Summary
The South Carolina Supreme Court held that an intended third-party beneficiary of an existing will or estate planning document may bring tort and contract claims against the lawyer whose drafting error defeats or diminishes the client's intent. The court rejected strict privity and the Florida-Iowa rule's categorical bar on extrinsic evidence, reversed the dismissal under Rule 12(b)(6), and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether South Carolina recognizes a legal-malpractice cause of action by an intended third-party beneficiary of an existing will or estate-planning document against the drafting attorney despite the absence of a traditional attorney-client relationship.
- Whether South Carolina recognizes a breach-of-contract claim by such an intended beneficiary under a third-party-beneficiary theory.
- Whether recovery is limited to beneficiaries named in the estate-planning document or identified by status, and whether extrinsic evidence may be used to establish the client's intent and drafting error.
- Whether Fabian's complaint stated viable claims sufficient to survive Rule 12(b)(6) dismissal.
Holdings
- South Carolina recognizes a cause of action for legal malpractice in tort by a third-party beneficiary of an existing will or estate-planning document against a lawyer whose drafting error defeats or diminishes the client's intent.
- An intended third-party beneficiary of an existing will or estate-planning document may bring a breach-of-contract action against the drafting attorney.
- Recovery is limited to persons named in the estate-planning document or otherwise identified in the instrument by their status, such as children or grandchildren.
- Extrinsic evidence is not barred in a beneficiary's malpractice or third-party-beneficiary claim and may be essential to proving the client's intent and the attorney's drafting error.
- Fabian's complaint stated viable tort and contract causes of action, so dismissal under Rule 12(b)(6) was improper.
Key quotations
“We recognize a cause of action, in both tort and contract, by a third-party beneficiary of an existing will or estate planning document against a lawyer whose drafting error defeats or diminishes the client's intent.” (at 491-492)
“Recovery under either cause of action is limited to persons who are named in the estate planning document or otherwise identified in the instrument by their status.” (at 492)
“Where the claim sounds in both tort and contract, the plaintiff may elect a recovery.” (at 492)
Factual background
Dr. Denis Fabian executed a trust drafted by respondents that gave his wife a life interest and divided the remainder between her children and Dr. Fabian's brother, Eli. A provision stated that if Eli predeceased Dr. Fabian, portions would pass to Eli's daughter and to Fabian, but Eli survived Dr. Fabian and later died before the life beneficiary, causing the provision, as drafted, to direct Fabian's anticipated share to Eli's estate. Fabian alleged the drafting error defeated Dr. Fabian's intent and resulted in her effective disinheritance and a double share for her cousin. After settling a trust-reformation action without releasing claims against the drafting attorneys, Fabian brought malpractice and third-party-beneficiary contract claims.
Procedural history
Fabian sued the attorney and law firm that drafted her late uncle's trust, alleging negligent drafting defeated the uncle's estate-planning intent and disinherited her. The Georgetown County Circuit Court dismissed the complaint for failure to state a claim, concluding that Fabian lacked an attorney-client relationship and that South Carolina did not recognize a third-party-beneficiary contract claim in this context. The Supreme Court of South Carolina certified the appeal from the Court of Appeals, reversed the dismissal, and remanded.
Remand instructions
Remand to the Georgetown County Circuit Court for further proceedings consistent with the opinion, including consideration of Fabian's tort and third-party-beneficiary contract claims.