Concurring: H. Joseph Coleman, Marlin J Appelwick
UNPUBLISHED OPINION
Shirl Firchau appeals the summary dismissal of her claims against attorney Allen Lane Carr for legal malpractice and for breach of his fiduciary duty as trustee under the will that Carr drafted in 1974 for Shirl's mother, Bobbie Firchau. Shirl argues that Carr's allegiance to his longtime client Albert Firchau, Bobbie's husband, created an irreconcilable conflict of interest, which led Carr to negligently draft Bobbie's will and to fail in his duties as trustee for a trust created by the will. Because Shirl's claims are barred by the statute of limitations, we affirm the trial court's grant of summary judgment to Carr.
FACTS
On April 9, 1975, Bobbie Firchau asked Allen Lane Carr to prepare her will. Carr had represented Bobbie's husband Albert Firchau for a number of years in various business transactions. Carr had also represented Albert in a divorce proceeding filed by Bobbie in 1974, which was dismissed three months later after the parties reconciled. Nevertheless, according to Carr, he and Bobbie were friends, and she sometimes dropped by his office to talk. When Bobbie asked Carr to draft her will, Carr recommended that Bobbie consult a tax attorney for estate planning advice, but she declined.
Carr also stated that he and Bobbie discussed any potential conflict of interest arising from his representation of Albert, but Bobbie still wanted Carr to draft her will. Carr stated that Bobbie also gave him permission to speak with Albert about the will, and that he obtained verbal authorization from Albert to proceed. Carr admits that he did not ask for or obtain written consent from Albert or Bobbie regarding the potential conflict of interest.
Carr maintains that Bobbie insisted on appointing him as executor of the will, even though Carr advised Bobbie that Albert had the statutory right to become administrator regardless of who she named in the will. In addition, Bobbie directed that her share of the estate be put in a trust for the benefit of Albert and their seven children, with Carr to serve as trustee and to have absolute discretion to distribute trust assets to her husband and/or the children as Carr deemed fit and proper, with due regard to the economic, health and general welfare of each of the beneficiaries. Accordingly, Carr included the following language in Bobbie's will:
I hereby give, devise and bequeath my entire estate to ALLEN LANE CARR, as Trustee, for the benefit of my husband and children heretofore named. The Trustee shall have the absolute discretion to distribute any of the assets to the above named husband and/or children as in his discretion seems fit and proper, with due regard to the economic, health and general welfare of each said person. Clerk's Papers at 416.
Bobbie signed the will in the presence of two witnesses, John A. McGary and Lark Baxter. Both witnesses had known Bobbie for a number of years. McGary, an attorney whose law office was located next door to that of Carr, later testified that he thought Bobbie understood Carr's recommendations and concerns, and that Carr drafted the will just as Bobbie had directed.
Bobbie Firchau died in September 1976. By this time, Carr no longer represented Albert Firchau. He delivered Bobbie's will to Albert's attorney, and her will was filed for probate approximately one month later. As expected, Albert exercised his statutory right pursuant to RCW 11.76.080 to become administrator of Bobbie's estate. An order of solvency was entered and Albert obtained nonintervention powers. Shirl was 13 years old at the time of her mother's death. Shirl was not informed of the will or the circumstances of its preparation at that time.
In January 1979, the court appointed attorney Robert Beezer to serve as guardian ad litem for the four Firchau children who were still minors, including Shirl. In July 1979, Beezer filed a first report and petition of guardian ad litem. He asked the court to construe the validity of Bobbie's will and the trust contained therein, because Albert had indicated that he might try to void the will and trust in order to become the sole beneficiary of the estate. The court ruled that the will and trust were valid. Beezer also asked the court to remove Albert as personal representative because of alleged commingling of estate funds with after-acquired assets, but the court declined to do so. Beezer further requested that Carr either accept or decline his appointment as trustee. Carr accepted, and qualified as trustee in October 1979.
In February 1981, Beezer filed a second guardian ad litem report, again requesting Albert's removal as administrator. Beezer also noted that Carr, as trustee, had not yet advised him of any steps taken to compel Albert to make a partial distribution of Bobbie's estate to the trust. This time, the court removed Albert and appointed Rainier National Bank to replace him as administrator of the estate. But Albert refused to relinquish control, and transferred estate property without notifying Rainier Bank or providing a proper accounting.
On October 9, 1981, Shirl turned 18 years of age.
In September 1984, Rainier Bank filed an interim accounting report, to which Albert objected. After two weeks of hearings on the report, in March 1985, Albert proposed settling the estate. The hearings were recessed to permit negotiation of a settlement. The active parties to the negotiation were Albert, Rainier Bank through its attorneys in the probate proceeding, the trustee Allen Carr through his attorney David Olwell, and two of the older Firchau children, Dana and Bentli, through their attorneys. Shirl, then age 22, and her older sister Leslie were not represented by counsel but they nevertheless signed the stipulation and settlement agreement that the active participants had negotiated. The 1985 stipulation and agreement, which the probate court approved on April 17, 1985, are not part of the record for this appeal, but portions of the documents are found in this court's unpublished opinion in the appeal by which Shirl eventually succeeded in getting the settlement agreement set aside. As reported in that opinion, the stipulation contained the following clause:
Dana, Bentli and the children have entered into agreements for the transfer of their interests in the estate to {Albert J. Firchau}. {Rainier National Bank} and the estate are not parties to the agreements which provided in part:
Each of the children shall be paid the sum of $95,770.00, which sum is the same as their respective shares of the Estate as set forth in the Federal Estate Tax Return, Form 706; provided, however, that Dana and Bentli shall be paid an additional sum of $39,230.00, each, because of their and their attorneys' involvement. Payment shall be made as promptly as possible. In re the Estate of Bobbie J. Firchau, Deceased, Shirl Lee Firchau and Leslie Firchau, Appellants, v. Rainier National Bank, Estate of Bobbie J. Firchau, and Allen L. Carr, Respondents, No. 19290-6-I, filed January 6, 1989, Slip Opinion at 2-3.
Notwithstanding the payment provisions contained in the above clause, the agreement transferring Shirl's and Leslie's shares of the estate to Albert actually read:
(1) Albert J. Firchau will pay each of the said children the sum of $95,770.00 as and for each of his or her full inheritance and expectancy under the provisions of the Testamentary Trust. Payment shall be as follows: $10,000.00 in cash and a Promissory Note ('Note') in the sum of $85,770.00, payable at the rate of $2,000.00 or more per month, including interest thereon at the rate of ten percent (10%) per annum. Payments shall commence sixty (60) days following the appointment of Albert J. Firchau as nonintervention administrator, with payment in full on or before the end of two (2) years from the date of such appointment. Id., Slip Opinion at 3.
Albert paid Shirl and Leslie $10,000 in cash, each, and paid Leslie one $2,000 installment, but made no other payments. Nevertheless, in November 1985, Shirl and Leslie signed a release of Rainier Bank and its attorneys, and in February 1986 they signed a formal assignment of their interests in the estate to Albert. The release of Rainier Bank is not in the record. The portion of the release that is quoted in the Slip Opinion above referenced makes no mention of Allen Carr. See Slip Opinion at 5, n.7.
In any event, after all of the Firchau children settled with their father, the probate court terminated the testamentary trust, thereby ending Carr's status as trustee, on May 23, 1985.
Albert Firchau died in June 1986. Soon thereafter, Shirl and Leslie sought to vacate the stipulation with the bank and the settlement agreement with Albert, and as indicated above, they eventually succeeded in doing so, through the above-referenced appeal to this court, on the basis that they were coerced into signing the settlement agreement by their overbearing father, Albert Firchau. John A. Hackett, attorney for Shirl and Leslie, sent a letter to Carr's former attorney in the probate proceeding, David Olwell, specifying that Shirl and Leslie 'disavow and rescind any and all agreements, stipulations and/or releases' purporting to release their interest in Bobbie's estate, citing a variety of factors including undue influence, duress, coercion, and breach of fiduciary duty. The long and detailed letter also stated Shirl and Leslie's disavowal of any agreement purporting to 'discharge and/or release the trustee of said testamentary trust from the trustee's duties and responsibilities.' There was nothing in the letter suggesting that Hackett was aware of the court order terminating the trust and Carr's role as trustee. Carr maintains that he never received the letter until sometime after the instant lawsuit was filed.
Although Carr was a named respondent in the aforementioned appeal to this court, the Slip Opinion for the appeal indicates that only Rainier Bank responded to the appeal. Following this court's remand, Shirl's and Leslie's claims remained open until 1993 when Shirl and Leslie settled with the Bank for $135,000 and entered into a stipulation and order of dismissal with prejudice of all claims regarding Bobbie's estate as against the Bank.
Carr indicates that their claims remained open until 1993, when Shirl accepted $135,000 from the Bank in exchange for entering into a stipulation and order of dismissal with prejudice of all claims regarding Bobbie's estate against the Bank, the Estate, and Allen L. Carr. The stipulation and order of dismissal were signed on behalf of the Bank, the estate, and Allen L. Carr by attorney John T. John. Carr explains that he knew nothing of this until much later, and that attorney John was representing him under a hold-harmless agreement given by the estate at the time that Carr was released as trustee.
In 1999, despite the terms of the stipulation and release, Shirl and Leslie filed suit against the Bank alleging breach of fiduciary duty based on criminal acts that were not released. The trial court granted summary judgment to the Bank and imposed CR 11 sanctions against Shirl and Leslie. On appeal, this court affirmed the trial court in an unpublished opinion. Firchau v. Bank, 2001 WL 746460, July 2, 2001 (Wash. App. Div. 1).
In February 1999, at or about the same time that they sued the Bank, Shirl and Leslie also filed this lawsuit against Carr. There were a series of delays, and Carr was not able to take Shirl's deposition until April 2000. At that time, Carr asked Shirl whether she had filed any suits or made any claims against others in this matter, and Shirl said that she had not. However, Carr subsequently discovered that Shirl and Leslie had in fact filed a suit against the Bank at the same time as the suit against Carr. Carr moved for summary judgment, which the trial court granted. Shirl appeals.1
DISCUSSION
An order of summary judgment is reviewed de novo, with the appellate court engaging in the same inquiry as the trial court. Enterprise Leasing, Inc. v. City of Tacoma, 139 Wn.2d 546, 551, 988 P.2d 961 (1999). Summary judgment should be granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Kuhlman v. Thomas, 78 Wn. App. 115, 119, 897 P.2d 365 (1995). The court must consider all facts and reasonable inferences in favor of the nonmoving party. Scott v. Blanchet High School, 50 Wn. App. 37, 42, 747 P.2d 1124 (1987). Summary judgment should be affirmed only if reasonable minds could reach but one conclusion. Id.
The essence of Shirl's argument is that Carr committed legal malpractice when he prepared Bobbie's will despite the conflict of interest engendered by his longstanding attorney-client relationship with Albert, particularly with respect to the divorce proceeding.2 Shirl argues that this conflict of interest is especially egregious where Carr drafted a will that placed all of Bobbie's property in a trust and named himself executor and trustee with full and unfettered discretion to dispense the property as he pleased, thereby allowing Carr to favor Albert's interests over that of the Firchau children. Shirl also contends that the vague, inartfully drafted trust directly led to the long, bitter litigation between Albert, the children, and the Bank that ultimately drained the trust to pay legal fees. She also blames her father's death upon the stress and strain of years of litigation that she attributes to the terms of the testamentary trust. Shirl also contends that Carr breached his fiduciary duty as trustee by failing to look out for the Firchau children's interests and failing to ensure that they received any money from the trust.
Carr correctly argues that Shirl's claims against him for legal malpractice are barred by the statute of limitations. The statute of limitations for attorney malpractice is three years. RCW 4.16.080(3); French v. Gabriel, 116 Wn.2d 584, 595, 806 P.2d 1234 (1991). Under the 'discovery rule,' the statute of limitation for legal malpractice does not run until the client discovers, or in the exercise of reasonable diligence should have discovered, the facts giving rise to the cause of action. Peters v. Simmons, 87 Wn.2d 400, 405, 552 P.2d 1053 (1976).
This rule does not require that a plaintiff have knowledge of the cause of action itself; rather, only the 'facts' that give rise to that cause of action must be known to start the running of the statute. Still, the facts supporting each of the essential elements of the cause of action duty, breach, causation, and damages in a malpractice action must be known before the statute begins to run. Janicki Logging & Constr. Co., Inc. v. Schwabe, Williamson & Wyatt, P.C., 109 Wn. App. 655, 659-60, 37 P.3d 309 (2001) (citations omitted).
To establish a claim for legal malpractice a non-client plaintiff must prove the following elements: (1) the existence of an attorney-client relationship which gives rise to a duty of care to the plaintiff, (2) an act or omission by the attorney in breach of the duty of care, (3) damage to the plaintiff, and (4) proximate causation between the attorney's breach of duty and the damage incurred. Hizey v. Carpenter, 119 Wn.2d 251, 260-61, 830 P.2d 646 (1992).
The undisputed facts in this case demonstrate that, in the exercise of due diligence, Shirl either knew or could have easily discovered the facts giving rise to her cause of action many years ago. First, simply by looking at the will, Shirl would have known or easily could have ascertained that Carr drafted the will and that she was a beneficiary of the trust, thereby arguably giving rise to a legal duty.3 Second, the will plainly revealed that Carr was named as executor and trustee with absolute discretion over disbursements of trust assets. Regarding the third and fourth factors, the damages allegedly arising from the form of the trust and Carr's conduct were readily apparent, in that Albert and the Firchau children fought over the estate until it was drained to pay legal fees, and Shirl was a party to the litigation, in person rather than through her guardian ad litem, from the time she reached adulthood until 1993 when she finally settled with the Bank.
Shirl argues that she could not have known about Carr's negligence in drafting the will until he informed her of his interpretation of the will when she called him in late 1997 and he told her that she was not an heir to her mother's estate but only a beneficiary of the trust. However, Carr's personal interpretation of the will is not a component of Shirl's legal malpractice claim. Moreover, the fact that Shirl discovered Carr's point of view by simply picking up the phone and calling him indicates that such facts were readily discoverable in the exercise of due diligence.
Clearly, Shirl had long been suspicious of Carr. In 1986, Shirl's lawyer wrote a letter to Carr detailing Shirl's repudiation of the 1985 agreement with Albert, Carr's possible involvement, and Shirl's disavowal of any intention to release Carr from liability. Shirl and Leslie then filed suit to repudiate the agreement with Albert and to reassert their claim in Bobbie's estate, naming Carr as a party to that suit. In order to file that claim, they must have known of the existence and terms of Bobbie's will. They would have observed that Carr drafted the will, and that he was named as both executor and trustee. They would have noticed that the trust gave Carr complete discretion to distribute funds from the estate to Albert or the children as he saw fit, and that the vague terms of the trust as drafted by Carr arguably led to the years of litigation. If this was not enough to raise a red flag, in 1993 Shirl and Leslie were directly involved in the stipulation and release of all their claims regarding Bobbie's estate, including their claims against Carr as trustee. Viewing the facts in the light most favorable to Shirl, the nonmoving party, and even assuming that Shirl did not reasonably discover her cause of action against Carr until 1993, the three-year limitations period would have run in 1996, and Shirl did not file her claim against Carr until February 1999.
Accordingly, we cannot reach the merits of Shirl's claim legal malpractice claim.
Shirl's claims against Carr for breach of his fiduciary duty as trustee are also plainly barred by the three-year statute of limitations. Under former RCW 11.96.060,4 any action against a trustee must be brought within three years from the time the alleged breach was discovered or reasonably should have been discovered, whichever is earlier. There can be no doubt that Shirl has long known of facts which might give rise to a cause of action for breach of fiduciary duty as trustee. Indeed, in 1993, Shirl entered into a settlement agreement with Carr and the Bank in which she stipulated to the dismissal of all claims asserted regarding Bobbie's estate, including her claims against Carr. Shirl was represented by counsel in that action. She either knew or should have known about Carr's actions or omissions with respect to his duties as trustee.
Because Shirl's claims are barred by the statute of limitations, we need not reach the remainder of the arguments advanced by the parties. We affirm the trial court's grant of summary judgment to Carr.
1. Leslie Firchau is not a party to this appeal.
2. Shirl also asserted in her complaint that Carr forged Bobbie's name on the will. However, she abandoned this claim on appeal because she concedes that she has no proof to back up her claim.
3. Although the will did not explicitly state that Carr drafted it, he did sign it in his capacity as notary public.
4. RCW 11.96.070 was repealed in 1999, and the statute was recodified as RCW 11.96A.070.