Thursday, July 23, 2009
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C.A.: No Conflict in Representation of Executor as Beneficiary
By SHERRI M. OKAMOTO, Staff Writer
The Fifth District Court of Appeal yesterday reversed the disqualification of a Fresno law firm from serving as counsel to any party in a probate action due to a conflict of interest.
Granting the writ petition by Baker Manock & Jensen, the panel said the firm could represent the executor of Lillian Salwasser’s will as an individual beneficiary in a dispute with another beneficiary.
Baker Manock drafted the will executed by Salwasser in 1999, and she died in 2006. After the will was submitted to probate, two of Salwasser’s sons, George Salwasser and Gary Salwasser, were appointed co-executors of the will.
George Salwasser was represented by Baker Manock in these proceedings and his brother was represented by Michael L. Farley of the Farley Law Firm.
Lillian Salwasser’s will left certain property to her husband and placed the remainder of her estate in a trust. George Salwasser and Gary Salwasser were named successor trustees of this trust, and they, along with their families, were the sole beneficiaries of the trust.
Denis Salwasser and Marvin Salwasser, Lillian Salwasser’s other two sons, were omitted from the will and the trust.
Not long after the probate proceedings began, Lillian Salwasser’s husband died and his will was admitted to probate. Denis Salwasser was appointed executor, but approximately six months later, he also passed away. Marvin Salwasser was then appointed executor of his father’s estate.
In order to seek resolution of questions concerning ownership of Lillian Salwasser’s assets, George and Gary Salwasser filed separate applications seeking a declaration that their proposed petitions addressing these issues would not violate the no contest clause of their mother’s will.
Subsequently, Marvin Salwasser, as executor of his father’s estate, filed an application for a determination that petitions he proposed to file would not violate the no contest clause of Lillian Salwasser’s will as well.
Opposition Filed
George Salwasser filed an opposition to Marvin Salwasser’s application, through Baker Manock, as a beneficiary of Lillian Salwasser’s will.
In response to this opposition, Marvin Salwasser filed a petition to disqualify Baker Manock from representing George Salwasser in his individual capacity as a beneficiary under Lillian Salwasser’s will.
Fresno Superior Court Judge Debra J. Kazanjian granted Marvin Salwasser’s petition and sua sponte disqualified the firm from representing George Salwasser as executor of Lillian Salwasser’s will.
She later entered an amended order clarifying that she intended to disqualify the firm from representing any person in any capacity in the probate of Lillian Salwasser’s estate.
Kazanjian found that Baker Manock had a conflict of interest because it owed Lillian Salwasser a “duty of loyalty” as the drafter of her will and a “duty of care” to the beneficiaries of the will.
Conflict of Interest
In representing George Salwasser against Marvin Salwasser “with regard to the very estate plan [it] drafted and for which [it] acted as attorney to the estate fiduciary,” Kazanjian determined the firm was placed “in an active and acute conflict of interest.”
Writing for the appellate court, Justice Steven M. Vartabedian explained that Kazanjian had erred in implying Baker Manock had an attorney-client relationship with Marvin Salwasser as a result of having drafted Lillian Salwasser’s will.
Although an attorney may have liability to an intended beneficiary of a will who, because of the attorney’s error, does not receive the bequest intended by the testator, such liability “does not arise from the will drafter’s status as an attorney but, instead, as a result of negligent performance of a contract,” Vartabedian said, noting that no such allegation had been made in the instant case.
He emphasized that the potential for negligence liability “in no way corresponds to or implicates the duties of confidentiality and loyalty that are present in any instance of an attorney-client relationship” and does not create an attorney-client relationship with third-party beneficiaries of the contract to draft the will.
Divergence of Interests
As for Baker Manock’s representation of George Salwasser as an individual beneficiary and as executor of his mother’s estate, Vartabedian reasoned that no conflict would exist unless there were “a divergence of the interests of George as executor and George as beneficiary.”
Even if the law firm were “viewed as representing ‘two Georges’ who, at least in theory, could have conflicting interests,” Vartabedian concluded that this was not the situation at hand and therefore the firm had no conflict of interest in representing George Salwasser as executor and beneficiary.
Justices Brad R. Hill and Stephen Kane joined Vartabedian in his decision.
Edith R. Matthai and Steven S. Fleischman of Robie & Matthai represented Baker Manock.
Elliott D. Chielpegian, Michael S. Chielpegian and Lee S. W. Cobb of the Chielpegian Law Offices represented Marvin Salwasser.
The case is Baker Manock & Jensen v. Superior Court (Salwasser), 09 S.O.S. 4477.
Copyright 2009, Metropolitan News Company