Vinton v. Vorzi

• Decision Date: 13 February 2012
• Docket Number: No. 11SA77.,11SA77.
• Parties: In re Amanda VINTON, Esq., Petitioner v. Sharon VIRZI, Beneficiary; Walter J. Kirkland & Elaine Kirkland Irrevocable Living Trust; and Debra McWilliams, Trustee of the Walter J. Kirkland & Elaine Kirkland Irrevocable Living Trust, and individually, Respondents.
• Court: Colorado Supreme Court

2012 CO 10

269 P.3d 1242

In re Amanda VINTON, Esq., Petitioner

v.Sharon VIRZI, Beneficiary; Walter J. Kirkland & Elaine Kirkland Irrevocable Living Trust; and Debra McWilliams, Trustee of the Walter J. Kirkland & Elaine Kirkland Irrevocable Living Trust, and individually, Respondents.

No. 11SA77.

Supreme Court of Colorado, En Banc.

Feb. 13, 2012.

McConnell Fleischner Houghtaling, LLC, Michael T. McConnell, Cecelia Fleischner, Matthew C. Miller, Denver, Colorado, Attorneys for Petitioner.

Kirkland & Seal, LLC, Catherine Anne Seal, Colorado Springs, Colorado, Attorneys for Respondent Sharon Virzi.

Hershey Skinner, LLC, Katrina A. Skinner, Littleton, Colorado, Attorneys for Respondent Debra McWilliams.No appearance by or on behalf of Walter J. Kirkland & Elaine Kirkland Irrevocable Living Trust.Justice COATS delivered the Opinion of the Court.

¶ 1 Vinton petitioned for relief pursuant to C.A.R. 21 from orders of the probate court permitting Virzi to amend her challenge to a trust administration by adding a claim of fraud against Vinton, the attorney for the trustee. Over Vinton's objection, the probate court summarily granted Virzi's motion to amend, forcing Vinton to withdraw as counsel for the trustee. The probate court subsequently summarily denied two motions by Vinton to dismiss the claim against her and ordered her to pay Virzi's attorney fees for having to defend against a substantially frivolous and groundless motion. We issued our rule to show cause.

¶ 2 Because Virzi's fraud claim was not plead with sufficient particularity to withstand a motion to dismiss, it was futile, and the probate court abused its discretion in ever permitting the joinder of her opponent's attorney. Similarly, whether or not Vinton's motion to dismiss for lack of subject matter jurisdiction over the separate fraud claim was meritorious, the record is inadequate to support an award of attorney fees. The rule is therefore made absolute, and the matter is remanded to the probate court with directions to dismiss Virzi's claim of fraud against Vinton and vacate its award of attorney fees.

I.

¶ 3 From the representations of the parties in this proceeding and the pleadings below, the following historical and procedural facts appear to be largely undisputed. Walter and Elaine Kirkland created a trust in 2002, naming themselves as co-trustees and providing for Debra McWilliams to become successor trustee upon their deaths. Mrs. Kirkland survived her husband but died in 2007, causing McWilliams to become successor trustee and to begin administering the trust. Under its terms, McWilliams was to pay the taxes and other expenses of Mrs. Kirkland's estate and distribute three-quarters of the remaining balance to herself as beneficiary and one-quarter to Sharon Virzi, her half-sister and co-beneficiary. The trust's assets included two pieces of real property in California, referred to as the Crater Street and Newhall properties.

¶ 4 Disputes between McWilliams and Virzi over the administration of the trust led McWilliams to retain Amanda Vinton to represent her as counsel and led Virzi, through her attorney, to request an accounting of the trust property. In April 2010, after receiving several accountings, Virzi filed a petition in the probate court, pursuant to section 15–10–501, C.R.S. (2011), to review McWilliams's conduct as trustee. Alleging a breach of fiduciary duty by McWilliams, Virzi asserted that McWilliams had valued the real property in the trust below its fair market value in order to lower the overall value of the trust and consequently reduce the share to which Virzi was entitled. Virzi also alleged that McWilliams had committed fraud by providing an inventory of trust assets that falsely designated the California properties as assets of the trust, despite their having earlier been titled in McWilliams's name alone. Virzi contended that by titling the properties in her own name, McWilliams had, in effect, made an unaccounted for distribution of trust property to herself.

¶ 5 Following a deposition of McWilliams, in which she admitted that the properties had been titled in her name since shortly after she became successor trustee in 2007, and in which her responses to certain questions were understood by Virzi to be a concession that her attorney, Vinton, was aware of this titling when Vinton prepared various accountings of trust property, Virzi moved to amend her fraud claim against McWilliams to include Vinton as well. Virzi's specific allegations were that Vinton had on two occasions, in 2008 and 2009, provided Virzi with trust inventories and accountings falsely claiming that the California real properties continued to be owned by the trust; and that in correspondence with Virzi's counsel in February 2010, despite admitting transfer of the Crater property to McWilliams, Vinton continued to commit fraud by claiming that the transfer occurred in 2009 rather than 2007.

¶ 6 Vinton denied knowing that her client had titled the properties in her own name as early as 2007 until McWilliams disclosed as much at her deposition. In any event, however, the correspondence and accountings by Vinton referred to in the amended complaint, which were made part of the record, represent that the properties were not distributed to McWilliams until January 1, 2009, a date prior to which all rents and expenses were clearly attributed to the trust rather than to McWilliams personally.

¶ 7 The probate court permitted the amendment over Vinton's objections, forcing Vinton to withdraw as McWilliams's counsel. Vinton thereafter filed two motions to dismiss, arguing both that the probate court lacked subject matter jurisdiction over the claim against her and that it failed to state a claim upon which relief could be granted. The probate court summarily denied both motions and awarded attorney's fees in favor of Virzi in the amount of $1,114.50, on the grounds that Vinton's motion to dismiss for lack of subject matter jurisdiction was substantially frivolous and groundless.

¶ 8 Vinton then petitioned for relief pursuant to C.A.R. 21, and we issued our rule to show cause.

II.

¶ 9 The choice whether to exercise this court's original jurisdiction is entirely within its discretion. Lazar v. Riggs, 79 P.3d 105, 106 (Colo.2003); Coquina Oil Corp. v. Dist. Court, 623 P.2d 40, 41 (Colo.1981). Exercise of that jurisdiction pursuant to C.A.R. 21 is appropriate to correct an abuse of discretion or excess of jurisdiction by a lower court where appellate review would be inadequate. People v. Baltazar, 241 P.3d 941, 942 (Colo.2010); Lazar, 79 P.3d at 106. In the past, we have chosen to exercise our original jurisdiction to review an order permitting a party opponent's attorney to be designated a non-party at fault, largely because of its immediate and destructive impact on the attorney-client relationship and the attorney's ability to continue representation in the case. See Stone v. Satriana, 41 P.3d 705, 707–08 (Colo.2002). For much the same reasons, we considered it appropriate to stay the proceedings below and immediately review the probate court's orders permitting the amendment of a claim of fraud by joining the defending party's attorney.

III.

¶ 10 After a responsive pleading has been filed, a party may amend its complaint only by leave of court or written consent of the adverse party. C.R.C.P. 15(a). Although the decision whether to grant or deny leave to amend is a matter within the discretion of the trial court, its discretion is not without limits. Polk v. Dist. Court, 849 P.2d 23, 25 (Colo.1993). In making that determination, the court must assess the motion in the totality of the circumstances, balancing the policy generally favoring the amendment of pleadings against the burden that granting the amendment may impose on other parties. Id. at 26. Both this court and the United States Supreme Court have identified the dominant considerations applicable to the resolution of requests for amendatory pleadings, including among them such things as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party by virtue of allowing the amendment, and whether the amendment would be futile in any event. See Bristol Co. v. Osman, 190 P.3d 752, 759 (Colo.App.2007); Benton v. Adams, 56 P.3d 81, 85–86 (Colo.2002); Varner v. Dist. Court, 618 P.2d 1388, 1390 (Colo.1980) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).

¶ 11 While a motion to amend is generally entitled to lenient examination, motions to amend requiring the joinder of other parties involve additional considerations, see C.R.C.P. 19 and 20, and the inherent prejudice of any amendment with a potential for adversely affecting the continued representation of an opponent's attorney requires closer scrutiny. In Stone v. Satriana, 41 P.3d at 713, we identified strong public policy concerns warranting the careful scrutiny of a legal malpractice defendant's attempt to designate his opposing counsel as a nonparty at fault. As relevant here, we expressed particular concern that allowing a party to bring an opposing party's counsel into a suit in this way is not only destructive of attorney-client confidences but in fact gives the moving party a means of disqualifying his opponent's attorney of choice. Id. at 709–10. In addition to the delay inevitably resulting from a substitution of counsel, we took particular note of the profound financial and psychological impact on a litigant that can result from the disqualification of his chosen counsel. Id. Elsewhere, we have even required that motions to disqualify an opponent's attorney be viewed with skepticism in light of their potential abuse as dilatory or tactical devices. See Fognani v. Young, 115 P.3d 1268, 1272 (Colo.2005); see also In re Estate of Myers, 130 P.3d 1023 (Colo.2006).

¶ 12 These same concerns apply...