Attorney-Client Communications

One of the requirements I have for any client is for there to be a clear channel of communication between the parties (I'm positive other attorneys require the same). This is a bilateral relationship. If the client inquires, I respond in a timely fashion. If I inquire with the client, I expect the same. For a productive attorney-client relationship, both sides need to uphold their end of the bargain. Otherwise, there can be serious ramifications.

This segues into a recent unpublished opinion that dealt with an attorney-client relationship that lacked communication and the client suffered the serious consequences.

Crabill et al. v. Brown, San Diego County Superior Court, Case # 37-2010-00151394-PR-TR-CTL

The summary of the case is as follows:

"Defendant Frank Brown appeals from the denial of his motion to vacate an order assessing over $250,000 in penalties arising from a breach of his duties as a trustee. Brown's motion, filed approximately 14 months after the penalty assessment order, claimed he simply forgot to disburse payments as the trustee and did not read his mail to receive notice of the subsequent court proceedings. The probate court denied the motion, finding that the time periods for statutory relief had long since passed and equitable relief was not warranted. Brown now contends the court abused its discretion in denying his motion because he presented compelling evidence that he had a satisfactory excuse for not appearing, acted diligently in seeking to set aside the order and, if he had appeared, had a meritorious defense. We see no abuse of discretion and accordingly affirm."

Some notable excerpts from the case include: 

"Crabill and Smidebush allege that over the course of the next year they sent letters to Brown's attorney seeking their distributions. Brown's attorney told them that he forwarded their letters to Brown but did not receive any response. Ultimately, in June 2014, Brown's attorney informed counsel for Crabill and Smidebush that he no longer represented Brown."

"The motion to vacate sought relief pursuant to Code of Civil Procedure sections 473, subdivision (b) and 663. In support of his motion, Brown declared that after the court's final disbursement order, he believed he did not need to take any further action in regard to Smidebush because he had sent her a check for her distribution years earlier. He claimed he never paid Crabill because he wanted to directly hand her a check, but her family prevented him from seeing her. After several months of attempting to personally deliver a check to Crabill, he "came to believe" he had sent the trust disbursement, although he now recognizes he was mistaken. He attributed his mistake to "old age, medical issues and memory loss problems." He listed a broad range of medical issues, including a serious car accident, that "distracted from any trust-related matters."

"Brown further declared that he never saw any mail concerning trust issues because he does not have a "secure home mailbox," and that it was possible the mail "was inadvertently discarded or lost." He also explained that during the entire time period, he believed he was still represented by his former attorney."

Attorney as Beneficiary of a Client's Estate (Don't do it!)

Santa Barbara County Courthouse

Attorneys can receive gifts from clients. For example, one client gave me cookies during the holiday season a few years ago. Attorneys, however, should generally never write a testamentary instrument that provides a "gift" of a client's estate to them. One attorney was recently found culpable in making this grievous mistake.

Butler v. LeBouef (2016) ___ Cal.App.4th _____

The published opinion's first paragraph provided a clear preview of how the appeal would be decided:

"An ethical estate planning attorney will plan for his client, not for himself. (See Estate of Moore (2015) 240 Cal.App.4th 1101, 1103.) A license to practice law is not a license to take advantage of an elderly and mentally infirm client. As we shall explain, the factual findings of the trial court compel the conclusion that appellant used his license to take advantage of an elderly and mentally infirm person to enrich himself. The trial court factual findings are disturbing, fatal to appellant's contentions, and suggest criminal culpability."

The trial court found that attorney John F. LeBouef had authored the will and trust of the late John A Patton and made himself the principal beneficiary to a $5 million estate. Naturally, the trust and will were invalidated.

The trial court also further found against attorney LeBouef:

"In a Supplemental Statement of Decision, the trial court factually found that appellant caused the loss of the original trust instrument, which made it impossible for the court to determine the true terms of the trust. The trial court declared the will and trust invalid and removed appellant as trustee. Appellant was ordered to turn over the trust assets and pay $1,256,971 attorney fees pursuant to section 21380, subdivision (d)."

The loss of the original trust instrument was highly suspicious. According to a footnote in the opinion, "on April 24, 2012, appellant reported that Patton's house was burglarized and that the burglar took the original trust document and a laptop computer used by appellant to prepare trust documents. The burglary occurred just before appellant was scheduled to produce the document for his deposition and a forensic examination. The police suspected it was a staged burglary because nothing else was taken and the house was made to look like it was ransacked. Expensive watches and art work were in plain sight but were not taken."

The opinion concluded:

"The clerk is directed to forward a copy of this opinion to the California State Bar (Bus. & Prof. Code, § 6103.6) and the district attorney for the County of Santa Barbara. We express no opinion on discipline and/or the decision to initiate criminal prosecution." 

I do not foresee this ending well for Mr. LeBouef..........

In Re Conservatorship of Person and Estate of Moore

When an attorney becomes the trustee of a client's trust, trouble usually ensues. The following published decision is representative of this. 

In Re Conservatorship of Person and Estate of Moore, __ Cal.App.4th __ (2015) 

Attorney William Salzwedel was retained by Lester Moore to assist with amending his estate plan and filing an elder abuse action against his daughter. The elder abuse action stemmed from Mr. Moore's daughter, Poppy Helgren, questioning Mr. Moore about large monetary gifts Mr. Moore was providing his girlfriend. In fact, according to the appellate opinion, Ms. Helgren did nothing wrong. Ms. Helgren became concerned about this after being notified from Mr. Moore's doctors that he "suffered from dementia and lacked the capacity to handle his affairs."

In October 2010, Mr. Salzwedel had Mr. Moore "sign the following documents: (1) a partial revocation and modification of the Trust, naming appellant as temporary successor trustee of the Trust; (2) Moore's resignation as trustee; and (3) a Durable Power of Attorney appointing appellant as Moore's attorney-in-fact."

In December 2010, Ms. Helgren "filed a petition for conservatorship. A few months later, she filed a second petition to determine Moore's capacity to execute the estate planning documents."

Mr. Moore, through Mr. Salzwedel, to put it mildly, vigorously objected to the conservatorship petition. The resulting fees and charges was reflective of that. Later Mr. Salzwedel was removed as trustee in May 2012 by the probate court and it ordered him to account for his expenses. 

The details of the accounting were eye-opening.........

"The probate court noted that the accounting listed $474,348.01 in opening inventory and cash receipts and that appellant paid himself $148,105.11 in fees, or 31.22% of the conservatee's reported trust estate, . . . plus another $32,288.21, or another 6.81% of the conservatee's reported trust estate, in related professional and litigation fees."

"The expert witness expenses ($27,515.13) were also excessive. Appellant retained Edward Hyman, Ph.D., a psychologist, from Northern California who billed at the rate of $495 an hour. Doctor Hyman charged $6,000 for travel time and billed 23.25 hours ($11,508.75) on January 6, 2012 for "report writing" and a psychological assessment. The trial court found that appellant could have hired an medical expert from UCLA to make the psychological evaluation for $2,500. Appellant also paid a "celebrity psychiatrist," Dr. Carole Lieberman, $7,500 to evaluate Moore but the doctor never wrote a report or testified. In an e-mail, appellant admitted that Doctor Lieberman's fees were shocking and that Doctor Hyman's travel fees were an embarrassment. Appellant paid another attorney-doctor, Alan Abrams, $3,000 to review some medical records. The trial court found that $2,500 was a reasonable fee for Moore's psychological evaluation and that "everything else was wasted money and wasted time."

Predictably, the appellate court upheld the "$96,077.14 judgment surcharging him for excessive attorney's/trustee's fees ($70,044.99), medical expert fees ($25,015.13), and costs ($1,017.02)."

Duties to a Non-Client?

A lawyer owes various fiduciary duties to a client. These include the duty of loyalty, confidentiality, competence, etc. A list of these duties can be found in the California Rules of Professional Conduct (CA Attorney Ethics Rules). 

However,  a lawyer generally does not owe such duties to a non-client. Moore v. Anderson Zeigler Disharoon Gallagher & Gray (2003) 109 Cal.App.4th 1287, 1294. Furthermore, an attorney does not owe a duty to non-clients to ascertain a client competence's when making a trust or will revision. Id. at 1290.

In Moore, decedent's children sued the estate planning attorney for malpractice. Just prior to his passing, decedent was in poor health. According to the appellate opinion "by June 2000 Clyde was extremely sick, debilitated, and confused. Clyde had undergone chemotherapy and was under the influence of powerful medications, including pain medication." Nevertheless, the attorney drafted and decedent executed an amendment to his trust. The amendment was executed on June 21, 2000 and decedent passed away on June 23, 2000. Hence, at most, decedent had 48 hours to live when he executed the amendment. 

This amendment reduced the distribution to some of the children. Litigation then ensued between the beneficiaries. 

Surprise surprise.

Once the litigation had settled, they then sued the estate planning attorney and his law firm for malpractice.   

The plaintiffs, non-clients, sought to impose a duty on the attorney to ascertain decedent's mental capacity and since decedent was extremely ill, the attorney acted negligently in "failing to 'assure, confirm and document' that Clyde had capacity and was competent to execute his will and trust amendments."

The Moore Court rejected imposing such a duty, finding that determining "testamentary capacity is often difficult and the potential for liability to beneficiaries who might deem any investigation inadequate would unjustifiably deny many persons the opportunity to make or amend their wills." 

"Factors which might suggest lack of testamentary capacity to some attorneys do not necessarily denote a lack of capacity. It has been held over and over in this state that old age, feebleness, forgetfulness, filthy personal habits, personal eccentricities, failure to recognize old friends or relatives, physical disability, absentmindedness and mental confusion do not furnish grounds for holding that a testator lacked testamentary capacity." (Estate of Selb (1948) 84 Cal.App.2d 46, 49."  

Naming a Beneficiary

It is seldom a good idea for an attorney to be the beneficiary of a testamentary instrument written by a current or former client. This includes either a trust or will. The crux of such a scenario is the perception that the attorney unduly influenced the client into leaving them an inheritance. In a typical attorney-client relationship, the client will regularly place much trust and confidence in their attorney. For example, the client will disclose very private and sensitive information to them knowing that what they say to the attorney is privileged. The client is thus in a vulnerable position that can be exploited.  

Recently a California attorney, Carl Dimeff, was ordered by a San Diego County Superior Court judge to pay the trust estate of Siv Ljungwe $4.3M. Yes $4.3M. This ruling stemmed from the fact that Ms. Ljungwe had named Mr. Dimeff as the sole beneficiary of her trust and had, in the judge's opinion, procured it through undue influence.

In 2004, Ms. Ljungwe executed a trust which named four charities as co-equal beneficiaries of her estate, (1) SDSU Research Foundation, (2) UNICEF, (3) NPR and (4) Doctors without Borders. Thereafter, family turmoil ensued and Ms. Ljungwe retained Mr. Dimeff to assist with obtaining restraining orders against her husband. Ms. Ljungwe's health also suffered during this time, principally from the death of her adult son in 2004. This caused her to be hospitalized for paranoia and delusions.

Over the next couple of years, Ms. Ljungwe wrote Mr. Dimeff hundreds of personal notes. According to the court opinion, the notes were bizarre and contained sexual innuendo. Eventually Ms. Ljungwe informed Mr. Dimeff that she wanted him to be the sole beneficiary of her trust. Due to a California law that prohibits an attorney from drafting a trust in which he or she is a beneficiary, another attorney, Kirk Miller, wrote the trust.

Following Ms. Ljungwe's death in 2010, the four charities challenged the validity of the 2008 trust in San Diego Superior Court. Each argued that the 2008 trust was basically the product of undue influence and therefore the operative trust should be the 2004 trust (which named them as the beneficiaries). Judge William Nevitt Jr. agreed and ordered that the 2008 trust be invalidated in October 2014. Later in December 2014, Judge Nevitt Jr. assessed damages of $4.3M for Mr. Dimeff to pay Ms. Ljungwe's estate.       

Mr. Dimeff has indicated that he will appeal this decision. Given the gravity of the situation, I know I sure would.