Fabian v. Lindsay - 410 S.C. 475, 765 S.E.2d 132 (2014)

Rule:

The South Carolina Supreme Court recognizes 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. 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. Where the claim sounds in both tort and contract, the plaintiff may elect a recovery.

Facts:

Appellant brought the present action for legal malpractice and breach of contract by a third-party beneficiary, alleging that the attorney and his law firm (collectively, respondents) made a drafting error in preparing a trust instrument for her late uncle and, as a result, she was effectively disinherited. The circuit court dismissed appellant’s action, holding that she was not in privity with the attorneys and that her third party beneficiary claim was not cognizable under state law. Appellant challenged the decision, arguing that South Carolina should recognize a cause of action, in tort and in contract, by a third-party beneficiary of a will or estate planning document against a lawyer whose drafting error defeated or diminished the client's intent.

Issue:

Did South Carolina recognize a cause of action by a third-party beneficiary of a will or estate planning document against a lawyer whose drafting error defeated the client's intent? 

Answer:

Yes.

Conclusion:

The order of dismissal was reversed. The court held that South Carolina recognized a cause of action, in tort and in contract, by a third-party beneficiary of a will or estate planning document against a lawyer whose drafting error defeated or diminished the client's intent. According to the court, South Carolina law generally recognized a breach of contract claim for a third-party beneficiary of a contract. Generally, one not in privity of contract with another cannot maintain an action against him in breach of contract, and any damage resulting from the breach of a contract between the defendant and a third-party was not, as such, recoverable by the plaintiff. However, if a contract was made for the benefit of a third person, that person may enforce the contract if the contracting parties intended to create a direct, rather than an incidental or consequential, benefit to such third person.