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RATHBLOTT v. LEVIN

October 24, 1988

ELIZABETH RATHBLOTT, Executrix of the Estate of ALBERT RATHBLOTT, Deceased, and ELIZABETH RATHBLOTT, individually, Plaintiffs,
v.
JAY F. LEVIN, Defendant



The opinion of the court was delivered by: GERRY

 This legal malpractice action arose out of a dispute over a will executed by the decedent, Albert Rathblott. Mr. Rathblott practiced law in New Jersey for 40 years, maintaining offices in Camden and Haddonfield. The defendant, Jay F. Levin, joined Mr. Rathblott's practice in 1973, and became a partner in 1974.

 Mr. Rathblott suffered from esophageal cancer for approximately ten years before his death on October 19, 1979. He was survived by his third wife, plaintiff Elizabeth Rathblott, and two adult children by his first marriage, Paul Rathblott and Iris Rathblott Bennett. Mr. Rathblott had executed his first will in 1963. He added a codicil in 1973, which made a specific bequest of $ 10,000 to Elizabeth.

 Mr. Rathblott entered the hospital on October 8, 1979, and remained there until his death 11 days later. During that time, Mr. Rathblott executed several wills with the aid of his partner, the defendant. The last will, executed on October 17, was unsuccessfully challenged in New Jersey state court by Paul Rathblott and Iris Rathblott Bennett. Elizabeth Rathblott, the successful defendant in that suit, has now brought a complaint against Levin, alleging the defendant was negligent in failing to firmly establish Mr. Rathblott's testamentary capacity and free will in his last days, and negligent in not advising Mr. Rathblott that his will should recite a New Jersey domicile, rather than a Florida domicile. Plaintiff urges that this negligence caused her expenses in defending the will contest to be at least double what they should have been, with the effect of depleting her husband's estate. Defendant argues that he properly exercised that degree of reasonable knowledge and skill ordinarily possessed and exercised by attorneys in similar circumstances, and that even if he acted negligently, the beneficiary Elizabeth Rathblott was not in privity with him and cannot show that defendant caused her expenses in contesting the will to inflate.

 This case was originally brought before Senior District Judge Cohen and went to trial on June 6, 1988. On June 9, plaintiff's counsel sought to introduce evidence of a conspiracy between defendant and Paul Rathblott and Iris Rathblott Bennett. Defendant immediately objected, claiming unfair surprise. The parties' inability to settle the dispute led Judge Cohen to declare a mistrial. The case was then transferred to this court.

 Plaintiff and defendant both argue at length in their briefs on the issue of whether defendant's actions in drawing up the decedent's last will were negligent. Plaintiff points to facts that suggest that during his last week of life decedent was increasingly dependent and acted "in an atmosphere of chaos and confusion." Defendant points to other facts which suggest the opposite. Similarly, both sides have submitted letters from experts regarding the propriety and competence of defendant's actions. These issues of material fact preclude the issuance of summary judgment on the issue of defendant's negligence. F.R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 Nevertheless, defendant also argues that he owed no duty to any of the beneficiaries of decedent's will, particularly plaintiff's, because he was not in privity with them.

 This court has jurisdiction over this case pursuant to its diversity jurisdiction. 28 U.S.C. § 1332. As such, we apply state law, in this case New Jersey law, to determine whether defendant owed a duty to the beneficiaries of his dying client. Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 82 L. Ed. 1188, 58 S. Ct. 817 (1938).

 The issue of privity is a troubling one in this case, for it presents an issue not treated in any case, to our knowledge. Should an attorney who drafts 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? It is incumbent upon this court to review New Jersey law and predict how the New Jersey Supreme Court would rule if presented with this issue. Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). In so doing, we are mindful of the admonition that "the federal court should proceed with great caution when the effect of its ruling would be to broaden the law beyond the point where any other court has yet ventured." W.A. Wright, Inc. v. KDI Sylvan Pools, Inc., 746 F.2d 215, 218 (3d Cir. 1984).

 The question of privity in the context of attorney/beneficiary suits was first addressed in New Jersey in Stewart v. Sbarro, 142 N.J. Super. 581, 362 A.2d 581 (App. Div.), cert. denied, 72 N.J. 459, 371 A.2d 63 (1976). The negligence in that case was that of an attorney for a buyer who had failed to obtain the needed signatures to execute a mortgage, and been sued by the seller. The Sbarro court stated that while it was "true that generally an attorney is not liable to third persons for negligence in the performance of his professional duties . . ., this rule is not all encompassing." Id. at 593, 362 A.2d at 588. Therefore, when "an attorney undertakes a duty to one other than his client, he may be liable for damage caused by a breach of that duty to a person intended to be benefited by his performance." Id. Whether such a duty existed should be determined by 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.

 Id., quoting Biakanja v. Irving, 49 Cal. 2d 647, 650, 320 P.2d 16 (1958). This rule was invoked in Albright v. Burns, 206 N.J. Super. 625, 503 A.2d 386, 389 (App. Div. 1986), to find liability on the part of attorneys who engaged in a collusive arrangement to sell some of a decedent's assets for their own purposes, thereby depriving the beneficiaries. Id. Finally, in R.J. Longo Construction Co., Inc. v. Schragger, 218 N.J. Super. 206, 527 A.2d 480 (App. Div. 1987), an attorney who had negligently failed to obtain easement rights for a municipality was held liable to a successful bidder for construction of a sewer facility. The Schragger court simplified the test for surmounting the privity requirement through reliance:

 
(1) the extent to which [the attorney/client relationship] was intended to affect the plaintiff; (2) the foreseeability of reliance by the plaintiff and the harm it could thereby suffer; (3) the degree of certainty that plaintiff has been harmed; and (4) the need from a public policy standpoint of preventing future harm without unduly burdening the profession.

 Id. at 209, 527 A.2d at 481. The court added, in dicta, that "the need to establish privity by third parties in claims against a professional, such as an attorney, or indeed in the field of tort liability, may have outlived its usefulness." Id. at 208-09, 527 A.2d at 481. Nevertheless, the court ...


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