An attorney who drafted a power of attorney for a client that included a requirement that the client’s agents provide an inventory and yearly accountings to the attorney had a duty to ensure the agents complied with the requirements, according to an Ohio appeals court. Svaldi v. Holmes (Ohio Ct. App., 10th Dist., No. 12-AP167, Dec. 27, 2012).

Attorney Robert Holmes met with Peter Svaldi about changing his power of attorney and other estate documents. Two of Mr. Svaldi’s neighbors accompanied Mr. Svaldi to the meeting. Mr. Svaldi told Mr. Holmes he wanted to name his neighbors (1) attorneys-in-fact under a new power of attorney, and (2) executors under his Will. Mr. Holmes drafted a power of attorney that gave the agents various powers over Mr. Svaldi’s assets. The power of attorney also required the agents to provide an inventory of estate assets within 30 days of appointment and provide yearly accountings of Mr. Svaldi’s assets to attorney Holmes. Mr. Svaldi signed the power of attorney prepared by Mr. Holmes. A new Will naming the neighbors as executors was also executed.

The agents failed to provide the inventory or the accountings. Holmes never followed up with Mr. Svaldi or with the agents to ascertain whether the agents completed the inventory or annual accountings. It was later discovered that the agents stole money from Mr. Svaldi.

Mr. Svaldi sued Mr. Holmes for legal malpractice, claiming he was negligent by (1) failing to verify the fitness of the agents to perform under the power of attorney and (2) failing to monitor the performance of the holders of the power of attorney through receipt and review of the inventory and yearly accountings. After the parties completed discovery, attorney Holmes moved for summary judgment. The trial court granted summary judgment, holding that Mr. Holmes did not owe a duty to Mr. Svaldi. Mr. Svaldi appealed, arguing that the trial court erred in concluding that Holmes owed him no duty.

The Ohio Court of Appeals reversed, holding that Mr. Holmes owed a duty to Mr. Svaldi to monitor the agents’ performance under the power of attorney, so summary judgment was not appropriate. According to the court,

[B]y incorporating the inventory and accounting scheme into the power of attorney, Holmes expanded the scope of his representation of Svaldi beyond the mere drafting of legal documents. By setting up the inventory and accounting scheme, Holmes assumed a responsibility to attempt to make it work. Thus, Holmes had a duty to follow up with [the agents] regarding their obligation to complete an inventory and the annual accountings and encourage [the agents] to comply with the scheme.

As a result, the appellate court reversed the judgment of the trial court, and remanded the case to the trial court for further proceedings.

The Ohio appeals court case is annexed here – Svaldi v. Holmes