Title: Caba v. Barker
Citation: N/A
Docket Number: S51769
State: Oregon
Issuer: Oregon Supreme Court
Date: October 19, 2006

FILED: October 19, 2006
IN THE SUPREME COURT OF THE STATE OF OREGON
SANDRA CABA
and FLOY JONES,
Respondents on Review,
v.
ANTHONY J. BARKER,
Petitioner on Review.
(CC 0107-07280; CA A118089; SC S51769)
On review from the Court of Appeals.*
Argued and submitted May 9, 2005; reassigned September 20,
2006.
Brian R. Talcott, Dunn Carney Allen Higgins &amp; Tongue LLP,
Portland, argued the cause for petitioner on review.  With him on
the briefs were Thomas H. Tongue and Madeleine S. Campbell.
Thomas W. Sondag, Lane Powell PC, Portland, argued the cause
and filed the brief for respondents on review.
Before Carson,** Chief Justice, and Gillette, Durham, Riggs,*** De Muniz,**** Balmer, and Kistler, Justices.*****
GILLETTE, J.
The decision of the Court of Appeals is reversed.  The
judgment of the circuit court is affirmed.
*Appeal from Multnomah County Circuit Court, Michael J. McShane, Judge. 193 Or App 768, 93 P3d 74 (2004).
**Chief Justice when case argued.
***Riggs, J., retired September 30, 2006, and did not participate in the decision of this case.
****Chief Justice when decision rendered.
*****Walters, J., did not participate in the consideration or  decision of this case.
GILLETTE, J.
In this case, two residual legatees (1) of a will
brought an action against the lawyer who drafted it.  Plaintiffs
assert that, in addition to their status as residual legatees,
they are the intended third-party beneficiaries of what they
characterize as an "implied" promise that they allege that
defendant made to testator in connection with that will. 
Plaintiffs further allege that defendant failed to carry out the
terms of his implied promise to testator, that they suffered
damages as a result of that failure, and that they have either a
viable breach of contract claim or a viable negligence claim (or
both) against defendant as a result.  The trial court dismissed
plaintiffs' complaint for failing to state claims for either
breach of contract or negligence.  The Court of Appeals reversed,
holding that, under Hale v. Groce, 304 Or 281, 744 P2d 1289
(1987), plaintiffs sufficiently had alleged that they were
intended third-party beneficiaries of promises associated with
the drafting of testator's will and that they had alleged legally
sufficient claims for losses suffered as a result of defendant's
failure to perform in conformance with his implied promise.  Caba
v. Barker, 193 Or App 768, 93 P3d 74 (2004).  We allowed review
and, for the reasons that follow, reverse the decision of the
Court of Appeals.  
Because this is an appeal from a trial court order
dismissing a complaint under ORCP 21 A(8), (2) we assume that
all well-pleaded facts are true and give plaintiffs the benefit
of all favorable inferences that reasonably may be drawn from
those factual allegations.  See, e.g., Babick v. Oregon Arena
Corp., 333 Or 401, 407, 40 P3d 1059 (2002) (stating standard of
review).  Plaintiffs' third amended complaint alleges that, in
October 1999, Laura Carnese (testator) was suffering from the
effects of a stroke.  Charles Carnese (Carnese), testator's
relative by marriage and a friend and former colleague of
defendant, arranged for defendant to prepare testator's will. 
The resulting will designated Carnese as executor of the estate
and named him as both a beneficiary of a cash gift and as a
residual legatee along with plaintiffs and three others. 
Testator executed that will on October 22, 1999; she died the
following month.  Shortly after the court admitted the will to
probate, a will contest was filed.  The estate subsequently
settled that will contest.  The settlement diminished each
residual legatee's share of the estate by $103,569.50.  
Plaintiffs then filed the present breach of contract
and professional negligence action against defendant.  In
addition to the facts recited above, plaintiffs alleged the
following facts in support of their breach of contract claim:
"[D]efendant promised to prepare a will for
[testator]. * * * Defendant knew that [testator's]
estate plan included residuary bequests to
plaintiff[s.]
"Defendant's promise to prepare [testator's] will
included an implied promise to make the will
invulnerable to a will contest so as to achieve
[testator'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.
"* * * * *
"The will contest would not have been filed if
[testator's] will had been prepared by an independent
lawyer. * * * In preparing [testator'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
[testator]."
(Emphasis added.)
Plaintiffs incorporated the above-mentioned allegations
in their negligence claim, in which they also alleged that
defendant had been negligent in several particulars related to
exposing testator's estate plan to a will contest and "failing to
otherwise minimize the chances of a will contest being filed or
the success of a will contest."
Defendant moved to dismiss both plaintiffs' claims,
arguing that plaintiffs did not allege that defendant had made a
specific contractual promise to render the will invulnerable to a
contest.  Defendant argued that an implied promise to do so is
legally insufficient to support either of plaintiffs' claims or
to establish that plaintiffs were intended third-party
beneficiaries of defendant's contract with testator.  The trial
court agreed, concluding that an implied promise to make a will
impervious to attack alleges only a professional duty that a
lawyer owes to a client and not a duty that runs to nonclients. 
Plaintiffs appealed, and the Court of Appeals reversed
the trial court's decision.  Caba, 193 Or App at 783.  That court
concluded that, under Hale, plaintiffs were classic "intended"
third-party beneficiaries of defendant's promises, including the
implied promise to act in a professionally competent manner.  Id.
at 779.  Accordingly, the court concluded that plaintiffs
properly had pleaded their breach of contract and negligence
claims by alleging that defendant had breached "a promise to
prepare a will that is 'invulnerable' to challenge."  Id. at 782. 
We allowed defendant's petition for review.
Defendant argues to this court, as he did before the
Court of Appeals, that plaintiffs must allege a specific and
express promise before they may proceed against a lawyer in a
third-party, nonclient action for either breach of contract or
negligence.  With respect to plaintiffs' breach of contract
claim, however, defendant also argues that a promise to render
the will invulnerable to a will contest alleges only a general
standard of care that cannot support a contract action.  Finally,
defendant argues that plaintiffs have failed to state any basis
for relief.  
Plaintiffs' case -- and, as noted, the Court of Appeals
opinion -- relied heavily on this court's decision in Hale, 304
Or 281.  We therefore turn first to that case as an essential
step in analyzing plaintiffs' claims in the present action.
In Hale, the defendant lawyer had promised the testator
that he would include in the testator's will a specific bequest
to the plaintiff.  The lawyer then unaccountably failed to carry
out that promise.  The plaintiff, after unsuccessfully attempting
to reform the will, brought an action against the lawyer for
breach of contract and negligence.  This court held that the
plaintiff's complaint stated claims both for breach of contract
and for negligence but, as we shall show, our analysis in that
regard demonstrates why the same may not be said for plaintiffs'
complaint here.
The court in Hale began by observing,
"The two claims are related, but they differ in
important respects.  Standing alone, without a duty to
plaintiff derived from defendant's contractual
undertaking, plaintiff's tort claim would confront the
rule that one ordinarily is not liable for negligently
causing a stranger's purely economic loss without
injuring his person or property. * * * It does not
suffice that the harm is a foreseeable consequence of
negligent conduct that may make one liable to someone
else, for instance to a client.  Some source of a duty
outside the common law of negligence is required. * * *
A contract claim, on the other hand, does not
necessarily depend on showing negligence."
304 Or at 283-84 (citations omitted).  The court then turned to
the question whether the allegations in the plaintiff's complaint
were sufficient to permit him to assert "third-party beneficiary"
status.  The court stated:
"We agree that the beneficiary in these cases is
not only a plausible but a classic 'intended' third-party beneficiary of the lawyer's promise to his client
within the rule of [the] Restatement [(Second) of
Contracts] section 302(1)(b) and may enforce the duty
so created[.]"
Id. at 286.  The court went on to hold that, 
"[b]ecause under third-party analysis the contract
creates a 'duty' not only to the promisee, the client,
but also to the intended beneficiary, negligent
nonperformance may give rise to a negligence action as
well."
Id. 
The court in Hale considered a will beneficiary to be a
classic "intended" third-party beneficiary when the facts satisfy
the standards in the Restatement (Second) of Contracts, section
302 (1981), which provides:
"Unless otherwise agreed between promisor and
promisee, a beneficiary of a promise is an intended
beneficiary if recognition of a right to performance in
the beneficiary is appropriate to effectuate the
intention of the parties and either
"(a) the performance of the promise will satisfy
an obligation of the promisee to pay money to the
beneficiary; or
"(b) the circumstances indicate that the promisee
intends to give the beneficiary the benefit of the
promised performance.
"(2) An incidental beneficiary is a beneficiary
who is not an intended beneficiary."
Here, plaintiffs invoke Hale (and the Restatement)
alleging that defendant's promise to the testator to draft a will
that included a specific bequest to them (to make them residual
legatees) "included an implied promise to make the will
invulnerable to a will contest so as to achieve [testator's] plan
to maximize gifts to residuary beneficiaries."  The difficulty
with that second part of plaintiffs' allegation, however, is
that, because (as plaintiffs themselves have pleaded) that part
of defendant's promise was only "implied," the complaint must
allege some basis for the implication.
Two sources of such an implication are possible: the
facts and the law.  The complaint alleges no facts that would
permit the implication.  Plaintiffs, while entitled to all the
inferences that fairly may be drawn from their allegations, also
are deemed, in standing on their third amended complaint, to have
alleged the facts in the best light possible.   See Harding v.
Bell, 265 Or 202, 209, 508 P2d 216 (1973) (stating principle). 
That leaves the question whether the law itself will draw the
implication on which plaintiffs rely.
We perceive no basis for doing so.  A promise implied
in law needs some basis in policies associated with contracts in
general, or with contracts of the specific kind involved in this
case, in order to achieve judicial recognition.  That is,
promises implied in law are "created by the law for reasons of
justice."  See Joseph M. Perillo, 1 Corbin on Contracts § 1.20,
64 (revised ed. 1993) (explaining principle); Derenco v. Benj.
Franklin Fed. Sav. and Loan, 281 Or 533, 557-59, 577 P2d 477
(1978) (holding that a particular obligation is implied-in-law
because, "under all the circumstances of the parties'
relationship, * * * defendant would be unjustly enriched" if the
promise were not implied).  Here, plaintiffs have pointed to no
such "reasons of justice," and none occurs to us.  Indeed, it is
difficult to imagine a situation in which the law would, for
reasons of justice, imply a promise to obtain the particular
result described here, as contrasted with a promise to exercise a
particular level of skill and learning to attempt to achieve such
a result.  See, e.g., Securities-Intermountain v. Sunset Fuel,
289 Or 243, 259, 611 P2d 1158 (1980) (contrasting general
standards of contract performance, which will be implied in law,
with specific promises to produce different or particular
results, which promises may be enforced regardless of general
standards of professional performance but which must in fact have
been made). (3)
We hold that plaintiffs' allegation of an implied
promise to make the will invulnerable to a will contest did not
constitute a legally sufficient source of duty and breach to
enable plaintiffs to bring their breach of contract and
negligence claims.  The contrary conclusion of the Court of
Appeals was error.  It must be reversed.
The decision of the Court of Appeals is reversed.  The
judgement of the trial court is affirmed.
1. One of the plaintiffs in this case, Floy Jones, was not a
residual legatee under testator's will.  However, the complaint
alleges that another of the residual legatees, Linda Cammann,
assigned her claim against defendant to Jones.  Accordingly, our
references to "plaintiffs" in this opinion are to persons with
claims as residual legatees.
2. ORCP 21 A provides, in part: 
"Every defense, in law or fact, to a claim for
relief in any pleading, whether a complaint,
counterclaim, cross-claim or third party claim, shall
be asserted in the responsive pleading thereto, except
that the following defenses may at the option of the
pleader be made by motion to dismiss: * * * (8) failure
to state ultimate facts sufficient to constitute a
claim[.]"
3. Plaintiffs would not be able to sustain their claims under
the more general, professional negligence standard, because they
are not parties to the contract between defendant and testator
and the damages that they assert are financial only.  See Hale,
304 Or at 284-87 (explaining limitation).