The issue before us is whether a trustee’s attorney can be Hable to the beneficiaries of the trust for legal malpractice. Plaintiff appeals from summary judgment entered in defendant’s favor and argues that the trial court should have applied the general foreseeability test for negligence and should not have taken a “poficy approach” to decfining to recognize а basis for malpractice Habifity under the circumstances of this case. We hold that defendant did not owe a duty to protect the beneficiaries from their economic losses and therefore is not liable as a matter of law. Accordingly, we affirm.
On review of summary judgment, we state the evidence in the light most favorable to plaintiff, as the nonmov-ing party.
Jones v. General Motors Corp.,
The parties’ dispute centers on the appficable test for determining to whom an attorney is Hable for malpractice. Plaintiff argues that a “special relationship” exists between a trustee’s attorney and the beneficiaries because a trustee’s attorney owes a duty of care to the trustee and because the
trustee owes a heightened duty to the bеneficiaries. Alternatively, plaintiff argues that defendant’s liability should be determined under general foreseeability principles.
See generally Fazzolari v. Portland School Dist. No. 1J,
We begin by outlining the development of Oregon negligence law and its application to legal malpractice. Oregon courts have rejected the traditional proximate cause and duty approaches to determining the scope of liability in negligence actions.
See generally Fazzolari,
Duty also becomes an issue, however, when the plaintiff pleads damages based on purely economic losses. Oregon adheres to the traditional rule that “one ordinarily is not liable for negligently causing a stranger’s purely economic loss without injuring his person or property,” on the theory that people generally do not have a duty to protect others from such losses.
Hale v. Groce,
That approach, translated into the legal malpractice arena, accords with the general rule that an attorney can be liable for malpractice only to those with whom he or she is in privity. Said conversely, an attorney ordinarily is not liable to those outside of the attorney-client relationship because there is no obligation to protect anyone outside of the attorney-client relationship from economic losses.
See Currey,
Here, the trial court declined to apply traditional negligence analysis
(i.e.,
foreseeability) and instead concluded that a successor trustee should not be allowed to sue a former trustee’s attorney for negligence, “even in a situation wherе the interests of the trustee and beneficiaries are not in conflict.” The trial court explained that “allowing any such right of action will greatly impair the ability of any attorney for any trustee to give the attorney’s trustee-client the kind of independent legal advice that the profession must be able to
provide in such situations.” In so doing, the trial court anticipated that Oregon appellatе courts, if presented with the issue, would adopt a “policy approach” similar to the multifactor test used in
Trask v. Butler,
123 Wash 2d 835,
Although some states have adopted formal, policy-based balancing tests, Oregon courts have thus far declined to adopt a particular test for determining when a case should be taken out of the general privity rule. In
Metzker v. Slocum,
Oregon courts have instead extended the attorney’s duty to third parties on a case-by-case basis and have found a “duty” to nonclients in only three cases: (1) in
Lee,
With that backdrop, we turn to the case before us. Plaintiff brought this action on behalf of the trusts and the trust beneficiaries. The threshold question here is: Is there an attorney-client relationship between defendant and the trusts оr defendant and the trust beneficiaries? If the answer to the first question is no, then we ask: Are there other circumstances that indicate the existence of a special (or de facto) relationship that justifies imposing a duty on defendant to pursue the economic interests of the trusts or the trust beneficiaries?
In the context of an attorney’s ethical obligations, the Oregon State Bar has taken the stance that an attorney retained by a fiduciary represents only the fiduciary. OSB Legal Ethics Op No 1991-119 (attorney represents trustee, not beneficiaries) and No 1991-62 (although personal representative owes fiduciary duty to estate and beneficiaries, attorney for personal representative is the personal representative’s attorney only). That view accords with the weight of authority in оther jurisdictions.
See, e.g., Goldberg v. Frye,
217 Cal App 3d 1258, 1268, 266 Cal Rptr 483, 488 (1990) (attorney for administrator of estate represents the administrator, not estate);
Hopkins v. Akins,
We therefore turn to the second question — whether the trustee’s attorney nonethеless owes a duty to pursue the economic interests of the trusts and trust beneficiaries. We note first that this case is not like any of the other cases in which we have found sufficient circumstances to overlook the privity requirement. This is not a case, as in
Lee,
where the attorney blurred the lines of representation by acting on behalf of the trusts or the beneficiaries. Defendant here adamantly deniеs ever having agreed to represent or having purported to represent the trusts or beneficiaries, and plaintiff
does
Plaintiff asserts instead that an attorneys duty to the trustee should “extend” to the trusts and the trust beneficiaries due to the trustee’s heightened duty as a fiduciary. Plaintiff emphasizes that, in the trustee-beneficiary relationship, the interests are closely aligned — i.e., the trustee and the beneficiaries have the common goal of protecting the beneficiaries’ economic interests. In other words, according to plaintiff, because defendant owed a duty to Turner, who owed a duty to the trusts and its beneficiaries, defendant as a matter of law also owes a duty to the trusts and its beneficiaries.
We decline to extend liability that far, as a
per se
rule. To be sure, the trustee’s attorney will advise the trustee to make decisions that have the effect of benefitting the trusts and, more indirectly, the beneficiaries’ economic interests. Under the special relationship rule announced in
Onita,
the trustee’s attorney may be, in that sense, acting “at least in part” to further the economic interests of the trusts and the beneficiaries.
See Ammons v. Jackson County,
To hold that an attorney’s duty of care runs not only to the fiduciary-client, but also to those to whom the fiduciary’s duties run, would be particularly problematic in this context. A trustee’s attorney is charged with the task of advising the trustee on issues ranging from the trustee’s fiduciary obligations to how to manage conflicts in the beneficiaries’ personal objectives. The attorney cannot simultaneously advise the trustee and serve thе economic interests of each beneficiary without risking conflicts of interest.
See Spinner v. Nutt,
417 Mass 549, 553-54,
We recognize that, in many cases, the
potential
for conflict may never become an
actual
conflict. We decline, however, to view the attorney’s duty through an after-the-fact lens. We agree with the trial court’s conclusion
Our conclusion does not necessarily foreclose redress for a trust or its beneficiaries. Instead, the emphasis remains where it more properly belongs: upon the
trustee’s
judgments, choices, and actions.
See Trask,
123 Wash 2d at 843-44,
Here, plaintiff alleged only passive conduct — namely, that defendant was aware of Turner’s loans and failed to advise him against making the loans. That allegation does not state a claim for aiding another in the breach of a fiduciary duty. Nor does it demonstrate sufficient circumstances to take this case out of the privity requirement. We therefore conclude that defendant owed no duty to protect the trusts or the beneficiaries from economic losses.
Because we conclude that no duty of care
existed
under these circumstances, we have no occasion to examine whether the harm was generally foreseeable. “Foreseeability alone is not a sufficient basis to permit the recovery of economic losses on a theory of negligence.”
Onita,
Affirmed.
Notes
Plaintiff also brought an action against Turner for breach of fiduciary duty. That claim was dismissed on Turner’s motion because the surcharge action was still pending before the probate court.
In Trask, the Washington Supreme Court adopted a “modified” multi-factor balancing test for determining whether an attorney owes a duty of care to a non-client. The court determinеs first whether there is an “intent to benefit” the plaintiff, considering the following:
“(1) the extent to which the transaction was intended to benefit the plaintiff;
“(2) the foreseeability of harm to the plaintiff;
“(3) the degree of certainty that the plaintiff suffered injury;
“(4) the closeness of the connection between the defendant’s conduct and the injury;
“(5) the policy of preventing future harm; and
“(6) the extent to which the profession would be unduly burdened by a finding of liability.”
123 Wash 2d at 843,
Plaintiff urges us to adopt the rationale of
Moeller v. Superior Court (Sanwa Bank),
16 Cal 4th 1124, 69 Cal Rptr 2d 317,
We have found only one case holding that an attorney hired by the trustee represеnts the estate and not the trustee.
See Steinway v. Bolden,
In his answer to the complaint, defendant admits that he also represented the settlor prior to his death. In a proper case, liability to third parties conceivably might arise based on the settlor’s privity with an
attorney
— e.g., a plaintiff might be able to argue successfully that the trust beneficiaries were intended by the settlor to be third-party beneficiaries of the attorney-client relationship between the attorney and the settlor.
See Hale,
For contrary authority,
see, e.g., Morales v. Field,
99 Cal App 3d 307, 316, 160 Cal Rptr 239, 244 (1979) (trustee’s attorney owes duty to beneficiary and “assumes a relationship with the beneficiary akin to that between trustee and beneficiary”);
Charleson v. Hardesty,
108 Nev 878,