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By Joan C. Rogers
A lawyer who drafted a power of attorney for an elderly client assumed an enhanced duty to the client by adding requirements that the designated agents submit an initial inventory to the lawyer and annual accountings to the lawyer or some other attorney, a divided Ohio Court of Appeals, Tenth District, ruled Dec. 27 (Svaldi v. Holmes, Ohio Ct. App. 10th Dist., No. 12AP-167, 12/27/12).
The court decided 2-1 that by including the inventory and accounting arrangement, the lawyer took on a responsibility to try to make the scheme work. The lawyer had a duty to follow up with the named agents about their obligation and encourage them to comply, but did not assume a broader duty to supervise them, Judge William A. Klatt said.
Svaldi had a power of attorney that designated a family friend as his agent, and he was concerned that she would make him move to the state where she lived and go into an assisted-living community there. Holmes advised Svaldi that to prevent the move he should select a different agent for his power of attorney. Svaldi indicated that he wanted to name Johnson and Esquibel as his agents.
Holmes drafted a new power of attorney making that designation, along with a revised will naming the women as executors. Svaldi executed the documents after Holmes confirmed in private that his client really wanted to name the two women as his agents.
The power of attorney Holmes drafted gave Johnson and Esquibel the authority to manage, sell, and transfer Svaldi's assets, and it allowed them to open and close bank accounts and sign checks on his behalf. The power of attorney also contained these two paragraphs:
10. The holder of this Power-of-Attorney shall within thirty (30) days of appointment, or as soon thereafter as possible make an inventory of my estate assets and list any claims or obligations which I have or may have, giving me a copy, keeping a copy for herself, and leaving a copy with my attorney, Robert D. Holmes….
11. The holder shall also file an annual account by January 31st of each year and deliver it to Robert D. Holmes, attorney, or any attorney licensed in Ohio, designated by me or by the holder of this Power-of-Attorney for safe-keeping.
“By setting up the inventory and accounting scheme, [the drafting lawyer] assumed a responsibility to attempt to make it work.”Judge William A. Klatt
Svaldi sued Holmes for malpractice, asserting that he was negligent by “failing to monitor the performance of the holders of the [power of attorney] through receipt and review of the inventory and annual accounting of assets and obligations.”
Svaldi claimed that Holmes incurred a duty to monitor events when the lawyer incorporated the inventory and annual accounting requirements into the power of attorney. Holmes argued that his sole duty to Svaldi was to exercise appropriate care in drafting the power of attorney and revising the will.
After discovery was completed, the trial court granted summary judgment in favor of Holmes, holding that the lawyer owed no enhanced duty to Svaldi. Disagreeing with that conclusion, the appellate court reversed.
According to Holmes, he incorporated the arrangement for an inventory and annual accountings into the power of attorney as a protective mechanism so that a third party could ascertain whether the designated agents were misappropriating or mismanaging Svaldi's assets.
The court pointed out that certain steps needed to occur in order for this arrangement to fulfill its protective purposes: the named agents had to create the inventory and annual accountings; Holmes had to receive the inventory; Holmes had to receive the annual accountings or, if they were submitted to another attorney, that attorney would need the inventory and any previous annual accountings; and Holmes or the other attorney needed to review and compare the documents.
By incorporating the inventory and accounting scheme into the power of attorney, the court said, Holmes expanded the scope of his representation of Svaldi beyond the mere drafting of legal documents.
“By setting up the inventory and accounting scheme, Holmes assumed a responsibility to attempt to make it work,” Klatt stated. “Thus, Holmes had a duty to follow up with Johnson and Esquibel regarding their obligation to complete an inventory and the annual accountings and encourage Johnson and Esquibel to comply with the scheme,” he said.
The court disagreed, however, with Svaldi's broad characterization of the duty that resulted from the inventory and accounting arrangement. Holmes did not assume an overarching duty to supervise the designated agents, the court declared. “Svaldi did not request and Holmes did not suggest that Holmes would serve as the guardian of Svaldi's financial well-being or the general overseer of Svaldi's agents,” Klatt wrote.
“Moreover, neither justice nor good sense warrants the imposition of such a broad duty in these circumstances,” the court stated.
Anne M. Valentine and Susie L. Hahn of Leeseberg & Valentine, Columbus, Ohio, represented Svaldi. Rick E. March of Lane, Alton & Horst, and Ray S. Pantle, both of Columbus, represented Holmes.
The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.
Copyright 2013, the American Bar Association. All Rights Reserved.
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