Opinion ID: 3208853
Heading Depth: 3
Heading Rank: 3

Heading: Contingent, Residuary Beneficiaries

Text: As there is no justification for barring contingent or residuary beneficiaries as a matter of law from being considered third-party beneficiaries to the attorney-client contract, neither can there be justification for barring contingent, residuary beneficiaries as a matter of law. See Passell, 794 So.2d 651, 652. Determining whether such parties satisfy the requirements for an actionable claim is an inquiry properly left to the finder of fact. D. Plea in Bar The denial of a plea in bar as to the statute of limitations is a question of law that this Court reviews do novo. Van Dam v. Gay, 280 Va. 457, 460, 699 S.E.2d 480, 281 (2010). In Virginia, actions for legal malpractice are actions for breach of contract and are thus governed by the limitations periods prescribed for contract claims. Oleyar, 217 Va. at 90, 225 S.E.2d at 399. Code § 8.01-246 states that “actions founded upon a contract . . . shall be brought within the following number of years next after the cause of action shall have accrued: . . . 4. In actions upon any unwritten contract, express or implied, within three years.” (Emphasis added.) Code § 8.01-230 states that: In every action for which a limitation period is prescribed, the right of action shall be deemed to accrue and the prescribed limitation period shall begin to run from the date the injury is sustained in the case of injury to the person or damage to property, when the breach of contract occurs in actions ex contractu and not when the resulting damage is discovered, except where the relief sought is solely equitable or where otherwise provided under Code § 8.01-233, subsection C of § 8.01-245, §§ 8.01-249, 8.01-250 or other statute. (Emphases added.) 17 Thorsen maintains that, if he breached the contract, it was when he drafted the will, thus completing his legal services, on April 16, 2003 (citing MacLellan v. Throckmorton, 235 Va. 341, 345, 367 S.E.2d 720, 722 (1988) (“[T]he breach of contract or duty occurs and the statute of limitations begins to run when the attorney’s services rendered in connection with that particular undertaking or transaction have terminated.”)). In his view, the statute of limitations then expired three years later, on April 16, 2006. We disagree. Statutes of limitation do not affect a cause of action; they bar a right of action. The two may accrue at the same time, but will not of necessity do so. First Va. Bank-Colonial v. Baker, 225 Va. 72, 81-82, 301 S.E.2d 8, 13-14 (1983). A cause of action is the operative set of facts giving rise to a right of action. Id.; Locke v. Johns-Manville Corp., 221 Va. 951, 959, 275 S.E.2d 900, 905 (1981). “A right of action cannot arise until a cause of action exists because a right of action is a remedial right to presently enforce an existing cause of action.” Van Dam, 280 Va. at 460, 699 S.E.2d at 481 (citing Shipman v. Kruck, 267 Va. 495, 502, 593 S.E.2d 319, 322 (2004)). “Some injury or damage, however slight, is essential to a cause of action.” Id. at 463, 699 S.E.2d at 482. In the case of a testamentary beneficiary, no injury, however slight, can be sustained prior to the testator’s death, because “[a] testator may, during his lifetime, alter his will or other testamentary papers as he pleases and whenever he chooses.” Van Dam, 280 Va. at 462, 699 S.E.2d at 482. “While [the testator] lives, no beneficiary has anything more than a bare expectancy and no person has suffered any injury or damage as a result of his tentative dispositions.” Id. (citing Schilling v. Schilling, 280 Va. 146, 149, 695 S.E.2d 181, 183 (2010)). Because of this mutability and bare expectancy, no testamentary beneficiary has a cause of action prior to the death of the testator. 18 In accordance with Code § 8.01-246, the three-year statute of limitations cannot begin to run as to the testamentary beneficiary until a cause of action accrues, after the death of the testator. Thus Code § 8.01-246 can, under the proper circumstances in which no injury is sustained, provide one of the referenced statutory exceptions to the rule set forth in Code § 8.01230 that contractual rights of action accrue at breach. 4 Most courts have allowed both the promisee and the third-party beneficiary to sue to enforce the contract. 13 Williston on Contracts § 37:55, at 354 (Richard A. Lord ed., 4th ed. 1990 & 2013 rev.). While both parties have an action against the promisor, there can only be one satisfaction, preventing double recovery. Id. at 355. This is particularly true of testamentary actions. We do not today overrule our previous holding in MacLellan, 235 Va. at 345, 367 S.E.2d at 722 (holding that the statute of limitations began to run on a divorce attorney’s services when that particular undertaking or transaction had terminated). There, MacLellan received erroneous advice on his Property Settlement Agreement, which was entered by the court as part of his divorce decree, but suffered monetarily from that harm only years later when his income changed. However, while some injury or damage, however slight, is required for a cause of action to accrue, “it is immaterial that all the damages resulting from the injury do not occur at the time of the injury.” Van Dam, 280 Va. at 463, 699 S.E.2d at 482 (emphasis added). Although the plaintiff in Van Dam similarly suffered primary monetary damage at the time of her ex-husband’s death due to lost survivor benefits, the Court found some initial injury took place at the time the divorce decree was entered. In each instance, the statute of limitations on 4 We note that the primary purpose of Code § 8.01-230 as to contracts is to avoid creating a so-called “discovery rule,” and this reading of the two statutes together in no way frustrates that purpose. The requirement of the cause of action is merely that one sustains injury, not that it be known. 19 plaintiff’s right of action ran from the entry of the divorce decree, when the parties’ rights were fixed. The RSPCA’s position in this case can be distinguished. It was unable to bring suit in the years following the execution of the will: lacking a vested interest and possessing only a bare expectancy, it had no standing to sue. Not even slight harm or damage accrued to the RSPCA until the testator’s death. American jurisdictions vary considerably in their approaches to statutes of limitations, some permitting the discovery rule to apply to contracts which Virginia’s Code § 8.01-230 would prohibit. Nonetheless: Courts which have addressed this issue seem to agree that the cause of action accrues as [sic] the testator’s death, not at the time of the drafting of, or signing of, the will. This is the time when the attorney’s negligence becomes irremediable and the impact of the injury occurs, courts recognize; before a testator’s death, the potential beneficiaries possess no recognized legal interest in the estate. Joan Teshima, Annotation, Attorney’s Liability, To One Other Than Immediate Client, For Negligence in Connection with Legal Duties, 61 A.L.R. 4th 615, § 5 (1988 & 2015 rev.) (citing Heyer v. Flaig, 449 P.2d 161 (Cal. 1969), Shideler v. Dwyer, 417 N.E.2d 281 (Ind. 1981); Auric v. Continental Casualty Co., 331 N.W.2d 325 (Wis. 1983)). Because the RSPCA’s cause of action could not have accrued until the testator’s death, we must affirm the trial court’s denial of the plea in bar premised on the statute of limitations. E. Sufficiency of the Evidence Thorsen additionally challenges the sufficiency of the evidence to render a verdict in favor of the RSPCA at trial. Thorsen stipulated at trial that, as Dumville’s attorney and pursuant to their agreement, he “had a duty to incorporate Ms. Dumville’s intent into her Will in an accurate manner,” that the will he drafted “did not incorporate [her] intentions regarding the 20 disposition of her property,” that he is “ultimately responsible for the error in [the will],” and “as a result of this error, the RSPCA did not receive all of [her] property.” Accordingly, the only element that Thorsen challenges the sufficiency of is whether the RSPCA was an intended thirdparty beneficiary of the contract, such that Thorsen’s duty ran not only to Dumville but also to the RSPCA. On appeal, we view the evidence and all reasonable inferences arising therefrom in the light most favorable to the prevailing party at trial. Nationwide Mut. Ins. Co. v. St. John, 259 Va. 71, 76, 524 S.E.2d 649, 651 (2000); Ravenwood Towers, Inc. v. Woodyard, 244 Va. 51, 57, 419 S.E.2d 627, 630 (1992). “A judgment should be reversed for insufficient evidence only if it is plainly wrong or without evidence to support it.” Edmonds v. Edmonds, 290 Va. 10, 18, 772 S.E.2d 898, 903 (2015) (internal quotation marks omitted). To review the circuit court’s finding that the RSPCA was a third-party beneficiary of the contract, we review both the evidence as to Dumville’s intent and Thorsen’s intent at the time of the contract to consider whether the RSPCA was a “clearly and definitely intended” beneficiary. 1. Dumville’s Intent First, we consider the question of whether the facts were sufficient for a factfinder to conclude that, for Dumville, an overriding purpose of the contract was to benefit the RSPCA. Thorsen’s answer to an interrogatory from the prior collateral proceeding stated: “The decedent was clear in her instructions to Thorsen . . . that she wanted her entire estate to go to her mother and if her mother predeceased her, then her entire estate be to the Richmond SPCA. These were her instructions and intentions at the time of the initial interview and the creation of her last will and testament and throughout the drafting period.” The RSPCA introduced a letter from Thorsen to the title insurance company stating: 21 [I]t was the clear intent of Alice and the intent in my drafting, to make a full and complete conveyance of Alice’s estate to her mother if she survived Alice, and if not, a full and complete bequeath/conveyance of all of Alice’s entire estate to the RSPCA. Moreover, I had no idea Alice had any relative other than her mother, and did not become aware of Ms. Boyles [sic] until sometime after [Dumville’s mother] died. The parties stipulated that Dumville was forty-three and her mother was in her late seventies or early eighties when the will was drafted. Thorsen testified that he was aware that Dumville had a relationship with the RSPCA, had an affinity for the organization, and wanted her cats to go to the RSPCA after her death. Thorsen testified in the previous matter that these three cats “were her babies” and she “probably cared for her cats more than she did herself.” Finally, although there is error in the drafting, the RSPCA is named specifically in the will instrument. Thorsen testified in the current proceeding that Dumville’s motivation for creating a will was in part to disinherit her husband while divorce proceedings were underway. However, in the prior 2009 proceeding, he stated that “it would not have been a consideration,” and he “did not discuss with [Dumville] any issue of her husband’s rights of intestacy.” The circuit court found Thorsen’s answers in the 2009 proceeding credible. The factfinder is entitled to consider the nature and content of the instrument as evidence and draw reasonable inferences arising therefrom. Here, a single woman with an uncomplicated estate created a simple will devising her entire estate to the only relative with whom evidence suggests she had a close relationship, her elderly mother, or, if her mother predeceased her, a charity with which she had a preexisting relationship, upon her death. It is a fair inference that the client entered into a contract to draft a will for the purpose of benefiting one of those parties upon her death. Given the deference afforded to the factfinder, we find no error in the circuit court’s conclusion that the primary or overriding purpose of the contract was for the benefit of the will beneficiaries. 22 The evidence was also sufficient to support Dumville’s intent for the RSPCA specifically to benefit. There was testimony as to her relationship with the RSPCA, supporting the RSPCA as a purposeful choice. The ages of Dumville and her mother at the time the will was drafted make it not unlikely and, in fact, foreseeable that Dumville’s mother would predecease her and the RSPCA would take the entirety of Dumville’s estate. Finally, in the case of a residuary charitable beneficiary, affirmatively being named in the instrument lends additional support to the testator’s clear and definite intention to benefit the charity in her contract with her attorney and his understanding of that obligation. 5 Taking these facts together, we find no error in the trial court’s finding of sufficient evidence to conclude that Dumville clearly and definitely intended the RSPCA to be a third-party beneficiary of the contract. 2. Thorsen’s Intent Thorsen alleges that there was no evidence that Thorsen agreed to benefit the RSPCA in entering into the retention agreement to draft the will, and so the RSPCA cannot be a third-party beneficiary of the contract. A third-party beneficiary rule “has no application unless the party sought to be held liable has assumed an obligation for the benefit of the third party.” Valley Landscape Co., 218 Va. at 259-60, 237 S.E.2d at 122. Thorsen argues that, in the Copenhaver hypothetical, this Court explicitly included a requirement that a lawyer comply with the testator’s specific directives at the outset of their retention. 238 Va. at 369, 384 S.E.2d at 597. Thorsen desires the Court to distinguish between the obligation undertaken to make a will in a retention agreement and the obligation to benefit the parties in the will. 5 Here, it is equally important to note what we do not decide today: while naming may in some cases support intention, failure to name does not necessarily indicate lack of intention, such as in the case of an intentional bequest to the substantially defined but open class of “my children,” a term invoked in many wills to include after-born children. 23 We disagree that Copenhaver requires some specific language in the contract between a testator and her attorney that the lawyer must comply with her directives or there will be no contract, and we do not find this cause of action necessarily so limited. The Copenhaver hypothetical indeed emphasizes that mutual understanding of the benefit to the third party is essential to the contract. Id. at 369, 384 S.E.2d at 597 (e.g., “unless the lawyer agrees . . . the client will take his legal business elsewhere”; “if the lawyer agrees to comply with these specific directives”). Yet, the agreement to comply with specific directives is implied when the client contracts with the attorney to perform a specific service which the attorney then undertakes to perform. We cannot separate the obligations of the client’s intent from the agreement because, without the intent and the assent to take on those specific directives, there would be no retention agreement. For this reason, when a client can terminate a contract at any time, a client’s request six months into an attorney-client relationship to make a third party his or her beneficiary has the same weight as a request on the first day of the relationship: refusal of the attorney to draft the will according to his or her wishes would likewise result in the termination of the attorney-client relationship. Thus, we do not find it necessary to prove that this mutual assent was expressed prior to retention, but rather that, prior to the completion of the attorney’s services, the attorney became aware of the directives of the client and agreed to undertake the obligation. There may be many reasons for drafting a testamentary instrument which would not result in the creation of third-party beneficiaries to the attorney-client contract. But the evidence in this case supports the trial court’s finding that Dumville went to Thorsen to draft a will for the purpose of benefiting her mother and the RSPCA. The parties stipulated that, at the end of their initial meeting regarding preparation of the will, “Thorsen understood that Ms. Dumville wanted 24 him to prepare a Will which would accurately incorporate and effectuate Ms. Dumville’s decisions as to the distribution of her estate upon her death, i.e. that upon her death all of her property would be left to her mother if her mother survived her, and in the event her mother predeceased her, all of her property would be left to the RSPCA.” Thorsen stated under oath that “There was no doubt in my mind what she wanted in terms of the will, no doubt what she expressed.” In that meeting, which Thorsen testified was their only meeting regarding the will prior to his drafting, Thorsen agreed to draft a will according to those specifications. We find no error below. Thus, taking these findings together as a whole, we find no error in the trial court’s holding that the RSPCA was a clearly and definitely identified third-party beneficiary of the contract.