Opinion ID: 2071023
Heading Depth: 1
Heading Rank: 2

Heading: Fauntleroy

Text: Because the issue before us arises from the granting of a motion to dismiss the complaint, we must assume as true all well-pleaded material facts in the complaint, the exhibits, and any reasonable inferences that may be drawn from them. See Flaherty v. Weinberg, 303 Md. 116, 135-36, 492 A.2d 618, 628 (1985). The complaint alleges that the Fauntleroy beneficiaries are the sole beneficiaries of a residuary clause contained in the will of the late Sue M. Jackson. Ms. Jackson retained T. Hughlett Henry, Jr., [2] and his law firm, Henry & Price, to advise her in planning her estate and preparing her will. Ms. Jackson's will was executed on March 11, 1983. Ms. Jackson owned a significant amount of stock in a company called Pittsburgh Des Moines Steel Company (PDM). The 1983 will bequeathed her shares of PDM stock to the children and grandchildren of William R. Jackson, Ms. Jackson's brother-in-law. The 1983 will also directed that all of the taxes be paid out of the residuary estate. On March 29, 1983, Henry sent to Ms. Jackson a letter estimating the federal estate taxes that would be imposed on her estate at her death. The letter included the following statement by Henry: I do not know whether you were aware that the tax problem in your estate is as bad as it is and I am all the more pleased that we have made the decision to have the bulk of the PDM stock pay its own share of that tax. Ms. Jackson later added two codicils to her 1983 will, but neither codicil changed the clause regarding payment of taxes. In 1988, Ms. Jackson revoked the 1983 will and executed a new will also prepared by Henry and his firm. However, the 1988 will was substantially the same as the 1983 will, leaving intact the clause directing all of the taxes to be paid out of the residuary estate. Ms. Jackson subsequently executed two codicils on March 29, 1990 and on January 28, 1992. Again, these codicils did not alter the clause regarding payment of taxes. In April 1990, Ms. Jackson and PDM entered into a stock purchase agreement which provided that upon Ms. Jackson's death the estate would sell all of Ms. Jackson's PDM shares back to PDM at a price equal to the closing price of the stock as of the date of her death. Ms. Jackson's obligation under this agreement was conditioned on the transaction being treated as a sale or exchange, rather than a dividend, for tax purposes. The stock purchase agreement, however, was never implemented upon Ms. Jackson's death because this condition could not be satisfied. The agreement was ultimately declared null and void. On January 10, 1994, Ms. Jackson died. In addition to a farm, Ms. Jackson's estate included 44,816 shares of PDM stock, worth approximately $1.4 million. Because the stock purchase agreement was not implemented, the PDM stock passed to certain beneficiaries as provided in Ms. Jackson's 1988 will and its codicils. The estate and inheritance taxes totaled approximately $910,000 and were borne by the Fauntleroy beneficiaries as residuary beneficiaries. On January 8, 1997, the Fauntleroy beneficiaries filed a complaint against Respondents, Sara N. Blizzard and W. Thomas Fountain, Personal Representatives of the Estate of Henry [3] and his law firm, alleging that Henry and his firm committed malpractice by negligently preparing the 1983 will so that all taxes would be paid out of the residuary estate, contrary to Ms. Jackson's intent. Respondents subsequently filed a motion to dismiss or, in the alternative, a motion for summary judgment. Prior to discovery, a hearing was held on Respondents' motion, and the Circuit Court for Talbot County granted Respondents' motion to dismiss on April 4, 1997, ruling that the Fauntleroy beneficiaries lacked standing to sue Respondents under Kirgan. On April 10, 1997, the Fauntleroy beneficiaries appealed to the Court of Special Appeals and also filed in this Court a petition for writ of certiorari. This Court issued a writ of certiorari on July 30, 1997 prior to proceedings in the Court of Special Appeals.