Klancke v. Smith, 90CA1328

• Decision Date: 26 September 1991
• Docket Number: No. 90CA1328,90CA1328
• Citation: 829 P.2d 464
• Parties: Kim KLANCKE, Kirk Klancke, Jill Klancke Cook, and Kit Klancke, Plaintiffs-Appellants, v. Peter M. SMITH, individually and as a partner of Peter M. Smith and Susan Y. Young Law Offices; Susan Y. Young, individually and as a partner of Peter M. Smith and Susan Y. Young Law Offices; Peter M. Smith and Susan Y. Young Law Offices, a Colorado general partnership, Defendants-Appellees. . V
• Court: Colorado Court of Appeals

Page 464

829 P.2d 464

Kim KLANCKE, Kirk Klancke, Jill Klancke Cook, and Kit Klancke, Plaintiffs-Appellants, v. Peter M. SMITH, individually and as a partner of Peter M Smith and Susan Y. Young Law Offices; Susan Y. Young individually and as a partner of Peter M. Smith and Susan Y Young Law Offices; Peter M. Smith and Susan Y. Young Law Offices, a Colorado general partnership, Defendants-Appellees.

No. 90CA1328.

Colorado Court of Appeals Div. V.

Sept. 26, 1991. ^*

Rehearing Denied Nov. 29, 1991.

Certiorari Denied May 18, 1992.

Tobey & Pelz, P.C., Harlan P. Pelz, Jeffrey A. Knoll and Cyndi L. Lyden, Denver, for plaintiffs-appellants.

Faegre & Benson, Michael S. McCarthy and Charlotte Weissner, Denver, for defendants-appellees.

Opinion by Judge JONES.

Plaintiffs, Kim Klancke, Kirk Klancke, Kit Klancke, and Jill Klancke Cook (children), appeal from a summary judgment entered in favor of defendants, Peter M. Smith, Susan Y. Young, and Peter M. Smith and Susan Y. Young Law Offices, on claims of negligence and breach of fiduciary duty. We affirm.

This appeal arises out of a dispute over the disposition of proceeds recovered in a wrongful death action brought by Janet Klancke (Ms. Klancke) in federal district court. In that action, Ms. Klancke recovered a money judgment for the death of her husband, Calvin Klancke, who was killed in an airplane crash near Granby, Colorado, in 1986.

Plaintiffs are the surviving natural children of Calvin Klancke and are stepchildren of Ms. Klancke, who was Calvin Klancke's second wife.

Ms. Klancke retained defendants to prosecute her wrongful death claim. On June 16, 1986, defendant Smith filed a complaint in federal district court listing only Ms. Klancke as plaintiff.

While the wrongful death claim was pending, a dispute arose between the children and Ms. Klancke concerning the childrens' rightful share in the proceeds of any potential recovery. Ms. Klancke took the position that the children were required to prove their net pecuniary loss in order to share in the wrongful death recovery.

As a result of this dispute, three of the children retained separate counsel to represent their interests in the wrongful death action. The children concede that they at no time retained defendants to represent them in the wrongful death suit.

In June 1987, an attorney entered an appearance in the wrongful death action on behalf of certain of the children and filed motions regarding their participation in the action and sharing in any proceeds deriving therefrom.

In November of 1987, the federal district court issued two orders, in which it determined that, although the children are entitled to share in the proceeds of any recovery, under Colorado law, those proceeds may only be distributed to the surviving spouse in whose name the action was commenced.

On April 26, 1988, a jury awarded Ms. Klancke approximately $465,000 in her wrongful death action. On May 24, 1988, the judgment was satisfied when defendant Smith received payment and deposited the funds in his firm's trust account.

Before such satisfaction, the children filed a motion requesting the federal court to supervise distribution of the wrongful death proceeds, but that motion was denied on June 3, 1988. Subsequently, after deducting costs and attorney fees, defendant Smith distributed the wrongful death proceeds in their entirety to his client, Ms. Klancke.

Thereafter, the children commenced an action in the state court against Ms. Klancke for breach of trust and conversion. Summary judgment was entered in favor of the children in October 1989 in the approximate amount of $190,000. However, in August 1989, Ms. Klancke filed a petition for bankruptcy and an automatic stay was issued. Thereafter, the children brought this action against defendants.

Plaintiffs contend that the trial court erred in determining that defendants owed no duty to them, fiduciary or otherwise, to ensure that any wrongful death proceeds recovered were actually shared with or paid to them. We disagree.

An action for wrongful death did not exist at common law, but rather is entirely a creation of statute. Therefore, the proper method for distribution of monies recovered in connection with a wrongful death action must be derived exclusively from the terms of the wrongful death statute. Clint v. Stolworthy, 144 Colo. 597, 357 P.2d 649 (1960); Campbell v. Shankle, 680 P.2d 1352 (Colo.App.1984).

Colorado's wrongful death statute is set forth in § 13-21-201, et seq., C.R.S. (1987 Repl.Vol. 6A). The sections of the statute applicable here, §§ 13-21-201(1)(a) and 13-21-201(1)(b), provide that, within the first year from the date of death, the surviving spouse of the deceased has the exclusive right to bring the action. See Campbell v. Shankle, supra.

Section 13-21-203, C.R.S. (1987 Repl.Vol. 6A) provides that:

"All damages accruing under section 13-21-202 shall be sued for and recovered by the same parties and in the same manner as provided in section 13-21-201, and in every such action the jury may give such damages as they may deem fair and just ... to the surviving parties who may be entitled to sue...." (emphasis added)

Here, as in the Campbell case, the action was initiated within one year of the death at issue. Hence, the surviving spouse, here Ms. Klancke, had the exclusive right to sue under § 13-21-201 and she, therefore, was the party entitled to recover the damages awarded.

Although we agree that the children are entitled to a portion of the award, we conclude that defendant Smith satisfied his statutory duty by paying the settlement proceeds to his client, the surviving party entitled to sue and recover damages. See § 13-21-203; Campbell v. Shankle, supra. And, given the surviving spouse's express statutory right to receive the proceeds, we agree with the trial court's conclusion that the identity of the payor, in Campbell an insurance company, here an attorney, does not alter the result.

We also perceive no duty owed by defendants to the children based upon an attorney-client relationship.

The relationship of an attorney and client is based upon contract which may be implied by the conduct of the parties. People v. Razatos, 636 P.2d 666 (Colo.1981). However, to establish such a relationship based upon conduct requires a showing that a person seeks and receives legal advice from an attorney regarding the legal consequences of the person's past or contemplated actions. People v. Morley, 725 P.2d 510 (Colo.1986).

Here, the children concede that they did not retain defendants to represent them. The children also concede that no "express attorney-client" relationship existed between defendants and themselves. Furthermore, the record reveals a developing adversity between the children and Ms. Klancke, concerning which defendants could not ethically represent both sides. Under these circumstances, defendants' only client was Ms. Klancke.

An attorney is charged with a duty to act in the best interest of his or her client, and in fulfilling this obligation, the attorney is liable for injuries to third parties only for conduct that is fraudulent or malicious. Schmidt v. Frankewich, 819 P.2d 1074 (Colo.App.1991); McGee v. Hyatt Legal Services, Inc., 813 P.2d 754 (Colo.App.1990).

Here, the trial court...