Kinney v. Shinholser

• Decision Date: 22 September 1995
• Docket Number: No. 94-1526,94-1526
• Citation: 663 So.2d 643
• Parties: 20 Fla. L. Weekly D2183 George R. KINNEY, individually, and as Personal Representative of the Estate of Ruth R. Kinney, deceased, and as Trustee of the Testamentary Trust created by the Last Will and Testament of A. Girton Kinney, Appellant, v. A. Edwin SHINHOLSER; Phillip H. Logan; S. Kirby Moncrief; James A. Barks; Harry G. Reid, III; Shinholser, Logan, Moncrief & Barks; Shinholser, Barks & Reid; Moncrief & Reid, P.A.; Harold Hartsock; and Hartsock and Hartsock, Certified Public Accountants, Appellees.
• Court: Florida District Court of Appeals

Page 643

663 So.2d 643

20 Fla. L. Weekly D2183

George R. KINNEY, individually, and as Personal Representative of the Estate of Ruth R. Kinney, deceased and as Trustee of the Testamentary Trust created by the Last Will and Testament of A. Girton Kinney, Appellant, v. A. Edwin SHINHOLSER; Phillip H. Logan; S. Kirby Moncrief James A. Barks; Harry G. Reid, III; Shinholser, Logan Moncrief & Barks; Shinholser, Barks & Reid; Moncrief &amp Reid, P.A.; Harold Hartsock; and Hartsock and Hartsock, Certified Public Accountants, Appellees.

No. 94-1526.

District Court of Appeal of Florida, Fifth District.

Sept. 22, 1995.

Rehearings Denied Nov. 29, 1995.

Joseph H. Williams, of Troutman, Williams, Irvin, Green & Helms, P.A., Winter Park, for appellant.

David B. King and John F. Tannian of King & Blackwell, P.A., Orlando, Christopher T. Hill, of Rumberger, Kirk & Caldwell, Orlando, and Shelley H. Leinicke and Ila J. Klion of Wicker, Smith, Tutan, O'Hara, McCoy, Graham & Lane, P.A., Ft. Lauderdale for appellees.

ORFINGER, M., Senior Judge.

The issues before this court are 1) whether the trial court properly dismissed appellant's second amended complaint with prejudice, and 2) whether a summary judgment in favor of certain of the appellees was properly entered. We affirm in part and reverse in part.

Appellant's second amended complaint seeks relief against attorney A. Edwin Shinholser and various partners and successor law firms (Shinholser hereafter); against attorney S. Kirby Moncreif and various partners and successor law firms (Moncrief hereafter); and against accountant Harold Hartsock and his C.P.A. firm of Hartsock and Hartsock (Hartsock hereafter). Appellant is the only child and sole heir of his parents, A. Girton Kinney and Ruth R. Kinney, and is the personal representative of his mother's estate and trustee and ultimate beneficiary of a trust created by the will of his deceased father.

For the purpose of determining the sufficiency of a pleading, we accept as true all well pleaded allegations of the complaint. Bolton v. Smythe, 432 So.2d 129, 130 (Fla. 5th DCA), rev. denied, 440 So.2d 353 (Fla.1983). Girton Kinney's will was prepared by Shinholser. Its essential provisions created a trust into which the residue of the estate was transferred, and of which appellant was designated the trustee. All net income of the trust was to be paid to Ruth Kinney, and appellant, as trustee, had the power to invade the principal of the trust for Ruth's benefit. At Ruth's death, all remaining trust assets were devised to appellant. At the heart of this controversy, as will be discussed later, was a provision in the will giving Ruth a general power of appointment over the assets of the trust.

When Girton Kinney died in 1986, Shinholser had retired from the active practice of law, so Ruth retained Moncrief to handle the probate of Girton's estate. During the course of the probate proceedings, upon becoming aware of the need to file a federal estate tax return, Moncrief suggested to Ruth that she retain a C.P.A. to prepare and file the return. She retained Hartsock and a copy of the will and other necessary documents were delivered to him. The complaint then alleges:

18. Because the will of A. Girton Kinney gave his surviving spouse ... a general power of appointment over the assets in his trust, the Estate of A. Girton Kinney was prevented from using A. Girton Kinney's unified credit against estate taxes ... to protect $500,000.00 of his assets from being subject to estate tax in the estate of Ruth R. Kinney at her death.

It was then alleged that Moncrief and Hartsock falsely caused the estate tax return to be filed as though the general power of appointment did not exist and that an IRS audit rejected the return and treated all assets of the trust as belonging to Ruth, with the result that Girton's estate lost the unified credit, and upon Ruth's death, her estate was obligated for additional taxes, interest and penalties amounting to $320,000, the sum of which appellant claims as damages from the appellees.

A. The cause of action against Shinholser.

As to Shinholser, the complaint alleges that the senior Kinneys advised him that they wanted to minimize the estate taxes, that the provision in the will "that all my just debts, funeral expenses, taxes and costs of administration of my estate be paid" indicated the intention to minimize estate taxes, and that Shinholser knew or should have known that the inclusion of the general power of appointment in the trust would frustrate that intent and cause an increase in such taxes.

In Espinosa v. Sparber, Shevin, Shapo, Rosen and Heilbronner, 612 So.2d 1378 (Fla.1993), the supreme court reaffirmed the principle that standing in legal malpractice actions involving the drafting of a will is limited to those who can show that the testator's intent as expressed in the will is frustrated by the negligence of the testator's attorney. 612 So.2d at 1380. Extrinsic evidence is not admissible to determine the testamentary intent because, as pointed out in Espinosa, to allow such evidence would dramatically increase the risk of misinterpreting the testator's intent, as well as heightening the tendency to manufacture false evidence which could not be rebutted due to the unavailability of the testator. Therefore, the extrinsic evidence offered by appellant was properly rejected by the trial court in determining whether appellant stated a cause of action against Shinholser.

The sole evidence of the testator's intent is the will itself which contains, at best, only a direction that the just taxes be paid. This provision is a far cry from the clear expression of intent found in In re Estate of Reese, 622 So.2d 157 (Fla. 4th DCA 1993), where the testator's will contained a specific expression of intent to minimize estate and generational skipping tax liability. Neither does the will express the intent that the purpose of the trust was to minimize taxes. For these reasons, the complaint does not state a cause of action for malpractice in the drafting of the will, and therefore we affirm the dismissal of the second amended complaint as to Shinholser.

B. The cause of action against Moncrief and Hartsock.

In addition to dismissing the complaint as to Moncrief, the trial court granted a summary judgment in favor of Moncrief and Hartsock. Moncrief argues that absent the frustration of an express testamentary intent, the failure of an attorney to properly advise a client regarding how to dispose of property or make transfers is not actionable by a disappointed beneficiary such as appellant. In addition, Moncrief argues that there is no privity between them and appellant and therefore appellant has no standing to bring this suit.

However, Moncrief was not sued for malpractice in the drafting of the will; he and Hartsock were sued for negligence in failing to provide vital information to Ruth and appellant regarding the tax consequences of not disclaiming the power of appointment within nine months after Girton's death. Hartsock wrote to Ruth, advising her that the exercise of the power of appointment would produce serious tax consequences, although the evidence in the record tends to show that Hartsock knew, as soon as he read Girton's will, that it was the mere existence of the power of appointment in the will which would produce serious tax consequences unless waived by Ruth within the nine month period, and that there remained sufficient time for such a waiver to be effective.

There is also deposition testimony that Hartsock relayed that information to Moncrief because Moncrief was the attorney for the estate, and that Moncrief advised him to prepare the estate tax return as though the power of appointment did not exist. Neither Hartsock nor Moncrief advised Ruth that the tax problem would disappear if she disclaimed the power of appointment within the permitted time. She did not disclaim, the tax return was rejected, and it is alleged that Ruth's assets were diminished by $320,000 as previously mentioned.

Moncrief and Hartsock were hired by Ruth to probate the will and prepare the estate tax return, respectively. Appellant is not only the residuary beneficiary of the trust created by Girton's will, but is also the personal representative of Ruth's will and her sole beneficiary. It is clear that Ruth's assets (and thus appellant's inheritance) were diminished as a result of the increased tax liability. The supreme court held in Espinosa that a plaintiff in a legal malpractice action must either be in privity with the attorney or an intended third party beneficiary. Thus, under Espinosa, appellant has standing as the intended beneficiary of both Girton's and Ruth's wills. See also First Florida Bank, N.A. v. Max Mitchell & Company, 558 So.2d 9, 13 (Fla.1990) (the liability of a lawyer, in the absence of privity, is limited to cases where legal services which were negligently performed were initiated to benefit a third party); Rushing v. Bosse, 652 So.2d 869 (Fla. 4th DCA 1995) (attorney is liable even in the absence of privity, to intended third party beneficiaries of attorney's actions when it is clear the client intended to benefit the third party); Brennan v. Ruffner, 640 So.2d 143 (Fla. 4th DCA 1994) (the rule of privity in legal malpractice actions is relaxed when the plaintiff is the intended third party beneficiary of the contract between the client and the attorney); Greenberg v. Mahoney, Adams & Criser, P.A., 614 So.2d 604 (Fla. 1st DCA), rev. denied, 624 So.2d 267 (Fla.1993) (third party who is intended beneficiary has standing to sue for legal malpractice where it is the apparent intent of the client to benefit the third party).

In addition, appellant was a third party beneficiary of the relationship between Ruth and Hartsock. In First Florida Bank, N.A. v. Max Mitchell & Company, 558 So.2d 9 (Fla.1990), the Florida Supreme Court held that an accountant's liability extends not...