Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. 

Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

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THE SUPREME COURT OF THE STATE OF ALASKA

COURTNEY GUERRA, as Personal 

Representative of the ESTATE OF 

JAMES FRANCIS GOARD, 

 Appellant, 

v. 

JOHN WALLACE and ROBERT 

NESBITT, 

 Appellees. 

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Supreme Court No. S-18317

Superior Court No. 4FA-19-02367 CI

O P I N I O N

No. 7683 – February 2, 2024

Appeal from the Superior Court of the State of Alaska, 

Fourth Judicial District, Fairbanks, Paul R. Lyle, Judge.

Appearances: Todd Young, Todd Young Law Firm, 

Anchorage, for Appellant. Laura L. Farley and Tracy 

Hillhouse Price, Farley & Graves, P.C., Anchorage, for 

Appellee John Wallace. No appearance by Appellee Robert 

Nesbitt.

Before: Maassen, Chief Justice, and Borghesan, Henderson,

and Pate, Justices. [Carney, Justice, not participating.]

BORGHESAN, Justice. 

INTRODUCTION

 The estate of a deceased Fairbanks entrepreneur languished in probate for 

years. The value of its assets, already encumbered by tax liens and creditors’ claims, 
-2- 7683

eroded. Eventually the personal representative of the estate was replaced, and the 

deceased man’s wife and sole beneficiary of his estate became the personal 

representative. Under her direction, the estate then sued the former personal 

representative for breach of fiduciary duty and conversion. The estate also sued the 

lawyer who represented the former personal representative, asserting claims of 

malpractice and negligence. 

The lawyer moved for summary judgment, arguing that because his only 

client was the former personal representative, the lawyer had no liability for harms to 

others. The lawyer argued that he was not liable for malpractice to the deceased man’s 

wife because there was no privity of contract between them. Acknowledging that in 

some cases a lawyer may owe a duty of care to a nonclient that can give rise to a 

negligence claim, the lawyer argued that he had no such duty in this case. The superior 

court granted summary judgment in favor of the lawyer. The estate appeals. 

We affirm the superior court’s judgment. The estate’s opening brief failed 

to challenge the superior court’s ruling on the malpractice claim, so the estate waived

this issue. And the estate did not show there are disputed facts material to the question 

of the lawyer’s duty of care to the deceased man’s wife. Because she had a reasonable 

ability to protect her own rights against some of the former personal representative’s 

alleged misdeeds, and because the former personal representative’s lawyer did not 

know or have reason to know of the other alleged misdeeds, the lawyer did not owe a 

duty of care to the deceased man’s wife.

FACTS AND PROCEEDINGS

A. Probate Proceedings

James Goard died on April 20, 2012. Goard’s will left his entire estate to 

his surviving spouse, Theresa Hester. 
-3- 7683 

Both Hester and Robert Nesbitt, who claimed to be one of Goard’s 

creditors,1 petitioned for appointment as personal representative. After a hearing at 

which Hester did not appear, the superior court appointed Nesbitt as personal 

representative. The superior court also issued an order enjoining the sale, transfer, or 

encumbrance of any estate property. 

 Nesbitt’s time as personal representative was contentious. Hester 

petitioned several times to have Nesbitt removed.2 In 2014 she petitioned to have him 

removed for various alleged failures, misdeeds, and conflicts. The matter was referred 

to a standing master. At an evidentiary hearing in March 2015, Nesbitt testified about 

the estate’s financial issues. He explained that the estate owed $19,000 in taxes on one 

property (the “Elim property”) and that taxes on a residential property known as “the 

Five-Plex” had not been paid in three years. Nesbitt testified that “there ha[d]n’t been 

any money available” in the estate to pay the Elim property taxes and he had needed to 

borrow money to pay the taxes on the Five-Plex. Later in the hearing he reiterated that 

there was no money in the estate. After the hearing the standing master recommended 

that Hester’s petition to remove Nesbitt be denied. The superior court adopted the 

recommendation. 

 Because the court had previously enjoined the sale of any estate property, 

Nesbitt petitioned the court to allow the sale of the Five-Plex and another real property 

owned by the estate (the “Showboat,” a Fairbanks cabaret) in May 2015. The petition, 

which was served on Hester’s attorney, stated that neither the Showboat nor the FivePlex had liability insurance, that the Showboat was undergoing tax foreclosure, and that 

1 In July 2012 Nesbitt filed a $31,200 claim against the estate for live-in 

care he allegedly provided Goard at the end of his life. Hester disputed that Nesbitt 

provided any care for Goard. 

2 AS 13.16.295(b) (“Cause for removal exists when removal would be in 

the best interests of the estate, . . . or [the personal representative] has mismanaged the 

estate or failed to perform any duty pertaining to the office.”).
-4- 7683 

the Five-Plex had frozen pipes because the heat and electric bills had not been paid. 

Nesbitt also explained that he had obtained an unsecured loan on the estate’s behalf to 

avoid tax foreclosure on the Five-Plex, but the note had matured and was in default. 

 In June 2015 Nesbitt filed an accounting and proposed distribution, but 

the superior court rejected it and ordered Nesbitt to file an updated inventory and 

accounting. The court expressed frustration with Nesbitt’s accounting, opined that the 

job was “way too much” for him, and stated that “someone needs to step forward.” The

court noted that Hester was “the only person before the court as an alternative” but was 

“not appropriate” because she had missed initial hearings and had no knowledge of 

what was going on. The court reiterated that it was willing to entertain a proposal for 

another person to take over the role of personal representative, stating that “someone 

needs to be in charge.” 

 In October 2015 Nesbitt retained a new attorney, John Foster Wallace, to 

represent him in the estate proceedings. Wallace entered his first appearance on behalf 

of Nesbitt in November 2015. Wallace’s retainer was paid by a business partner of 

Nesbitt’s, William St. Pierre. 

 St. Pierre filed a $25,000 claim against the estate on November 27, 2015 

for “money loaned to the estate to cover the costs of removing encroachments on federal 

land.” Nesbitt allowed the claim.3 Wallace later prepared an interim estate inventory 

filed with the court that categorized St. Pierre’s claim as “[m]oney [o]wed [b]ut [n]ot 

[p]aid.” The inventory contained the caveat that “[j]ust because a debt is listed does

not mean that it has been accepted as valid.” 

3 Nesbitt’s signature was dated “1-27-15.” The superior court “assume[d] 

the ‘1-27-15’ allowance date [was] a typographical error and that the claim was 

approved by Nesbitt the same day [St. Pierre’s attorney] signed the claim”: November 

27, 2015. 
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The Showboat burned down around August 2017. It was uninsured at the 

time. The property had been insured when Nesbitt became personal representative, but 

Nesbitt cancelled the coverage, asserting that the estate lacked enough money to pay 

for it. At a later deposition Wallace testified that he had advised Nesbitt to insure the 

property. 

At the beginning of 2017 the estate’s bank account had $54,126 in it, but 

by the year’s end it had only $206. In 2018 most of the estate’s real property went into 

tax foreclosure, including the Showboat and the Five-Plex. 

In August 2018 the superior court removed Nesbitt as the estate’s personal 

representative. It appointed a special administrator in his place. Shortly after, Wallace 

moved for permission to withdraw as Nesbitt’s counsel. 

The newly appointed special administrator concluded that the estate was 

insolvent. He reported that the Showboat had been foreclosed upon by the Fairbanks 

North Star Borough and was likely to be sold at auction; that the Five-Plex had little 

value and was encumbered by a federal tax lien; that Nesbitt had made a series of 

withdrawals from the estate’s bank account in 2017 that left the estate with no funds to

pay an administrator; and that creditors were claiming almost $300,000 from the estate. 

The special administrator resigned in November 2018. 

The superior court then appointed Hester as personal representative of the 

estate. 

B. The Estate’s Suit Against Nesbitt And Wallace

With Hester acting as personal representative, Goard’s estate sued both 

Nesbitt and Wallace in August 2019. The estate alleged that both Nesbitt and Wallace

were liable for damages to the estate. The estate alleged that Wallace performed his 

duties as attorney for Nesbitt negligently and that he owed a duty not only to Nesbitt, 

but also to the beneficiaries of the estate. Wallace answered, denying liability. 

Hester passed away a few months later, and her daughter, Courtney 

Guerra, was substituted as personal representative of the estate. 
-6- 7683 

 Wallace moved for summary judgment. He argued that the estate’s claims 

were barred by a three-year statute of limitations. He also argued that as a matter of 

law he was not liable to the estate for malpractice or breach of fiduciary duty. The 

estate opposed summary judgment.

 The superior court granted summary judgment in favor of Wallace. Citing 

our decision in In re Estate of Johnson,

4 the superior court reasoned that we had 

implicitly adopted a rule that beneficiaries of an estate cannot sue the personal 

representative’s attorney for malpractice because there is no privity of contract that 

could be the basis for a malpractice claim. It therefore granted summary judgment to 

Wallace on the malpractice claim. The court then analyzed the estate’s negligence

claim under our decision in Pederson v. Barnes,

5 which described when an attorney 

owes a duty of care to a nonclient. The court concluded that the estate failed to show a 

dispute of material fact that would support the existence of a duty of care. Because the

court granted summary judgment to Wallace on these grounds, it did not address his 

alternative statute of limitations argument. 

 The estate appeals.6

 

STANDARD OF REVIEW

 We review a grant of summary judgment de novo.7 We will affirm a grant 

of summary judgment if there are no genuine disputes of material fact and if the moving 

party is entitled to judgment as a matter of law.8 To determine if there is a genuine 

dispute of material fact, we look to the pleadings, depositions, answers to 

4

 119 P.3d 425 (Alaska 2005). 

5

 139 P.3d 552 (Alaska 2006).

6

 Nesbitt did not participate in this appeal. 

7 Alakayak v. B.C. Packers, Ltd., 48 P.3d 432, 447 (Alaska 2002). 

8 Id.
-7- 7683 

interrogatories, and admissions on file, together with the affidavits.9 The material fact 

requirement has two important aspects: “(1) the ‘material fact is one upon which 

resolution of an issue turns’ and (2) ‘the existence of a dispute over a material fact’ is 

determined using a ‘reasonableness standard.’ ”10

 The burden is initially on the party moving for summary judgment to 

prove “(1) the absence of genuine fact disputes, and (2) its entitlement to judgment as 

a matter of law” through admissible evidence.

11 If the moving party makes its prima 

facie case, the burden then shifts to the nonmovant “to set forth specific facts showing 

that [it] could produce admissible evidence reasonably tending to dispute or contradict 

the movant’s evidence, and thus demonstrate that a material issue of fact exists.”12 

“Mere assertions of fact in pleadings and memoranda are insufficient” to rebut the 

moving party’s prima facie case.13 And “the offered evidence must not be too 

conclusory, too speculative, or too incredible to be believed, and it must directly 

contradict the moving party’s evidence.”14 

IV. DISCUSSION

A. The Estate’s Malpractice Claim Is Waived For Inadequate Briefing.

 The estate’s opening brief did not address the superior court’s ruling that 

it cannot sue Wallace for malpractice because there is no privity of contract between 

9 Alaska R. Civ. P. 56(c). 

10 Punches v. McCarrey Glen Apartments, LLC, 480 P.3d 612, 624 (Alaska 

2021) (quoting Christensen v. Alaska Sales & Serv., Inc., 335 P.3d 514, 519 (Alaska 

2014)). 

11 Alakayak, 48 P.3d at 447-48. 

12 Id. at 448 (quoting Philbin v. Matanuska-Susitna Borough, 991 P.2d 1263, 

1265-66 (Alaska 1999)). 

13 French v. Jadon, Inc., 911 P.2d 20, 26 (Alaska 1996) (quoting State, Dep’t 

of Highways v. Green, 586 P.2d 595, 606 n.32 (Alaska 1978)). 

14 Christensen, 335 P.3d at 516. 
-8- 7683 

Wallace and the estate’s beneficiaries. Wallace pointed this out in his briefing. The 

estate replied only that: 

The Estate did not fail to challenge [the superior court’s 

grant of summary judgment on the malpractice claim] . . . . 

The Estate does contest the trial court’s ruling as to Count II 

[malpractice] and it contests the trial court’s finding by 

showing there were material issues of fact in dispute that 

precluded entry of summary judgment. 

The estate then filed a notice of supplemental authority. By failing to make the 

argument in its opening brief, the estate has waived it, and we do not address it.15 

B. The Superior Court Did Not Err In Granting Summary Judgment To 

Wallace Because The Estate Failed To Present Evidence Establishing 

That Wallace Owed Beneficiaries Of The Estate A Legal Duty. 

A lawyer owes various duties to a client. If the lawyer breaches those 

duties, the lawyer may be liable to the client for resulting harm.

16 But in this case, a 

lawyer is being sued for harms suffered by someone who was not his client: the estate 

is suing Wallace, who represented the former personal representative of the estate,

based on alleged harms to Hester, who was the beneficiary of the estate. For Wallace 

to be held liable in tort for harms to Hester, it must be shown that he owed a legal duty 

to her even though she was not his client.

17 

A lawyer owes a duty of care to nonclients that can be the basis for tort 

liability in relatively limited circumstances. In Pederson v. Barnes we adopted the 

Restatement (Third) of the Law Governing Lawyers section 51(4) as the proper 

15 See Timothy W. v. Julia M., 403 P.3d 1095, 1101 (Alaska 2017) (ruling 

that appellant’s claim was waived because it was not discussed in brief).

16 L.D.G., Inc. v. Robinson, 290 P.3d 215, 221-22 (Alaska 2013) (describing 

elements of client’s legal malpractice claim against attorney). 

17 Pederson v. Barnes, 139 P.3d 552, 556 (Alaska 2006) (holding that in 

order to be liable for damages to ward of lawyer’s client, lawyer “must have breached 

a legal duty that he owed” to ward).
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standard to govern the potential liability of a guardian’s lawyer to the guardian’s ward.18 

In this case the superior court applied Restatement section 51(4) to the estate’s claims. 

On appeal the parties dispute whether the estate has established a genuine dispute of 

material fact showing liability under this framework. 

The estate’s brief suggests that an additional standard applies. It cites our 

statement in In re Estate of Brandon that “[w]hen an attorney undertakes to perform 

legal services for a client who is acting in a fiduciary capacity, the attorney has a duty 

not to affect adversely the interests of the intended beneficiary.”19 It also cites decisions 

of Arizona courts that we relied on in Brandon. As a threshold matter we note that in 

Brandon the attorney represented both the beneficiary of the estate and the personal 

representative, presenting the question of whether this arrangement created an 

impermissible conflict of interest.20 Therefore it is not clear whether that decision’s

description of the attorney’s duty would apply when the attorney does not represent 

both parties. But in any event, the estate failed to apply this proposed standard to the 

facts of this case; its opening brief analyzed the evidence solely under section 51(4) of 

the Restatement. By failing to adequately explain how a standard for legal duty other 

than section 51(4) applies to the evidence in this case, the estate waived this argument.21 

We therefore focus our analysis on section 51(4).

 Section 51(4) of the Restatement provides that an attorney owes a 

nonclient a duty of care and may be found liable for breaching that duty when and to 

the extent that:

18 Id. at 557.

19 902 P.2d 1299, 1316 (Alaska 1995). 

20 Id. at 1315.

21 See Sengupta v. Univ. of Alaska, 21 P.3d 1240, 1259 n.86 (Alaska 2001) 

(argument waived for inadequate briefing).
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(a) the lawyer’s client is a trustee, guardian, executor, or 

fiduciary acting primarily to perform similar 

functions for the nonclient;

(b) the lawyer knows that appropriate action by the 

lawyer is necessary with respect to a matter within the 

scope of the representation to prevent or rectify the 

breach of a fiduciary duty owed by the client to the 

nonclient, where (i) the breach is a crime or fraud or 

(ii) the lawyer has assisted or is assisting the breach;

(c) the nonclient is not reasonably able to protect its 

rights; and

(d) such a duty would not significantly impair the 

performance of the lawyer’s obligations to the 

client.[22]

 

Because these elements are in the conjunctive, the estate must establish all of them in 

order to hold Wallace liable.23

As an initial matter, we address the estate’s argument that “the question 

whether [a] duty was breached is generally not susceptible to summary judgment.” 

Whether a duty was breached is not the relevant issue in this appeal. Instead we are 

focused on whether a duty even existed. That question is susceptible to summary 

judgment, even if the scope of a duty and whether the duty was breached are generally 

not. 24 

22 RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51(4) (AM.

L. INST. 2000). 

23 Bachner Co. v. State, Dep’t of Admin., Div. of Gen. Servs., 468 P.3d 703, 

708 n.13 (Alaska 2020). 

24 Lynden Inc. v. Walker, 30 P.3d 609, 613 (Alaska 2001) (“While the 

question whether a duty exists may be susceptible to summary judgment, questions 

about the scope of a duty and whether the duty was breached are normally not 

susceptible to summary judgment, ‘particularly so when the scope of the duty poses a 

fact-specific question . . . .’ ” (quoting Guerrero v. Alaska Hous. Fin. Corp., 6 P.3d 250, 

257 (Alaska 2000))). 
-11- 7683 

The estate’s assertion that Wallace owed estate beneficiaries a legal duty 

is based on five actions by Nesbitt that Wallace allegedly failed to prevent or rectify: 

Nesbitt’s alleged failure to maintain the Five-Plex; his alleged failure to pay tax on real 

properties; his alleged failure to insure the Showboat property; his approval of the St. 

Pierre claim; and his withdrawal of funds from the estate’s bank account. The superior 

court granted summary judgment to Wallace because it concluded that the estate’s 

evidence did not establish a genuine dispute of material fact on subsections (b) or (c). 

It concluded that the evidence did not show that Wallace knew or had reason to know 

that he was required to act to rectify or prevent a breach of fiduciary duty by Nesbitt. 

It also concluded that Hester, the sole beneficiary of the estate at the time of the relevant 

events, was reasonably able to protect her rights. We generally agree with the superior 

court’s conclusions.

1. There is no genuine dispute that Hester was reasonably able to 

protect her rights against most of Nesbitt’s alleged misdeeds. 

 The evidence presented at summary judgment established as a matter of 

law that Hester, the only beneficiary of the estate at the time of Nesbitt’s alleged 

failures, was “reasonably able to protect [her] rights.”25 There is no genuine dispute 

that she was aware of the estate administration problems for which she faults Nesbitt 

and Wallace, nor is there a genuine dispute that she was free from legal disability. And 

the probate code gave her the ability to protect her rights. For these reasons, Wallace 

did not owe her a duty of care.

The comments to the Restatement indicate that a person who knows about 

the fiduciary’s failings and is not under a legal disability is reasonably able to protect 

the person’s rights. The Restatement’s example of a person unable to reasonably 

protect her rights is “a beneficiary unable (for reasons of youth or incapacity) to manage 

25 RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51(4)(c) 

(AM. L. INST. 2000). 
-12- 7683 

. . . her own affairs.”26 By contrast, “a beneficiary of a family voting trust who is in 

business and has access to the relevant information has no similar need of protection by 

the trustee’s lawyer.”27 

Hester fell into the latter camp. She sought to hold Wallace liable for 

Nesbitt’s squandering the value of the Five-Plex, letting the insurance on the Showboat 

lapse before it burned down, failing to pay property taxes, and approving the assertedly 

fraudulent St. Pierre claim. But Hester was aware of all these problems and possessed 

the legal capacity to appreciate them. Hester herself raised allegations about 

mismanagement of the Five-Plex in 2014, well before Wallace began representing 

Nesbitt in October 2015. Hester was served with a petition in April 2015 stating that 

neither the Showboat nor the Five-Plex had liability insurance. The petition also 

explained that taxes were owed on at least two of the estate’s real properties — the 

Showboat property and the Elim property. Finally, Hester was aware of the St. Pierre 

claim by December 2015, because the superior court had informed Wallace of its 

existence during a status hearing in which her counsel was present. In light of Nesbitt’s 

alleged failures, Hester petitioned to remove him as personal representative on three 

separate occasions. The fact that Hester received notice of Nesbitt’s missteps and took 

legal action to rectify them indicates that she was both aware of the fiduciary’s failings 

and possessed the legal capacity to respond.

Moreover, the probate code gave Hester a reasonable ability to protect the 

estate’s assets and with them her own interests. Under AS 13.16.275 Hester had the 

ability to petition for an order “to secure proper performance of the personal 

representative’s duty” upon showing that the “personal representative otherwise may 

take some action that would jeopardize unreasonably” her interest in the estate. She 

26 Id. § 51 cmt. h. 

27 Id.
-13- 7683 

also could and did petition under AS 13.16.295 to remove Nesbitt as personal 

representative. The estate argues that there are clearly “questions of fact whether the 

beneficiary took steps to protect her interest,” but the argument misconstrues the legal 

standard. The test does not turn on whether the beneficiary attempted to protect her 

rights or even was successful in doing so. It turns on whether she was “reasonably able” 

to protect her rights.28 The probate code provisions give interested parties a reasonable 

ability to protect their rights in the estate. The estate did not present evidence that 

Hester, the sole beneficiary of the estate at the time of the events in question, was under 

a disability or otherwise incapable of protecting her rights. For that reason the superior 

court did not err in granting summary judgment to Wallace against liability for the 

alleged failings by Nesbitt described above. 

2. Because it is undisputed that Wallace did not know or have 

reason to know that Nesbitt was withdrawing funds from the 

estate’s bank account, Wallace had no duty to prevent or 

rectify these withdrawals. 

A different analysis applies to Wallace’s alleged liability for Nesbitt’s 

withdrawals of funds from the estate’s bank account. It is not entirely clear from the 

record whether Hester knew that Nesbitt was making these withdrawals in time to 

prevent them. But it is undisputed that Wallace did not know about the withdrawals 

either. Nor did he have reason to know about them. Therefore Wallace had no legal 

duty to prevent them. 

A lawyer representing a fiduciary may have a duty to a nonclient if the 

lawyer “knows that appropriate action by the lawyer is necessary . . . to prevent or 

rectify the breach of a fiduciary duty owed by the client to the nonclient, where (i) the 

breach is a crime or fraud or (ii) the lawyer has assisted or is assisting the breach.”29 

For purposes of this standard, “knows” means “having actual knowledge or, 

28 Id. § 51(4)(c). 

29 Id. § 51(4)(b). 
-14- 7683 

alternatively, ‘reason to know.’ ”30 “Reason to know” is further defined as having 

“information from which a person of reasonable intelligence or of the superior 

intelligence of the actor would infer that the fact in question exists.”31 In Pederson we 

observed that the Restatement “takes care to distinguish ‘reason to know’ from ‘should 

know.’ ”32 “Should know” entails “a duty to inquire and determine new facts.”33 

“Reason to know” is a “less onerous standard” that involves only “drawing inferences 

from known facts.”34 

Even when all inferences are drawn in the estate’s favor, the evidence does 

not show that Wallace had “reason to know” that Nesbitt was withdrawing funds from 

the account. Nesbitt testified at his deposition that he was the only person with authority 

to withdraw funds from the estate’s account. He testified that none of the attorneys he 

hired while serving as personal representative had authority to deposit or withdraw 

money from the account. In an affidavit Wallace attested that he advised Nesbitt not to 

spend any estate funds without court order or party agreement. Wallace also attested 

that he did not have access to the estate’s bank account and did not know that Nesbitt 

had withdrawn funds in 2017. 

The estate’s evidence does not refute these statements or otherwise create 

a genuine dispute about whether Wallace knew or had reason to know of the 

withdrawals. In support of its assertion that Wallace had reason to know Nesbitt would 

30 Pederson v. Barnes, 139 P.3d 552, 557-58 (Alaska 2006) (citing 

RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51 cmt. h (AM. L. INST.

2000)). 

31 Id. (citing RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 

51 cmt. h (AM. L. INST. 2000)).

32 Id. at 558. 

33 Id.

34 Id.
-15- 7683 

drain the estate’s account,35 the estate lists certain facts about the proceedings: that the 

superior court had denied Hester’s requests to remove Nesbitt as personal 

representative; that the court told Wallace that Nesbitt had accepted the St. Pierre claim; 

and that Wallace “could not get a full inventory and appraisement because he could not 

control his client.” Yet none of these facts, individually or together, gave Wallace 

reason to know that Nesbitt would later make unauthorized withdrawals from the 

estate’s bank account.

36

The estate’s citation to log notes of hearings in 2015 and 2016, well before 

the withdrawals took place in 2017, is equally unavailing. These log notes do not 

support any inference that Nesbitt was intending to make withdrawals from the account

or that Wallace knew of that intent. The first hearing cited was in October 2015; it 

lasted six minutes. Neither Nesbitt nor Wallace was present, and the main topic 

discussed was a request that the court send notice to the parties of an Order to Show 

Cause hearing. At the next hearing cited, in December 2015, the parties discussed a lis 

pendens that had been placed on the Five-Plex, and Wallace agreed to furnish all parties 

with an interim accounting of the estate assets. No parties mentioned anything 

regarding Nesbitt withdrawing funds or spending estate money. At the third hearing 

cited, in January 2016, Wallace stated that he had advised Nesbitt not to spend any 

money from the estate’s account without either a court order or agreement of all parties. 

Even when all inferences are drawn in the estate’s favor, none of this evidence supports 

35 The estate’s brief contains a single section describing facts that preclude 

summary judgment, so it is not entirely clear whether the estate is describing these facts 

in support of its assertion that Hester attempted to protect her rights or in support of its 

assertion that Wallace had reason to know that Nesbitt would withdraw money from 

the estate’s account. We read the estate’s brief to make both points. 

36 The estate also emphasizes that the superior court “correctly concluded 

that Nesbitt breached his fiduciary duty.” But the court’s characterization of Nesbitt’s 

actions has little bearing on what Wallace knew or had reason to know years earlier at 

the time of the relevant events. 
-16- 7683 

the inference that Wallace knew or had reason to know that Nesbitt would later drain 

the estate’s bank account.37 

The facts of this case resemble an illustration in the Restatement 

commentary showing when the lawyer has no duty to a nonclient.38 In this illustration 

the client, a trustee, told the lawyer that he was planning to transfer trust funds into the 

trust account.

39 But the client actually transferred the funds into his own personal 

account.40 Even though the lawyer “could have exercised diligence” and upon “further 

investigation” discovered that “appropriate action was necessary to prevent a breach of 

fiduciary duty by [c]lient,” the lawyer did not have a duty of care to the beneficiary 

because the lawyer did not know or have reason to know of the client’s intended 

breach.41 According to the Restatement, Wallace was permitted to “assume in the 

absence of contrary information” that Nesbitt was complying with the law after Wallace 

37 In oral argument before the superior court, the estate conceded that it had 

no evidence that Wallace knew Nesbitt was taking money out of the account in 2017: 

MR. YOUNG: . . . [B]etween January of 2017 and 

September of 2017, I forget how many withdrawals there 

were but there was over $50,000 taken out of that account.

THE COURT: And that was done by Mr. Nesbitt?

MR. YOUNG: True. 

. . . . 

THE COURT: Do you have any evidence that Mr. Wallace 

knew what Mr. Nesbitt was doing?

MR. YOUNG: I don’t think so, Your Honor. I hope he 

didn’t know. 

38 RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51 cmt. h, 

illus. 6 (AM. L. INST. 2000).

39 Id.

40 Id.

41 Id. 
-17- 7683 

had advised Nesbitt not to withdraw funds from the estate’s account.

42 The estate does 

not point to evidence showing that Wallace had “reason to know” that Nesbitt would 

not follow this advice. Although the estate argues that Wallace should have asked the 

bank to notify him if Nesbitt made withdrawals, Wallace did not have a duty to inquire 

and determine new facts under the “reason to know” standard in Restatement 

section 51(4).43 For that reason, the superior court correctly concluded that the estate 

failed to establish that Wallace had a duty of care to beneficiaries of the estate. 

Summary judgment was proper. 

V. CONCLUSION

 We AFFIRM the superior court’s grant of summary judgment to Wallace. 

42 Id. § 51 cmt. h.

43 Id.