Opinion ID: 888148
Heading Depth: 2
Heading Rank: 4

Heading: ALPS's Application of the Trask Test

Text: ¶95 But even if it was reasonable for ALPS to rely on just the Trask multi-factor balancing test as a defense to Redies' third-party theory of liability, ALPS's actual application of that test did not constitute a reasonable basis in law for contesting her claims. ¶96 As we explained in Rhode, the multi-factor test involves a balancing of six factors: (1) the extent to which the transaction was intended to affect the plaintiff; (2) the foreseeability of harm to the plaintiff; (3) the degree of certainty that the plaintiff suffered injury; (4) the closeness of the connection between the defendant's conduct and the injury suffered; (5) the policy of preventing future harm; and (6) the extent to which the profession would be unduly burdened by a finding of liability. Rhode, ¶ 14 (quoting Trask, 872 P.2d at 1083). (This test can be traced to Lucas v. Hamm, 364 P.2d 685, 687-88 (Cal. 1961).) We further explained that the important inquiry under the multi-factor balancing test is whether the attorney's services were intended to affect the plaintiff. Rhode, ¶ 14; see also Trask, 872 P.2d at 1083. [1] ¶97 In Addy's motion for summary judgment, ALPS argued that [a]lthough the Supreme Court has not unequivocally adopted the multi-factor balancing test, it is clear that even if it was applied, there would be no liability to Janet Redies under these circumstances. ALPS then proceeded to apply the Trask test, as follows. ¶98 First, with respect to factor (1)the extent to which the contract between Addy and Cosner was intended to affect RediesALPS argued that Redies was an incidental beneficiary, a relationship not close enough to satisfy that aspect of the multi-factor balancing test. But how could Rediesthe protected person in the conservatorship possibly have been a mere incidental beneficiary when Addy was retained by Cosner specifically to render legal advice concerning the management and administration of Redies' estate? ALPS's assertion is preposterous, to say the least. ¶99 Section 72-5-427(3)(w), MCA, states: A conservator, acting reasonably in efforts to accomplish the purpose for which he was appointed, may act without court authorization or confirmation to . . . employ persons, including attorneys, auditors, investment advisors, or agents, even though they are associated with the conservator, to advise or assist him in the performance of his administrative duties ; act upon their recommendation without independent investigation ; and instead of acting personally, employ one or more agents to perform any act of administration, whether or not discretionary . . . . [Emphases added, paragraph break omitted.] That is precisely what took place here. ¶100 Indeed, in April 2002, Cosner completed an affidavit in which he stated that Mr. Addy assisted me in performing my duties as temporary conservator, and later as permanent conservator, as those duties are established under Montana law. Cosner further stated that in my capacity as temporary and permanent conservator, I relied on Mr. Addy's counsel and advise [sic] in performing my duties, and I relied on Mr. Addy's advice and recommendations on handling Ms. Redies' estate, as evidenced and set forth in Mr. Addy's letter of September 7, 1995. (That is the letter in which Addy memorialized the management plan. See ¶ 9 n.2 of the Court's Opinion.) Finally, and most significantly, Cosner concluded his affidavit with the following statement: During the period [of] time I served as Ms. Redies' temporary and permanent conservator of Ms. Redies' estate, I did not retain Mr. Addy as my attorney for any purpose, personal or business, other than as identified above. (Emphasis added.) ¶101 Addy never disputed that his services were retained by Cosner for the sole and specific purpose of advising Cosner regarding the management of Redies' estate. Notably, Addy's bills for legal services were paid not by Cosner, but by Redies' estate. Thus, it was disingenuous to say the leastand perhaps even a flat-out misrepresentation of the factsfor ALPS to assert that Redies was a mere incidental beneficiary of Addy's contract with Cosner. To the contrary, the record firmly establishes that Addy's services were intended to affect Redies. ¶102 Next in its analysis, ALPS omitted any discussion of factors (2) and (3)the foreseeability of harm to Redies, and the degree of certainty that Redies suffered injury, respectivelyboth of which weigh heavily in favor of finding a duty of care. ALPS instead skipped ahead to factor (4)the closeness of the connection between Addy's conduct and the injury suffered by Redies. In this regard, ALPS argued as follows: Mr. Addy had no authority to act on his own with regard to the Estate of Janet Redies. The only person with that legal authority was the Conservator, Mr. Cosner. Thus, Mr. Addy could not have performed any acts which were improper or caused harm to her since Mr. Addy's actions take form only through the actions of the Conservator. ALPS suggested that Redies' proper and exclusive remedy was to sue Cosner. ¶103 Aside from the fact that this appears to be another privity argument, ALPS's contentions were contrary to the record. Given that Cosner retained Addy solely and specifically to render legal advice concerning the management and administration of Redies' estate, and given that Cosner in fact relied on Mr. Addy's advice and recommendations on handling Ms. Redies' estate, there clearly was a close connectionindeed, a direct conduitbetween Addy's conduct and Redies' injury. Addy not only should have known, but in fact did know, that Cosner would be acting upon Addy's recommendations, as Cosner was authorized to do by § 72-5-427(3)(w), MCA. ¶104 Moreover, it was absurd to suggest that Addy could hide behind Cosner under these circumstances. Cosner hired Addy precisely because he (Cosner) did not have the legal expertise to make certain administrative decisions concerning Redies' estate. Addy could not be shielded from liability to Redies simply because it was Cosnerand not Addywho implemented Addy's advice and recommendations. (In this regard, it is not at all clear that Addy in fact did not have authority to act on his own with regard to the Estate of Janet Redies, given that § 72-5-427(3)(w), MCA, authorizes a conservator to employ one or more agents to perform any act of administration, whether or not discretionary.) Thus, ALPS's assertion that Addy had no authority to act on his own, even if true, was both misleading and irrelevant. ¶105 Next, as with factors (2) and (3), ALPS omitted any discussion of factor (5)the policy of preventing future harm, which also weighs in favor of finding a duty of care and focused the remainder of its analysis on factor (6)the extent to which the legal profession would be unduly burdened by a finding of liability. According to ALPS: Where a duty to a non-client creates a risk of divided loyalties because of conflicting interests, those considerations against finding duties to a non-client outweigh the other considerations. Trask, 872 P.2d at 1085. It is from this general rule that the Rhode court extracted its determination that there should not [be] a duty to a non-client where there are potentially adversarial proceedings. That is truly the case here. There are currently adversarial proceedings between Janet Redies and her attorneys and Mr. Cosner, the Conservator, and his attorneys, including Mr. Addy. To hold Mr. Addy had duties to Janet Redies in addition to those of Mr. Cosner would create an irresolvable conflict of interest and division of loyalties for him. ALPS also suggested that an inherent conflict exists between a protected person and the attorney retained by her conservator. ¶106 In Rhode, the adversarial proceeding which precluded a finding of duty was a contested child custody case, wherein the defendant-attorney represented one of the parents. Rhode, ¶¶ 3-8. We concluded that if an attorney owes the same duty of care to both the parent and the children, he or she will be able to serve neither effectively. Rhode, ¶ 21. In Trask, the adversarial proceeding which precluded a finding of duty was an attorney's representation of the personal representative of an estate. Trask, 872 P.2d at 1081-82. The court concluded that a duty is not owed from an attorney hired by the personal representative of an estate to the estate or to the estate beneficiaries, in part because [a] conflict of interest arises in estate matters whenever the interest of the personal representative is not harmonious with the interest of an heir and, thus, the unresolvable conflict of interest an estate attorney encounters in deciding whether to represent the personal representative, the estate, or the estate heirs unduly burdens the legal profession. Trask, 872 P.2d at 1085. ¶107 In the case at hand, by contrast, there was no conflict of interest whatsoever between Cosner and Redies; in fact, Redies initially was comatose and then remained incapacitated at least until 1998, when she began to question the disposition of her assets. (In this regard, ALPS's reliance on adversarial relationships that developed in 1998 three years after Addy had advised Cosner to pauperize Rediesis misplaced.) Had the opposite been true and an adversarial relationship had existed between Cosner and Redies, then he could not have served as her conservator. See §§ 72-5-423, 72-34-105, MCA. Thus, given the nature and purpose of a conservatorshipparticularly, the fact that the interest of the conservator and the interest of the protected person are, by definition, harmoniousAddy simply could not have faced an irresolvable conflict of interest in representing Cosner and Redies simultaneously. ALPS's argument that the existence of a duty to Redies would create an irresolvable conflict of interest and division of loyalties for Addy was not only contrary to the foregoing statutes and devoid of merit, but also unreasonable. ¶108 In my view, a reasonable application of the Trask factors, in conjunction with Prosser's rule, leads to only one conclusionthat Addy owed Redies a duty of care. First, in efforts to accomplish the purpose for which he was appointed, Cosner employed Addy to advise or assist him in the performance of his administrative duties. See § 72-5-427(3)(w), MCA. This same provision authorized Cosner to act upon [Addy's] recommendation without independent investigation. Section 72-5-427(3)(w), MCA. It cannot be disputed, therefore, that Addy's services [were] intended to affect the plaintiff [Redies]. (Factor 1.) Rhode, ¶ 14; Trask, 872 P.2d at 1083. ¶109 Likewise, it was certainly foreseeable that Redies would suffer harmindeed, the type of harm that she in fact suffered hereif Addy advised or assisted Cosner negligently in the administration of Redies' estate. (Factors 2 and 3.) And, as explained above, there was a direct connection between Addy's conduct and Redies' injury, since Cosner retained Addy to render legal advice concerning the administration of Redies' estate and since Cosner, in fact, acted upon Addy's advice and recommendations. (Factor 4.) ¶110 Next, given that a conservatorship exists to promote the best interests of the protected person, In re Estate of Bayers, 2001 MT 49, ¶ 14, 304 Mont. 296, ¶ 14, 21 P.3d 3, ¶ 14 (citing § 72-5-401 to -439, MCA), the policy of preventing the type of harm suffered by Redies from occurring to protected persons in the future weighs heavily in favor of a duty of care. (Factor 5.) Finally, a finding of liability would not unduly burden the legal profession. (Factor 6.) Indeed, the legitimate interests of a conservator are inseparable from those of the protected person. Cf. In re Guardianship of Karan, 38 P.3d 396, 401 (Wash.App. Div. 3 2002) (determining, under the Trask factors, that an attorney retained by a guardian owes a duty of care to the ward). ¶111 The record before us establishes that the raison d'etre for Addy's providing legal advice to Cosner was to benefit Redies; Addy's professional relationship with Cosner had no other purpose. Accordingly, by entering into this legal services contract with Cosner, Addy placed himself in such a relation toward Redies that the law imposed upon him an obligation, sounding in tort and not in contract, to act in such a way that Redies would not be injured. The incidental fact that Addy was retained by Cosner, and not by Redies personally, did not negative Addy's responsibility when he entered upon a course of affirmative conduct which clearly was expectedindeed, was intended to affect Redies' interests. This was the established law in 2001 and 2002; and under this established law, the inevitable conclusion is that Addy owed Redies a duty of care.