The Attorney Represents the Executor; Who Represents the Estate?

An estate is left to two sisters.  An uncle is named executor.  He loots the estate for more than $1 million, and is surcharged and suspended.  New executor sues the attorneys representing uncle and the estate for the losses.

Betz v Blatt  2014 NY Slip Op 02554  Decided on April 16, 2014  Appellate Division, Second Department tells us that the law suit for legal malpractice fails, because there was no privity (no attorney-client relationship) between the estate and the attorneys.  The attorneys represented the executor only.

"Contrary to the Supreme Court's factual finding, the Sirignano defendants' retainer agreement with Carbone does not contain the phrase "administration of the estate." Both the retainer agreement and the facts as pleaded in the complaint indicate that the Sirignano defendants were retained solely to defend Carbone in the contested accounting proceeding and related matters, and were not retained to administrate the estate. Therefore, the Supreme Court erred in finding that the Sirignano defendants "under[took] a duty of undivided loyalty to the Estate and its beneficiaries." Since the documentary evidence demonstrates that the Sirignano defendants were not in privity with the estate, and because the plaintiff failed to plead specific facts tending to show that the Sirignano defendants engaged in fraud or colluded with Carbone, the plaintiff did not assert a viable cause of action against them on the estate's behalf to recover damages for legal malpractice. Accordingly, the eleventh cause of action, which alleged legal malpractice by the Sirignano defendants, must be dismissed pursuant to CPLR 3211(a) (see Keness v Feldman, Kramer & Monaco, P.C., 105 AD3d at 813; Jacobs v Kay, 50 AD3d at 526-527; Chinello v Nixon, Hargrave, Devans & Doyle, LLP, 15 AD3d at 895; Conti v Polizzotto, 243 AD2d at 672). For the same reasons, the twelfth cause of action, which alleged breach of fiduciary duty by the Sirignano defendants, was properly dismissed.

This Court has held that "an attorney represents the administrators individually and not the estate itself" (Matter of Hof, 102 AD2d 591, 593, citing Matter of Schrauth, 249 App Div 847, 847, and Matter of Scanlon, 2 Misc 2d 65, 69 [Sur Ct, Kings County]; see Matter of Della Chiesa, 23 AD2d 562). Accordingly, an attorney may recover fees from the estate only where the services rendered benefit the estate (see Matter of Rodken, 2 AD3d 1008, 1009; Matter of Winckler, [*3]234 AD2d 307, 309; Matter of Baxter [Gaynor], 196 AD2d 186, 190; Matter of Della Chiesa, 23 AD2d at 562; see also Matter of Smolley, 188 AD2d 535, 538). Where a plaintiff asserts a cause of action for restitution, the " essential inquiry'" is " whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered'" (Goel v Ramachandran, 111 AD3d 783, 791, quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421; see Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182; Sample v Yokel, 94 AD3d 1413, 1415; Trotta v Ollivier, 91 AD3d 8, 12). In determining whether this equitable remedy is warranted, a court should " look to see if a benefit has been conferred on the defendant under mistake of fact or law, if the benefit still remains with the defendant, if there has been otherwise a change of position by the defendant, and whether the defendant's conduct was tortious or fraudulent'" (Goel v Ramachandran, 111 AD3d at 791, quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d at 421; see Zamor v L & L Assoc. Holding Corp., 85 AD3d 1154, 1156-1157).

Here, the plaintiff alleged that the Sirignano defendants' fees for representing Carbone were paid from estate assets even though those services were not beneficial to the estate and were, in fact, adverse to it. Thus, the plaintiff has pleaded facts sufficient to assert a cause of action for restitution (see Goel v Ramachandran, 111 AD3d at 791; see also Matter of Rodken, 2 AD3d at 1009; Matter of Winckler, 234 AD2d at 309; Matter of Baxter [Gaynor], 196 AD2d at 190; Matter of Della Chiesa, 23 AD2d 562). Accordingly, the Supreme Court erred in granting that branch of the Sirignano defendants' motion which was to dismiss the fourteenth cause of action, which sought disgorgement and restitution of attorneys' fees from them."

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