Tensfeldt v. Haberman

• Citation: 2009 WI 77,768 N.W.2d 641
• Decision Date: 14 July 2009
• Docket Number: No. 2007AP1638.,2007AP1638.
• Parties: Robert William TENSFELDT, John F. Tensfeldt and Christine L. Tensfeldt, Plaintiffs-Appellants-Cross-Respondents, v. F. William HABERMAN, Defendant-Respondent, Roy C. LaBudde and Michael Best & Friedrich LLP, Defendants-Respondents-Cross-Appellants.
• Court: United States State Supreme Court of Wisconsin

768 N.W.2d 641

2009 WI 77

Robert William TENSFELDT, John F. Tensfeldt and Christine L. Tensfeldt, Plaintiffs-Appellants-Cross-Respondents, v. F. William HABERMAN, Defendant-Respondent, Roy C. LaBudde and Michael Best & Friedrich LLP, Defendants-Respondents-Cross-Appellants.

No. 2007AP1638.

Supreme Court of Wisconsin.

Argued December 2, 2008.

Decided July 14, 2009.

For the defendants-respondents-cross-appellants there were briefs (in the court of appeals) by Thomas R. Schrimpf and Hinshaw & Culbertson LLP, Milwaukee, and oral argument by Thomas R. Schrimpf.

For the plaintiffs-appellants there were briefs (in the court of appeals) by Gary M. Young and Law Offices of Gary M. Young, Madison, and oral argument by Gary M. Young.

¶ 1 ANN WALSH BRADLEY, J

This case is before this court on certification from the court of appeals pursuant to Wis. Stat. (Rule) § 809.61 (2007-08).¹ It involves a dispute between the children of the deceased, Robert Tensfeldt, and the two attorneys who provided his estate planning services, Attorneys LaBudde and Haberman. Both the children and Attorney LaBudde appealed a circuit court order on their cross motions for summary judgment.²

¶ 2 Attorney LaBudde asserts that the circuit court improperly granted the children's motion for summary judgment, thereby concluding as a matter of law that LaBudde is liable for intentionally aiding and abetting his client's violation of a divorce judgment. First, he contends that he is not liable because the judgment was not enforceable. Second, he asserts that the question was fairly debatable, entitling him to qualified immunity and the good faith advice privilege.

¶ 3 We determine that the circuit court properly concluded that LaBudde is liable as a matter of law for intentionally aiding and abetting his client's unlawful act. The divorce judgment was enforceable at the time it was entered and at the time Robert asked LaBudde to draft an estate plan that violated the judgment. Under these facts, LaBudde is not entitled to either qualified immunity or the good faith advice privilege.

¶ 4 Additionally, on the children's third-party negligence claim, LaBudde argues that the circuit court improperly denied his motion for summary judgment. We determine that the circuit court erred in denying LaBudde's motion for summary judgment because the children cannot establish that LaBudde's negligence thwarted Robert's clear intent.

¶ 5 Regarding the claim against Attorney Haberman, the Tensfeldt children assert that the circuit court erroneously granted Haberman's motion for summary judgment. They contend that Haberman is liable for negligently advising their father regarding his estate. We conclude that the circuit court did not err in granting summary judgment. Under these circumstances, Haberman is not liable to third parties for his negligent advice, and further, the children failed to present evidence sufficient to show that they were harmed by Haberman's negligent advice.

¶ 6 Accordingly, we affirm in part and reverse in part the order of the circuit court, and we remand to the circuit court for further proceedings.³

I

¶ 7 Robert Tensfeldt and his first wife, Ruth, had three children—Christine, Robert William, and John.⁴ When Robert and Ruth divorced in 1974, they entered into an agreement stipulating to various terms of the divorce. The divorce court determined that the stipulation was "fair and reasonable" and incorporated the stipulation into the divorce judgment.⁵

¶ 8 One of the terms of the stipulation provides that Robert would make and maintain a will leaving two-thirds of his net estate to the children:

Will in Favor of Children: Simultaneously with the execution of this Stipulation, [Robert] shall execute and shall hereafter keep in effect, a Will leaving not less than two-thirds (2/3) of his net estate outright to the three adult children of the parties, or to their heirs by right of representation. Except as herein provided, [Robert] shall have the right to make such disposition of his estate as he may desire, except as limited herein, and further, except as limited by the requirements set forth in [the provision dealing with unpaid alimony.] As used herein, the term "net estate" shall mean [Robert's] gross estate passing under his Will (or otherwise, upon the occasion of his death), less funeral and burial expenses, administration fees and expenses, debts and claims against the estate, and Federal and State taxes.

¶ 9 Robert married his second wife, Constance, in 1975. They remained married until Robert's death in 2000. Robert and Constance had no children together, although Constance had three children from a previous marriage. In 1978, Robert executed a will that was compliant with the stipulation and order—one-third of the net estate went to Constance, and two-thirds of the net estate went to his children or their issue.

¶ 10 In 1980, Robert retained Attorney LaBudde (LaBudde) of Michael Best & Friedrich, LLP to provide estate planning services. It is undisputed that Robert made LaBudde aware of his obligation to his children from the outset. When Robert initially met with LaBudde, he gave the attorney a copy of the divorce judgment and stipulation. LaBudde told Robert that he had three choices: comply with the stipulation; negotiate with the children to alter his obligation; or ignore the stipulation, knowing that the children might contest Robert's will upon his death. Robert chose the third option, and in 1981, LaBudde drafted an estate plan that did not leave two-thirds of the net estate outright to the Tensfeldt children.

¶ 11 After Robert executed the non-compliant estate plan, LaBudde received a letter from Robert's divorce attorney, J.M. Slechta. Attorney Slechta wrote:

Since you have drafted a will for Mr. Robert Tensfeldt of Oconomowoc, I recalled that in his divorce in 1974 in which proceedings I represented him, it was agreed in the Stipulation made part of the judgment, some restrictions on the disposition of his estate.... Realizing this might have some effect upon the disposition which you have proposed I am enclosing a copy of such stipulation for your examination. There does not seem to be any sanction against disposition of assets during his lifetime.

LaBudde wrote back:

Your letter ... asks whether Mr. Tensfeldt's most recent Will ... violates his obligations under that decree....

In my opinion, Mr. Tensfeldt's present Will needs some revision in light of the obligations under the divorce decree, of which I was unaware until receipt of your letter. On the other hand, the so-called "Economic Recovery Tax Act of 1981" does, as you know, offer significant new estate and gift tax advantages which may be available to Mr. Tensfeldt to some extent despite the decree.

¶ 12 Robert and LaBudde never changed the estate plan to bring it into compliance with the divorce stipulation and judgment. Even though Robert and Constance moved to Florida in 1985, they continued to retain the attorneys at Michael Best & Friedrich to handle their estate planning. Over the course of 12 years, LaBudde drafted and executed a series of revisions to the plan for Robert,⁶ including the 1992 plan that was in effect when Robert died. None of the revised plans left at least two-thirds of his net estate outright to the three adult children of his first marriage.

¶ 13 Attorney LaBudde later scaled back his practice, and Robert first consulted with Attorney Haberman (Haberman) in 1994. In 1999, Robert met with Haberman to discuss his estate plan in depth. According to a memo from his file, Haberman "carefully outlined the assets passing to his children and his wifes children, and [Robert] decided to leave things as they are and make no changes" to the 1992 estate plan.

¶ 14 According to the 1992 plan, after Robert's death the Tensfeldt children would receive some money and property up front. However, the majority of Robert's estate would pour into an inter vivos trust. Constance would receive an income from the trust during her life, and after Constance's death her children would receive a cash payment from the trust. The Tensfeldt children would receive the remainder of the balance.

¶ 15 When he met with Robert in 1999, Haberman was unaware of a recent Florida case that would have a substantial impact on the distribution of Robert's assets. This decision, Bravo v. Sauter, 727 So.2d 1103 (Fla.Ct.App.1999), allowed a surviving spouse to elect against the will (thereby taking 30 percent of the estate off the top) and continue to receive income from the revocable trust for the remainder of her life.⁷ Because he was unaware of Bravo, Haberman did not inform Robert of the likely impact of this decision—that Constance could elect to receive a larger share of the estate than Robert contemplated and to defer the bulk of the Tensfeldt children's inheritance until after her death. It is undisputed that Haberman was negligent in failing to properly advise his client.

¶ 16 Robert died in 2000. Robert's son and Constance were appointed personal representatives of the estate, and Haberman was retained as counsel. At that point, Haberman learned about the divorce stipulation, and he told Constance and the Tensfeldt children about its existence.

¶ 17 The estate was probated in Florida, with Haberman as the attorney representing the estate. See Estate of Robert C. Tensfeldt, Deceased, Case No. 00-809-CP-02-HDH. This probate action turned into a lengthy dispute, encompassing two independent actions in the Florida circuit court.⁸ Initially, the Tensfeldt children sued to enforce the stipulation and order promising them two-thirds of Robert's net estate outright. See Tensfeldt v. Tensfeldt, Case No. 01-26-CA-HDH. Constance objected to the claim, elected against the will, and expressed her intention to continue to receive income under the inter vivos trust. The children objected to Constance's election and argued that it was untimely. Haberman,...