The gift of estate planning services that Portland, Ind., resident Jeffrey G. Corle and his wife received in 2010 seemed at first like a thoughtful and worthwhile investment in their future.
The couple felt that way about the gift until questions about Unauthorized Practice of Law began drawing attention away from what the estate planning package offered and focused on what was not included: adequate lawyer involvement.
Now, the Jay County man is the lead plaintiff in a class-action lawsuit in the Northern District of Indiana that aims not only to recover the $2,495 paid to Michigan-based Estate Planning and Preservation Inc. but also alleges the company was engaged in UPL when it sold the estate planning package to Corle without adequate lawyer involvement.
Whether those estate planning services actually constitute UPL, though, is a question that makes this case stand out as one that may break new legal ground for Indiana. The state Supreme Court hasn’t weighed in on Estate Planning and Preservation and its activity possibly being UPL, typically the first step in actions accusing a person or business of practicing law without a license.
The Logansport law firm Starr Austen & Miller that filed Corle’s suit is applying the Indiana Supreme Court’s decision last year in Indiana State Bar Association v. United Financial Systems Corp., 926 N.E.2d 8 (Ind. 2010), as the basis for this new class-action claim. The lawyers contend that case set the standard for what is and isn’t UPL in Indiana and that it offers guidelines that can be applied to future litigation without first obtaining that determination from state justices as required by court rule and the state constitution.
“This is almost a mirror image of what United Financial did with their course of conduct determined to be illegal,” said attorney Mario Massillamany with Starr Austen & Miller. “We don’t believe there’s any distinction between the two, and there’s no question now what UPL in Indiana is when it comes to this kind of conduct. The justices were pretty detailed in their analysis, and just like any precedent you take this caselaw and apply it to the facts here.”
In United Financial, the Supreme Court examined the Indianapolis company’s activity after the Indiana State Bar Association filed a trust mill suit in 2008. The justices in April 2010 ruled that the company had engaged in UPL based on how it offered estate planning services: a non-attorney salesperson contacts and sells the product, receives the money up front, then passes that information on to a panel attorney who contacts the client by phone and reviews the documents as previously written before returning them to United Financial Systems Corp. for final approval before delivery.
Finding that to be UPL, the justices ordered that customers be notified and reimbursed, but that didn’t happen and the court has since appointed former Monroe Superior Judge Viola Taliaferro as commissioner to preside over the refund and attorney fee matters.
UFSC officials Richard and Beau Follett and Richard L. Follett II failed to appear at a hearing in late June and the commissioner issued warrants for their arrest. But Judge Taliaferro has agreed to stay those warrants temporarily and give the Folletts another chance to appear and post a $50,000 certified check for refunds to those who purchased estate plans from the company. Two class-action lawsuits have been lodged against UFSC, which had its business license revoked in April by the Indiana Department of Insurance. Those lawsuits are pending in state courts. Starr Austen & Miller is one of the firms representing plaintiffs in the Fulton County action, while Cohen & Malad in Indianapolis is handling the other one in Marion County. Both are on hold as the ISBA’s case and the Follett bench warrant issues are resolved.
But even as the UFSC case continues, Massillamany says the specific UPL decision from United Financial is precedent that can be applied to Corle’s case involving Estate Planning and Preservation, an insurance marketing agency that Marie-Dawn Joseph of southern Michigan founded in 2001.
The business plan calls for convincing senior citizens and retirees to “avoid probate” and purchase a living trust package sold by EPP, the suit says. Much like UFSC, this company operates by soliciting to potential clients and then having a salesperson obtain financial information and sell legal documents such as a living trust, power of attorney, pour over will, deeds and living will. No attorney is involved when these documents are reviewed and sold, the suit says, and the standard price for a living will package is $2,495.
After the money is obtained, information is routed through Joseph’s husband’s law firm, Joseph & Associates. Her husband, Paul T. Joseph, has been a Michigan attorney since 1982, and both he and attorney Amanda Klaiss, who handled the EPP legal services, reviewed and made phone contact with the clients, the suit says. A client’s information is inserted into “boiler plate language” in the forms, the suit claims.
The suit states that Corle’s father in March 2010 paid EPP a premium of $2,495 for a living trust package for Corle and his wife, Kay. The representative didn’t ask about existing estate plans and Corle never met with Klaiss, who was assigned to the case.
The suit asks for disgorgement of fees as a result of the UPL (which the Indiana Supreme Court ordered in United Financial), and alleges constructive fraud, contractual invalidity, conversion, and legal malpractice claims against the law firm and attorneys.
The question of whether the federal court applies the state justices’ UPL holding may not survive. U.S. Magistrate Judge Roger Cosby has issued an order describing the class action and diversity of citizenship jurisdiction claims in the suit “woefully inadequate” and wants an amended complaint by the end of July.
Whether the United Financial holding can be applied to this and future UPL actions is unclear.
Both Article 7, Section 4 of the Indiana Constitution and Indiana Code 33-24-1-2 give the state’s highest court exclusive jurisdiction over UPL matters, and a specific passage from the justices in United Financial says they have not previously nor would they in that ruling attempt to provide “a comprehensive definition because of the infinite variety of fact situations.”
The Indiana attorney general’s office takes the position that United Financial would be precedential in other cases that might be factually similar to it, according to Deputy Attorney General Abigail Kuzma. But the Indiana Supreme Court maintains original jurisdiction on any UPL action and state courts, not federal, would generally be involved.
Indianapolis attorney Don Lundberg, the longtime Disciplinary Commission leader who left that position in 2010, said the issue is complicated. If a case is filed under diversity jurisdiction, Lundberg said it’s an interesting question whether a federal court sitting in diversity can enforce Indiana UPL as interpreted by the justices in UFSC when there’s a specific constitutional provision and state court rule that limits UPL jurisdiction to original actions before the justices, and seems to limit standing to seek injunctive relief.
Kevin McGoff, the Indianapolis attorney with Bingham McHale who represented the ISBA on United Financial, also found interesting the interplay between state court rules and procedure and this federal class-action claim.
“I can certainly appreciate how they’d adopt that theory on how the Supreme Court has reviewed this behavior and decided it’s UPL, as support for a civil claim,” he said. “If you look at caselaw in Indiana and the nation, you’ll find a lot of cases that define what the practice of law is in various states and jurisdictions. By the same token, you’ll find cases defining UPL and all those definitions could be dropped in state or federal court to use as precedent. But obviously, it’s up to the court to see if they’re willing to.”•