The Second District holds that an attorney owes no duty to a intended beneficiary absent an executed estate plan that establishes the identity of the beneficiary and the extent of the bequest.
About six months prior to the marriage of Raphael Schumert and Myung Chang, Schumert retained Gregory Lederman to prepare an estate plan. Schumert left a small bequest to Chang and the rest to his only child. Shortly before the marriage Schumert amended the plan to reduce the bequest to Chang. Six months after the marriage Schumert, who was seriously ill, allegedly instructed Lederman to revise his plan to leave the entire estate to Chang. Lederman refused and told Schumert that if he modified the plan Schumert would be sued by his first wife. Schumert died without amending his estate plan.
Following Schumert’s death Lederman represented the trustee and asked Chang to vacate the marital residence. Chang unsuccessfully sought to revoke the estate plan. She then filed suit against Lederman for breach of fiduciary duty, professional negligence, and intentional infliction of emotional distress.
Chang alleged that Lederman, as Schumert’s estate attorney, breached his legal duty of care to Chang, as an intended third-party beneficiary of her husband’s estate plan, by refusing and failing to revise the trust and will to comply with Schumert’s expressly communicated intent to bequeath to her his entire estate. She also asserted that Lederman’s subsequent representation of the trustee was a breach of Lederman’s ethical duty to Chang because her interests were adverse to those of the trustee. The demand that Chang move out of the residence shortly after the death of her husband was the premise of the emotional distress claim. The Court of Appeal confirmed the trial court’s ruling sustaining a demurrer to the second amended complaint.
To state a cause of action for legal malpractice, a plaintiff must plead duty, breach, causation and damages. A key element of any action for professional malpractice is a duty by the professional to the claimant. The question of duty is a question of law and depends on a judicial weighing of the policy considerations for and against the imposition of liability under the circumstances.
The traditional rule in California was an attorney could be held liable only to his or her client. This strict privity test was modified by a Supreme Court case that involved a notary public. The Court announced that the question of whether a defendant will be held liable to a third person not in privity involves a balancing of policy factors: the extent to which the transaction was intended to affect the plaintiff; the foreseeability of harm to the plaintiff; 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.
In a legal malpractice case the Supreme Court applied these factors to consider liability against an attorney who was negligent in the estate planning context. The Court added the factor of whether the recognition of liability would impose an undue burden on the profession. The Court concluded that imposing liability did not impose an undue burden on the legal profession because the main purpose of the transaction between the attorney and the testator was to provide for the transfer of property to plaintiffs; the damage to plaintiffs from the invalidity of the bequest was clearly foreseeable; plaintiffs would have received the intended benefits but for the negligence of defendant; and the imposition of liability would serve the policy of preventing future harm. The basis for tort liability was breach of duty owed directly to the beneficiary that arises when and an attorney undertakes to fulfill the testamentary instructions of a client.
Where third party liability has been recognized in the estate planning context, courts are cognizant of whether liability will impose an undue burden on the profession; imposing liability must not compromise the attorney’s duty of undivided loyalty to the testator. For example, an attorney does not owe a duty to the beneficiary of an unsigned estate plan because this would improperly compromise an attorney’s primary duty of undivided loyalty to his or her client, the decedent. Potential testators may change their minds more than once after the first meeting, the potential for misunderstanding is high, and the only party who can say what he or she intended has died. On the other hand, where an estate plan had been completed, but in a negligent manner, there is a clear expression of the testator’s intention and holding a negligent attorney liable to an intended beneficiary is not an undue burden on the profession. Conversely, where an estate plan although properly executed and free of other legal defects, is alleged to not accurately express the testator’s intent, no duty or liability to the nonclient potential beneficiary is recognized because of the substantial question about whether the third party was in fact the decedent’s intended beneficiary.
Chang could meet some of the factors that indicate there was a duty. According to Chang, Schumert advised Lederman of his desire to leave his estate to Chang and instructed him to amend the estate plan indicating that the transaction was intended to directly affect Chang; it was foreseeable Lederman’s failure to exercise due care could harm Chang; Chang suffered injury as a result of Schumert’s negligence; and there appeared to be a causal connection between Lederman’s conduct and Chang’s damage. The policy of preventing future harm was not clear given the absence of an express bequest by Schumert of his estate to Chang, but if true imposing a duty of care to a prospective beneficiary would arguably encourage a higher quality of legal practice. Problematic is that any disappointed potential beneficiary could make such factual allegations. Without the requirement of an explicit manifestation of the testator’s intentions the question of duty would always turn on the resolution of disputed facts and could never be decided as a matter of law. Thus, under the factor of whether liability would impose an undue burden on the profession, the court held that estate planners do not owe a duty of care to unnamed potential beneficiaries.
The small bequest left to Chang in the estate plan did not create a duty with respect to the alleged plan for Schumer to bequeath to her his entire estate. The limited duty of estate planning attorneys to intended beneficiaries is neither enforceable by all potential third-party beneficiaries nor by intended beneficiaries once expressly named in a will. The duty extends to the intended beneficiary that the attorney exercise ordinary care and skill to properly effectuate a bequest expressly set forth in the testamentary document. For example, an attorney preparing a will for a testator owes no duty to the beneficiary of the will or to the beneficiary under a previous will to ascertain and document the testamentary capacity of the client. Such a duty would subject attorneys to conflicting duties to different sets of beneficiaries and place the attorney in the position of potential liability to either the beneficiaries disinherited or to the potential beneficiaries of the new will. Under Chang’s argument Lederman would have conflicting duties to her and Schumert’s son, the expressly named primary beneficiary of Schumert’s estate.
Nor could Chang claim intentional infliction of emotional distress. Such a claim consists of extreme and outrageous conduct by the defendant with the intent to cause, or reckless disregard for the probability of causing, emotional distress; suffering of severe or extreme emotional distress by the plaintiff; and that the plaintiff’s emotional distress is actually and proximately the result of defendant’s outrageous conduct. Extreme and outrageous conduct is conduct that is so extreme as to exceed all bounds of that usually tolerated in a civilized community and must be of a nature especially calculated to cause, and does cause, mental distress. The court makes the initial determination as to whether the defendant’s conduct may reasonably be regarded as so extreme and outrageous as to permit recovery.
Chang was never Lederman’s client and he had no duty to provide legal advice to her as Schumert’s widow. Thus, none of the conduct alleged could reasonably be regarded as extreme or outrageous. Lederman took actions as counsel for the successor trustee consistent with the express terms of the trust. Lederman had no duty to advise Chang about her rights as Schumert’s surviving spouse. In addition Lederman’s letter to Chang advising her to vacate the house was absolutely protected under the litigation privilege because it was sent to further the objectives of the probate proceedings.
Comment: Exceptions to the rule that an attorney’s primary duty is to the client are narrowly construed.