June 27, 2007
CARL TORBAN, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF ALBIE J. TORBAN AND LOLA R. TORBAN, DECEASED, PLAINTIFF-APPELLANT,
OBERMAYER REBMANN MAXWELL & HIPPEL AND KIMBERLY J. SCOTT, DEFENDANTS-RESPONDENTS.
On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3406-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 6, 2007
Before Judges Skillman, Lisa and Grall.
This appeal is from the dismissal of a legal malpractice case. Plaintiff Carl Torban, individually and as executor of the estates of his parents Albie J. and Lola R. Torban, appeals from final orders granting summary judgment in favor of defendants Kimberly J. Scott and Obermayer, Rebmann, Maxwell & Hippel, L.L.P. (Obermayer), the law firm through which Scott practiced law. Because Scott and Obermayer owed no duty to provide estate-planning advice to plaintiff or Albie following Lola Torban's death, we affirm.*fn1
On December 17, 1996, Obermayer assigned Scott to revise the estate plan for its clients Albie and Lola Torban. She prepared wills and powers of attorney. By letter dated January 23, 1997, she sent these documents to the Torbans and advised them to consider establishing trusts in order to minimize taxes on the estate of the surviving spouse.
At the Torbans' request, Scott revised the wills to include the trusts. By letter dated February 13, 1997, she sent the revised documents and explained the need for the Torbans to take additional steps to reallocate their holdings. That advice was as follows:
Both of your Wills were revised in accordance with my recommendation that you create tax-saving credit shelter trusts.
[T]hese trusts will be funded with assets up to $600,000 in value, and will be held outside the estate of the surviving spouse.
In order to have assets available to fully fund the trust at the death of the first spouse to die, it is important that you have assets divided and held in your sole names.
You have indicated that most of your assets are held jointly. Any assets held jointly will pass to the surviving spouse by operation of law and will not be available to fund the credit shelter trust. Please send me a detailed list of your assets, how they are titled and approximate values so that I may assist you in dividing the assets. Remember, if you leave your assets in joint names, all of the tax planning that you are doing will be irrelevant.
On March 20, 1997, Scott supplemented that advice with recommendations for division of specific assets and an additional warning that "the planning will not be effective until you take the next 'step' and divide your jointly-held assets." Scott specifically referenced an equal division of Torbans' Vanguard mutual funds and "transfer [of] two of the Crusader certificates of deposit into Mrs. Torban's sole name . . . ."
Although the Torbans executed the wills on May 9, 1997, they did not divide their assets in accordance with Scott's recommendations.
Lola died on September 22, 1998. There is no dispute that the attorney-client relationship between Scott, Obermayer and the Torbans terminated before Lola's death when the wills were signed. That point was conceded below at oral argument on the motion for summary judgment.
Although Scott wrote one letter identifying herself as the attorney representing Albie, individually, and plaintiff, as executor of his mother's will, there is no agreement or letter memorializing her undertaking of a duty of representation after Lola's death. Obermayer concedes that plaintiff retained the firm to handle the administration of his mother's estate.
Obermayer took steps to probate the will and administer the estate. Consistent with the terms of Lola's will, plaintiff served as executor because his father was suffering from senior dementia and had been admitted to an assisted-living facility within days of his wife's death. On October 5, 1998, Scott filed Lola's will for probate, and, by letter dated January 22, 1999, Scott wrote to plaintiff and asked him to submit information about Lola's assets so that she could assist him in administering Lola's estate. On March 4, 1999, plaintiff, with the assistance of an accountant he had retained in connection with the estate work, gave Obermayer the information.
Because plaintiff did not agree to pay the fee requested for additional legal services, on April 8, 1999, Obermayer sent plaintiff a bill for services rendered and a letter terminating its representation. The text of the letter follows:
It has become apparent that you no longer wish to avail yourself of our services. Accordingly, I enclose our statement for services rendered to date which I trust you will find satisfactory.
We greatly appreciate your calling upon us during the initial stages of the Estate.
In August 2000 Albie died and left an estate of approximately $1.5 million. Plaintiff subsequently filed the complaint in this action asserting that the tax owed on his father's estate was approximately $90,000 higher than it would have been but for defendants' negligence. Specifically, he contended that when his mother died, defendants had a duty to inform Albie and him about the estate tax savings that would follow on Albie's death if he disclaimed an interest in Lola's certificates of deposit within nine months of her death.
In general, "the requisite elements of a legal malpractice claim are: '(1) the existence of an attorney-client relationship creating a duty of care upon the attorney; (2) the breach of that duty; and (3) proximate causation.'" Estate of Fitzgerald
v. Linnus, 336 N.J. Super. 458, 467 (App. Div. 2001) (quoting Conklin v. Hannock Weisman, 145 N.J. 395, 416 (1996)); see Estate of Albanese v. Lolio, ___ N.J. Super. ___, ___ (App. Div. 2007) (slip op. at 12) (quoting Fitzgerald).
The question of duty is one of law. Albanese, supra, ___ N.J. Super. at ___ (slip op. at 14). And while an attorney- client relationship is generally required, absence of an attorney-client relationship is not determinative and does not end the inquiry. Fitzgerald, supra, 336 N.J. Super. at 468. A legal malpractice claim "by a non-client [is sustainable] where an independent duty is owed." Ibid. "Whether that duty exists is a question of law to be determined by the court, and ultimately turns on considerations of fairness and policy. The inquiry involves a weighing of the relationship of the parties, the nature of the risk, and the public interest in the proposed solution." Ibid. (internal quotations and citations omitted).
We consider first whether defendants had an attorney-client relationship with plaintiff or Albie giving rise to a duty to render advice on estate planning after Lola's death.
Albie did not have the requisite attorney-client relationship with defendants at the time of his wife's death or thereafter. The Torbans' attorney-client relationship with defendants, which included advice on estate planning, was terminated when they executed their wills. Plaintiff's attorney conceded that point below. The legal services were provided, but contrary to the clear legal advice about estate planning given on multiple occasions, the Torbans did not fund the tax-saving trusts established by the wills defendants prepared. They did not return for additional advice.
After his wife's death, Albie did nothing to re-establish his attorney-client relationship with defendants. Plaintiff, not Albie, contacted defendants for assistance in administering Lola's estate. Under these circumstances, plaintiff's request for legal services from defendants in connection with administering Lola's estate could not revive his father's status as a client of Scott or Obermayer. Accordingly, we conclude that Albie did not have an attorney-client relationship upon which defendants' duty could be founded.
In asserting that defendants had a continuing duty to advise Albie about his right to disclaim, plaintiff, as did his expert below, relies primarily upon Linck v. Barokas & Martin, 667 P.2d 171, 172-173 (Alaska 1983). That case is factually distinguishable and posed a different legal issue.
In Linck, the defendant law firm was "in the process of developing an estate plan" for the husband which was not complete when he died. Id. at 172. Under the will in place at the time of his death, Linck's entire estate, valued at three million dollars, passed to his wife. Ibid. His children were contingent beneficiaries. Ibid. Despite the defendant-firm's involvement in estate planning at the time of its client's death, the firm did not advise his wife of her ability to avoid future taxes on her estate by disclaiming part of her interest in her husband's estate. Id. at 173. On that basis, the plaintiffs alleged an ongoing attorney-client relationship with the deceased client's family with respect to estate planning.
In this case, there was no ongoing estate planning at the time of the death. The advice necessary to minimize taxes on the estate of the surviving Torban and the legal work essential to accomplishing that goal had been done long before Lola died. Albie and Lola either purposely rejected or negligently ignored that advice.
There is another reason for concluding that Linck is not pertinent. Linck was not decided on a motion for summary judgment, where evidence sufficient to permit a finding of duty is required. See Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The issue in Linck was whether the trial court erred in dismissing the complaint for failure to state a claim. Id. at 173-74. Noting the allegations of an ongoing attorney-client relationship with the Linck family relevant to estate planning, the Supreme Court of Alaska held that it was error to dismiss the complaint on the pleadings. Id. at 172-74. Linck does not support plaintiff's claim that Albie had an ongoing attorney-client relationship with defendant.
The evidence in this case is also inadequate to permit a finding of an attorney-client relationship between plaintiff and defendant that encompassed advice about his father's estate planning. It is undisputed that plaintiff retained the firm to probate his mother's will and assist him as its executor. His father's will was not at issue. Plaintiff's will was not at issue. In addition, plaintiff declined to pay a fee for services beyond the work completed, which led defendants to terminate representation. The evidence suggests nothing more than representation limited to plaintiff in his capacity as the executor of his mother's will. See Fitzgerald, supra, 336 N.J. Super. at 470-71 (discussing limited representation); cf. Albanese, supra, ___ N.J. Super. at ___ (slip op. at 24-26) (discussing representation pursuant to a retainer agreement referencing the executor in her individual capacity).*fn2
Having concluded that there is no basis for imposition of a duty based on attorney-client relationship, we consider whether a duty should be imposed based on considerations of fairness and policy. Fizgerald, supra, 336 N.J. Super. at 468. In Fitzgerald, this court considered the fairness of imposing a duty that would obligate an attorney retained to represent an estate to give estate-planning advice to a surviving spouse who also was the executrix. 366 N.J. Super. at 461. We wrote, "The suggestion that an attorney retained to represent an estate has an affirmative obligation to engage an executrix-wife in post-mortem estate planning fails to recognize the realities of the retention and that of a limited attorney-client relationship." Id. at 471. We held that the defendant lawyer retained to administer the estate of a former client -- a client who had intended to complete estate planning on his own but had not done so -- owed no duty to render estate-planning advice to the client's surviving spouse. Id. at 469-74. We recognized that the duty imposed on attorneys, like the degree of care, is "'considered . . . with reference to the type of service the attorney undertakes to perform.'" Id. at 467-68 (quoting Ziegelheim v. Apollo, 128 N.J. 250, 260 (1992) (discussing the contours of "reasonable care")).
We acknowledge that there are differences between this case and Fitzgerald. The surviving spouse in Fitzgerald had told the attorney that she intended to consult with someone who specialized in money management and had expressed her interest in prompt acquisition of the assets left to her. Id. at 470.
Albie expressed no similar intentions, but he had already received advice about allocating assets in order to minimize taxes on his estate in the event he survived Lola. Thus, he had declined, either affirmatively or by neglect, to take full advantage of the trusts provided in the wills defendants drafted and he and his wife executed.
The facts of this case clearly are not the same as those in Fitzgerald, but the differences do not favor imposition of a renewed duty to give estate-planning advice to a former client. In this case, the surviving spouse was not the executor and did not even contact the defendant-lawyers after his spouse's death. Thus, imposition of a duty would require attorneys retained to administer an estate to reach out to a former client who was not seeking additional representation and had not followed earlier advice. Neither fairness nor policy supports that result.
Plaintiff points to no decision in which a court has held that an attorney has a duty to give estate-planning advice to an executor of one estate because that executor is a beneficiary of the surviving parent's will. Under that circumstance, the executor has no estate-planning decision to make. The estate-planning decision is one that must be made by the surviving spouse.
There are no apparent considerations of fairness and public policy that favor imposition of a duty to advise an executor about matters beyond the scope of his authority. This is especially true in a case such as this. There is an inherent potential for a conflict of interest between the surviving spouse and an executor who is a beneficiary of the surviving spouse's will. See Barner v. Sheldon, 292 N.J. Super. 157, 158 (App. Div. 1996) (discussing potential conflict with testator's intent in holding that defendant-attorneys had no duty to advise beneficiaries about the potential favorable tax impact of disclaimer). The surviving spouse must decide whether to disclaim assets, and thereby save his or her estate from taxes, or retain assets, and thereby provide for his or her own needs and wants. An executor who is also designated as a beneficiary of the surviving spouse's will stands to gain only if there is a disclaimer.
In summary, we hold that defendants had no attorney-client relationship with either Albie or plaintiff that would give rise to a duty to provide advice about the benefits of a disclaimer by Albie. We further hold that the "considerations of fairness and policy" implicated in this case do not warrant imposition of such a duty owed to either Albie or plaintiff.
While it is unnecessary to our decision, the lack of evidence to support a finding of "proximate causation" also warrants a grant of summary judgment in favor of defendants. Fitzgerald, 366 N.J. Super. at 473. There is nothing to suggest that Albie Torban, or any person acting in his interest with knowledge of his condition and need for assisted living, would have followed advice to disclaim assets in order to minimize tax on his estate. See Leipham v. Adams, 894 P.2d 576 (Wash. Ct. App. 1995) (discussing absence of evidence of proximate cause in the context of a legal malpractice claim by beneficiaries of mother's will based on attorney's failure to advise mother about the possibility of minimizing estate tax by disclaiming at the time of father's death). On the state of this record, the only reasonable inference is that Albie and Lola declined to arrange their holdings to achieve estate tax savings so as to provide for the support of the surviving spouse.