Spencer v. Barber

• Decision Date: 28 February 2013
• Docket Number: No. 33,133.,33,133.
• Citation: 299 P.3d 388
• Court: New Mexico Supreme Court
• Parties: Herman SPENCER, Plaintiff–Petitioner, v. Paul BARBER, Barber & Borg, L.L.C., and Ellen Sam, as personal representative of the Estate of Hermanda Spencer (deceased), Defendants–Respondents.

299 P.3d 388

Herman SPENCER, Plaintiff–Petitioner,

v.Paul BARBER, Barber & Borg, L.L.C., and Ellen Sam, as personal representative of the Estate of Hermanda Spencer (deceased), Defendants–Respondents.

No. 33,133.

Supreme Court of New Mexico.

Feb. 28, 2013.

Luebben, Johnson & Barnhouse, L.L.P., Dolph Barnhouse, Kelli J. Keegan, Albuquerque, NM, for Petitioner.

Madison & Mroz, P.A., M. Eliza Stewart, Jacqueline A. Olexy, Albuquerque, NM, for Respondents.

Montgomery & Andrews, P.A., Sean E. Garrett, Albuquerque, NM, for Amicus Curiae New Mexico Defense Lawyers Association.

Law Office of Carpenter & Stout, Ltd., David J. Stout, Michael B. Browde, Albuquerque, NM, for Amicus Curiae New Mexico Trial Lawyers Association.

OPINION

CHÁVEZ, Justice.

{1} Paul Barber and his law firm, Barber & Borg, L.L.C. (Barber), were the attorneys for Ellen Sam. Barber filed a lawsuit against numerous defendants for injuries Sam sustained when her car was struck from behind on Interstate 40 (I–40). Barber also represented Sam in her capacity as the personal representative of the estates of her daughter and granddaughter, both of whom died from injuries they sustained in the collision. At the time of the collision, Sam had stopped her car on I–40 to trade places with one of her passengers, Daniel Begay. At some time during his representation of Sam, Barber learned that Sam had been drinking alcohol before the collision and that she had “parked at night with the lights off in a lane of traffic on [I–40], following which the car was struck by a truck.”

{2} Barber also learned at some time during the litigation that Sam, who was a statutory beneficiary of her daughter's estate, took the position that the other statutory beneficiary, her ex-husband, Herman Spencer, was not entitled to share in any wrongful death proceeds because he had abandoned their daughter. Based on Sam's position, Barber approached Spencer in person with a settlement agreement, which Spencer ultimately signed, that reduced Spencer's entitlement to proceeds from the wrongful death litigation. Spencer later hired an attorney, who wrote to Barber and challenged the validity of the agreement. Barber filed a lawsuit against Spencer on Sam's behalf to enforce the settlement agreement. Spencer then counterclaimed against Sam and filed a third-party complaint against Barber for malpractice, fraud, collusion, and misrepresentation. The district court granted Barber summary judgment on the grounds that under Leyba v. Whitley, 120 N.M. 768, 776, 778, 907 P.2d 172, 180, 182 (1995), Barber did not owe a duty to Spencer as a statutory beneficiary because Spencer and Sam were adverse parties, and Barber represented Sam.

{3} Spencer appealed, and the Court of Appeals affirmed in part and reversed in part. Spencer v. Barber, 2011–NMCA–090, ¶ 2, 150 N.M. 519, 263 P.3d 296. The Court of Appeals agreed that Spencer could not sue Barber for malpractice because Spencer became Sam's adverse party, thereby negating any duty that Barber owed Spencer as a statutory beneficiary. Id. In so holding, the Court of Appeals rejected, as “an unjustified extension” of Leyba, Spencer's argument that Barber violated numerous rules under the New Mexico Rules of Professional Responsibility, and therefore he was required to withdraw from representing the personal representative. 2011–NMCA–090, ¶¶ 23–24, 150 N.M. 519, 263 P.3d 296. However, the Court of Appeals reversed the summary judgment to the extent it enforced the settlement agreement because it found genuine issues of material fact regarding the allegations that Barber made material misrepresentations which induced Spencer to sign the agreement. Id. ¶¶ 38, 42–43. Barber did not ask us to review this portion of the Court of Appeals' opinion.

{4} We granted certiorari to consider the following two questions: (1) “[w]hether the duties a lawyer owes wrongful death statutory beneficiaries are governed, in whole or in part, by the Rules of Professional Conduct”; and (2) “[w]hether an adversarial relationship precludes only contract based malpractice claims and not independent tort claims.” We answer the first question by reaffirming our holding in Sanders, Bruin, Coll & Worley, P.A. v. McKay Oil Corp., 1997–NMSC–030, ¶ 16, 123 N.M. 457, 943 P.2d 104, that the Rules of Professional Conduct provide guidance in determining lawyers' obligations to their clients. A statutory beneficiary under the Wrongful Death Act, NMSA 1978, §§ 41–2–1 to –4 (1882, as amended through 2001), is an intended beneficiary of the agreement between the attorney and the personal representative. Leyba, 120 N.M. at 776, 907 P.2d at 180. Therefore, the statutory beneficiary may sue the personal representative's attorney when the attorney harms the statutory beneficiary by failing to exercise reasonable skill and care during the attorney's representation of the personal representative. See id. at 771, 907 P.2d at 175 (stating that an intended third-party beneficiary of an attorney-client contract has a remedy against the attorney). The Rules of Professional Responsibility thus become relevant when ascertaining the scope of the duty owed by the attorney to the personal representative and how a breach of that duty may have harmed the statutory beneficiary.

{5} With respect to the second question, the adversarial exception we announced as dicta in Leyba may preclude a malpractice action, whether it is in tort or in contract. However, the adversarial exception does not preclude “traditional tort claims against an attorney for misrepresentation, fraud, and collusion, none of which depend upon a duty arising out of [the] contract” between the attorney and the personal representative. Id. at 773 n. 3, 907 P.2d at 177 n. 3. Therefore, in this case, Spencer's non-malpractice tort claims are not barred by Leyba. In addition, we conclude that the adversarial exception does not preclude Spencer's malpractice claim against Barber because there exist genuine issues of material fact regarding whether Barber failed to exercise reasonable skill and care in his representation of Sam as the personal representative, and if so, whether such failure harmed Spencer.

DISCUSSION

{6} “Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.” Self v. United Parcel Serv., Inc., 1998–NMSC–046, ¶ 6, 126 N.M. 396, 970 P.2d 582. Because this is a question of law, we review de novo. Id.

A. The Rules of Professional Conduct Establish the Appropriate Standard of Conduct for Attorneys in New Mexico

{7} The first issue requires this Court to determine to what extent the Rules of Professional Conduct govern the duty owed by an attorney to wrongful death statutory beneficiaries. To put this discussion in context, we first discuss the procedure for wrongful death litigation and examine our opinion in Leyba.

{8} Wrongful death lawsuits must be brought in the name of the personal representative of an estate. Section 41–2–3; Kilkenny v. Kenney, 68 N.M. 266, 268, 361 P.2d 149, 150–51 (1961), superseded by statute on other grounds as stated in 1961 N.M. Laws, ch. 202, § 1, as recognized in Lujan v. Regents of the Univ. of Cal., 69 F.3d 1511, 1519–20 (10th Cir.1995), and State Farm Mut. Auto. Ins. Co. v. Luebbers, 2005–NMCA–112, ¶ 42, 138 N.M. 289, 119 P.3d 169. The Wrongful Death Act identifies the beneficiaries of the lawsuit in Section 41–2–3. Statutory beneficiaries are generally not permitted to join as parties in a wrongful death lawsuit because the personal representative is the beneficiary's trustee, Stang v. Hertz Corp., 81 N.M. 348, 350, 467 P.2d 14, 16 (1970), and because the personal representative and any beneficiaries should have the same interest—to recover as large an award as possible from the tortfeasors who caused the decedent's death. See Dominguez v. Rogers, 100 N.M. 605, 608, 673 P.2d 1338, 1341 (Ct.App.1983) (noting that would-be intervenor had “identical” interest to personal representative). The personal representative has a duty to act with reasonable care regarding the interests of the statutory beneficiaries and must distribute proceeds from a wrongful death lawsuit to the statutory beneficiaries in strict accordance with the Wrongful Death Act. Leyba, 120 N.M. at 774, 778, 907 P.2d at 178, 182.

{9} Although the personal representative may be, and often is, a statutory beneficiary, for purposes of the attorney-client relationship, the client is the personal representative. See McTaggart v. Lindsey, 202 Mich.App. 612, 509 N.W.2d 881, 884 (1993) (“[T]he personal representative can be considered the lawyer's client for the purposes of ethical duties of loyalty, confidentiality, and conflicts.”). In addition, the attorney owes a duty to provide services to the personal representative with reasonable skill and care. Leyba, 120 N.M. at 772, 907 P.2d at 176 (“[T]he common law of torts ... recognizes an attorney's duty to provide professional services with the skill, prudence, and diligence of attorneys of ordinary skill and capacity.”); see also George v. Caton, 93 N.M. 370, 376, 600 P.2d 822, 828 (Ct.App.1979) (describing an attorney's implied representations and duties when he takes a case). What happens if the attorney breaches his duty to the personal representative and, in so doing, harms the statutory beneficiaries? We attempted to provide a comprehensive answer to this question in Leyba.

{10} In Leyba, the mother of a deceased adult son hired two attorneys to represent her as the personal representative of her son's estate in a wrongful death lawsuit against medical providers. 120 N.M. at 770, 907 P.2d at 174. The attorneys ultimately settled the litigation and disbursed the settlement funds to the personal representative. Id. At the time they disbursed the funds, the attorneys knew that the sole statutory beneficiary of the decedent's estate under the Wrongful Death Act was the decedent's infant son. Id....