NORMAN PORTER v. KEVIN M. KILCULLEN

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6671-06T26671-06T2

NORMAN PORTER, DEAN D. PORTER,

and SUSAN PORTER, as the

guardian of CHASE PORTER

and BRETT PORTER,

Plaintiffs-Appellants,

v.

KEVIN M. KILCULLEN, ESQ. and

STERN, GREENBERG & KILCULLEN,

Defendants-Respondents,

and

DRINKER, BIDDLE & REATH, LLP,

formerly known as DRINKER,

BIDDLE, and SHANLEY, LLP, formerly

known as SHANLEY & FISHER,

Defendants.

 
 

Argued November 19, 2008 - Decided

Before Judges Parrillo, Lihotz and Messano.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-5340-04.

Keith A. McKenna argued the cause for appellants

(Keith A. McKenna & Associates, LLC, attorneys;

Mr. McKenna, on the brief).

Diana C. Manning argued the cause for respondents (Bressler, Amery & Ross, attorneys; Ms. Manning and Benjamin J. DiLorenzo, on the brief).

PER CURIAM

Plaintiffs, Norman Porter, Dean Porter, and Susan Porter as the guardian of Chase and Brett Porter, appeal from the August 3, 2007 summary judgment dismissal of their legal malpractice cause of action against defendant Kevin Kilcullen (Kilcullen or defendant) and his law firm, Stern, Greenberg & Kilcullen (SGK). We affirm.

We view the facts of record in a light most favorable to plaintiffs. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). By way of background, Elinor and Norman were married in 1946 and had one child, Dean. During their marriage, Elinor inherited between one and five million dollars from four of her aunts, thus providing the family with a comfortable lifestyle. As for Norman, he worked in "[s]ales" positions for "[m]any years" before retiring in 1982 at the age of 62. Dean graduated from law school in 1974 and became a lawyer specializing in estate planning, elder law, and business law. His second wife is Susan Porter, with whom he has two minor children, Chase and Brett.

On February 26, 1990, Norman and Elinor executed "mirror" Wills that had been prepared for them by Kilcullen. According to Norman, Elinor's "testamentary intent" was to leave the assets in her estate to him, to "do what I wanted" with them. In furtherance of her testamentary intent, Elinor directed in her Will that her tangible and residuary assets were to go to Norman under the marital deduction, except that the optimum sum necessary to reduce estate taxes ($600,000) was to be placed in a unified credit trust (the Article Fourth Trust), of which Dean was named as the remainder beneficiary.

Under the terms of the Article Fourth Trust, Norman was entitled to receive annually, in addition to all trust income, the greater of $5,000 or five percent of the trust's principal. The Article Fourth Trust also appointed Norman trustee, permitting him to utilize trust principal for the maintenance, support, education, and medical needs of himself and Elinor's "issue," who included Dean and his two minor children, Chase and Brett.

Elinor died on March 17, 1994. Her Will was "promptly probated" without objection and, according to the estate tax return, her estate was valued at $1,950,351. Of that amount, $600,000 was placed in the Article Fourth Trust, while the remaining $1,350,351 "passed to Norman Porter directly," all in accordance with Elinor's express testamentary intent.

As to the $600,000 in the Article Fourth Trust, Norman has always elected to withdraw the maximum allowable principal on a yearly basis. He also apparently elected to take all the trust income on a quarterly basis, as permitted. Additionally, over a period of about twelve years, Norman made sizable withdrawals from the Article Fourth Trust to pay the educational expenses of Dean's minor children, as well as for the trust's legal expenses and management fees.

As a result, between 1994 and November 30, 2006, the Article Fourth Trust paid to Norman $209,115.94 in five-percent-of-principal extractions and $95,371.89 in income payments, as well as more than $110,000 in education expenses for Dean's minor children, $61,101.57 in legal expenses, and $33,691.56 in fund management fees. According to Norman, as of 2006, "[t]here is very little in the [Article Fourth] trust. There is only about a hundred thousand [dollars] left in the trust."

As to the remainder of the monies that Norman received outright under Elinor's Will, on April 29, 1996, Kilcullen prepared, and Norman executed, the "Norman Porter Living Trust" (Revocable Trust), into which was placed the $1,350,000 left to Norman by Elinor, along with other monies, bringing the total trust corpus to $1,700,000. Norman was the grantor under the Revocable Trust and was apparently permitted unfettered discretion under the trust's terms to "distribute the net income and principal thereof (even to the point of completely exhausting such assets) to such persons and in such manner as the Grantor may from time to time direct." The Revocable Trust also provided in Article Sixth:

[N]o Trustees hereunder shall have any power or discretion, or be deemed to be a Trustee with respect to payments, applications, or allotments of income or principal to or for the use or benefit of (1) himself or herself as a beneficiary of any trust created hereunder, or (2) any person whom said Trustee, in his or her individual capacity, is legally obligated to support, if such payment, application, or allotment shall constitute a discharge of any part of such Trustee's legal support obligation.

Moreover, Norman could terminate the Revocable Trust at any time or take assets out of the trust for any purpose, even though such action might entail estate-tax consequences.

Norman and Dean were the initial trustees under the Revocable Trust, but Norman amended the trust instrument about three weeks later on May 14, 1996, to name himself as sole trustee and Dean as successor trustee. Norman amended the Revocable Trust many times over the ensuing years for varying reasons, including, in one version, naming Kilcullen a successor trustee. Significantly, however, Kilcullen was never appointed to act as a trustee or co-trustee under any of the trust instruments that he prepared for Norman; thus, at no point did Kilcullen have direct control over the distribution of funds from the Revocable Trust.

Following Elinor's death, Norman's inheritance funded a rather lavish lifestyle. In April 1995, utilizing a limited liability corporation, Vliettown Road Associates (Vliettown), formed by Norman and Dean, Norman purchased a large home and carriage house in Bedminster for $950,000. Norman made a down payment of $200,000, obtained a mortgage of $750,000, and immediately undertook improvements at a cost of $300,000. Norman then moved into the carriage house, while Dean and his family occupied the main house. Over the years, Norman made all of the monthly payments on the mortgage loan, which amounted to $87,000 per year initially, but was later reduced to $72,000 per year. Dean made no financial contribution to the purchase price of the home or to the mortgage payments.

In January 1996, Norman, at age seventy-five, embarked on the first of several world cruises aboard the Queen Elizabeth II (QEII) where he met a Brazilian citizen, Maria, fourteen years his junior, whom he married nine months later on October 5, 1996. "[S]hock[ed]" by the news, Dean had convinced his father to execute a prenuptial agreement, which was then prepared by Kilcullen and executed by Norman and Maria on August 16, 1996. The terms of the agreement protected each party's interest in property brought into the marriage, which on Norman's part consisted of $2,988,189 in assets: $1,829,058 in the Revocable Trust; $674,612 in the Article Fourth Trust; a $369,243 ownership interest in Vliettown; and $115,276 in other monies. For her part, Maria owned four apartments and a house in Rio de Janiero, and had an annual income of $70,000, savings in the amount of $260,000, and jewelry valued at $85,500.

Over the next six years, the couple continued enjoying an extravagant lifestyle funded largely, if not exclusively, by Norman. They initially occupied the carriage house on the Bedminster estate, but at Maria's urging, Norman purchased a house in Peapack-Gladstone for $640,000, with a down payment of $200,000, and a mortgage for $440,000. Over the next six years, the couple cruised around the world "five or six" times aboard the QEII, at a cost of about $150,000 per trip. Norman estimated that he spent "[c]lose to a million" dollars on these cruises.

Other travel expenses financed entirely by Norman included a trip to Paris; a three-month stay at the Copacabana Hotel in Rio de Janiero, which Norman testified cost "a lot of money"; a trip to Florida on the Queen Mary at a cost of about $10,000; a trip to visit Dean and his family in South Carolina; and multiple trips by Maria's son and granddaughters from Brazil to visit the couple in New Jersey. Although Norman and Maria experienced marital difficulties throughout, prompting Dean to suggest that his father file for divorce, the couple remained together, and as of the early 2000's, continued to live in their Peapack-Gladstone residence.

In November 2001, Norman withdrew "all of the assets," consisting of more than $350,000 in stock shares, from the Article Fourth Trust and deposited those assets in his personal accounts in violation of the trust terms. At the time, Norman claimed that Kilcullen made him do so; however, this claim is flatly contradicted by Kilcullen's letter of January 14, 2002, which Norman did not deny receiving, explicitly directing Norman that "'[t]he [stock] shares must be returned to the Article IV Trust. All sales proceeds must be returned to the Article IV Trust.'" Consequently, Norman returned the assets to the Article Fourth Trust shortly after withdrawal.

As further evidence of his concern over Norman's removal of assets from the Article Fourth Trust, on December 4, 2001, Kilcullen, in his capacity as successor trustee of Norman's Revocable Trust, filed a guardianship action, alleging that Norman was unfit to manage his financial affairs, seeking to have Norman submit to a psychiatric examination, and requesting that Norman be compelled to return all of the assets "improperly withdrawn" from the Article Fourth Trust.

Kilcullen informed Norman that, by instituting the guardianship action, he was "fulfilling my obligations as his successor trustee to determine whether [Norman] was disabled or not," where "[i]ncompetency would be one element of disability." Kilcullen told Norman that he "was only comfortable continuing to represent him if I knew he was, in fact, competent or incompetent." According to Kilcullen, Norman agreed to submit to evaluation, and on January 9, 2002, Norman "was seen in independent psychiatric evaluation" by a psychiatrist. The psychiatrist concluded in his report dated January 14, 2002, that:

patient [(Norman)] is fully competent in a psychiatric sense and is able to govern his own affairs. Testamentary capacity is in place as tested in that he is aware of his financial holdings, is aware of his natural heirs and is able to attend to these facts at one point in time. I find no evidence of mental defect, psychiatric illness, or dysfunction. The patient is a competent adult who is able to govern his own affairs.

As a result of this report, Kilcullen effectively abandoned his guardianship action against Norman.

In the meantime, having learned of Norman's asset withdrawal and the couple's newly-hatched plan to move to Brazil, where "they could live like kings," and evidently concerned over depletion of his "inheritance," Dean sued Norman on June 6, 2002, alleging breach of fiduciary duty in removing the Article Fourth Trust assets; seeking an accounting of the trust; and demanding that Norman be removed as trustee. Norman's answer was prepared by Kilcullen, as was his counterclaim, seeking recovery under Dean's two still outstanding promissory notes in the amounts of $401,000 and $72,000, which arose out of Norman's earlier transfers of his interests in Vliettown and the Bedminster property to Dean. The matter eventually settled at some point in 2002. Under the terms of the settlement, Norman cancelled Dean's two promissory notes, and an institutional trustee was appointed to act as co-trustee with Norman of the Article Fourth Trust. Additionally, while Norman retained the ability to extract the larger of $5,000 or five percent of the trust corpus, the settlement required that he also "withdraw an amount equal to his distribution to pay the tuition expenses of Dean's children." In that manner, the settlement agreement effectively doubled, to ten percent, the rate at which the trust principal in the Article Fourth Trust would be depleted when Norman extracted trust principal pursuant to the $5,000 or five-percent provision of Elinor's Will.

At around this same time, Norman and Maria had apparently resolved their marital discord and decided to move to Brazil. Accordingly, on July 15, 2002, Norman and Maria entered into a "Mid-Marriage Agreement," providing that their prenuptial agreement was nullified, their Peapack-Gladstone home was to be sold, and obligating Norman to purchase a home in Rio de Janiero for not less than $400,000. Under the terms of the agreement, in the drafting of which Norman was represented by Kilcullen, if Maria survived Norman, who was eighty-two years old at that time, then Maria would receive Norman's interest in the house; and if Norman survived Maria, then Norman would have a life interest in the house, following which the house would be transferred to Maria's estate and her heirs. Additionally, the agreement provided that Norman would pay all costs associated with the couple's move to Brazil. Thus, Norman paid $30,000 to ship certain furniture to Brazil, including $5,000 to ship a piano.

Although Norman later asserted that he did not understand the terms of the mid-marriage agreement, the signing ceremony was actually videotaped and recorded. At that time, Norman represented that he understood the terms of the agreement, that he had consulted with both an accountant and with Kilcullen "many times" concerning the agreement, and that he was "pleased" with Kilcullen's services. Norman further asserted that he had no questions to ask Kilcullen about the agreement at that time, and that he understood that he "could simply walk out of this meeting today without signing this Midmarriage Agreement." On the same day that he executed the mid-marriage agreement, Norman revised his Will to disinherit Dean, "not because of any lack of love or affection for him, but because of his litigious behavior toward me"; an obvious reference to Dean's suit concerning Norman's withdrawal of assets from the Article Fourth Trust.

After executing the agreement, Norman and Maria departed for Brazil on July 17, 2002. Around this same time, Norman sold his home in Peapack-Gladstone and applied the proceeds towards the couple's new residence in Rio de Janiero, an apartment he eventually purchased for $670,000, even though the mid-marriage agreement only obligated him to spend $400,000.

At various times between 2000 and 2004, Norman paid legal fees, evidently to Kilcullen, in the total amount of $61,101.57 from the principal of the Article Fourth Trust. According to Kilcullen, these payments from the trust were authorized by the trustee, Norman, who admitted directing that the payments be made. In fact, Elinor's Will explicitly provided that the trustee had the power to engage lawyers to aid in the administration of the trust and to pay for any legal services performed.

Having evidently reconciled, on July 2, 2004, Norman and Dean, along with Dean's wife on behalf of their children, filed a legal malpractice action against Kilcullen and his law firm, SGK, essentially asserting that Kilcullen failed both to advise Norman concerning the prudent disbursement of his funds from the testamentary and revocable trusts, and to protect the interests of Dean and Dean's children. By that time, of course, Norman's monies in the testamentary and revocable trusts had been reduced considerably. By November 2006, the assets in the Article Fourth Trust had dwindled to about $100,000, while the monies in the Revocable Trust amounted to about $368,283, apparently bolstered by $200,000 that Norman received from the sale of an apartment in Brazil. Worse yet, because Norman had taken out loans against some of those trust assets, they were not immediately available to him. As of January 2006, Norman's annual expenses were about $60,000, while his annual income from Social Security and his trusts was only about $35,000. This shortfall left Norman in a "very big bind," since Maria "will not contribute one penny."

Following discovery, defendants moved for summary judgment. In granting the relief dismissing plaintiffs' complaint with prejudice, the motion judge concluded that: (1) the limitations period had expired for claims involving Elinor's Will, (2) Norman could not prove malpractice because Kilcullen had always acted in conformance with Norman's expressed intent to completely control the spending of his monies and to spend them as he wished, and (3) Dean and his children could not prove malpractice because Kilcullen owed no duty to non-client third parties.

On appeal, plaintiffs argue that the trial court erred: (1) in dismissing Norman's legal malpractice claims, (2) in concluding that Kilcullen did not owe a duty of care to Dean and his family, and (3) in dismissing certain claims involving Elinor's Will on statute-of-limitations grounds. We disagree.

(I)

The essential thrust of plaintiffs' malpractice claim is that in providing legal advice and drafting documents, Kilcullen allowed Norman to take monies from the two trusts and spend it unwisely. They cite multiple instances, none of which we find evidential of their claim.

(A)

First, plaintiffs argue that Kilcullen acted negligently by failing to draft Elinor's Will in such a way as to control Norman's spendthrift conduct, claiming he should have used a QTIP device instead of the Article Fourth Trust, and by failing to advise Norman about provisions in the Article Fourth Trust that purportedly restricted him from utilizing trust principal for any purpose, other than support, maintenance, education and welfare. Neither assertion has any merit.

As to the former, plaintiffs' challenge to the Will drafting is outside the applicable six-year limitations period, N.J.S.A. 2A:14-1; Grunwald v. Bronkesh, 131 N.J. 483, 499 (1993), and is therefore barred. The Will having been executed in 1990 and probated in 1994, the motion judge correctly observed that, "[a]t the time the Will was probated, both [D]ean and Norman were fully aware of the legal effect of the estate plan and at the time did not raise any challenge," thus prompting the judge to find that the "statute of limitations issue standing alone could be grounds for granting application for summary judgment."

We agree. Plaintiffs' assertion that Kilcullen should have employed the more restrictive QTIP trust was made ten years after Elinor's Will was probated and about four years after the six-year limitations period expired. The effect of Kilcullen's choosing the Article Fourth Trust would have been obvious when the trust was funded shortly after the Will was probated. Thus, that aspect of plaintiffs' claim concerning the QTIP estate planning device was properly dismissed on statute-of-limitations grounds.

There is yet another, more substantive reason why this particular feature of the malpractice claim fails. Plaintiffs' own expert, Chester Kasarik, upon whom they rely as support for this assertion, testified that a QTIP trust would be inappropriate in a Will "if you wanted to leave the money to your spouse outright." Here, Elinor's testamentary intent was indisputably to leave outright to Norman those monies that were not placed in the Article Fourth Trust, and that he spend that inheritance as he deemed appropriate. Thus, according to plaintiffs' own expert, inclusion of a QTIP device to exert control over Norman's broad discretion would have been contrary to the testator's clearly expressed testamentary intent. Plaintiffs' alternate claim concerning the Article Fourth Trust is that Kilcullen failed to advise Norman about restrictions preventing him from utilizing trust principal for any purpose other than support, maintenance, education and welfare, and accordingly, that Norman could not pay counsel fees therefrom. We disagree. Under the express provisions of the Article Fourth Trust, Norman was entitled to receive all trust income during his lifetime and to withdraw on a yearly basis the greater of $5,000 or five percent of trust principal. This right under the Trust's clear language is "absolute." Thus, as designated trustee of the Article Fourth Trust, Norman was authorized to distribute the Trust's principal to himself or Elinor's issue "to provide for the care, maintenance, support and education" of those individuals.

The so-called "restrictions" referred to by plaintiffs simply do not limit Norman's right to distribute trust corpus beyond the "five-and-five" power already described. In fact, the relevant trust language imposes restrictions on distributions only "for so long as there shall be any principal held in a trust created by [Elinor], whether by Will or deed, and which shall have qualified for the marital deduction under the Code," but plaintiffs can point to no trust created by Elinor that would invoke this provision. Certainly not the Revocable Living Trust, which was created by Norman to protect those assets he received outright under Elinor's Will. Indeed, the only other trusts identified under Elinor's Will would have come into existence only in the event Norman predeceased her.

Furthermore, contrary to plaintiffs' argument, there is no restriction on payments from trust principal for counsel fees. Elinor's Will explicitly authorizes the trustee to retain legal counsel for the administration of the Article Fourth Trust and to pay counsel for services rendered. Payment from the trust corpus is therefore implicitly authorized by the grant of such power to the trustee. With respect to plaintiffs' argument that Trust corpus was used to pay for counsel fees unrelated to administering the Trust, plaintiffs have presented no evidence to support such a claim.

Significantly for present purposes, in the only instance when Norman impermissibly withdrew assets from the Article Fourth Trust Estate, Kilcullen, upon discovery of this fact, immediately directed Norman to return the monies, which he did. Moreover, management of the Article Fourth Trust, including Norman's late 2001 unilateral withdrawal of funds beyond those authorized, was the subject of litigation instituted by Dean against his father which eventually settled. That settlement agreement, contrary to plaintiffs' argument, did not restrict Norman's ability to pay legal fees from trust principal. Rather, it merely addressed Norman's ability to receive payments from Article Fourth Trust principal, permitting such payments conditioned on Dean and his children receiving a like sum. In other words, instead of being more restrictive, the settlement agreement simply required that Norman match any withdrawals from trust principal with equal payments to Dean, effectively allowing depletion of trust corpus at twice the rate of the trust's original terms. We perceive no basis therein for any claim of legal malpractice on Kilcullen's part.

(B)

Plaintiffs next argue that Kilcullen's "recommendation and use of the Revocable Trust for Norman was ineffective, inappropriate and useless as an estate planning tool given Norman's emotional state and limited financial capabilities" and, alternatively, that Kilcullen failed to advise Norman about restrictions in the Revocable Trust that supposedly limited Norman's access to monies therein. These seemingly contradictory positions have no basis in fact.

As to the former, there is no competent credible evidence of Norman's incapacity to govern himself or manage his financial affairs. Quite the contrary, the guardianship action was effectively aborted when a January 2002 psychiatric evaluation found him competent.

Equally unavailing is plaintiffs' assertion that Kilcullen failed to advise Norman about a restriction on his ability to obtain the monies in the Revocable Trust. Clearly, the essence of the Trust was to permit Norman unfettered access to trust principal in his discretion, and to have the assets held therein, if any, to pass to the designated beneficiaries free of probate upon Norman's death. Thus, Article Second vests Norman, as both Grantor and Trustee, with the ultimate discretion to direct payment of principal to any individual he may choose, including himself:

SECOND: The Trustees shall hold, administer, invest, and reinvest the assets transferred to the Lifetime Trust by the Grantor during the Grantor's lifetime, shall collect the income therefrom, and shall distribute the net income and principal thereof (even to the point of completely exhausting such assets) to such persons and in such manner as the Grantor may from time to time direct. In the absence of such directions, the Trustees may during the Grantor's lifetime, at any time and from time to time, distribute the net income and principal thereof (even to the point of completely exhausting such assets) to or for the benefit of the Grantor as the Trustees, in their sole and absolute discretion, deem advisable for the Grantor's health, support, maintenance, education, and comfort. Any net income not so distributed in any accounting year of the Lifetime Trust shall be accumulated and, at the end of such year, added to, and in all respects treated as, principal.

The "restrictions" plaintiffs refer to are set forth in Article Sixth, which by its express terms apply only to the payment of monies to: (1) a Trustee of the Living Trust in his or her capacity as a beneficiary of any trust created under the Living Trust; and (2) payment by the Trustee of monies to an individual whom the Trustee, in his or her individual capacity, owes a legal support obligation. These restrictions, however, plainly do not apply to Norman, who is the grantor and trustee of the Revocable Trust and neither a beneficiary of any trust created under its terms, nor legally obligated to support any other person.

Thus, plaintiffs' contention concerning the Revocable Trust is without merit. The argument effectively presumes that Norman wanted and would have tolerated some restriction on his discretion to use the monies in the Revocable Trust. This presumption, of course, is without basis; in fact, the contrary is quite clear. The bulk of the trust monies came from Elinor, who wanted Norman to do with those monies as he wished. Norman admits that he "was comfortable spending his money, the way he did, because he did not expect that he would live to his current age." Indeed, Norman thought that every year "would be my last year." Given his mindset, it seems highly unlikely that Norman would have heeded any contrary advice rendered by Kilcullen.

(C)

Plaintiffs' next contention is that Kilcullen negligently permitted Norman to execute a mid-marriage agreement ceding certain property interests to his wife, and is thus responsible for the resultant loss of monies that should have been "available to provide for the health, maintenance, education and welfare of Appellant Norman Porter and his issue." The record, however, belies this contention.

The undeniable fact is that Norman was medically determined to be mentally competent and able to manage his financial affairs shortly before he entered into the mid-marriage agreement. Prior to executing the agreement, Norman consulted with both Kilcullen and an accountant, and testified under oath that he understood the terms of the agreement, had no questions concerning it, and was pleased with Kilcullen's services. Furthermore, Norman indicated his belief that the agreement represented a "fair negotiation" of rights between Maria and him, and that he was not "uncomfortable" with any of the agreement's provisions. In short, there is simply no proof that Norman entered into the agreement other than voluntarily, after being fully informed of the agreement's terms.

Finally, to the extent Dean predicates his claim of legal malpractice on Kilcullen's failure to protect Dean's potential inheritance by having Norman enter into the mid-marriage agreement (see, infra), suffice it to say, that on the same day he executed this document, Norman revised his Will to disinherit his only child. Here again, we perceive no basis for a malpractice claim grounded on Norman's voluntary and informed decision to enter into the mid-marriage agreement. As so aptly put by the motion judge:

[a]fter years of spending [by Norman], plaintiffs cannot . . . now sustain a claim that defendants [Kilcullen and SGK] should have dishonored the expressed intent of their client [Norman] simply because the putative beneficiaries think they should receive an inheritance. In fact, Dean Porter raised no objection to Norman Porter's spending when it was to his benefit.

[(emphasis added).]

(II)

Plaintiffs contend that the trial court erred both in concluding that Kilcullen and SGK did not owe a duty of care to Dean and his two children to, in effect, "preserve their inheritance," and in dismissing the legal malpractice claim on that basis. This argument fails.

In order to establish an action for legal malpractice, a "plaintiff must demonstrate: 1) the existence of an attorney-client relationship creating a duty of care upon the attorney; 2) that the attorney breached the duty owed; 3) that the breach was the proximate cause of any damages sustained; and 4) that actual damages were incurred." Sommers v. McKinney, 287 N.J. Super. 1, 9-10 (App. Div. 1996).

While it is clear that Kilcullen and Norman enjoyed an attorney-client relationship that created a duty of care on the part of Kilcullen to Norman, no such duty of care was owed to Dean, whose professional relationship with Kilcullen ceased on July 8, 1997. In arguing otherwise, Dean relies upon Kilcullen's June 1999 preparation of the two promissory notes concerning the Bedminster property; on a June 27, 2003 release that Kilcullen sought to have executed by Dean relating to the settlement of Dean's June 2002 lawsuit against Norman; and on Dean's affidavit supporting Kilcullen's December 2001 guardianship action. Each of these events, however, fails to demonstrate a continuing attorney-client relationship. There is no proof that Kilcullen was acting as Dean's counsel when he prepared the promissory notes for the transfer of Norman's interest in Vliettown to Dean. On the contrary, the notes, which were prepared long after the Kilcullen/Dean relationship ended, were intended for the protection and benefit of Kilcullen's actual client, Norman, who had a substantial financial interest in the Bedminster property at that time, and on whose behalf they were prepared.

Insofar as the release is concerned, it was prepared in connection with the settlement of litigation instituted by Dean against Norman, on whose behalf Kilcullen filed an answer and counterclaim. Dean was represented in that lawsuit by his own counsel, John M. Elias, and as the release makes abundantly clear, Kilcullen was acting as Norman's attorney at all pertinent times covered by the release.

As to Kilcullen's aborted guardianship action, Dean argues an attorney-client relationship may be inferred from the fact that Kilcullen was seeking "affirmative relief on [Dean's] behalf." We fail to see the basis for any such implication. Even Dean admits to only a limited involvement (submitting an affidavit) and concedes that Kilcullen "discontinued all communication" with him after the guardianship action was filed, refusing to accept any assistance from Dean in prosecuting the action.

Implicitly acknowledging the absence of a direct contractual relationship, Dean next argues he and his children were protected third parties to the attorney-client relationship between Kilcullen and Norman, based on their reliance upon Kilcullen to ensure that Elinor's testamentary intent as to the Article Fourth Trust was carried out. This contention fails as well.

To be sure, "there are circumstances in which an attorney may owe a duty to a third party with whom the attorney does not have a contractual relationship." Banco Popular N. Am. v. Gandi, 184 N.J. 161, 179 (2005). The key to establishing such an attorney-client relationship involves the third-party's reliance upon the attorney. Id. at 180-81.

As explained by the Court in Banco Popular N. Am.:

If the attorney[']s actions are intended to induce a specific non-client[']s reasonable reliance on his or her representations, then there is a relationship between the attorney and the third party. Contrariwise, if the attorney does absolutely nothing to induce reasonable reliance by a third party, there is no relationship to substitute for the privity requirement [underlying the usual attorney-client relationship]. . . . [T]he invitation to rely [by the attorney] and reliance [by the third party] are the linchpins of attorney liability to third parties.

[Ibid.]

Dean's contention in this regard is bottomed firmly on the faulty premise that he and his children have a right to inherit substantial monies from Norman and Elinor, which right was largely denied them because Kilcullen supposedly failed to prevent Norman from spending the trust's assets. However, as correctly recognized by the trial court, a "parent need not make testamentary provisions for a child." Raynor v. Raynor, 319 N.J. Super. 591, 612 (App. Div. 1999). Thus, "[i]t is well-settled that New Jersey law does not prohibit the disinheriting of an adult child." In re Unanue, 311 N.J. Super. 589, 596 (App. Div.), certif. denied, 157 N.J. 541 (1998), cert. denied, 526 U.S. 1051, 119 S. Ct. 1357, 143 L. Ed. 2d 518 (1999). Accordingly, to the extent this notion of duty supports Dean's claim of an attorney-client relationship, and more generally, plaintiffs' claim for legal malpractice, those claims are simply unfounded.

To the extent Dean argues he relied upon Kilcullen to safeguard the Article Fourth Trust assets based on Kilcullen's earlier representation of Elinor's estate, this contention suffers from the same defect that dooms the rest of his arguments. As noted, Elinor's Will plainly allows Norman to receive, without restriction, all of the income generated by the assets in the Article Fourth Trust, as well as $5,000 or five-percent of the trust principal on an annual basis. Thus, Elinor's testamentary intent plainly contemplated the possibility that Norman could exhaust the trust principal by properly withdrawing the $5,000 or five percent amounts yearly, provided that he lived long enough to do so.

This circumstance, in turn, evidences Elinor's "expressed intent" not so much to preserve the trust principal as to control the depletion of principal by allowing Norman to make only measured and timed withdrawals for his own use. Thus, Elinor's declared testamentary intent to allow Norman to tap the trust principal provides no basis for any reliance by Dean or his children on Kilcullen to safeguard trust assets.

Furthermore, Dean's argument also overlooks the fact that, except for one quickly-remedied occasion, Norman made only authorized withdrawals of trust principal from the Article Fourth Trust. Norman paid authorized legal fees and administrative costs, and made substantial payments for the education expenses of Dean's children. Accordingly, plaintiffs' tacit contention that the principal in the Article Fourth Trust has not been preserved as Elinor intended is simply mistaken.

The final contention in this regard is that pursuant to Rules of Professional Conduct (RPC) 1.9(a), Kilcullen had a "continuing duty" to Dean, as a former client, not to do anything that was "materially adverse" to Dean's interests. According to plaintiffs, Kilcullen's "acts of preparing documents to dissipate the Article IV Trust and accepting payment of his fees from the Article IV Trust were actions that were materially adverse" to Dean's interests, and thus constituted legal malpractice. Plaintiffs are mistaken.

The violation of a rule of professional conduct, standing alone, does not provide a basis for a civil action for legal malpractice. Baxt v. Liloia, 155 N.J. 190, 193, 201 (1998). Moreover, plaintiffs have not demonstrated that the acts of Kilcullen of which they complain constitute breaches of RPC 1.9(a). As previously explained, Norman's withdrawals of income and principal from the Article Fourth Trust were authorized under Elinor's Will. In light of that authorization, plaintiffs have not demonstrated how Kilcullen may have violated the rule of professional conduct by aiding Norman in doing what Norman was allowed to do. For all these reasons, then, we conclude that Kilcullen owed no duty of care to Dean and his children, and that even if such a duty existed, there are no facts of record from which a reasonable jury could find any breach thereof.

Affirmed.

In related litigation, which eventually settled, over the management of the Article Fourth Trust initiated by Dean against Norman, his father, there was testimony that Norman could deplete the trust of its entire principal during Norman's lifetime if Norman exercised his discretion to take all of the trust income and five-percent of the trust principal annually, and invaded the trust corpus for the benefit of Dean and his minor children.

Kilcullen was Norman's counsel in the formation of Vliettown and the purchase of the Bedminster estate. Because he also provided Dean with "estate planning and tax counselling services," on June 27, 1994, Kilcullen advised both Norman and Dean of a "potential conflict" of interest between them concerning the Vliettown purchase, and required them to execute a waiver of any such conflict. About three years later, on July 8, 1997, Kilcullen sent Dean a letter, explicitly ceasing to represent Dean in Dean's "personal and estate planning" because of a "potential conflict" between Dean and Norman concerning another matter handled by Kilcullen on behalf of Norman. That letter effectively terminated any formal attorney-client relationship between Kilcullen and Dean.

Subsequently, on June 17, 1999, Dean gave two promissory notes to Norman in the amounts of $401,000 and $72,000 in exchange for Norman's interest in Vliettown, thus affording Dean the effective ownership of the Bedminster estate. Norman, however, continued to make the mortgage payments on the Bedminster property. Later, however, in 2000, Dean and his family left the Bedminster estate and moved to South Carolina. By that time, Norman had moved from the carriage house to another home that he purchased in Peapack-Gladstone. Norman made the mortgage payments on both houses for a "number of years," but eventually "couldn't afford it anymore." As a result, Norman stopped making the mortgage payments on the Bedminster estate and, in 2003, the mortgage company foreclosed on the loan. According to Norman, he lost his entire investment of between $1,000,000 and $1,200,000 in the Bedminster estate as a result of that foreclosure.

At that juncture, in late 1996, Norman was paying the mortgages on both the Bedminster estate, occupied by Dean and his family, and the Peapack-Gladstone house.

Also named as a defendant was the law firm of Drinker, Biddle and Reath (Drinker firm), with whom Kilcullen had evidently been employed when he provided legal services to Norman and Elinor during the 1990s. Plaintiffs eventually settled their action against the Drinker firm, leaving only Kilcullen and SGK as the remaining defendants.

The settlement agreement also authorized Norman to pay "interest on a 'margin' loan encumbering the investment assets in the Revocable Trust."

Dean's argument is also seriously undercut by the fact that Norman is still alive, and thus it is uncertain which of his putative heirs will survive him or how many assets, if any, will remain in the trusts at the time of his death.

(continued)

(continued)

30

A-6671-06T2

December 31, 2008