Court Opinion

ID: 9621874
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:08:24.37469+00
Date Added: 2024-06-11T18:05:10.702435
License: Public Domain

SCOTT, J.,
dissenting.
I must respectfully dissent from the majority’s opinion extending the attorney-client relationship with a guardian to the ward of the guardian actually represented. I do so for several reasons.
*104Firstly, opening of this “door” will invite greater extensions. See Fickett v. Superior Court of Pima County, 27 Ariz.App. 793, 558 P.2d 988 (1976) (conservator of incompetent’s estate brought action against attorney for former guardian alleging that attorney was negligent in failing to discover that guardian had embarked upon scheme of misappropriation, conversion, and improper investment of ward’s estate); Pelham v. Griesheimer, 92 Ill.2d 13, 64 Ill.Dec. 544, 440 N.E.2d 96 (1982) (children brought malpractice action against an attorney who represented mother in divorce case and allegedly failed to ensure that children remained beneficiaries on father’s life insurance policy, as required by divorce decree); Scholler v. Scholler, 10 Ohio St.3d 98, 462 N.E.2d 158 (1984) (action on behalf of minor child against mother’s attorney who allegedly negotiated and prepared the child support provisions in mother’s separation agreement); Metzker v. Slocum, 272 Or. 313, 537 P.2d 74 (1975) (action upon behalf of minor child against attorney retained by husband and wife to perfect adoption of minor, which attorney allegedly failed to perfect, leading to minor’s loss of support upon divorce).
Secondly, it introduces an expensive complexity into litigation for minors that is unjustified given its infrequency and the fact that matters related to guardianships are committed to the exclusive supervision of the courts. “Where [the] legal disability of the individual is shown, the jurisdiction of the court is plenary and potent to afford whatever relief may be necessary to protect his interests and preserve his estates.” DeGrella By and Through the Parrent v. Elston, 858 S.W.2d 698 (Ky.1993) (citing Strunk v. Strunk, 445 S.W.2d 145, 147 (Ky.1969)). “The court’s action in such a case is not limited by any narrow bounds, but it is empowered to stretch forth its arm in whatever direction its aid and protection may be needed.” Strunk, 445 S.W.2d at 147; see also KRS 387.070 (“[N]o guardian or conservator shall act until the guardian or conservator has been appointed by the proper District Court, and given bond to the Commonwealth of Kentucky with good surety, either corporate or personal, approved by the District Court to faithfully discharge the trust of guardian or conservator.”); KRS 387.122 (“The District Court may direct that all or some part of the assets of a ward’s estate be deposited in a bank ... subject to withdrawal by the guardian or conservator only upon authorization of the District Court.”); KRS 387.125(6) (“Subject to the approval of the court ... a guardian may settle or compromise the action, claim, or proceeding on behalf of the ward.”); KRS 389A.010(l)(a) (“Any trustee, guardian, conservator, or personal representative ... not otherwise possessing a power of sale, may move the District Court of the county in which the fiduciary has qualified for an order granting the fiduciary the power to sell or mortgage any real estate or any interest therein possessed by his ward, decedent, or trust.”).
Moreover, such an extension will necessarily endanger the finality of a guardian’s decisions even though approved by a court, as well as extend, by several multiples, the attorneys necessary to represent a parent/guardian with multiple childrenAvards, not to mention the additional attorney necessary for the parent’s personal claims. With such a “cast of counsel” imposed on one lay parent — each arguing for inconsistent results — how can one realistically expect our current statutory scheme to function inexpensively and expeditiously?
Here, Vicky Backus (Backus) retained Appellant, Ira Branham (Branham), to represent her in litigation stemming from an automobile accident, which killed her ex-husband, Gary Stewart (Stewart), and *105her minor son, Adam Stewart (Adam). Her minor son, Gary Ryan Stewart (Gary Ryan), was severely injured but survived the accident. Branham was hired by Backus to represent her in all her various capacities. First, Branham was hired to represent her on her individual claims. Secondly, Branham was hired to represent her as Administrator of Adam’s estate.1 Thirdly, Branham was hired to represent her as next-friend, and later as guardian, for Gary Ryan.
On August 14, 1997, Branham filed the suit on behalf of Backus individually, as administratrix of Adam’s estate, and as next-friend of Gary Ryan, a minor. Several months later, on December 17, 1997, an application and petition for Backus’s appointment as guardian for Gary Ryan was filed in the Pike District Court.2 The reasons given for the appointment were: “Gary Ryan Stewart has acquired interest in real property in Pike County which is going to be sold and a guardian must sign the deed.” The Pike County District Court guardianship record discloses an order setting the matter for hearing at 4:00 p.m. on December 23, 1997. It also discloses an order appointing Backus and setting the bond at “$5,000.00 w/o surety”3 The order appointing and setting the bond was signed on December 23, 1997, but not entered until January 5,1998.
In addition, attorney Michael Lucas was appointed guardian ad litem to represent Gary Ryan in regards to the proposed sale of his interest in the real estate. His report recommending approval of the sale was filed January 29, 1998. Thus, at its inception, the guardianship proceeding was an “adversary” proceeding. See KRS 389A.010(4) (right of appeal to circuit court in adversary proceedings). Thereafter, the sale of Gary Ryan’s real estate was approved by the court with the net proceeds therefrom, payable upon behalf of Gary Ryan, being in the amount of $2,000.
Several months later, an agreement was reached to settle the multi-party wrongful death and personal injury suit for $1.3 million dollars, with $325,000.00 to be payable to Backus individually;, $325,000.00 to be payable to Adam’s estate; and $650,000.00 to be paid for the benefit of Gary Ryan.4 On March 31, 1998, a petition was filed in Gary Ryan’s guardianship action to approve the settlement of his personal injury claim disclosing the stated settlement amount of $650,000.00. It was *106approved by order of the same date. However, the bond “$5,000.00 w/o surety” was not increased, nor was surety added. Thereafter, Backus failed to file any ac-countings in the guardianship proceedings and allegedly dissipated the funds disbursed to her upon behalf of Gary Ryan. Suit was ultimately filed against Backus in Arkansas, but less than the full amount allegedly paid to her upon behalf of Gary Ryan was recovered. This action followed, alleging Branham failed to divide the money properly and failed to safeguard the money given Backus on Gary Ryan’s behalf.
Given the majority’s extension of the attorney-client relationship on the facts at hand, a future guardian, such as Backus, will not be able to rely upon the advice of one (1) counsel in navigating the myriad number of issues she will face in resolving multi-party, multi-issue litigation. Due to the inherent conflict now created for counsel, she will need three (3) attorneys: one for her individual claims, another to advise her as administratrix of Adam’s estate, and a third to advise her as next friend/guardian on Gary Ryan’s claims— each of which counsel must necessarily, by virtue of our loyalty rule, be solely devoted to maximum benefits for the single interest they represent. One could only imagine the difficulties this will present in the decision-making process for lay people, whether parents or not, who must handle these various fiduciary positions. It not only increases the complexity of litigation involving minors and other beneficiaries but inhibits the fundamental precept embodied by the court’s mandatory supervision of a guardian’s actions and decisions.
Certainly,
[t]he citadel of privity is under ... attack. The potency of attack is rooted in modern tort law’s goal of providing maximum recovery to injured parties and placing the risk of loss among those thought to be most able to bear the cost. However, the attack on privity threatens to impose upon the attorney [and the legal process] more than just increased exposure to liability; he or she increasingly faces a real ethical dilemma.
Keybank Nat. Ass’n v. Shipley, 846 N.E.2d 290, 300 (Ind.App.2006). “When lawyers must be conce[r]ned about their potential liability to third parties, the resultant self-protective tendencies may deter vigorous representation of the client. Attention to third-party risk might cause the attorney improperly to consider ‘personal interests’ or ‘the desires of third parties’ above the client’s interests. This would contravene the lawyer’s duty of loyalty to the client.” Id. Citing Jack I. Samet, et al., The Attack on the Citadel of Privity, 20 A.B.A. Winter Brief 9, 40 (1991). And “[l]oyalty is an essential element in the lawyer’s relationship to a client.” Baker v. Coombs, 219 S.W.3d 204, 209 (Ky.App.2007) (citing Kentucky Rules of the Supreme Court (“SCR”) 3.130, Rule 1.7, Comment 1).
The “unavoidable tension between these ethical standards on the one hand, and the fear of exposure to malpractice liability to non-clients on the other, is an issue that must be confronted and dealt with squarely.” Shipley, 846 N.E.2d at 300. And in resolving such a dilemma, we cannot ignore the inherent difficulties and expense of commanding multiple counsel. “It is well recognized that a fiduciary relationship exists between an attorney and a client, and the attorney owes the client the utmost fidelity, honesty[,] and good faith. An attorney [should owe] a duty to a non-client only in the most limited circumstances.” Grimes v. Saikley, 388 Ill.App.3d 802, 328 Ill.Dec. 421, 904 N.E.2d 183, 194 (2009).
Under our previous precedents, although a legal malpractice claim may ac*107crue only to the attorney’s client, “an attorney still may be liable for damages to a third party because of events arising out of his representation of a client if the attorney’s acts are fraudulent or tortious and result in injury to that third person.” Coombs, 219 S.W.3d at 208-09; Rose v. Davis, 288 Ky. 674, 157 S.W.2d 284, 284-85 (1941), overruled, on other grounds by Penrod v. Penrod, 489 S.W.2d 524 (Ky.1972); see also Klancke v. Smith, 829 P.2d 464, 466-67 (Colo.App.1991) (“An attorney is charged with a duty to act in the best interest of his or her client, and in fulfilling this obligation, the attorney is hable for injuries to third parties only for conduct that is fraudulent or malicious.”) (citations omitted). And certainly, “[sjuch liability may be found to exist where the attorney is responsible ‘for damage caused by his negligence to a person intended to be benefited by his performance irrespective of any lack of privity[.]’ ” Coombs, 219 S.W.3d at 209 (quoting Hill v. Willmott, 561 S.W.2d 331, 334 (Ky.App.1978)). Yet, the application of this doctrine demands that the representation be “primarily and directly intended to benefit” the party claiming injury. Id. Any contrary rule creates a conundrum for attorneys under SCR 3.130, Rule 1.7 (July 15, 2009). Under this rule, of course, each affected client can give “informed consent, confirmed in writing” SCR 3.130, Rule 1.7(b)(4). Yet, a child cannot meet such a standard.
Here, the problem was the bond. It was too low and lacked a surety. Yet, “[t]o hold an attorney responsible for the damages occasioned by an erroneous judicial order, even though the error be induced by him, would make the practice of law one of such financial hazard that few men would care to incur the risk of its practice.” Rose, 157 S.W.2d at 285. Rose involved an action by a former husband against the wife’s attorney to recover alimony improperly paid due to an erroneous court order directing such payments. Although the impropriety of the payments was evident, the court in Rose upheld the dismissal of the claim against the attorney, finding that:
It does not appear from the petition that appellee made any false representations to the court or concealed any facts from the court in order to obtain the rulings of which complaint is made. On the other hand, the chancellor had before him all material facts in the case, and, with full knowledge of all the facts, rendered judgment....
Id. at 285. That being said, “[a] false or fraudulent, and collusive, decision is beyond the power of a court to approve.” Elston, 858 S.W.2d at 710. Thus, the court in Revill v. Pettit, 3 Met. 314, 60 Ky. 314, 1861 WL 5630 (1860), upheld the liability of an attorney for his participation with the court in a wrongful proceeding. See also Wood v. Weir, 5 B.Mon. 544, 44 Ky. 544, 1845 WL 3330 (1845). Yet, this action — and the majority’s opinion — is not based upon or limited to allegations or collusion of fraud.
That being said, I recognize the majority’s reliance upon precedent from other states — specifically Leyba v. Whitley, 120 N.M. 768, 907 P.2d 172, 182 (1995), Toporek v. Zepp, 224 Ga.App. 26, 479 S.E.2d 759, 761 (1996), and In re Guardianship of Karan, 110 Wash.App. 76, 38 P.3d 396, 401 (2002)—as well as other cases un-cited, such as Pederson v. Barnes, 139 P.3d 552 (Alaska 2006), Jenkins v. Wheeler, 69 N.C.App. 140, 316 S.E.2d 354 (1984), and Estate of Treadwell ex rel. Neil v. Wright, 115 Wash.App. 238, 61 P.3d 1214 (2003).5 *108However, each of these cases involved only one attorney, one guardian, and one ward. Here, we have multiple relationships and issues with Branham representing Backus in her individual capacity, as administra-trix of her deceased son Adam’s estate, and as next friend/guardian for Gary Ryan’s injuries; guardianship began with the sale of Gary Ryan’s interest in real estate, a proceeding recognized as adversarial by statute. See KRS 389A.010(4). Thus, a guardian ad litem was appointed to represent him individually. While a quasi-extension of the attorney-client relationship might work in single issue, single ward cases, it is not a practical solution in multi-party, multi-issue litigation for the reasons pointed out.
A better analysis is provided within the context of the Restatement (Third) of The Law Governing Lawyers § 51 (2000). Subsection 4 negates a duty of care to a non-client unless, “such a duty would not significantly impair the lawyer’s performance of obligation to the client.” Id. The Restatement goes on to state:
A lawyer representing a client in the client’s capacity as a fiduciary (as opposed to the client’s personal capacity) may in some circumstances be liable to a beneficiary for a failure to use care to protect the beneficiary. The duty should be recognized only when the requirements of Subsection (4) are met and when action by the lawyer would not violate applicable professional rules.
Id. at 363 (emphasis added). The Restatement specifically sets forth a similar analysis when it states in § 51:
A lawyer owes no duty to a beneficiary if recognizing such duty would create conflicting or inconsistent duties that might significantly impair the lawyer’s performance of obligations to the lawyer’s client in the circumstances of the representation. Such impairment might occur, for example, if the lawyer were subject to liability for assisting the fiduciary in an open dispute with a beneficiary or for assisting the fiduciary in exercise of its judgment that would benefit one beneficiary at the expense of another. For similar reasons, a lawyer is not subject to liability to a beneficiary under Subsection (4) for representing the fiduciary in a dispute or negotiation with the beneficiary with respect to a matter affecting the fiduciary’s interests.
Id. at 365. This is consistent with KBA Ethics Opinion E-401, which states, “[a] lawyer who represents a fiduciary ... stands in a lawyer-client relationship with the fiduciary and not with respect to the fiduciary’s estate.”6
*109Thus, for the grounds stated, I must dissent from the majority’s opinion extending Branham’s attorney-client relationship to Gary Ryan in violation of his attorney-client relationship -with Backus.
CUNNINGHAM, J., joins this dissenting opinion.

. She was also the beneficiary of Adam's estate. See KRS 391.010(2) and KRS 391.030(1).

. The application and petition were filed on AOC forms 852 and 853. The application and petition for guardianship disclose that both Backus and Gary Ryan resided in Arkansas. In re: Estate of Gary Ryan Stewart, a minor, Pike District Court Probate Case No. 97-P-000687. The complaint filed herein also alleges that both Backus and Gary Ryan resided in Scott County, Arkansas, and that the funds ultimately received through the settlement of the personal injury action for the benefit of Gary Ryan were sent or delivered to her in Arkansas.

. The order is entered on a typed AOC form 854 with three (3) handwritten entries in the blanks, as provided on the form. The case number is written in on the top of the form in blue ink; whereas, the district judge's signature and date and the notation on the bond, "5,000.00 w/o surety,” are written in black ink.

.Of this $650,000.00, $150,000.00 was withheld for medical bills and later resolved for less; $82,863.97 was later disbursed to Backus on behalf of Gary Ryan; $300,000.00 was placed into a structured annuity for Gary Ryan; and that part of the additional $200,000.00 remaining after attorney’s fees was disbursed to Backus upon behalf of Gary Ryan. The record available does not disclose how much of the $200,000.00 remained to be disbursed.

. Notwithstanding the majority’s reliance upon several of these cases, it seems to base its extension of the attorney-client relationship on agency law, rather than the multi-*108factor balancing test or intended third-party beneficiary test relied upon in the cases it cites. However, a guardian is no more a servant to the ward, than a regent is to a young king-to-be. Their power to act does not come from a master-servant relationship but, rather, from the state. "The relationship of guardian to ward is not that of agent to principal. The guardian’s authority is not derived from the ward, but from the appointing court for which the guardian acts as agent, exercising those powers conferred by statute or by the court.” Mack v. Mack, 329 Md. 188, 618 A.2d 744, 750 (Md.App.1993) (citation omitted). " 'In reality the court is the guardian; an individual who is given that title is merely an agent or arm of that tribunal in carrying out its sacred responsibility.' The administration of guardianship affairs remains subject to judicial control by the equity court that appointed the guardian.” Id. (citations omitted). In Southard v. Steele, 3 T.B.Mon. 435, 19 Ky. 435, 1826 WL 1336 (1826), the court acknowledged that "[a] guardian represents the ward for whom he acts, and is his general agent; yet if he submits to a reference, as he may do, for the infant, he binds himself thereby and not the infant.... A court of chancery will not decree an award to bind the infant.” Id. at *6.

. See Kentucky Bar Association Ethics Opinion E-401 ("The fact that a fiduciary has *109obligations to the beneficiaries of the trust or estate does not in itself either expand or limit the lawyer’s obligations to the fiduciary under the rules of professional conduct, nor impose on the lawyer obligations towards the beneficiaries that the lawyer would not have toward other third parties.”).