Trust Beneficiary Cannot Sue Trust Attorney For Malpractice

The Rhode Island Supreme Court has held that a claim for legal malpractice by a trust beneficiary must fail

“This Court has held that the essence ‘of an action for attorney malpractice is the negligent breach of [a] contractual duty and that in order to maintain such an action, whether brought in tort or in contract, the plaintiff must establish an employment relationship between him/or herself and the attorney.’” Credit Union Central Falls v. Groff, 966 A.2d 1262, 1272 (R.I. 2009) (quoting Church v. McBurney, 513 A.2d 22, 24 (R.I. 1986)). Absent fraudulent conduct, third parties generally cannot recover for attorney malpractice. See id. at 1271 (citing Nisenzon v. Sadowski, 689 A.2d 1037, 1046 n.12 (R.I. 1997)). Furthermore, we have said that “[g]enerally, an attorney owes no duty to an adverse party.” Id. at 1270.

Audette does not argue that he had a direct attorney-client relationship with Correira, nor does he allege that Correira engaged in any fraudulent conduct during his advisement and representation of Poulin. Thus, under our general rule, Audette would be barred from recovering on a legal malpractice claim against Correira. Nonetheless, Audette argues that Correira owed him a duty of care as a beneficiary of the Martel trust while he advised and represented Poulin as the trustee, as well as with respect to carrying out the direct responsibilities relating to administering the trust.

This Court has never squarely addressed the issue of whether an attorney of a trustee owes a duty of care to the beneficiaries of a trust. The closest we have come was in Groff, 996 A.2d at 1272, where we “recognize[d] that the liability of an attorney may extend to third-party beneficiaries of the attorney-client relationship if it is clear that the contracting parties intended to benefit the third party.” That case involved a transaction where the lawyer was retained by the borrower to conduct a real estate closing. Id. at 1273. We said that the legal services rendered by the attorney on behalf of the borrowers “were done for the direct purpose of providing [the lender] with a first secured mortgage,” thereby imposing a duty on the lawyer to diligently pay off any existing loans from the refinancing proceeds to ensure that the lender would be placed in first secured position. Id. at 1274. Although the attorney was retained by the borrower, and not the lender, we held that the lender “was at the very least an intended beneficiary of the contractual obligations between [the attorney] and his borrowers, and as such, the attorney owed [the lender] a duty of care.” Id. We did caution, however, that the third-party beneficiary exception had a “‘narrow scope.’” Id. at 1271.

Audette urges us to effectively extend the third-party beneficiary exception from Groff and “allow a cause of action to proceed against an attorney of a fiduciary at least in the limited circumstances where there exists an ‘identity of interest’ between [t]rustee and [b]eneficiary.” Even if we were to entertain Audette’s suggestion, his argument still has one fatal flaw: there was no “identity of interest” between Audette and Poulin in this setting. Rather, their interests were clearly adverse from the outset; and, because of the antagonistic nature of their relationship, it would have been difficult for Correira to adequately represent the interests of both Audette andnPoulin. At oral argument, Audette’s counsel suggested that, while Audette and Poulin may have been adversaries with regard to some matters, their interests were identical as to others, such as with regard to tax matters relating to the trust. While perhaps true, we cannot help but note that the bitterness between the parties – present from the beginning – so tainted their relationship that it would supplant any identity of interest the two may have had. Accordingly, even under the “identity of interest” theory Audette puts forth, we cannot conclude that Correira owed a duty to Audette on this set of facts.

Given our conclusion that Correira did not owe Audette a duty of care with regard to his representation of Poulin as trustee, Audette’s claims for malpractice must fail.

(Mike Frisch)