ST. PAUL, Minn. (Legal Newsline) – An appellate court decision was struck down by the Minnesota Supreme Court on June 27 over its finding that a trustee lacked standing to sue an attorney for legal malpractice during a deceased client’s estate-planning.
Judge Anne McKeig wrote the Supreme Court order, agreeing with the district court’s original decision and reversing the appellate court opinion.
Security Bank & Trust Co. sued law firm Larkin, Hoffman, Daly & Lindgren LTD after the death of Gordon P. Savoie over allegations of legal malpractice. Security, the trustee and personal representative for the Gordon P. Savoie Revocable Trust, claimed that Larkin negligently prepared estate-planning documents when drafting Savoie’s will and trust documents in 2009.
Security claimed that Larkin didn’t tell Savoie when drafting his will and trust that his estate would be subject to a “generation-skipping transfer tax” of about $1.65 million because Savoie allocated more than 45 percent of his estate to a beneficiary who was 37.5 years younger than him.
The district court held that because legal malpractice had not happened while Savoie was alive, Security had no standing to sue Larkin. The district court found Security itself didn’t have an attorney-client relationship with Larkin “and was not a direct and intended beneficiary of Larkin’s relationship with Savoie.”
The district court determined that using the “some damage” rule, the alleged damage only occurred after Savoie’s death, when the estate “became liable for the generation-skipping tax.”
In 2017, the court of appeals reversed, finding that Savoie’s reliance on his attorney’s alleged negligent advice “to the detriment of his legal rights” constituted “some damage.”
In this appeal, Security argued that “a legal-malpractice claim need not accrue during a deceased client’s lifetime to allow the personal representative to pursue it after the client’s death,” while Larkin argued that because the alleged damage happened after Savoie’s death, Security has no standing to sue.
Security claimed that it could sue on behalf of Savoie because the claims of legal malpractice “survive” to Security as the personal representative for the estate. McKreig disagreed, finding that the alleged negligent cause of action would have needed to occur before Savoie’s death.
McKeig noted that after reviewing Savoie’s will and testament, there was no mention that Savoie intended to benefit Security, and that the court could not ascertain that Larkin knew Savoie intended to benefit Security.
“We cannot conclude that Security Bank was a direct and intended beneficiary of Larkin’s estate-planning services.” and that “the trust itself cannot be a 'direct and intended beneficiary' of Larkin’s legal services,” McKeig wrote.
Security Bank & Trust Co. was represented by Paul A. Sortland of the Sortland Law Office PLLC, Minneapolis.
Larkin, Hoffman, Daly & Lindgren LTD Is represented by Sally J. Ferguson and Stephen M. Warner of Arthur, Chapman, Kettering, Smetak & Pikala PA, Minneapolis.
Supreme Court of Minnesota case number A16-1810