Opinion ID: 888148
Heading Depth: 2
Heading Rank: 5

Heading: ALPS's Reliance on Watkins Trust

Text: ¶112 ALPS makes much of the fact that in Watkins Trust, we noted that [t]he duty owed [by an attorney] to a nonclient beneficiary is a matter of first impression in Montana. Watkins Trust, ¶ 21 (emphasis added). However, ALPS construes this language to mean something more than it did. A case of first impression is [a] case that presents the court with issues of law that have not previously been decided in that jurisdiction. Black's Law Dictionary 206 (Bryan A. Garner ed., 7th ed., West 1999) (emphasis added). Thus, while we suggested in Rhode that an attorney, in nonadversarial contexts, may owe a duty to third persons to exercise care in the performance of services for his or her client, see Rhode, ¶¶ 12, 17, we actually found such a duty in Watkins Trust as a matter of first impressionnotably, relying on Rhode in the process, see Watkins Trust, ¶¶ 21-22. ¶113 More to the point, the question here is not whether we had previously decided the defense proffered by ALPS in contesting Redies' third-party theory of liability. Rather, as the Court observes in ¶ 43, the determinative question is whether that defense was reasonable under our then-existing precedents, given the progression in our caselaw toward holding an attorney liable to certain nonclients (as we finally did in Watkins Trust ). For the reasons set forth above, the answer to this question is No. Our caselaw as of 2001 and 2002including Thayer, Jim's Excavating, Turner, and Rhode  unmistakably foreshadowed our holding in Watkins Trust ; the only thing remaining at that point in time was for us to make the holding explicit, as we might well have done in Redies v. Addy, had the case been taken to trial and appealed to this Court. ¶114 Indeed, in the same way that Thayer and Jim's Excavating announced new rules with respect to accountants and engineering firms, respectively, Redies v. Addy could have been the Watkins Trust case with respect to attorneys, had the parties not settled. Our cases certainly were headed in that direction. For this reason, although this Court had not yet found a duty running from an attorney to a nonclient by 2001 and 2002, ALPS nonetheless, in evaluating Redies' claims against Addy and deciding whether to contest those claims, had to weigh the likelihood that the District Court would find such a duty under our then-existing precedents (as Judge Baugh ultimately did) and that this Court would affirm that finding. ¶115 This is not to say that an insurer must accurately predict future holdings of this Court. Rather, it is an acknowledgement of the standard to which the insurer is held: reasonableness. As the Court notes in ¶ 41, a tort defendant and his or her insurer should be able to test the scope and boundaries of legal duties, remedies, and defenses, but the insurer should not be immune from liability under the UTPA simply because this Court had not yet explicitly rejected the legal proposition on which the insurer relied in the underlying action. This is precisely the point of evaluating the reasonableness of the insurer's proffered defense. ¶116 Of course, if the law in 1995 had held that a conservator's attorney does not owe a duty to the protected person, then ALPS's no-duty defense would have been reasonable. Likewise, if the law in 1995 had not provided for the creation of a self-sufficiency trust, then Addy could not have been faulted for failing to establish one. As it is, however, ALPS could not rely on a definitive holding from this Court with respect to the duty owed by a conservator's attorney to the protected person. Thus, ALPS was required to evaluate pertinent then-existing precedents and base its decision on those cases, mindful of any handwriting on the wall. The reasonableness of that evaluation, in turn, dictates whether ALPS proffered a reasonable basis in law for contesting Redies' claims against Addy. As explained above, I conclude that ALPS's evaluation of our then-existing precedents was not reasonable.