Present: Hassell, C.J., Keenan, 1 Koontz, Lemons, Goodwyn and
Millette, JJ., and Russell, S.J.
NANCY E. JOHNSON
v. Record No. 090984 OPINION BY JUSTICE DONALD W. LEMONS
April 15, 2010
JOHN W. HART, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Frederick B. Lowe, Judge
In this appeal we consider whether a sole testamentary
beneficiary, in her individual capacity, may maintain a legal
malpractice action against the attorney for the estate for the
attorney’s allegedly negligent services rendered to the estate.
We also consider whether the prevailing party in the circuit
court, by endorsing the final order “seen and consented to,”
has expressly waived any arguments he presented to the trial
court.
I. FACTS AND PROCEEDINGS BELOW
On January 17, 2007, Nancy E. Johnson (“Johnson”) filed a
complaint against John W. Hart and John W. Hart, P.C.
(collectively, “Hart”), alleging that Hart committed legal
malpractice after being retained to provide legal counsel and
advice regarding the probate of Johnson’s mother’s estate (“the
Estate”). As a result of Hart’s alleged malpractice, Johnson
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Justice Keenan participated in the hearing and decision
of this case prior to her retirement from the Court on March
12, 2010.
asserted that she was removed from her position as the executor
of the Estate and suffered pecuniary loss.
Hart filed an answer, affirmative defenses, and demurrer.
Hart’s demurrer asserted that Johnson’s complaint failed to
state a cognizable claim because Hart represented Johnson as
the executor of the Estate, not in her individual capacity.
Accordingly, any proper claim would be in the name of the
Estate “and/or by [Johnson], in her capacity as” the executor.
Subsequently, Hart filed a motion for summary judgment,
along with a supporting memorandum. In order to provide an
adequate record for the trial court to rule on the summary
judgment motion, the parties stipulated to the following facts:
1. Peggy Johnson was the mother of [Johnson]
and Andrea S. Johnson, and Peggy Johnson died on
July 23, 2002, having executed her Last Will and
Testament on December 5, 1980.
2. [Johnson] was referred to [Hart] and met
with Hart and asked Hart to represent the
[Estate] and assist in having [Johnson] qualified
as the Executrix of the Estate.
3. There was no written contract or fee
agreement between the Estate [and] Hart, and Hart
represented the [Estate] between August 19, 2002
through May 13, 2005, when he ceased any
representation of the Estate.
4. The claim being asserted by [Johnson] arises
out of the alleged malpractice of [Hart] as the
attorney for the [Estate]. Although no claim is
being asserted against [Hart] for his conduct
relating to anything other than his services to
the [Estate], the parties would stipulate that
John Hart did provide legal advice in some form
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to [Johnson] in other personal matters,
including:
a. He did write checks for her personal
bills;
b. He did help in obtaining a Restraining
Order for [Johnson] and her
grandmother against [Johnson’s]
former husband;
c. He did help [Johnson] recover her cats
from a friend;
d. He did help in filing a suit for damages
to [Johnson’s] ex-husband’s car;
e. He did help [Johnson] with respect to
qualifying as Guardian for her
sister.
5. John Midgett [“Midgett”] was appointed
Administrator C.T.A. of the [Estate] when an
Order was entered on July 1, 2005
removing [Johnson] as the Executrix of the
[Estate].
6. At no time prior to [Midgett’s] winding up
the [Estate] and filing the final accounting for
approval did the [Estate] ever file a claim
against John Hart.
7. When [Midgett] completed his
responsibilities as Administrator C.T.A., Andrea
S. Johnson had died, and [Johnson] was the sole
beneficiary under the Last Will and Testament of
Peggy Johnson. [Midgett], as Administrator
C.T.A. of the [Estate], submitted the final
accounting for the [Estate], which was approved
on June 5, 2006, at which time [Johnson]
inherited all of the assets of the [Estate] as
the sole beneficiary of the Estate.
8. On October 18, 2005, [Midgett], as
Administrator C.T.A. of the [Estate], executed an
Assignment of Interest in Real Estate Contract
whereby the [Estate] assigned to [Johnson] all of
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the Estate’s right, title and interest in and to
that certain written instrument by and between
the [e]state of Peggy Lee Anderson Johnson and
D.M. Barbini Contracting, Inc. dated October 21,
2002 for the purchase of Lot 16, Phase I,
Seaboard Forest on Live Oak Trail, Virginia
Beach, Virginia and for the construction of a
residence thereon.
9. The Final Accounting for the [Estate] was filed
and approved on June 5, 2006, at which time the
Estate was closed.
10. The lawsuit that has been filed by [Johnson]
was filed in her individual capacity and has not
been filed as a fiduciary, and as of this time,
no lawsuit has been filed by the [Estate] against
[Hart].
In his memorandum, Hart argued that Johnson was not the
proper party to the legal malpractice action because “[i]n
order to maintain a claim for legal malpractice, a plaintiff
must plead and prove, inter alia, that an attorney-client
relationship existed between the plaintiff and the defendant.”
In this case, Hart continued, “the attorney-client relationship
that Hart purportedly breached was between Hart and the
Estate.”
Johnson argued that Code § 8.01-13 permitted her, as a
beneficial owner of the Estate, to bring suit in her individual
capacity. Hart responded that Code § 8.01-13 “does not answer
the question whether Ms. Johnson is the ‘beneficial owner’ of
the legal malpractice claim. Rather, this section ‘simply
stipulates that [beneficial owners] of claims can sue in their
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own names.’” Finally, Hart contended, “to find that Ms.
Johnson inherited the legal malpractice claim belonging to the
Estate would be contrary to Virginia common law and public
policy that legal malpractice claims cannot be assigned.”
In her memorandum in opposition to Hart’s motion for
summary judgment, Johnson conceded that legal malpractice
claims are not assignable under Virginia law, but she argued
Code § 8.01-13 distinguishes beneficial ownership from
assignment. She further argued that a beneficiary, devisee,
legatee or donee under a will is a beneficial owner of the
assets of the estate, and for that reason Code § 8.01-13
permits such a beneficiary to bring a legal malpractice action
in her own name.
The trial court issued a letter opinion granting Hart’s
motion for summary judgment holding that Johnson, “as a
beneficiary [of the Estate,] possesses beneficial ownership of
the [E]state’s legal malpractice claim.” The trial court then
acknowledged that while Code § 8.01-13 “would therefore appear
to allow her to proceed,” “she is the functional equivalent of
an assignee.” Accordingly, because this Court has interpreted
Code § 8.01-26 to exclude the assignment of legal malpractice
claims, the trial court reasoned that Code § 8.01-13 should not
“serve to override the public policy against suits by strangers
to the personal representative-attorney relationship.”
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The trial court later entered an order which incorporated
its letter opinion, granted Hart’s motion for summary judgment,
and dismissed Johnson’s complaint with prejudice. Counsel for
Hart endorsed this order “[s]een and consented to,” and counsel
for Johnson endorsed the order “[s]een and objected to.”
Johnson timely filed her notice of appeal and we granted
an appeal on the following assignment of error:
1. The trial court erred in granting summary judgment in favor
of Hart in holding that Johnson, as a beneficial owner of a
legal malpractice claim accruing to the Estate, lacked
legal standing to maintain her action against Hart.
We also granted Hart’s assignment of cross-error:
1. The trial court erred in applying Virginia Code § 8.01-13
to the facts in this case.
II. ANALYSIS
A. Standard of Review
In this case, the trial court granted Hart’s motion for
summary judgment relying upon the stipulated facts presented by
the parties. “[W]e conduct a review of the trial court’s
application of law to the undisputed facts.” Virginia College
Building Authority v. Lynn, 260 Va. 608, 622, 538 S.E.2d 682,
688 (2000). Therefore, Johnson’s assignment of error and Hart’s
assignment of cross-error “are questions of law which we review
de novo.” Davenport v. Little-Bowser, 269 Va. 546, 552, 611
S.E.2d 366, 369 (2005).
B. Hart’s Assignment of Cross-Error
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On brief to this Court, Johnson argues that Hart waived
his objection to the trial court’s holding that Johnson was a
beneficial owner pursuant to Code § 8.01-13 when counsel for
Hart endorsed the trial court’s order “[s]een and consented
to.” This argument misapprehends the language of Code § 8.01-
384, which provides in pertinent part:
No party, after having made an objection or
motion known to the court, shall be required to
make such objection or motion again in order to
preserve his right to appeal, challenge, or move
for reconsideration of, a ruling, order, or
action of the court. No party shall be deemed
to have agreed to, or acquiesced in, any written
order of a trial court so as to forfeit his
right to contest such order on appeal except by
express written agreement in his endorsement of
the order.
The first question before this Court is whether Hart expressly
waived the arguments he presented to the trial court in his
memorandum in support of his motion for summary judgment,
thereby precluding him from assigning error to the portion of
the trial court’s letter opinion that was adverse to him.
Hart’s endorsement as “[s]een and consented to” was no
more an express waiver of his objection to the trial court’s
unfavorable ruling than was Johnson’s endorsement of the order
as “[s]een and objected to” an objection to that portion of the
same ruling, which was favorable to her. Rather, the context
of Hart’s endorsement, as the prevailing party, indicates that
he consented to the trial court’s order granting his motion for
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summary judgment. With regard to the trial court’s ruling that
Johnson was a beneficial owner of a legal malpractice action
pursuant to Code § 8.01-13, Hart clearly stated his opposition
to this ruling in memoranda before the court and cannot be
deemed to have abandoned this position by acquiescing in a
summary judgment order in his favor.
C. Beneficial Ownership of a Legal Malpractice Claim
Code § 8.01-13 provides in pertinent part, “[t]he assignee
or beneficial owner of any bond, note, writing or other chose
in action, not negotiable may maintain thereon in his own name
any action which the original obligee, payee, or contracting
party might have brought.” On brief, Johnson concedes that
Virginia law prohibits the assignment of legal malpractice
claims, notwithstanding Code § 8.01-26. 2 Similarly, we hold
today that Code § 8.01-13 does not permit beneficial ownership
of a cause of action for legal malpractice.
Virginia has adopted the strict privity doctrine in legal
malpractice cases; as a threshold requirement, a plaintiff must
demonstrate the existence of an attorney-client relationship.
“It is settled in the Commonwealth that no cause of action
exists in cases [involving a claim solely for economic losses]
2
Code § 8.01-26 provides in pertinent part: “Only those
causes of action for damage to real or personal property,
whether such damage be direct or indirect, and causes of action
ex contractu are assignable.”
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absent privity of contract.” Copenhaver v. Rogers, 238 Va.
361, 366, 384 S.E.2d 593, 595 (1989).
“A cause of action for legal malpractice
requires the existence of an attorney-client
relationship which [gives] rise to a duty, breach
of that duty by the defendant attorney, and that
the damages claimed by the plaintiff client must
have been proximately caused by the defendant
attorney’s breach.” Rutter v. Jones, Blechman,
Woltz & Kelly, P.C., 264 Va. 310, 313, 568 S.E.2d
693, 695 (2002). Thus, “an action for the
negligence of an attorney in the performance of
professional services, while sounding in tort, is
an action for breach of contract . . . .” Oleyar
v. Kerr, 217 Va. 88, 90, 225 S.E.2d 398, 400
(1976); accord Shipman v. Kruck, 267 Va. 495,
501, 593 S.E.2d 319, 322 (2004). It is the
contract formed between an attorney and a client
that gives rise to the attorney-client
relationship; but for the contract, the attorney
owes no duty to the client. O’Connell v. Bean,
263 Va. 176, 180, 556 S.E.2d 741, 743 (2002).
Cox v. Geary, 271 Va. 141, 152, 624 S.E.2d 16, 22 (2006).
In MNC Credit Corp. v. Sickels, 255 Va. 314, 497 S.E.2d
331 (1998), we answered the question “whether a claim of legal
malpractice against an attorney may be assigned by a former
client to a third party.” Id. at 316, 497 S.E.2d at 332. We
held that Code § 8.01-26 “does not abrogate the common law rule
which prohibits the assignment of legal malpractice claims in
this Commonwealth because the General Assembly did not plainly
manifest an intent to do so.” Id. at 318, 497 S.E.2d at 333.
In view of the “highly confidential and fiduciary relationship
between an attorney and client,” we reasoned, “the common law
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rule which prohibits the assignment of legal malpractice claims
safeguards the attorney-client relationship which is an
indispensable component of our adversarial system of justice.”
Id. at 318, 319, 497 S.E.2d at 333, 334.
This same policy precludes a testamentary beneficiary from
maintaining, in her own name, a legal malpractice action
against an attorney with whom an attorney-client relationship
never existed. To hold otherwise would implicate the same
concerns that counsel against the assignment of legal
malpractice claims. Although Code § 8.01-13 permits the
“beneficial owner of any . . . chose in action” to maintain in
her own name any action the original contracting party might
have brought, the common law has long provided that this
particular chose in action requires the existence of an
attorney-client relationship as a threshold element. See
Ayyildiz v. Kidd, 220 Va. 1080, 1086, 266 S.E.2d 108, 112-13
(1980).
In this case, no such relationship existed between Johnson
and Hart. As the stipulation indicated, Hart was retained to
represent the Estate, not Johnson. Additionally, “the General
Assembly did not plainly manifest an intent” in Code § 8.01-13
to “abrogate the common law rule which prohibits the assignment
of legal malpractice claims in this Commonwealth.” MNC Credit
Corp., 255 Va. at 318, 497 S.E.2d at 333. Similarly, the trial
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court erred when it held that Johnson, “as a beneficiary [of
the Estate,] possesses beneficial ownership of the [E]state’s
legal malpractice claim.” Despite this error, the trial court
reached the correct resolution of the issue.
III. CONCLUSION
We hold that the trial court correctly concluded that
Johnson lacked standing to maintain a legal malpractice claim
against Hart. For the reasons stated herein, we will affirm
the judgment of the trial court granting Hart’s motion for
summary judgment.
Affirmed.
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