Estate Lawyers And Fiduciary Duties

The Mississippi Supreme Court reversed the grant of summary judgment to defendants in a legal malpractice claim arising out of a conservatorship and estate matter.

The plaintiff ("Bobby") is the spouse of the decedent ("Debbie") , whose brother ("Michael") served as her conservator. .Michael spent nearly all the funds that she had prior to her death and failed to file an inventory.

When Debbie died, it is alleged

Following Debbie’s passing, [attorney] Montgomery summoned Bobby and others to a meeting at the offices of WWM to discuss Debbie’s estate. At the meeting, Montgomery informed Bobby that he was the only “interested party” who had not signed the combined probate proceeding petition” and that, if he signed the combined petition, he would receive “big money,” but if he did not sign, the estate would sell certain guns which had sentimental value to Bobby. Montgomery also informed Bobby that Debbie’s estate lacked sufficient assets to fund a $50,000 legacy to Bobby’s grandson, and that Bobby should contribute $50,000 of the proceeds he received as beneficiary of Debbie’s $400,000 life-insurance policy.  The unpaid bequest to Bobby’s grandson was the only one that had not already been satisfied. Further, Montgomery promised Bobby that, in exchange for contributing the $50,000 from his life insurance proceeds, he would give Bobby the guns, which were valued at only $14,468.48, but had high sentimental value to Bobby.

As a result of Montgomery’s representations, Bobby signed the combined petition, which designated him as a “Petitioner.” Montgomery signed the petition as an “Attorney[] for Petitioners.” At the time he signed the petition, Bobby was not told that Debbie’s estate had been significantly depleted by Michael’s expenditures as conservator, and Montgomery did not inform him that, by signing the petition, he would be waiving his rights to contest and to renounce Debbie’s will and receive a child’s share of the estate.

 Throughout the estate proceedings, Bobby did not challenge any distributions made pursuant to the will, the status of Debbie’s estate, or the actions of the conservator, executor, or Montgomery. 

The court rejected res judicata grounds for summary judgment

Montgomery and WWM argue that, because Bobby asserted a similar factual account in his Petition to Re-open Debbie’s estate, res judicata precludes him from litigating his legal-malpractice action which is predicated on the same facts. Bobby indeed alleges almost identical facts in both his Petition to Re-open and his Complaint, and this Court reasonably could conclude that the two actions contain the same “identity of the subject matter of the action.”

The “identity of the cause of action,” however, is absent. In his Petition to Re-open, Bobby merely asked that the estate proceedings be reopened to further investigate alleged wrongful conduct and specifically requested relief through the creation of a constructive trust, injunctive relief, and an accounting of the conservatorship and estate. Importantly, within the petition to reopen, Bobby did not assert any legal-malpractice or fiduciary-duty claims. In other words, Bobby sought relief solely within the context of the estate. Conversely, in his legal-malpractice complaint, Bobby specifically alleged claims (including fiduciary-duty claims)—arguing duty, breach, and causation—against Montgomery and WWM, and he requested relief in the form of damages—both actual and punitive. 

On the merits

this Court has held that fiduciary relationships can arise in a variety of contexts, and that relationships between attorneys and third parties can give rise to a fiduciary relationship—and the requisite fiduciary duties—despite the absence of an actual “attorney-client” relationship. Accordingly, the general rule in Mississippi is that, under certain facts and circumstances, attorneys can acquire fiduciary obligations to third parties who are not their clients where no attorney-client relationship is present. Fiduciary relationships often turn on questions of fact related to exertion of influence, whether the reliance was justified.

 In other words, while it is true that we have never held—and we do not hold today—that attorneys for estates always owe fiduciary duties to every estate beneficiary, we see no reason to carve out a rule of special protection for estate attorneys, exempting them from any beneficiary claim of a fiduciary relationship. An attorney for the estate may, under certain circumstances, owe fiduciary duties to a beneficiary of the estate based on the same considerations relevant to determine fiduciary duties to all third parties. The existence of these fiduciary relationships are questions to be determined in the trial court, and here, we believe sufficient evidence exists in the record for a factfinder to conclude that Montgomery owed Bobby fiduciary duties, even without a finding of an attorney-client relationship...

 And, should the trial court find that Montgomery assumed fiduciary duties to Bobby, we also find that—viewing the facts and allegations in the light most favorable to
Bobby—Montgomery allegedly induced Bobby into signing a petition without first informing him of the consequences. This, in effect, caused Bobby to waive his statutory rights to  contest and renounce Debbie’s will. Montgomery approached Bobby under circumstances which, if not enough to create an attorney-client relationship, could support an inference of dependence and trust, as Montgomery purported to have Bobby’s interests in mind and to exercise control over Debbie’s estate. There is evidence in the record to support Bobby’s claim that Montgomery coerced or compelled him to deduct $50,000 of life-insurance proceeds to fund a bequest in Debbie’s will. These acts, if true—and assuming a fiduciary relationship is found to have existed—would constitute a breach of that fiduciary duty. So genuine issues of material fact remain regarding Bobby’s fiduciary-duty claims.

To be clear, we do not address today the duties of attorneys who represent executors and administrators of estates. Montgomery claims he was the attorney for the estate and not for the executor of the estate. In thirty filings with the trial court, Montgomery was either listed as or signed as the “attorney for the Estate.”

(Mike Frisch)