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any assets withdrawn by revocation .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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