Attorney as Trustee
Adopted: July 15, 1981
Attorney A represents H, who is divorced from W. Prior to the divorce in which Attorney A represented H, H and W had obtained a loan from Bank B. The loan was secured by a deed of trust, Attorney A is the trustee.
May Attorney A now represent H in a partition proceeding which would of necessity involve Bank B and Attorney A as trustee?
Opinion:
No, unless Attorney A resigns as trustee. In prior opinions, the rule has been established that the trustee is a fiduciary charged with representing the interests of both lender and borrower. As such, he cannot both be a party in his fiduciary capacity as trustee and represent one of the adversaries in the same proceeding, whether it be a foreclosure proceeding, an appeal from a foreclosure proceeding, or a suit to recover damages or enjoin foreclosure. See, e.g., CPR's 264, 166, 94. The conflict or potential conflict between his roles as trustee and as attorney for H would prevent his both representing H and acting as trustee in the partition proceeding, but would not prevent his representing H if he resigned as trustee.