Opinion ID: 2834542
Heading Depth: 1
Heading Rank: 2

Heading: The Barcelo Privity Barrier Should Govern this Case

Text: Today’s case should fall under the Barcelo privity barrier because conflicts of interest abound. While this case has a slightly altered procedural posture—suit filed by the executor, not the beneficiaries directly—there is little confusion that the executor is a pass-through, essentially bringing the children’s claims in the estate’s name. The trust beneficiaries had interests that directly conflicted with the interests of Corwin Denney, the client. The trust was established at the death of Denney’s second wife, Des Cygne , pursuant to her will. Every asset that went into Des Cygne’s trust was an asset that Denney could not treat as his separate property and spend or otherwise use as he wished. Barcelo ’s central holding is that this conflict of interest necessarily means that trust beneficiaries do not share privity with the client’s attorneys, who should focus solely on the client’s best interests and wishes. The trust beneficiaries, Denney’s children, could have sued Denney during his lifetime for failing to adequately fund Des Cygne’s trust with her rightful share of the couple’s community property. The beneficiaries declined to do so, almost surely aware that Denney would have vigorously contested any characterization of the Automation Industries stock as community property and that he would have offered evidence of an oral agreement with Des Cygne that all the stock was his separate property. Nor did the beneficiaries sue Denney’s attorneys after Denney’s death. If they had, they would have lost under Barcelo . Instead, they waited thirty-four days after their father died and sued his estate. The executor, O’Donnell, raised no limitations defense but instead settled with the beneficiaries for generous sums. [10] He then sued Cox & Smith for malpractice, essentially taking the position that Denney’s attorneys should have persuaded him, against his strong and repeated wishes, to surrender more assets to Des Cygne’s trust. So we have a Barcelo suit draped in Belt garb. I would disallow the legal makeover. The record is clear that Denney believed that all the Automation Industries stock was his separate property and that he opposed funding the trust with this prized asset. O’Donnell, with nothing to win or lose personally by settling with the trust beneficiaries, has now become a conduit for the trust beneficiaries’ claim that Denney should have been more generous to the trust and less generous to himself. Under Barcelo , attorneys should not be forced to answer such claims. The privity rule should preempt lawsuits where the executor effectively serves as a pass-through for the beneficiaries’ claims.