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MacLeish v. Boardman & Clark LLP

Supreme Court of Wisconsin

March 26, 2019

David MacLeish, Hayden MacLeish, Kay MacLeish and Robin MacLeish, Plaintiffs-Appellants-Petitioners,
v.
Boardman & Clark LLP, Quale Hartmann, S.C., Continental Casualty Company and OneBeacon Insurance Company, Defendants-Respondents.

          ORAL ARGUMENT: January 24, 2019

          Circuit Court Dane County, L.C. No. 2012CV3621, Josann M. Reynolds Judge.

         REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 381 Wis.2d 471, 915 N.W.2d 455

          For the plaintiffs-appellants-petitioners, there were briefs filed by Douglas W. Kammer, and Kammer Law Office, S.C., Portage. There was an oral argument by Douglas W. Kammer.

          For the defendants-respondents, there was a brief filed by Bruce A. Schultz, Karen M. Gallagher, and Coyne, Schultz, Becker & Bauer, S.C., Madison. There was an oral argument by Bruce A. Schultz.

          ANN WALSH BRADLEY, J.

         ¶1 The petitioners, collectively the MacLeish children, [1] seek review of an unpublished court of appeals decision affirming the circuit court's order dismissing their legal malpractice claim against the law firm that administered their father's estate.[2] The court of appeals assumed without deciding that the MacLeish children could bring a claim for legal malpractice based on the negligent administration of an estate. It nevertheless affirmed the circuit court's dismissal of the claim against the Boardman law firm[3] because the children failed to demonstrate that the firm's alleged negligent administration of their father's estate thwarted their father's clear testamentary intent.

         ¶2 The MacLeish children contend first that we should alter the test for standing to permit third party non-clients to bring legal malpractice actions. Specifically, they argue that this court should abandon Auric v. Continental Cas. Co., Ill. Wis.2d 507, 331 N.W.2d 325');">331 N.W.2d 325 (1983), [4] and instead adopt the Restatement (Third) of the Law Governing Lawyers § 51 (2000). In the event we do not adopt the Restatement, the parties advance that we should reaffirm the Auric exception to nonliability and apply it beyond claims of negligent will drafting and execution to also encompass a claim of negligent administration of an estate.

         ¶3 Alternatively, applying the Auric exception, the MacLeish children further argue that the court of appeals erred when it determined that the children failed to demonstrate that their father's clear testamentary intent was thwarted. According to the children, Boardman's failure to construe the will to create a trust for their mother for her lifetime with a remainder interest to them caused them to lose significant tax benefits and incur additional probate expenses.

         ¶4 We reject the MacLeish children's invitation to adopt the Restatement (Third) of the Law Governing Lawyers § 51 (2000). The Auric exception remains the operative standard.

         ¶5 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.

         ¶6 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.

         ¶7 Accordingly, we affirm the decision of the court of appeals.

         I

         ¶8 Charles MacLeish died in April of 1984. His one-page will, which was drafted in 1967 by Attorney James Hill, provided:

I, Charles MacLeish, of the Town of Caledonia, Columbia County, Wisconsin, do make, publish and declare this instrument as my Last Will and Testament.
FIRST: I direct the payment of my just debts and funeral expenses.
SECOND: All the rest, residue and remainder of my property I give, devise and bequeath to my beloved wife, Thelma MacLeish, to use the income and so much of the principal as she may need for her care, comfort and support during her lifetime, meaning and intending hereby to give to my wife, Thelma MacLeish, the life use of the income and so much of the principal as she may need.
THIRD: At the death of my wife, Thelma, I direct that the remainder of my estate in existence at that time be placed in trust until my youngest child shall have completed his college education through a Bachelor's degree or indicated in writing to the trustee that he did not desire any further education, at which time said trust shall terminate and the remainder of my estate shall be divided equally between my four children.
FOURTH: I nominate and appoint my beloved wife, Thelma MacLeish, executrix of this my Last Will and Testament and request of her that she employ the firm of Hill, Miller & Quale in the settlement of my estate.

         IN WITNESS THEREOF, I have hereunto set my hand and seal this 1st day of February, 1967.

         ¶9 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.

         ¶10 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.

         ¶11 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.

         ¶12 In February of 2008, Thelma died. As a result of the administration of Charles's estate twenty-four years earlier, Thelma's estate included those assets that had passed from Charles's estate to Thelma. Thelma's estate incurred a federal estate tax of $261, 343.[5]

         ¶13 Dissatisfied with the tax that had been levied on Thelma's estate and with the additional probate expenses, the MacLeish children brought suit for legal malpractice against Boardman. They asserted that the tax and expenses would have been avoided if the estate had been administered differently.

         ¶14 Specifically, the MacLeish children alleged that there would have been no estate tax if, in 1984, a trust had been imposed over Charles's assets. In their complaint, they allege that "the will of Charles MacLeish should have been construed to create a trust for the benefit of Thelma MacLeish for her lifetime, with a remainder to the four plaintiffs in this action." They further allege that absent such a trust, "the property in which these plaintiffs had a remainder interest was delivered to Thelma MacLeish. . . . The estate was probated as though the plaintiffs had a future interest for Wisconsin Inheritance Tax purposes, but treated for federal taxes as if the property were devised to Thelma MacLeish absolutely (instead of an interest in a trust or other limited interest) and free of any trust or ownership interest of these plaintiffs."

         ¶15 The complaint additionally detailed the MacLeish children's view that Boardman's method of administration "wasted" Charles's unified credit and resulted in "entirely avoidable" estate tax on Thelma's estate. Accordingly, in the MacLeish children's estimation, the tax and additional expenses incurred on Thelma's estate was the result of Boardman's negligent administration of Charles's estate.

         ¶16 Moving for summary judgment, Boardman contended that Charles's will unambiguously does not call for the creation of a trust.[6] It argued that Attorney Hartmann did just as the will instructs and that Charles's testamentary intent was not thwarted by Attorney Hartmann's administration of the will. As a result, Boardman asserted that the MacLeish children cannot maintain a legal malpractice claim pursuant to Auric, 111 Wis.2d 507.

         ¶17 The circuit court agreed and granted summary judgment to Boardman. Applying the rule that "a third-party beneficiary of a will may maintain a legal malpractice action for negligence against an attorney only where the beneficiary can show the attorney's actions thwarted the decedent's testamentary intent[, ]" it concluded that Charles's intent was not thwarted.

         ¶18 In the circuit court's view, Charles's will "did not create a trust as a matter of law, nor did he intend to create a trust." The circuit court observed that the MacLeish children "carry the burden of presenting evidence that Charles' testamentary intent was thwarted before their negligence claim can be presented to a trier of fact. This they have failed to do."

         ¶19 The MacLeish children appealed, and the court of appeals affirmed. It framed its analysis by assuming without deciding that the Auric exception to attorney nonliability is applicable not only to the negligent drafting of a will but to the negligent administration of a decedent's estate where the alleged negligence thwarts the decedent's clear testamentary intent. MacLeish v. Boardman & Clark LLP, No. 2016AP2491, unpublished slip op., ¶10 (Wis. Ct. App. Mar. 15, 2018).

         ¶20 Applying this assumption, the court of appeals concluded that "Charles's will did not create a trust, as argued by the MacLeish siblings, and therefore by definition the attorney's failure to read the will as creating a trust could not have thwarted any clear intent of Charles." Id., ¶13. It determined that the MacLeish children can point to no "language in the will [that] manifests an intent by Charles that a trustee be appointed, that the assets of Charles's estate be held by a trustee for the benefit of Thelma, or that enforceable duties with respect to those assets be imposed upon a trustee." Id., ¶16. II

         ¶21 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. State v. Popenhagen, 2008 WI 55, ¶23, 309 Wis.2d 601, 749 N.W.2d 611.

         ¶22 We also examine the court of appeals' determination that the circuit court properly granted summary judgment to Boardman on the ground that the MacLeish children did not establish that Charles's clear testamentary intent was thwarted. We review a summary judgment decision independently of the determinations rendered by the circuit court and court of appeals, applying the same methodology as the circuit court. SECURA Ins. v. Lyme St. Croix Forest Co., LLC, 2018 WI 103, ¶15, 384 Wis.2d 282, 918 N.W.2d 885. Summary ...


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