Costello v. Hardy

• Decision Date: 21 January 2004
• Docket Number: No. 2003-C-1146.,2003-C-1146.
• Citation: 864 So.2d 129
• Parties: Josephine COSTELLO v. Ashton R. HARDY, Bradford D. Carey, Hardy and Carey, L.L.P., and XYZ Insurance Company.
• Court: Louisiana Supreme Court

864 So.2d 129

Josephine COSTELLO v. Ashton R. HARDY, Bradford D. Carey, Hardy and Carey, L.L.P., and XYZ Insurance Company.

No. 2003-C-1146.

Supreme Court of Louisiana.

January 21, 2004.

Betsy J. Barnes, Richard L. Root, Barnes & Root, for Applicant.

Alayne R. Corcoran, Metairie, James H. Daigle, Jr., Henry L. Klein, New Orleans, Richard T. Simmons, Jr., Hailey, McNamara, Hall, Larmann & Papale, Metairie, for Respondent.

WEIMER, Justice.

This litigation originated as a suit alleging legal malpractice. The plaintiff alleged that the defendant attorneys failed to properly draft the will of plaintiff's late son to reflect the son's desire to provide his 85-year-old mother with $25,000.00 per year for living expenses. Defendants answered and asserted a reconventional demand seeking damages for abuse of process and for allegedly defamatory statements in the plaintiff's petition. The trial court granted a motion for partial summary judgment on the legal malpractice claim, dismissing plaintiff's claims against the attorneys and their law firm with prejudice. Following a trial on the merits of the reconventional demand, the trial court found in favor of the defendants on the defamation claim and awarded the attorneys damages totaling $60,000.00. The court of appeal affirmed, finding no error in the rulings of the trial court. We granted certiorari primarily to address the propriety of the award of damages for defamation. Finding that the evidence fails to establish the element of malice, or fault, and that the trial court erred in its determination to the contrary, we reverse the judgment awarding damages for defamation. In all other respects, the judgments below are affirmed.

FACTS AND PROCEDURAL HISTORY

In January 1997, Joseph Costello, a successful businessman with considerable holdings in the communications industry,¹ found himself in deteriorating health. He contacted his longtime attorney and friend, Ashton Hardy, and requested that Hardy draft his will. Costello, who was unmarried and had no children, wished to leave the bulk of his estate to Loyola University. Hardy contacted the Director of Planned Giving at Loyola, Robert Gross, and together Hardy and Gross met with Costello to discuss the disposition of his estate. Hardy's office then prepared an initial draft of the will. That draft was subsequently revised to include a specific bequest to Costello's elderly mother, Josephine Costello, granting her the usufruct of Costello's home for the remainder of her life.

On the morning of March 5, 1997, Hardy received a telephone call from Costello who informed him about surgery scheduled the next day and concerns related to the risks associated with undergoing general anesthesia, which prompted a wish to finalize his will that day. The will was signed on the afternoon of March 5. At the time of signing, it was contemplated that revisions might be necessary to complete some unresolved estate planning issues. One of those issues was Costello's desire to provide his mother with an annual income of $25,000.00 should he pre-decease her. Discussions between Hardy and Gross as to the best method of accomplishing this goal, as well as how to accomplish other estate planning goals, ensued over the next few weeks. Apparently, Costello was concerned that any bequest to his mother not disqualify her from receiving federal benefits in the event she should find it necessary to enter a nursing home.

Costello, Hardy, and tax attorney Michael Mayhall scheduled a meeting for April 8, 1997, to discuss the will, the best method of effectuating the stipend to Costello's mother, and various tax issues. Unfortunately, Costello was hospitalized that day. He remained in the hospital until his death on April 23, 1997. At the time of Costello's death, no document existed, testamentary or otherwise, that guaranteed his mother the $25,000.00 annual income Costello desired her to receive.

Costello was survived by his mother and three brothers, who were incensed by the terms of Costello's will and the substantial bequest to Loyola. The family was particularly aggrieved over the lack of any meaningful provision for Costello's mother.

On July 8, 1997, a "Petition to Annul and/or Declare Invalid the Probated Testament of Joseph M. Costello, III" was filed in the Succession of Joseph M. Costello, III, in the Civil District Court for the Parish of Orleans, naming as defendants the co-executors, Ashton R. Hardy and Michael Costello; and legatees, The Mary Joseph Residence for the Elderly, Loyola University, Aloma Powell, and the Greater New Orleans Foundation (collectively "Succession"). The petition, filed on behalf of Josephine, Martin, and Donald Costello, alleged that the will was invalid because Costello was of unsound mind and body; was acting under duress, fraud or mistake; and/or lacked testamentary capacity at the time he signed the will. The Costello petitioners were represented in this litigation by attorney James Minge.

During the course of discovery in the nullity proceeding, numerous documents were produced. Among the documents was a letter, dated February 26, 1997, from Hardy to Loyola's Gross stating:

As promised, I am enclosing herewith a copy of the latest draft of the Last Will and Testament that I prepared for Joe Costello. During my conference with him, he indicated that he wanted to ensure that his mother received an annual income of $25,000.00 during her lifetime, should she survive him. How do you propose that we deal with that issue[?]

A second letter, dated March 7, 1997, was also produced. This letter, addressed to Hardy and authored by Gross, states in part:

One of Joe's concerns when we were talking before the reading of the will was that the will be "iron clad." He is worried about a family attack on the will, as happened in his father's succession.

....

Joe is also concerned about providing his mother with $25,000 annually of income. A "special needs" Charitable Remainder Trust of a sufficient size could be established for this purpose. If the remainderman of this trust was Loyola, it would not be necessary to change the will, i.e. the cash bequest to Greater New Orleans Foundation.

On the basis of these documents, and others (including one transmitting to Hardy suggested language for including the bequest to Mrs. Costello in a revision of Costello's will), Minge advised the Costello family that, should the will be found to be valid, Mrs. Costello, as a legatee and third party beneficiary under the will, had a potential cause of action against Hardy for negligence in the drafting of the will. Minge referred the Costellos to attorney Richard Root for further investigation of this potential claim. On April 18, 1998, with the one year anniversary of Costello's death approaching, Josephine Costello, through attorney Root, filed a petition for damages in the Twenty Fourth Judicial District Court for the Parish of Jefferson. The petition named as defendants Ashton R. Hardy, Bradford D. Carey, and the law firm of Hardy and Carey, L.L.P.; it alleged that Hardy failed to properly draft or amend Joseph Costello's will to include the bequest of $25,000.00 annually to Josephine Costello and that such conduct fell below the standard of care of competent practitioners in the same field and locality.² As a result, the allegations continued, Mrs. Costello was deprived of living expenses, leaving her unable to support herself in the residence over which she was granted usufruct.

Shortly after the institution of the legal malpractice action in Jefferson Parish, the Costello family settled the nullity action in Orleans Parish. Specifically, the Costellos dismissed their challenge to the will, acknowledging the validity of that document and of all of the legacies outlined therein, in exchange for the Succession's agreement to provide Josephine Costello with a $25,000.00 annual stipend from her late son's estate. The terms of the settlement were read into the record on June 17, 1998, and finalized in a "Petition for Authority to Compromise Claim" filed on October 20, 1998.

In the interim, the defendants in the Jefferson Parish malpractice action filed an exception of no cause of action, asserting that they did not have an attorneyclient relationship with Mrs. Costello and, therefore, owed no duty to her in connection with the drafting of her late son's will. The trial court granted the no cause of action exception, dismissing Mrs. Costello's suit. Mrs. Costello appealed. In an opinion not designated for publication, the court of appeal reversed, finding that as a legatee and third party beneficiary under the will, Mrs. Costello stated a cause of action in negligence against Hardy for his failure either to include a provision in the will for her living expenses or to prepare a codicil providing for living expenses. Costello v. Hardy, 98-1320 (La.App. 5 Cir. 4/27/99) 738 So.2d 210.³

The case was remanded to the trial court where defendants filed an answer and reconventional demand seeking damages for abuse of process and defamation arising out of the allegations of malpractice in Mrs. Costello's petition.⁴ Thereafter, the defendants filed a motion for partial summary judgment on the malpractice claim. Finding no genuine issue of material fact, the trial court granted summary judgment in favor of defendants, dismissing Mrs. Costello's claim. Mrs. Costello again appealed. The court of appeal dismissed that appeal as premature because the judgment was a partial summary judgment that was not "designated as a final judgment by the court after an express determination that there is no just reason for delay" pursuant to LSA-C.C.P. art. 1915(B) and the defendant's reconventional demand was still pending. Costello v. Hardy, 01-583 (La.App. 5 Cir. 1/15/02), 807 So.2d 950.

The case was returned to the trial court where a bench trial was conducted on the reconventional demand. Following the close of evidence, the trial court...