Wechter v. Schroeder, Comis, Nelson & Kahn, LLP, Court of Appeals of California, Second Circuit, May 3, 2010 (Unpublished).
Facts: Decedent died shortly before the division of marital property and entry of the final judgment of divorce. His surviving spouse then asserted claims to his share of the marital estate. Plaintiffs, the surviving children and heirs of the decedent, brought suit against the decedent’s former matrimonial attorneys for their alleged failure to abide by decedent’s instructions and act in the best interests of his beneficiaries.
Plaintiffs allege that the attorneys failed to prepare an estate and trust plan removing decedent’s former spouse as beneficiary of his will, trust, life insurance, and retirement plan. They allege that the attorneys directed decedent to prepare a holographic will that became the subject of litigation in probate court, and that they failed to promptly deliver a revocation of trust to decedent’s former spouse. Finally, Plaintiffs’ alleged the attorneys were negligent in not referring decedent to an estate planning attorney.
The attorneys argued that the complaint ought to dismissed because they owed no duty to the decedent’s beneficiaries.
Issue: Did the decedent’s former matrimonial attorneys owe a duty to the beneficiaries of his estate?
Ruling: No. The Court initially noted that a determination of whether an attorney is liable to third-parties not in privity is a policy question:
The question involves balancing various factors, including the extent to which the transaction was intended to affect plaintiff; the forseeability of harm to him; the degree of certainty that he suffered injury; the closeness of the connection between the defendant’s conduct and the injury suffered; the moral blame attached to a defendant’s conduct; and the policy of preventing future harm.
The Court concluded that decedent’s matrimonial attorney owed no duty to his beneficiaries for a number of reasons. First, the Court noted that the attorneys had no knowledge that the Plaintiffs were decedent’s only heirs or intended beneficiaries. Nor did they agree to perform legal services intended directly to benefit them. Moreover, the attorneys could not, in violation of the California Family Code, unilaterally dispose of marital property during dissolution proceedings without a court order or consent of decedent’s former spouse.
Lesson: The question of whether an attorney owes a duty to a third-party is a fact sensitive one. The biggest factor appears to be whether the attorney knew or could have reasonably expected his actions to negatively affect the interests of a third-party.