Court Opinion

ID: 895136
Source: CourtListenerOpinion
Date Created: 2013-06-06 21:22:20.790093+00
Date Added: 2024-06-11T12:26:27.080850
License: Public Domain

IN THE SUPREME 
COURT OF TEXAS════════════No. 07-0697════════════Paul H. Smith, et al., 
Petitioners,v.Thomas O’Donnell, 
Executor of the Estate of Corwin Denney, Respondent════════════════════════════════════════════════════On 
Petition for Review from theCourt of Appeals for the Fourth District of 
Texas════════════════════════════════════════════════════
 
Argued September 
10, 2008
 
 
Justice O’Neill delivered the opinion of the Court, in 
which Chief Justice Jefferson, Justice 
Brister, Justice Medina, 
and Justice Johnson joined.
 
            
Justice Willett filed a dissenting opinion, in which 
Justice Wainwright joined.
 
            
Justice Hecht and Justice Green did not participate in the 
decision.
 
 
            
Thomas O’Donnell, as executor of the estate of Corwin Denney, sued Cox 
& Smith, Corwin’s attorneys, for legal malpractice, breach of fiduciary 
duty, and gross negligence/malice arising out of advice the attorneys gave 
Corwin while he was serving as executor of his wife’s estate. The trial court 
granted summary judgment for the attorneys on all claims. The court of appeals 
reversed the summary judgment on the legal malpractice claim based on our 
holding in Belt v. Oppenheimer, Blend, Harrison & Tate, 
Inc., 192 S.W.3d 780 (Tex. 2006). 234 S.W.3d 135, 
138. In Belt, we held that an executor was in privity with the decedent’s attorneys and could sue them for 
estate-planning malpractice. 192 S.W.3d at 787. A prior 
case, Barcelo v. Elliott, 923 S.W.2d 575 
(Tex. 1996), barred estate-planning legal malpractice claims brought by 
third-party beneficiaries of the estate. This case asks us to consider whether 
an executor may bring suit against a decedent’s attorneys for malpractice 
committed outside the estate-planning context. We hold that the executor should 
not be prevented from bringing the decedent’s survivable claims on behalf of the 
estate, and affirm the court of appeals’ judgment.
I. Background
            
When Corwin Denney’s wife, Des Cygne, died, Corwin served as executor of her estate. 
He retained Cox & Smith to advise him in the independent administration of 
her estate, and consulted the law firm regarding the separate versus community 
character of the couple’s assets. According to Corwin, he and his wife had 
orally agreed that stock in Automation Industries, Inc., would be his separate 
property and stock in Gilcrease Oil Co. would be hers. 
Cox & Smith prepared a memorandum advising Corwin that the Automation and 
Gilcrease stock was presumed to be community property, 
and that additional information was necessary before classifying the assets. 
According to Cox & Smith, Corwin was also advised that he should probably 
pursue a declaratory judgment to properly classify the stock, which he declined 
to do. Cox & Smith, relying upon an analysis performed by Corwin’s 
California accountant and without seeking a declaratory judgment, prepared an 
estate tax return that omitted any Automation stock from a list of Des Cygne’s assets. Corwin died twenty-nine years later, leaving 
the bulk of his estate to charity. Approximately one month after his death, the 
Denney children, as beneficiaries of Des Cygne’s 
trust, sued Corwin’s estate alleging that Corwin had misclassified the 
Automation stock as his separate property, and as a result underfunded their mother’s trust. O’Donnell, the executor of 
Corwin’s estate, settled the children’s claims for approximately $12.9 million, 
less than half of their estimated value.[1] O’Donnell then brought this suit for 
legal malpractice against Cox & Smith, alleging that the attorneys failed to 
properly advise Corwin about the serious consequences of mischaracterizing 
assets, and that their negligence caused damage to Corwin’s estate.
II. Procedural History
            
At the trial court, Cox & Smith won a summary judgment on all claims. 
The trial court did not state a basis for its decision. The court of appeals 
initially affirmed the summary judgment, holding that no cause of action had 
accrued to Corwin during his lifetime, and thus O’Donnell lacked privity with the lawyers. O’Donnell v. Smith, No. 
04-04-00108-CV, 2004 WL 2877330, at *3 (Tex. App.—San Antonio Dec. 15, 2004). We 
vacated and remanded for reconsideration in light of our decision in 
Belt, 192 S.W.3d 780. In Belt, we held that there was no accrual 
problem under similar circumstances. 192 S.W.3d at 
785–86. There, the independent executrixes of an estate brought a legal 
malpractice claim on the estate’s behalf alleging that a negligently-drafted 
will had increased the estate’s tax liability. Id. at 
782. We held that because the injury that formed the basis of the claim 
occurred when the will was drafted, the claim accrued prior to the decedent’s 
death. 192 S.W.3d at 785–86. We further held that legal 
malpractice claims for pure economic loss are survivable and an estate’s 
personal representative may bring survivable claims on behalf of the estate. 
Id. at 785–87.
            
In this case, the court of appeals held, on remand, that (1) a fact issue 
existed as to whether a malpractice cause of action accrued during Corwin’s 
lifetime; (2) such a claim would survive in favor of the estate; and (3) no 
evidence supported O’Donnell’s malice claim. 234 S.W.3d at 
145–48. Cox & Smith argued to the court of appeals that despite our 
holding in Belt, the summary judgment should have been affirmed because 
O’Donnell lacks privity with Cox & Smith. Cox 
& Smith based its argument on Barcelo, 923 
S.W.2d 575, in which we held that estate-planning attorneys owe no duty to 
third-party beneficiaries, and are not subject to malpractice lawsuits brought 
by them. Cox & Smith contends legal malpractice claims cannot be brought by 
anyone but the client, and Belt merely created a narrow exception for 
executors bringing estate-planning legal malpractice claims. The court of 
appeals rejected this argument, and we consider it here.
III. Privity Between Attorneys and Executors of the Client’s 
Estate
            
An executor is a personal representative 
who “stands in the shoes” of the decedent. Belt, 192 
S.W.3d at 787. As a general rule, an estate’s personal 
representative may bring the decedent’s survivable claims on behalf of the 
estate. Id. at 784; see also Tex. Prob. Code § 233A (“Suits for the 
recovery of personal property, debts, or damages . . . may be instituted by 
executors or administrators.”). In Belt, we considered whether the 
executrixes’ legal malpractice claim was survivable. 192 
S.W.3d at 784. At common law, actions for damage to real or personal 
property survive the death of the owner. Id. Thus, we held that “legal 
malpractice claims alleging pure economic loss survive in favor of a deceased 
client’s estate.” Id. at 785.
            
Having identified these claims as survivable, we must consider whether 
there is any reason for an exception preventing executors from bringing them. 
Cox & Smith again relies on our holding in Barcelo, where we identified the longstanding privity rule barring non-clients from suing for legal 
malpractice. 923 S.W.2d at 577. In that case, the 
beneficiaries of a will and a trust agreement sued the estate-planning attorney 
for legal malpractice, alleging that negligent drafting had harmed their 
interests. Id. at 576. We refused to join the 
majority of states that relax the common-law privity 
barrier for intended beneficiaries, and held that third parties lack privity with a deceased’s attorney and cannot sue for 
malpractice. Id. at 577–79.
            
We identified two policy considerations that supported our decision in 
Barcelo. First, allowing these suits could 
disrupt the attorney–client relationship. If third parties could sue for 
estate-planning legal malpractice, attorneys would be distracted by the threat 
of future lawsuits from disgruntled heirs, making them less able to serve their 
clients. Id. at 578. Second, third-party 
estate-planning malpractice suits would allow disappointed beneficiaries to seek 
a greater share of the estate by claiming the testator’s true intent was 
different from what is expressed in a formally-executed will, and thus create “a 
host of difficulties.” Id.
            
Cox & Smith contends Barcelo 
bars all legal malpractice suits brought by non-clients, with the exception of 
estate-planning malpractice claims brought by executors, like that in 
Belt. To adopt the rule Cox & Smith 
suggests would place us alone among the states, and would unnecessarily immunize 
attorneys who commit malpractice. None of the concerns we voiced about 
third-party malpractice suits apply to malpractice suits brought by an estate’s 
personal representative. The threat of executor 
lawsuits will not impede the attorney–client relationship, because the estate’s 
suit is based on injury to the deceased client, as opposed to any third party. 
The estate’s suit is identical to one the client could have brought during his 
lifetime. An estate’s interests, unlike a third-party beneficiary’s, mirror 
those of the decedent. Belt, 192 S.W.3d at 
787.[2]
            
Cox & Smith argues that the estate’s interest in this suit is not 
truly in line with the decedent’s because Corwin had 
always intended to keep the community-property stock out of the trust and treat 
it as his own property, and he did so without seeking the declaratory judgment 
Cox & Smith recommended.[3] This argument, though, goes to the 
weight of the legal malpractice claim and does not change the fact that 
O’Donnell “stands in the [deceased’s] shoes” in assessing the claim’s merit and 
deciding whether or not to assert it on the estate’s behalf. Id. Of 
course, if the evidence demonstrates that Corwin would have ignored Cox & 
Smith’s advice no matter how competently provided, the malpractice claim will 
fail for lack of proximate causation. But at this point in the proceedings, the 
merits of the malpractice claim are undeveloped. There is at least some evidence 
that Corwin would have followed his lawyers’ advice to pursue a declaratory 
judgment if they had clearly advised him to do so or warned him adequately of 
the severe consequences of mischaracterizing community assets.
            
And although Cox & Smith suggests, and the dissenting justices 
assume, that O’Donnell colluded with the Denney children in settling their 
claims, there is nothing in the record that would support such a presumption. If 
Cox & Smith can in fact demonstrate collusion at trial, it would presumably 
negate causation and/or mitigate damages on the legal malpractice claim, and 
could subject O’Donnell to personal liability to Corwin’s beneficiaries for 
violating his fiduciary duties as executor of Corwin’s estate. We see no reason 
to create a rule that would deprive an estate of any remedy for wrongdoing that 
caused it harm by prohibiting the estate from pursuing survivable claims the 
decedent could have brought during his lifetime.
            
Cox & Smith argues that the court of appeals’ decision creates an 
end-run around Barcelo, allowing disgruntled 
beneficiaries to sue to increase their inheritances. However, the Des Cygne beneficiaries’ claims were not against Corwin’s estate 
as beneficiaries of his will, but against Corwin as executor of their mother’s 
estate. Had they known during his lifetime that Corwin had misallocated their 
mother’s community property and brought suit while he was alive, as the 
dissenting justices say they should have, any judgment or settlement they might 
have obtained for damage to their mother’s estate would have been collectable 
from Corwin, who then could have asserted a claim against Cox & Smith for 
legal malpractice. In such a case, under Cox & Smith’s and the dissenting 
justices’ view, Barcelo would extinguish 
Corwin’s malpractice claim upon his death simply because the Des Cygne beneficiaries were also beneficiaries of Corwin’s 
estate. We do not believe Barcelo will bear 
such an expansive reading. To the contrary, when negligent legal advice depletes 
the decedent’s estate in a manner that does not implicate how the decedent 
intended to apportion his estate, Barcelo’s 
concerns about quarreling beneficiaries and conflicting evidence do not arise. 
See Barcelo, 923 S.W.2d at 
578. Here, the beneficiaries of Des Cygne’s 
trust do not dispute Corwin’s intent as expressed in his will. They have already 
been paid a settlement out of Corwin’s estate for damage Corwin allegedly caused 
to their mother’s trust; the outcome of O’Donnell’s legal malpractice suit 
against Cox & Smith will have no impact on their recovery, and they have no 
interest in that suit.
            
Adopting the broad rule Cox & Smith proposes would preclude executors 
from recovering for any claims the estate has to pay potential beneficiaries due 
to bad legal advice the decedent received during his lifetime. For example, 
according to Cox & Smith and the dissenting justices, if Corwin had 
improperly handled co-owned property based on bad legal advice and then died, 
his estate would be liable to the co-owner and could sue for legal malpractice 
so long as the co-owner was not related to Corwin and therefore a potential 
beneficiary of his estate. If a judgment was entered against Corwin because 
counsel botched his defense in a personal injury action arising out of an 
automobile accident, and Corwin later died, his estate could not assert a 
malpractice claim for damages that his estate must pay if the injured party 
happened to be a beneficiary of his will. We see no reason to extend the Barcelo privity bar to 
survivable malpractice suits brought by an executor, and declined to do so in 
Belt. We do not read Barcelo to bar 
O’Donnell’s suit against Cox & Smith.
            
The dissent contends our decision will somehow allow disgruntled 
beneficiaries to employ gamesmanship to recover more than they were devised and 
will open up new avenues for attorney liability. Under Barcelo, beneficiaries cannot sue a decedent’s 
attorneys for estate-planning malpractice. Id. at 
579. But this case does not involve a claim of estate-planning 
malpractice and it does not involve a suit by a decedent’s beneficiaries against 
the decedent’s attorneys. The Des Cygne beneficiaries 
did not sue Corwin’s attorneys and have no interest in the outcome of the legal 
malpractice case. They did sue Corwin’s estate, but did so in their capacity as 
the wronged beneficiaries of their mother’s allegedly underfunded trust, not as disgruntled beneficiaries of 
Corwin’s will. We see no reason to bar a completely separate lawsuit — that of 
the executor against Corwin’s attorneys — simply because Des Cygne’s beneficiaries sued the estate for Corwin’s 
mishandling of their mother’s trust.
IV. Malice
            
O’Donnell has filed a cross-petition challenging the court of appeals’ 
holding that O’Donnell presented no evidence of malice to support an award of 
exemplary damages. See Act of Apr. 11, 1995, 74th Leg., R.S., ch. 19, § 1, 1995 Tex. Gen. Laws 108, 110 (amended 2003) 
(current version at Tex. Civ. Prac. 
& Rem. Code § 
41.003(a)). Malice has both an objective and a subjective 
prong; proof of malice involves an objective determination that the defendant’s 
conduct involves an extreme risk of harm, and a subjective determination that 
the defendant had actual awareness of the extreme risk created by his conduct. 
Kinder Morgan N. Tex. Pipeline, L.P. v. Justiss, 202 S.W.3d 427, 447 (Tex. App.—Texarkana 2006, 
no pet.).
            
The objective prong is a function of both the magnitude and the 
probability of potential injury and is not satisfied if the defendant’s conduct 
merely creates a remote possibility of serious injury. Universal Servs. Co. v. Ung, 904 S.W.2d 638, 641 (Tex. 1995). 
“Extreme risk” is not a remote possibility of injury or even a high probability 
of minor harm, but rather the likelihood of serious injury to the plaintiff. 
Lee Lewis Constr., Inc. v. 
Harrison, 70 S.W.3d 778, 785 (Tex. 2001). The subjective prong 
requires evidence that the defendant was subjectively aware of the risk but 
consciously chose to do nothing. Lee Lewis, 70 S.W.3d 
at 786.
            
In reviewing a no-evidence summary judgment, we review the evidence in 
the light most favorable to the respondent against whom the summary judgment was 
rendered. City of Keller v. Wilson, 168 S.W.3d 802, 824 
(Tex. 2005). If the respondent brings forth more than a scintilla of 
probative evidence to raise a genuine issue of material fact, a no-evidence 
summary judgment cannot properly be granted. Reynosa v. Huff, 21 
S.W.3d 510, 512 (Tex. App.—San Antonio 2000, no pet.).
            
O’Donnell argues that he introduced more than a scintilla of evidence on 
both the objective and subjective prongs. We agree with the court of appeals 
that the strict standard for proving malice was not met. The evidence O’Donnell 
offered to prove that there was an extreme risk of harm amounts to conclusory statements from his expert and Corwin’s 
California counsel. Similarly, the evidence raises no fact issue that Cox & 
Smith intended to cause Corwin injury or acted with actual awareness of an 
extreme risk of injury. Cox & Smith recognized that classifying the property 
was important, and informed Corwin that it was “presumably community,” and that 
more information was needed to classify it properly. Cox & Smith also 
advised him that he should “probably” seek a declaratory judgment on the 
classification.
            
O’Donnell argues that it was inappropriate for the court of appeals to 
consider this evidence of “some care” exercised by Cox & Smith, because 
“some care” will not carry the burden on a no-evidence summary judgment. But the 
court of appeals is charged with considering “all the evidence” in 
reviewing punitive damage issues. City of Keller, 168 
S.W.3d at 817 (emphasis in original). Moreover, we have held that in 
reviewing a summary judgment on malice, courts should consider “all of the 
surrounding facts, circumstances, and conditions” in deciding whether an action 
was pursued with conscious indifference to risk. Burk 
Royalty Co. v. Walls, 616 S.W.2d 911, 922 (Tex. 1981).
            
The court of appeals did not err in considering evidence that Cox & 
Smith had in fact made some attempt to point Corwin down the path of correctly 
classifying the stock. Considering all the evidence, there is nothing to suggest 
that Cox & Smith had any intent to harm Corwin or consciously chose to not 
give him more detailed advice, and thus the court of appeals did not err in 
affirming the no-evidence summary judgment on malice.
V. Conclusion
            
For the foregoing reasons, the court of appeals’ judgment is 
affirmed.
 
 
___________________________________
Harriet O’Neill
Justice
 
OPINION DELIVERED: June 26, 
2009

[1] According to 
O’Donnell’s attorney, the Des Cygne beneficiaries’ 
claims against Corwin were worth at least $32 million and perhaps as much as $40 
million.

[2] In 
Belt, we noted that several considerations should discourage 
beneficiaries who also act as an estate’s personal representative from pursuing 
estate-planning malpractice claims in order to increase their own shares. First, 
mismanagement could subject the personal representative to removal. Belt, 
192 S.W.3d at 787–88 (citing Tex. Prob. 
Code § 222(b)(4)). Second, any damages recovered 
would be paid to the estate, then distributed according 
to the existing estate plan. Id. at 788. These 
concerns are not present here because O’Donnell is not a beneficiary of Corwin’s 
will or Des Cygne’s, and furthermore, the claim is not 
for estate-planning malpractice.

[3] The dissent 
asks, “would the client be rooting for the executor and 
the beneficiaries?” The answer is almost certainly yes. The Des Cygne beneficiaries received fixed amounts under Corwin’s 
will. The only beneficiaries that stand to benefit from the suit against Cox 
& Smith are the charity to which Corwin intended to leave the bulk of his 
estate and possibly Corwin’s widow.