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Attorney is liable to third parties for tort

By: dmc-admin//July 20, 2009//

Attorney is liable to third parties for tort

By: dmc-admin//July 20, 2009//

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As a general rule, attorneys aren’t liable to third parties in tort.

However, a July 14 opinion by the Wisconsin Supreme Court created an exception, permitting an attorney to be sued for intentionally aiding a client in drafting a will to evade his obligations under a divorce agreement.

“We agree that in most cases, an attorney is immune from liability to third parties based on the attorney’s failure to perform a duty owed to a client,” Justice Ann Walsh Bradley wrote for the court. “However, failure to perform an obligation to a client is entirely distinct from conduct that assists the client committing an unlawful act to the detriment of a third party.”

Robert Tensfeldt and his first wife, Ruth, had three children. When they divorced in 1974, the divorce judgment provided that Robert would maintain a will granting at least two-thirds of his net estate to the adult children.

Robert remarried, and in 1981 (and in several later revisions), drafted a new will contrary to the divorce judgment. Attorney Roy C. LaBudde drafted the new wills.

After LaBudde scaled back his practice, Tensfeldt was represented by attorney F. William Haberman. It was undisputed that Haberman did not know about the divorce provision until after Tensfeldt died in 2000, and did not draft any will for Tensfeldt, but was negligent in providing advice in an unrelated aspect of the law.

The estate was probated in Florida, and was settled after extensive litigation. The children then sued LaBudde and Haberman in Wisconsin, alleging negligence against both, and intentional tort against LaBudde.

The Supreme Court held that both attorneys were entitled to summary judgment on the negligence claims, but that the intentional tort claim could proceed against LaBudde.

Intentional Tort

The court rejected LaBudde’s argument that an attorney can never be sued by third parties for acts committed on behalf of his client in the exercise of his professional responsibilities, although it agreed, as a general rule.

Here, however, the court found that the claim was not based on failure to fulfill a professional obligation, but on knowingly assisting the commission of an unlawful act.

“LaBudde drafted documents that obtained for Robert something he was not legally entitled to — an estate plan that violated a court judgment requiring Robert to leave two-thirds of his net estate to his children outright,” Bradley wrote. “Under these circumstances, LaBudde is not entitled to qualified immunity.”

The court distinguished cases in which an attorney counseled a client to breach a contract, noting, “The action here is not for breach of contract. Rather, it is an action in tort for assisting a client to unlawfully violate a court judgment.”

The court further found it irrelevant that LaBudde may have believed in good faith that the divorce judgment was void.

Even if he did, the court concluded, “The only lawful courses of action were to follow the judgment, to ask the court to modify it, or to appeal the judgment.”

Negligence

However, the court held that LaBudde could not be held liable to the children in negligence, because his drafting of the will was consistent with Tensfeldt’s clear intent. Wisconsin law only permits negligence actions against attorneys if the decedent intended the third party to recover, but that intent was thwarted by the attorney’s negligence.

The court also held that Haberman could not be sued in negligence, because he did not draft any will for Tensfeldt.

Although Auric v. Continental Cas. Co., 111 Wis.2d 507, 331 N.W.2d 325 (1983), permits an intended beneficiary to sue a negligent attorney who fails to draft a will carrying out the decedent’s intent, the court concluded that it would go too far to extend Auric to attorneys who merely give advice, without drafting any will.

Dissent

Justice Patience Drake Roggensack dissented from the part of the opinion addressing the intentional tort claim.

Roggensack, joined by Justice Annette Kingsland Ziegler, concluded that in 1974, the provision requiring Tensfeldt to maintain his will in favor of the children was beyond the circuit court’s authority, and thus was illegal and void ab initio.

Because a party cannot be held in contempt for failing to comply with a void order, the dissent concluded that LaBudde cannot be liable for abetting failure to comply.

Furthermore, even if the divorce judgment was not void, the dissenters concluded that LaBudde acted in good faith in concluding that it was, and thus, he is immune from suit.

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