CAN AN ATTORNEY EVER OWE A FIDUCIARY DUTY TO AN UNREPRESENTED THIRD PARTY?
Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.
Johnson v. Wiegers, 30 Kan. App. 2d 672, 46 P.3d 563 (2002).
THIS CASE ADDRESSES THE FOLLOWING ISSUES:
Can an attorney ever owe a fiduciary duty to an unrepresented third party?
Can the estate of an individual sue for negligence (in the form of legal malpractice) based only upon contradicting the deceased party’s wishes?
This case dealt with two claims by a deceased mother’s estate and the administrator that estate, each arising out of an unsavory series of transaction brought about by the attorney hired by the mother’s eldest daughter. Id. at 673. Despite the egregious nature of these actions, the court found that neither the husband’s claim for violation of a fiduciary duty nor the estate’s claim for negligence was valid. Id. at 674. Concerning the first claim, though the lawyer should have been more clear in his relationship with the eldest daughter, he did not owe any duty to the husband because he was an unrepresented adverse party. Id. at 679. So far as the negligence claim, the court only dealt with the issues of damages, finding that the estate did not demonstrate any damages merely from the allegation that the lawyer’s actions deprived the deceased mother of her wishes concerning the estate. Id.
Here, Neva Johnson was terminally ill. Id. at 673. She was then married to Louis Johnson and had three children from a previous marriage, the eldest of which was Ruth Naaf. Id. at 672-73. Ruth had a relationship with an attorney, Wiegers, based on prior legal representation. Id. at 673. Ruth hired Wiegers to represent Neva, which ultimately lead to a lucrative IRA being changed from going to Louis upon Neva’s death to going entirely to Ruth. Id. In a separate trial, a jury found that Neva was not competent during this transfer and was placed under duress by both Ruth and Wiegers. Id. After that trial, this action was filed by Louis, bringing claims on his behalf and on behalf of the estate, each directed towards Wiegers and his law firm. Id.
The court began with Louis’ claim that Wiegers, acting as an attorney for Neva and paid by Ruth, owed a fiduciary duty to Louis. Id. at 675. There is a clear divide between fiduciary duties and ethical duties, which truly ended up resolving this claim. Id. An attorney is always under an ethical obligation to inform a third party that he or she represents someone’s interested. Id. at 675-76. However, just because this information is not properly conveyed does not establish a breach of a fiduciary relationship or even that a fiduciary relationship existed. Id. at 676. Instead, the courts apply a rigorous and complex six-part test. Id. However, because Wiegers’ client’s interest were directly adverse to Louis’ interest, there was no need to apply this test: Wiegers simply could not owe a fiduciary duty to an adversarial party. Id. at 679.
Moving on the second claim by the estate, the court also made quick work. Id. The estate was never to receive any part of the IRA at issue, so the court began by asking what damages—if any—the estate did have. Id. Put another way, what had the estate lost in all of this? The answer was, quite simply, nothing. Id. The wishes of the deceased party are not enough to form a basis for monetary damages, particularly when the wrongful transaction had already been set aside in a previous case. Id. Thus, the negligence claim failed because the estate had lost nothing. Id.