Court Opinion

ID: 9929495
Source: CourtListenerOpinion
Date Created: 2024-02-02 20:01:54.519769+00
Date Added: 2024-06-11T10:25:05.296532
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
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               THE SUPREME COURT OF THE STATE OF ALASKA

 COURTNEY GUERRA, as Personal                      )
 Representative of the ESTATE OF                   )   Supreme Court No. S-18317
 JAMES FRANCIS GOARD,                              )
                                                   )   Superior Court No. 4FA-19-02367 CI
                        Appellant,                 )
                                                   )   OPINION
       v.                                          )
                                                   )   No. 7683 – February 2, 2024
 JOHN WALLACE and ROBERT                           )
 NESBITT,                                          )
                                                   )
                        Appellees.                 )
                                                   )

              Appeal from the Superior Court of the State of Alaska,
              Fourth Judicial District, Fairbanks, Paul R. Lyle, Judge.

              Appearances: Todd Young, Todd Young Law Firm,
              Anchorage, for Appellant. Laura L. Farley and Tracy
              Hillhouse Price, Farley & Graves, P.C., Anchorage, for
              Appellee John Wallace. No appearance by Appellee Robert
              Nesbitt.

              Before: Maassen, Chief Justice, and Borghesan, Henderson,
              and Pate, Justices. [Carney, Justice, not participating.]

              BORGHESAN, Justice.

      INTRODUCTION
              The estate of a deceased Fairbanks entrepreneur languished in probate for
years. The value of its assets, already encumbered by tax liens and creditors’ claims,
eroded. Eventually the personal representative of the estate was replaced, and the
deceased man’s wife and sole beneficiary of his estate became the personal
representative.   Under her direction, the estate then sued the former personal
representative for breach of fiduciary duty and conversion. The estate also sued the
lawyer who represented the former personal representative, asserting claims of
malpractice and negligence.
             The lawyer moved for summary judgment, arguing that because his only
client was the former personal representative, the lawyer had no liability for harms to
others. The lawyer argued that he was not liable for malpractice to the deceased man’s
wife because there was no privity of contract between them. Acknowledging that in
some cases a lawyer may owe a duty of care to a nonclient that can give rise to a
negligence claim, the lawyer argued that he had no such duty in this case. The superior
court granted summary judgment in favor of the lawyer. The estate appeals.
             We affirm the superior court’s judgment. The estate’s opening brief failed
to challenge the superior court’s ruling on the malpractice claim, so the estate waived
this issue. And the estate did not show there are disputed facts material to the question
of the lawyer’s duty of care to the deceased man’s wife. Because she had a reasonable
ability to protect her own rights against some of the former personal representative’s
alleged misdeeds, and because the former personal representative’s lawyer did not
know or have reason to know of the other alleged misdeeds, the lawyer did not owe a
duty of care to the deceased man’s wife.
      FACTS AND PROCEEDINGS
      A.     Probate Proceedings
             James Goard died on April 20, 2012. Goard’s will left his entire estate to
his surviving spouse, Theresa Hester.

                                           -2-                                     7683
             Both Hester and Robert Nesbitt, who claimed to be one of Goard’s
creditors,1 petitioned for appointment as personal representative. After a hearing at
which Hester did not appear, the superior court appointed Nesbitt as personal
representative. The superior court also issued an order enjoining the sale, transfer, or
encumbrance of any estate property.
              Nesbitt’s time as personal representative was contentious.            Hester
petitioned several times to have Nesbitt removed.2 In 2014 she petitioned to have him
removed for various alleged failures, misdeeds, and conflicts. The matter was referred
to a standing master. At an evidentiary hearing in March 2015, Nesbitt testified about
the estate’s financial issues. He explained that the estate owed $19,000 in taxes on one
property (the “Elim property”) and that taxes on a residential property known as “the
Five-Plex” had not been paid in three years. Nesbitt testified that “there ha[d]n’t been
any money available” in the estate to pay the Elim property taxes and he had needed to
borrow money to pay the taxes on the Five-Plex. Later in the hearing he reiterated that
there was no money in the estate. After the hearing the standing master recommended
that Hester’s petition to remove Nesbitt be denied. The superior court adopted the
recommendation.
             Because the court had previously enjoined the sale of any estate property,
Nesbitt petitioned the court to allow the sale of the Five-Plex and another real property
owned by the estate (the “Showboat,” a Fairbanks cabaret) in May 2015. The petition,
which was served on Hester’s attorney, stated that neither the Showboat nor the Five-
Plex had liability insurance, that the Showboat was undergoing tax foreclosure, and that

      1
             In July 2012 Nesbitt filed a $31,200 claim against the estate for live-in
care he allegedly provided Goard at the end of his life. Hester disputed that Nesbitt
provided any care for Goard.
      2
               AS 13.16.295(b) (“Cause for removal exists when removal would be in
the best interests of the estate, . . . or [the personal representative] has mismanaged the
estate or failed to perform any duty pertaining to the office.”).

                                           -3-                                       7683
the Five-Plex had frozen pipes because the heat and electric bills had not been paid.
Nesbitt also explained that he had obtained an unsecured loan on the estate’s behalf to
avoid tax foreclosure on the Five-Plex, but the note had matured and was in default.
             In June 2015 Nesbitt filed an accounting and proposed distribution, but
the superior court rejected it and ordered Nesbitt to file an updated inventory and
accounting. The court expressed frustration with Nesbitt’s accounting, opined that the
job was “way too much” for him, and stated that “someone needs to step forward.” The
court noted that Hester was “the only person before the court as an alternative” but was
“not appropriate” because she had missed initial hearings and had no knowledge of
what was going on. The court reiterated that it was willing to entertain a proposal for
another person to take over the role of personal representative, stating that “someone
needs to be in charge.”
             In October 2015 Nesbitt retained a new attorney, John Foster Wallace, to
represent him in the estate proceedings. Wallace entered his first appearance on behalf
of Nesbitt in November 2015. Wallace’s retainer was paid by a business partner of
Nesbitt’s, William St. Pierre.
             St. Pierre filed a $25,000 claim against the estate on November 27, 2015
for “money loaned to the estate to cover the costs of removing encroachments on federal
land.” Nesbitt allowed the claim. 3 Wallace later prepared an interim estate inventory
filed with the court that categorized St. Pierre’s claim as “[m]oney [o]wed [b]ut [n]ot
[p]aid.” The inventory contained the caveat that “[j]ust because a debt is listed does
not mean that it has been accepted as valid.”

      3
            Nesbitt’s signature was dated “1-27-15.” The superior court “assume[d]
the ‘1-27-15’ allowance date [was] a typographical error and that the claim was
approved by Nesbitt the same day [St. Pierre’s attorney] signed the claim”: November
27, 2015.

                                          -4-                                     7683
               The Showboat burned down around August 2017. It was uninsured at the
time. The property had been insured when Nesbitt became personal representative, but
Nesbitt cancelled the coverage, asserting that the estate lacked enough money to pay
for it. At a later deposition Wallace testified that he had advised Nesbitt to insure the
property.
               At the beginning of 2017 the estate’s bank account had $54,126 in it, but
by the year’s end it had only $206. In 2018 most of the estate’s real property went into
tax foreclosure, including the Showboat and the Five-Plex.
               In August 2018 the superior court removed Nesbitt as the estate’s personal
representative. It appointed a special administrator in his place. Shortly after, Wallace
moved for permission to withdraw as Nesbitt’s counsel.
               The newly appointed special administrator concluded that the estate was
insolvent. He reported that the Showboat had been foreclosed upon by the Fairbanks
North Star Borough and was likely to be sold at auction; that the Five-Plex had little
value and was encumbered by a federal tax lien; that Nesbitt had made a series of
withdrawals from the estate’s bank account in 2017 that left the estate with no funds to
pay an administrator; and that creditors were claiming almost $300,000 from the estate.
The special administrator resigned in November 2018.
               The superior court then appointed Hester as personal representative of the
estate.
          B.   The Estate’s Suit Against Nesbitt And Wallace
               With Hester acting as personal representative, Goard’s estate sued both
Nesbitt and Wallace in August 2019. The estate alleged that both Nesbitt and Wallace
were liable for damages to the estate. The estate alleged that Wallace performed his
duties as attorney for Nesbitt negligently and that he owed a duty not only to Nesbitt,
but also to the beneficiaries of the estate. Wallace answered, denying liability.
               Hester passed away a few months later, and her daughter, Courtney
Guerra, was substituted as personal representative of the estate.

                                           -5-                                      7683
             Wallace moved for summary judgment. He argued that the estate’s claims
were barred by a three-year statute of limitations. He also argued that as a matter of
law he was not liable to the estate for malpractice or breach of fiduciary duty. The
estate opposed summary judgment.
             The superior court granted summary judgment in favor of Wallace. Citing
our decision in In re Estate of Johnson,4 the superior court reasoned that we had
implicitly adopted a rule that beneficiaries of an estate cannot sue the personal
representative’s attorney for malpractice because there is no privity of contract that
could be the basis for a malpractice claim. It therefore granted summary judgment to
Wallace on the malpractice claim. The court then analyzed the estate’s negligence
claim under our decision in Pederson v. Barnes,5 which described when an attorney
owes a duty of care to a nonclient. The court concluded that the estate failed to show a
dispute of material fact that would support the existence of a duty of care. Because the
court granted summary judgment to Wallace on these grounds, it did not address his
alternative statute of limitations argument.
             The estate appeals.6
      STANDARD OF REVIEW
             We review a grant of summary judgment de novo.7 We will affirm a grant
of summary judgment if there are no genuine disputes of material fact and if the moving
party is entitled to judgment as a matter of law. 8 To determine if there is a genuine
dispute of material fact, we look to the pleadings, depositions, answers to

      4
             119 P.3d 425 (Alaska 2005).
      5
             139 P.3d 552 (Alaska 2006).
      6
             Nesbitt did not participate in this appeal.
      7
             Alakayak v. B.C. Packers, Ltd., 48 P.3d 432, 447 (Alaska 2002).
      8
             Id.

                                           -6-                                    7683
interrogatories, and admissions on file, together with the affidavits. 9 The material fact
requirement has two important aspects: “(1) the ‘material fact is one upon which
resolution of an issue turns’ and (2) ‘the existence of a dispute over a material fact’ is
determined using a ‘reasonableness standard.’ ” 10
             The burden is initially on the party moving for summary judgment to
prove “(1) the absence of genuine fact disputes, and (2) its entitlement to judgment as
a matter of law” through admissible evidence. 11 If the moving party makes its prima
facie case, the burden then shifts to the nonmovant “to set forth specific facts showing
that [it] could produce admissible evidence reasonably tending to dispute or contradict
the movant’s evidence, and thus demonstrate that a material issue of fact exists.”12
“Mere assertions of fact in pleadings and memoranda are insufficient” to rebut the
moving party’s prima facie case. 13      And “the offered evidence must not be too
conclusory, too speculative, or too incredible to be believed, and it must directly
contradict the moving party’s evidence.” 14
IV.   DISCUSSION
      A.     The Estate’s Malpractice Claim Is Waived For Inadequate Briefing.
             The estate’s opening brief did not address the superior court’s ruling that
it cannot sue Wallace for malpractice because there is no privity of contract between

      9
             Alaska R. Civ. P. 56(c).
      10
             Punches v. McCarrey Glen Apartments, LLC, 480 P.3d 612, 624 (Alaska
2021) (quoting Christensen v. Alaska Sales & Serv., Inc., 335 P.3d 514, 519 (Alaska
2014)).
      11
             Alakayak, 48 P.3d at 447-48.
      12
            Id. at 448 (quoting Philbin v. Matanuska-Susitna Borough, 991 P.2d 1263,
1265-66 (Alaska 1999)).
      13
            French v. Jadon, Inc., 911 P.2d 20, 26 (Alaska 1996) (quoting State, Dep’t
of Highways v. Green, 586 P.2d 595, 606 n.32 (Alaska 1978)).
      14
             Christensen, 335 P.3d at 516.

                                           -7-                                      7683
Wallace and the estate’s beneficiaries. Wallace pointed this out in his briefing. The
estate replied only that:
              The Estate did not fail to challenge [the superior court’s
              grant of summary judgment on the malpractice claim] . . . .
              The Estate does contest the trial court’s ruling as to Count II
              [malpractice] and it contests the trial court’s finding by
              showing there were material issues of fact in dispute that
              precluded entry of summary judgment.

The estate then filed a notice of supplemental authority. By failing to make the
argument in its opening brief, the estate has waived it, and we do not address it.15
       B.     The Superior Court Did Not Err In Granting Summary Judgment To
              Wallace Because The Estate Failed To Present Evidence Establishing
              That Wallace Owed Beneficiaries Of The Estate A Legal Duty.
              A lawyer owes various duties to a client. If the lawyer breaches those
duties, the lawyer may be liable to the client for resulting harm. 16 But in this case, a
lawyer is being sued for harms suffered by someone who was not his client: the estate
is suing Wallace, who represented the former personal representative of the estate,
based on alleged harms to Hester, who was the beneficiary of the estate. For Wallace
to be held liable in tort for harms to Hester, it must be shown that he owed a legal duty
to her even though she was not his client. 17
              A lawyer owes a duty of care to nonclients that can be the basis for tort
liability in relatively limited circumstances. In Pederson v. Barnes we adopted the
Restatement (Third) of the Law Governing Lawyers section 51(4) as the proper

       15
              See Timothy W. v. Julia M., 403 P.3d 1095, 1101 (Alaska 2017) (ruling
that appellant’s claim was waived because it was not discussed in brief).
       16
             L.D.G., Inc. v. Robinson, 290 P.3d 215, 221-22 (Alaska 2013) (describing
elements of client’s legal malpractice claim against attorney).
       17
              Pederson v. Barnes, 139 P.3d 552, 556 (Alaska 2006) (holding that in
order to be liable for damages to ward of lawyer’s client, lawyer “must have breached
a legal duty that he owed” to ward).

                                           -8-                                         7683
standard to govern the potential liability of a guardian’s lawyer to the guardian’s ward.18
In this case the superior court applied Restatement section 51(4) to the estate’s claims.
On appeal the parties dispute whether the estate has established a genuine dispute of
material fact showing liability under this framework.
              The estate’s brief suggests that an additional standard applies. It cites our
statement in In re Estate of Brandon that “[w]hen an attorney undertakes to perform
legal services for a client who is acting in a fiduciary capacity, the attorney has a duty
not to affect adversely the interests of the intended beneficiary.”19 It also cites decisions
of Arizona courts that we relied on in Brandon. As a threshold matter we note that in
Brandon the attorney represented both the beneficiary of the estate and the personal
representative, presenting the question of whether this arrangement created an
impermissible conflict of interest.20 Therefore it is not clear whether that decision’s
description of the attorney’s duty would apply when the attorney does not represent
both parties. But in any event, the estate failed to apply this proposed standard to the
facts of this case; its opening brief analyzed the evidence solely under section 51(4) of
the Restatement. By failing to adequately explain how a standard for legal duty other
than section 51(4) applies to the evidence in this case, the estate waived this argument.21
We therefore focus our analysis on section 51(4).
              Section 51(4) of the Restatement provides that an attorney owes a
nonclient a duty of care and may be found liable for breaching that duty when and to
the extent that:

       18
              Id. at 557.
       19
              902 P.2d 1299, 1316 (Alaska 1995).
       20
              Id. at 1315.
       21
            See Sengupta v. Univ. of Alaska, 21 P.3d 1240, 1259 n.86 (Alaska 2001)
(argument waived for inadequate briefing).

                                            -9-                                        7683
               (a)   the lawyer’s client is a trustee, guardian, executor, or
                     fiduciary acting primarily to perform similar
                     functions for the nonclient;
               (b)   the lawyer knows that appropriate action by the
                     lawyer is necessary with respect to a matter within the
                     scope of the representation to prevent or rectify the
                     breach of a fiduciary duty owed by the client to the
                     nonclient, where (i) the breach is a crime or fraud or
                     (ii) the lawyer has assisted or is assisting the breach;
               (c)   the nonclient is not reasonably able to protect its
                     rights; and
               (d)   such a duty would not significantly impair the
                     performance of the lawyer’s obligations to the
                     client.[22]
Because these elements are in the conjunctive, the estate must establish all of them in
order to hold Wallace liable. 23
               As an initial matter, we address the estate’s argument that “the question
whether [a] duty was breached is generally not susceptible to summary judgment.”
Whether a duty was breached is not the relevant issue in this appeal. Instead we are
focused on whether a duty even existed. That question is susceptible to summary
judgment, even if the scope of a duty and whether the duty was breached are generally
not. 24

          22
             RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51(4) (AM.
L. INST. 2000).
          23
             Bachner Co. v. State, Dep’t of Admin., Div. of Gen. Servs., 468 P.3d 703,
708 n.13 (Alaska 2020).
          24
              Lynden Inc. v. Walker, 30 P.3d 609, 613 (Alaska 2001) (“While the
question whether a duty exists may be susceptible to summary judgment, questions
about the scope of a duty and whether the duty was breached are normally not
susceptible to summary judgment, ‘particularly so when the scope of the duty poses a
fact-specific question . . . .’ ” (quoting Guerrero v. Alaska Hous. Fin. Corp., 6 P.3d 250,
257 (Alaska 2000))).

                                           -10-                                      7683
              The estate’s assertion that Wallace owed estate beneficiaries a legal duty
is based on five actions by Nesbitt that Wallace allegedly failed to prevent or rectify:
Nesbitt’s alleged failure to maintain the Five-Plex; his alleged failure to pay tax on real
properties; his alleged failure to insure the Showboat property; his approval of the St.
Pierre claim; and his withdrawal of funds from the estate’s bank account. The superior
court granted summary judgment to Wallace because it concluded that the estate’s
evidence did not establish a genuine dispute of material fact on subsections (b) or (c).
It concluded that the evidence did not show that Wallace knew or had reason to know
that he was required to act to rectify or prevent a breach of fiduciary duty by Nesbitt.
It also concluded that Hester, the sole beneficiary of the estate at the time of the relevant
events, was reasonably able to protect her rights. We generally agree with the superior
court’s conclusions.
              1.     There is no genuine dispute that Hester was reasonably able to
                     protect her rights against most of Nesbitt’s alleged misdeeds.
              The evidence presented at summary judgment established as a matter of
law that Hester, the only beneficiary of the estate at the time of Nesbitt’s alleged
failures, was “reasonably able to protect [her] rights.” 25 There is no genuine dispute
that she was aware of the estate administration problems for which she faults Nesbitt
and Wallace, nor is there a genuine dispute that she was free from legal disability. And
the probate code gave her the ability to protect her rights. For these reasons, Wallace
did not owe her a duty of care.
              The comments to the Restatement indicate that a person who knows about
the fiduciary’s failings and is not under a legal disability is reasonably able to protect
the person’s rights. The Restatement’s example of a person unable to reasonably
protect her rights is “a beneficiary unable (for reasons of youth or incapacity) to manage

       25
             RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51(4)(c)
(AM. L. INST. 2000).

                                            -11-                                       7683
. . . her own affairs.”26 By contrast, “a beneficiary of a family voting trust who is in
business and has access to the relevant information has no similar need of protection by
the trustee’s lawyer.”27
             Hester fell into the latter camp. She sought to hold Wallace liable for
Nesbitt’s squandering the value of the Five-Plex, letting the insurance on the Showboat
lapse before it burned down, failing to pay property taxes, and approving the assertedly
fraudulent St. Pierre claim. But Hester was aware of all these problems and possessed
the legal capacity to appreciate them.         Hester herself raised allegations about
mismanagement of the Five-Plex in 2014, well before Wallace began representing
Nesbitt in October 2015. Hester was served with a petition in April 2015 stating that
neither the Showboat nor the Five-Plex had liability insurance. The petition also
explained that taxes were owed on at least two of the estate’s real properties — the
Showboat property and the Elim property. Finally, Hester was aware of the St. Pierre
claim by December 2015, because the superior court had informed Wallace of its
existence during a status hearing in which her counsel was present. In light of Nesbitt’s
alleged failures, Hester petitioned to remove him as personal representative on three
separate occasions. The fact that Hester received notice of Nesbitt’s missteps and took
legal action to rectify them indicates that she was both aware of the fiduciary’s failings
and possessed the legal capacity to respond.
             Moreover, the probate code gave Hester a reasonable ability to protect the
estate’s assets and with them her own interests. Under AS 13.16.275 Hester had the
ability to petition for an order “to secure proper performance of the personal
representative’s duty” upon showing that the “personal representative otherwise may
take some action that would jeopardize unreasonably” her interest in the estate. She

      26
             Id. § 51 cmt. h.
      27
             Id.

                                          -12-                                      7683
also could and did petition under AS 13.16.295 to remove Nesbitt as personal
representative. The estate argues that there are clearly “questions of fact whether the
beneficiary took steps to protect her interest,” but the argument misconstrues the legal
standard. The test does not turn on whether the beneficiary attempted to protect her
rights or even was successful in doing so. It turns on whether she was “reasonably able”
to protect her rights.28 The probate code provisions give interested parties a reasonable
ability to protect their rights in the estate. The estate did not present evidence that
Hester, the sole beneficiary of the estate at the time of the events in question, was under
a disability or otherwise incapable of protecting her rights. For that reason the superior
court did not err in granting summary judgment to Wallace against liability for the
alleged failings by Nesbitt described above.
             2.     Because it is undisputed that Wallace did not know or have
                    reason to know that Nesbitt was withdrawing funds from the
                    estate’s bank account, Wallace had no duty to prevent or
                    rectify these withdrawals.
             A different analysis applies to Wallace’s alleged liability for Nesbitt’s
withdrawals of funds from the estate’s bank account. It is not entirely clear from the
record whether Hester knew that Nesbitt was making these withdrawals in time to
prevent them. But it is undisputed that Wallace did not know about the withdrawals
either. Nor did he have reason to know about them. Therefore Wallace had no legal
duty to prevent them.
             A lawyer representing a fiduciary may have a duty to a nonclient if the
lawyer “knows that appropriate action by the lawyer is necessary . . . to prevent or
rectify the breach of a fiduciary duty owed by the client to the nonclient, where (i) the
breach is a crime or fraud or (ii) the lawyer has assisted or is assisting the breach.”29
For purposes of this standard, “knows” means “having actual knowledge or,

      28
             Id. § 51(4)(c).
      29
             Id. § 51(4)(b).

                                           -13-                                      7683
alternatively, ‘reason to know.’ ” 30 “Reason to know” is further defined as having
“information from which a person of reasonable intelligence or of the superior
intelligence of the actor would infer that the fact in question exists.” 31 In Pederson we
observed that the Restatement “takes care to distinguish ‘reason to know’ from ‘should
know.’ ”32 “Should know” entails “a duty to inquire and determine new facts.”33
“Reason to know” is a “less onerous standard” that involves only “drawing inferences
from known facts.”34
              Even when all inferences are drawn in the estate’s favor, the evidence does
not show that Wallace had “reason to know” that Nesbitt was withdrawing funds from
the account. Nesbitt testified at his deposition that he was the only person with authority
to withdraw funds from the estate’s account. He testified that none of the attorneys he
hired while serving as personal representative had authority to deposit or withdraw
money from the account. In an affidavit Wallace attested that he advised Nesbitt not to
spend any estate funds without court order or party agreement. Wallace also attested
that he did not have access to the estate’s bank account and did not know that Nesbitt
had withdrawn funds in 2017.
              The estate’s evidence does not refute these statements or otherwise create
a genuine dispute about whether Wallace knew or had reason to know of the
withdrawals. In support of its assertion that Wallace had reason to know Nesbitt would

       30
          Pederson v. Barnes, 139 P.3d 552, 557-58 (Alaska 2006) (citing
RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51 cmt. h (AM. L. INST.
2000)).
       31
            Id. (citing RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS §
51 cmt. h (AM. L. INST. 2000)).
       32
              Id. at 558.
       33
              Id.
       34
              Id.

                                           -14-                                      7683
drain the estate’s account,35 the estate lists certain facts about the proceedings: that the
superior court had denied Hester’s requests to remove Nesbitt as personal
representative; that the court told Wallace that Nesbitt had accepted the St. Pierre claim;
and that Wallace “could not get a full inventory and appraisement because he could not
control his client.” Yet none of these facts, individually or together, gave Wallace
reason to know that Nesbitt would later make unauthorized withdrawals from the
estate’s bank account. 36
              The estate’s citation to log notes of hearings in 2015 and 2016, well before
the withdrawals took place in 2017, is equally unavailing. These log notes do not
support any inference that Nesbitt was intending to make withdrawals from the account
or that Wallace knew of that intent. The first hearing cited was in October 2015; it
lasted six minutes. Neither Nesbitt nor Wallace was present, and the main topic
discussed was a request that the court send notice to the parties of an Order to Show
Cause hearing. At the next hearing cited, in December 2015, the parties discussed a lis
pendens that had been placed on the Five-Plex, and Wallace agreed to furnish all parties
with an interim accounting of the estate assets.         No parties mentioned anything
regarding Nesbitt withdrawing funds or spending estate money. At the third hearing
cited, in January 2016, Wallace stated that he had advised Nesbitt not to spend any
money from the estate’s account without either a court order or agreement of all parties.
Even when all inferences are drawn in the estate’s favor, none of this evidence supports

       35
              The estate’s brief contains a single section describing facts that preclude
summary judgment, so it is not entirely clear whether the estate is describing these facts
in support of its assertion that Hester attempted to protect her rights or in support of its
assertion that Wallace had reason to know that Nesbitt would withdraw money from
the estate’s account. We read the estate’s brief to make both points.
       36
              The estate also emphasizes that the superior court “correctly concluded
that Nesbitt breached his fiduciary duty.” But the court’s characterization of Nesbitt’s
actions has little bearing on what Wallace knew or had reason to know years earlier at
the time of the relevant events.

                                           -15-                                       7683
the inference that Wallace knew or had reason to know that Nesbitt would later drain
the estate’s bank account.37
              The facts of this case resemble an illustration in the Restatement
commentary showing when the lawyer has no duty to a nonclient. 38 In this illustration
the client, a trustee, told the lawyer that he was planning to transfer trust funds into the
trust account. 39 But the client actually transferred the funds into his own personal
account.40 Even though the lawyer “could have exercised diligence” and upon “further
investigation” discovered that “appropriate action was necessary to prevent a breach of
fiduciary duty by [c]lient,” the lawyer did not have a duty of care to the beneficiary
because the lawyer did not know or have reason to know of the client’s intended
breach.41 According to the Restatement, Wallace was permitted to “assume in the
absence of contrary information” that Nesbitt was complying with the law after Wallace

       37
             In oral argument before the superior court, the estate conceded that it had
no evidence that Wallace knew Nesbitt was taking money out of the account in 2017:
              MR. YOUNG: . . . [B]etween January of 2017 and
              September of 2017, I forget how many withdrawals there
              were but there was over $50,000 taken out of that account.
              THE COURT: And that was done by Mr. Nesbitt?
              MR. YOUNG: True.
              ....
              THE COURT: Do you have any evidence that Mr. Wallace
              knew what Mr. Nesbitt was doing?
              MR. YOUNG: I don’t think so, Your Honor. I hope he
              didn’t know.
       38
              RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 51 cmt. h,
illus. 6 (AM. L. INST. 2000).
       39
              Id.
       40
              Id.
       41
              Id.

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had advised Nesbitt not to withdraw funds from the estate’s account. 42 The estate does
not point to evidence showing that Wallace had “reason to know” that Nesbitt would
not follow this advice. Although the estate argues that Wallace should have asked the
bank to notify him if Nesbitt made withdrawals, Wallace did not have a duty to inquire
and determine new facts under the “reason to know” standard in Restatement
section 51(4).43 For that reason, the superior court correctly concluded that the estate
failed to establish that Wallace had a duty of care to beneficiaries of the estate.
Summary judgment was proper.
V.    CONCLUSION
             We AFFIRM the superior court’s grant of summary judgment to Wallace.

      42
             Id. § 51 cmt. h.
      43
             Id.

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