What Is The Privity Rule In Texas Estate Planning Malpractice Claims?

In Flores v. Branscomb, a Texas appellate court discussed the estate planning privity rule for legal malpractice claims, and determined whether a non-client could sue an estate planning attorney for malpractice.  In this case, the answer was no.

The Facts of Flores v. Branscomb

Iris Henderson executed a will in January 2005.  Later, Henderson retained Leal, an attorney employed by Branscomb, to provide estate planning services. On July 20, 2007, Henderson and Leal signed an engagement letter which provided that appellees’ “representation of [Henderson] will include advising [Henderson] regarding [her] Will and incapacity planning documents” and that appellees would “advise [Henderson] regarding potential estate and gift tax issues related to [her] estate[.]” The letter further provided that appellees would “supervise [Henderson’s] execution of [her] Will and incapacity planning.”

In January 0f 2014, Henderson and her granddaughter, Candace Flores, met with Leal at his office.  Leal told Flores that Henderson intended to amend her will to designate Flores as the executor and to include Flores as a beneficiary and that Henderson wanted Flores to serve as her attorney-in-fact. Leal informed Flores what her duties and responsibilities would be for these roles.

Leal told Henderson and Flores that he would draft a new will in accordance with Henderson’s wishes. On May 13, 2014, Leal came to Henderson’s home, and Henderson signed several estate planning documents, including a durable power of attorney.

Several days later, Leal called Flores and informed her that Henderson did not execute the new will at the May 13, 2014 meeting. Leal then went to Henderson’s house to have the will executed. Upon his arrival, Leal asked Flores to step outside while Henderson signed the will due to Flores’s status as a beneficiary. Leal, a notary, and the required witnesses, remained with Henderson. Henderson attempted to execute the will, but she was too weak to sign her name. Leal then informed Flores that Henderson was unable to sign the will that day. Henderson passed away on May 28, 2014, without having executed the new will. Her 2005 will was admitted to probate in June 2014.

Beneficiary Sues For Estate Planning Legal Malpractice

Flores sued Branscomb PA for legal malpractice and related claims.  Flores alleged that the law firm failed to “cause [the] proposed Will” to be “made valid[.]”  In particular, Flores alleged that Leal failed to advise either Henderson or Flores that Henderson “could have directed another person in her presence to sign the Will” as permitted by Texas Estates Code § 251.051. See Tex. Est. Code Ann. § 251.051. See What Are the Requirements For a Valid Will In Texas?

Flores alleged that appellees negligently misrepresented to Flores that “the changes [to the Will] could not be validly made[.]” Flores further maintained that appellees represented Flores “in an attorney[-]client relationship[.]” In the alternative, Flores asserted that appellees “should have  reasonably expected that [Flores] would believe [appellees] represented her” and that appellees were negligent in failing to advise Flores that they did not represent her.

The trial court granted Branscomb’s motion for summary judgment, and Flores appealed.

The Estate Planning Privity Rule In Texas Legal Malpractice

The Texas appellate court first discussed the estate planning privity rule that applies to legal malpractice cases:

Legal malpractice claims sound in tort. Belt v. Oppenheimer, Blend, Harrison & Tate, Inc., 192 S.W.3d 780, 783 (Tex. 2006). To establish such a claim, a plaintiff must prove: (1) the attorney owed the plaintiff a duty; (2) the attorney breached that duty, (3) the breach proximately caused the plaintiff’s injuries; and (4) damages occurred. Id. While  an attorney owes a duty of care to a client, no such duty is owed to non-clients, even if they are damaged by the attorney’s malpractice. Id. The existence of duty is a question of law when all of the essential facts are undisputed. Helbing v. Hunt, 402 S.W.3d 699, 703 (Tex. App.-Houston [1st Dist.] 2012, pet. denied).

In Barcelo v. Elliott, the Texas Supreme Court declined to create an exception to the attorney duty limitation in the estate planning context. 923 S.W.2d 575, 579 (Tex. 1996). Specifically, the court held that an attorney retained by a testator to draft a will owes no professional duty of care to persons named as beneficiaries under the will. Id. The court reasoned that the threat of lawsuits by disappointed heirs after a client’s death could create conflicts during the estate planning process and divide the attorney’s loyalty between the client and potential beneficiaries. Id. at 578. In reaching its holding, the court contemplated a scenario similar to the present case:

In most cases where a defect renders a will or trust invalid, however, there are concomitant questions as to the true intentions of the testator. Suppose, for example, that a properly drafted will is simply not executed at the time of the testator’s death. The document may express the testator’s true intentions, lacking signatures solely because of the attorney’s negligent delay. On the other hand, the testator may have postponed execution because of second thoughts regarding the distribution scheme. In the latter situation, the attorney’s representation of the testator will likely be affected if he or she knows that the existence of an unexecuted will may create malpractice liability if the testator unexpectedly dies.

. . . .

In sum, we are unable to craft a bright-line rule that allows a lawsuit to proceed where alleged malpractice causes a will or trust to fail in a manner that casts no real doubt on the testator’s intentions, while prohibiting actions in other situations. We believe the greater good is served by preserving a bright-line privity rule which denies a cause of action to all beneficiaries whom the attorney did not represent. This will ensure that attorneys may in all cases zealously represent their clients without the threat of suit from third parties compromising that representation. Id. at 578-79 (emphasis added).

Since Barcelo, the Texas Supreme Court has recognized two scenarios in which a non-client can bring a legal malpractice claim against an estate planning attorney. First, an estate representative may bring a legal malpractice action for damage to the estate. Belt, 192 S.W.3d at 787. Second, an executor of a will may bring suit for malpractice committed by a decedent’s attorney outside of the estate-planning context. Smith v. O’Donnell, 288 S.W.3d 417, 419 (Tex. 2009). Neither scenario concerns Flores’s claims in this case.

When Does an Implied Attorney-Client Relationship Exist Under Texas Law?

Flores urged that Barcelo did not apply because an implied attorney-client relationship existed between her and Branscomb and therefore she did have standing to sue for estate planning legal malpractice under Texas law.  Although an attorney-client relationship is usually created through an express contract, it can also be implied from conduct:

To support an implied attorney-client relationship, there must be evidence that both parties intended to create the  relationship. Kiger, 376 S.W.3d at 291. One party’s mistaken, subjective belief that there exists an attorney-client relationship is insufficient to establish that an attorney owes a duty to the purported client. Pineda, 535 S.W.3d at 152; Kiger, 376 S.W.3d at 291. We use an objective standard to determine whether there is an implied attorney-client relationship. Kiger, 376 S.W.3d at 291.

The Court determined that no such implied attorney-client relationship existed here, and Flores’ subjective belief was not enough:

Appellees had an express attorney-client relationship with Henderson for the provision of estate planning services. Appellees did not have a contract with Flores, open a file on behalf of Flores, or accept fees from Flores. Leal communicated with Flores regarding Henderson’s wishes that Flores serve in various capacities relating to Henderson’s estate. There is no evidence that appellees ever manifested an intent to provide legal services to Flores or that appellees reasonably should have known that Flores was relying on appellees in that regard. Rather, the record reflects that Leal’s communications with Flores were in furtherance of appellees’ representation of Henderson. See Wright v. Gundersen, 956 S.W.2d 43, 48 (Tex. App.- Houston [14th Dist.] 1996, no writ) (concluding that evidence that an estate planning attorney discussed with the plaintiff her roles as executor and attorney-in-fact did not create a fact issue as to the existence of an implied attorney-client relationship). Flores’s subjective belief that appellees represented her is insufficient to establish an implied attorney-client relationship. See Pineda, 535 S.W.3d at 152; Kiger, 376 S.W.3d at 291.