New Case: Fabian v. Lindsay

In Fabian v. Lindsey, the Supreme Court of South Carolina held that a third-party beneficiary has a cause of action for the lawyer’s error in defeating client’s intent.  

After the death of the decedent’s surviving spouse, one-half of the trust property was given to the children of his surviving spouse and the other half to his brother if he survived the decedent, which he did; if he did not, one-quarter to brother’s child and one-quarter to Erika, the child of another brother who predeceased the decedent. The brother died a few weeks after decedent and by the terms of the trust half of the trust remainder passed through his estate to his child. Erika would receive nothing even though two of the three trustees, including the widow and the decedent’s financial advisor, agreed that the trust failed to carry out the decedent’s intent to treat his brother’s child and Erika equally. Erika brought a proceeding to reform the trust, which ended with her accepting a settlement in which she specifically did not release any malpractice claims against the firm that drafted the trust.  She then brought an action for malpractice and breach of contract against the law firm that drafted the trust instrument.  The trial court granted the defendants’ motion to dismiss for failure to state a claim, but on appeal the Supreme Court of South Carolina reversed, recognizing for the first time a cause of action in both tort and contract by a third-party beneficiary of an estate planning document against a lawyer whose drafting error “defeats or diminishes the client’s intent.” Two justices concurred in the recognition of the tort action but not of the contract action; and they and another justice stated that the burden of proof, not discussed by the majority opinion, should be clear and convincing evidence. Fabian v. Lindsey, No. 27460, 2014 WL 5462562 (S.C. Oct. 29, 2014).

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.