Federal Estate Planning Malpractice Case Dismissed for Lack of Privity in Florida

In Martin v. Sheehan (N.D. Fla. 2016), a federal estate planning malpractice case is dismissed because of the lack of “privity” between the plaintiff and the drafting attorney.

In this case Mr. Martin’s mother hired attorney Sheehan to draft a trust for her.  Mr. Martin was named as a beneficiary of the trust.  Subsequently, attorney Sheehan was involved in a change to the document pursuant to which a third person was named trustee of the trust.  Mr. Martin sued, claiming estate planning malpractice, under the theory that he should have been named trustee, not the third person.

Privity in Estate Planning Malpractice

In dismissing the case, the court focused on the necessity of a plaintiff and an attorney being in privity with one another.  In general, a person may not sue an attorney for estate planning malpractice, or any malpractice at all, unless that attorney represented the person.

Exception If Attorney’s Services Intended To Benefit The Person Suing

The narrow exception to the requirement of privity in estate planning malpractice is if the attorney’s services were intended to benefit that person.

As explained by the court:

Under Florida law, an attorney can be held liable for professional negligence–malpractice–to the attorney’s own client, that is, when there is privity. Further, in a “narrow exception” to the privity requirement, an attorney may, in appropriate circumstances, be held liable to a person the client specifically intended to benefit through the transaction at issue. See, e.g., Dingle v. Dellinger, 134 So. 3d 484, 487-90 (Fla. 3d DCA 2014). The most typical example of the “narrow exception” is a will or trust intended to transfer assets to a specific beneficiary. If the attorney negligently fails to have the will or declaration of trust properly witnessed or negligently omits property the settlor intended to include, the beneficiary may be able to recover against the attorney.

Mr. Martin claims that the trust instruments were properly drafted to make Mr. Martin a beneficiary and that a separate power of attorney–one in which Mr. Sheehan had no role–was properly drafted to make Mr. Martin the trustee. Mr. Martin asserts that Mr. Sheehan was negligent in a different respect–in the transaction that resulted in appointment of a different trustee. But any representation Mr. Sheehan provided in connection with that transaction could not have been specifically intended to benefit Mr. Martin. On that transaction–in connection with Mr. Sheehan’s rendering of advice at that time on who should be appointed as the trustee–Mr. Martin was not an intended third-party beneficiary. The “narrow exception” to the privity requirement did not apply.

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Natasha M. Dalton

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