Judges disagree on when duty to exercise ordinary care extends to beneficiaries

The Indiana Court of Appeals was divided Tuesday on whether a legal malpractice lawsuit filed by third-party beneficiaries of a will against their relative’s attorney should proceed beyond summary judgment. The case hinged on the interpretation of the “known” requirement outlined in Walker v. Lawson.

Mary Linder, through a recommendation by her alma mater Marian College, hired Berton O’Bryan to change her will. Linder told O’Bryan she had a list of items she wanted to leave to various individuals, but the will did not name those people. Linder later filled in a form that O’Bryan gave her that spelled out what her relatives would receive, but it was not dated or signed.

After her death, the probate court investigated the list’s validity, but the relatives in question settled with Linder’s estate and agreed the list was invalid. Those relatives then filed a legal malpractice lawsuit against O’Bryan. The trial court granted summary judgment in favor of O’Bryan on his argument he owed the relatives no duty because there’s no evidence that he had actual knowledge they were on the list in question or that they were the intended beneficiaries.

In  Martha Ferguson, Anthony Schmitt, Rebecca Schmitt, Mary Meadows, et al. v. Berton O'Bryan, 49A02-1211-CT-917, the judges had to decide whether O’Bryan’s duty to exercise ordinary care and skill in the preparation of the will extended to the relatives.  The judges cited Walker,  526 N.E.2d 968, 968 (Ind. 1988), in support of their rulings.

“Relatives argue for purposes of the ‘know’ or ‘known’ elements, under Walker v. Lawson, it was enough that Mr. O’Bryan knew that [Linder] wanted to name specific people.  We find this argument persuasive,” Judges Terry Crone and Chief Judge Margret Robb ruled in reversing summary judgment for O’Bryan.  “Article II of Linder’s will conclusively establishes that O’Bryan knew that she intended to benefit third parties, whom she would list on a separate form that he provided to her. To hold that O’Bryan did not owe the Relatives a duty in this situation would immunize and thus encourage even more egregious acts of malpractice, to the detriment of innocent third-party beneficiaries.”

In his dissent, Judge Ezra Friedlander pointed out that the relatives were not named in the will, but just on the list, and Linder could have added a potentially limitless number of unknown individuals to the list.

“Under these circumstances, the rationale underlying the exception for known beneficiaries disappears, and imposing a duty would expose the drafting attorney to precisely the type of unlimited liability the privity rule and the exception set forth in Walker v. Lawson were designed to prevent. Accordingly, I do not believe the Relatives fall within the category of known third parties contemplated by our Supreme Court in Walker v. Lawson,” Friedlander wrote.

“Accordingly, I would hold, and indeed we have always held, that in order to qualify as a known third party, an intended beneficiary must be known and identified at the time the will is drafted. Because the list on which the Relatives were identified was not created until after the will was drafted, they clearly do not fall within this category.”