Warner v. Winter

ETHAN J. WARNER, Plaintiff v. A. MARK WINTER, Defendant

CIVIL ACTION NO. 1:20-CV-496

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

March 3, 2021

(Judge Conner)

MEMORANDUM

Plaintiff Ethan Warner ("Warner") filed this action alleging breach of contract and legal malpractice against defendant A. Mark Winter, Esquire ("Attorney Winter"). (Doc. 1). Attorney Winter moves to dismiss Warner's claim pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). (Doc. 9). We will grant Attorney Winter's motion and dismiss Warner's complaint with prejudice.

I. Factual Background & Procedural History

Warner is an adult resident of the state of California and the son of the late Mary Warner ("decedent"). (Doc. 1 ¶¶ 1, 4). Warner is one of decedent's three sons. (Id. ¶ 4). In 2013, decedent executed a Declaration of Trust which declared Warner the beneficiary of "one third of [one half] of the trust." (Id. ¶ 5). When decedent moved to Pennsylvania in 2017, she executed an amendment to this trust. (Id. ¶ 6). The trust holds all of decedent's real and personal property. (Id. ¶ 8).

Attorney Winter practices law in Hershey, Pennsylvania, and provides estate planning services. (Id. ¶ 2). In late 2018 or early 2019, decedent met with Attorney Winter to prepare a will. (Id. ¶ 9). Warner alleges that decedent's close friend accompanied decedent to the meetings with Attorney Winter, and that decedent gave Attorney Winter a copy of the trust documents. (Id. ¶ 10). According to Warner, decedent explained to Attorney Winter that "she wanted to distribute her entire estate to Mr. Warner except for certain specific monetary bequests to charities and the other [two] siblings and an in-kind bequest of her residence to her close friends." (Id. ¶ 11). Warner further alleges Attorney Winter asked decedent if she wanted to update her trust, and she responded no, ostensibly "because she believed the [t]rust was only effective during her lifetime." (Id. ¶ 12). Warner claims Attorney Winter never informed decedent that her trust provisions would supersede her will, or that "she would need to amend or dissolve the [t]rust to effectuate her expressed testamentary intent." (Id. ¶ 13).

Attorney Winter prepared a will for decedent in February 2019. (Id. ¶ 14). The complaint alleges that the will provides for Warner to receive "the balance of the estate after certain enumerated specific bequests." (Id. ¶ 16). Warner alleges that but for Attorney Winter's failure to amend or dissolve the trust—to give testamentary effect to the will prepared by Attorney Winter—Warner would be entitled to a distribution under the will that "far exceeds" that which he now expects to receive under the trust. (Id. ¶¶ 13, 16). Warner estimates that hisdistribution would be around $900,000¹ greater under the will than his anticipated distribution under the trust. (Id. ¶ 19).

Warner filed the instant action in March 2020 alleging both legal malpractice and breach of contract. On the legal malpractice claim, Warner alleges that Attorney Winter failed to exercise "the standard of care" of the legal profession to ensure decedent's will reflected her testamentary intent. (Id. ¶¶ 25-27). Because of this failure, Warner "has been deprived of the full legacy" decedent intended for him. (Id. ¶ 28). Warner further alleges that Attorney Winter breached a contract with decedent (presumably an oral or written retainer agreement) because he "accepted payment of fees" from her but "failed to effectuate the distribution" of her estate according to her intentions. (Id. ¶¶ 31, 34). Attorney Winter moves to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The motion is fully briefed and ripe for disposition.

II. Legal Standard

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of complaints that fail to state a claim upon which relief may be granted. FED. R. CIV. P. 12(b)(6). When ruling on a motion to dismiss under Rule 12(b)(6), the court must "accept all factual allegations as true, construe the complaint in the lightmost favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (quoting Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). In addition to reviewing the facts contained in the complaint, the court may also consider "exhibits attached to the complaint, matters of public record, [and] undisputedly authentic documents if the complainant's claims are based upon these documents." Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)).

Federal notice and pleading rules require the complaint to provide "the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Phillips, 515 F.3d at 232 (alteration in original) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To test the sufficiency of the complaint, the court conducts a three-step inquiry. See Santiago v. Warminster Township, 629 F.3d 121, 130-31 (3d Cir. 2010). In the first step, "the court must 'tak[e] note of the elements a plaintiff must plead to state a claim.'" Id. at 130 (alteration in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)). Next, the factual and legal elements of a claim must be separated; well-pleaded facts are accepted as true, while mere legal conclusions may be disregarded. Id. at 131-32; see Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). Once the court isolates the well-pleaded factual allegations, it must determine whether they are sufficient to show a "plausible claim for relief." Iqbal, 556 U.S. at 679 (citing Twombly, 550 U.S. at 556); Twombly, 550 U.S. at 556. A claim is facially plausible when the plaintiff pleads facts "that allow[]the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678.

III. Discussion

Attorney Winter principally challenges Warner's claims for lack of "standing" to assert either legal malpractice or breach of contract under Pennsylvania Supreme Court precedent.² (Doc. 9 ¶ 8). We agree with Attorney Winter that Warner's claims are not cognizable under Pennsylvania law.

In Pennsylvania, a person may sue his own attorney for malpractice using tort or contract theories. See Wachovia Bank, N.A. v. Ferretti, 935 A.2d 565, 570 (Pa. Super. Ct. 2007) (quoting Garcia v. Cmty. Legal Servs. Corp., 524 A.2d 980, 982 (Pa. Super. Ct. 1987). Until Guy v. Liederbach, 459 A.2d 744, 748-749 (Pa. 1983), however, third-party beneficiaries to an attorney-client relationship were unable to bring suits against the attorney due to lack of privity between the third party and the attorney. Beginning with Guy, the Pennsylvania Supreme Court adopted Section 302 of the Restatement (Second) of Contracts and applied it to namedbeneficiaries under a will. See id. at 751 (citing RESTATEMENT (SECOND) CONTRACTS § 302 (AM. LAW INST. 1979)).

In Guy, the decedent executed a will leaving plaintiff the residue of decedent's estate. Id. at 747. Because the drafting attorney allowed the plaintiff beneficiary to witness the will execution, plaintiff's legacy was barred under a since-repealed New Jersey law forbidding a beneficiary from also acting as a witness. Id. Plaintiff sued the drafting attorney, and the Pennsylvania Supreme Court allowed her claim to go forward under a contract theory. Id. at 753. Guy created a narrow exception to the privity requirement, allowing named beneficiaries to bring a breach-of-contract action against the drafting attorney when those beneficiaries would otherwise "lose their intended legacy due to the failure of an attorney to properly draft the instrument." Id. at 752.

In Estate of Agnew v. Ross, 152 A.3d 247 (Pa. 2017), the state supreme court construed Guy's limited application of Section 302, and it articulated a two-part test to determine whether an individual can sue as a third-party beneficiary:

(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 [testator] to pay money to the beneficiary" or "the circumstances indicate that the [testator] intends to give the beneficiary the benefit of the promised performance.

Agnew, 152 A.3d at 253 (quoting Guy, 459 A.2d at 751). Only if the beneficiary meets both prongs, he can bring a contract claim despite a lack of privity with the drafting attorney. Guy, 459 A.2d at 751, 753. Importantly, Pennsylvania courts have interpreted the Guy exception narrowly. Agnew, 152 A.3d at 262-263 (stating thatthe Guy court did not eliminate the privity requirement for a negligence action and observing that the Guy court specifically held that third party beneficiary standing should be narrowly tailored).

The instant matter is analogous to Hess v. Fox Rothschild, LLP, 925 A.2d 798, 808 (Pa. Super. Ct. 2007). In Hess, a will established a marital trust for the decedent's husband and a residuary trust for her stepsons. Id. at 801-02. The will also provided for the corpus of the marital trust to pass to the residuary trust when the husband died. Id. at 802. The will allowed the husband to withdraw as much as he desired from the marital trust. Id. When the husband withdrew $5 million shortly before his death, the stepsons consequently received a smaller inheritance from the residuary trust. Id. The stepsons, who were explicitly named in decedent's will, brought suit against the decedent's attorneys "sounding in negligence, breach of contract, [and] intentional breach of the covenant of good faith and fair dealing." Id. at 801. The trial court dismissed the suit based on defendants' preliminary objections, and the dismissal was affirmed on appeal. Id. at...