7.2 DISTINGUISHING BETWEEN INTENDED AND INCIDENTAL BENEFICIARIES
7.201 The "Clearly and Definitely Intended" Standard. As noted above, a third party who merely "incidentally" benefits from a contract may not recover under a third-party beneficiary contract theory. In order to determine whether a claimant is an "intended" rather than an "incidental" beneficiary, the Virginia Supreme Court, in Copenhaver v. Rogers, 4 applied the "clearly and definitely intended" standard to distinguish between the two:
In order to proceed on the third-party beneficiary contract theory, the party claiming the benefit must show that the parties to a contract "clearly and definitely intended" to confer a benefit upon him. Thus, [Virginia Code section 55.1-119] has no application unless the party against whom liability is asserted has assumed an obligation for the benefit of a third party. 5
Copenhaver demonstrates how strictly the court applies the requirement that the third party be an intended beneficiary of both the contracting parties, and its "clearly and definitely intended" language continues to guide
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courts across the Commonwealth today. 6 In Copenhaver, the plaintiffs, the grandchildren of a client of Rogers, an attorney, brought suit against Rogers, claiming that his alleged malpractice in drafting a trust provision in their grandmother's will caused them to lose their remainder interest. They also complained that Rogers' advice caused the estate to pay maximum estate taxes, to their detriment. 7 The plaintiffs based their claim in contract on a third-party beneficiary theory. 8 The trial court sustained Rogers' demurrer to the plaintiffs' motion for judgment, and the Virginia Supreme Court affirmed.
Assuming without deciding that section 55.1-119 of the Virginia Code applies to oral contracts even though it refers to "instruments," the court noted that the motion for judgment did not allege that Rogers, the party against whom liability is asserted, entered into any agreement with his client with the intent of conferring a direct benefit upon the [plaintiffs]. 9 Rather, the plaintiffs merely alleged that they were "intended third-party beneficiaries of the estate," which the court found "[f]alls far short" of what is required. 10 The plaintiffs' failure to allege that they were the intended beneficiaries of the contract with the lawyer—that he was directed by his client to make sure they received a specified amount as opposed to merely being directed to minimize estate taxes, the client not otherwise caring about what happened to her money—was fatal to the plaintiffs' cause of action. 11 The
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court noted that it would be difficult for a plaintiff in a case of this kind to meet the requirements of a third-party beneficiary claim. 12
Acknowledging this difficulty, the Copenhaver court emphasized that there is a difference between being the intended beneficiary of an estate and being the intended beneficiary of a contract between a lawyer and his client. 13 To illustrate this critical difference, Copenhaver presented a hypothetical scenario to help determine whether a contract constitutes a third-party beneficiary contract. In this scenario, a client directs his attorney to prepare a will. He tells the attorney that his one "overriding intent" in preparing the will is to ensure that his grandchildren will receive $1 million and that if the attorney does not agree to this stipulation, he will not hire him. The court stated that only if the attorney agreed to this condition and then failed to comply with the directions could the grandchildren then intercede and sue as intended third-party beneficiaries to the contract. It is not enough that the grandchildren were intended beneficiaries under the estate; they must be intended beneficiaries under the actual contract to draft the will in order to sue as third-party beneficiaries. 14
The Virginia Supreme Court reaffirmed the Copenhaver holding in MNC Credit Corp. v. Sickels, 15 in which it upheld the trial court's ruling sustaining a demurrer to a bank's claim against a law firm on a third-party beneficiary theory. The bank, MNC Credit, had purchased the assets of Maryland National Bank, which had contracted with the attorneys to prepare documentation for a loan. As part of the transaction, Maryland National also attempted to assign to MNC its rights to a malpractice claim against the attorneys. After holding that a legal malpractice claim is not assignable, the court also rejected MNC's third-party beneficiary theory, holding that MNC's allegations that the attorneys were aware that the loan might be transferred from Maryland National to a related corporation or a third party and that the loan documents contemplated that such a transfer might occur were factually insufficient to establish that Maryland National and its attorneys intended to confer a benefit on MNC. 16
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In Thorsen v. Richmond SPCA, 17 the Court addressed the very hypothetical posed in Copenhaver involving an oral contract for preparation of a will. There, Thorsen specifically agreed to prepare a will for Dumville that would, upon her death, convey all of her property to her mother if her mother survived her, and, in the event her mother predeceased her, to the Richmond Society for the Prevention of Cruelty to Animals (RSPCA). 18 However, upon Dumville's death, the title insurance company for Dumville's property informed Thorsen that, in its opinion, the will only left the tangible estate (valued at $72,05.60), not real estate (valued at $675,425.50), to the RSPCA. The RSCPA thereafter sued Thorsen for professional malpractice under a third-party beneficiary theory. Thorsen demurred, arguing that the RSCPA was not a third-party beneficiary of his contract with Dumville and therefore lacked standing to pursue its claim and that § 55.1-119 did not apply to oral contracts such as his with Dumville. 19
On appeal, the Supreme Court made a number of holdings that clarify the scope of Copenhaver and third-party beneficiary law. First, the Court held that third-party beneficiary claims were not limited to claims to enforce the terms of written instruments under § 55.1-119; but rather under the common law, which § 55.1-119 did not abrogate, such claims extend to oral contracts. 20 Second, the Court held that the RSCPA, as an alleged intended beneficiary of the will, could state a claim for breach of contract-professional negligence as a third-party beneficiary of the oral contract between Dumville and Thorsen. 21 Finally, the Court rejected Thorsen's invitation to announce a per se rule that contingent, residuary beneficiaries of a will could not be considered a definitely intended third-party beneficiary because such issues were questions of fact to be resolved by a jury. 22
In Environmental Staffing Acquisition Corp. v. B&R Construction Management, Inc., 23 a case predating Thorsen, the court held that a subcontractor was not a third-party beneficiary to a contract between a general contractor
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and developer. In that case, the court relied on Copenhaver's discussion of "the 'critical difference' between merely being a person or entity that will benefit...
