Hale v. Groce

Supreme Court of Oregon
744 P.2d 1289 (1987)

ELI5:

Rule of Law:

An intended beneficiary of a testamentary instrument may bring an action against the drafting attorney for both professional negligence (tort) and as a third-party beneficiary (contract) when the attorney's error results in the loss of the intended bequest.

Facts:

Robert Rogers hired attorney Groce to prepare testamentary instruments to dispose of his property upon his death.
Rogers instructed Groce to include a bequest of $300,000 for Hale in the documents.
Groce specifically told Rogers that he would prepare a trust document that would include the $300,000 gift for Hale.
Groce presented a trust document to Rogers for execution and represented to both Rogers and Hale that the document included the gift to Hale.
Relying on Groce's representations, Rogers executed the trust document without reading it.
After Rogers' death, it was discovered that neither the will nor the trust instrument drafted by Groce contained the $300,000 bequest for Hale.
As a result of the omission, Hale did not receive the intended $300,000 gift from Rogers' estate.

Procedural Posture:

Hale sued Groce in an Oregon circuit court (court of first instance), alleging claims for professional negligence and breach of contract.
Groce filed a motion to dismiss both claims for failure to state a claim.
The circuit court granted Groce's motion and dismissed the complaint.
Hale, as appellant, appealed the dismissal to the Oregon Court of Appeals.
The Court of Appeals reversed the dismissal of the negligence claim but affirmed the dismissal of the contract claim.
Both Hale and Groce, as petitioners, sought review from the Supreme Court of Oregon.

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Issue:

Does an intended beneficiary of a testamentary instrument, who is left out due to the drafting attorney's error, have a valid legal claim against that attorney for either professional negligence or as a third-party beneficiary to the contract between the attorney and the decedent?

Opinions:

Majority - Linde, J.

Yes, an intended beneficiary has valid legal claims under both professional negligence and third-party beneficiary contract theories. A plaintiff who is the intended beneficiary of a lawyer's contract with a client may sue the lawyer for failing to perform as promised. Under contract theory, Hale is a classic 'intended' third-party beneficiary under Restatement (Second) of Contracts § 302(1)(b), as the purpose of Groce's promise to Rogers was to confer a gift upon Hale. Therefore, Hale can sue to enforce the duty created by that contract. The complaint specifically alleges Groce breached his direct promise to include the gift, which is a claim for nonperformance of a contract, not just negligent performance. Under tort theory, while one is ordinarily not liable for negligently causing a stranger's purely economic loss, the contract between the attorney and client creates a duty of care that extends to the intended beneficiary. This derivative duty arises from the professional obligation to the client and aligns with, rather than divides, the lawyer's loyalty, as the duty to the beneficiary is to fulfill the client's directive.

Analysis:

This decision significantly expands attorney liability in Oregon by rejecting the traditional requirement of attorney-client privity for malpractice claims involving intended beneficiaries of testamentary instruments. By allowing claims under both contract and tort theories, the court aligns Oregon with the modern trend of holding attorneys accountable for errors that harm non-clients who were the direct and intended object of the client's retention of the attorney. This precedent ensures that intended beneficiaries have a legal remedy, as the client is deceased and cannot sue, and it reinforces the attorney's duty to competently execute the client's expressed intentions. The decision distinguishes between a claim for negligent performance and a claim for total nonperformance of a specific contractual promise.

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