Mary Jane Pence, Bryan Prahl, Christopher Prahl, William Byron Leek Irrevocable Trust, Joan Duvall, James Leek, John Leek, Thomas Leek, Daniel Prahl, Michael Prahl and Pamela Predick, Plaintiffs-Appellants,
Joan R. Slate and Slate Tax Service, Defendants, William Slate d/b/a Slate Law Offices, Defendant-Respondent, American Family Mutual Insurance Company, Intervenor.
recommended for publication in the official reports.
from an order of the circuit court for Green Lake County: No.
2016CV116 BRIAN A. PFITZINGER, Judge. Affirmed.
Lundsten, P.J., Blanchard and Fitzpatrick, JJ.
Wisconsin has a long-standing rule that an attorney is not
liable to a non-client for "acts committed in the
exercise of his [or her] duties as an attorney." See
Auric v. Continental Cas. Co., 111 Wis.2d 507, 512, 331
N.W.2d 325 (1983). There are exceptions to this rule and one
of those exceptions, established in Auric, applies
in the estate-planning context.
In this case, beneficiaries of a trust seek to hold an
attorney liable for his alleged negligence related to the
trust, despite the fact that the beneficiaries were never
clients of the attorney. They rely on the Auric
exception. The attorney, William Slate, moved for summary
judgment dismissing the malpractice claim, arguing that the
Auric exception does not apply. The circuit court
agreed, and dismissed the suit with respect to Attorney
We agree with the circuit court that Attorney Slate was
entitled to summary judgment. Accordingly, we affirm.
In 1994, Attorney Slate drafted an irrevocable life insurance
trust as a part of William Leek's estate planning. The
purpose of the trust was to hold and maintain a previously
purchased life insurance policy so that, upon Leek's
death, an expected death benefit of $600, 000 would be
distributed to the beneficiaries named in the trust.
In 2002, Leek learned that the trustee for the trust might
need to resign and that the person named as the successor
trustee had died. Leek and Attorney Slate discussed the
trustee situation. They discussed whether Joan Slate could
act as the trustee. At the time, Joan Slate prepared
Leek's income taxes. Joan Slate owned and operated
"Slate Tax Service" in a building next to Attorney
Slate's law office.
Leek picked Joan Slate to be the new trustee. Attorney Slate
drafted the trust amendment naming Joan, and she took over
trustee duties at the beginning of 2003. In her role as
trustee, it was Joan Slate's responsibility to make sure
that an annual life insurance policy premium was paid.
So far as the record discloses, Joan Slate performed her
duties competently until 2014. That year, the policy-issuing
insurance company sent Joan Slate two notices informing her
that the policy would lapse if the premium was not paid.
After the policy lapsed, the insurance company provided Joan
with information explaining how the policy could be
There are more details but, for purposes of this opinion, we
will assume that Joan Slate negligently failed to pay the
premium and negligently failed to take the steps necessary to
have the policy reinstated. As a result, the life insurance
policy was not in effect when Leek died the next year on
August 30, 2015, and the beneficiaries did not receive the
death benefit as Leek intended.
The beneficiaries sued Joan Slate for breach of fiduciary
duty and negligence. They later amended their complaint to
include a legal malpractice claim against Attorney Slate, the
claim at issue in this appeal.
Attorney Slate moved for summary judgment, arguing that the
malpractice claim must be dismissed because the beneficiaries
were not Attorney Slate's clients. The circuit court
granted Attorney Slate's motion, thereby dismissing the
sole claim against him. The beneficiaries appeal that
Generally, an attorney is not liable to third parties for
negligent acts committed within the scope of the
attorney-client relationship. Beauchamp v. Kemmeter,
2001 WI.App. 5, ¶7, 240 Wis.2d 733, 625 N.W.2d 297
(2000). There are exceptions. A non-client may sue an
attorney based on alleged fraud. Auric, 111 Wis.2d
at 512. A non-client may sue when an attorney knowingly
"assists [a] client committing an unlawful act to the
detriment of a third party." See Tensfeldt v.
Haberman, 2009 WI 77, ¶¶59-68, 319 Wis.2d 329,
768 N.W.2d 641. A third exception applies in the
estate-planning context and has come to be known as the
Auric exception. In broad strokes, the
Auric exception permits a named beneficiary to sue
an attorney for malpractice when the beneficiary can show
that he or she was harmed by attorney negligence that
thwarted the intent of the attorney's client. See
Auric, 111 Wis.2d at 512, 514; Beauchamp, 240
Wis.2d 733, ¶9 (non-clients must be "named in an
executed or unexecuted will or similar estate planning
The beneficiaries here argue that summary judgment was
improperly granted because, under the Auric
exception, they may maintain a legal malpractice action
against Attorney Slate. We disagree.
Our analysis proceeds as follows. First, we briefly set forth
the legal principles governing summary judgment. Second, we
discuss the beneficiaries' factual assertions regarding
what the record says about possible negligence on the part of
Attorney Slate and explain that the assertions are not
supported by the record. Third, we summarily reject as
undeveloped an argument that Attorney Slate may be found
liable to the beneficiaries for Joan Slate's negligence
because Joan was acting as Attorney Slate's agent while
Joan was acting as the trustee.
Summary Judgment Standards
We review summary judgment decisions de novo, applying the
same methodology as the circuit court. Green Spring Farms
v. Kersten, 136 Wis.2d 304, 315-17, 401 N.W.2d 816
(1987). The burden is on the moving party to establish the
absence of a genuine disputed issue as to any material fact.
Kraemer Bros. v. United States Fire Ins. Co., 89
Wis.2d 555, 565, 278 N.W.2d 857 (1979). We must view the
evidence, and inferences from the evidence, in the light most
favorable to the non-moving party. Id. at 567.
The Beneficiaries' Factual Assertions
We agree with the statement in Attorney Slate's appellate
brief that the beneficiaries "blur the distinction
between the allegations in their complaint and their
unsubstantiated conjecture on the one hand, with the
undisputed material facts in the record on the other
hand." As Attorney Slate goes on to state, our review
"is limited to the facts in the record, not the case
[the beneficiaries] wish they had."
We have identified 11 factual allegations that, so far as we
can tell, form the factual basis for the beneficiaries'
legal theory as to why they have a viable legal malpractice
claim against Attorney Slate. According to the beneficiaries,
(1) recommended to Leek that Joan Slate be the new trustee;
(2) failed to disclose to Leek that Joan Slate had no trustee
(3) knew that Joan Slate did not have appropriate insurance;
(4) failed to warn Leek that Joan Slate lacked appropriate