp. v. Fleming, 58 P.3d
965 (2002). The
attorney represented a conservator of an estate. The attorney failed to act
when the conservator illegally used estate funds to make gifts and loans to
her family members. When the surety filed a malpractice claim against the
attorney, he filed a motion to dismiss. After the trial court granted the
motion, the surety sought review. In affirming, the court determined that the
surety had no direct cause of action against the attorney. The attorney owed
no duty to nonclients who were not, at least derivatively, intended
beneficiaries of the attorney-client relationship. Moreover, the primary
objective of the attorney representing the conservator was not to create a
benefit for the surety. It was doubtful that the absence of a duty on the
attorney's part to protect the surety would have made enforcement of the
attorney's obligations to the conservator any less likely. RULE:
An attorney is not liable for legal malpractice to parties other than the
attorney's client absent collusion or fraud. But, an attorney has owed a duty
to the ward and is liable for breach of that duty. The determination of
whether, in a specific case, the attorney will be held liable to a third
person not in privity is a matter of policy and involves the balancing of various factors, among which are: (1) the
extent to which the transaction was intended to affect the plaintiff; (2) the
foreseeability of harm to him; (3) the degree of certainty that the plaintiff
suffered injury; (4) the closeness of the connection between the defendant's
conduct and the injuries suffered; (5) the moral blame attached to the
defendant's conduct; and (6) the policy of preventing future harm. |
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ARKANSAS |
INTENDED THIRD PARTY BENEFICIARY Ark.
Code Ann. § 16-62-101, |
McDonald v. Pettus, 337
Ark. 265 (1999). Appellants,
decedent's children and the personal representatives of his estate, sued for
legal malpractice, alleging that appellees, an attorney and his firm, failed
to adequately prepare assignments of property by decedent's wife. The supreme
court affirmed summary judgment for appellees on appellant children's tort
survival claim because appellants failed to establish direct privity with
appellees as required by the lawyer-immunity statute. Moreover, appellant
children did not qualify for an exception to the requirement because
appellees were not aware that the assignments were intended for appellant
children's benefit, and appellees never sent them a copy of the will codicil.
The court also affirmed summary judgment for appellees on appellant personal
representatives' tort claim because, although there was privity, decedent
suffered no damages prior to death because the codicil took effect after his
death. STATUTORY
LAW: The lawyer-immunity statute contains two exceptions to the privity
requirement. First, no privity is required for acts, omissions, decisions, or
conduct that constitutes fraud or intentional misrepresentations. The second
exception to the privity requirement provides for other acts, omissions,
decisions, or conduct if the person, partnership, or corporation was aware
that a primary intent of the client was for the professional services to
benefit or influence the particular person bringing the action. If the
person, partnership, or corporation: (A) identifies in writing to the client
those persons who are intended to rely on the services, and (B) sends a copy
of the writing or similar statement to those persons identified in the
writing or statement, |
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CALIFORNIA |
BALANCING OF FACTORS |
Biakanja v. Irving, 49 Cal.2d 647, 320
P.2d 16 (1958) notary prepared will and such conduct was improper- leaving open a
potential departure from forseeability when faced with the attorney-defendant
RULE:
The determination whether in a specific case the defendant will be held
liable to a third person not in privity is a matter of policy and involves
the balancing of various factors, among which are the extent to which the
transaction was intended to affect the plaintiff, the foreseeability of harm
to him, the degree of certainty that the plaintiff suffered injury, the
closeness of the connection between the defendant's conduct and the injury
suffered, the moral blame attached to the defendant's conduct, and the policy
of preventing future harm. (Cf.
Prosser, Torts (2d ed. 1955), §§ 36, 88, 107, pp. 168, 172, 544-545, 747; 2
Harper and James, Torts (1956), § 18.6, p. 1052.) Biakanja at 650. Also
see; Rowland
v. Christian, 69 Cal.2d 108, 113, 70
Cal.Rptr. 97, 100, 443 P.2d 561, 564, (1968) ("factor
analysis" used to determine whether duty exists). Heyer v. Flaig (1969) 70 Cal.2d 223,
74 Cal.Rptr. 225, 449 P.2d 161, It was
alleged that the decedent had retained the defendant attorney to prepare a
will leaving everything to the plaintiffs, that she had told the attorney
that she planned to marry, that the attorney negligently omitted from the
will language which would defeat the rights of the post-testamentary spouse,
that the decedent executed the will, married, and subsequently died, and that
as result of the attorney's omission the plaintiffs' share of the estate was
substantially reduced by the claim of the post-testamentary spouse. On appeal
after demurrer sustained, the dispositive issue was the date on which the
statute of limitations would have begun to run against the plaintiffs, but
preliminarily the Supreme Court reviewed the principles stated in Biakanja and Lucas. The court stated that the
theory of tort liability to the
intended beneficiary, "for a breach of duty owed directly to him,"
lay "[a]t the heart of our decision in Lucas ...," and that Lucas's third-party-beneficiary
contract theory "is conceptually superfluous since the crux of the
action must lie in tort in any case; there can be no recovery without
negligence." (70
Cal.2d at pp. 226, 227, 74 Cal.Rptr. 225, 449 P.2d 161.) Heyer strongly reinforced the
theory that an attorney who "undertakes to fulfill the testamentary
instructions of his client ... realistically and in fact assumes a
relationship ... also with the client's intended beneficiaries," that
"the possibility of injury to an intended beneficiary" is
foreseeable should the client's testamentary plan fail after his or her death,
and that in such an eventuality "only the beneficiaries suffer the real
loss. We recognized in Lucas that unless the beneficiary
could recover against the attorney in such a case, no one could *959 do so
and the social policy of preventing future harm would be frustrated. [¶]....
We impose this duty because of the relationship between the attorney and the
intended beneficiary; public policy requires that the attorney exercise his
position of trust and superior knowledge responsibly so as not to affect
adversely persons whose rights and interests are certain and
foreseeable." (Id. at pp. 228-229, 74 Cal.Rptr. 225,
449 P.2d 161.) Lucas v. Hamm- attorney drafted will
that violated RAP. Ct found Atty owed duty of care to beneficiaries despite
lack of privity. In addressing the
Biakanja factors the improper conduct was excluded w/o explanation and
deleted from the balancing test. -impose an undue burden on the legal profession- negligible
when balanced against the innocent beneficiary= injury. -main purpose of the transaction b/t attorney and testator
was to benefit the legatee -otherwise bene left w/o remedy -overruled Buckley-main purpose of K between A and T was to
pass T=s estate to beneficiaries. Beneficiaries were 3Pbeneficiaries -attorney owned duty to beneficiaries in tort and contract
but concluded that attorney was not negligent Ventura County Humane Society, Inc. v. Holloway 115 Cal. Rptr. 464 (cal.
Ct. App. 1974) B Attorney owed duty to draft an unambiguous will. Ct. held testamentary intent expressed in
the will must be frustrated in order for beneficiary to recover for legal
malpractice.-See also, Creighton University 919 F. Supp at 1422 Bucquet v. Livingston, 129 Cal. Rptr. 514, 521 (Cal. App. 1976). In this malpractice case, in holding that, as with
beneficiaries under a negligently drafted will, the beneficiaries of a trust
have standing to sue the drafter, the court stated: Lack
of privity does not preclude testamentary beneficiary from maintaining an
action against attorney who drafted a trust instrument on either a
contractual theory of third-party beneficiary or a tort theory of negligence.
citing (Biakanja
v. Irving, supra, 49 Cal.2d 650, 320 P.2d 16; Lucas
v. Hamm, supra, 56 Cal.2d 588, 15 Cal.Rptr. 821, 364 P.2d 685; Ventura,
supra, 40 Cal.App.3d 903, 115 Cal.Rptr. 464). Radovich v. Locke-Paddon, 41 Cal.
Rptr. 2d 573 (Cal. App. 1995). The court held that the beneficiary of an
un-executed will must prove facts that "manifest a commitment by the
decedent to benefit" the beneficiary in order for the decedent's lawyer
to owe any duty to that beneficiary. The appellate court upheld summary
judgment for the lawyer in a suit brought by the deceased client's husband.
The lawyer had met with the client in June to discuss the preparation of a
new will that would increase the provisions to be made for her husband.
Although the lawyer knew the client was terminally ill, the lawyer did not
send a draft of the new will to the client until October and did not
otherwise follow-up on the matter. The client died in December without having
executed a new will. The court found that the lawyer did not have a duty,
after sending the draft will to the client, to inquire whether she had any
questions or wanted further assistance. (Distinguished from Biankja, Lucas
and Heyer where the client did sign the will. Client did not sign the will in
Radovich) Sindell v. Gibson, Dunn & Crutcher, 63 Cal. Rptr 2d 594 (Cal. App. 1997). The court held that the intended beneficiaries of a law firm's estate planning services rendered for the beneficiaries' father suffered "actual injury" (attorneys' fees and litigation expenses) in defending a lawsuit by the surviving spouse's conservator that plaintiffs alleged would not have been filed but for the law firm's failure to obtain a waiver of community property rights from the allegedly willing spouse when she was competent. |
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COLORADO |
BALANCING OF FACTORS |
Glover v. Southard, 894 P.2d 21 (1994). The
attorney for a bank drafted a trust agreement for the decedent, a client of
the bank, designating a non-profit corporation as sole residual beneficiary
to the trust corpus that included most of the decedent's property. Later, the
attorney amended the decedent's will to leave the entire estate to the
beneficiaries. The trust was never amended, and the beneficiaries brought an
action for legal malpractice against the attorney. The trial court granted
the attorney's motion to dismiss the action on the grounds that the
beneficiaries lacked standing to maintain the action. On appeal, the court
affirmed the judgment, holding that the attorney had no duty to beneficiaries
of testamentary instruments that he drafted for the decedent. RULE:
An attorney must act in his client's best interest and is not liable to a
third party absent conduct that is fraudulent or malicious. Whether a legal
duty is owed a plaintiff as well as the scope of such duty are questions of
law that the court must decide. The court's conclusion as to the existence of
duty is an expression of the sum total of those considerations of policy
which lead the law to say the plaintiff is or is not entitled to protection.
Although the court may consider a variety of relevant factors in reaching its
decision, the question becomes one of fairness under a contemporary standard
as to whether a reasonable person recognize and agree that a duty of care
exists. |
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CONN. |
FORESEEABLE RELIANCE BY A
THIRD PARTY |
Krawczyk v. Stingle, 208
Conn. 239 (1988). STRICT
PRIVITY: The decedent, who was to undergo open heart surgery, retained the
attorney on March 8 to prepare estate planning documents. The decedent wanted
to establish a relatively complex trust rather than a simple will. On March
11 he delivered some documents to the attorney's office and was told that
additional documents were needed. He did not provide the materials until a
scheduled meeting on March 15 and so the attorney and the decedent arranged
to meet on March 19 to execute the estate documents. At the March 15 meeting
the decedent gave new instructions to the attorney. On March 17 the attorney
was told that the decedent suffered a massive heart attack. The next day she
was told the decedent was very ill. She completed the documents. She went to
the hospital but was not permitted to see the decedent because of his
condition. He died shortly afterwards without having signed the documents.
The appellate court found that the attorney did not owe any duty to the
relatives. The court ruled that the attorney's duty was to the decedent and
that to have rushed her preparation of the documents to satisfy the relatives
could have created a situation contrary to her client's interests. Licata v.
Spector, 26 Conn. Supp. 378 (1966). BALANCING
FACTORS: Plaintiff estate administrator alleged that, because of defendant
attorney's negligence in failing to provide for the required number of
witnesses in decedent's will, the probate court invalidated the will, assets
of the estate had been diverted, and the decedent's estate had suffered
damages. Defendant demurred and the court overruled, holding, on one count,
that an attack relating to the elements of damage should be made by motion
and not by demurrer. The court also overruled defendant's demurrer to the
count based on lack of duty and privity. The court held that liability for a
negligent performance of a contract should be imposed where the injury to
plaintiff was foreseeable and where the contract was an incident to an
enterprise of defendant and there were adequate reasons from policy for
imposing a duty of care. Therefore, plaintiff had an equitable right of
action. Stowe v. Smith, 441 A.2d 81 (Conn.
1981). A disappointed will beneficiary's cause of
action against the drafter may sound in both third-party beneficiary contract
and tort theories, but, absent a conflict between the rules of contract and
tort, the plaintiff could proceed on either or both grounds. |
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DELAWARE |
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NO
RELEVANT CASELAW |
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D.C. |
INTENDED THIRD PARYT
BENEFICIARY THEORY |
Needham v. Hamilton 459 A.2d 1060 ( D.C. 1983) DRAFTING
ATTORNEY The
court held that the requirement of privity did not
extend to a malpractice suit brought by the intended beneficiary
of a will against the attorneys who drafted it. The court reasoned that
neither of the rationales supporting the requirement of privity
applied to the situation presented. The court noted that it was not a case in
which the ability of a non-client to impose liability would in any way affect
the control over the contractual agreement held by the attorney and his
client, as the interests of the testatrix and the intended beneficiary
with regard to the proper drafting and execution of the will were the same.
Further, the court noted that the duty did not extend to the general public
but only to a non-client who was the direct and intended beneficiary
of the attorney-client relationship. Finally, the court reasoned that it was
the main purpose of a contract for the drafting of a will to accomplish the
future transfer of the estate to the beneficiaries. |
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FLORIDA |
FOGEL’S FLORIDA-IOWA RULE FRUSTRATED INTENT OF THE
TESTATOR |
Arnold v. Carmichael, 524 So. 2d 464 (1988) CLAIM ALLOWED The testatrix of a will
retained appellant attorney to amend her will. Appellant was not present when
testatrix came to his offices to read and execute the amended will. When the
testatrix died, appellees, relatives of the testatrix, discovered that the
original will's residuary clause naming them as beneficiaries had been
omitted from the redrafted will. Appellees filed a suit for professional
negligence against appellant, and the trial court awarded them damages in the
non-jury trial of their action. On appeal, the court reversed. The court held
that the trial court properly found that appellant was liable, because the
language of the residuary clause did not contradict or frustrate the language
of the new will and because appellees presented evidence that appellant
failed to read the will before it was given to the testatrix. McAbee v. Edwards(1976) 340 So. 2d 1167- CLAIM ALLOWED daughter sued attorney for
advising Testatrix not to revise will after marriage. Spouse file as
pre-termitted spouse/ Appellant, intended
third-party beneficiary, filed a legal malpractice
action against appellees, attorney and his insurance carrier, arising out of
the preparation of the last will and testament for appellant's mother. The
trial court entered a judgment on the pleadings in favor of appellees. The
court noted that an attorney who erred in drafting a will could be held
liable to a person named in the instrument who suffered deprivation of
benefits as a result of the mistake. The court also found the harmed party
could recover on a theory of tort liability for a breach of duty. As the
complaint alleged that appellee negligently failed to advise the testatrix
that she should change her will after her marriage and continued the
negligent omission until the time of her death, the complaint stated a sufficient
cause of action in tort. Winston v. Brogan, 844 F. Supp. 753 (1994) CLAIM ALLOWED The testator
hired the attorneys to execute her last will and testament. The beneficiary initiated
action against the attorneys alleging that they had committed negligence and
had wrongfully executed his mother's will. The attorneys filed a motion for
summary judgment. The court held that, in order to maintain a legal
malpractice action, the beneficiary was required to prove employment, neglect
of a reasonable duty, and that such negligence resulted in and was the
proximate cause of loss to the beneficiary. Although such liability was
generally limited to clients in privity of contract,
the court held that such rule of privity was relaxed
where it was the apparent intent of the client to the benefit a third party.
The court held that the beneficiary had presented sufficient evidence to
create a question of fact as to whether his damages resulted from the
attorneys' alleged negligence Espinosa v. Sparber,
Shevin, Shapo, Rosen & Heilbronner 612 So. 2d 1378, 1380 (Fla. 1993) CLAIM NOT ALLOWED Will failed to provide for
after-born children. Upon death of testator, plaintiff guardian of children
sued for legal malpractice. The trial court dismissed the complaint and
plaintiffs appealed. The court held that plaintiff as guardian did not have
standing to maintain suit as there was no privity of
contract. The only exception to this rule was when the testamentary intent
could be established through the will itself. Extrinsic evidence could not be
used to prove testator's intent. However, testator's estate could sue for
negligence in drafting the will, but recovery was limited to the amount of
fees paid by the testator for defendant lawyer's alleged negligence. Stept v. Paoli 701 So. 2d 1228, 1229
(Fla. Dist. Ct. App. 1997) CLAIM NOT ALLOWED. Lawyers
were not liable to clients' children for legal malpractice on grounds that
lawyers included language in clients' revocable living trusts that created
general power of appointment in surviving spouse over trust assets of first
spouse to die, although children were thereby required to pay federal estate
taxes, as trust documents did not contain any expressed intent that taxes
should be avoided or minimized; lawyers did no legal work for children, who
were residuary beneficiaries of trusts that were part of clients' estate
plan. O’Neill v. Sacher 526 So. 2d 771, 772 (
Fla. Dist. Ct. App. 1988) CLAIM NOT ALLOWED Beneficiary
of testamentary trust brought action for professional negligence against
attorney who drafted testamentary instruments. The Circuit Court for Dade
County, Jack M. Turner, J., entered summary judgment in favor of attorney,
and beneficiary appealed. The District Court of Appeal, Ferguson, J., held
that attorney was not liable to nonclient trust beneficiary where ambiguity
in testamentary instruments did not result in frustration of testamentary
intent. Lorraine v. Grover,
Ciment, Weinstein & Stauber, P.A. 467 So. 2d 317 (Fla. Dist Ct. App. 1985) CLAIM NOT ALLOWED Beneficiary was not entitled to recover for
attorney's alleged negligent drafting of testator's will based on attorney's
failure to advise testator about possibility of making inter vivos transfer
of his residence, although devise to beneficiary of residence failed because
it was a homestead, since no privity existed between beneficiary and attorney
with respect to inter vivos transfer of property, attorney was not found
negligent. Kinney v. Shinholser, 663 So. 2d
643 (Fla. App. 1995). CLAIM
ALLOWED Standing
in legal malpractice actions involving drafting of will is limited to those
who can show that testator's intent as expressed in will is frustrated by negligence
of testator's attorney. Applying
Florida malpractice standards, the court here upheld the dismissal of a
complaint against the lawyer who drew a will for a married client which did
not preserve the tax benefit of the testator's unified credit. The will gave
the testator's entire residuary estate to a trust for the benefit of his
widow, over which she was given a general power of appointment. In effect,
the will caused the widow's estate to pay some estate tax that was avoidable
had she not been given a general power of appointment. According to the court
there was no evidence of malpractice by the scrivener as the will did not
indicate any intent to minimize taxes on the death of the surviving spouse.
However, the court held that the complaint stated a cause of action by the
decedent's son, the remainderman under the husband's will and the sole
beneficiary of the wife's will, against the lawyer and the accountant who
were retained by the surviving spouse to probate the will and prepare the
federal estate tax return for failing to advise her of the tax savings that
would be achieved if she disclaimed the general power of appointment. |
|
GEORGIA |
|
NO
RELEVANT CASELAW |
|
HAWAII |
BALANCING OF FACTORS UNDER
CONTRACT & TORT THEORY – The intended beneficiary may proceed under
either theory. |
Blair v. Ing, 95 Haw. 247 (2001) The
beneficiaries' parents retained attorney to create an estate plan, and upon
their father's death, their mother hired accountant to prepare the estate tax
forms. Alleged errors resulted in approximately $ 200,000 in taxes. The state
supreme court held that attorney had a duty of care toward the beneficiaries,
and they were intended beneficiaries of the contract between attorney and the
trust settlers, so they had standing, under both negligence and contract
theories to proceed against him. The cause of action would not create a
conflict of interest, violate attorney-client privilege, prevent the
enforcement of the trust document, or vary its terms. RULE:
Whether a particular legal malpractice defendant can be liable to a third
person not in privity is a matter of public policy, requiring the balancing
of several factors: (1) the extent to which the transaction was intended to
affect the plaintiff; (2) the foreseeability of harm to him; (3) the degree
of certainty that the plaintiff suffered injury; (4) the closeness of the
connection between the defendant's conduct and the injury; (5) the policy of
preventing future harm; and (6) whether imposing liability placed an undue
burden upon the legal profession. TORT
CONSIDERATION: As an exception to the general rule that an attorney is only
liable to his client for negligence, a non-client may maintain a legal
malpractice action based upon a third party beneficiary claim. The essence of
a third-party beneficiary's claim is that others have agreed between
themselves to bestow a benefit upon the third party but one of the parties to
the agreement fails to uphold his portion of the bargain. Thus, the third
party beneficiary approach focuses the existence of a duty entirely on
whether the plaintiff was the person intended to be benefited by the legal
services and does not extend to those incidentally deriving an indirect
benefit. In other words, the non-client must have been an intended
beneficiary, not merely an incidental beneficiary CONTRACT
CONSIDERATION: There is a two-part test for determining whether a person is
an intended third party beneficiary. In part one of the test, the trial court
possesses the discretion to confer standing under a third party beneficiary
theory by determining whether the recognition of the beneficiary's right is
appropriate to effectuate the intention of the parties. Under part two, the
performance must satisfy an obligation of the promisee to pay money to the
beneficiary or the circumstances indicate that the promisee intends to give
the beneficiary the benefit of the promised performance. A will, providing
for one or more named beneficiaries, clearly manifests the intent of the testator to benefit the legatee. The recognition of the
right to performance in the beneficiary is appropriate to effectuate the
intention of the parties since the estate either cannot or will not bring
suit. Since only named beneficiaries can bring suit, they meet the first step
standing requirement of Restatement (Second) of Contracts § 302. |
|
IDAHO |
FOGEL’S FLORIDA-IOWA RULE FRUSTRATED INTENT OF THE
TESTATOR |
Harrigfeld v. J.D. Hancock, 364 F.3d 1024 (2004). |
|
ILLINOIS |
INTENDED THIRD PARTY
BENEFICIARY |
Pelham v. Griesheimer, 92 Ill. 2d
13 (1982) The
children argued that the attorney owed a duty to exercise a reasonable degree
of professional care and skill as an attorney, with reference to seeing that
the children became the prime beneficiaries in all life insurance policies
that insured their father. The amended complaint also alleged that the
attorney breached that duty by negligently and carelessly failing to notify
their father's employer, or the insurance company, of the divorce-decree
provision and, failing to advise the children's mother to notify her
ex-husband's employer or insurance company of the provision that the children
were direct third-party beneficiaries of the contract between their mother
and the attorney. As to the breach of contract claim, the court pointed out
that the complaint did not allege factually or legally that a contract was
entered into for the direct benefit of the children and, thus, did not state
a cause of action. The court dismissed the children's negligence complaint
because it failed to establish the existence of a duty owed by the attorney. *
Obviously the purpose of a will is to pass the testator=s estate to the
beneficiaries named in the will - We consider that privity is not an
indispensable prerequisite to establishing a duty of care between a nonclient
and an attorney in a suit for legal malpractice. It would appear that courts
are more willing to apply the balancing test to
extend an attorney's duty to nonclients in cases in which the attorney's
representation of his client has essentially been of a nonadversarial nature,
such as drafting wills for the benefit of intended beneficiaries thereunder Jewish Hosp. v. Boatmen's Nat'l Bank, 633 N.E.2d 1267 (Ill. App. 1994), cert.
denied, 642 N.E.2d 1282 (Ill. 1994).
The beneficiaries of the testator's will sued the attorney who
allegedly negligently prepared the will and who represented the personal
representative of the testator's estate and allegedly negligently prepared
the federal estate tax return. Applying a third-party beneficiary/breach of
contract theory, the Illinois appellate court held that the attorney owed the
beneficiaries a duty in preparing the will but, as counsel for the estate
representative, owed no duty to the beneficiaries in handling the probate
administration. estate. [Citations omitted.] 633 N.E.2d at 1277-1278. McLane v. Russell, 546 N.E.2d 499 (Ill. 1989). This case holds that the beneficiaries under the decedent's will were intended beneficiaries of the decedent's attorney-client relationship with the will's drafter and could therefore bring an action for legal malpractice. Despite contention of attorney and law firm that testator intended to devise farm to testamentary beneficiaries only if testator's sister died first, evidence supported finding that testator intended to devise her one-half interest in farm to beneficiaries under will regardless of whether she predeceased her sister joint tenant, and thus, beneficiaries under will were intended beneficiaries of attorney-client transaction and could bring legal malpractice action against attorney and law firm; language of will, under which testator devised only her interest in property, rather than entire property, to beneficiaries suggested intent to devise her interest in property to beneficiaries regardless of whether she was surviving joint tenant. Ogle v. Fuiten, 466 N.E.2d 224 (Ill.
1984).
The Supreme Court of Illinois here held that the beneficiaries under an
allegedly negligently drafted will could sue the drafter directly in legal
malpractice both under traditional negligence theory and third-party
beneficiary/breach of contract theory given the plaintiffs' allegations that,
among other things, the testators' purpose in employing the attorney was to
draft the will not only for the benefit of the testators (plaintiffs' uncle
and aunt) but for the benefit of the intended contingent beneficiaries. Rutkoski v. Hollis, 600 N.E.2d 1284 (Ill.
App. 1992). The
appellate court found that husband as executor had a claim against the lawyer
but affirmed the trial court's dismissal of the wife's action on behalf of
her husband as beneficiary. The court reasoned that the plaintiff could not
have successfully brought an action against defendant because of the
potentially adversarial relationship between an executor's interest in
administering the estate and the interests of the beneficiaries of the
estate. Defendant's primary duty was to Charles as executor of the estate and
not to the beneficiaries of the estate, including Charles. If defendant's
primary duty was to the beneficiaries, plaintiff had to explicitly include
facts to that effect. |
|
INDIANA |
INTENDED BENEFICIARY – TORT THEORY |
Walker v. Lawson, 514 N.E.2d 629 (Ind.
1987) – Decision overturned on basis of factual, not legal conclusions by Walker v. Lawson, 526 N.E.2d 968,
(Ind. 1988) The
beneficiary filed a complaint against the attorney who prepared his mother's
will, alleging that the attorney failed to advise his mother that her husband
could take against the will and receive a statutory share of one-third of the
net personal estate. The court concluded that the trial court erred in
concluding that an attorney who drafted a will owed no fiduciary duty to the
beneficiary because ordinary principles of negligence applied to create a
cause of action for malpractice for the known intended
beneficiaries of a testamentary scheme. (intended third-party
beneficiary under a breach of contract theory) Hermann v. Frey, 537 N.E.2d 529 (Ind.
App. 1989).
The court held that decedent's
surviving spouse and sole heir at law had standing to pursue an action for
legal malpractice against the attorney handling the estate where the
surviving spouse, as personal representative, had retained the attorney and
was therefore entitled to rely on the attorney's advice with respect to her
personal cause of action for wrongful death. Sole
heir of decedent's estate was third-party beneficiary of agreement between
estate and attorney to pursue legal action on behalf of estate, and thus
could bring action against estate attorney for legal malpractice, |
|
IOWA |
LIABLE ONLY TO
SPECIFICALLY, IDENTIFIABLE BENEFICIARIES. ACTION IN CONTRACT OR TORT. (Fogel’s Florida-Iowa
rule) |
Schreiner v. Scoville, 410 N.W.2d
679 (1987) The
lawyer prepared the testator's will and a later codicil, both of which
expressed the intention to leave the beneficiary half of her real property.
The lawyer then prepared a transaction that partitioned the real property.
After the testator's death, the bequest to the beneficiary was adjudicated to
have been adeemed by the partition. The beneficiary brought suit against the
lawyer, and the district court dismissed the action. The beneficiary
appealed. The court reversed and remanded. The court found that privity of an
attorney-client relationship was not required, because the beneficiary was
clearly the third party intended to benefit from the will and codicil. The
court found that the three transactions were interrelated, close in time,
dealt directly with the same parcel of real property, and that the lawyer
represented the testator's interests in all three transactions. Because the
lawyer had been actively involved in all the transactions, was fully aware of
the testator's intent to leave the property to the beneficiary, but failed to
advise the client of the impact the partition would have, the beneficiary had
stated a claim sufficient to survive summary judgment. RULE:
A lawyer owes a duty of care to the direct, intended, and specifically
identifiable beneficiaries of the testator as expressed in the testator's
testamentary instruments. The thrust of any action brought by such an
individual, whether couched in terms of contract or tort, necessarily will
center on the existence and breach of this duty of care. A cause of action
ordinarily will arise only when as a direct result of the lawyer's
professional negligence the testator's intent as expressed in the testamentary
instruments is frustrated in whole or in part and the beneficiary's interest
in the estate is either lost, diminished, or unrealized. If the testator's
intent, as expressed in the testamentary instruments, is fully implemented,
no further challenge will be allowed. Thus, a beneficiary who is simply
disappointed with what he or she received from the estate will have no cause
of action against the testator's lawyer. This limitation, which protects the
integrity and solemnity of an individual's testamentary instruments as well
as the testator's express intent, will not apply if the lawyer concedes
negligence. Schmitz v. Crotty, 528 N.W.2d 112 (Iowa 1995). Because,
the defendant accepted responsibility for the death tax returns he filed on
behalf of the plaintiffs' mother's estate,
and the plaintiffs showed defendant's undisputed mishandling of those
returns, the court concluded that this is a rare case which requires us to
hold in this bench-tried law action that defendant breached his duty to exercise
reasonable care as a matter of law. |
|
KANSAS |
INTENDED THIRD PARTY BENEFICIARY THEORY (CONTRACT) |
Pizel v. Zuspann, 247 Kan. 54 (1990) Appellant
intended beneficiaries filed a legal malpractice
suit against appellees, attorney and partner, for failure to create a valid
inter vivos trust. The lower court granted summary judgment for appellee
attorney and assessed appellee partner's partial fault. Appellee partner
challenged the ruling, claiming that the lower court should have declined to
allow appellant as a non-client to sue appellee partner for conduct in his
representation of a client. The court affirmed the lower court's order. The
court held that appellant was entitled to bring suit as there was no dispute
that appellant was an intended beneficiary to the
trust and there was foreseeable harm because without the trust, appellant's
inheritance was subject to a residuary clause of a will. The court found a
close connection between appellee partner's representation of the client
while the trust was supposedly in operation and appellant's injury of losing
the benefits of the trust provisions. The court held that without recovery
against appellee partner, appellant would have no other avenue of recovery
and that the legal profession would not be unduly burdened by the recognition
of liability RULE:
An attorney cannot be held liable for the consequences of the attorney's
professional negligence to an adversary of his or her client. Traditionally,
an attorney will be held liable for negligence only to a client. Privity of contract must exist between the plaintiff and
the attorney to support an action for professional negligence. The strict
requirement of privity of contract, however, has
been eased when an attorney renders services that the attorney should have
recognized as involving a foreseeable injury to a third-party beneficiary of the contract. These cases usually
involve the negligence of attorneys in drafting a will or examining real
estate titles. |
|
KENTUCKY |
|
NO
RELEVANT CASELAW |
|
LOUISIANA |
INTENDED THIRD PARTY BENEFICIARY |
Succession of Killingsworth, 292 So. 2d
536 (1973) The
decedent retained the attorney, a notary, to draft a noncupative will. The
district court admitted testimony from the witnesses to the will, as well as
the will itself. The witnesses testified that the attorney had dictated to
his secretary, who typed the will. When signing the will, the witnesses had
attested that it was written by the attorney. The district court and
appellate court held that the will was invalid and that the estate, partner,
and insurer of the attorney were liable to the legatees. On appeal, the court
affirmed in part, reversed in part, and remanded. The court held that the
dictation to the secretary violated art. 1578, which required that the will
be written by the notary, rendering the will invalid. The court held that the
witnesses' testimony, when corroborated by an erroneous use of a legal term
in the will by the secretary, established the violation. The court found
that the legatees were entitled to recover damages as either third party
beneficiaries for breach of the attorney's stipulation to legally draft the
will, or for negligence under La. Civ. Code Ann. art. 2315. Woodfork v. Sanders, 248 So. 2d 419 (La. App.
1971), cert denied, 252 So. 2d 455
(La. 1971). The court rejected an attorney-drafter's privity defense in a
legal malpractice action brought by a disappointed beneficiary and applied an
intended third-party beneficiary/breach of contract theory. An attorney's
clear error in confecting a will, which error could have been avoided by the
exercise of reasonable competence, constitutes a breach of contractual
stipulation for the benefit of the intended legatee and, therefore, legatee
may maintain action against attorney for such an error. |
|
MAINE |
|
NO
RELEVANT CASELAW |
|
MARYLAND |
INTENDED THIRD PARTY
BENEFICIARY |
Ferguson v. Cramer, 709 A.2d 1279 (Md.
1998).
The court held that the third-party beneficiary exception to the strict
privity rule does not apply to confer upon the beneficiaries of an estate
standing to sue the personal representative's attorney. Under the general
rule, in order to hold an attorney liable for legal malpractice, an attorney-
client relationship must exist between the parties. Cavacos, 313 Md. at 253, 545 A.2d 46;
Flaherty, 303 Md. at 128, 492 A.2d
618. Unless the beneficiaries have contractual privity or an employment
relationship with the attorney, the attorney will not be liable for
professional malpractice. Although the beneficiaries of
the estate may gain some benefit from the personal representative's attorney,
this benefit is only incidental. As the Court explained in Flaherty, "an incidental
benefit does not suffice to impose a duty upon the attorney." Flaherty, 303 Md. at 131 n. 6, 492
A.2d 618. Noble v. Bruce, 709 A.2d 1264 (Md.
1998). The
Court of Appeals (Maryland's highest court) held that a testamentary
beneficiary, who is not a client of the drafting lawyer, may not maintain a
malpractice action against the lawyer for allegedly providing negligent
estate planning advice to the testator or negligently drafting the testator's
will in a manner which resulted in significant estate and inheritance taxes
that could have been avoided, thus re-establishing the strict privity rule in
Maryland. Plaintiff must prove direct employment relationship ( Noble @ 709 or that he was the intended
3rd party beneficiary under the narrow exception to the strict prvity
requirement. Flaherty @ 625. Murphy v. Comptroller of the Treasury, 207
F. Supp. 2d D. Md. 2002). Noble @ 1276 beneficiary is merely an ancillary
purpose of the attorney-client relationship |
|
MASS. |
FORESEEABLE RELIANCE BY INTENDED BENEFICIARY |
Williams v. Ely, 423 Mass. 467 (1996) The
general rule is that an attorney owes a duty of care only to clients. See
Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 522, 536 N.E.2d
344, cert. denied, 493 U.S. 894, 107 L. Ed. 2d 192, 110 S. Ct. 242 (1989);
DeVaux v. American Home Assurance Co., 387 Mass. 814, 817, 444 N.E.2d 355
(1983). An attorney-client relationship may be implied from the conduct of
the parties. Page v. Frazier, 388 Mass. 55, 62, 445 N.E.2d 148 (1983). An
attorney may owe a duty to nonclients who the attorney knows will rely on the
services rendered. Connecticut Junior Republic v. Doherty, 478 N.E.2d 735 (Mass. App. 1985), review
denied, 482 N.E.2d 328 (Mass. 1985). In this case the court assumed that
the attorney-drafter of a defective will could be held liable to the
disappointed beneficiary but found no liability on the facts of this case
since the testator had ratified the attorney's error. But the court suggests that at the time of
executing the second codicil, the testator did not intend to benefit the
plaintiffs. Had the court reached the question, ruling suggests a third party
beneficiary theory. ("We are not presented with a situation in which a
third party demonstrates foreseeable and justifiable reliance upon the attorney's
performance.") Citing Hiemstra v. Huston, 12 Cal.App.3d
1043, 91 Cal.Rptr. 269 (1970). Spinner v. Nutt, 631 N.E.2d 542 (Mass.
1994).
Beneficiaries of trust were not third-party beneficiaries of contract between
trustees and trustees' attorneys and, thus, attorneys did not owe
beneficiaries duty of care; beneficiaries failed to establish that trustees
or their attorneys manifested intent to confer benefit of legal counsel on
beneficiaries, such intention would have been contrary to what would be
ordinarily expected of trustees seeking legal counsel, and fact that
beneficiaries may have received incidental benefit from contract between
trustees and their attorneys did not impose duty of care upon attorneys with
respect to beneficiaries. |
|
MICHIGAN |
FOGEL’S FLORIDA-IOWA RULE FRUSTRATED INTENT OF THE
TESTATOR |
Ginther v. Zimmerman, 195 Mich.
App. 647 (1992) Alleging
that the defendants committed legal malpractice when they failed to carry out
the estate plan of the decedent by which the beneficiaries would have received real estate, the beneficiaries filed suit against defendants. After the
circuit court granted summary disposition to the defendants, the beneficiaries appealed. The court affirmed. A full reading
of the decision revealed that the circuit court actually decided the issue on
the ground that beneficiaries failed to state a
claim upon which relief can be granted. The beneficiaries
did not allege that they were named in the will or that the testator's
intent, as expressed in the instruments, was frustrated. Therefore, the court
believed that, where the intent of the testator as expressed in the
testamentary instrument was not frustrated, an attorney owed no duty that
will have given rise to a cause of action to persons not named in the
instrument. However, the court expressed no view regarding an attorney's
liability to direct and intended beneficiaries named
in the instrument where the intent of the testator, as expressed within the
four corners of the instrument, was frustrated. That situation was not before
the court. RULE:
Where the intent of the testator as expressed in the testamentary instrument
is not frustrated, an attorney owes no duty that will give rise to a cause of
action to persons not named in the instrument. Mieras v. DeBona, 550 N.W.2d 202 (Mich.
1996).
The Supreme Court of Michigan here held that, although a beneficiary named in
a will may bring a tort-based cause of action against the attorney who
drafted the will for negligent breach of the standard of care owed to the
beneficiary by reason of the beneficiary's third party beneficiary status,
the attorney could not be held liable to the testator's heirs for negligence
inasmuch as the will in question fulfilled the intent of the testator as expressed in the will. (The will
did not exercise the testator's power of appointment over her predeceased
husband's marital trust, thereby permitting the testator's daughter,
disinherited by the testator, to receive one-third of the assets held in the
husband's trust.) |
|
MINN. |
BALANCING OF FACTORS –
TORT THEORY |
Marker v. Greenberg, 313 N.W.2d
4 (Minn. 1981). The
surviving joint tenant’s father hired the attorney to prepare deeds conveying
certain real property to himself and his son as joint tenants. After the
father’s death, the joint tenant was required to pay additional estate taxes
because he had not held the property as a tenant in common with his late
father. The joint tenant sued the attorney to recover the cost of those
additional taxes. On appeal, the court found that the attorney owed no duty
to the joint tenant because he had no attorney-client relationship with him.
Further, the court held that the joint tenant could not recover as an
intended third party beneficiary of his father’s
attorney-client relationship because the deeds the attorney prepared were
valid and conveyed the interest in the real property that the father had
requested. RULE:
The general rule in legal malpractice is that an attorney is liable for
professional negligence only to a person with whom the attorney has an
attorney-client relationship and not, in the absence of special circumstances
such as fraud or improper motive, to anyone else. There are exceptions,
however, where strict privity is not required.
Exceptions are frequently found in cases involving drafting or executing a
will. An intended beneficiary may bring an action
for legal malpractice against the decedent’s
attorney where the attorney’s negligent act causes the named beneficiary to lose the intended bequest. The relaxation
of the strict privity requirement is very limited,
however. The cases extending the attorney’s duty to non-clients are limited
to a narrow range of factual situations in which the client’s sole purpose in
retaining an attorney is to benefit directly some third party. A third party,
in order to proceed successfully in a legal malpractice action, must be a
direct and intended beneficiary of the lawyer’s
services. In the context of an action for legal malpractice, the
determination whether in a specific case a defendant will be held liable to a
third person not in privity is a matter of policy
and involves the balancing of various factors, among which are the extent to
which the transaction was intended to affect the plaintiff, the
foreseeability of harm to him, the degree of certainty that the plaintiff
suffered injury, the closeness of the connection between the defendant’s
conduct and the injury, and the policy of preventing future harm Goldberger v. Kaplan, Strangis & Kaplan, P.A.,
534 N.W.2d 734 (Minn. App. 1995),
review denied, 1995 Minn. LEXIS 859 (1995). In a lawsuit brought by
the beneficiaries of an estate against a personal representative and its
attorneys for alleged negligence, the court adopted a modified multifactor balancing test (first enunciated in Biakanja v. Irving), and dismissed the
beneficiaries' claim against the attorneys, holding: Here, appellants are not the direct, intended
beneficiaries of the personal representative's attorneys' services. As
permitted by statute, the personal representative hired the attorneys to
assist and advise him in fulfilling his fiduciary duty to manage the estate
in accordance with the terms of the will and the law and "consistent
with the best interests of the estate." The attorneys' services,
therefore, must be directed towards serving the best interests of the estate,
and, thus, all beneficiaries. If any "person" is a third-party
beneficiary of the attorneys' services, it is the estate itself; at best,
individual beneficiaries of the estate are only "incidental
beneficiaries" of the attorneys' services. Id. at 738-739. Witzman v. Gross, 148 F.3d 988 (8th Cir.
1998). In
this action by a trust beneficiary against the trustee's law firm for legal
malpractice where the beneficiary's claims included failure to file
accountings, excessive compensation, self dealing and imprudent investment,
the court, applying Minnesota law, held that the lack of any attorney/client
relationship between the beneficiary and the law firm barred any cause of
action. (The beneficiary in this case was the trustee's sister and had
previously settled her breach of fiduciary claims against her brother.) "It is a well established rule in Minnesota that an attorney is liable for professional malpractice "only to a person with whom the attorney has an attorney-client relationship." Goldberger v. Kaplan, Strangis & Kaplan, P.A., 534 N.W.2d 734, 738 (Minn.Ct.App.1995) (review denied) (citing Marker v. Greenberg, 313 N.W.2d 4, 5 (Minn.1981) (en banc)). Like many jurisdictions, Minnesota recognizes exceptions to this strict privity requirement. See Marker, 313 N.W.2d at 5. A nonclient may sue an attorney for professional malpractice when the non-client is a direct, intended beneficiary of the attorney's services. See Goldberger, 534 N.W.2d at 738. Witzman, however, can establish neither that she had an attorney-client relationship with the appellees, nor that she is a direct, intended beneficiary of their services" |
|
MISS. |
|
NO
RELEVANT CASELAW |
|
MISSOURI |
BALANCING OF FACTORS – TORT THEORY |
Donahue v. Shughart, Thomson & Kilroy, P.C., 900 S.W.2d 624 (1995) Plaintiff
clients filed a petition asserting two theories of legal malpractice, breach
of fiduciary duty and one of breach of contract as third party beneficiaries
of an attempted testamentary transfer. Defendants, attorney and law firm,
filed a motion to dismiss, and the trial court granted. The court affirmed in
part, reversed in part, and remanded. The court concluded that plaintiffs, as
intended beneficiaries, had standing to bring a legal malpractice action
against defendants because they failed to effectuate a transfer in accordance
with the wishes of their client, the deceased. The court concluded that
plaintiffs could not have been characterized as incidental or indirect
beneficiaries because negligent advice or preparation of testamentary
documents was almost certain to cause them injury. The court affirmed the
trial court's dismissal of the third party beneficiary claim because it was
one of attorney malpractice clothed in a contract theory. RULE:
The first element of a legal malpractice action may be satisfied by
establishing as a matter of fact either that an attorney-client relationship
exists between the plaintiff and defendant or an attorney-client relationship
existed in which the attorney-defendant performed services specifically
intended by the client to benefit plaintiffs. As a separate matter, the
question of legal duty of attorneys to non-clients will be determined by
weighing the factors in the modified balancing test. The factors are: (1) the
existence of a specific intent by the client that the purpose of the
attorney's services were to benefit the plaintiffs; (2) the foreseeability of
the harm to the plaintiffs as a result of the attorney's negligence; (3) the
degree of certainty that the plaintiffs will suffer injury from attorney
misconduct. (4) the closeness of the connection between the attorney's
conduct and the injury; (5) the policy of preventing future harm; (6) the
burden on the profession of recognizing liability under the circumstances. Johnson v. Sandler, Balkin, Hellman &
Weinstein, P.C., 958 S.W.2d 42 (Mo. App.
1997). Applying Missouri's recently adopted "modified balancing
test" as enunciated in Donahue,
supra, the court directed the trial court on remand to determine whether
or not the decedent, in employing the defendant estate planning attorney,
intended to benefit the non-client/beneficiary. The court noted that the
lawyer, who had prepared a total amendment and restatement of an existing
trust instrument, could be held responsible for the entire instrument's
contents even though large portions of the instrument were simply copied,
verbatim, from the original trust document. |
|
MONTANA |
|
NO
RELEVANT CASELAW |
|
NEBRASKA |
STRICT PRIVITY |
Lilyhorn v. Dier, 214 Neb. 728 (1983) The
son alleged that the attorney drafted a will for his mother that purported to
devise to the son a farm, although at the time his mother owned but a life
estate in that property, which fact was known to the son. The district court
granted summary judgment on the ground that the claim of the son was barred
by the statute of limitations. The court stated that it did not have to
resolve the limitations issues because the duty to exercise reasonable care
and skill that an attorney owed his client ordinarily did not extend to third
parties. No attorney-client privilege existed between the attorney and the
son with respect to the drafting or execution of the decedent's will, which
the court held was sufficient reason to support the action taken by the
district court |
|
NEVADA |
|
NO
RELEVANT CASELAW |
|
NEW HAMP. |
FORESEEABLE RELIANCE BY INTENDED THIRD PARTY BENEFICIARY – CONTRACT
THEORY |
Simpson v. Calivas, 139 N.H. 1 (1990). The
intended beneficiary brought an action for
negligence and breach of contract alleging that his father's lawyer failed to
draft a will that incorporated the father's actual intent to leave all his
land to the intended beneficiary in fee simple. The
trial court dismissed the claim and held that a lawyer who drafted a will
owed no duty to intended beneficiaries. On appeal,
on an issue of first impression, the court reversed and remanded the case.
The court held that although there was no privity
between a drafting lawyer and an intended beneficiary,
the obvious foreseeability of injury to the beneficiary
demanded an exception to the privity rule and that
an identified beneficiary had third-party beneficiary status. The court further held that an
intended beneficiary stated a cause of action simply
by pleading sufficient facts to establish that an attorney negligently failed
to effectuate the testator's intent as expressed to the attorney. RULE: When an attorney
undertakes to fulfill the testamentary instructions of his client, he
realistically and in fact assumes a relationship not only with the client but
also with the client's intended beneficiaries. The
attorney's actions and omissions will affect the success of the client's
testamentary scheme; and thus the possibility of thwarting the testator's
wishes immediately becomes foreseeable. Equally foreseeable is the
possibility of injury to an intended beneficiary. In
some ways, the beneficiary's interests loom greater
than those of the client. After the latter's death, a failure in his
testamentary scheme works no practical effect except to deprive his intended beneficiaries of the intended bequests. RULE:
The general rule that a nonparty to a contract has no remedy for breach of
contract is subject to an exception for third-party beneficiaries.
Third-party beneficiary status necessary to trigger
this exception exists where the contract is so expressed as to give the
promisor reason to know that a benefit to a third party is contemplated by
the promisee as one of the motivating causes of his making the contract.
Where a client contracts with an attorney to draft a will and the client
identifies to whom he wishes his estate to pass, that identified beneficiary may enforce the terms of the contract as a
third-party beneficiary. Sisson v. Jankowski, 2002 DNH
14 It
was undisputed that the brother intended to pass his entire estate to the
beneficiary, and the beneficiary contended that the attorney's unwarranted
delay in accomplishing execution of the will resulted in the estate being
distributed among several parties by intestate succession. The attorney and
the law firm argued that permitting the beneficiary's action would create a
duty to the beneficiary which could conflict with their duty to represent the
brother. The court held that, while state law recognized that an attorney has
no duty to third parties where such duty would conflict with the duty of
loyalty to the client, state law also recognized circumstances where privity was not be required based on injuries that were
the reasonably foreseeable consequence of an attorney's deviation from
professional standards of care. RULE:
Under New Hampshire law, a duty runs from an attorney to an intended
beneficiary of a will. Although there is no privity
between a drafting attorney and an intended beneficiary, the obvious
foreseeability of injury to the beneficiary demands an exception to the privity rule. Where a client has contracted with an
attorney to draft a will and the client has identified to whom he wishes his
estate to pass, that identified beneficiary may enforce the terms of the
contract as a third-party beneficiary. |
|
NEW JERSEY |
BALANCING OF FACTORS – TORT THEORY |
Rathblott v. Levin, 697 F. Supp. 817, 820 (D. N.J. 1988) Obvious that the primary purpose
of the attorney-client relationship was to benefit the beneficiaries of the
estate. The question for the court was whether an attorney who drafted a will
be able to invoke lack of privity as a defense in a case where his alleged
negligence did not cause a beneficiary to lose her rights under the will, but
did cause her to spend more funds in defending a will contest than she
otherwise would have. The court saw no valid legal difference between one who
lost the right to one-half of an estate and one who lost one-half of an
estate in protecting rights. The court asserted that if either was caused by
an attorney's drafting negligence, that attorney should be liable. The court
found that the executrix was the beneficiary of the relationship between the
deceased and the lawyer, and the foreseeability of the executrix's reliance
and the degree of certainty of harm were matters to be explored at trial,
especially when the alleged negligence caused the executrix expenses in
defending the will at least double what they should have been, depleting her
husband's estate. Albright v. Burns, 503 A.2d 386 (N.J.
Super. 1986).
Before his uncle's death, a nephew acting pursuant to a power of attorney
employed counsel to advise him in connection with the sale of certain stock
and the making of a loan to the nephew's business. The attorney performed the
requested services which included distributing the proceeds of the stock sale
to the nephew. After the uncle's death, the attorney represented the nephew
as personal representative of the estate. In an action by the estate
beneficiaries against the attorney, the court applied the Biakanja
multifactor balancing test and found that the attorney had a duty to the
beneficiaries for breach of which he could be held liable. Barner v. Sheldon, 678 A.2d 717 (N.J. App.
Div. 1996).
The court affirmed a summary judgment granted in favor of a lawyer who, while
serving as the lawyer for the executor in an estate administration
proceeding, had not advised the decedent's children to disclaim the bequests
to them. Doing so would have increased the amount of the decedent's estate
that would be received by the surviving spouse, thereby decreasing the estate
tax liability of the decedent's estate. The appellate court held that under
the circumstances, "the defendant had no duty to inform the
beneficiaries of the tax consequences of their failure to disclaim." The
court pointed to the decedent's wish to minimize the amount that passed to
his surviving spouse. "Had plaintiffs, the testator's children,
disclaimed, the testator's wife would have benefitted. This would have been
contrary to the testator's intent." The trial court opinion (678 A.2d
767), which contains a useful summary of decisions regarding the duties the
lawyer for a personal representative may owe to the beneficiaries, concludes
that, "when an attorney is employed to render services in procuring
admission of a will to probate or in settling the estate, he acts as attorney
of the executor, and not of the estate and for his services the executor is
personally responsible." Lovett v. Estate of Lovett,
593 A.2d 382 (N.J. Super. Ct. Ch. Div. 1991). This case involved various
charges of misconduct by a lawyer in connection with the preparation of a
will, including a failure to meet with the husband-testator out of the
presence of his second wife who would receive a share of his estate outright
under the new will rather than in trust for her; a failure to counsel the
client adequately with respect to tax matters; and a failure to obtain information
regarding the husband's assets. Although the charges were rejected by the
court, it stated that, "[i]n most circumstances, meeting with a client
alone would be well advised." 593 A.2d at 387. A failure to counsel the
client in detail regarding the tax consequences was permissible because the
client had indicated that he was not interested in them. In addition, the
court observed that obtaining information regarding a client's assets
"in most cases, is important to the formulation of an adequate testamentary
disposition." 593 A.2d at 387. |
|
NEW MEX. |
MULTIFACTOR BALANCING TEST |
Leyba v. Whitley, 907 P.2d 172 (N.M.
1995). In
this case involving a suit by the conservator for the minor beneficiary of
his father's estate against the lawyers representing the personal
representative in a wrongful death claim, where the proceeds from the
settlement of the claim were paid to the minor beneficiary's mother who then
squandered the funds, the Supreme Court of New Mexico, applying the Biakanja multifactor balancing test,
found that the attorneys owed a duty to the minor beneficiary. Wisdom v. Neal, 568 F. Supp. 4 (D.N.M.
1982). In
this legal malpractice case involving estate administration the court applied
California's multifactor balancing test in holding that lack of privity was
no defense to an action brought by decedent's niece and nephew against an
attorney who had incorrectly determined that the estate should be distributed
per stirpes rather than per capita. |
|
NEW YORK |
STRICT PRIVITY |
Baer v. Broder, 436 N.Y.S.2d 693 (Sup.
Ct. 1981), aff'd on other grounds,
447 N.Y.S.2d 538 (App. Div. 1982). In an action by the executor of a decedent's
estate against the attorney whom he had hired to pursue a wrongful death
claim (of which the executor was also a statutory beneficiary in his
individual capacity), the court held that the plaintiff had a cause of action
despite the lack of contractual privity because of several "face to
face" meetings between the attorney and the plaintiff. Kramer v. Belfi, 482
N.Y.S.2d 898 (App. Div. 1984). Applying New York's strict privity doctrine, the
court here denied standing to the beneficiary of a decedent's estate to sue
the attorney for the executor for allegedly failing to give tax advice that
would have saved estate taxes. Weingarten v. Warren, 753 F. Supp. 491 (S.D.N.Y. 1990). In this lawsuit by the remainder beneficiaries of a trust against the trustee's attorney for allegedly negligently permitting trust principal to be converted to income, the federal district court, applying New York law, dismissed the beneficiaries' malpractice claim under New York strict privity rule. The court did hold however that the beneficiaries could state a cause of action against the attorney for breach of fiduciary duty based on the New York Court of Appeals' decision in In re Clarke's Estate, 12 N.Y.2d 183, 237 N.Y.S.2d 694, 188 N.E.2d 128 (1962), where an attorney's fees were disallowed in an accounting of an estate because the attorney had a conflict of interest with the beneficiaries of the estate, the Court of Appeals held that: "[a]n attorney for a fiduciary has the same duty of undivided loyalty to the cestui as the fiduciary himself." Id., 12 N.Y.2d at 187, 237 N.Y.S.2d at 697, 188 N.E.2d at 130; Conti v. Polizzotto, 646 N.Y.S.2d 259 (1996). Plaintiffs
could not assert a claim for legal malpractice based on their status as
beneficiaries of a will and their alleged instruction to the attorneys to
draft the will in accordance with their aunt's intentions. Deeb v. Johnson, 548 N.Y.S.2d 622 (1989). Because
privity did not exist between coexecutors and the attorney against whom they
claimed professional negligence for his drafting of the decedent's will, the
coexecutors could not maintain their claim against the attorney. In re Estate of Pascale, 644
N.Y.S.2d 887 (1996). Lack
of privity between any legatees under decedent's will and the attorneys who
drafted the will precluded the legatees from recovering damages based upon
the attorneys' alleged malpractice in the drafting of decedent's will. Estate of Spivey v. Pulley, 526
N.Y.S.2d 145 (1988). In
an action against attorney for legal malpractice and breach of contract
relating to decedent's last will and testament, the trial court properly
granted defendant's motion for summary judgment dismissing the complaint for
lack of privity. Viscardi v. Lerner, 510 N.Y.S.2d 183 (1986).
Sisters
lacked privity with attorneys who drafted their brother's will. Therefore,
they could not sustain a negligence action that contended that had will been
drawn according to their brother's wishes, they would have inherited part of
his estate |
|
N.C. |
BALANCING
OF FACTORS |
Jenkins v. Wheeler, 316 S.E.2d 354 (N.C. App. 1984), review denied, 321 S.E.2d 136 (N.C. 1984). In this action by an estate's sole heir against, among others, the estate administrator and counsel for the administrator, the court found that the heir had standing to sue the attorney in tort where the heir alleged that the attorney had failed to list the wrongful death action as an asset of the estate, gave incorrect legal advice to the administrator and continued the representation of conflicting interests. Interestingly, the court also held that the heir's alleged contributory negligence was no bar to the cause of action of malpractice. Balancing of Factors. See United Leasing Corp. v. Miller, 45 N.C.App. 400, 263 S.E.2d 313, disc. rev. denied, 300 N.C. 374, 267 S.E.2d 685 (1980). |
|
N.D. |
|
NO
RELEVANT CASELAW |
|
OHIO |
STRICT PRIVITY |
Simon v. Zipperstein, 512 N.E.2d 636, 638 (Ohio 1987) The
decedent's will did not mention an antenuptial
agreement that the attorney had previously prepared for the decedent in contemplation of the decedent's
upcoming marriage. Prior to the filing of the malpractice
action, an appellate court determined that the decedent's
new wife was entitled to a distribution under both the antenuptial agreement
and the will. The guardian and the decedent's son
contended that the attorney negligently failed to renounce the antenuptial
agreement or make any provision in the will with respect to the antenuptial
agreement. The court held that (1) in general, an attorney was immune from
liability to third persons arising from his performance as an attorney in
good faith on behalf of, and with the knowledge of his client, unless such
third person was in privity with the client or the
attorney acted maliciously; (2) the complaint failed to set forth any special
circumstances such as fraud, bad faith, collusion, or other malicious conduct
which would have justified departure from the general rule; and (3) privity was lacking because the decedent's
son, as a potential beneficiary of the decedent's estate,
had no vested interest in the estate. Firestone v. Galbreath, 976 F.2d
279 (1992) The
grandchildren were beneficiaries under their grandmother's will. After their
grandmother's death, the grandchildren brought an action against the
executor, accountants, and attorneys, and alleged various state law tort
claims and federal Racketeer Influenced and Corrupt Organizations Act claims.
The district court dismissed the bulk of the claims on the ground that the
grandchildren lacked standing to assert the claims of their grandmother's
estate and family trust. On appeal, the court held that the grandchildren as
beneficiaries did not have the capacity under Fed. R. Civ. P. 17(b) to bring
the action on behalf of the estate. The executor had the right to bring any
action. The court held that the grandchildren as third-party beneficiaries to
the transactions did not have standing to bring the action against the
accountants and attorneys without allegations of fraud or malice by the
accountants and attorneys against the grandchildren. Elam v. Hyatt Legal Serv., 541 N.E.2d
616 (Ohio 1989). In this case the Supreme Court of Ohio permitted a law suit brought
by beneficiaries contending they had lost their inheritance through the
negligence of the estate's attorney who had recorded a certificate of title
to certain real estate in the name of the deceased testator's husband alone,
despite the fact that the decedent's will had bequeathed the husband only a
life estate in the property with the remainder devised to the plaintiff
beneficiaries. The court distinguished Simon
v. Zipperstein, and found that
the estate's beneficiaries were in privity with the estate attorney because
because the remaindermen were in
privity with the executor of the estate where their interests were vested, whereas in Simon the beneficiaries' interests were contingent and not
vested. RULE:
See Scholler v. Scholler (1984), 10 Ohio
St.3d 98, 10 OBR 426, 462 N.E.2d 158, "An attorney is immune from
liability to third persons arising from his performance as an attorney in
good faith on behalf of, and with the knowledge of his client, unless such
third person is in privity with the client or the attorney acts
maliciously." Lewis v. Star Bank, N.A., 630 N.E.2d 418 (Ohio App. 1993). This decision upholds dismissal of a malpractice action brought by the beneficiaries of a revocable trust against the trustee and the lawyers for the deceased trustor for alleged failures to advise her properly regarding the generation-skipping transfer tax. Dismissal was proper because the beneficiaries were not in privity of contract with the trustee or the lawyers during the trustor's lifetime. In addition, the court observed that "While [the Trustor] was alive, the Law Firm owed her a duty of complete and undivided loyalty. If we were to hold that the duty was owed to [the Trustor] and to all the plaintiffs, as plaintiffs implicitly urge us to do, the Law Firm would have found itself representing divided and disparate interests, which is impermissible." 630 N.E.2d at 421. |
|
OKLA. |
INTENDED THIRD PARTY BENEFICIARY |
Leak-Gilbert v. Fahle, 2002 OK 66 Certain
of a decedent's heirs sued the decedent's
lawyer in federal court for not including them in the decedent's
will. The supreme court held the lawyer was not obligated to conduct an
independent investigation of the decedent's heirs,
apart from the information provided to the lawyer by the decedent,
unless requested to do so. To hold that the lawyer had a duty
to independently investigate the decedent's heir
information, even when not requested to do so, expanded the lawyer's
obligation beyond reasonable limits. The lawyer was required to (1) inquire
into the decedent's heirs at law; (2) offer a proper
explanation; (3) advise the decedent as to what is
meant by heirs at law; (4) explain the significance of including all heirs at
law in a will; and (5) prepare a will according to the decedent's
directions. If it was shown that the decedent
intended to include the heirs in the will and the lawyer did not include all
the decedent's heirs in the will due to substandard
professional performance, the heirs could bring a malpractice
action against the lawyer under either negligence or contract theories. RULE: TORT - As part of an
agreement to prepare a will, an attorney is under a common law duty to perform with care, skill, reasonable expediency
and faithfulness to properly execute the will; and a duty
created by a contract may be extended to a third party when the contract is
made expressly for the benefit of a third-party, non-client beneficiary and the harm to the beneficiary
is foreseeable. Intended beneficiaries of a will may
maintain an action against the lawyer because, as a matter of law, it is
foreseeable that an intended beneficiary under the
terms of a will could be harmed by an attorney's failure to have the will
properly executed CONTRACT
- Accompanying every contract is a common law duty
to perform the contract with care, skill, reasonable experience and
faithfulness the thing agreed to be done. A negligent failure to perform
these duties is a tort and a breach of contract. An
action for breach of contract and an action in tort may arise from the same
set of facts. At common law, privity of contract was
required before a tort action could arise from a breach of duty
created by contract - i.e. limiting liability to contracting parties.
However, liability for negligent breach of a contract with a third party is
not necessarily dependent upon a pre-existing privity
in legal relationship between the person injured and the person causing the
injury. Hesser v. Central Nat'l Bank, 956 P.2d
864 (Okla. 1998). Recently joining the majority of jurisdictions that permit a lawsuit
for alleged negligent will drafting by a disappointed beneficiary, the court
here applied the third party/intended beneficiary contract theory to permit a
suit for malpractice by the intended beneficiary of a will that the
testator's lawyer allegedly failed to have properly executed. |
|
OREGON |
INTENDED THIRD PARTY
BENEFICIARY |
See Roberts v. Feary, 162 Ore.
App. 546 (1999). Oregon
courts adhere to the strict privity rule but examine an attorney's duty to third parties on a case-by-case basis and have
found a "duty" to nonclients in only three
cases: (1) in Lee, 65 Ore. App. at 545, where the
attorney purported to act as the plaintiff's attorney by filing a
motion on behalf of the plaintiff; (2) in Hale, 304
Ore. at 286-87, where the plaintiff was the "intended" third-party beneficiary of the attorney's relationship with a client;
and (3) in McEvoy v. Helikson, 277 Ore. 781, 785-87,
562 P.2d 540 (1977), where the attorney stipulated to perform a service for
the opposing party. Hale v. Groce, 744 P.2d 1289 (Or. 1987). The court here held
that a malpractice action for negligence in the drafting of a will sounds
under both tort and contract theories. ADDRESSES
DIVIDED LOYALTY ARGUMENT PUT FORTH BY DEFENDERS OF STRICT PRIVITY APPROACH: “Because under third-party analysis the contract creates
a "duty" not only to the promisee, the client, but also to the intended
beneficiary, negligent nonperformance may give rise to a negligence action as
well. Not every such contract will support either claim. A contract to
prepare a will or other instrument may promise different things. It may
undertake to make a particular disposition by means specified by the client
(for instance, in trust, or by a gift of identified property), or to
accomplish the intended gift by specified means of the lawyer's choosing.
Failure to do what was promised then would be a breach of contract regardless
of any negligence. On the other hand,
the lawyer's promise might be to use his best professional efforts to
accomplish the specified result with the skill and care customary among
lawyers in the relevant community. Because negligence liability of this kind
arises only from the professional obligation to the client, it does not
threaten to divide a lawyer's loyalty between the client and a potentially
injured third party. Hale at 1292. |
|
PENN. |
THIRD PARTY BENEFICIARY CONTRACT THEORY |
Guy v. Liederbach, 459 A.2d 744
(Pa. 1983). Appellee
named legatee filed a lawsuit in both trespass and assumpsit against
appellant attorneys alleging malpractice in the
drafting of the will. The lawsuit was dismissed. The court on review held
that a beneficiary had a cause of action against the
attorney who drafted the will based either on a negligence or a third party beneficiary theory. Appellants sought review. The court
found that appellee had a cause of action if she were an intended beneficiary of the contract between the testator and the
attorney who drafted the will. The court found that the facts showed that the
measure of appellee's damages was her loss of expectancy. RULE:
Although a plaintiff on a third party beneficiary
theory in contract may in some cases have to show a deviation from the
standard of care, as in negligence, to establish breach, the class of persons
to whom the defendant may be liable is restricted by principles of contract
law, not negligence principles relating to foreseeability or scope of the
risk. Gregg v. Lindsay, 649 A.2d 935 (Pa. Super. 1994), appeal
denied, 661 A.2d 874 (Pa. 1995). This decision reverses a judgment
entered on a jury verdict that the lawyer's failure to see that a client's
will was executed constituted a breach of a third party beneficiary contract.
The lawyer prepared a new will on the same day that a friend of the decedent
told the lawyer of the client's wish to execute a new will that made the
friend the principal beneficiary. When the lawyer took the will to the
hospital for execution the client said it was acceptable. However, as no
witnesses were available, it was not signed. The lawyer agreed to change the
name of a charitable beneficiary designated in the will and bring it back the
following day for execution. The client was moved to another hospital where
he died the next day. The court stated: To hold otherwise, under the circumstances of this
case, would open the doors to mischief of the worst type. To permit a third person
to call a lawyer and dictate the terms of a will to be drafted for a
hospitalized client of the lawyer and to find therein a contract intended to
benefit the third person caller, even though the will was never executed,
would severely undermine the duty of loyalty owed by a lawyer to the client
and would encourage fraudulent claims. 649 A.2d at 940. |
|
R.I. |
BALANCING OF FACTORS (MODIFIED – NO CONSIDERATION OF MORAL BLAME) TORT THEORY |
Am. Kennel Club Museum of the Dog v. Edwards & Angell, LLP, 2002 R.I. Super. LEXIS 104 After
the settlor disappeared, the trustee used the trust to satisfy the settlor's
tax liabilities. The trust's provision that it was governed by the law of
another state applied only to its construction, so that law did not govern
the action for legal malpractice and breach of fiduciary duty. The previous
denial of the attorneys' motion to dismiss was not the law of the case as to
their summary judgment motion. The attorneys owed a duty of care to the
beneficiary, even though they represented the trustee, so the beneficiary had
standing to sue the attorneys. While it was unnecessary to decide if the
trustee's assignment of his malpractice claim to the beneficiary was valid,
the trustee could validly have so assigned that claim as the beneficiary's
liabilities, assumed from the trustee, arose directly out of the attorneys'
conduct. There were genuine issues of material fact as to the attorneys'
advice to the trustee and whether it was substantially correct, precluding
summary judgment. Given the duty of care owed to the beneficiary, it could
seek recovery for damages sustained as a result of the attorneys' negligence
and breach of fiduciary duty. RULE:
An action in negligence is maintained when the plaintiff shows that the
defendant breached a duty of care owed to the plaintiff and that the breach
proximately caused an injury to the plaintiff resulting in actual damages.
There is no requirement of privity in Rhode Island to maintain an action in
tort. In considering whether a duty exists from a defendant to a plaintiff,
among the factors considered are (1) the foreseeability of harm to the
plaintiff, (2) the degree of certainty that the plaintiff suffered an injury,
(3) the closeness of connection between the defendant's conduct and the
injury suffered, (4) the policy of preventing future harm, and (5) the extent
of the burden to the defendant and the consequences to the community for
imposing a duty to exercise care with resulting liability for breach. |
|
S.C. |
|
NO
RELEVANT CASELAW |
|
S.D. |
BALANCING FACTORS |
Persche v. Jones, 387 N.W.2d 32 (S.D.
1986). Rule:
One who negligently fails to direct proper attestation of a will becomes
liable in tort to an intended beneficiary who suffered damage because of the
invalidity of the testamentary instrument. Biakanja;
Heyer v. Flaig, 70 Cal.2d 223, 226, 449 P.2d
161, 163, 74 Cal.Rptr. 225, 227 (1969). |
|
TENN. |
FORESEEABLE RELIANCE BY A
THIRD PARTY |
Harper v. Harsh, 1992 Tenn. App. LEXIS
121 The
deceased and his widow employed the attorney to plan their estates
and prepare their wills. After the death of the deceased, plaintiffs
contended that as a result of the attorney's negligence, the combined estate would suffer a loss by liability
for estate taxes. The court noted that the children
did not have any interest in the estate of the
deceased, whose entire estate passed to the widow by
will. The children were named beneficiaries in the
widow's will, but their interests in her estate
would not become vested until her death. The court held that the children had
no standing to pursue a suit for damage to an unvested interest in the estate of the widow. Therefore, the court held that the
trial court properly dismissed the suits of the children. Further, the
dismissal of the executor's suit against the attorney was correct because
neither the deceased nor his estate sustained any
loss due to negligence on the part of the attorney. RULE:
Ordinarily, an attorney is not liable for negligence to third parties who are
not clients and not in privity of contract with the
attorney. However, an attorney may be liable to a non-client third party who
is known by him to be relying upon his proper preparation of a document
affecting vested rights of the third party |
|
TEXAS |
STRICT PRIVITY |
Barcelo v. Elliot, 923 S.W.2d 575 (Tex.
1996). Plaintiff
grandchildren filed suit against defendant attorney for legal malpractice. The lower court granted defendant's summary
judgment on grounds that defendant did not represent plaintiff and owed no
professional duty to them. The court affirmed and
stated that defendant owed a duty of care only to
his client and not to third parties who may have been damaged by defendant's
negligent representation of the client. The court held that without this privity barrier clients would lose control over the
attorney-client relationship and attorneys would be subject to almost
unlimited liability. The court held that it was
unable to craft a rule that allowed a lawsuit to proceed where alleged malpractice caused a will or trust to fail in a manner
that casted no real doubt on the testator's intentions, while prohibiting
actions in other situations. The court affirmed the lower court's decision
that defendant owed no professional duty of care to
plaintiff under the will and reiterated Texas law that legal malpractice is governed by tort principles. RULE:
An attorney retained by a testator or settlor to draft a will or trust owes
no professional duty of care to persons named as beneficiaries under the will or trust. The court believes
the greater good is served by preserving a bright-line privity
rule which denies a cause of action to all beneficiaries
whom the attorney did not represent. This will ensure that attorneys may in
all cases zealously represent their clients without the threat of suit from
third parties compromising that representation. Thompson v. Vinson & Elkins, 859 S.W.2d
617 (Tex. App. 1993). Texas is one of the minority of jurisdictions applying the strict
privity rule, and on that ground the court here barred an action by the
beneficiaries of a trust against the trustee's attorneys for alleged
negligence in the attorneys' distribution of the trust assets. OUTSIDE
THE SCOPE Moser v. Davis, 79 S.W.3d 162 (2002) No action against secretary who drafted & had will executed rendering the will void due to secretary’s unauthorized practice of law. |
|
UTAH |
|
NO
RELEVANT CASELAW |
|
VERMONT |
|
NO
RELEVANT CASELAW |
|
VIRGINIA |
MUST SHOW THAT BENEFICIARY WAS A CLEARLY INTENDED BENEFICIARY OF CONTRACT
BETWEEN ATTORNEY AND TESTATOR – NO CAUSE OF ACTION FOR AN INTENDED
BENEFICIARY OF AN ESTATE. |
Rutter v. Jones, Blechman, Woltz & Kelly, P.C., 264 Va. 310 (2002) The
executor claimed that negligence in drafting of the testamentary instruments
cost the estate an otherwise avoidable estate tax liability. The
appellate court ruled that Va. Code Ann. § 8.01-25 specifically limited
survival of actions to those that "existed" prior to the decedent's death. In the absence of any injury or damage,
there was no cause of action for legal malpractice.
While the alleged breach occurred during the decedent's
lifetime upon the drafting of her testamentary documents, the damage or
injury resulting from the breach that the executor
claimed did not occur until after the decedent's death. The injury or
damage that was proximately caused by the alleged legal malpractice
was the additional amount of the tax assessed against the estate
and additional legal and accounting fees required--all of which did not arise
until after the decedent's death. Accordingly,
because the cause of action for legal malpractice
asserted in this case did not come into existence during the decedent's lifetime, it did not survive her death. RULE: A cause of action for
legal malpractice requires the existence of an
attorney-client relationship which gave rise to a duty,
breach of that duty by the defendant attorney, and that
the damages claimed by the plaintiff client must have been proximately caused
by the defendant attorney's breach. In the absence of any injury or damage,
there is no cause of action. Timmons v. J.D., 49 Va. Cir. 201 (1999) Decedent hired defendant attorney to draft a will, under
which decedent's property was to be given to
plaintiff and another individual, or to the survivor, in equal shares. Decedent did not retain a copy of the will, and defendant
never notified plaintiff of its existence. Decedent
died leaving plaintiff as the sole beneficiary under
the will. Decedent's heirs-at-law filed claims
against decedent's estate on the presumption that decedent died intestate. Plaintiff sued defendant for the
difference between what she received under intestate succession and what she
would have received under the will. Defendant filed a demurrer to the
complaint. The court overruled the demurrer, holding plaintiff had
sufficiently alleged that she was the third-party beneficiary
of a contract between decedent and defendant.
Plaintiff adequately alleged the existence of an implied understanding that
defendant would return the will for probate. Plaintiff sufficiently alleged
that decedent's overriding purpose in contracting
with defendant was to benefit plaintiff because there were only two beneficiaries under the will, the estate
was small, and plaintiff was not the primary intestate taker. RULE: In order to proceed on
the third-party beneficiary contract theory, the
party claiming the benefit must show that the parties to a contract clearly
and definitely intended to confer a benefit upon him. There is a critical
difference between being the intended beneficiary of an
estate and being the intended beneficiary of
a contract between a lawyer and his client. If a client's overriding desire
is to minimize the amount of taxes recoverable by the government and he does
not really care who actually got the money, the beneficiaries
would certainly not be third-party beneficiaries of
the contract for legal services. However, if the client's one overriding
intent is to ensure that the beneficiaries receive a
certain portion of the estate, and the lawyer agrees
to comply with these specific directives, one might fairly argue that each beneficiary is an intended beneficiary
of the contract between the client and the lawyer. Copenhaver v. Rogers, 384 S.E.2d
593 (Va. 1989). In this action brought by a decedent's grandchildren against the
decedent's estate planning attorney for alleged negligence, the court held
that lack of privity barred any cause of action in tort and the plaintiffs'
allegations based on a third-party beneficiary contract theory were
insufficient to confer standing to sue since the plaintiffs failed to show
that they were "clearly intended" beneficiaries of testator's
contract with the law firm. |
|
WASH. |
BALANCING OF FACTORS AND THIRD PARTY BENEFICIARY |
Tomkins v. Beckley, 1999 Wash. App. LEXIS
443 The
court reversed a grant of summary judgment in favor of respondent attorney in
appellant beneficiaries' legal malpractice
action alleging that respondent was negligent in the execution of their
father's will. Respondent prepared the decedent's
will and gave him specific instructions on how to execute, witness, and
notarize the will. At the time of the decedent's
death, respondent possessed a copy of the will with the decedent's
signature and a notary signature, but no witnesses. The evidence gave rise to
the inference that the decedent returned to
respondent's office to have his will formally executed, but for unexplained
reasons the will was never formally executed. The trial court erred in
dismissing the cause of action because the original will was not produced.
Respondent, the party charged with the custody of the missing document, could
not be allowed to avoid liability simply because he
could not produce the document. Further, the court found as a matter of law
that respondent had a duty to appellants as beneficiaries of the decedent's will under the California
multifactor balancing test and the third-party beneficiary
test. Leipham v. Adams, 894 P.2d
576 (Wash. App. 1995), review denied, 904 P.2d
1157 (Wash. 1995). In this legal malpractice action the court, applying the
modified MULTIFACTOR BALANCING TEST
for determining when an attorney owes a duty of care to a non-client (see Trask v. Butler, discussed below),
held that the beneficiaries of an estate were barred from suing the lawyer
for the estate for the lawyer's alleged negligent failure to advise the decedent's
surviving spouse with respect to a possible disclaimer of a joint tenancy
account. The court found that the limited scope of the lawyer's undertakings
on behalf of the surviving spouse distinguished this case from Linck v. Barokas & Martin (see Alaska). Trask v. Butler, 872 P.2d
1080 (Wash. 1994). In this decision the Supreme Court of Washington holds that the Biakanja
multifactor balancing test should be applied in determining whether
the beneficiary of a decedent's estate may bring an action against the lawyer
who represented the executor in her fiduciary capacity. "After analyzing
our modified multifactor balancing test, we hold that a duty is not owed from
an attorney hired by the personal representative of an estate to the estate
or to the estate beneficiaries." 872 P.2d at 1085. Ward v. Arnold, 328 P.2d 164 (Wash.
1958). In
this malpractice action the court found an attorney liable for breach of
contract where the beneficiary had employed the defendant attorney to draw a
will for her husband, and the will was defective. |
|
W.Va. |
MULTIFACTOR BALANCING |
Brammer v. Taylor, 338 S.E.2d 207 (W. Va. 1985). HINTS AT MULTIFACTOR APPROACH BUT DOES NOT REACH IT. In this malpractice action for the unauthorized practice of law, a disappointed beneficiary under an invalid codicil. The question of whether or not bank employees had not only acted as typists and attesting witnesses but also engaged in the unauthorized practice of law (in which event the court found their supervision of the codicil's execution would be prima facie negligence) was held to be a question for the trier of fact. The court cited Heyer v. Flaig, 70 Cal.2d 223, 74 Cal.Rptr. 225, 449 P.2d 161 (1969) in recognition of the intended beneficiaries’ right to bring an action separate from that of the decedent’s estate. |
|
WISC. |
BALANCING OF FACTORS (MODIFIED – NO CONSIDERATION
OF MORAL BLAME) |
Auric v. Continental
Casualty Co, 331 N.W.2d 325 (Wis.
1983). Testator drafted a new
will to replace a previous will. The new will contained a specific bequest to
the testator's brother. The probate court denied admission of the new will
because it was not executed as required by Wis. Stat. § 853.03(2), which
required two subscribing witnesses. The trial court dismissed the brother's
action, which alleged breach of an implied contract and negligence against
the testator's attorney. On appeal, the court reversed with directions to
enter judgment in favor of the brother, and the cause was remanded for
further proceedings. Public policy supported the imposition of liability on the attorney who acted negligently in
supervising the execution of the will resulting in a loss to a beneficiary. RULE: In will beneficiary suits
against attorneys, a court considers the following factors: the extent to
which the transaction was intended to affect the plaintiff, the
foreseeability of harm to him, the degree of certainty that the plaintiff
suffered injury, the closeness of the connection between the defendant's
conduct and the injury, and the policy of preventing future harm. Anderson v. McBurney, 467 N.W.2d
158 (Wis. App. 1991). In this case the decedent's only child was omitted from the will
drafted by an attorney to whom the decedent gave his estate. The attorney's
law firm represented the attorney as executor, and the lawyer filed an
affidavit with the court incorrectly stating that the decedent had no heirs.
The child's guardian sued the attorneys for negligence in failing to discover
her status as a pretermitted heir. The court affirmed the dismissal of the
child's claim holding that, under Wisconsin's intended third-party
beneficiary/breach of contract test, the child lacked standing to sue. The
court found that the Auric exceptions did not apply because loss of mere
opportunity does not in and of itself constitute harm which is a required
prong to prove negligence. |
|
WYOMING |
STRICT PRIVITY |
Brooks v. Zebre, 792 P.2d 196 (1990) Attorney
represented parties who leased, with an option to purchase, a ranch from the
trustees. The district court rescinded the contract because it was unconscionable.
At the same time, the attorney also acted as the personal representative of
the estate of the husband of trustee wife. The trustees brought an action
against the attorney for negligence, gross negligence, and fraud. They
alleged that the attorney was negligent in his treatment of the wife as an
adverse party. They also made conclusory allegations concerning fraud. The
district court granted summary judgment to the attorney, and the trustees
appealed. The court affirmed the summary judgment because (1) no legal duty
for a cause of action in negligence flowed from the attorney to the wife, and
(2) the trustees failed to allege their claims of fraud with particularity. RULE:
In order to recover for negligence or gross negligence, the plaintiff is
required to demonstrate all necessary elements of the tort including the
element of a legal duty owed by the defendant to the plaintiff |
|
|
|
|