Title: Allen v. Hall
Citation: N/A
Docket Number: S45130
State: Oregon
Issuer: Oregon Supreme Court
Date: February 11, 1999

Filed:  February 11, 1999

IN THE SUPREME COURT OF THE STATE OF OREGON

KRISTINE SANDOZ ALLEN and
ERIC S. SANDOZ,

	Plaintiffs,

	v.

SHERYL ANN HALL and 
DANIEL HALL,

	Defendants.

(USDC CV-96-00563-JJ; USCA 96-35996; SC S45130)

	En Banc

	On certified questions from United States Court of Appeals
for the Ninth Circuit order dated March 12, 1998; certification
accepted April 7, 1998.

	Honorable Ferdinand F. Fernandez, Honorable Pamela Ann
Rymer, and Honorable A. Wallace Tashima, Circuit Judges.

	Argued and submitted September 14, 1998.

	Margaret Fiorino, Portland, argued the cause for plaintiffs. 
With her on the brief were Julie R. Vacura and Fiorino &amp; Vacura,
LLP, Portland.

	Steven Carl Berman, Portland, argued the cause for
defendants.  With him on the brief were Sara J. Ryan and Ball
Janik, LLP, Portland.

	Richard S. Yugler, Portland, filed the brief for amicus
curiae Oregon Trial Lawyers Association.

	GILLETTE, J.

	Certified questions answered.  

		GILLETTE, J.

		This case is before the court on two certified
questions from the United States Court of Appeals for the Ninth
Circuit.  See ORS 28.200 et seq. (providing for certification of
certain questions of Oregon law from specified federal courts and
appellate courts of other states to Oregon Supreme Court).  As
framed by the Ninth Circuit, the questions are:  

	1.  Does Oregon recognize the tort of intentional
interference with prospective inheritance?

	2.  If a tort action for intentional interference with
prospective inheritance is available, what are the
elements of that tort?

		Framed more narrowly, the two questions resolve
themselves into a single issue:  Have plaintiffs in this case,
who have brought a tort action based on a theory that defendants
wrongfully interfered with a prospective inheritance that
otherwise would have gone to plaintiffs, alleged facts which, if
proved, would form a basis for relief under Oregon law?(1)  To that
reformulated question, our answer is "Yes."  

		The underlying case arises out of a tort action that
was filed in the United States District Court for the District of
Oregon under 28 USC § 1332 (diversity of citizenship).  The case
was assigned to a magistrate judge.  In that action, plaintiffs
Kristine Sandoz Allen and Eric Sandoz alleged the following
facts, as summarized by the magistrate judge:

		"Following heart transplant surgery in 1984,
Gregory Putman developed a number of serious medical
problems.  As his illness advanced, Putman became
increasingly dependent on [defendants Sheryl and
Daniel] Hall[] for assistance in managing his medical
and financial needs.  During the last four years of his
life, Putman gave the Halls possession of various wills
he had executed, placed Sheryl Hall's name on his bank
accounts, and placed title to various motor vehicles in
the Halls' names.

		 "On October 9, 1995, Putman executed a will
devising substantially all of his assets, including
homes in Pacific City, Oregon, and Oregon City, Oregon,
to the Halls.  That will, prepared on Putman's home
computer, devised nothing to plaintiffs.  Putman gave
the Halls the original of this will.

		"Putman drafted a second will on his home computer
on October 13, 1995.  This will, unlike the will
executed four days earlier, left Putman's Oregon City
home to plaintiffs.

		"Putman met with an attorney, Stephanie Barrie, on
October 19, 1995, in order to draft and execute a new
will.  Putman brought a copy of the October 13, 1995
draft with him to that meeting, and told Barrie that he
wanted to leave his Oregon City home to plaintiffs. 
Putman told Barrie that his illness required that the
new will be prepared immediately.  Barrie prepared a
will according to these instructions.

		"Defendant Sheryl Hall became aware of Putman's
efforts to change his will, and brought Putman for
admission to Good Samaritan Hospital in Portland,
Oregon, on October 30, 1995.   At the hospital, Sheryl
Hall falsely stated that Putman had been confused
during the previous two weeks.

		"Putman telephoned Barrie's office from the
hospital on October 31, 1995, asking Barrie to return
his call on his pager.  Sheryl Hall telephoned Barrie
the same day, asking Barrie to call her on Putman's
pager regarding Putman's will.

		"The next day, Barrie spoke with Sheryl Hall by
telephone.  Sheryl Hall told Barrie that Putman could
not execute a new will because he was not lucid, and
agreed to inform Barrie when he was lucid enough to
sign a will.  Sheryl Hall never telephoned Barrie with
such information.

		"On November 3, 1995, Sheryl Hall falsely claimed
to have a power of attorney to decide whether Putman
should be given life support, and instructed the Good
Samaratin Hospital staff not to provide such support to
Putman.  Putman died two days later, deprived by Sheryl
Hall's conduct of the opportunity to execute the will
Barrie had prepared."

Plaintiffs further alleged that but for the Halls' intentional
interference, they would have inherited the Oregon City home. 
They sought $245,000, the value of the home, in damages.

		On the Halls' motion, the district court dismissed the
action for failure to state a claim.  The magistrate judge opined
that, although some jurisdictions have recognized a claim for
intentional interference with prospective inheritance, Oregon
courts have not, and most likely would not, follow that trend. 
The judge also opined that, even if Oregon did recognize a claim
for intentional interference with prospective inheritance,
plaintiffs' complaint would fail, because it did not allege a
necessary element of such a claim, viz., that the conduct
complained of be "independently tortious."     

		On plaintiffs' appeal, the Ninth Circuit concluded
that, in the absence of controlling precedent from the courts of
this state regarding the existence or elements of the tort of
intentional interference with prospective inheritance,
certification of the foregoing two questions under ORS 28.200 et
seq. was appropriate.  We accepted certification.  See generally
Western Helicopter Services v. Rogerson Aircraft, 311 Or 361, 811
P2d 627 (1991) (setting out statutory and discretionary criteria
for acceptance of certified questions).  However, as already
indicated, we do not confine our answer to the strict terms of
the Ninth Circuit's questions.  Rather, we direct our answer at
what we perceive to be the substance of the Ninth Circuit's
inquiry.  We turn to the questions.        

		1.  Does Oregon recognize the tort of intentional
interference with prospective inheritance?

		On the facts presented, this case does not afford this
court a reason to resolve that specific question.  It is true
that this court to date has not recognized a separate and
distinct claim of intentional interference with a prospective
inheritance.  The reason that the issue need not be answered now
(or, perhaps, ever) is that, under Oregon law, an intentional
interference with a prospective inheritance may be actionable
under a reasonable extension of the well-established tort known
as intentional interference with economic relations.  Although,
heretofore, this court has applied that tort only to contractual
and business relationships and prospects, we are persuaded that
the tort also may, by a reasonable and principled extension, be
made applicable to some noncommercial relationships and
prospects, such as the one alleged by plaintiffs in the present
case.

		Our cases to date have stated the elements of the tort
of intentional interference with economic relations as follows: 
(1) the existence of a professional or business relationship
(which could include, e.g., a contract or a prospective economic
advantage); (2) intentional interference with that relationship
or advantage; (3) by a third party; (4) accomplished through
improper means or for an improper purpose; (5) a causal effect
between the interference and the harm to the relationship or
prospective advantage; and (6) damages.  See McGanty v.
Staudenraus, 321 Or 532, 535, 901 P2d 841 (1995) (stating
elements); Uptown Heights Associates v. Seafirst Corp., 320 Or
638, 651, 891 P2d 639 (1995) (same).  As noted, this court
heretofore has applied those elements only to business and
contractual relationships and prospects.  It follows that, before
we attempt to relate the allegations in the present complaint to
the elements of that tort, we must explain why the tort may, by a
reasonable and principled extension, be made applicable to a
prospective inheritance -- typically a noncommercial expectancy.  
		
		
The answer lies in the very close analogy that exists
between an expectancy of inheritance and those other interests to
which this court already has extended the protections of the tort
of intentional interference with prospective economic advantage. 
Although an expectancy of inheritance is, by definition, purely
prospective, so are many of the commercial interests that have
been associated with and are protected by the tort.  See McGanty,
321 Or at 535 (noting that tort protects prospective economic
advantage in addition to existing contracts and business
relationships).  Moreover, prospects of inheritance long have
been recognized as interests that are worthy of common-law
protection.  See, e.g., Hale v. Groce, 304 Or 281, 744 P2d 1289
(1987) (permitting intended beneficiary of will to sue lawyer for
failing to include gift to intended beneficiary in will as
directed by testator); Brown v. Hilleary, 133 Or 26, 286 P 593
(1930) (decedent's heirs could sue to set aside deed that was
procured by undue influence); Groesbeck v. Groesbeck, 49 Or 113,
88 P 870 (1907) (decedent's heirs permitted to set aside sale of
property that was procured from testator before his death by
fraud and undue influence).  Ultimately, an expectancy of
inheritance is an interest that fits by logical extension within
the concept underlying the tort of intentional interference with
prospective economic advantage and, absent some legitimate reason
for excluding it, may be deemed to be covered by that theory of
recovery.

		Defendants suggest that there are a number of reasons
for excluding the expectancy of an inheritance from this tort, or
from any other kind of common-law protection.  They argue, first,
that the established tort is logically inapposite -- that it is
rooted in a "law and economics" paradigm that recognizes that
society may want to encourage "efficient" breaches of contracts
and deems such breaches as privileged.  Defendants contend that,
because there is no analogous concept of an efficient breach in
the inheritance context, the reason for recognition of the
intentional interference with prospective economic advantage tort
cannot apply in that context.

		Defendants are correct that some of our intentional
interference cases include discussions of economic theory and
privilege to interfere that are irrelevant in the inheritance
context.  Examples are Top Service Body Shop v. Allstate Ins.
Co., 283 Or 201, 582 P2d 1365 (1978), and Wampler v. Palmerton,
250 Or 65, 439 P2d 601 (1968).  However, neither case purports to
limit recovery, once and for all, to those situations to which
their economic theory discussions apply.  The fact that economic
privilege can form part of the wrongfulness analysis does not
mean that it is a necessary element of the tort.

		Defendants next argue that recognizing any liability in
tort for the kind of interference alleged here could undermine a
central element of this state's common law and statutory system
of probate -- the so-called "testamentary intent" rule.  That
rule holds that, for purposes of disposing of a decedent's
estate, the decedent's intent is to be ascertained only from the
four corners of a validly executed will, if one exists.(2) 
Defendants contend that recognizing tort liability for
intentional interference with a prospective inheritance could
violate that rule by, in essence, permitting a plaintiff to
obtain relief that is contrary to a will's clear import by
alleging and proving facts outside of the will.  They suggest, in
fact, that that potential exists in the present case.  

		We disagree.  We are considering a tort action, not an
action to set aside a will.  Although the testamentary intent
rule clearly is controlling in a will contest, it does not follow
that the rule must be followed in the tort context.  If, as
alleged here, a party has obtained the benefit of the
testamentary intent rule by committing a tort against a third
party, the policy of the law should be to provide an avenue for
relief from the tortious act.  To do so here still would give
defendants all the benefits that the testamentary intent rule
calls for them to receive.  Once possessed of those benefits,
however, defendants would be liable to respond in damages for
torts that they may have committed -- a separate legal inquiry
with its own societal justifications.           

		Defendants also argue that recognizing tort liability
for intentional interference with a prospective inheritance would
undermine the legislature's clear intent specifically to limit
the kinds of challenges that can be brought to contest the
disposition of property under a will.  According to defendants,
the legislature has created, in the Oregon Probate Code, a
"complete" statutory scheme for resolving all disputes that arise
out of the disposition of property under a will.  The
legislature's intent to occupy the field in that manner is
evident, defendants contend, from the fact that the probate code
limits and explicitly enumerates the permissible bases for
challenging a will.  See, e.g., ORS 112.270 (requiring written
evidence of any contract to create, revoke or not make a will);
ORS 112.285(1), (2) (setting out limited circumstances under
which court will infer intent to revoke a will); ORS 113.075(1)
(describing limited group of persons who have standing to
challenge a validly executed will); ORS 113.075(1)(a)-(c)
(setting out limited reasons for contesting probate or validity
of a will).  Defendants contend that allowing a tort action for
interference with a prospective inheritance would invade the
legislature's province by permitting disappointed survivors to
circumvent that legislative scheme.

		In making the foregoing argument defendants rely, in
part, on Burnette v. Wahl, 284 Or 705, 588 P2d 1105 (1978), where
this court was asked to recognize a tort claim that children
could bring against their parents for failing to perform parental
duties.  The court declined to do so, finding that the
contemplated tort touched on an extremely complex area of social
planning, that the legislature had responded to that complexity
by enacting "comprehensive social regulations," and that
recognizing the tort might intrude on that "total legislative
scheme."  Id. at 712.  Defendants argue by analogy that the
probate code also is a "complete" legislative response to a
complex social problem, viz., property dispositions under wills. 
As such, they argue, Burnette dictates that we refrain from
recognizing any tort liability for interfering with a prospective
inheritance, because doing so might interfere with the
legislature's scheme.

		Defendants ascribe a breadth of purpose to the Oregon
Probate Code that is not borne out by the statutes.  Although it
is true that that code strictly controls the kinds of issues that
can be litigated in a proceeding to probate a will, and
presumably requires plaintiffs to pursue those issues in the
probate system where possible, that fact does not necessarily
translate into a broader legislative purpose to deny legal
significance to any other issue that might arise out of a
decedent's making of, or failure to make, a will.  Whether or not
the probate code is or may be a "complete" legislative scheme, it
is complete only within the confines of its subject matter, i.e.,
will contests.  A tort claim does not become a will contest
simply because it arises out of facts relating to the making or
unmaking of a will.

		The correctness of foregoing should be clear from our
decision in Hale.  In that case, we permitted a plaintiff to
bring a third-party negligence action against a lawyer who failed
to carry out the instructions of his client, the deceased
testator, to include a specific bequest to the plaintiff in his
will.  304 Or at 281.  Although the preclusive scope of the
probate code was not at issue in that case, the facts speak for
themselves:  We held that the complaint stated a claim, although
the complaint turned on an allegation that the testator had a
different intent than that expressed in his properly executed and
duly probated will.

		To conclude:  Defendants have offered no persuasive
reason for declining to extend the class of interests that are
protected by the tort of intentional interference with economic
relations to include a prospective inheritance.  It follows that,
for purposes of the first element of that tort, as extended, a
clear prospect of an inheritance can qualify as a protected
economic relationship.

		We turn, now, to the complaint that is at issue in this
case.  As noted, plaintiffs have alleged facts that satisfy the
first element of the tort, viz., the existence of a prospective
economic advantage in the form of a prospective inheritance. 
They also have alleged the second and third elements, viz., an
intentional interference by a third party:  They have alleged
that, after learning that Putman intended to change his will,
Sheryl Hall -- a third party -- took steps to prevent that
eventuality by having Putman admitted to the hospital under false
pretenses, by contacting Putman's lawyer and falsely informing
her that Putman could not execute a new will, and by falsely
claiming a power of attorney to stop life support, thereby
depriving Putman of the opportunity to execute the new will that
his lawyer had prepared.

  		Turning to the fourth element, we must consider whether
Sheryl Hall's interference allegedly was accomplished through
improper means or for an improper purpose.  In Top Service, we
stated that that element is satisfied 

"when interference resulting in injury to another is
wrongful by some measure beyond the fact of the
interference itself.  Defendant's liability may arise
from improper motives or from the use of improper
means.  They may be wrongful by reason of a statute or
other regulation, or a recognized rule of common law."  

283 Or at 209-10.  In a related footnote, we said:

	"Commonly included among improper means are
violence, threats or other intimidation, deceit or
misrepresentation, bribery, unfounded litigation,
defamation, or disparaging falsehood.  See Fleming,
[The Law of Torts], at 612-14 [(4th ed 1971)]; Prosser,
[Handbook of the Law of Torts], § 129, at 936-937 [(4th
ed 1971)]; Restatement (Second) of Torts § 766,
comments j, k, § 767, Comment c (Tent. Draft No. 23,
1977).  As the latter comment points out, in a claim of
improper interference with plaintiff's contractual
relations, it is not necessary to prove all the
elements of liability for another tort if those
elements that pertain to the defendant's conduct are
present.  For instance, fraudulent misrepresentations
made to a third party are improper means of
interference with plaintiff's contractual relations
whether or not the third party can show reliance
injurious to himself." 

Id. at 210 n 11.

		Under the foregoing standard, the conduct alleged in
the present case was improper.  The complaint alleges that Sheryl
Hall intentionally and falsely represented to Putman's lawyer
that Putman was not lucid enough to execute a will.  The
complaint further alleges that Putman thereafter did not have an
opportunity to execute the will prepared by the lawyer.  The
complaint further alleges that Hall intentionally and falsely
represented to the hospital that she had a power of attorney that
authorized her to remove Putman from life support.  There is no
separate allegation that the hospital relied on that false
representation, but the complaint does allege that Putman died
two days later, "deprived by Sheryl Hall's conduct of the
opportunity to execute the will [that his lawyer] had prepared." 
In sum, plaintiffs have alleged that Sheryl Hall interfered by
means of fraudulent misrepresentations, means that are improper
within the meaning of Top Service.

		To state a claim, plaintiffs also must allege facts
that establish a causal relationship between the interference and
the loss of the prospective advantage.  They have done so.  They
have alleged that Putman drafted an alternative will that named
them as beneficiaries on October 13, 1995, that he brought the
draft to his lawyer on October 19, with instructions to prepare
it for execution, that he attempted to reach his lawyer by phone,
wishing to talk about the will, on October 31, and that, on the
next day, Sheryl Hall prevented the lawyer from talking to Putman
through misinformation about Putman's state of mind.  Those facts
create a reasonable inference that Putman desired to change his
will to name plaintiffs as beneficiaries, that he intended to act
on that intent, and that he would have been able to do so before
his death on November 5, were it not for Hall's intentional
interference.                 

		As to the final element of the claim, damage,
plaintiffs have alleged that the interference resulted in the
loss of the intended bequest, Putman's home, valued at
approximately $245,000.

		We have shown that, under Oregon law, plaintiffs'
complaint states a claim under an appropriate extension of the
tort of intentional interference with economic relations.  Before
we conclude our analysis, however, we note one final argument
offered by defendants -- that the elements of the traditional
intentional interference economic relations tort are
insufficiently demanding in the prospective inheritance context,
particularly when compared to the elements of the tort of
intentional interference with prospective inheritance, as it has
been recognized by the Restatement (Second) of Torts § 5774B
(1979) and other jurisdictions.(3)

  		We decline to involve ourselves in that argument.  The
question whether there is, in fact, a difference between the
"independently tortious" and "reasonable certainty" of
realization elements of the intentional interference with a
prospective inheritance tort, as that tort is recognized by the
Restatement and other jurisdictions, and the "improper means or
purpose" and "causal effect" elements of Oregon's economic
relations tort, is a purely abstract one for the purposes of this
case.  That is so because, as we have explained, plaintiffs'
allegations are sufficient to meet the requirements of a tort
presently recognized in Oregon.  Because a reasonable and
principled extension of that tort can encompass the facts that
plaintiffs allege, Oregon law demands no more.

		In summary:  The answer to the questions propounded to
us by the Ninth Circuit, as we have reformulated them, is that
there is no need, in the case before us, to decide in the
abstract whether to recognize a separate and distinct claim for
intentional interference with prospective inheritance in this
state.  We hold that the complaint in the present case states a
claim under a reasonable extension of the scope of the tort of
intentional interference with economic relations.

		Certified questions answered.   

1. 	This court reserves the authority to reformulate
certified questions.  See, e.g., Western Helicopter Services v.
Rogerson Aircraft, 311 Or 361, 811 P2d 627 (1991) (so stating).

2. 	See ORS 112.227 ("The intention of a testator as
expressed in the will of the testator controls the legal effect
of the disposition of the testator."); see also, e.g., Voden v.
Yates, 252 Or 110, 112, 447 P2d 94 (1968) (testator's intention
must be ascertained from language of will); Unander v. U.S. Nat'l
Bank et al., 224 Or 144, 152-53, 355 P2d 729 (1960) (evidence of
testamentary intent different than that expressed in will is not
admissible).  

3. 	The Restatement (Second) of Torts, section 774B (1979),
provides:

	"One who by fraud, duress or other tortious means
intentionally prevents another from receiving from a
third person an inheritance or gift that he would
otherwise have received is subject to liability to the
other for loss of the inheritance or gift."

The jurisdictions that recognize the tort of intentional
interference with prospective inheritance either repeat that
wording, or require that the interferer's conduct be
"independently tortious."