2019 ABA LPL Ed Mendrzycki Essay Contest—Hypothetical
Sponsored by: ABA Standing Committee on Lawyers' Professional Liability and Long & Levit, LLP
Attorney Jimmy Able, an estate planning attorney in California, represented client George Green in drafting an estate plan, trusts and wills for George and his wife Clara, in 2010. George insisted that Mr. Able serve as the executor of the estate upon the passing of either George or Clara. In 2014, approximately four years after the execution of the wills, Mr. George passed away. Clara by that time was under care at an assisted living center for dementia, among other ailments. George and Clara have three adult children who are contingent beneficiaries to their parents' estates upon the passing of the last surviving parent, i.e. the estate assets of the first to die are left in trust to the surviving spouse, with the remainder of each spouse's estate left to their three children upon the passing of the surviving spouse. In 2015, Mr. Able was appointed as executor of Mr. George's estate and trustee of a trust to benefit Clara.
In March 2018, the three adult children file a complaint for legal malpractice and breach of fiduciary duty against Mr. Able in San Francisco, California. In their complaint the Plaintiffs allege that Mr. Able committed legal malpractice by failing to advise Mr. Green to transfer the bulk of the estate, in 2010, to a trust for the benefit of the three children in order to take advantage of Medicaid payments for the care of Clara. They also allege that Mr. Able failed to account for over $100,000 in missing funds from Mr. George's trust, and seek a full accounting and reimbursement from Mr. Able for all missing funds. Finally, the Plaintiffs seek reimbursement of all legal fees collected by Mr. Able as Executor and Trustee.
Mr. Able, distraught over the malpractice complaint, and himself suffering from a long-term addiction to prescribed pain medication and bouts of depression, reluctantly notified his malpractice insurance carrier, Malpractice Insurance Inc. ("MII"), of the claim. MII immediately acknowledged the claim and issued a reservation of rights letter, notifying Mr. Able that his policy would not provide coverage for any amounts he may be found to have wrongly taken from the George estate, or for reimbursement of any attorneys' fees the Georges or the estate may have paid to Mr. Able. MII retained defense attorney Mary Best, to which Mr. Able did not object.
Upon being retained, Ms. Best sent Mr. Able this letter:
Dear Mr. Able:
Malpractice Insurance Inc. ("MII") has retained me to defend the suit against you by the Green children. MII regularly retains me to defend its insureds, and it will be paying my fees to represent you.
I understand that MII believes that it is authorized by the language of your insurance policy to settle the claims against you, at its own expense, whenever it deems that advisable. Unless you tell me otherwise, I will assume that this is acceptable to you and that I may assist MII in making such a settlement, if MII asks me to do so.
I look forward to working with you. Remember, I need you to tell me everything you can about the Green representation and your work as executor and trustee, so I can most effectively defend you. And I will need your full cooperation in developing and presenting your defense.
While the malpractice case is pending, Mr. Able goes into a severe depression, contributing to communication and assistance issues between he and Ms. Best. Ms. Best has become concerned that Mr. Able may not be able to assist in his defense, as Mr. Able has made it clear he does not want to attend the mediation. MII, unaware of these issues, requests Ms. Best to schedule a mediation with Mr. Able present to attempt to settle the malpractice claim. MII is insistent that Mr. Able attend the mediation because of the uncovered claims for return of the missing funds.
Ms. Best is concerned that Mr. Able's depression might impact his ability to comply with his contractual duty to cooperate with MII in defending the case. Should she disclose his depression and communication issues to MII? How should Ms. Best deal with Mr. Able's depression? What advice should Ms. Best give to Mr. Able? How should Ms. Best handle the claims that Mr. Able diverted funds from the estate?