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Simpson v. Calivas - 139 N.H. 1, 650 A.2d 318 (1994)

Rule:

The general rule that a nonparty to a contract has no remedy for breach of contract is subject to an exception for third-party beneficiaries. Third-party beneficiary status necessary to trigger this exception exists where the contract is so expressed as to give the promisor reason to know that a benefit to a third party is contemplated by the promisee as one of the motivating causes of his making the contract. Where a client contracts with an attorney to draft a will and the client identifies to whom he wishes his estate to pass, that identified beneficiary may enforce the terms of the contract as a third-party beneficiary. 

Facts:

A father executed a will that had been drafted by his lawyer. The will left all real estate to his son except for a life estate in "our homestead located at Piscataqua Road, Dover, New Hampshire," which was to be given to his wife, the son's stepmother ("Roberta"). After the father's death in September 1985, both the son and his stepmother filed a joint petition seeking a determination of whether the term "homestead" referred to all the decedent's real property on Piscataqua Road (including a house, over 100 acres of land, and buildings used in the family business), or only to the house (and, perhaps, limited surrounding acreage). The probate court found the term "homestead" ambiguous, and in order to aid construction, admitted some extrinsic evidence of the testator's surrounding circumstances, including evidence showing a close relationship between the father and stepmother. The probate court, however, did not admit notes taken by the son during consultations with his father that read: "House to wife as a life estate remainder to son, Robert H. Simpson, Jr. . . . Remaining land . . . to son." The probate court construed the will to provide stepmother Roberta with a life estate in all the real property. After losing the will construction action, the son negotiated with his stepmother to buy out her life estate in all the real property for $400,000. The son then filed a case against the lawyer who drafted the will for negligence and breach of contract, alleging that the lawyer failed to draft a will, which incorporated the actual intent of his father to leave all his land to the son in fee simple. Sitting with a jury, the Superior Court directed a verdict for defendant lawyer based on plaintiff son's failure to introduce any evidence on damages or breach of duty. The trial court also granted summary judgment on collateral estoppel grounds based on findings of the probate court and dismissed the action, ruling that under New Hampshire law, an attorney who drafts a will owes no duty to intended beneficiaries. 

Issue:

In an action based on legal malpractice, negligence, and contract by plaintiff beneficiary against defendant attorney who drafted a will, did a duty run from that drafting attorney to an intended beneficiary and did an intended beneficiary have third-party beneficiary status?

Answer:

Yes

Conclusion:

The Supreme Court of New Hampshire reversed and remanded the case. The Court held that although there was no privity between a drafting lawyer and an intended beneficiary, the obvious foreseeability of injury to the beneficiary demanded an exception to the privity rule and that an identified beneficiary (here, the plaintiff son) had third-party beneficiary status. The Court further held that an intended beneficiary stated a cause of action simply by pleading sufficient facts to establish that an attorney negligently failed to effectuate the testator's intent as expressed to the attorney (here, the defendant lawyer). The Court found no basis for collateral estoppel because a finding of actual intent by the probate court was not necessary for that judgment. The trial court erred in excluding the appraisal values in the probate inventory.

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