Nye v. Eastman & Smith, LTD, C.A. NO. L-13-1034, Court of Appeals of Ohio Affirms Dismissal of Legal Malpractice Action Due to Lack of Standing

In all jurisdictions, including Massachusetts, a plaintiff cannot maintain a malpractice claim against an attorney unless an attorney-client relationship exists. Spinner v. Nutt, 417 Mass. 549 (1994). Lawyers hired to advise trustees of trusts owe a duty of care to beneficiaries and other third parties only in rare circumstances. Id. at 553. An Ohio appellate court has analyzed these issues and affirmed a lower court’s decision granting a law firm’s motion to dismiss a legal malpractice suit.

In Nye v. Eastman & Smith, LTD, a husband and wife hired an estate planning attorney to establish two family trusts, one in each of their names. Under the terms of the trusts, the couple’s daughter was named successor trustee and sole beneficiary of each trust upon the death of both parents. The attorney would then succeed the daughter as trustee upon her death, and several charitable organizations were named the residual beneficiaries. The trusts also purchased life insurance policies on the lives of the trustees.

Fifteen years later, both parents had passed away and the daughter became trustee and sole beneficiary of both trusts. She wished to receive a greater income from the trusts and retained a new law firm to help her accomplish this goal. The firm advised her to surrender the insurance policies for their cash value, which she did. The cash value was substantially less than the death benefit.


Two years later, the client became suddenly ill and passed away. By operation of law, the former attorney succeeded her as sole trustee. Over one year later, the attorney filed a legal malpractice claim against the law firm claiming that they had negligently permitted the residual value of the trust assets to diminish. The law firm successfully moved to dismiss the claim and the attorney appealed.

The appeals court affirmed, holding that the attorney lacked standing to bring a malpractice claim. He was neither a trustee nor beneficiary at the time of the surrender, and thus the law firm did not owe him a duty of care. The Court also held that even if the attorney had standing, his action was barred by a one year statute of limitations because he knew of the daughter’s intention to liquidate the policies, but failed to file suit until three years later. Thus, the attorney could not recover under any set of facts. Therefore, the court affirmed the dismissal, but modified the ruling to be with prejudice, preventing the attorney from re-filing his claim.

Opinion: Nye v. Eastman & Smith, LTD
__________________________________________________________________________________________
The above information is provided by Boston Accident Attorney, Keith L. Miller, a Boston, Massachusetts civil trial lawyer, specializing in the legal representation of individuals who believe that they have been injured as the result of the negligence of others and have been involved in all types of accidents causing personal injury. If you or a loved one has been injured in an accident where you believe someone else is at fault, contact Keith L. Miller to arrange a free consultation 24 hours a day, 7 days a week either by telephone at (617) 523-5803, or click here to send him an email. You will be contacted within 24 hours.