Brooks v. Zebre

• Citation: 792 P.2d 196
• Decision Date: 17 May 1990
• Docket Number: No. 88-263,88-263
• Parties: Patricia A. BROOKS and First Interstate Bank, N.A., Casper, Co-Trustees of the Brooks Marital Trust, Appellants (Plaintiffs), v. John A. ZEBRE, d/b/a John A. Zebre, P.C., a Wyoming Corporation, Appellee (Defendant).
• Court: United States State Supreme Court of Wyoming

Page 196

792 P.2d 196

Patricia A. BROOKS and First Interstate Bank, N.A., Casper, Co-Trustees of the Brooks Marital Trust, Appellants (Plaintiffs), v. John A. ZEBRE, d/b/a John A. Zebre, P.C., a Wyoming Corporation, Appellee (Defendant).

No. 88-263.

Supreme Court of Wyoming.

May 17, 1990.

Wesley A. Roberts and Donald P. White of White, White & Keenan, P.C., Riverton, for appellants.

W.W. Reeves of Reeves & Murdock, Casper, for appellee.

Before CARDINE, C.J., THOMAS, URBIGKIT, and MACY, JJ., and ROONEY, J., Retired.

THOMAS, Justice.

In this case, we address the question of whether John A. Zebre, a practicing attorney d/b/a John A. Zebre, P.C. (Zebre), owed a duty to Patricia A. Brooks (Brooks) and First Interstate Bank, N.A., Casper (Bank), the co-trustees of the Brooks marital trust, who were not clients of Zebre. The claims against Zebre had their genesis in his representation of members of the Arambel family in connection with a contract to lease, and an option to purchase, a ranch. Zebre's clients were the lessees and optionees under the contract. The claims against Zebre are asserted by Brooks and the Bank, with Brooks being the lessor and grantor of the option under the contract while acting as the personal representative of the estate of her deceased husband. After the contract was rescinded by the court because it was found to be unconscionable, Brooks and the Bank sought damages from Zebre. In the assertion of the claim for damages, theories of negligence, gross negligence, and fraud were pleaded. The district court granted a summary judgment to Zebre on the ground that no duty was owed by Zebre to Brooks that would permit recovery under the theories of negligence or gross negligence and on the ground that there was no fraud demonstrated on the record. We affirm the grant of summary judgment by the district court.

In the Appellants' Brief, Brooks and the Bank submit the following statement of issues:

"1. Does an attorney owe a duty to a non-client who he knows to be represented by an attorney when he undertakes to conduct negotiations, advises both parties as to the legal consequences of the transaction, and presides over the execution and closing of the transaction?

"2. Is there a genuine issue as to any material fact so as to preclude Summary Judgment as a matter of law in this case?

"3. Assuming, arguendo, that there exists no genuine issue as to any material fact, could reasonable minds reach different conclusions from those undisputed facts on the issues of negligence, gross negligence and fraud so as to preclude Summary Judgment as a matter of law?"

Those issues then are afforded additional substance by the Summary of Argument, which we quote:

"I. Zebre owed a duty to the Brooks estate, and the heirs thereof, in connection with the lease and option to sell the Brooks Ranch, notwithstanding the absence of privity between them, because "A. The ethical duty imposed on attorneys in Wyoming by the Code of Professional Responsibility creates a legal duty and a legal standard of care.

"B. Zebre was not only acting as an attorney, but was performing functions of a real estate agent or broker in closing the Brooks Ranch transaction and should be held to at least that legal standard of care imposed upon the real estate profession.

"C. Zebre's conduct, when considered under the 'balancing of factors' test established in recent court decisions, clearly gives rise to an independent duty of care to the Brooks estate and the heirs thereof.

"D. Once Zebre spoke to the issue of imputed interest, he thereafter had a duty to make a full and fair disclosure thereof.

"II. The district court erred in granting summary judgment because there exist genuine issues as to material facts in this case.

"III. Assuming, arguendo, that there exist no genuine issues as to any material facts, the district court erred in granting summary judgment because reasonable minds could reach different conclusions and inferences from the undisputed facts on the issues of negligence, gross negligence and fraud on the part of Zebre."

In the Brief of Appellee, John A. Zebre, the issues are articulated in this fashion:

"1. Whether current theories which impose liability on an attorney for harm to non-clients resulting from the attorney's negligence in performing professional services for a client, can apply where the non-client had interests adverse to those of the attorney's client and where the legal services were performed to the client's satisfaction;

"2. Whether violation of ethical rules of conduct adopted by the Supreme Court creates a private right of action, where no right of action for the conduct complained of otherwise exists;

"3. Whether appellants have adequately plead and established in the evidence a viable claim of fraud;

"4. Whether appellants' claims of fraud have been conclusively adjudicated against it, that is, may appellants maintain an action against Mr. Zebre on the contention that he participated in his client's scheme to defraud, when appellants tried and lost the same fraud claims against the clients; and

"5. Whether having obtained the equitable remedy of rescission and restitution from Mr. Zebre's clients, appellants may now use the same facts to pursue a claim for the legal remedy of damages against the lawyer, Zebre."

In a Reply Brief of Appellants, the issues are not expanded, but the following Summary of Argument is submitted in response to points raised in the brief of the appellee:

"I. There is no issue of judicial estoppel in this case.

"II. Claims for fraud have never been litigated in this matter, and, therefore, appellants cannot be foreclosed from litigating those claims now.

"III. Appellants are entitled to recover damages that are a direct and proximate result of Mr. Zebre's tortious conduct."

This dispute centers upon the lease of a ranch in Sweetwater County that included an option to purchase. The ranch, a viable livestock raising enterprise, was developed by Isaac Brooks who died in the spring of 1983, leaving a substantial estate that included the ranch. Isaac Brooks's wife, Patricia, was appointed the personal representative of the estate, and she, of course, was among the heirs. In addition to his wife, Isaac Brooks was survived by their four natural children and a daughter of Mrs. Brooks whom Isaac had adopted. One son was in quite delicate health, having already had a colostomy and a brain shunt at a relatively early age.

About two months after Isaac Brooks's death, members of the Arambel family, neighbors and long-time friends, began a series of almost daily visits with Mrs. Brooks. In the course of these visits, she expressed an interest in leasing the ranch.

She also manifested an overriding concern for the future of her ill son. The record demonstrates that the additional duties required of her as personal representative, which included management of the ranch, when added to her usual responsibilities as the mother of five young children, created an extremely difficult burden for Brooks, who had not received much formal education and had little business experience. She exhibited indications of stress including drinking as much as a case of beer per day.

Not long after she expressed an interest in leasing the ranch, the Arambels arranged a meeting with Brooks in the law offices of Zebre for the purpose of discussing and arranging a possible lease. Zebre was acquainted with Brooks, and the record discloses he visited in her home during Isaac Brooks's last illness. At that time, he reviewed Isaac Brooks's will, in her presence, and offered some suggestions as to improvement of the dispositive scheme. Despite this earlier acquaintance, however, and despite whatever knowledge Zebre possessed of the Isaac Brooks will and estate, there is no question on the part of any party that Zebre represented only the Arambels.

At the meeting in Zebre's office, Brooks advised him that another attorney was handling the probate of the estate of her deceased husband, and she suggested to all who were present that the estate attorney be involved in the negotiations. Later, she testified that, in response to this suggestion, John Arambel told her, "[y]ou don't need to talk to [the attorney] because he won't let you do it because he wants all the money." She further testified that Zebre said to her, "[d]on't tell [the attorney] because he'll just tell you not to lease that ranch." Zebre claims to have made several attempts to contact the attorney for the Brooks estate, but the record does not demonstrate that any contact ever was made or that the estate attorney was informed of these matters until after all negotiations had been completed and the agreement had been executed. The meeting at which the contract provisions were agreed upon was conducted with neither Brooks, nor her children, nor the estate being represented by an attorney or any other person knowledgeable in either business or law.

This meeting, which lasted about an hour, is exemplified only by reports of the conversation. No records were kept, and no documents were reviewed, discussed, or created. The parties testified that Mike Zebre, Zebre's brother, was summoned to the meeting at one point to explain the tax consequences of the imputation of interest by the Internal Revenue Service with respect to periodic payments that did not include an interest factor. Brooks asked no questions of Mike Zebre although he admitted in his deposition that he, in fact, did give her advice.

Brooks's testimony with respect to this meeting was that she was not able to comprehend much of the discussion. Her recollections of the meeting, and the discussion relating to the lease and the option, were extremely vague. She testified that she did not remember any conversation concerning an option to purchase the ranch, a forty-year lease, a sale of all the cattle and sheep, or other essential terms and conditions of the agreement finally reached....