Justia Legal Ethics Opinion Summaries

Paul retained attorney Patton to draft an amendment to his revocable living trust. Paul signed the “Trust Amendment,” which, as drafted by Patton, named his wife, Helen, and his children, Stephen, David, Alan, and Nancy, as beneficiaries. Stephen and David also are the successor trustees. Following Paul’s death, they petitioned the probate court to modify the Trust Amendment, alleging it failed to conform to Paul’s intentions by erroneously granting Helen an interest in brokerage accounts and personal and real property. In that probate court action, Patton admitted the Trust Amendment did not reflect Paul’s intention that his brokerage accounts and personal and real property be divided among his children. Stephen and David settled the probate court action with Helen. The children filed the legal malpractice action, alleging that Patton failed to exercise reasonable care in performing legal services by failing to draft the Trust Amendment in a manner consistent with the decedent’s intentions. The trial court dismissed. The court of appeal reversed. The trial court erred in concluding as a matter of law that the children could not establish Patton owed them a duty as beneficiaries; they should be permitted to amend their complaint to allege such a duty. View "Paul v. Patton" on Justia Law

Bell sued attorney Ruben and his firm, alleging that they negligently and fraudulently mismanaged her trust, causing a loss of $34 million. Before arbitration, Ruben filed for Chapter 7 bankruptcy. Bell filed an adversary complaint opposing discharge of Ruben’s fraud-based debt to her, 11 U.S.C. 523(a)(2)(A), (4). The bankruptcy judge granted Ruben a discharge of his other debts, but not of that fraud debt. Ruben’s liability insurance did not cover fraud. Bell settled her negligence claims against Ruben and all claims against the other defendants in arbitration. The arbitration panel ruled, with respect to the fraud claim, that “damages proven to be attributable to the actions of [Ruben] have been compensated,” but ordered Ruben to pay administrative fees and expenses of the American Arbitration Association (AAA) totaling $21,200.00 and that compensation and expenses of the arbitrators, advanced by Bell, totaling $150,304.54 would be borne by Ruben. AAA rules, which governed the arbitration, provide that expenses of arbitration “shall be borne equally” unless the parties agree otherwise or the arbitrator assesses expenses against specified parties. Ruben refused to pay. The bankruptcy judge entered summary judgment in favor of Ruben. The district court reversed, in favor of Bell. The Seventh Circuit affirmed. View "Ruben v. Bell" on Justia Law

Edmonds was admitted to the Illinois bar in 1975. He became a member of St. Mark Church. In1998, Sloan asked Edmonds to rewrite Sloan’s will to benefit St. Mark’s. Edmonds knew Hannah, a lawyer who, in 1992, was suspended for neglecting and misrepresenting client matters, failing to maintain a client trust account, and commingling. In 1994, Hannah was suspended until further order; he never sought reinstatement. Edmonds was unaware of Hannah’s disciplinary status and believed that Hannah was an estate planning expert. Edmonds introduced Hannah to Sloan, who transferred some assets to American Express for Hannah’s management. Sloan’s trust held $3.36 million at one point. Sloan died in 2000. Edmonds acted as executor and trustee. At his direction, the trust and estate bought Range Energy stock recommended by Hannah. Hannah eventually became president and CEO of Range, which, by 2001, held all of Sloan’s personal assets and most of the trust assets. In 2003, the British Columbia Securities Commission suspended trading of Range stock, which ultimately became worthless. Edmonds did not inform St. Mark’s about the situation. The church eventually filed suit. In 2009, the successor trustee closed the trust with a balance of $1,149. The ARDC Hearing Board found that Edmonds breached fiduciary duties, engaged in dishonest conduct, neglected an estate matter associated with the trust, and commingled his funds with client or third-party funds. The Review Board reversed the findings of breach of fiduciary duty and dishonest conduct and recommended that Edmonds be suspended for 60 days. The Illinois Supreme Court imposed a three-month suspension. View "In re Edmonds" on Justia Law

Appellant Erika Fabian brought this action for legal malpractice and breach of contract by a third-party beneficiary, alleging respondents attorney Ross M. Lindsay, III and his law firm Lindsay & Lindsay made a drafting error in preparing a trust instrument for her late uncle and, as a result, she was effectively disinherited. Appellant appealed the circuit court order dismissing her action under Rule 12(b)(6), SCRCP for failing to state a claim and contended South Carolina should recognize a cause of action, in tort and in contract, by a third-party beneficiary of a will or estate planning document against a lawyer whose drafting error defeats or diminishes the client's intent. Upon review of the matter, the Supreme Court agreed, reversed and remanded for further proceedings. View "Fabian v. Lindsay" on Justia Law

In 2002, David hired the Attorneys to represent him in petitioning for his appointment as probate conservator of the person and estate of his mother, Donna. In his petition, David represented there were no conservatorship assets and that all of Donna’s assets were held in her Trust, so that no bond was required. Donna actually owned significant assets, including real property and several individual retirement accounts (IRAs), individually and not as assets of her Trust. The probate court appointed David as conservator of both Donna’s person and estate and waived bond. The Attorneys continued to represent David and allegedly “knew that Donna . . . had assets in her name that under California law were assets of the conservatorship,” but never informed the probate court of their existence nor petitioned the court to require or increase a bond. David subsequently misappropriated over one million dollars. Stine, a subsequently-appointed licensed professional fiduciary sued David for financial elder abuse and conversion and the Attorneys for legal malpractice. The trial court dismissed the Attorneys. The court of appeal reversed holding that the successor trustee is not subject to any defense that can be interposed against David and David’s malfeasance. View "Stine v. Dell'Osso" on Justia Law

Sir John Thouron died in 2007 at the age of 99, leaving a substantial estate. Thouron’s grandchildren are his only heirs. His named executor retained Smith, an experienced tax attorney. The Estate’s tax return and payment were due November 6, 2007. On that date, the Estate requested an extension of time and made a payment of $6.5 million, much less than it would ultimately owe. The Estate timely filed its return in May 2008 and requested an extension of time to pay. It made no election to defer taxes under 26 U.S.C. 6166, it had conclusively determined it did not qualify. The provision allows qualifying estates to elect to pay tax liability in installments over several years. The IRS denied as untimely the Estate’s request for an extension and notified the Estate that it was imposing a failure-to-pay penalty. The Estate unsuccessfully appealed administratively. The Estate then filed an appropriate form and paid all outstanding amounts, including a penalty of $999,072, plus accrued interest, then filed a request with the IRS for a refund. After not receiving a response from the IRS, the Estate filed a complaint, alleging that its failure to pay resulted from reasonable cause, reliance on Smith’s advice, and not willful neglect and was not subject to penalty. The district court granted the government summary judgment, holding that under Supreme Court precedent the Estate could not show reasonable cause. The Third Circuit vacated, reasoning that the precedent did not apply to reliance on expert advice.View "Estate of Thouron v. United States" on Justia Law

The Jicarilla Apache Nation's ("Tribe") reservation contained natural resources that were developed pursuant to statutes administered by the Interior Department and proceeds from these resources were held by the United States in trust for the Tribe. The Tribe filed a breach-of-trust action in the Court of Federal Claims ("CFC") seeking monetary damages for the Government's alleged mismanagement of the Tribe's trust funds in violation of 25 U.S.C. 161-162a and other laws. During discovery, the Tribe moved to compel production of certain documents and the Government agreed to the release of some documents but asserted that others were protected by, inter alia, the attorney-client privilege. At issue was whether the fiduciary exception to the attorney-client privilege applied to the general trust relationship between the United States and Indian tribes. The Court held that the fiduciary exception did not apply where the trust obligations of the United States to the Indian tribes were established and governed by statute rather than the common law and, in fulfilling its statutory duties, the Government acted not as a private trustee but pursuant to its sovereign interest in the execution of federal law. The reasons for the fiduciary exception, that the trustee had no independent interest in trust administration, and that the trustee was subject to a general common-law duty of disclosure, did not apply in this context. Accordingly, the Court reversed and remanded for further proceedings.View "United States v. Jicarilla Apache Nation" on Justia Law

Bill Graham, a successful promoter of rock and roll concerts, died testate and his will created individual trusts for his sons, Alexander and David. Nicholas Clainos was the trustee of the trusts and the executor of the estate and Richard Greene, through his firm, provided Clainos legal counsel. On appeal, Alexander and David challenged the district court's disposition of a motion to dismiss, a special motion to strike under California's anti-SLAPP statute, Cal. Proc. Code 425.16(b)(1), and related attorney's fees awards. The court affirmed the disposition of the motion to strike in part and reversed in part. The court concluded that striking plaintiffs' conversion and unjust enrichment claims against Clainos was erroneous. The court also concluded that striking plaintiffs' breach of fiduciary duty claim against Clainos was erroneous. The court further concluded that plaintiffs sufficiently alleged claims for conversion, copyright infringement, and declaratory relief against the BGA Defendants and that dismissal of those claims was erroneous. In regards to attorney's fees, the court vacated the post-motion-to-strike fee award to Clainos, as well as the post-motion-to-dismiss fee award to the BGA Defendants. The court affirmed in all other respects. View "Graham-Sult v. Clainos" on Justia Law

Thirteen years after the divorce was finalized, the Lamar County Chancery Court found that the former husband, Appellee John David Gatwood, was in arrears on certain financial obligations imposed by the divorce decree. Because of various extenuating circumstances, the chancellor ordered Gatwood to pay off his debt in monthly installments. More than a year after the chancery court judgment, the former wife's attorney, Jack Parsons, successfully filed a suggestion for writ of garnishment, significantly accelerating payment of Gatwood's financial obligations. Circumstances related to the manner in which the writ of garnishment was obtained resulted in sanctions against Parsons; the garnishment proceedings also gave rise to other rulings which were appealed to this Court. After review, the Supreme Court declined to find the trial court erred: evidence at trial supported that court's finding that attorney's fees and sanctions against Parsons and his client were appropriate. Accordingly, the circuit court's decision was affirmed. View "Cooper v. The Estate of William David Gatwood" on Justia Law

The Kivers retained C&T, an Illinois law firm, to prepare trusts to benefit their daughters, Diane and Maureen, among others. Maureen and Diane each served as trustee of various trusts. Maureen died in 2007. Her husband, Minor, represents Maureen’s estate, which filed suit against C&T, alleging that C&T failed to disclose the existence and terms of certain trusts to Maureen, to her detriment, and failed to make distributions to her. The estate filed a separate state court suit against Diane, alleging that Diane breached her duties as trustee by failing to disclose the existence of certain trusts to Maureen or make distributions to her. Diane was a client of C&T during the relevant period. The district court entered an agreed protective order governing discovery disclosure to deal with privilege issues and denied the estate’s motion to compel production. The estate violated the protective order. The district court imposed sanctions and dismissed several of the estate’s claims. The Seventh Circuit affirmed, stating that “The complexity of the multiple trusts … the untimely death of Maureen, the pursuit of concurrent state and federal suits … the length of this litigation, and the disorderly nature of the estate’s presentation… evoke a middle installment of Bleak House." View "Scott v. Chuhak & Tecson, PC" on Justia Law