ST. MALACHY ROMAN CATHOLIC CONGREGATION OF GENESEO, Illinois; Steve Bristol; Conni Bristol; and Kewanee Area United Way, Appellants,
Donna K. INGRAM, as Executor of the Estate of James Ingram, and Robert W. Baird & Co., Inc., Appellees, and Marie R. Tarbox and Gosma, Tarbox & Associates, P.L.C., Appellants.
Rehearing Denied Feb. 11, 2014.
[Copyrighted Material Omitted]
Peter C. Riley of Tom Riley Law Firm, P.L.C., Cedar Rapids, for appellants St. Malachy Roman Catholic Congregation of Geneseo, Illinois; Steve Bristol; Conni Bristol; and Kewanee Area United Way.
Kevin J. Visser and Lisa A. Stephenson of Simmons PerrineMoyer Bergman PLC, Cedar Rapids, for appellants Marie R. Tarbox and Gosma, Tarbox & Associates, P.L.C.
William T. McCartan of Bradley & Riley PC, Cedar Rapids, for appellee Robert W. Baird & Co., Inc.
Gregory M. Lederer and Megan R. Dimitt of Lederer WestonCraig PLC, Cedar Rapids, for appellee Donna K. Ingram, executor of the estate of James Ingram.
This case requires us to decide whether a financial advisor to an individual can be sued by identified beneficiaries of the individual's signed written estate plan when, due to the advisor's allegedly negligent performance of his duties, those beneficiaries do not receive what they were supposed to get under the plan. We conclude the rationale of Schreiner v. Scoville, 410 N.W.2d 679, 682 (Iowa 1987), which held tat attorneys could be sued in these circumstances, extends to nonattorneys acting within the scope of their agency. Accordingly, we reverse the summary judgment below in part and remand for further proceedings.
Specifically, we find that plaintiff Steve Bristol was owed a duty by the decedent's financial advisor and has raised a genuine issue of material fact as to whether the financial advisor's negligent performance of his agency responsibilities caused Bristol not to receive a specific devise set forth in the decedent's will. Accordingly, we reverse the judgment that was entered against Bristol and his spouse. However, as to plaintiffs St. Malachy Roman Catholic Congregation of Geneseo, Illinois, and Kewanee Area United Way, we find their damages are too speculative and affirm the judgments against them on this alternative ground.
II. Facts and Procedural Background.
This controversy centers on the estate planning of Alvin Engels, who died in February 2006 at the age of eighty. Engels was never married and had no children.
Beginning as early as 1993, Engels retained James " Jay" Ingram of Piper Jaffray as a securities registered representative. At some point, Engels apparently began speaking with Ingram about estate planning. On September 24, 1999, Engels executed a revocable trust agreement that appointed Engels and Loretta Wongstrom the cotrustees of the Alvin F. Engels Revocable Trust. Engels also created the Engels Charitable Foundation, a not-for-profit corporation, of which Engels, Ingram, and Wongstrom were appointed directors.  The Revocable Trust and Charitable Foundation paperwork was drafted by attorney Jerry Pepping, while Ingram handled the transfer of Engels's assets— including his home, checking accounts, Piper account, series H and HH bonds, a promissory note, and a variable annuity— to the Revocable Trust.
The Revocable Trust agreement provided that, upon Engels's death, the Revocable Trust assets would be disbursed to two new trusts: Trust A and Trust B. Trust A
would be funded only to the extent necessary to minimize federal estate taxes. The contents of Trust A were to be distributed to the Charitable Foundation, except for $15,000, which would go to St. Malachy Roman Catholic Congregation (St. Malachy's). Trust B would receive the remaining assets, which would be used for the benefit of Katherine, Andrea, and Andrew Bristol and Jerri McLane, Lynn McLane, and James Kleinau.
It is clear that Ingram was involved, to some degree, in the planning for Engels's estate during this time, including the Revocable Trust. Pepping sent drafts of the Revocable Trust agreement and a draft of Engels's last will and testament to Engels, Ingram, and Wongstrom. Ingram was also named as executor of Engels's will in an October 1, 2001 codicil and, on the same day, was named as the successor trustee of the Revocable Trust. Less than a year later, Ingram was appointed Engels's attorney-in-fact for healthcare decisions.
In approximately November 1999, Ingram left Piper Jaffray for Robert W. Baird & Co. He took the Engels account with him.
In 2003, Engels apparently decided to alter his estate plan. On October 1, 2003, Engels executed five documents: (1) a durable power of attorney appointing Jerri McLane as attorney-in-fact for healthcare decisions, (2) a living will, (3) a durable financial power of attorney appointing Ingram attorney-in-fact for Engels's financial affairs, (4) a new last will and testament, and (5) a charitable trust agreement creating the Alvin F. Engels Charitable Trust.
These documents were drafted by attorney Marie Tarbox of the law firm Gosma, Tarbox & Associates. Ingram signed the Charitable Trust agreement, Ingram's wife witnessed three of the documents, and each document, with the exception of the living will, was also notarized by Ingram's assistant, Mardee Trapkus.
The Will provided that Steve Bristol would receive Engels's residence located in Geneseo, Illinois. In addition, the Will made specific bequests of $75,000 to Jerri McLane, $25,000 to Lynn McLane, and $25,000 to James Kleinau. However, the entire residue of the estate after these bequests was to be paid to the Charitable Trust. The Will named Jerri McLane as executor and Ingram as successor executor in the event McLane could not serve.
The Charitable Trust provided in article 3 as follows:
On the death of the Grantor [Engels], the Trustee shall distribute the net income and so much of the Trust principal as the Trustee may determine among St. Malachy's Catholic Church, Geneseo, Illinois, and the United Way and the American Red Cross, with direction that distributions to the latter two organization[s] shall be used for the benefit of residents of Henry County, Illinois, and to such other 501(c)(3) organizations benefitting Henry County, Illinois as may apply for distributions and which the Trustee, in its sole discretion, determines appropriate in any given year.
The Grantor recognizes that he is placing a good deal of discretionary power in the Trustee, and is confident that
the Trustee will exercise its discretionary power in a manner that will best meet[ ] the needs of the charitable organizations named herein, Geneseo, Illinois and Henry County, Illinois over the years.
In article 5, Ingram and Jerri McLane were designated to serve as cotrustees of the Charitable Trust upon Engels's death. The Charitable Trust also provided:
If either of the named Trustees is unable or unwilling to serve as a Trustee, the Trust assets shall be distributed to the Geneseo Is For Tomorrow (" GIFT" ) Community Foundation with the remaining Trustee to serve in assisting the GIFT Board of Directors in determining distributions from the Trust in a manner consistent with those set forth in Article 3, hereof.
As with the 1999 estate planning documents, the record reflects that Ingram was heavily involved in the development of the 2003 Will and Charitable Trust. Tarbox testified she had a referral relationship with Ingram and received four to six referrals from him annually between 1998 and 2002. In each referral, Tarbox testified Ingram typically provided her with
background information about the client in the sense of what their asset value was, if there was a trust in existence, information about the family, information about things that may be of particular concern to that client, and if there had been [specific] things that he had discussed with the client....
Engels was one of these referrals. Tarbox said she had three or four conversations with Ingram in which he outlined Engels's estate plan before she ever met with Engels.
According to Tarbox, during her meeting with Engels, Mardee Trapkus— Ingram's assistant— was also present. Tarbox stated Ingram had told her in advance which charities Engels wanted to benefit. Despite Ingram's history of disclosing a client's existing trusts, Ingram made no mention of the existence of Engels's Revocable Trust. Tarbox indicated she did not become aware of the existence of the Revocable Trust or the Charitable Foundation until after Engels's death. She admitted she never asked Engels how his assets were titled.
Following the discussions with Ingram and her meeting with Engels, Tarbox concluded Engels's intent was to leave his home to neighbor Steve Bristol, $25,000 each to niece Lynn McLane and nephew James Kleinau, $75,000 to niece Jerri McLane, and the remainder of his assets to charity through the Charitable Trust. That meeting was the only time Tarbox ever spoke directly with Engels. She summarized her conclusions in a September 25, 2003 letter to Engels, copied to Ingram, which read in part as follows:
Briefly, you indicated that you wanted Steve Bristol to receive your residence and that your niece Jerri McLane should receive $75,000. Your niece and nephew Lynn McLane and James Kleinau are to receive $25,000 each. After those distributions, the balance of your assets are to be held and distributed to charities and Jay [Ingram] and Jerri [McLane] may decide.
With the letter, she enclosed draft documents, including versions of the Will and Charitable Trust agreement. She later testified it was her intention that Engels would review the documents and return to her office to execute them if they were acceptable.
According to Tarbox, rather than returning to Tarbox's office, Engels executed the documents and merely had copies delivered to Tarbox. Tarbox was angry that Engels had executed the documents outside
of her office. Apparently, Tarbox and Engels patched things up because Tarbox continued to do work for Engels.
Meanwhile, the record indicates that Ingram made several efforts to get Engels to transfer his assets into his Charitable Trust during his lifetime. On January 23, 2004, Ingram's assistant Trapkus sent Engels a letter that stated,
I have enclosed a form that needs to be signed so that Marie Tarbox can change the ownership of your house into the [Charitable] Trust that you have created.
Please sign by the red arrow and return to me in the envelope I have enclosed. I will notarize your signature for you.
Nineteen days later, on February 11, 2004, Tarbox's office sent a quitclaim deed to the recorder's office. The quitclaim deed stated " Alvin F. Engels" was conveying the home in Geneseo to the " Alvin F. Engels Charitable Trust Agreement." The deed was recorded on February 23, 2004. However, apparently unbeknownst to Tarbox, at the time the home was titled in the name of the Revocable Trust, not in Engels's name, so the deed was ineffective.
Approximately one year later, in February 2005, Ingram sent another letter to Engels regarding the Charitable Trust. In it he stated:
Mardee [Trapkus] indicated that you have some issues with Marie [Tarbox]. It's important to make choices according to what you want. (It's your money and you can control where it goes.) I've enclosed transfer forms that are ...