Timothy J. LaFon
Charles
R. Bailey
Michael J. Del Giudice Billie
Jo Streyle
Ciccarello, Del Giudice & LaFon Bailey
and Wyant, P.L.L.C.
Charleston, West Virginia Charleston,
West Virginia
and
Attorneys
for William H. Scharf
Carl S. Kravitz
Blair G. Brown
Michael
J. Farrell
Zuckerman Spaeder LLP Robert
L. Hogan
Washington, District of Columbia Farrell,
Farrell & Farrell, L.C.
Attorneys for
Huntington,
West Virginia
James A. Calvert, Jr., et al. Attorneys
for
Bowles
Rice McDavid Graff & Love, P.L.L.C.
JUSTICE DAVIS delivered the Opinion of the Court.
JUSTICES MAYNARD AND BENJAMIN, deeming themselves disqualified, did not participate
in the decision of this case.
JUDGE FRANK E. JOLLIFFE sitting by temporary assignment.
1. Generally,
in a suit against an attorney for negligence, the plaintiff must prove three
things in order to recover: (1) the attorney's employment; (2) his/her neglect
of a reasonable duty; and (3) that such negligence resulted in and was the proximate
cause of loss to the plaintiff.
2. Direct,
intended, and specifically identifiable beneficiaries of a will have standing
to sue the lawyer who prepared the will where it can be shown that the testator's
intent, as expressed in the will, has been frustrated by the negligence of the
lawyer so that the beneficiaries' interest(s) under the will is either lost or
diminished.
3. “In
an attorney malpractice action, proof of the attorney's negligence alone is insufficient
to warrant recovery; it must also appear that the client's damages are the direct
and proximate result of such negligence.” Syllabus point 2, Keister v.
Talbott, 182 W. Va. 745, 391 S.E.2d 895 (1990).
4. “Damages
arising from the negligence of an attorney are not presumed, and a plaintiff
in a malpractice action has the burden of proving both his loss and its causal
connection to the attorney's negligence.” Syllabus point 3, Keister v.
Talbott, 182 W. Va.
745, 391 S.E.2d 895 (1990).
Davis, Justice:
In this action for attorney malpractice in
the drafting of a will, the circuit court of Kanawha County certifies nine questions
for determination by this Court. The subject will purported to exercise a power
to appoint granted to Erma D. Surface, deceased, by her deceased husband's will.
This malpractice action was brought by James A. Calvert, Jr., individually and
as personal representative of the estate of his father, James A. Calvert, Sr.,
deceased, and his siblings (also children of James A. Calvert, Sr.), Kim Marie
Kizer, Robin Calvert Boyias, and William Carlyle Calvert (hereinafter collectively
referred to as “the Calverts”), who are all beneficiaries under Erma
D. Surface's will. After carefully considering the nine certified questions,
the briefs and oral arguments of the various parties, the record submitted on
appeal, and the pertinent authorities, we reformulate the certified questions
into one question and conclude that, while beneficiaries of a will have limited
standing to assert a malpractice claim alleging negligence on the part of the
lawyer who prepared the will, the Calverts may not pursue their cause of action
under the particular facts of this case as they have failed to establish that
they have suffered damages that were proximately caused by attorney malpractice.
The facts underlying the instant dispute
began with the wills of Garrett H.
Surface (hereinafter referred to as “Garrett”) and Erma D. Surface
(hereinafter referred to as “Erma”). Garrett and Erma Surface were
husband and wife. There were apparently no children born of the marriage, but
Garrett and Erma each had a child from a prior marriage. Garrett's child, a
daughter, is Delores Carole Surface (hereinafter referred to as “Delores” or “Garrett's
daughter”). (See footnote
1) Erma's child, a son, is James A. Calvert, Sr. (See
footnote 2)
On July 18, 1978, Garrett executed his Last
Will and Testament (hereinafter referred to as “Garrett's will”). Garrett's
will, which was drafted by attorney John Smallridge, established a marital trust
and granted a testamentary general power of appointment over the property in
the marital trust to his wife, Erma. This provision, located at “ITEM FIVE,” “Paragraph
I.B.” of Garrett's will, states:
My
wife shall have the right and power to appoint, as hereinafter provided, by her
Last Will and Testament the entire principal of the MARITAL TRUST, as constituted
at the time of her death, to her estate, to her creditors, or to such person
or persons as she may designate in her sole, absolute and unrestricted discretion.
The aforesaid power of appointment shall be exercisable by my wife in her Will
by a separate ITEM in which she specifically refers to this power of appointment
and in which ITEM she does not dispose of or attempt to dispose of any other
property. This power of appointment in my wife shall be exercisable by her, alone
and in all events. If, however, no
marital deduction is allowable for federal estate tax purposes at the time
of my death, then this paragraph I B shall have no effect, and my wife shall
have no power of appointment over the principal of the MARITAL TRUST.
Garrett's will also established a charitable
remainder unitrust to pay five percent of its net fair market value annually
to his daughter Delores, commencing upon Garrett's death (hereinafter referred
to as the “Residuary Trust”). Upon the death of Garrett's daughter,
the principal of the Residuary Trust was to be split equally between the Union
Mission Settlement, Inc., and World Vision, Inc. (hereinafter referred to as “the
Default Charities”). In the event that Erma failed to exercise the power
of appointment granted to her in Garrett's will, the principal of the marital
trust was to be combined with the Residuary Trust created for the benefit of
Delores and the Default Charities:
If my wife should fail, in whole or in part, to exercise by her Last Will and Testament the power of appointment given to her in respect to the principal of the MARITAL TRUST, the Trustee shall add the principal remaining in the MARITAL TRUST, not validly appointed as aforesaid, to the principal of the RESIDUARY TRUST; and thereafter the combined principals of the MARITAL TRUST and the RESIDUARY TRUST shall be administered and distributed as hereinafter provided.
Garrett's will, “ITEM FIVE,” “Paragraph I.C.”
Garrett died in May, 1979. Shortly thereafter,
attorney Smallridge prepared a will for Erma, which, the parties agree, contained
a valid and effective exercise of the general
testamentary power of appointment granted to Erma in Garrett's will. However,
in 1984 Erma retained the law firm now known as Bowles Rice McDavid Graff & Love,
P.L.L.C. (hereinafter referred to as “Bowles Rice”) to perform estate
planning services on her behalf. Pursuant to this engagement, William Scharf,
then a partner at Bowles Rice, drafted a new will for Erma (hereinafter referred
to as “Erma's will”), along with several trust documents including
a revocable trust (hereinafter referred to as “the Living Trust”).
With respect to exercising Erma's power of appointment as granted in Garrett's
will, Erma's will stated:
SECOND: All the rest, residue and remainder of my property and estate, of whatever nature and wherever situate, including all property over which I have a power of appointment under Item Five I B of the will of my husband, GARRETT H. SURFACE, who died May 2, 1979, which said will is dated July 18, 1978, and is of record in the office of the Clerk of the County Commission of Kanawha County, West Virginia, in Will Book 321, at page 160, which power of appointment I hereby specifically exercise, after payment of any debts, expenses of administration and taxes, I give, devise and bequeath to the Trustee under the existing Trust Agreement executed by me as Grantor and by the Bank of West Virginia as Trustee, on June 1, 1984, at 9:30 A.M., and establishing a revocable trust [(the Living Trust)] for my benefit, to be added to the principal of the trust assets held thereunder as if said rest, residue and remainder of my estate had originally formed a part thereof, and to be held, administered and distributed in accordance with the provisions of said Trust Agreement.
Thus, Erma sought to appoint the Living Trust as beneficiary of the property
over which she had been granted the power of appointment by Garrett's will.
In turn, the beneficiaries of the Living Trust were the Calverts (plaintiffs
in this malpractice action). Subsequently, the Living Trust was amended on
four separate occasions. The final two amendments were
prepared by the law firm of Jackson Kelly, L.L.P. In its final version, the
Living Trust established five charitable unitrusts (one for each of the Calverts)
as additional beneficiaries. Under the amended terms, each Calvert was to receive
annual distributions from a corresponding unitrust. Five charities (hereinafter
referred to as the “Appointed Charities”), one corresponding to each
unitrust, were appointed to receive the principal remaining in its designated
unitrust upon the death of the corresponding Calvert.
Erma died in 1999. Subsequent to her death,
One Valley Bank, successor-in- interest to the Bank of West Virginia, as executor
of Erma's estate and as trustee of Erma's Living Trust, Garrett's Marital Trust,
and Garrett's Residuary Trust, filed a declaratory judgment action in the Circuit
Court of Kanawha County, West Virginia. (See
footnote 3) One Valley Bank sought an affirmative declaration that
it should distribute the assets of Garrett's Marital Trust into the Living Trust.
In addition to One Valley Bank, the parties to the declaratory judgment action
were the Calverts, the Calverts' minor children, the Appointed Charities, Garrett's
daughter Delores, and the Default Charities.
The issue in the declaratory judgment action
was whether Erma's will complied with the requirements established in Garrett's
will for the exercise of her power of appointment, as Garrett's will had required
the appointment be by “a separate ITEM in
which . . . she does not dispose of or attempt to dispose
of any other property.” Erma's will exercised the power of appointment
in a residuary clause that disposed of all of Erma's property. If Erma's will
did not validly exercise the power of appointment, the Marital Trust would
not fund the Living Trust of which the Calverts and the Appointed Charities
are the beneficiaries. Instead, under the terms of Garrett's will, the Marital
Trust would fund the Residuary Trust, of which Garrett's daughter Delores and
the Default Charities are the beneficiaries.
Shortly before a scheduled hearing on cross-motions
for summary judgment in the declaratory judgment action, the parties notified
Judge Charles E. King, Jr., that a settlement had been reached. Following a hearing
held on March 1, 2002, Judge King entered an order approving the settlement.
The settlement agreement and settlement order provided, in pertinent part, that
the Residual Trust benefitting Delores and the Default Charities would receive
26.57% of the Marital Trust, and that the five trusts benefitting the Calverts
and the Appointed Charities would receive 73.43% of the Marital Trust. (See
footnote 4) In addition, the settlement agreement and order provided
that if the Calverts were to bring a legal malpractice action, then the Residual
Trust benefitting Delores and the Default Charities would receive the first $100,000
from the net recovery and then 50% of every
additional dollar of that recovery up to a designated ceiling. (See
footnote 5) The circuit court's order accepting the settlement
expressly stated that “this Court specifically finds that monies to be
paid to the Charitable Remainder Trust [(the Residual Trust)] as the result
of the Malpractice Claims is not an assignment of any portion of the claim,
but rather a promise to pay with recovery as a condition precedent to payment.”
Apparently an attempt had been made to include
Bowles Rice in the settlement negotiations pertaining to the declaratory judgment
action, but Bowles Rice had refused to participate in mediation or to compromise
any malpractice claims that the Calverts might have had against them by contributing
to the settlement of the declaratory judgment action.
Thereafter, on March 12, 2002, the Calverts
filed the instant legal malpractice action against Bowles Rice, Mr. Scharf and
Jackson Kelly, L.L.P. As one component of their damages, the Calverts sought
the amount that they were obligated to pay to settle the declaratory judgment
action, including the amount up to $225,000 that they are obligated to pay from
a recovery in this malpractice action. Jackson Kelly, L.L.P., offered to settle
the malpractice claim against it for five thousand dollars. The Calverts accepted
the settlement
offer leaving Bowles Rice and Mr. Scharf as the only remaining defendants.
Bowles Rice and Mr. Scharf filed motions
for summary judgment and partial summary judgment. Thereafter, Judge Gary L.
Johnson, sitting by special assignment, certified nine questions for review by
this Court. (See footnote
6) We accepted the questions for review.
Before addressing the particular issues raised
in this proceeding, we exercise our power to reformulate the questions certified
to us by the circuit court. With respect to our authority to reformulate certified
questions, we have held:
When a certified question is not framed so that this Court is able to fully address the law which is involved in the question, then this Court retains the power to reformulate questions certified to it under both the Uniform Certification of Questions of Law Act found in W. Va. Code, 51-1A-1, et seq. and W. Va. Code, 58-5-2 [1967], the statute relating to certified questions from a circuit court of this State to this Court.
Syl. pt. 3, Kincaid v. Mangum, 189 W. Va. 404, 432 S.E.2d 74 (1993). See
also W. Va. Code § 51-1A-4 (1996) (Repl. Vol. 2000) (“The
[S]upreme [C]ourt of [A]ppeals of West Virginia may reformulate a question
certified to it.”). See, e.g., Potesta v. United States Fid. & Guar.
Co., 202 W.Va. 308, 313 n. 9, 504 S.E.2d 135, 140 n. 9 (1998).
After careful consideration of the nine certified
questions presented by the circuit court, we find it necessary to answer only
one reformulated question in order to resolve the issues necessary to the resolution
of this case:
May
intended beneficiaries of a will maintain a claim of negligence against the lawyer
who drafted the will when the intended beneficiaries have settled a declaratory
judgment action that, if litigated to its conclusion, would have resolved the
issue of whether the will was sufficiently drafted to exercise a power of appointment
granted to the testator.
Following a brief statement of the standard
we apply in answering this question, we will proceed to our analysis.
We conduct plenary review of questions certified
by a circuit court. “The appellate standard of review of questions of law
answered and certified by a circuit court is de novo.” Syl. pt. 1, Gallapoo
v. Wal-Mart Stores, Inc., 197 W. Va. 172, 475 S.E.2d 172 (1996). Accord Potesta
v. United States Fid. & Guar. Co., 202 W. Va. 308, 314, 504 S.E.2d
135, 141; Griffis v. Griffis, 202 W. Va. 203, 208, 503 S.E.2d 516,
521 (1998); Syl. pt. 1, Williamson v. Greene, 200 W. Va. 421, 490
S.E.2d 23 (1997).
In answering the reformulated certified question,
we begin by examining the elements of a cause of action for negligence by a lawyer.
We have repeatedly recognized, and now expressly hold, that, generally, “'[i]n
a suit against an attorney for negligence, the plaintiff must prove three things
in order to recover: (1) [t]he attorney's employment; (2) his[/ her] neglect
of a reasonable duty; and (3) that such negligence resulted in and was the proximate
cause of loss to the [plaintiff].'” Keister v. Talbott, 182 W. Va.
745, 748-49, 391 S.E.2d 895, 898-99 (1990) (citations omitted). See also Sheetz,
Inc. v. Bowles Rice McDavid Graff & Love, PLLC, 209 W. Va. 318,
333 n.13, 547 S.E.2d 256, 271 n.13 (2001) (same); Armor v. Lantz, 207
W. Va. 672, 681, 535 S.E.2d 737, 746 (2000) (same); McGuire v.
Fitzsimmons, 197 W. Va. 132, 136-37, 475 S.E.2d 132, 136-37 (1996)
(same). We examine each of these factors in turn.
The attorney's employment is a factor that
speaks to whether the attorney owed a duty to the person claiming to have been
harmed by the attorney's negligence, as “'[n]o action for negligence will
lie without a duty broken.' Syl. Pt. 1, in part, Parsley v. General Motors
Acceptance Corp., 167 W. Va. 866, 280 S.E.2d 703 (1981).” Syl.
pt. 3, Strahin v. Cleavenger, 216 W.Va. 175, 603 S.E.2d 197 (2004). Where
a malpractice claim involves a matter for which the plaintiff directly hired
the attorney, there is no question that a duty was owed. However, in cases such
as the instant one where there is no employment relationship between the lawyer
and the malpractice plaintiffs, establishing the existence of a duty is critical
to the plaintiffs' ability to go forward with their action. This is so because,
without a duty owed, a person claiming to have been harmed by a lawyer's negligence
does not have standing to assert a claim. “[S]tanding is defined as '[a]
party's right to make a legal claim or seek judicial enforcement of a duty or
right.'” Findley v. State Farm Mut. Auto. Ins. Co., 213 W. Va.
80, 94, 576 S.E.2d 807, 821 (2002) (quoting Black's Law Dictionary 1413 (7th
ed. 1999) (second alteration in original)). Accordingly, in this section of the
opinion, we will examine whether a lawyer preparing a will owes any duty to the
beneficiaries of that will such that the beneficiaries may have standing to assert
a cause of action against the lawyer
for malpractice in the drafting of the testamentary document.
Traditionally, it was an accepted rule that
a lawyer owed no duty to individuals who were not clients:
Over a century ago, the United States Supreme Court held that a third party not in privity of contract with an attorney may not maintain a legal malpractice action against an attorney for negligence absent fraud or collusion. See National Sav. Bank v. Ward, 100 U.S. 195, 205-206, 25 L. Ed. 621 (1879).
Blair v. Ing, 95 Hawai'i 247, 253, 21 P.3d 452, 458 (2001). This rule was “premised upon two basic concerns. First, absent a requirement of privity, parties to a contract for legal services could easily lose control over their agreement. Second, imposing a duty to the general public upon lawyers would expose lawyers to a virtually unlimited potential for liability.” Schreiner v. Scoville, 410 N.W.2d 679, 681 (Iowa 1987) (citation omitted). Accord Needham v. Hamilton, 459 A.2d 1060, 1061-62 (D. C. 1983). As the parties to this action correctly point out, however, a majority of courts have recognized an exception to this general principle and now allow beneficiaries of a will to maintain an action against the lawyer who drafted the will. See generally 4 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice §32.4, at 735 (5th ed. 2000) (“Although the rationale varies, the prevailing rule is that an attorney can be liable for negligence to the intended beneficiary or heirs.”)
(footnote collecting cases omitted). (See
footnote 7) See also Blair v. Ing, 95 Hawai'i at 253, 21
P.3d at 458 (“Although the strict privity requirement remains prevalent
in many factual circumstances of legal malpractice, the trend in estate planning
is to allow a legal malpractice cause of action brought by non-clients.” (citation
omitted)); Schreiner v. Scoville, 410 N.W.2d at 681 (“The trend
in recent years . . . has been to allow some relaxation
of the privity standard in severely limited situations.”). (See
footnote 8) This Court has not expressly adopted a rule recognizing
that
lawyers owe a duty to the intended beneficiaries of a will. (See
footnote 9) In deciding whether we will follow the majority rule,
we will examine decisions of other jurisdictions.
One court discussing the two concerns that
form the basis for the general rule requiring privity concluded those concerns
do not apply in the context of the lawyer/non- client beneficiary relationship. Needham
v. Hamilton, 459 A.2d 1060. According to the Needham court, a
lawyer/non-client beneficiary relationship does not present a circumstance
in which the ability of a nonclient to impose liability would in any way affect the control over the contractual agreement held by the attorney and his client, as the interests of the testatrix and the intended beneficiary with regard to the proper drafting and execution of the will are the same. Additionally, this duty does not extend to the general public but only to a nonclient who was the direct and intended beneficiary of the attorney-client relationship.
459 A.2d at 1062-63. The Needham court ultimately held that “the better view is that which allows the intended beneficiary of a will a malpractice cause of action against the drafting attorneys.” Id. at 1062.
Moreover, courts permitting a non-client beneficiary to maintain a malpractice action against the lawyer who drafted the will have expressed practical reasons for allowing such lawsuits, including the fact that often the beneficiary is the only party who could properly bring such an action:
[O]ne of the main purposes which the transaction between [the lawyer] and the testator intended to accomplish was to provide for the transfer of property to [the beneficiaries]; the damage to [the beneficiaries] in the event of invalidity of the bequest was clearly foreseeable; it became certain, upon the death of the testator without change of the will, that [the beneficiaries] would have received the intended benefits but for the asserted negligence of [the lawyer]; and if [beneficiaries] are not permitted to recover for the loss resulting from negligence of the draftsman, no one would be able to do so, and the policy of preventing future harm would be impaired.
Lucas v. Hamm, 56 Cal. 2d 583, 589, 15 Cal. Rptr. 821, 824, 364 P.2d 685, 688 (1961) (concluding that lack of privity between beneficiaries under a will and the lawyer who prepared the will did not preclude beneficiaries from maintaining an action in tort against the lawyer). Likewise,
if a lawyer who prepares a will erroneously is to be accountable for breach of the duty he owed his deceased client, the beneficiaries of the will must be able to maintain an action. No one else has a sufficient interest, can show damage, or possesses the [volition], to do so. “It would be unconscionable to permit admitted actionable conduct to be insulated by the fortuitous death of the person recognized in the law to have standing to prosecute such a claim, where the brunt of the injury from such conduct is born by a living party.”
Mieras v. DeBona, 452 Mich. 278, 290-91, 550 N.W.2d 202, 207-08 (1996)
(citation omitted). See also Heyer v. Flaig, 70 Cal. 2d 223, 228, 74 Cal. Rptr.
225, 229, 449 P.2d 161, 165 (1969) (“Indeed, the executor of an estate
has no standing to bring an action for the amount of the bequest against an
attorney who negligently prepared the estate plan, since in the normal case
the estate is not injured by such negligence except to the extent of the fees
paid; only the beneficiaries suffer the real loss.”), superseded by
statute on other grounds as stated in Laird v. Blacker, 279 Cal. Rptr.
700 (Cal. Ct. App. 1991); Schreiner v. Scoville, 410 N.W.2d 679, 682
(“[I]f no cause of action could be maintained, the very purpose for which
the lawyer was retained (i.e., disposition of the testator's estate
in accord with his or her wishes) would be frustrated without remedy.” (citations
omitted)); Karam v. Law Offices of Ralph J. Kliber, 253 Mich. App.
410, 429, 655 N.W.2d 614, 625 (2002) (“In this case, because the beneficiaries,
not the estate, suffered the real loss, the personal representatives have no
standing to assert a cause of action.”).
It has also been explained that
[a]
promise to prepare a will pursuant to the instructions of a testatrix states
a direct obligation to render a performance beneficial to her, i.e., the creation
of a document which would enable her upon her death to effect the transfer of
her assets to the beneficiaries named in her instructions. . . .
. . . If
the defendant [lawyer] thwarted the wishes of the testatrix, an intended beneficiary
would also suffer an injury in that after the death of the testatrix the failure
of her testamentary scheme would deprive the beneficiary of an intended bequest.
It therefore follows that the benefit which the plaintiff would have received
under a will prepared in accordance with the
contract is so directly and closely connected with the benefit which the defendant
promised to the testatrix that . . . the [beneficiary]
would be able to enforce the contract.
Stowe v. Smith, 184 Conn. 194, 197-98, 441 A.2d 81, 83 (1981) (internal citations omitted). Stated otherwise,
the cases have repeatedly held that an attorney who assumes preparation of a will incurs a duty not only to the testator client, but also to his intended beneficiaries, and lack of privity does not preclude the testamentary beneficiary from maintaining an action against the attorney based on either the contractual theory of third party beneficiary or the tort theory of negligence.
Ventura County Humane Soc'y v. Holloway, 40 Cal. App. 3d 897, 903, 115 Cal. Rptr. 464, 468 (1974). (See footnote 10)
We note, however, that the recognition that a non-client beneficiary may have a cause of action for malpractice against a will-drafting lawyer is not without limitation. One of the primary concerns expressed by courts in recognizing the standing of a non-client beneficiary to sue a lawyer with whom he or she is not in privity is that lawyers should not be exposed to “'a virtually unlimited potential for liability.'” Holsapple v. McGrath, 575 N.W.2d 518, 521 (Iowa 1998) (citation omitted). Accordingly, “[b]ecause no privity exists [between a lawyer and an intended beneficiary], courts extending lawyer liability to nonclient-third parties generally have limited a lawyer's liability to the direct, intended, and specifically identifiable beneficiaries of the testator's testamentary disposition.” Schreiner v. Scoville, 410 N.W.2d 679, 682 (citations omitted). Likewise, some courts have limited the evidence that may be used to establish the testator's intent to that which is expressly stated in the testamentary instrument. For example, the rule adopted by the Holsapple court holds that
[f]or third parties to maintain a cause of action against the preparer of a testamentary instrument, they must prove that “as a direct result of the lawyer's professional negligence the testator's intent as expressed in the testamentary instruments is frustrated in whole or in part and the beneficiary's interest in the estate is either lost, diminished, or unrealized.”
575 N.W. at 521 (alteration in original) (citation omitted).
Moreover, the California judiciary addresses
the competing interests of lawyers and beneficiaries by recognizing that beneficiaries
may sue a lawyer for negligent preparation
of a will that “caused them to lose their testamentary rights” only “where
the attorney's engagement was intended to benefit the nonclient, and the imposition
of liability would not place an undue burden upon the legal profession.” Osornio
v. Weingarten, 124 Cal. App. 4th 304, 312, 21 Cal. Rptr. 3d
246, 248 (2004) (citing Lucas v. Hamm, 56 Cal. 2d 583, 15 Cal. Rptr.
821, 364 P.2d 685). Additionally, California courts have established that
the attorney's liability towards the intended beneficiaries under the will is not automatic. The cases underline that the determination whether in a specific case the attorney should be held responsible to a third person not in privity constitutes a policy matter and involves balancing factors, among which are [(1)] the extent to which the transaction was intended to affect the plaintiff, [(2)] the foreseeability of harm to him, [(3)] the degree of certainty that the plaintiff suffered injury, [(4)] the closeness of the connection between the defendant's conduct and the injury suffered, [(5)] the moral blame attached to the defendant's conduct, [(6)] and the policy of preventing future harm.
Ventura County Humane Soc'y v. Holloway, 40 Cal. App. 3d 897, 903, 115
Cal. Rptr. 464, 468 (citations omitted).
Additionally, the state of Florida has addressed
certain evidentiary problems that are inherent in estate planning malpractice
cases brought by beneficiaries and, to remedy these difficulties, has declined
to allow extrinsic evidence on the issue of the testator's intent:
Because the client is no longer alive and is unable to testify, the task of identifying those persons who are intended third-party beneficiaries causes an evidentiary problem closely akin to the problem of determining the client's general testamentary intent. To minimize such evidentiary problems, the will was designed as a legal document that affords people a clear opportunity to express the way in which they desire to have their property distributed upon death. To the greatest extent possible, courts and personal representatives are obligated to honor the testator's intent in conformity with the contents of the will. . . .
If extrinsic evidence is admitted to explain testamentary intent, as recommended by the petitioners, the risk of misinterpreting the testator's intent increases dramatically. Furthermore, admitting extrinsic evidence heightens the tendency to manufacture false evidence that cannot be rebutted due to the unavailability of the testator. For these reasons, we adhere to the rule that standing in legal malpractice actions is limited to those who can show that the testator's intent as expressed in the will is frustrated by the negligence of the testator's attorney.
Espinosa v. Sparber, Shevin, Shapo, Rosen & Heilbronner, 612 So. 2d
1378, 1380 (Fla. 1993). See also Walker v. Lawson, 526 N.E.2d 968, 968
(Ind. 1988) (“[A]n action will lie by a beneficiary under a will against
the attorney who drafted that will on the basis that the beneficiary is a
known third party.” (emphasis added)); Schreiner v. Scoville,
410 N.W.2d 679, 682 (“[W]e conclude a lawyer owes a duty of care to the
direct, intended, and specifically identifiable beneficiaries of the testator
as expressed in the testator's testamentary instruments.”). (See
footnote 11) But see Teasdale v. Allen, 520 A.2d 295, 296
(D.C. 1987)
(refusing “to adopt any per se rule that standing may be granted only
to those whose precise status as intended beneficiaries can be discerned from
the four corners of the will itself.”).
Plainly, then, while a majority of courts
grant intended beneficiaries standing to sue a lawyer who negligently drafts
a will, they have imposed various limitations on such a cause of action. Accordingly,
we now hold that direct, intended, and specifically identifiable beneficiaries
of a will have standing to sue the lawyer who prepared the will where it can
be shown that the testator's intent, as expressed in the will, has been frustrated
by negligence on the part of the lawyer so that the beneficiaries' interest(s)
under the will is either lost or diminished.
Applying this standard to the Calverts, it
is clear that they are direct, intended, and specifically identifiable beneficiaries
of Erma's will. Likewise, it is apparent from the face of her will that Erma
intended for the Calverts to receive the benefit of her exercise of the power
of appointment in question. Consequently, the Calverts have standing to assert
that the negligence of the defendant lawyers frustrated this aspect of Erma's
testamentary plan. Our analysis does not end here, however, as there are two
more elements of a cause of action for legal malpractice that the Calverts
must meet in order to maintain their action: neglect of a reasonable duty and
damages.
The second element of a cause of action for
attorney negligence is the neglect of a reasonable duty. This element in the
context of a lawyer malpractice case brought by an intended beneficiary of a
will does not differ significantly from other types of negligence cases; thus,
we need not belabor our discussion. For ease of discussion in the instant case,
we will assume without deciding that there was neglect of a reasonable duty in
the drafting of Erma's will. We make this assumption because it is not a dispositive
factor in our resolution of this case. Thus, we proceed to the issue that is
pivotal to our resolution of this case _ damages.
With respect to damages in an action
against a lawyer for malpractice, we have held that “[i]n an attorney
malpractice action, proof of the attorney's negligence alone is insufficient
to warrant recovery; it must also appear that the client's damages are the
direct and proximate result of such negligence.” Syl. pt. 2, Keister
v. Talbott, 182 W. Va. 745, 391
S.E.2d 895 (1990). Thus, in order to prevail in a malpractice action against
a lawyer, the plaintiff must establish not only his or her damages, but must
additionally establish that, but for the negligence of the lawyer, he or she
would not have suffered those damages.
The Calverts contend that they should not
be required to prove that they would have lost the declaratory judgment action
in order to prevail in their malpractice action. Instead, they suggest that merely
establishing that they were sued in the declaratory judgment action should be
sufficient to establish proximate cause. We reject this position.
In Syllabus point 3 of Keister, we
explained that “[d]amages arising from the negligence of an attorney are
not presumed, and a plaintiff in a malpractice action has the burden of proving
both his loss and its causal connection to the attorney's negligence.” 182
W. Va. 745, 391 S.E.2d 895. Without the requisite causal connection between
an attorney's malpractice and a loss to the client, a malpractice case simply
cannot go forward. See, e.g., Harrison v. Casto, 165 W. Va. 787,
271 S.E. 2d 774 (1980) (finding no error in lower court's dismissal of case alleging
malpractice against an attorney who failed to file a complaint on behalf of client
upon finding that, although the attorney did not file a complaint, the client
had not been harmed by the failure as the statute of limitations on that action
had not run at the time the malpractice action had been instituted).
Placing this rule in the context of negligence in the drafting of a will, it is clear that an intended beneficiary must suffer an actual loss and that loss must be the direct result of the lawyer's negligence. If a lawyer is negligent in drafting a provision in a will, but the defect is cured so that the intended beneficiary receives his or her bequest pursuant to the will, then there is no causal connection between the attorney's negligence and the beneficiary's damages, because the beneficiary has not suffered damages proximately caused by the attorney's negligence. One court has stated this proposition thusly:
the contention that respondents [(lawyers)] owed a duty of care towards appellant class as potential beneficiaries, even in the absence of an allegation of a clear causal connection between the claimed malpractice and the alleged loss and notwithstanding the fact that appellants did receive their testamentary share, is not supported by the existing case authorities. Appellants' position therefore can only be construed as a request to extend the scope of the attorney's liability so that any defects in wills which result in litigation would also constitute actionable legal malpractice. Neither appellants nor amicus curiae, however, advance any cogent reasons why the scope of an attorney's duty should be so extended under [existing case law] and/or on the basis of general legal policy.
Ventura County Humane Soc'y v. Holloway, 40 Cal. App. 3d 897, 904, 115
Cal. Rptr. 464, 469 (emphasis added). See also Schreiner v. Scoville,
410 N.W.2d 679, 683 (“If the testator's intent, as expressed in the testamentary
instruments, is fully implemented, no further challenge will be allowed. Thus,
a beneficiary who is simply disappointed with what he or she received from
the estate will have no cause of action against the testator's lawyer.” (citation
omitted)). Cf. Blair v. Ing, 95 Hawai'i 247, 259, 21 P.3d 452,
464 (“An attorney
cannot be held liable for every mistake made in his or her practice . . . .
Such a blanket duty would possibly 'amount to a requirement to draft litigation
proof legal documents. This unlimited liability . . . would
result in a speculative and almost intolerable burden on the legal profession . . . .'” (internal
citations omitted) (quoting Ventura, 40 Cal. App. 3d at 905, 115 Cal.
Rptr. at 469)).
For these reasons, we wholeheartedly reject
the Calverts' contention that they are entitled to damages merely because they
were called into court by virtue of the declaratory judgment action. Adopting
such a rule as proposed by the Calverts would require lawyers to draft litigation-proof
documents. The result would be an excessive potential for liability that would
place an extraordinarily unreasonable burden upon the legal profession. Instead,
under West Virginia law, the Calverts are required to establish they suffered
an actual loss and that the loss was proximately caused by negligence in the
drafting of Erma's will. See Syl. pts. 2 & 3, Keister v. Talbott,
182 W. Va. 745, 391 S.E.2d 895.
If, in the instant case, the declaratory
judgment action had proceeded to a final judgment, the question of whether or
not the Calverts have suffered any loss resulting from negligence in the drafting
of Erma's will would have been definitively answered. However, due to their settlement
of the declaratory judgment action, there has been no final judicial determination
as to whether any negligence in the drafting of Erma's will proximately caused
injury to the Calverts.
The Calverts contend that they sustained
damages as a result of the settlement they voluntarily reached with Delores and
the Default Charities. Specifically, the Calverts seek to recover the portion
of the estate already paid over to Delores and the Default Charities as part
of their settlement of the declaratory judgment action, as well as additional
amounts they have promised to pay in the event they are successful in this action
for legal malpractice. These damages, which the Calverts have either voluntarily
paid or voluntarily agreed to pay, simply bear no causal relationship to any
negligence on the part of the attorneys who drafted Erma's will. Had the declaratory
judgment action proceeded to its conclusion and resulted in a final judicial
determination that Erma's exercise of her power of appointment had failed, then
the causal connection between the attorney's negligence and any losses sustained
by the Calverts would have been established. However, the Calverts' voluntary
settlement of the declaratory judgment action precluded any such determination.
Thus, as a matter of law, no cause of action exists. Accordingly, we answer the
reformulated certified question in the negative and find that the Calverts may
not maintain their action for malpractice against Mr. Scharf and Bowles Rice.
For the reasons explained in the body of
this opinion, we conclude that the Calverts' status as beneficiaries of Erma's
will did not deprive them of standing to bring an action for negligence against
the lawyers who prepared the will. However, because they have failed to establish
that they have suffered damages that were proximately caused by attorney malpractice,
they may not maintain their action for malpractice against Mr. Scharf and Bowles
Rice.