In a recent decision, the U.S. District Court for the District of Massachusetts ruled a testator’s attorney can be held liable to a prospective beneficiary for fraudulent misrepresentations. In Spinnato v. Gold- man, 2014 WL 7236343 (D. Mass. Dec. 19, 2014) (Saris, C.J.), applying Massachusetts law, the Court distinguished a fraudulent misrepresentation claim, where the case law is unsettled, from a negligence, negligent misrepresentation, and breach of fiduciary duty claim, where it is well-settled that a testator’s attorney cannot be held liable to prospective beneficiaries because the testator’s attorney does not owe a duty of care to prospective beneficiaries.
On August 29, 1995, the decedent, a Massachusetts resident, executed a last will and testament prepared by her estate planning attorney. The will listed eight heirs, all of whom were distant relatives and all but one of whom lived in Texas. The decedent had no regular contact with any of these heirs during the last twenty years of her life.
The plaintiff, a New Hampshire resident, met the decedent in 1998. The two established a close friendship which lasted until the dece- dent’s death in 2011. The decedent introduced the plaintiff to her estate planning attorney five or six times. The estate planning attor- ney believed the plaintiff to be the decedent’s best friend and never mentioned he thought their relationship was improper. On one occa- sion, the estate planing attorney told the plaintiff the decedent want- ed to give him the bulk of her assets either upon her death or through the use of joint accounts. The estate planning attorney told the plaintiff he approved of the decedent’s plan.
In 2006, the decedent changed her estate plan to reflect her rela- tionship with the plaintiff. She executed a codicil to her will and a durable power of attorney in favor of the plaintiff. The estate plan- ning attorney drafted and notarized both documents. The codicil made the estate planning attorney and the plaintiff co-executors of the decedent’s estate and made the plaintiff a major heir of the estate. The estate planning attorney indicated to the plaintiff both documents reflected the decedent’s true intent and never suggested that the decedent was incompetent or subject to undue influence. In reliance on these documents and statements by the estate planning attorney, the plaintiff and decedent transferred assets in four of the decedent’s accounts outside of probate to the plaintiff.
On January 24, 2008, the decedent executed a second codicil to her will which made the plaintiff the sole beneficiary of her $200,000 deposit on her assisted living facility apartment. The estate planning attorney drafted and notarized the codicil and indicated to the plaintiff there was nothing improper about the change. At the time of the execution of the second codicil, the estate planning attorney was aware of the decedent’s transfer of assets out of probate to the plaintiff.
The decedent died on March 26, 2011. Shortly after her death, unbeknown to the plaintiff, the estate planning attorney contacted the decedent’s Texas heirs and alleged that plaintiff wrongfully trans- ferred the decedent’s assets out of probate when the decedent was either incompetent or under the plaintiff’s undue influence. The estate planning attorney also placed the Texas heirs in contact with a Massachusetts attorney and assisted them and their attorneys in preparing a lawsuit against the plaintiff. The plaintiff was unaware of any of these communications until May, 2012, when the Texas heirs filed a lawsuit against the plaintiff in Massachusetts Superior Court.
In that litigation, the estate planning attorney signed an affidavit supporting the Texas heirs’ claims against the plaintiff. He also testi- fied at deposition that he believed the decedent was under the plaintiff’s undue influence from the day he met the plaintiff. His dep- osition testimony also suggested the decedent was not competent to execute the legal documents transferring her assets out of probate to the plaintiff. Based on the estate planning attorney’s affidavit and deposition testimony, the plaintiff agreed to settle the lawsuit and pay a portion of the non-probate assets to the Texas heirs.
Thereafter, the plaintiff sued the testator’s attorney for: (i) breach of fiduciary duty; (ii) fraudulent misrepresentation; and, (iii) tortious interference with the expectancy of a gift. The testator’s attorney moved to dismiss the suit.
Relying on the seminal case in Massachusetts, Miller v. Mooney, 431 Mass. 57 (2000), the Court held the testator’s attorney did not owe a fiduciary duty to the plaintiff as a beneficiary because, “[i]n preparing an estate plan and distributing property, either through a will or through inter vivos trusts, attorneys can only have one client to whom they owe a duty of undivided loyalty.” It is “[b]ecause of the potential for conflicting interests [that] testators’ attorneys do not owe a duty to prospective beneficiaries when drafting a will.” In rejecting the plaintiff’s argument that no conflict existed because both he and the decedent wanted her will effectuated, the Court explained: “[I]t is the potential for conflict that prevents the imposition of a duty . . .. [A]n isolated instance [of] identity of interests between [the attorney’s client and the nonclients] would not support the imposition of a duty.”
The Court, however, held that in his capacity as co-executor of the decedent’s estate, the testator’s attorney did owe the plaintiff, a bene- ficiary of the estate, a fiduciary duty, which required the testator’s attorney to fully disclose to the plaintiff all “information which is relevant to affairs entrusted to him and which . . . the [plaintiff] would desire to have.” The Court found the plaintiff would have wanted to know that the co-executor of the decedent’s estate, i.e., the testator’s attorney: (i) believed the estate planning documents making the plaintiff an heir were invalid; (ii) told the Texas heirs he believed the decedent was under the plaintiff’s undue influence when she transferred assets out of probate to the plaintiff; and, (iii) was providing assistance to the Texas heirs in preparing the lawsuit against him. Accordingly, the Court denied dismissal of the breach of fiduciary duty claim insofar as was it was asserted against the testator’s attorney in his capacity as co-executor of the estate.
The Court also denied dismissal of the fraudulent misrepresenta- tion claim. This claim was based on the plaintiff’s detrimental reliance on the testator’s attorney’s prior misrepresentations to him regarding the validity of: (i) the estate planning documents which made him an heir; and, (ii) the decedent’s transfer of assets out of probate to him. The testator’s attorney argued, under Massachusetts law, a testator’s attorney owes no duty of care to prospective beneficiaries. Although the Court agreed that this is the rule for negligence, negligent misrepresentation, and breach of fiduciary duty claims, it found no Massachusetts case law indicating a prospective beneficiary cannot prevail on a fraudulent misrepresentation claim against a testator’s attorney.
The Court also denied dismissal of the plaintiff’s claim for tortious interference with expectancy of a gift, finding the allegations in the Complaint set forth a plausible claim. To set forth a claim for tortious interference with expectancy of a gift, a plaintiff must plead the following three elements: (i) the defendant intentionally interfered with the plaintiff’s expectancy in an unlawful way; (ii) the plaintiff has a legally protected interest; and, (iii) the defendant’s interference acted continuously on the donor until the time the expectancy would have been realized. The plaintiff’s Complaint alleged, during the decedent’s life, the testator’s attor- ney interfered with the decedent’s intent to include the plaintiff in her will by fraudulently executing changes to her estate plan that were favorable to the plaintiff despite having concerns about the plaintiff’s undue influence over her which only surfaced after her death. Accordingly, the Court found the Complaint set forth a plausi- ble claim for tortious interference with expectancy of a gift.
The Spinnato decision illustrates one of the many hazards an attorney faces when making statements to non-clients and, in particular, when a non-client, as alleged in this case, detrimen- tally relies on the statements. The Spinnato decision also serves as a forewarning to estate planning attorneys to “speak up now or forever hold your peace,” as waiting until after the testator’s death to assert the testator was incompetent or under the undue influence of another when the testator executed or changed an estate planning document may give rise to an actionable claim by a beneficiary.
