Opinion
No. 2-813 / 02-0037
Filed September 10, 2003
Appeal from the Iowa District Court forBooneCounty,Stephen P. Carroll, Judge.
Plaintiff appeals from the summary judgment ruling that dismissed her legal malpractice action. AFFIRMED.
Kathryn S. Barnhill and Cynthia A. Miller of Barnhill Associates, P.C., West Des Moines, for appellant.
John A. McClintock and Aaron T. Oliver of Hansen, McClintock Riley, Des Moines, for appellee.
Heard by Sackett, C.J., and Miller and Eisenhauer, JJ.
Jan Mills appeals from the district court summary judgment ruling that dismissed the legal malpractice action she filed against Jordan, Mahoney Jordan, P.C. We affirm.
Background Facts and Proceedings . Jan Mills and Wilford T. Aspholm married in 1990. Aspholm died testate in 1997. After deductions for mortgages and estimated debts, Aspholm's estate was valued at just over $2,500,000. The estate was probated under a will Aspholm executed in 1994. The 1994 will primarily served to incorporate the terms of Aspholm's 1990 will and two subsequent 1990 codicils. All four testamentary instruments were prepared by Aspholm's long-time attorney Richard Jordan, a partner in the law firm of Jordan, Mahoney Jordan, P.C. (hereinafter collectively referred to as Jordan).
In addition to Mills, the 1994 will made bequests to Marjorie Odell, Aspholm's daughter from a previous marriage, and Odell's children, Tami and Thomas Odell (the grandchildren). Under Articles III and IV of the will, Mills received the homestead and various items of personal property. Under Article V, Aspholm's shares of International Valve Corporation stock were bequeathed one-half to Mills and one-half to the grandchildren. Article VI contained the following bequest to Odell and the grandchildren:
I will and bequeath to my daughter and my grandchildren a sum of money equal to the maximum amount that considering the unified credit and credit for state death taxes (except to the extent that state death taxes are hereby increased) would result in no federal estate tax payable by reason of my death less the aggregate amount of money they receive as beneficiaries on any life insurance policy which is included as an asset of my estate for federal tax purposes. Such sum of money shall be distributed as follows: 50% thereof to my daughter and 50% thereof to my grandchildren in equal shares. However, the share of this bequest to my grandchildren shall be reduced by an amount equal to the value of the shares of International Valve Corporation bequeathed to them, pursuant to the provision contained in the preceding Article of this will, and the share passing to my daughter shall be increased by the amount of the reduction of the share passing to my grandchildren. If the value of the shares of International Valve Corporation received by my grandchildren exceeds one-half of the maximum amount of the unified credit and credit for state death taxes, the bequest to my grandchildren contained in this Article shall then be null and void, and my daughter shall then receive 100% of the bequest contained in this Article.
Article VII then directed that all "inheritance, estate and succession or other similar taxes," whether those taxes were against the estate or the beneficiaries, were to be paid from the balance of the estate or, in the case of any generation-skipping tax, be charged against the relevant property.
Article VIII created a "Martial Trust," funded by the remainder of Aspholm's estate. Mills was to receive the net income of the trust during her lifetime, and the trustee had the discretion to invade the trust principal for Mills's "health, education, support and maintenance." Upon Mills's death the trust principal was to be distributed fifty percent to Odell and fifty percent to the grandchildren. Article VIII unequivocally stated Aspholm's intent that the trust was to qualify for the federal estate tax martial deduction, and directed that the provisions of the will were to be construed, and the trust to be administered, in such a manner that the trust would qualify for the deduction.
Mills elected to take under the will. Although none of the estate beneficiaries contested the will, a dispute arose over how certain debts and charges against the estate were to be paid. The executor filed an application to construe the terms of the will, and soon reached a settlement with Mills, Odell and the grandchildren. The district court approved the settlement, which not only resolved the dispute over payment, but altered Aspholm's testamentary bequests.
Under the settlement agreement Odell and the grandchildren took, collectively, just over $1,000,000. This was $112,000 more than they would have taken outright under the will. In addition to the proceeds of a life insurance policy payable to Odell, and the grandchildren's one-half of the International Valve Corporation stock, Odell and the grandchildren collectively received the sum of $450,000. The disbursements to Odell and the grandchildren where explicitly exempted from estate tax obligations. The settlement agreement also terminated the martial trust, and provided for an outright distribution to Mills of the remaining net estate. After taxes, Mills received just over $1,250,000.
Mills then sued Jordan for malpractice. She claimed that Jordan had drafted the will in such a manner as to frustrate Aspholm's testamentary intent to avoid federal estate taxes. She sought to recoup the nearly $300,000 in taxes paid by the estate. Jordan filed a motion for summary judgment, seeking dismissal of Mills's petition. The district court granted the motion, determining that Jordan did not owe a duty of care to Mills. Mills appeals.
Scope and Standard of Review . Summary judgment rulings are reviewed for the correction of errors at law. Iowa R.App.P. 6.4; General Car Truck Leasing Sys., Inc. v. Lane Waterman, 557 N.W.2d 274, 276 (Iowa 1996). Where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. Iowa R.Civ.P. 1.981(3); City of West Branch v. Miller, 546 N.W.2d 598, 600 (Iowa 1996). All facts are viewed in the light most favorable to the party opposing the motion for summary judgment. Bearshield v. John Morrell Co., 570 N.W.2d 915, 917 (Iowa 1997). Although summary judgment is improper where reasonable minds could differ on resolution of the matter before the court, Dickerson v. Mertz, 547 N.W.2d 208, 212 (Iowa 1996), no fact issue exists if the only dispute is over legal consequences flowing from undisputed facts. City of West Branch, 546 N.W.2d at 600.
Testamentary Intent . Although a lawyer generally owes a duty of care only to his or her client, an attorney who drafts a will owes a duty of care to not only the testator, but also "to the direct, intended, and specifically identifiable beneficiaries of the testator as expressed in the testator's testamentary instruments." Schreiner v. Scoville, 410 N.W.2d 679, 681-82 (Iowa 1987). As expressed by the clear terms of the will, Mills was a "direct, intended, and specifically identifiable" beneficiary of Aspholm. We therefore cannot agree with the district court's conclusion that Jordan owed no duty of care to Mills. For the reasons that follow, however, we nevertheless concur in the court's ultimate decision to grant summary judgment. See In re Estate of Voss, 553 N.W.2d 878, 879 n. 1 (Iowa 1996) (holding appellate court may affirm "on any basis appearing in the record and urged by the prevailing party").
In its motion for summary judgment and its supporting brief the defendant did urge the basis upon which we affirm the trial court.
A nonclient, testamentary beneficiary cause of action for professional liability
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.
Schreiner, 410 N.W.2d at 683 (emphasis added and citations omitted).
Under this standard, we are guided by Aspholm's testamentary intent as that intent is expressed in his uncontested, probated, and therefore valid, will. Mills urges us to consider deposition testimony and other evidence that she contends creates a factual dispute on the issue of testamentary intent. However, "[e]xtrinsic evidence cannot be used to supply the intent element where the will does not." Holsapple v. McGrath, 575 N.W.2d 518, 521 (Iowa 1998). AccordKinney v. Shinholser, 663 So.2d 643, 645 (Fla.Ct.App. 1995) ("to allow such evidence would dramatically increase the risk of misinterpreting the testator's intent, as well as heightening the tendency to manufacture false evidence which could not be rebutted due to the unavailability of the testator"). We therefore limit out analysis to the clear and unambiguous language of Aspholm's will.
Nothing in the will indicates that Aspholm intended his entire estate to pass free from federal estate tax. While he did include provisions intended to allow his executor to qualify any or all of the residue of his estate for the federal estate tax marital deduction, that intent and the executor's ability to do so were frustrated not by Jordan, but by the family settlement which terminated the martial trust. As for Aspholm's pre-residue bequests to persons other than his spouse, the will demonstrates his intent, not that those bequests be free from federal estate tax, but that those bequests be made while assuring full use of the unified credit.
There is no dispute that Aspholm intended fifty percent of his International Valve Corporation stock to pass to his grandchildren, and that it was this bequest that triggered some federal estate tax liability under the will. While Article VI makes full use of the unified credit, the will does not limit the stock bequest to the grandchildren so that it and the bequest of money to Odell and the grandchildren (together with any life insurance policies included for federal estate tax purposes) do not exceed the amount of the unified credit. Nor does the will demonstrate an intent to avoid estate taxes on property bequeathed to Odell and the grandchildren by using some device other than the unified credit. Rather, the possibility of estate taxes being triggered by these bequests is acknowledged, and any burden of those taxes is assigned to the residue of the estate, in Article VII.
Mills would have us infer an overall intent to minimize estate taxes that goes beyond the provisions of Aspholm's will. In ruling on a motion for summary judgment the court must consider on behalf of an opposing party every legitimate inference that can be reasonably deduced from the record. McIlravy v. North River Ins. Co., 653 N.W.2d 323, 328 (Iowa 2002). However, an inference is not legitimate if it is based on speculation or conjecture. Id. Here, any inference that Aspholm's intent concerning federal estate taxes was other than as expressed in his will would be based on speculation and conjecture, and thus not a legitimate inference which would preclude summary judgment.
There is no substantial evidence that any act by Jordan frustrated Aspholm's testamentary intent. Thus, Mills can have no professional liability cause of action against Jordan. Cf. Schreiner, 410 N.W.2d at 683 (finding cause of action would lie where will and codicil drafted by counsel specifically devised one-half of certain real property to plaintiff, and then same counsel brought a partition action that resulted in the sale of the subject property, which caused the devise to adeem). The district court did not err in granting Jordan's motion for summary judgment.