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2007-0113. Shoemaker v. Gindlesberger, Slip Opinion No. 2008-Ohio-2012.
Holmes App. No. 05 CA 010, 2006-Ohio-6916. Judgment affirmed.
O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Moyer, C.J., and Pfeifer and Lundberg Stratton, JJ., concur separately.
Opinion: http://www.supremecourtofohio.gov/rod/docs/pdf/0/2008/2008-Ohio-2012.pdf
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(May 7, 2008) In a decision announced today, the Supreme Court of Ohio held that a beneficiary of a decedent’s will does not have legal standing to sue the decedent’s attorney for alleged negligence in the preparation of a deed during the client’s life that later results in increased tax liability for the decedent’s estate after her death.
While all seven justices concurred in judgment, the Court issued divergent opinions regarding the continuing vitality of a 1987 decision in which it barred intended beneficiaries of a decedent’s will from pursuing malpractice claims against the decedent’s attorney based on alleged negligent estate planning.
In this case, attorney Thomas Gindlesberger prepared a deed in 1990 transferring ownership of a farm owned by a client, Margaret Schlegel, to Roy Schlegel, one of her three children. The new deed reserved to Mrs. Schlegel various residual rights and control over the property for the remainder of her life. Gindlesberger, who had prepared Mrs. Schlegel’s will in 1987, remained her attorney and provided her with estate planning advice and other legal services until her death in 2003.
Following her death, Mrs. Schlegel’s children discovered that the terms of the 1990 deed conveying the farm property to Roy required that the full value of that property must be included in the calculation of their mother’s taxable estate. With the value of the farm included, the amount of federal and state taxes assessed against the estate required the sale of most of Mrs. Schlegel’s other assets, significantly reducing the inheritances of her other two children, Robert Schlegel and Anna Shoemaker.
Robert and Anna filed suit against Gindlesberger in the Holmes County Court of Common Pleas, alleging that he was negligent in preparing the 1990 deed and in failing to recognize and advise their mother about the negative tax consequences it would have on her estate. The plaintiffs asserted claims for recovery from Gindlesberger of alleged amounts they would have inherited from their mother’s estate if he had provided her with competent estate planning advice.
Gindlesberger filed a motion for summary judgment, asking the trial court to dismiss the plaintiffs’ claims because there never was an attorney-client relationship between the Schlegel children and himself, and therefore none of the children had legal standing to bring a negligence claim against him. The court granted summary judgment in favor of Gindlesberger, holding that none of the plaintiffs was ever his client or “in privity” with (on the same legal footing as) a lawyer-client relationship.
The Schlegels appealed. In their argument to the 5th District Court of Appeals, they urged the court to follow the lead of other states, which have expanded the right to sue for legal malpractice to persons who were the intended beneficiaries of a lawyer’s client when they can show that the lawyer’s negligence or incompetence in providing estate planning was directly responsible for a loss of money or property that the client intended to pass on to those persons. The court of appeals rejected that argument and affirmed the trial court’s summary judgment in favor of Gindlesberger. The Schlegels sought and were granted Supreme Court review of the 5th District’s ruling.
In today’s lead opinion, Justice Judith Ann Lanzinger affirmed the court of appeals’ application of a 1987 Supreme Court decision, Simon v. Zipperstein, to the facts of this case. She wrote: “In Zipperstein ... (a)n attorney prepared a will for a client who had a son and upon the father’s death, the son’s guardian filed suit against the attorney for legal malpractice in the drafting of the will. The court held that the son’s guardian could not sue the attorney because the son did not have a vested interest in the estate and thus was not in privity with the client. The same applies here – the appellants were not in privity with their mother, the client, because they were only potential beneficiaries to her will and their rights as beneficiaries did not vest until her death. Margaret Schlegel retained the right to revoke or amend her will during her lifetime. For these reasons, the appellants do not have standing to file their negligence suit against Gindlesberger.”
Justice Lanzinger rejected the plaintiffs’ public policy arguments urging the Court to reconsider and change its legal reasoning in Zipperstein. While acknowledging that some other states have adopted less restrictive guidelines for legal malpractice actions based on estate planning errors, she expressed continuing support for Zipperstein’s requirement of “strict privity” between an attorney and a plaintiff in a negligence action.
“The strict privity rule ensures that attorneys may represent their clients without the threat of suit from third parties who may compromise that representation,” wrote Justice Lanzinger. “Otherwise, an attorney’s preoccupation or concern with potential negligence claims by third parties might diminish the quality of legal services provided to the client if the attorney were to weigh the client’s interests against the possibility of third-party lawsuits. ... A holding that attorneys have a duty to beneficiaries of a will separate from their duty to the decedent who executed the will could lead to significant difficulty and uncertainty, a breach in confidentiality, and divided loyalties. ... To overrule Zipperstein and develop a new rule relaxing the well-established privity requirement would require an overruling of a precedent based solely on public policy. We decline to change the rule of law in this state that bars an action for negligence against a lawyer by a plaintiff who is not in privity with the client.”
Justice Lanzinger’s opinion was joined by Justices Maureen O’Connor, Terrence O’Donnell and Robert R. Cupp.
Chief Justice Thomas J. Moyer entered a separate opinion, joined by Justices Paul E. Pfeifer and Evelyn Lundberg Stratton, stating that he agreed with the Court’s judgment in this particular case, but that under a different set of facts he would find “compelling reasons” to overrule Zipperstein and hold that a decedent’s heirs may have standing to sue a decedent’s attorney for negligence in the preparation of a will.
The Chief Justice noted that, in this case, the attorney negligence alleged by the plaintiffs was in Gindlesberger’s preparation of a property deed completely independent of Mrs. Schlegel’s will. Chief Justice Moyer wrote that “the appellants do not present compelling reasons for creating such a broad exception to the privity rule.” Under different circumstances, however, Chief Justice Moyer wrote: “I believe there would be compelling reasons to recognize a cause of action by an intended beneficiary against the decedent’s attorney for negligence in preparation of a will.”
Pointing out that the supreme courts of Pennsylvania and California, among others, have affirmed the standing of named beneficiaries in those states to sue a decedent’s attorney for negligent preparation of testamentary documents, Chief Justice Moyer quoted with approval from Justice Clifford Brown’s dissent in the Zipperstein decision and concluded: “I am persuaded that, as Justice Brown argued, the issue of an attorney’s conflict of interest does not arise if an intended beneficiary has a cause of action in negligence for an attorney’s preparation of a will. I am also persuaded that there is a strong need for attorney accountability in preparing wills. It serves no purpose to continue to invoke a strict rule of privity to protect the malpractice of a lawyer when we have abrogated that rule with respect to the liability of other professionals, such as accountants and architects. For this reason, if presented with a different set of facts, I would be in favor of revisiting our decision in Zipperstein in the context of the holding of Westfield Ins. Co. v. Galatis.”
Contacts
Ronald L. Rosenfield, 216.696.9300, for
Anna Mae Shoemaker and the Estate of Robert Schlegel.
John C. Nemeth, 614.443.4866, for Thomas Gindlesberger.