Court Opinion

ID: 4355373
Source: CourtListenerOpinion
Date Created: 2018-12-31 21:37:14.688011+00
Date Added: 2024-06-11T07:49:43.255039
License: Public Domain

J-A18006-18

                                  2018 PA Super 358

    THE ESTATE OF PHILIP F. YOUNG AND                      IN THE SUPERIOR COURT
    BRINTON YOUNG, INDIVIDUALLY AND                           OF PENNSYLVANIA
    AS EXECUTOR OF THE ESTATE OF
    PHILIP F. YOUNG,

                             Appellant

                        v.

    ROBERT LOUIS, ESQUIRE AND SAUL
    EWING LLP

                             Appellee                         No. 2898 EDA 2017

                  Appeal from the Order Dated August 2, 2017
              In the Court of Common Pleas of Philadelphia County
                Civil Division at No.: June Term 2015 No. 01733

BEFORE: STABILE, J., STEVENS, P.J.E.*, and STRASSBURGER, J.**

OPINION BY STABILE, J.:                                  FILED DECEMBER 31, 2018

        Appellant    Brinton    Young,         both   individually   and   as   personal

representative of the Estate of Philip F. Young, appeals from an order granting

summary judgment in this legal malpractice action in favor of Appellees Robert

Louis, Esquire, and Saul Ewing LLP. Appellant argues that Appellees’ negligent

preparation of estate documents prevented him from receiving all assets that

Philip Young intended him to receive from Philip’s trust. We affirm.

        The trial court accurately summarized the factual and procedural history

as follows:

____________________________________________

*   Former Justice specially assigned to the Superior Court.
**   Retired Senior Judge assigned to the Superior Court.
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     The material facts of this case are undisputed. There are three
     purported testamentary instruments at issue: Philip F. Young’s
     executed 1951 revocable deed of trust (“the Trust” and “the Trust
     instrument”), his executed 2006 will (“the Will”), and an
     unexecuted 2007 Trust amendment (“Draft Amendment”).

     On January 30, 1951, Philip executed a revocable deed of trust
     designed to hold and manage his extensive portfolio of
     Pennsylvania coal lands, to manage the income and profits those
     lands generated, and to distribute those assets at the time of
     Philip’s death. The Trust instrument states in relevant part:

        Settlor reserves the right to revoke or amend this trust in
        whole or in part at any time and from time to time by written
        instrument delivered to Trustee in the lifetime of Settlor.
        Trustee shall deliver to Settlor absolutely and free of trust
        any assets withdrawn by revocation . . . Upon the death of
        Settlor Trustee shall grant and convey, divide, assign,
        transfer, and pay over the principal held hereunder to and
        among the persons who would then be entitled to receive
        the same under the intestate laws of the Commonwealth of
        Pennsylvania then in effect if Settlor had then died intestate
        seised and possessed of the same . . . .

     It is undisputed that, other than a 1951 amendment empowering
     the trustee to appoint an attorney-in-fact to manage certain
     assets, Philip never executed any amendments to the Trust. Philip
     never married or had any known children during his lifetime.
     Philip’s nephew and niece Brinton and Carolina Young were born
     after the execution of the Trust instrument. At the time of Philip’s
     death, the Trust held approximately 90% of his assets.

     On October 13, 2006, Philip executed his sole Will that had been
     drawn up on his behalf by Ewing attorneys. The Will contains
     three provisions relevant to our purposes: first, bequeathing
     Philip’s tangible personal property to Brinton; second,
     bequeathing the historic family homestead Windy Hill to Brinton
     “with the hope that he preserves it;” and third, bequeathing any
     and all residue of Philip’s estate to Brinton and/or to Brinton’s
     issue, per stirpes. Brinton is the sole named beneficiary of the
     Will.

     The parties in this case agree that Ewing attorneys drew up the
     Draft Amendment to the Trust at some point prior to their meeting

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     with Philip on February 7, 2007. The Amendment would have
     removed the Trust beneficiary class and instituted Brinton as the
     sole beneficiary. For whatever reason, Philip never signed or
     executed this Amendment.

     Philip died on June 17, 2013. Since the Draft Amendment was
     never executed, the 1951 Trust terms still controlled, so the Trust
     assets were equally distributed among all would-be intestate
     heirs. The only two qualifying individuals were Brinton and
     Caroline, so each received half: $3,149,406.50 each.           This
     represented the vast majority of Philip’s assets.

     As stated above, the Will named Brinton Philip’s sole heir and
     appointed him executor of the estate. Under the Will, Brinton
     received Philip’s personal assets, his residue, and the real property
     Windy Hill. As to Windy Hill, the Will stated, “I give our family
     homestead known as Windy Hill to my nephew BRINTON YOUNG,
     with the hope that he preserves it.” The Will does not include any
     bequests to Caroline.

     Brinton believes that Philip’s true testamentary intent was to leave
     all his assets under the Will and Trust to Brinton, so that Brinton
     could maintain and preserve Windy Hill. However, Brinton alleges,
     the Will assets are woefully insufficient to cover the costs of
     preservation work. Brinton argues that Philip had not realized the
     Trust controlled most of his assets when he executed the Will; had
     Philip’s attorneys advised him of this, Philip allegedly would have
     amended the Trust instrument so that Brinton would receive both
     the property and all Philip’s money. Brinton therefore argues that
     Ewing attorneys caused the frustration of Philip’s testamentary
     intent when they failed to ensure that he executed the Draft
     Amendment.

     For these reasons, Brinton sued Ewing, raising breach of contract
     and legal malpractice claims both as an individual and as executor
     of Philip’s estate.

     On May 1, 2017, Ewing moved for summary judgment, arguing
     that (1) Brinton lacked standing to sue individually as a third-party
     beneficiary of the legal services contract between Philip and
     Ewing; (2) Brinton has no standing to sue individually for legal
     malpractice; (3) Philip’s estate does not have standing to sue on
     the basis of an asset it no longer owns; (4) there is no basis for
     recovery on behalf of the estate because it did not suffer any

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     cognizable harm; and (5) an estate-planning attorney is not
     required to ensure that the existence of the client’s testamentary
     assets when drafting a testamentary instrument.             Brinton
     responded that he had standing to sue Ewing as a third-party
     beneficiary of the legal services contract between Ewing and
     Philip, because the Will clearly evidences Philip’s intent to make
     Brinton a named Trust beneficiary. Furthermore, he argued that
     the estate suffered harm because Philip’s testamentary wishes
     were not fulfilled.

     On August 2, 2017, this [c]ourt issued an Order granting summary
     judgment in favor of Ewing. The Order included an explanatory
     footnote regarding the hotly-contested interpretation of the recent
     Supreme Court case[,] Agnew v. Ross, 152 A.3d 247 (Pa. 2017)
     (analyzing third-party beneficiary standing of would-be devisees
     to sue for breach of legal services contract) and stating that it
     found, under Agnew, that Brinton lacked individual standing to
     sue for breach of contract and legal malpractice. It furthermore
     stated that his remaining claims (on behalf of Philip’s estate) failed
     for lack of damages. On August 14, 2017, Brinton moved for
     reconsideration. On August 28, 2017, this [c]ourt denied the
     reconsideration motion. This timely appeal followed.

Pa.R.A.P. 1925 Opinion, at 1-5.

     Appellant raises the following issues in this appeal:

     1. Did the trial court err as a matter of law in granting summary
     judgment where Pennsylvania law accords standing in malpractice
     actions to named legatees whose legacies fail due to attorney
     negligence?

     2. Did the trial court err as a matter of law in granting summary
     judgment where Brinton is specifically named in Philip’s will, and
     where the circumstances demonstrate that Philip intended to
     leave Brinton “everything,” including the assets contained in his
     trust, for the purpose of maintaining his ancestral home, Windy
     Hill?

     3. Did the trial court err as a matter of law in granting summary
     judgment where the evidence demonstrates that the attorneys’
     negligence caused the assets contained in Philip’s trust to pass
     outside his will?

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      4. Did the trial court err as a matter of law in granting summary
      judgment where the facts are distinguishable from those in
      Agnew, and allowing Brinton to pursue his claim would advance
      the public policy goals of Agnew?

Appellant’s Brief at 4. Although Appellant states four questions, his position

reduces to three points, each of which we will consider below: (1) he has

standing to sue Appellees for malpractice; (2) he is entitled to prove standing

through extrinsic evidence; and (3) Philip’s Will signifies his intent for

Appellant to inherit the entire Trust.

      It is well-settled that

      [o]ur scope of review of a trial court’s order granting or denying
      summary judgment is plenary, and our standard of review is clear:
      the trial court’s order will be reversed only where it is established
      that the court committed an error of law or abused its discretion.

      Summary judgment is appropriate only when the record clearly
      shows that there is no genuine issue of material fact and that the
      moving party is entitled to judgment as a matter of law. The
      reviewing court must view the record in the light most favorable
      to the nonmoving party and resolve all doubts as to the existence
      of a genuine issue of material fact against the moving party. Only
      when the facts are so clear that reasonable minds could not differ
      can a trial court properly enter summary judgment.

Hovis v. Sunoco, Inc., 64 A.3d 1078, 1081 (Pa. Super. 2013) (quoting

Cassel-Hess v. Hoffer, 44 A.3d 80, 84-85 (Pa. Super. 2012)). Moreover,

“[w]here the non-moving party bears the burden of proof on an issue, he may

not merely rely on his pleadings or answers to survive summary judgment.”

Krauss v. Trane U.S. Inc., 104 A.3d 556, 563 (Pa. Super. 2014). “Failure

of a non-moving party to adduce sufficient evidence on an issue essential to

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his case and on which he bears the burden of proof establishes the entitlement

of the moving party to judgment as a matter of law.” Id.

      Appellant’s first argument boils down to the following.            Appellees

represented Philip—not Appellant—in connection with preparation of Philip’s

Will and Trust. Appellant received everything he was entitled to receive under

Philip’s Will, i.e., all of Philip’s personal property, the Windy Hill residence and

a residue. Appellant also received $3,149,406.50 from Philip’s Trust, half of

the trust’s assets. Yet according to Appellant, this was not enough. He claims

that Philip intended him to receive all Trust assets, but Appellees negligently

failed to amend the Trust to mirror Philip’s intent. Thus, Appellant contends,

he has standing individually to sue Appellees for negligence as an intended

third-party beneficiary of the Trust.

      Appellant’s argument requires analysis of two decisions from our

Supreme Court: Guy v. Liederbach, 459 A.2d 744 (Pa. 1983), and Agnew.

Guy held that plaintiff Guy, expressly named as an heir in an executed will,

stated a cause of action for breach of contract against the lawyer who drafted

the will, where the signed will was later declared invalid because Guy herself

witnessed the testator’s signature, at the lawyer’s direction, in violation of

then-applicable New Jersey law. The Court adopted Restatement (Second) of

Contracts § 302 in determining that Guy had standing to make such a claim

as an intended third-party beneficiary of the contract for legal services

between the testator and his lawyer. Id. at 757. The Court utilized Section

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302’s framework to devise a two-part test for determining whether a person

is an intended third-party beneficiary of a contract between others, such that

the third party may enforce the contract: (1) the recognition of the

beneficiary’s right must be “appropriate to effectuate the intention of the

parties,” and (2) the performance must “satisfy an obligation of the promisee

to pay money to the beneficiary” or “the circumstances indicate that the

promisee intends to give the beneficiary the benefit of the promised

performance.” Id. at 751. The first part of the test sets forth a standing

requirement, which restricts application of the second part of the test, “which

defines the intended beneficiary as either a creditor beneficiary (§ 302(1)(a))

or a donee beneficiary (§ 302(1)(b)).” Id. The Court applied this test to hold

that a third party to a legal services contract has standing to bring an action

against the testator’s lawyer to enforce a failed legacy where “the intent to

benefit [the third party] is clear and the promisee (testator) is unable to

enforce the contract.” Id. at 747. The Court expressly overruled prior case

law requiring privity in such cases. Id. at 751.

      Guy taught that in order for a plaintiff to have standing as a third-party

beneficiary to the contract of others, her right to performance must be

“appropriate to effectuate the intentions of the parties,” and the “standing

requirement leaves discretion with the trial court to determine whether

recognition of third-party beneficiary status would be appropriate.” Id. The

Court made clear that the relevant underlying contract on which the plaintiff

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is suing “is that between the testator and the attorney for the drafting of a

will. The will, providing for one or more named beneficiaries, clearly manifests

the intent of the testator to benefit the legatee. . . . Since only named

beneficiaries can bring suit, they meet the first step standing requirement of

§ 302.” Id. The will naming the plaintiff was signed by the testator, and

therefore an order allowing the plaintiff to enforce the contract between the

testator and his lawyer would “effectuate the intentions of the parties.” Id.

      Ultimately, Guy held that the plaintiff had standing to pursue her claim

against the drafting attorney because she was named in an executed will that

was made invalid only through the drafting attorney’s clear error regarding

the applicable law relating to witnesses. The Court specifically held “persons

who are named beneficiaries under a will and who lose their intended legacy

due to the failure of an attorney to properly draft the instrument should not

be left without recourse or remedy[.]” Id. at 752.

      With respect to Agnew, as of 2010, Robert Agnew had a will that

“bequeathed specific gifts of cash and property to selected friends and family,

including [the plaintiffs], who are relatives of his late wife, and the residue of

his estate to [a revocable trust].” Id. at 249. Agnew also had a trust that

directed the assets should be used, first, to satisfy the balance of any legacies

in the will and, then, to fund scholarships at four colleges and universities,

with the residue going to three of those schools. After entering a hospice,

Agnew told his attorney “he wanted to limit the amounts going to charity and

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provide more funds to [plaintiffs].” Id. at 250. At Agnew’s instruction, the

attorney prepared a revised will and an amendment to the trust, which

“continued to provide for gifts of $250,000 to four colleges, but expressly

provided that the residue of the assets of the Revocable Trust was to be

distributed to [plaintiffs].” Id. In August 2010, Agnew signed the revised

will, but he did not sign the amendment to the trust because the attorney “did

not have a copy of that document with him at the time.” Id. Agnew died in

January 2011 without ever executing the amendment to the trust.              The

plaintiffs, who stood to benefit if Agnew had executed the amendment, sued

Agnew’s attorney, claiming that the attorney breached his contract to Agnew

and thus deprived them sums of money to which they were entitled under the

unexecuted amendment to the trust.

       The Supreme Court held that the plaintiffs lacked standing to sue the

attorney. The Court distinguished Guy on the ground that Guy involved an

“executed” testamentary document expressly identifying the plaintiff as a

legatee. Agnew, 152 A.3d at 259, 262, 264 (emphasis in original). The fact

that the testator signed his will “clearly express[ed] his intent to benefit [the

plaintiff].”   Id. at 262.   Thus, “to the extent the attorney has drafted

testamentary documents, which have been fully executed by the testator,

such documents are conclusive evidence the testator intended to benefit the

named beneficiaries.” Id. at 264. The trust in Agnew, on the other hand,

was unexecuted, and “the fact [the Agnew plaintiffs] were named as

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beneficiaries in the unexecuted 2010 Trust Amendment does not provide

them with standing to recover on a contract claim against [Agnew’s

attorney].” Id. at 259 (emphasis in original).

     Public policy considerations, the Court observed,

     weigh against allowing a party to use an unexecuted testamentary
     document to establish standing to sue the testator’s lawyer for
     breach of contract as a third-party beneficiary under Restatement
     Section 302. In adopting Section 302, the Guy Court recognized
     the potential consequences of relaxing the strict privity
     requirement, such as a possible reduction in the quality of legal
     services rendered to clients due to attorneys’ increased concern
     over liability to third parties . . . As a result, the Court did not
     eliminate the privity requirement for a negligence action,
     specifically stating third-party beneficiary standing should be
     narrowly tailored. Id. at 746, 751, 752 (observing “a properly
     restricted cause of action for third party beneficiaries in accord
     with the principles of [Section 302] is available to named
     legatees;” Section 302 “provides an analysis of third party
     beneficiaries which permits a properly restricted cause of action;”
     “the class of persons to whom the defendant may be liable is
     restricted by principles of contract law;” and “cases such as
     [Guy’s] who is a third party beneficiary, sound in [contract], and
     involve considerations more restrictive than [tort].”).” Moreover,
     Guy repeatedly referred to “named legatees” and “named
     beneficiaries” when describing potential claimants in a breach of
     contract action. 459 A.2d at 746, 749, 751, 752 (emphasis
     added). The reasons for doing so remain compelling, and may be
     even more compelling given advances in technology which freely
     enable duplication, manipulation and reproduction of documents
     and pieces of documents. Requiring an alleged heir to point to an
     executed testamentary document—expressly identifying him—
     before he may sue the testator’s lawyer for breach of a contract
     to which he was not a party serves to protect the integrity and
     solemnity of the testator’s bequests from fraudulent claims.
     Correspondingly, such a requirement lessens the chance a
     testator’s attorney will be required to pay a bequest the testator
     never intended to make in the first place.

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Id. at 262-63. The Court also reasoned that the “mercurial” nature of estate

planning counseled against “allowing would-be legatees to use extrinsic

evidence” such as an unexecuted trust or verbal communications “to establish

third-party beneficiary standing to bring a legal malpractice action.” Id. at

263.   The Court elaborated that extrinsic evidence of a testator’s intent is

untrustworthy

       where that legal agreement could have involved any number of
       possible testamentary permutations or potential beneficiaries, and
       ultimately required execution by the testator to validate those
       drafts. A testator may change an estate plan at any time, adding
       and subtracting legatees, increasing and decreasing bequests.
       Under such mercurial circumstances, we decline to confer
       standing to purported heirs to prosecute a breach of contract
       action against the testator’s attorney on the basis the attorney
       failed to ensure the testator signed the particular document
       making a potential bequest.

       We recognize that Agnew apparently verbally expressed, in 2010,
       a desire to benefit his late wife’s family more and to leave less to
       charity. [The attorney] drafted the 2010 Will which provided
       substantial bequests to various family members, including [the
       plaintiffs]. [The attorney] also drafted the 2010 Trust Amendment
       which provided [the plaintiffs] would receive the residue of the
       trust after all legacies provided for in the 2010 Will, and the five
       college scholarships, were funded. Agnew signed the 2010 Will,
       but did not sign the 2010 Trust Amendment, for reasons
       ultimately unknown and unknowable.            It is possible Agnew
       decided the bequests in his revised Will sufficiently benefitted [the
       plaintiffs] and the 2010 Trust Amendment was unnecessary. Or,
       Agnew could have forgotten about the 2010 Trust Amendment or
       mistakenly believed he had signed the document.

Id. at 263 (footnotes omitted).

       Presently, Appellant’s action suffers from the same defect as the

plaintiffs’ action in Agnew. Appellees represented Philip, not Appellant. Philip

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executed a will in 2006 naming Appellant the sole beneficiary and bequeathing

Windy Hill, Philip’s tangible personal property, and a residuary interest to

Appellant. In 2006 or early 2007, Appellees drafted an amendment to the

Trust that made Appellant the sole beneficiary of the Trust. Philip never signed

the amended Trust. As in Agnew, the fact that Appellant was named as sole

beneficiary in the unexecuted amended Trust does not give him standing to

sue Appellees. It also deserves mention that Appellant received everything

he was entitled to receive under the executed 1951 Trust and executed 2006

will. The law does not entitle him to anything more.

      Appellant’s reliance on Fortunato v. CGA Law Firm, No. 1:17-CV-

00201, 2017 WL 3129825 (M.D.Pa. July 24, 2017), is misplaced.                In

Fortunato, the decedent’s original will left his entire estate to his two

children, but he hired the defendant attorney to change his will. The attorney

prepared a revised will that left fifty percent of the residuary estate to one

child, twenty percent to the second child, and thirty percent to his

grandchildren. The attorney allegedly assured the decedent that Merrill Lynch

accounts worth $1.1 million were included in the residue.        The decedent

executed the revised will. Following the decedent’s death, however, it came

to light that the Merrill Lynch accounts were not part of the residue, because

they were “transfer on death” accounts to the two children in equal shares.

As a result, none of the Merrill Lynch accounts passed to the grandchildren’s

share of the residue. The grandchildren filed a malpractice action against the

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attorney, who filed a motion to dismiss the complaint.       The district court

denied the motion to dismiss, construing the grandchildren’s claim “as one

based on a failed legacy that passed outside the will” (a claim that the court

believed was cognizable under Guy) instead of “a claim that [the decedent’s]

true intent was to bequeath [the grandchildren] a greater legacy than that

afforded by the will.”     Id.at *5.    The district court determined that the

grandchildren had standing to sue due to the attorney’s “mistaken belief” that

the Merrill Lynch accounts fell within the residue. Id.

      Appellant argues that the present case resembles Fortunato because

it, too, arises from attorney negligence:

      [Appellee] Louis admits that he never reviewed or analyzed the
      assets in the Revocable Trust, and never discussed the Revocable
      Trust with Philip, even while conceding the relevancy of the
      Revocable Trust to Philip’s estate plan. Worse yet, while the
      evidence shows that [Appellee] Saul Ewing was aware no later
      than 1999 that over 90 percent of Philip’s assets were held in the
      Revocable Trust, and that maintaining Windy Hill required the bulk
      of Philip’s income from the Revocable Trust, Attorney Louis never
      advised Philip how his assets were allocated, and never advised
      Philip that the assets in the Revocable Trust were separate and
      distinct from those included in the Will.

Appellant’s Brief at 25. This negligence “resulted in an incoherent estate plan”

that failed to realize Philip’s “clear instruction to leave ‘everything’ to

[Appellant].” Id. at 26.

      Accepting the allegations in Fortunato as true, but without deciding

whether they establish third-party standing, we conclude that Fortunato is

distinguishable from the present case. The attorney in Fortunato negligently

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advised that the executed revised will matched the testator’s intent; in

reality, it did not. Here, in contrast, Appellees prepared an amended Trust

that did match Philip’s intent, but Philip never signed it.          Even more

importantly, under Agnew, Appellant lacks standing to sue Philip’s attorneys

for malpractice based on an unexecuted Trust.

      In his second argument, Appellant insists that extrinsic evidence

demonstrates that Philip intended to amend the Trust to make Appellant sole

beneficiary. Once again, this argument fails under Agnew, which prohibits

use of extrinsic evidence to establish third-party standing to bring a legal

malpractice action. Id., 152 A.3d at 263.

      Third, and finally, Appellant argues that Philip’s executed Will constitutes

evidence of his intention to leave Appellant the entire Trust. This, too, runs

aground under Agnew’s determination that “we do not consider [Agnew’s

2010 Will] as dispositive of [the plaintiffs’] right to sue [the attorney] for any

breach related to the Revocable Trust and its amendments.” Id. at 259. The

language of Philip’s Trust stands on its own, and as such, does not leave

Appellant the entire Trust.

      For these reasons, we affirm the order granting summary judgment in

favor of Appellees.

      Order affirmed.

      President Judge Emeritus Stevens joins the opinion.

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         Judge Strassburger files a concurring opinion in which Judge Stabile

joins.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 12/31/18

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