Tuesday, March 17, 2009
Court Limits Liability of Testators’ Attorneys to Non-Clients
By Steven M. Ellis, Staff Writer
Testators’ attorneys owe no duty of care to non-clients who allege they were potential beneficiaries absent an executed will or trust instrument expressly reflecting the testator’s intent, this district’s Court of Appeal ruled yesterday.
Reasoning that the imposition of such a duty “would place an intolerable burden on the legal profession,” Div. Seven similarly declined to recognize a duty of care to non-clients previously named in an instrument who allege the testator intended to revise an estate plan to increase a gift.
Myung Chang sued Woodland Hills attorney Gregory Lederman for malpractice, breach of fiduciary duty and intentional infliction of emotional distress over Lederman’s representation of Chang’s late husband, Raphael Schumert, and Lederman’s administration of Schumert’s estate.
Duty of Care
Arguing Lederman owed her a duty of care as an intended beneficiary, Chang claimed he violated the duty by refusing to honor Schumert’s instruction to revise his will and trust to bequeath an approximately $600,000 estate to Chang, and by directing Chang to vacate the couple’s Sherman Oaks residence within 30 days after Schumert’s death.
Schumert retained Lederman, a probate attorney and estate planner, in early 2004 to prepare a revocable trust after being diagnosed with terminal cancer. Although Schumert and Chang lived together at the time, they were not married until six months later.
Chang was initially to receive $30,000 and the couple’s furniture under the trust, with the majority of the residue going to benefit Schumert’s minor son. The trust provided the boy’s mother—Schumert’s former wife, Etti Hadar—would be trustee, and specified Chang was to vacate the property within 30 days of Schumert’s death so it could be sold or leased.
Schumert later reduced the gift to Chang to $15,000, and then executed a second will in Israel after marrying her which disposed of assets there without providing for Chang in any way and did not expressly revoke the amended trust.
Chang alleged that six months after her marriage, Schumert—by then seriously ill—instructed Lederman to revise the trust to leave the entire estate to her with the understanding that she would give his son $250,000 upon the boy’s 25th birthday. However, she claimed, Lederman refused, advising Schumert that Hadar would sue if he modified the trust, and that Schumert should seek a psychiatric evaluation before making any changes.
Schumert died in March 2005 without making any further amendments and Lederman—who Hadar then retained in her capacity as trustee—wrote Chang approximately two weeks after Schumert’s death requesting that she vacate the property as specified in the trust.
Chang sought to revoke the trust and obtain a one-half interest under the “omitted spouse” doctrine, but the probate court ruled that the will following the marriage precluded the doctrine’s application. Upholding the trust, the court also ruled Chang’s action violated a no-contest provision, which revoked the $15,000 bequest.
Chang then sued Lederman, but Los Angeles Superior Court Judge Mary Ann Murphy dismissed the action, ruling that Lederman neither owed Chang a duty nor had acted in an extreme and outrageous manner intending to cause severe emotional distress.
On appeal, Chang pointed to the Supreme Court’s opinions in Biakanja v. Irving (1958) 49 Cal.2d 647 and Lucas v. Hamm (1961) 56 Cal.2d 583, where the court respectively held that a notary public who drafted a will owed a duty of care to the beneficiary who lost her inheritance due to the notary’s negligence, and that beneficiaries whose bequests arguably failed because the testator’s lawyer did not adequately prevent a challenge under the rule against perpetuities could assert a claim for professional negligence.
But Presiding Justice Dennis M. Perluss wrote that “[w]ithout a finite, objective limit on the identity of individuals to whom they owe a duty of care, the burden on lawyers preparing wills and trusts would be intolerable.”
“Expanding the attorney’s duty of care to include actual beneficiaries who could have been, but were not, named in a revised estate plan, just like including third parties who could have been, but were not, named in a bequest, would expose attorneys to impossible duties and limitless liability because the interests of such potential beneficiaries are always in conflict.”
Perluss also opined that Lederman’s letter could not reasonably be regarded as “extreme or outrageous” conduct because, insofar as Chang was never Lederman’s client, the attorney had no duty to advise her state law would protect her from having to move so soon after Schumert’s death.
The presidng justice also wrote that the letter was absolutely protected under Code of Civil Procedure Sec. 47(b)’s litigation privilege.
Justices Fred Woods and Laurie D. Zelon joined Perluss in his opinion.
The case is Chang v. Lederman, 09 S.O.S. 1601.
Copyright 2009, Metropolitan News Company