The Rhode Island Supreme Court recently issued a significant decision providing clearer guidance on the duties owed by trust and estate attorneys to the beneficiaries of a trust. In Audette v. Poulin, No. 2015-53-Appeal, issued on December 9, 2015, the Rhode Island Supreme Court held as a matter of first impression that an attorney representing the trustee of a trust did not also owe a duty of care to the beneficiary of the trust where the trustee and beneficiary are adverse.
In Audette, the plaintiff, Richard Audette, was the beneficiary of a trust established in 1993. The trust included, among other things, a provision allowing the plaintiff to live at a certain property rent-free. In 2000, plaintiff decided that he wanted to live at the property, along with his parents, and they all moved in. The trustee, Donald Poulin, objected, and sought legal advice from trust and estates lawyer David J. Correira.
Correira, as counsel to the trustee, advised the trustee that the terms of the trust did not permit the parents of the plaintiff/beneficiary to live with him at the property. Soon thereafter, Correira, on behalf of the trustee, filed a lawsuit to evict the plaintiff and his parents. The lawsuit was ultimately dismissed in 2005 by agreement of the parties.
Thereafter, plaintiff/beneficiary Audette filed an action against several parties, including the trustee Poulin and attorney Correira. The claims against Correira sounded in negligence and breach of fiduciary trust. Correira filed a motion to dismiss the complaint against him for failure to state a claim, arguing that he as attorney to the trustee did not owe a duty of care to the plaintiff/beneficiary while he represented the trustee, especially where the trustee and the beneficiary were adverse. The trial court agreed, dismissing the claims against Correira.
On appeal, the Rhode Island Supreme Court affirmed the trial court’s ruling. In its decision, the Supreme Court noted that the claims brought by the plaintiff/beneficiary were essentially for legal malpractice. The Court observed, citing prior Supreme Court precedent, that “third parties generally cannot recover for attorney malpractice” and that “generally an attorney owes no duty to an adverse party” in Rhode Island. The Court furthermore declined under the facts of the case to extend the exception providing that the liability of an attorney may include the third-party beneficiaries of an attorney-client relationship, where the plaintiff/beneficiary and trustee were adverse and had no overriding identity of interest. The Court wrote, “Give our conclusion that Correira did not owe Audette a duty of care with regard to his representation of Poulin as trustee, Audette’s claims for malpractice must fail.”
For trust and estate attorneys in Rhode Island, the decision offers guidance that, under Rhode Island law, they do not owe a duty of care to the beneficiary of a trust while representing the trustee in a matter adverse to the beneficiary. The Audette decision does not address, however, situations where the trustee and beneficiary are not adverse or have an overriding identity of interest.
The Audette decision in Rhode Island is consistent with the case law in Massachusetts following Spinner v. Nutt, 417 Mass. 549 (1994). There, the Massachusetts Supreme Judicial Court held that the attorneys of a trustee of a trust did not owe a duty of care to beneficiaries of the trust, and also that the beneficiaries of trust were not third-party beneficiaries of the attorney-client relationship between trustee and trustee’s attorneys. Like the Rhode Island Supreme Court in the Audette decision, the Spinner Court in Massachusetts affirmed dismissal of the claims brought by the trust beneficiaries against the trustee’s attorneys for failure to state a claim upon which relief can be granted.