• Estate of Schneider v. Finmann, 2009 NY Slip Op 2319 (App. Div. Mar. 24, 2009) (appeal pending before Court of Appeals)
  • June 16, 2010
  • Law Firm: Proskauer Rose LLP - New York Office
  • This case was argued before the Court of Appeals on May 4, 2010, and has not yet been decided by the Court. The issue before the Court is the applicability of New York’s strict privity defense in an estate planning malpractice claim. (Under the privity rule, lawyers owe no duty of care to non-clients, and only a client may sue a lawyer for legal malpractice.)

    Decedent retained the services of an attorney for estate planning advice. Prior to decedent’s death, it is alleged that, on the attorney’s advice, ownership of a life insurance policy was transferred from a family limited partnership controlled by decedent to decedent individually. When decedent died, the insurance proceeds became subject to estate tax.

    The estate brought a legal malpractice action for negligent estate planning against the attorney. The trial court dismissed the suit and the Appellate Division affirmed based on New York’s strict privity defense. 

    In its brief filed with the Court of Appeals, the estate argues that decedent had a cause of action for malpractice at the time when the attorney gave decedent erroneous estate planning advice. Had decedent discovered it, decedent would have had a claim for the damages then accruing, specifically, for the cost of hiring another attorney to correct the issue pertaining to ownership of the insurance and to recover fees paid to the attorney who initially advised decedent. Thus, a cause of action had accrued and was viable when decedent died. Furthermore, the estate argues that this is not a privity case as a beneficiary of the estate is not suing for any reduction or omission of his or her bequest. Rather, it is the estate that is bringing the action to seek damages that were done to decedent when the estate plan was negligently implemented.