Leyba v. Whitley
| Decision Date | 30 June 1994 |
| Docket Number | No. 14679,14679 |
| Citation | 882 P.2d 26,118 N.M. 435,1994 NMCA 92 |
| Parties | Candace LEYBA, Conservator of the Estate of Phillip Leroy Urioste, a minor, Plaintiff-Appellant, v. Joseph E. WHITLEY and Daniel W. Shapiro, Defendants-Appellees. |
| Court | Court of Appeals of New Mexico |
This appeal raises questions regarding the liability of a lawyer to a non-client. In particular, if a lawyer represents a trustee, when, if ever, does the beneficiary of the trust have a cause of action against the lawyer? In the specific circumstances of this case we hold that the district court was largely correct in finding no liability, but we reverse the summary judgment in favor of the two defendant lawyers because there is evidence that could support at least one theory of liability.
Corrine Urioste (Corrine) retained Defendant Joseph E. Whitley to assert a claim for damages against certain health care providers for the death in February 1990 of her son, Phillip Urioste (the Decedent). Whitley then associated with Defendant Daniel W. Shapiro to assist him in the litigation. Pursuant to the New Mexico Medical Malpractice Act, NMSA 1978, Secs. 41-5-1 to 41-5-28 (Repl.Pamp.1989), Shapiro and Whitley filed an application with the medical review commission. Because New Mexico's Wrongful Death Act, NMSA 1978, Secs. 41-2-1 to 41-2-4 (Repl.Pamp.1989), requires that such a claim be brought by and in the name of a personal representative of the decedent's estate, the claim was filed on behalf of Corrine, as personal representative of Decedent's estate. No lawsuit was ever filed. The parties settled the matter for $548,931.59.
All the settlement checks were made payable to Corrine, as personal representative of Decedent's estate. Some checks also included Shapiro and Whitley as payees. The checks were endorsed by all payees and deposited in Shapiro's trust account. After payment of fees and costs to Shapiro and Whitley, the net proceeds were $324,816.11. In the Spring of 1991 Corrine received the net proceeds in three checks drawn on Shapiro's trust account, each made payable simply to "Corrine Urioste." Nothing on the checks indicated that the funds were paid to her in any fiduciary capacity.
Under the Wrongful Death Act, when the decedent is unmarried the decedent's descendants should receive the proceeds of the wrongful death action. Section 41-2-3. At the time of his death Decedent was not married. He had, however, fathered a child by Candace Leyba. The child, Phillip Leroy Urioste (the Child), was born almost seven months after Decedent's death. Decedent had previously fathered two other children, but Decedent's parental rights and the children's right to inherit from him were terminated when the children were adopted by others. Thus, the proceeds of almost $325,000 were for the benefit of the Child. Unfortunately for the Child, his grandmother, Corrine, dissipated more than $300,000 on herself and others.
When Corrine's defalcation was discovered, Candace Leyba, as conservator for the Child, sued Corrine, other recipients of the funds, Whitley, and Shapiro. This appeal concerns only the claims against the two lawyers.
Leyba contends that Shapiro and Whitley had a duty to disburse the net settlement proceeds only to a conservator for the Child, rather than to Corrine. Leyba also contends that Whitley and Shapiro failed to fulfill their duties to the Child with respect to the proper application of the proceeds by not taking steps--such as making the net-proceeds checks payable to "Corrine Urioste, as personal representative of the estate of Phillip Urioste"--to protect the Child's interest in the proceeds.
All parties sought summary judgment with respect to the liability of Whitley and Shapiro. The district court granted the lawyers' motions and denied Leyba's. One significant factual dispute, which the district court apparently found immaterial, was whether the lawyers had advised Corrine that the money was solely for the benefit of the Child. Included in the evidence presented by the Defendants were sworn statements that (1) the Defendants had instructed Corrine that the money was for the Child and (2) other persons had also advised Corrine of her fiduciary status. Corrine, on the other hand, testified at her deposition that Whitley told her the money was hers and that she thought the money was hers. She also testified that neither lawyer advised her that the money belonged to the Child and not her. In addition, she offered evidence that shortly before the wrongful-death claim was settled, Whitley prepared a contract which called for Corrine to purchase for $40,000 cash a mobile home for her own use once the settlement proceeds were distributed. The contract contained a provision that nullified the parties' obligations to perform in the event that there was no wrongful death recovery. There was no additional evidence that either Shapiro or Whitley had reason to believe that Corrine would misappropriate the settlement proceeds. Leyba submitted an affidavit by a New Mexico lawyer expressing the expert opinion that Whitley and Shapiro committed malpractice. Shapiro and Whitley submitted a contrary affidavit by another New Mexico lawyer.
We first consider, and reject, Leyba's contention that Whitley and Shapiro had a duty to distribute the settlement proceeds to a conservator for the Child. Next we consider the contention that Whitley and Shapiro, as the lawyers in the wrongful death claim, had a duty to protect the Child's interest in the settlement proceeds. We hold that Shapiro and Whitley may be liable to the Child if they failed to advise Corrine that the settlement proceeds were for the Child's benefit and if this failure was a proximate cause of Corrine's defalcation. Because there is a genuine factual dispute on these matters, the summary judgment cannot stand.
Leyba argued in district court and now argues on appeal that she is entitled to partial summary judgment on the issue of liability because Shapiro and Whitley had a duty to distribute the settlement proceeds to a conservator for the Child. She contends that the payment from Shapiro's trust account to Corrine did not satisfy that duty and the Defendants must now make the required payment. See Iverson v. Scholl, Inc., 136 Ill.App.3d 962, 91 Ill.Dec. 407, 483 N.E.2d 893 (Ct.1985) ().
In arguing on appeal that she is entitled to partial summary judgment on the issue of liability, Leyba recognizes that we have held that a party appealing the grant of a summary judgment is not entitled to challenge the denial of that party's own motion for summary judgment. See Rivera v. King, 108 N.M. 5, 7, 765 P.2d 1187, 1189 (Ct.App.), cert. denied, 107 N.M. 785, 765 P.2d 758 (1988). Leyba asks us to revisit Rivera, contending that it is against the great weight of out-of-state authority.
We need not reconsider Rivera. Regardless of whether Leyba can appeal the denial of her motion for summary judgment, we still need to address her argument. After all, if it is correct, we must at least set aside the summary judgment granted Shapiro and Whitley. Our review of Leyba's argument, however, results in our rejecting it. Consequently, Leyba would not be entitled to partial summary judgment even if we can review the denial of her motion.
Turning to the merits, Leyba contends that Shapiro and Whitley owe her the net settlement proceeds because they had custody of money that belonged to the Child, owed him a duty to see that the money got to him, but paid the money to the wrong person. She relies on the provisions of the Wrongful Death Act regarding distribution of proceeds. The pertinent language is: "The proceeds of any judgment ... shall be distributed as follows: ... if there be no husband or wife, but a child or children, or grandchild or grandchildren, then to such child or children and grandchild or grandchildren by right of representation[.]" Section 41-2-3. The Child was thus the sole beneficiary of the proceeds of the wrongful-death claim.
Leyba argues that the only proper way to distribute the proceeds to the Child was through a conservator appointed to care for the Child's estate. Leyba notes that the New Mexico Probate Code provides:
A. Any person under a duty to pay or deliver money or personal property to a minor may perform this duty, in amounts not exceeding five thousand dollars ($5,000) per annum, by paying or delivering the money or property to:
(1) the minor, if he is married;
(2) any person having the care and custody of the minor with whom the minor resides;
(3) a guardian of the minor; or
(4) a financial institution for deposit in a federally insured savings account in the sole name of the minor and giving notice of the deposit to the minor.
B. This section does not apply if the person making payment or delivery has actual knowledge that a conservator has been appointed or proceedings for appointment of a conservator of the estate of the minor are pending....
NMSA 1978, Sec. 45-5-103 (Repl.Pamp.1993). Because this provision applies only if the amount due the minor is less than $5000, Leyba argues that one must infer...
To continue reading
Request your trial
-
Eldin v. Farmers Alliance Mut. Ins. Co.
... ... See Leyba v. Whitley, 118 N.M. 435, 437, 882 P.2d 26, 37 (Ct.App.1994), cert. granted, 118 N.M. 430, 882 P.2d 21 (1994); Maxey v. Quintana, 84 N.M. 38, 42, ... ...
- Leyba v. Whitley
-
Otero v. Jordon Restaurant Enterprises
... ... Cf. Leyba v. Whitley, 118 N.M. 435, 445, 882 P.2d 26, 36 (Ct.App.) (procedure under which child would sue trustee, and trustee would then sue her attorneys ... ...