Estate of Treadwell ex rel. Neil v. Wright

• Decision Date: 27 January 2003
• Docket Number: No. 50274-3-I.,50274-3-I.
• Citation: 61 P.3d 1214,115 Wash. App. 238,115 Wn. App. 238
• Court: Washington Court of Appeals
• Parties: The ESTATE OF Katherine M. TREADWELL, by Gerald W. NEIL, Administrator With Will Annexed, Appellant, v. Kathleen M.S. WRIGHT and "John Doe" Wright, individually and as wife and husband and the marital community composed thereof, Respondents. The Estate of Katherine M. Treadwell, by Gerald W. Neil, Administrator With Will Annexed, Plaintiff, v. Bank of America, sucessor in interest to SeaFirst Bank, a financial institution doing business in the State of Washington, Defendant.

61 P.3d 1214

115 Wn. App. 238

115 Wash. App. 238

The ESTATE OF Katherine M. TREADWELL, by Gerald W. NEIL, Administrator With Will Annexed, Appellant, v. Kathleen M.S. WRIGHT and "John Doe" Wright, individually and as wife and husband and the marital community composed thereof, Respondents.

The Estate of Katherine M. Treadwell, by Gerald W. Neil, Administrator With Will Annexed, Plaintiff, v. Bank of America, sucessor in interest to SeaFirst Bank, a financial institution doing business in the State of Washington, Defendant.

No. 50274-3-I.

Court of Appeals of Washington, Division 1.

January 27, 2003.

Robert B. Nettleton, Tacoma, WA, for Appellant.

Scott M. Barbara, Seattle, WA, for Respondent.

APPELWICK, J.

A guardian depleted the accounts of an incapacitated ward. The ward's estate sued the attorney hired by the ward's guardian to establish a guardianship for breach of duty. The alleged breach of duty was the attorney's failure to fully comply with the statutes requiring that prior to the inception of the guardianship a bond or bond agreements blocking access to unbonded funds absent a court order be in place. The attorney argued that she had no duty to the incapacitated ward because the ward was not her client. The trial court granted summary judgment to the attorney, finding no duty to the ward. Reconsideration was sought based on a recent decision in In re Guardianship of Karan, 110 Wash.App. 76, 38 P.3d 396 (2002), but was denied. The Estate appeals. We reverse and remand for trial.

FACTS

Kathleen M.S. Wright (Wright) is an attorney licensed to practice law in Washington State.¹ In June 1997, Linda Morrison (Morrison) retained Wright to commence a guardianship proceeding for Morrison's great-aunt, Katherine M. Treadwell (Treadwell). On June 17, 1997, Wright appeared before a court commissioner and presented a petition for "Appointment of Guardian of Person." The petition asserted that Treadwell: (1) was over 90 years old; (2) was a victim of potential physical and financial abuse; (3) was unable to protect herself; (4) was unable to manage her estate and person; and (5) suffered from memory problems.

Simultaneous with these proceedings, the court appointed attorney Randy Boyer from the court's guardian ad litem register to serve as guardian ad litem for Treadwell. Boyer's findings corroborated the assertions Wright had outlined in her June 17, 1997 verified petition. In his guardian ad litem report, Boyer observed that "Mrs. Treadwell suffers from very impaired recent memory and moderately severe impairment as to orientation of time," and that Treadwell needed "full time assistance with all financial matters and to meet her daily needs." Boyer also estimated that Treadwell had approximately $225,000 in assets. He recommended a $30,000 bond, and that funds in excess of $30,000 be in blocked accounts. Wright was provided with a copy of Boyer's report.

On August 26, 1997, a court commissioner signed an order appointing a guardian for Treadwell. The draft of the order that Wright submitted to the court included a provision requiring a $30,000 bond, but not a provision stipulating that assets in excess of $30,000 be maintained in blocked accounts. The court added a provision requiring blocking agreements. The court interlineated on the order that those agreements were set for review in 30 days, but was silent as to whether the letters of guardianship were final before the blocking agreements were in place.

The court clerk issued letters of guardianship on September 16, 1997, with a special instruction sheet to Morrison. Wright forwarded the letters of guardianship and instruction sheets to Morrison on September 22, 1997. Wright included a letter outlining Morrison's responsibilities as a guardian and enclosed copies of Washington statutes detailing Morrison's duties. Wright also included a receipt for blocked account form, explaining to Morrison, "I will prepare this for a particular institution once you have determined what the assets are and how they will be held. All funds in excess of $30,000 must be held in a blocked account."

Shortly thereafter, Morrison stopped contacting Wright, and Wright's attempts to contact Morrison were unsuccessful. Wright's last contact with Morrison was in January 1998. On June 1, 1999, Wright filed a notice of intent to withdraw, effective June 21, 1999.

Treadwell died on November 17, 1999. Treadwell's estate (the Estate) was unable to recover from Morrison, and began legal proceedings against Wright in June 2000. On November 30, 2001, Wright obtained summary judgment dismissing the Estate's claim on the grounds that she owed Treadwell no duty. Shortly after this court's decision in Karan, 110 Wash.App. at 76, 38 P.3d 396, the Estate filed a CR 60(b) motion to vacate the summary dismissal entered in favor of Wright. That motion was denied. The Estate appeals the orders granting Wright summary judgment and denying the Estate's motion to vacate.

ANALYSIS

I. An Attorney's Duty to a Guardianship

Whether Wright owed a duty to Treadwell under RCW 11.88.100 and .105, is a question of law that we review de novo. Rasmussen v. Bendotti, 107 Wash.App. 947, 955, 29 P.3d 56 (2001). The relevant test was discussed in Karan:

The general rule is that only an attorney's client may file a claim for legal malpractice. Trask v. Butler, 123 Wash.2d 835, 840, 872 P.2d 1080 (1994). But an attorney may owe a nonclient a duty even in the absence of this privity. Stangland v. Brock, 109 Wash.2d 675, 680, 747 P.2d 464 (1987)....

To determine whether a lawyer owes a duty to a nonclient which then creates standing to sue for malpractice, Washington applies a six-element test. Trask, 123 Wash.2d at 842, 872 P.2d 1080.

. . . .

To establish whether the lawyer owes the plaintiff a duty of care in a particular transaction, the court must determine:

1. The extent to which the transaction was intended to benefit the plaintiff;

2. The foreseeability of harm to the plaintiff;

3. The degree of certainty that the plaintiff suffered injury;

4. The closeness of the connection between the defendant's conduct and the injury;

5. The policy of preventing future harm; and

6. The extent to which the profession would be unduly burdened by a finding of liability.

Trask, 123 Wash.2d at 843, 872 P.2d 1080. The threshold question is whether the nonclient plaintiff is an intended beneficiary of the transaction. If not, there is no further inquiry.

Karan, 110 Wash.App. at 81-82, 38 P.3d 396.

Division III of the Court of Appeals held in Karan that the attorney of a guardian does owe a duty to the ward. 110 Wash.App. at 86,38 P.3d 396. In Karan, an attorney had been hired by the mother of a minor to create a guardianship for the minor daughter. The attorney failed to include in an order he drafted, as mandated by RCW 11.88.100 and .105, provisions for either a bond or blocked accounts. Karan,110 Wash. App. at 79,38 P.3d 396. Subsequently, a guardian ad litem was appointed for the minor. The guardian ad litem discovered that the mother, while serving as guardian, had depleted her daughter's funds. The guardian ad litem was unable to recover on judgments against the mother for the funds. Karan,110 Wash.App. at 79,38 P.3d 396. On behalf of the minor, the guardian ad litem then sued the attorney for malpractice, alleging that the attorney had a duty to make certain the guardianship order complied with RCW 11.88.100 and .105. The trial court held that the attorney did not owe the minor a duty because she was not his client. Karan,110 Wash.App. at 80,38 P.3d 396.

The court applied the Trask factors to analyze whether the guardian's attorney owed the ward a duty to comply with RCW 11.88.100 and .105. The court concluded such a duty did exist.

The threshold determination under Trask was whether the ward was an intended beneficiary of the transaction, i.e., the creation of the guardianship. The court distinguished the incidental beneficiary in Trask from the intended beneficiary in Karan:

Trask is factually distinguishable. The Trask case resolved a dispute between an adult, competent beneficiary of a will who was in an adversarial relationship with another adult beneficiary. The second beneficiary was also both the personal representative of the deceased father's estate and attorney-in-fact for the surviving mother. Trask, 123 Wash.2d at 838, 872 P.2d 1080. And the lawsuit against the lawyer was over day-to-day judgment calls in managing the estate.

By contrast, here we have: (1) a legally incompetent infant ward, (2) a non-adversarial relationship, and (3) legal services solely consisting of setting up the guardianship.

. . . .

1. Intended Beneficiary. The primary reason to establish a guardianship is to preserve the ward's property for his or her own use. It is not for the benefit of others. In re Guardianship of Michelson, 8 Wash.2d 327, 335, 111 P.2d 1011 (1941) (guardianship held unnecessary).

Karan, 110 Wash.App. at 84-85, 38 P.3d 396. The court found that even though a ward may oppose the appointment of a guardian, the protection of the property of a ward in the creation of the guardianship is an interest common to the ward, the guardian, and the guardian's attorney. Thus, the court found that the ward was an intended beneficiary.

The only factual difference in the case before us as to this factor of the Trask test is that Treadwell was an incompetent adult rather than an incompetent minor. We see no basis for this distinction to lead to a different result. Here, as in Karan, the incompetence of the ward is the key fact. Treadwell was the intended beneficiary of the guardianship Wright established because she was (1) a legally incompetent ward, (2) in a non-adversarial relationship with Morrison, and (3) because Wright's legal services for Morrison solely consisted of setting up Treadwell's guardianship.

The policy analysis of Trask factors 5 and 6 applied in Karan, applies equally in this case:

5.

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