Tuesday, March 26, 2019
The Wisconsin Supreme Court rejected a call to expand malpractice liability in third party beneficiary cases.
We conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.
Applying Auric to the facts of this case, we determine that Charles MacLeish's clear testamentary intent was not thwarted by any alleged negligence on the part of Boardman. As a result, we conclude that the MacLeish children's claim against Boardman for legal malpractice was properly dismissed.
MacLeish died in 1984 leaving a one-page will.
Attorney Forrest Hartmann, a former partner of the will's drafter, and subsequently a member of the Boardman firm, handled the administration of the estate. He advised Thelma MacLeish, Charles's wife, to claim full use of the federal estate tax marital deduction.
Thelma followed Attorney Hartmann's advice and treated all the assets of Charles's estate as though they passed directly to her. She also claimed a federal estate tax marital deduction for those assets.
The effect of this action was that Charles's estate was not subject to estate tax in 1984. Instead, the assets that had been in Charles's estate would be subject to estate tax at the time of Thelma's death.
Thelma followed Charles in 1988. The heirs were concerned about the tax advice.
The circuit court entered summary judgment to the defendants which was affirmed by the Court of Appeals
We are asked to review whether the MacLeish children have standing to bring this legal malpractice action against Boardman. A determination of standing presents a question of law reviewed independently of the determinations rendered by the circuit court and court of appeals.
The MacLeish children contend that the Restatement presents a better approach than the well-established general rule of nonliability and the Auric exception. They argue that broad immunity for attorneys from claims by non-clients is bad public policy. In their view, the Restatement provides a workable standard that narrows such immunity.
Adopting the Restatement as the MacLeish children urge would significantly change the general rule of attorney nonliability to non-clients. In the context of this case, adopting the MacLeish children's position would result in the elimination of the specific requirement that a third party beneficiary demonstrate that the testator's clear intent was thwarted in order to proceed with a legal malpractice claim.
The court squarely rejected this approach but
We therefore conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.
The Auric exception
the Auric exception and cases interpreting it are grounded in the constitutional right to make a will and have it carried out according to the testator's intentions.
...when presented with the opportunity in the past, we have been reluctant to expand attorney liability to non-clients in the estate planning context. For example, in Tensfeldt we concluded that "[e]xtending the Auric exception to attorneys who give negligent advice stretches the exception too far." Tensfeldt, 319 Wis. 2d 329, ¶77. The court was explicit in its instruction that the Auric exception "is a narrow one."
The proof here was insufficient to establish a thwart. (Mike Frisch)