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Lawyer’s Duty to Non-Clients Is Narrow, C.A. Declares
Such Duty, Hoffstadt Writes, Is Confined to Effecting Benefits Client Expressly Desired to Confer
By a MetNews Staff Writer
The Court of Appeal for this district yesterday affirmed a summary judgment in favor of the law firm of Ervin Cohen & Jessup LLP, holding that it had no duty to non-clients to make sure its client understood that instruments it was drafting at her request were not in conformity with a previously expressed intent.
“[A] lawyer’s duty to a nonclient does not extend to being a babysitter, a risk mitigation strategist, a sounding board, or a mental health specialist for the client,” Justice Brian M. Hoffstadt of Div. Two wrote. “Making a lawyer liable in malpractice to a nonclient for failing to act in any role beyond the role of implementing the client’s undisputed intent to benefit that nonclient is bad public policy….”
Client Claire Gordon, who died at the age of 100, had three sons, all of whom were in her favor. One of those sons was Kenneth Gordon, who had a wife and three sons whose relationship with the client was strained.
The law firm, pursuant to Claire Gordon’s instruction, drafted a trust under the terms of which Kenneth Gordon’s sons would not benefit. Later, however, a lawyer at Ervin Cohen, Reeve E. Chudd, set up three limited liability corporations (“LLC”s) that held income-producing real properties, with each son having a membership interest.
There was nothing in the operating agreements to prevent Kenneth Gordon’s interest to descend to his sons.
Summary Judgment Granted
There should have been such a provision, another son, Bruce Gordon, and his two sons asserted in their lawsuit against the law firm and Chudd. Then-Los Angeles Superior Court Judge Patricia Nieto granted summary judgment in favor of the defendants.
J authored the opinion affirming the judgment..
Hoffstadt said that “the California courts have uniformly settled upon the following rule: A lawyer has a duty to a nonclient third party only if the client’s intent to benefit that third party (in the way the third party asserts in their malpractice claim) is ‘clear,’ ‘certain’ and ‘undisputed.’ ”
He declared:
“[W]e conclude that the lawyers did not owe plaintiffs a duty to draft the LLC operating agreements in a way that disinherited Kenneth’s children because Claire’s intent to disinherit Kenneth’s children from being assigned any interest in the LLCs was not, as a matter of law, clear, certain or undisputed.”
The jurist pointed out that there is no evidence that she ever told Chudd that she wanted to have the LLC set up in such a way that Kenneth Gordon’s children would not succeed to interests.
No Duty
Chudd had no duty to point out that the client that the disfavored grandchildren could wind up with ownership interests in the parcels of real property which would not be in conformity of her previously expressed desire that they not share in her wealth, Hoffstadt wrote. He explained:
“[W]e conclude that the lawyers did not owe plaintiffs a duty to draft the LLC operating agreements in a way that disinherited Kenneth’s children from obtaining any interest in the LLCs because such a duty would obligate the lawyers to act as a sounding board and babysitter, effectively requiring them to ‘second guess’ Claire’s otherwise clear directive.”
He continued:
“ If, as plaintiffs urge, a client’s intent regarding who should inherit their property at the time of death creates an inference of the same intent for any and all inter vivos transfers, then the client’s previously expressed testamentary intent would forever after operate as a sort of ‘super-intent’ that would seemingly be controlling unless and until the client affirmatively expressed a contrary intent.”
The total value of Claire Gordon’s estate exceeded $40 million.
The case is Gordon v. Ervin Cohen & Jessup, B313903.
Rex S. Heinke of Complex Appellate Litigation Group joined with Joshua R. Furman in arguing for Bruce Gordon and his sons. Ervin Cohen & Jessup was represented by Joseph J. Ybarra, Kevin H. Scott, and Joel Mallord of Halpern May Ybarra Gelberg and Allan B. Cooper of its firm.
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