In re Estate of Goldberg, 2024 UT 15

This appeal pertains to an interpretation of rule 1.9(a) of the Utah Rules of Professional Conduct, which states, “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially…
attorney meeting with client at desk

This appeal pertains to an interpretation of rule 1.9(a) of the Utah Rules of Professional Conduct, which states, “A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client…”

Facts

In 2015, Leon Nelson and Marilynn Tetrick became co-trustees of the Goldberg Trusts. These trustees subsequently retained the Kesler & Rust law firm and attorney Thomas Nelson to assist the trustees in administering the trust. A few years later several beneficiaries of the trust sued the trustees (Leon Nelson and Marilynn Tetrick) for breach of fiduciary duty. A jury found the trustees liable for breach of duties, entered a judgement of over $1.8 million against them personally, and the court removed the trustees from their position, appointing successors.

The now-former trustees, continuing to be represented by Kesler & Rust and Mr. Nelson, moved to reduce the amount of the judgement entered against them. The new, successor trustees moved to disqualify Kesler & Rust and Mr. Nelson as the former trustees’ attorneys under rule 1.9(a), reasoning that these attorneys’ prior representation of the former trustees in 2015 had actually constituted an attorney-client relationship with the trust itself. Under this interpretation the attorneys would be in violation of rule 1.9(a) by now representing the former trustees in a matter substantially related to the attorneys’ purported representation of the trust from 2015. Representing the interests of the former trustees would seemingly be “materially adverse” to the interests of the trust, as the trust sought to recover damages from the former trustees’ breach of fiduciary duty to the trust.

Reasoning and Ruling

In reviewing the issue of whether “an attorney representing a trustee necessarily has an attorney-client relationship with the underlying trust,” the Utah Supreme Court ruled that an attorney does not automatically have such a relationship with a trust. Relying on the precedent of Snow, Christensen & Martineau v. Lindberg, the Court reasoned that an attorney-client relationship can exist with a trust itself, but such a relationship would depend on context. In this case, the 2015 engagement letters between the attorneys and former trustees indicate the attorneys specifically stated that they represented Leon Nelson and Marilynn Tetrick as trustees but did not represent the beneficiaries. This would indicate that in the context of the case an attempt was made by the attorneys to distinguish between representation of the trustees, and representation of the trust. When suing for breach of fiduciary duty, it had been the beneficiaries who had advocated for the interests of the trust, not the former trustees or their attorneys. Kesler & Rust and Mr. Nelson’s defense had been restricted to defending the former trustees in the limited capacity held by that position.

The Utah Supreme Court concluded that as an attorney-client relationship had not existed between the attorneys and the trust itself in this matter, the attorneys were not in violation of rule 1.9(a) in their representation of the former-trustees and should not be disqualified.

Originally Published: August 20, 2024

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