Caba v. Barker

• Decision Date: 16 June 2004
• Citation: 93 P.3d 74,193 Or.App. 768
• Parties: Sandra CABA and Floy Jones, Appellants, v. Anthony J. BARKER, Respondent.
• Court: Oregon Court of Appeals

93 P.3d 74

193 Or.App. 768

Sandra CABA and Floy Jones, Appellants, v. Anthony J. BARKER, Respondent.

0107-07280; A118089.

Court of Appeals of Oregon.

Argued and Submitted January 13, 2004.

Decided June 16, 2004.

Thomas W. Sondag, Portland, argued the cause for appellants. With him on the briefs was Lane Powell Spears Lubersky LLP.

Brian R. Talcott, Portland, argued the cause for respondent. With him on the brief was Dunn Carney Allen Higgins & Tongue LLP.

Before HASELTON, Presiding Judge, and LINDER and ORTEGA, Judges.

HASELTON, P.J.

Plaintiffs, residual beneficiaries of a will prepared by defendant, appeal, assigning error to the trial court's dismissal of their claims for professional malpractice and breach of contract. We conclude, under Hale v. Groce, 304 Or. 281, 744 P.2d 1289 (1987), that plaintiffs, as donee beneficiaries of defendant's promised performance, have pleaded legally sufficient claims both for negligence and for breach of contract. Accordingly, we reverse and remand.

In reviewing the trial court's dismissal pursuant to ORCP 21 A(8), "we assume the truth of all well-pleaded facts" in the operative pleading, plaintiffs' third amended complaint, giving plaintiffs "the benefit of all reasonable inferences that can be drawn" in their favor. Simons v. Beard, 188 Or.App. 370, 372, 72 P.3d 96 (2003). Plaintiffs' third amended complaint alleged the following material facts: In October 1999, the testator, Laura Carnese (Carnese), was suffering from the effects of a stroke. Carnese had formulated an estate plan that included residuary bequests to plaintiffs Caba, a relative by marriage, and Cammann, a blood relative.¹ Charles Carnese (Charles), an attorney, was Carnese's relative by marriage and had previously represented Carnese on other matters. Charles was aware of Carnese's testamentary plan.

On or before October 22, 1999, Charles arranged for defendant, another Oregon attorney, to meet with Carnese in the hospital and to prepare a will for her. Charles and defendant were friends and former professional colleagues. Before defendant met with Carnese, Charles informed defendant of Carnese's estate plan, and defendant knew or should have known that Carnese's will would include gifts to Charles.

Defendant promised to prepare Carnese's will. That promise included "an implied promise to make the will invulnerable to a will contest so as [to] achieve [Carnese's] plan to maximize gifts to residuary beneficiaries, including [plaintiffs]." Defendant prepared a will, which Carnese executed on October 22, 1999. Under the will, Charles received a gift of $35,000, was named a residual beneficiary, and was appointed executor of Carnese's estate. Carnese died in November 1999, a few weeks after she executed the will.

The will was admitted to probate and, shortly thereafter, a will contest was filed. Settlement of the will contest resulted in a total depletion of approximately $620,000 from the residual estate, which, in turn, reduced each residuary beneficiary's bequest by more than $100,000.² In July 2001, plaintiffs filed this action, alleging claims for breach of contract and negligence. In addition to the facts described above, with respect to the breach of contract claim, the third amended complaint alleged that

"[d]efendant's promise to prepare [Carnese's] will included an implied promise to make the will invulnerable to a will contest so as [to] achieve [Carnese's] plan to maximize gifts to residuary beneficiaries, including [plaintiffs]. [Plaintiffs] were intended, donee beneficiaries of defendant's promises, including his promise to prepare a will which would not be attacked by a will contest."

Plaintiffs also alleged that defendant had been unable to provide independent legal services to Carnese for various reasons, including his relationship with Charles, Charles's involvement in arranging for and facilitating execution of the will, and defendant's failure to sufficiently communicate with Carnese or properly consider her health. Plaintiffs' allegations pertaining to breach of contract concluded:

"The will contest would not have been filed if [Carnese's] will had been prepared by an independent lawyer. Because of the circumstances described above, defendant was disqualified at the outset from performing his promise and/or was unable to act as an independent lawyer or was materially prevented from acting as an independent lawyer. In preparing [Carnese's] will, defendant, under the circumstances, breached his implied promise to make the will invulnerable to a will contest, resulting in damages to plaintiffs, who bring this breach of contract claim as intended donee beneficiaries of defendant's implied promise to [Carnese]."

With respect to the legal malpractice claim, plaintiffs reiterated that "[d]efendant assumed the duty [to] make the will invulnerable to a will contest so as to achieve [Carnese's] plan to maximize gifts to residuary beneficiaries, including [plaintiffs]," and further pleaded 12 specifications of negligence:

"Defendant was negligent in one or more of the following particulars, causing damage to plaintiffs:

"1. In failing to advise [Carnese] that her estate plan, in which she disfavored or disinherited blood relatives in favor of [Charles] and his family, could foreseeably give rise to a will contest.

"2. In failing to ascertain from [Carnese] her reasons for her estate plan so that, in the event of a will contest, he would be able to testify about the subject.

"3. In failing to advise [Carnese] that, as [Charles's] colleague and friend, his independence would be an issue in a will contest.

"4. In failing to advise [Carnese] to obtain the services of a lawyer who was not tainted with a relationship with [Charles] and how to obtain such a lawyer.

"5. In failing to act independently of [Charles] by personally interviewing [Carnese] before a will was prepared, by advising her without [Charles's] assistance, and by obtaining a second witness to the will who had not been obtained by [Charles] and who was not an unwilling witness.

"6. In relying upon [Charles] for information about [Carnese's] estate plan before he met her and by using as the will a form of will that [Charles] had prepared.

"7. In failing to investigate [Carnese's] physical, mental and emotional status as of October 22, 1999, including her vision and how to successfully communicate with her.

"8. In failing to include in the will [Carnese's] reasons for disproportionately favoring [Charles] and his family and disfavoring her blood relatives.

"9. In failing to ascertain the dynamics of the family situation between blood relatives and relatives by marriage as they existed at the time the will was executed.

"10. In failing to ascertain the animosity in which [Charles] was held by the hospital staff and others.

"11. In failing to recognize that circumstances surrounding [Carnese's] estate plan, as described above, included factors which a reasonable lawyer would have recognized exposed [Carnese's] estate plan to a will contest, which factors included the issue of his independence, and in failing to advise [Carnese] of these factors and to minimize them so as not to expose the estate to an unreasonable risk of a will contest, including the failure to video or audio tape the interview with [Carnese] that should have been conducted as stated above.

"12. In failing to otherwise minimize the chances of a will contest being filed or the success of a will contest."

Defendant moved to dismiss both the breach of contract and negligence claims. In particular, defendant argued that, under Hale, in the absence of a "specific promise" to benefit a nonclient third party, only the client could recover damages for a lawyer's breach of contract or negligence. Defendant further contended that plaintiffs' pleadings were legally insufficient in that they were predicated upon, and alleged, merely an implied promise to make Carnese's will "invulnerable to a will contest." The trial court agreed:

"[I]t does seem like the courts have not left beneficiaries with much of a remedy in this kind of situation, where there's a will contest and the estate's depleted and the residual beneficiaries don't seem to have any real recourse against an attorney who may or may not have made some glaring errors. But I do read Hale v. Groce, as I did before, to stand for the proposition that unless there's a relationship that exists through a specific promise, there is no contractual obligation on the part of the attorney to the residual beneficiary in this case.

"Here the allegation is — by the plaintiffs is that there is this implied contract to create a will that's impervious to attack. To me, that is just the general attorney's duty, to act professionally and provide his legal skills, and that is not a duty that carries to a beneficiary, a residual beneficiary of a will. I think Hale v. Groce stands for the proposition that there has to be a specific promise to that third party for a relationship to exist to allow for this kind of suit."

On appeal, the parties reiterate their arguments before the trial court. Plaintiffs argue as follows: (1) Under the test prescribed in Hale and Lord v. Parisi, 172 Or.App. 271, 19 P.3d 358, rev. den., 332 Or. 250, 27 P.3d 1044 (2001), they sufficiently alleged that they were intended beneficiaries of defendant's promise to Carnese. (2) Defendant's promised performance necessarily included an implied promise to act in accordance with the standard of care owed by attorneys in drafting wills, and the third amended complaint sufficiently alleged that defendant's conduct negligently breached that standard of care. (3) Finally, and in addition, defendant's alleged implied promise to make the will "invulnerable" to challenge, so as to maximize the residuary gifts, was a contractual obligation, independent and distinct from defendant's obligation under the general professional standard of care; thus, defendant's breach of...