Pizel v. Zuspann

• Decision Date: 13 July 1990
• Docket Number: No. 63261,63261
• Citation: 795 P.2d 42,247 Kan. 54
• Parties: , 10 A.L.R.5th 1098 Herbert PIZEL, et al., Appellants/Cross-Appellees, v. Eugene P. ZUSPANN, et al., Appellees/Cross-Appellants.
• Court: Kansas Supreme Court

Page 42

795 P.2d 42

247 Kan. 54, 10 A.L.R.5th 1098

Herbert PIZEL, et al., Appellants/Cross-Appellees, v. Eugene P. ZUSPANN, et al., Appellees/Cross-Appellants.

No. 63261.

Supreme Court of Kansas.

July 13, 1990.

Syllabus by the Court

1. Rules relating to the granting of summary judgment are stated and applied.

2. In a legal malpractice action, an attorney is not relieved of liability to a former client or a third party for acts by the attorney which occurred prior to the termination of the attorney-client relationship, notwithstanding that the attorney ceases to represent the client on the matter in question and is subsequently replaced by other counsel who thereafter represents the client on that matter before substantial injury occurs or a cause of action accrues.

3. Comparative fault principles apply to a legal malpractice action based upon negligence unless as a matter of law the client had no obligation to act on his or her own behalf.

4. Lack of privity between the beneficiaries of an inter vivos trust and the attorney who represented the settlor does not preclude an action by the beneficiaries against the attorney for allegedly negligently representing the settlor.

5. Whether a beneficiary has a cause of action for negligence against an attorney who drafted a trust agreement or thereafter represented the settlor depends upon a balancing of a number of factors, including: (1) The extent to which the transaction was intended to affect the plaintiffs; (2) the foreseeability of harm to the plaintiffs; (3) the degree of certainty that the plaintiffs suffered injury; (4) the closeness of the connection between the attorney's conduct and the injury; (5) the policy of preventing future harm; and (6) the burden on the profession of the recognition of liability under the circumstances.

6. Under the facts of this legal malpractice action, the appeal from the district court's judgment tolled the statute of limitations until this court denied the appellants' petition for review of the Court of Appeals decision.

7. Under the facts of this legal malpractice action, the record is examined, and it is held: The district court did not err (1) in instructing the jury to compare the fault of the parties, and (2) in holding that plaintiffs' claim was not time barred. The district court did err in granting summary judgment in favor of defendant Zuspann.

Stephen B. Rhudy, of Rhudy & Bradford, Chartered, of Lawrence, argued the cause, and was on the briefs, for appellants/cross-appellees.

Mark A. Buck, of Davis, Wright, Unrein, Hummer & McCallister, of Topeka, argued the cause, and was on the brief, for appellee/cross-appellant B.E. Whalen.

Michael E. Francis, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, of Topeka, argued the cause, and was on the brief, for appellee/cross-appellant Eugene P. Zuspann.

ALLEGRUCCI, Justice:

This is a legal malpractice action brought by the potential beneficiaries of an inter vivos trust of Charles Pizel, deceased, against the defendants, attorneys Eugene P. Zuspann and B.E. Whalen.

Prior to trial, defendant Zuspann's motion for summary judgment was granted. Plaintiffs appeal this decision. The claims against defendant Whalen proceeded to a seven-day jury trial. The jury assessed fault at 60% to the appellants and Charles Pizel, 35% to defendant Whalen, and 5% to defendant Zuspann. Damages of $204,550 were awarded to appellants, which were reduced to the percentage of fault of Whalen, resulting in a judgment totaling $71,592.50. The trial court overruled plaintiffs' post-trial motions, from which plaintiffs appeal. The defendants cross-appealed the district court's ruling that nonclients may sue for negligence and that the claims were not barred by the statute of limitations. This court granted defendants' motion to transfer to the Supreme Court for final disposition pursuant to Supreme Court Rule 8.02 (1989 Kan.Ct.R.Annot. 39) on March 27, 1989.

Charles Pizel was a single man who owned and farmed over 1,760 acres of farm land in Sherman County, Kansas. He died in April 1979. The appellants here are three nephews of Charles Pizel. Allen lives in Colorado, where he owns and farms 2,700 acres of land. Allen's brother, Wilfred, also known as Bill or Billy, died after Charles and after the trust Charles created had been set aside by the Court of Appeals. Herbert, or Herb, is a farmer living in Kansas and the cousin of Allen and Wilfred.

Herbert Pizel had seven brothers and sisters, who were also nieces and nephews of Charles Pizel, but who were not mentioned in Charles' trust. Along with Herbert, they were named as residuary beneficiaries in Charles' will. These seven brothers and sisters sued Herbert, Allen, and Wilfred to quiet title to the land contained in the trust and won in Pizel v. Pizel, 7 Kan.App.2d 388, 643 P.2d 1094, rev. denied 231 Kan. 801 (1982). The land in the trust was sold, and the proceeds were divided among the residuary beneficiaries.

Eugene P. Zuspann is an attorney at law who has practiced law in Kansas since October 1939. For several years prior to 1962, Zuspann did Charles' taxes. In late 1961 or early 1962, Charles went to Zuspann to have him draft a contract of sale to transfer his 1,760 acres of land to Allen and Wilfred, who accompanied Charles. At this first meeting, Zuspann suggested a trust to accomplish what Charles wanted and provided a form on revocable trusts for Charles to read. Charles met with Zuspann several times over the next two months to discuss and prepare the trust, with Zuspann explaining that Charles would be deeding his property away to the trustees. Zuspann advised Charles that the trust could be canceled at any time to get the land back. Charles signed the trust on May 23, 1962. The same day, Charles executed a will and a deed conveying all his real estate to the trust. At that time, Zuspann believed Charles understood what he was doing and that he intended to create a trust. Zuspann represented Charles in this matter, not Allen or Wilfred. Zuspann believed a potential conflict of interest existed in advising Allen or Wilfred about their rights under the trust.

The trust named Charles, Allen, and Wilfred as trustees. Zuspann explained to Charles and Allen that the trustees owned the property, should manage it, and had the right to deal with the property as owners. No one, including Charles, ever asked Zuspann to change the trust after it was executed in 1962.

In 1962, Zuspann was involved in a law partnership with B.E. Whalen. Whalen was not involved in the preparation of the trust or estate plan or will in 1962. Whalen began representing Charles in the early 1970s. When he took over as Charles' lawyer, Whalen believed Allen, Wilfred, and Charles understood that the land was in trust, that the income from the land went to Charles, and that they had responsibility as trustees to take care of the land. The trust had been in effect for ten years and Whalen assumed Allen and Wilfred knew of their roles as trustees because they were involved in running the land and helped Charles with his affairs. Based upon his experience with Zuspann, Whalen believed the trust and the duties of the trustees had been explained to Charles. About 1972, Charles indicated to Whalen his belief that Allen, Wilfred, and Herb were in charge of the land. When Whalen, after looking at the trust documents, told Charles that Herb was not involved, Charles indicated his desire to have Herb named a trustee. Whalen prepared an amendment to the trust that included Herb as a trustee, and he discussed the proposed amendment with Charles. This was Whalen's first work on the trust and estate planning matters. Whalen met with Charles, Herb, Allen, and Wilfred and explained the amendments to the trust and the new deed needed to reflect Charles' desire to include Herbert as a trustee. The instrument amending the trust was signed on June 10, 1975, by Charles, Allen, and Herb, and later by Wilfred.

At the time the trust was amended, Whalen believed Herb knew the duties of a trustee because he had been with Charles on many occasions and because he was a real estate owner, appraiser, and expert witness in condemnation cases. Charles had told Herb about the trust before it was amended, and Herb received copies of the amended documents that had been signed on June 10, 1975. Whalen believed Charles understood the trust and the amendment. Whalen believed Allen and Wilfred had been operating as trustees for 13 years. On many occasions, Charles told Whalen he wanted the trust kept secret because he feared the reaction from Herb's brothers and sisters. Charles instructed Whalen not to record the deeds until after his death. Allen and Herb were also aware that Charles wanted to keep the trust secret.

After the trust was amended, Charles' mental and physical condition deteriorated. In the fall of 1976, Whalen wrote Herb, Allen, and Wilfred, asking them to schedule an appointment to discuss the trust and Charles' affairs. Whalen was considering what would need to happen if Charles became incompetent. The trustees did not come to see Whalen prior to Charles' death. Charles entered the hospital in 1978 and remained there until he died in April 1979.

Whalen recorded the deeds to the trust land after Charles died. Allen and Herb farmed the land from 1980 until August 1982. They received $69,000 in income. Suit was filed by Charles' other heirs in August 1980. In his deposition in the trust lawsuit, Allen stated that he, Herb, and Wilfred had done nothing as trustees before Charles died and that he did not think the trust took effect until after Charles' death, even though Allen had been a named trustee and had worked the land for 18 years. The trial court invalidated the trust in February 1981, finding that Charles treated the land as if it were his own, that the trustees denied doing any acts as trustees, and that the trustees testified that Charles intended the trust to...