Jeanes v. Bank of America, N.A.

• Decision Date: 29 August 2008
• Docket Number: No. 97,855.,97,855.
• Citation: 191 P.3d 325
• Parties: Janet J. JEANES, as Administrator C.T.A of the Estate of Maxine J. Anton, Deceased, Appellant, v. BANK OF AMERICA, N.A.; Bank of America Corporation; Rudy Wrenick; and Sharon Kunard, Appellees.
• Court: Kansas Court of Appeals

191 P.3d 325

Janet J. JEANES, as Administrator C.T.A of the Estate of Maxine J. Anton, Deceased, Appellant, v. BANK OF AMERICA, N.A.; Bank of America Corporation; Rudy Wrenick; and Sharon Kunard, Appellees.

No. 97,855.

Court of Appeals of Kansas.

August 29, 2008.

John R. Hamilton, of Hamilton, Laughlin, Barker, Johnson & Watson, of Topeka, for appellant.

Tom Haney and Thomas E. Beall, of Henson, Clark, Hutton, Mudrick & Gragson, LLP, of Topeka, for appellee Sharon Kunard.

Curtis E. Woods and Dolly R. Livingston, of Sonnenschein Nath & Rosenthal LLP, of Kansas City, Missouri, for appellee Rudy Wrenick.

Before HILL, P.J., PIERRON and GREEN, JJ.

GREEN, J.

Janet J. Jeanes appeals from a summary judgment granted in favor Sharon Kunard and Rudy Wrenick in Jeanes' negligence, breach of fiduciary duty, and breach of contract claims. On appeal, Jeanes contends that the trial court improperly determined that the claims against Kunard sounded in tort. We disagree. In addition, Jeanes asserts that the trial court inappropriately granted summary judgment in favor of Kunard on her tort claims against Kunard. We disagree. Jeanes further maintains that the trial court erred in granting summary judgment to Wrenick on Jeanes' breach of fiduciary duty claim. We agree. Finally, Jeanes contends that the trial court erred in granting summary judgment to Wrenick on Jeanes' breach of contract claims. We disagree. Accordingly, we affirm in part, reverse in part, and remand to the trial court for further proceedings in accordance with this opinion.

On June 13, 1991, Maxine J. Anton created a living trust agreement entitled the "Maxine Jeanes Anton Living Trust." Under the living trust, Anton was to receive income from the trust assets for life. Upon Anton's death, the living trust set aside some of the assets to fund charitable remainder trusts for Anton's stepson and Anton's personal assistant. Nevertheless, the vast majority of the assets were to pass to Janet J. Jeanes, Anton's niece and sole heir. Bank IV, the predecessor of Bank of America (the Bank), was named successor trustee of Anton's living trust. Anton also had two unitrusts, for which the Bank was trustee.

Anton entered into a written agency agreement with the Bank on July 5, 1991. Under the agency agreement, Anton deposited her common stock and securities with the Bank, including her common stock in Exxon Mobil Corporation. Anton served as trustee of her living trust, and the Bank served as agent for the trustee. According to the agency agreement, the Bank performed certain tasks for Anton, including the collection of dividends and interest for deposit in Anton's accounts; the collection of proceeds from the sale of assets as directed by Anton for deposit in Anton's accounts; and the paying of bills, debts, and other obligations such as charitable donations. In addition, the Bank collected financial and tax information and delivered it to Anton's accountant for preparation of Anton's tax returns. The agency agreement stated that the Bank would charge a fee for these services "in accordance with the schedule agreed upon by the Principal and Agent in writing." Anton's primary source of income was dividend and interest income, and most of that income came from her Exxon Mobil stock.

Anton first met with Sharon Kunard, a Topeka attorney, in 1991 to discuss setting up a trust for one of Anton's employees. At Anton's request, Kunard drafted trust documents and a will reflecting the wishes of Anton as expressed to Kunard. The last time Kunard was contacted by Anton for legal services was in June 2000. Anton's will, living trust, unitrusts, and all amendments thereto were prepared by Kunard.

In 1998, Rudy Wrenick was assigned to Anton's account and served as Anton's contact at the Bank. Wrenick holds the title of president of the Topeka branch of the Bank he is a senior vice president and trust officer of the Bank.

Anton died on April 25, 2003. Anton's estate tax return indicated that Anton had a gross estate of $39,491,806.00. Anton's estate paid estate and inheritance taxes on January 24, 2004, which amounted to approximately half of the estate.

On November 24, 2004, Jeanes, in her capacity as administrator of Anton's estate, sued the Bank; Bank of America Corporation (BAC); Wrenick; and Kunard. The petition alleged claims of negligence and breaches of fiduciary duty, contract, and trust against the Bank, BAC, and Wrenick. In addition, Jeanes alleged negligence and breaches of fiduciary duty and contract claims against Kunard. These claims were based on the alleged failure of the appellees to protect Anton's assets from tax liability upon her death. Specifically, Jeanes alleged that setting up a family limited partnership would have saved over $6 million in taxes. Jeanes later amended the petition to include claims of improperly charged fiduciary fees.

The Bank, BAC, and Wrenick moved for summary judgment. Kunard moved separately for summary judgment. The trial court granted summary judgment on all claims in favor of BAC, Wrenick and Kunard. The trial court noted that Jeanes had withdrawn her claims against BAC. The trial court later filed journal entries modifying its rulings, adding that its decisions granting summary judgment to Kunard and Wrenick constituted final judgments under K.S.A. 60-254(b). Jeanes timely appeals the grant of summary judgment to Wrenick and Kunard.

Did the trial court err in ruling that the claims against Kunard sounded in tort?

Jeanes argues that the trial court erred when it failed to consider Jeanes' separate breach of contract claim against Kunard and instead determined that Jeanes' claims against Kunard sounded only in tort. Jeanes claims that the evidence showed Anton had a contract with Kunard to give estate planning advice and Kunard breached that contract by failing to furnish any estate planning advice.

Turning to our standard of review, the standards for summary judgment are well known and can be stated as follows:

"`"Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied."' [Citations omitted.]" Robbins v. City of Wichita, 285 Kan. 455, 460, 172 P.3d 1187 (2007).

Additionally, the determination of whether a tort and contract claim can be brought in the same case is a question of law, which this court reviews de novo. See Bittel v. Farm Credit Svcs. of Central Kansas, P.C.A, 265 Kan. 651, 660, 962 P.2d 491 (1998).

In analyzing this issue, the trial court relied on our Supreme Court's decision in Canaan v. Bartee, 276 Kan. 116, 133, 72 P.3d 911, cert. denied 540 U.S. 1090, 124 S.Ct. 962, 157 L.Ed.2d 795 (2003), where our Supreme Court stated:

"When there is both a contractual relationship and a relationship that gives rise to a legal duty, such as the attorney-client relationship, the breach of that duty and not of the contract itself gives rise to a tort action.... If the gravamen of the action is a breach of the legal duty and not of the contract itself, the action is in tort. [Citation omitted.]"

In determining whether Jeanes' claims sounded in contract or in tort, the trial court considered the expert opinions procured by Jeanes. The trial court noted that the opinions included statements explaining the legal duties Kunard owed to Anton in connection with the estate planning services Kunard had provided. Jeanes' expert opined that Kunard was obligated to Anton to "use reasonable and ordinary care and diligence"; to use her "best judgment"; and to exercise that "reasonable degree of learning, skill, and experience which is ordinarily possessed by other attorneys in the community who practice estate planning." Moreover, regarding the agreement between Kunard and Anton, Jeanes' expert stated that if Kunard had intended to limit the scope of her estate planning services to Anton, Kunard "had the duty to explain" to Anton the consequences of the limitation and had "the duty to recommend" that Anton obtain other estate planning counsel.

Viewing this evidence in the light most favorable to Jeanes, the trial court determined that Jeanes' claims were based on allegations that Kunard had failed to exercise "`that degree of learning, skill, and care that a reasonably competent lawyer would use in similar circumstances.'" Thus, the trial court determined that the claims against Kunard sounded in tort, and the court granted summary judgment in favor of Kunard on the contract claim.

Because an action for negligence against an attorney relies on a contract for employment, a legal malpractice claim generally contains elements of both tort and breach of contract. Pancake House, Inc. v. Redmond, 239 Kan. 83, 85-86, 716 P.2d 575 (1986). As a result, a legal malpractice claim can be brought as a breach of contract claim when "the act complained of is a breach of specific terms of the contract without any reference to the legal duties imposed by law upon the relationship created thereby." 239 Kan. at 86, 716 P.2d 575. Nevertheless, when "the essential claim of the action is a breach of duty imposed by law upon the relationship of attorney/client and not of the contract itself, the action is in tort. [Citation omitted.]"...