Opinion
No. 56887-6-I.
October 2, 2006.
Appeal from judgments of the Superior Court for King County, No. 05-2-03739-3, Richard A. Jones, J., entered August 19 and November 2, 2005.
Counsel for Appellant(s), Robert B. Gould, Attorney at Law, 2110 N Pacific St Ste 100, Seattle, WA, 98103-9181.
Mark K Funke, Funke PS, 1411 E Olive Way, Seattle, WA, 98122-2127.
Counsel for Respondent(s), John Forsythe Jenkel, Forsberg Umlauf, 900 4th Ave Ste 1700, Seattle, WA, 98164-1039.
Susan Kathleen Mcintosh, Forsberg Umlauf, 900 4th Ave Ste 1700, Seattle, WA, 98164-1050.
Affirmed by unpublished opinion per Agid, J., concurred in by Appelwick, C.J., and Dwyer, J.
Jannelle Deigh Adams, a beneficiary of the Deigh estate, sued Roberta Deigh, the estate's original personal representative, for misappropriation of estate assets and breach of fiduciary duties. The court appointed Adams the successor personal representative. The parties settled before trial. In their settlement agreement, Roberta assigned her legal malpractice claims against Matthew Perkins, the attorney she hired while serving as personal representative to the Deigh estate, in return for Adams' agreement not to execute on the judgment against her. Adams then brought a legal malpractice and breach of fiduciary duty claim against Perkins. The trial court dismissed Adams' claims on summary judgment because she lacked standing and the legal malpractice claim could not be assigned. Adams argues she did have standing because Perkins owed a duty to the estate. She also asserts the legal malpractice claim could be assigned because Roberta assigned it to the estate, which was not an adversary in a previous action. Finally, she contends the trial court erred by striking declarations she presented in opposition to Perkins' summary judgment motion and by denying her motion for reconsideration.
The trial court properly dismissed Adams' case for lack of standing because, under the holding in Trask v. Butler, an attorney for a personal representative of an estate has no duty to the estate or its beneficiaries. Likewise, under the holding in Kommavongsa v. Haskell, Roberta could not assign her legal malpractice claims against Perkins. Finally, the court was within its discretion when it granted Perkins' motion to strike Adams' declarations and denied Adams' motion to reconsider.
We affirm.
FACTS
In July 2001, Guilhermina Deigh (Deigh) hired Matthew Perkins (Perkins) to prepare her will. Deigh executed her Last Will and Testament and a Durable General Power of Attorney on August 7, 2001, naming her step-granddaughter Roberta Deigh (Roberta) her attorney-in-fact for financial and health care matters. At that time, Roberta became a signatory on Deigh's bank accounts. In her will, Deigh appointed Roberta as her personal representative and Matthew Perkins the alternative personal representative. She left her home and its contents to her two stepsons, and the residue to her nine step-grandchildren in equal shares. Deigh died on February 20, 2002.
The residue of her estate consisted of: (1) three accounts at the Queen Anne Branch of Wells Fargo, (2) an annuity contract from Nationwide Life Insurance Company (a non-probate asset), and (3) a diamond ring.
Roberta then hired Perkins to represent and advise her in probating Deigh's estate. On April 2, 2002, Perkins mailed a Notice of Appointment and Pendency of Probate to the estate beneficiaries along with a letter and copy of Deigh's will. This letter told the beneficiaries Roberta was the personal representative of the estate and that she had retained Perkins' firm to handle the administration of the estate.
Before Deigh's death, Roberta withdrew $117,937.73 from Deigh's bank accounts for her own use. After Deigh's death, Perkins drafted an agreement to transfer the proceeds of an annuity worth approximately $208,086.80, from the annuitant who held the funds in constructive trust for the beneficiaries of Deigh's will, to Roberta. She used $196,086 from this annuity as her own assets. Roberta also transferred some of the assets to her sisters, Roxanne and Renee who were beneficiaries of Deigh's estate, and others. Roberta closed the estate on May 30, 2003. In early June 2003, Jannelle Deigh Adams received a Notice of Completion of Probate from Roberts and two checks totaling $1,000: one check for $728 was designated as a "gift" and the second check for $272 was described as the entire distribution from the estate.
Adams challenged the closure of the estate and demanded an accounting. Roberta failed to appear at the first hearing, and the court revoked her nonintervention powers and ordered her to provide a full accounting. In November 2003, Adams brought an action under RCW 11.96A, the Trusts and Estates Dispute Resolution Act (TEDRA), and petitioned for Roberta's removal as personal representative. The court found Roberta faithless and derelict in her duties, "giving the court reason to believe that [Roberta] had wasted or mismanaged the estate." It held that Adams made a prima facie case against Roberta for neglecting her statutory and fiduciary duties to the estate by ignoring Adams' requests for information and not communicating with Perkins.
Perkins stated he advised Roberta, both verbally and in writing, of her obligations as personal representative, her fiduciary duties to the estate and the estate beneficiaries, and the consequences of breaching these duties. He also advised her to open an estate bank account for all estate-related financial transactions and keep good financial records. He told Roberta she might need to hire an accountant, encouraged her to call him for assistance with any matters related to the estate, and reminded her of the tasks to be completed. Perkins also said he questioned and counseled Roberta about some of her transactions after he learned that she had not opened an estate bank account.
Adams notified Roberta that she would begin collection activities against Roberta and the third parties to whom she had transferred estate assets. In August 2004, the court removed Roberta as personal representative of the Deigh estate. In its order, the court ruled that Roberta's interests were "directly adverse to the interest of the estate." The court disqualified Perkins from acting as personal representative because he had represented Roberta and appointed Adams the successor personal representative.
The case was scheduled for trial on October 18, 2004. On October 14, Roberta settled with Adams and the estate, acknowledging that the court would likely find the bank accounts and annuity proceeds were assets of the estate. The written settlement agreement provided that judgment would be entered against Roberta for all amounts sought in the lawsuit. Adams agreed not to execute on the judgment so long as Roberta waived attorney-client privilege between herself and Perkins, assigned any potential claims against Perkins to Adams, and cooperated with Adams in any lawsuit against Perkins under the assignment. In return, Adams was to file a Full Satisfaction of Judgment in favor of Roberta at the conclusion of all litigation Adams pursued against Perkins. Adams also agreed to file a Full Satisfaction of Judgment three years after the date of the agreement if the estate filed no litigation. The parties jointly petitioned the court to approve the settlement. The court approved it and entered judgment against Roberta on November 23, 2004, for $314,024.53 plus interest at 12 percent from May 6, 2002.
The settlement agreement also stated that Roberta's total assets were less than $10,000.
Adams filed suit against Perkins on January 27, 2005, alleging legal malpractice in his representation of Roberta as personal representative of the Deigh estate and breach of fiduciary duties owed to Roberta and to the estate. Perkins filed a summary judgment motion on the ground that Adams lacked standing to sue. Adams filed declarations from Roberta Deigh, attorney Theresa Schrempp, and expert witnesses Evan O. Thomas and Robert B. Gould. Perkins filed a motion to strike Adams' declarations as irrelevant and not based on personal knowledge. Adams did not file a response to Perkins' motion to strike.
Schrempp's declaration described her involvement as the attorney for the Deigh estate leading up to the TEDRA settlement. In Thomas' declaration, he opined that Perkins' representation failed to meet the standard of care.
On August 15, 2005, the trial court granted Perkins' motion to strike without oral argument. On August 18, the court granted Perkins' summary judgment motion on the grounds that Adams lacked standing and that her claim was based on a prohibited assignment of a legal malpractice claim. Adams filed a motion for reconsideration, arguing the motion to strike was untimely. The court denied Adams' motion for reconsideration.
DISCUSSION
Appellate courts review summary judgments de novo, engaging in the same inquiry as the trial court. Summary judgment is proper if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The motion should be granted if, after reviewing all the evidence, a reasonable person could reach only one conclusion. We consider all the facts and reasonable inferences from them in the light most favorable to the moving party. We review issues of law de novo.
Shaffer v. McFadden, 125 Wn. App. 364, 367, 104 P.3d 742, review denied, 155 Wn.2d 1010 (2005) (citing Van Noy v. State Farm Mut. Auto. Ins. Co., 142 Wn.2d 784, 790, 16 P.3d 574 (2001)).
CR 56(c); Bank of Am. v. David W. Hubert, P.C., 153 Wn.2d 102, 111, 101 P.3d 409 (2004).
Trimble v. Wash. State Univ., 140 Wn.2d 88, 93, 993 P.2d 259 (2000) (citing Clements v. Travelers Indem. Co., 121 Wn.2d 243, 249, 850 P.2d 1298 (1993)).
Id. (citing Clements, 121 Wn.2d at 249.)
M.W. v. Dep't of Soc. Health Servs., 149 Wn.2d 589, 595, 70 P.3d 954 (2003).
Adams challenges the trial court's order on three grounds, none of which is persuasive. First, she argues she has standing because Perkins had a duty as a fiduciary to the estate and its heirs. She asserts that case law after Trask v. Butler conferred standing in this case. Second, she argues the assignment was not prohibited because Roberta assigned her claim to the estate, a separate legal entity. Finally, she argues the court's order approving the settlement agreement conferred standing and directed the parties to assign the malpractice claim.
Standing
Adams argues summary judgment on the standing issue was improper because the court failed to apply the six-factor balancing test enunciated in Trask v. Butler to determine whether Perkins owed a duty to the Deigh estate beneficiaries. She asserts Trask was modified by In re Guardianship of Karan and Estate of Treadwell v. Wright, cases which described circumstances under which a duty could arise between an attorney for a guardian and a non-client ward. She asks us to adopt the holding in Borissoff v. Taylor Faust, a California case that permitted the successor fiduciary of an estate in probate to bring a professional negligence claim against counsel hired by the predecessor personal representative.
123 Wn.2d 835, 872 P.2d 1080 (1994).
110 Wn. App. 76, 38 P.3d 396 (2002).
115 Wn. App. 238, 61 P.3d 1214, review denied, 149 Wn.2d 1035 (2003).
33 Cal. 4th 523, 93 P.3d 337 (2004).
The facts in this case are virtually the same as those in Trask v. Butler. There, the original personal representative, Laurel Slaninka, was removed as personal representative and her brother, Russell Trask, sued her for breach of her fiduciary duties. As part of the settlement, Laurel assigned to Russell her claims against Richard Butler, the attorney she hired to assist her as attorney-in-fact and personal representative for the estate. Trask, as the successor personal representative, then sued Butler. The Supreme Court held an attorney hired by the personal representative of an estate does not owe a duty to the estate or to the estate beneficiaries.
Id.
Id.
Id. at 845.
The Trask court adopted a new test to determine whether an attorney owed a duty to a non-client. This test combined two earlier tests, the multifactor balancing test and the third party beneficiary test, creating a modified multifactor balancing test. The Trask test begins with a threshold inquiry into the extent to which the acts in question were intended to benefit the non-client plaintiff. If the court finds the requisite intent, it goes on to determine the extent to which the attorney owed a duty to the plaintiff by analyzing five factors: (1) the foreseeability of harm to the plaintiff, (2) the degree of certainty that the plaintiff suffered injury, (3) the closeness of the connection between the defendant's conduct and the injury, (4) the policy of preventing future harm, and (5) the extent to which liability would unduly burden the profession.
Id.
Trask, 123 Wn.2d at 843.
Applying this new test, the Trask court held an attorney hired by a personal representative of an estate does not owe a duty to the estate or the estate beneficiaries. The attorney did not owe a duty to the estate beneficiary because
Id. at 845.
(1) the estate and its beneficiaries are incidental, not intended, beneficiaries of the attorney-personal representative relationship; (2) the estate heirs may bring a direct cause of action against the personal representative for breach of fiduciary duty; and (3) the unresolved conflict of interest an estate attorney encounters in deciding whether to represent the personal representative, the estate, or the estate heirs unduly burdens the legal profession.
Id. (emphasis omitted.)
Courts have found a duty to non-clients using the Trask test in limited circumstances, particularly when an attorney's services are intended to benefit an individual who was unable to protect him or herself from an attorney's actions. Adams relies on two guardianship cases. In In re Guardianship of Karan, the court held a ward who sued her guardian's attorney for failing to satisfy the statutory bond requirements under RCW 11.88.100 and .150 had standing. Applying Trask, the Karan court held the attorney's representation was intended to benefit the child because the primary reason for the representation was to preserve the child's property. The court then analyzed the remaining Trask five factors and found that the attorney owed the child a duty of care. In Estate of Treadwell v. Wright, the court also held the attorney for a guardian owed a duty to the ward, an incompetent adult, as a matter of law for failing to satisfy the statutory requirements for guardianship orders. But the rationale for the Karan and Treadwell decisions do not apply here because Roberta hired Perkins to protect her own interests, and the estate beneficiaries were capable of protecting themselves.
Karan, 110 Wn. App. at 85.
Id. at 86. The Karan court held that the attorney's failure to follow the statute caused foreseeable harm to the ward. It was likely that the ward would be harmed by the attorney's failure to ensure that the guardian posted a bond or deposited the proceeds of the child's father's estate in a blocked account, as required by statute. The harm caused by the attorney's failure to follow the statutory safeguards gave rise to this duty because of the special vulnerability of legally incompetent individuals and because a direct action was an empty remedy given the attorney's failure to ensure that a bond was in place. This duty did not unduly burden the profession because, unlike a personal representative of an estate and the estate's beneficiaries who are "frequently at odds" and likely "legal adversaries," conflicts do not typically arise in cases of vulnerable wards. Id.
115 Wn. App. 238, 61 P.3d 1214, review denied, 149 Wn.2d 1035 (2003).
Nor do the lawyer discipline cases Adams cites, such as In re Disciplinary Proceeding Against Vetter, 104 Wn.2d 779, 711 P.2d 284 (1985), and In re Estate of Larson, 103 Wn.2d 517, 694 P.2d 1051 (1985), apply because these cases preceded Trask. Cummings v. Guardianship Svcs. of Seattle, 128 Wn. App. 742, 757, 110 P.3d 796 (2005) (citing Trask, 123 Wn.2d at 845), review denied, 157 Wn.2d 1006 (2006).
Trask is the controlling law in this case. Perkins owed no duty to the estate or its beneficiaries. Roberta hired Perkins solely to advise her as the personal representative of the Deigh estate, a role in which she was a potential legal adversary to the estate beneficiaries for all of the reasons discussed in Trask. If we were to hold that Perkins could be liable to parties adverse to his client, the obvious inherent conflict would create an undue burden on the legal profession. That Roberta is judgment proof is immaterial to the Trask analysis. We hold the trial court properly dismissed Adams' case for lack of standing because under Trask an attorney for a personal representative of an estate has no duty to the estate or the estate's beneficiaries.
Further, because the court found Roberta failed to follow the advice of counsel, Adams cannot establish that Perkins' actions were the cause of the estate's harm. Roberta's misappropriation and breach of fiduciary duties both before and after Deigh's death caused the damage.
Adams reliance on Borisoff is misplaced. The court in Borisoff recognized the Trask decision but held it did not apply because successor fiduciaries have different rights under the California Probate Code. They have the same powers and duties as their predecessors, including the power to sue for malpractice harming the trust. The Washington Probate Code does not contain an equivalent provision. Trask is the law in Washington.
Assignment of Legal Malpractice Claims
Adams also argues the trial court erred by dismissing her case based on the holding in Kommavongsa v. Haskell, which prohibits adversaries from assigning legal malpractice claims to each other. She asserts the case does not apply because Roberta assigned her legal malpractice claim to the estate, which is a separate legal entity. We disagree.
In Kommavongsa, the plaintiff-guardians sued the driver of a car for damages on behalf of the injured passengers. The defendant-driver allowed them to take a default judgment against him. He was judgment proof. He assigned to the plaintiffs his legal malpractice claim against his attorney and agreed to help them pursue the claim. In exchange, the plaintiff-guardians agreed not to execute on the judgment against him. The court ruled that assignments between adversaries would give rise to conflicts of interest and could harm the legal profession by making lawyers reluctant to represent potentially judgment-proof clients. While Roberta's assignment was to the estate rather than to Adams, her assertion that the assignment was not between adversaries is specious. Adams was the successor personal representative of the estate when she settled the TEDRA claim against Roberta. Further, Roberta assigned her potential legal malpractice claims to the estate solely to avoid having judgment entered against her. We agree with the trial court that Roberta could not assign her legal malpractice claims to the estate for the reasons enunciated in Kommavongsa.
Id. at 292.
Id. at 293.
Id.
Court Approved Settlement
Adams also argues the trial court's order approving the settlement agreement between Adams and Roberta directs her to assign her legal malpractice claim to Adams and grants her standing. We disagree. Even if the trial court's order had included such a direction, it is valid only to the extent it conforms to Washington law. Because Trask and Kommavongsa control the legal issues in this case and neither confers standing or a valid cause of action, that order has no effect on the analysis here.
Exclusion of Evidence
Adams challenges the trial court's orders striking the declarations she presented in opposition to Perkins' summary judgment motion and denying her motion for reconsideration of this ruling. She asserts the court erred because it ruled on Perkins' motion three days after the motion was filed, violating CR 6(d)'s five-day filing requirement. She also argues the court prejudiced her by striking evidence relevant to her arguments concerning Perkins' liability under Trask. Perkins argues his motion to strike was timely because he served it five days before the scheduled hearing and asserts the court was not required to consider inadmissible evidence when deciding his summary judgment motion. We agree.
Trial court rulings on the admissibility of evidence and motions for reconsideration are reviewed for an abuse of discretion. A court abuses its discretion if its decision is manifestly unreasonable or is based upon untenable grounds.
Int'l Ultimate v. St. Paul Fire Marine, 122 Wn. App. 736, 744, 87 P.3d 774 (2004) ("A trial court's decision to admit or exclude evidence lies within its sound discretion."), review denied, 153 Wn.2d 1016 (2005); Rivers v. Wash. State Conference of Mason Contractors, 145 Wn.2d 674, 685, 41 P.3d 1175 (2002) (motions for reconsideration are reviewed for an abuse of discretion).
Wash. State Physicians Ins. Exch. Ass'n v. Fisons Corp., 122 Wn.2d 299, 339, 858 P.2d 1054 (1993).
Because the original hearing was scheduled for August 19, Perkins filed his motion to strike on time under CR 6(d) and CR 56(c) even though the court decided the case a day before the scheduled hearing. We also hold that the trial court did not abuse its discretion by striking Adams' declarations and denying her motion for reconsideration because the issues of standing and the validity of her legal malpractice claim were issues of law under the holdings in Trask and Kommavongsa.
Under CR 6(d), "a written motion, other than one which may be heard ex parte, and notice of the hearing thereof shall be served no later than 5 days before the time specified for the hearing, unless a different period is fixed by these rules or by order of the court." CR 56(c) states "[t]he moving party may file and serve any rebuttal documents not later than 5 calendar days prior to the hearing."
We affirm.
DWYER and APPELWICK, JJ., Concur.