“[A]s a general rule, it is only the private parties to contracts – as opposed to third parties or public authorities – who have the legal standing to sue for breach of contract.” See, generally, “Contract as Empowerment,” 83 U. Chi. L. Rev. 759, at note 120 (Spring 2016). But, “[e]very year, more than 100 reported court opinions consider the question whether an outsider can sue for damages under a contract made by others – in part because the law is so ambiguous.” See, discussion in “An ‘App’ for Third Party Beneficiaries,” 91 Wash. L. Rev. 1663 (Dec. 2016).

Both Kansas and Missouri follow the general rule that one must be a party or intended beneficiary of a contract to have standing to sue for breach of that contract. See, Verni v. Cleveland Chiropractic College, 212 S.W.3d 150, 153 (Mo. en banc 2007); compare, Cornwell v. Jesperson, 238 Kan. 110 at 115, 118, 708 P.2d 515 (1985), and Noller v. GMC Truck & Coach Div., General Motors Corp., 244 Kan. 612 at 617, 772 P.2d 271 (1989).

Neither Kansas nor Missouri treats the issue as one of capacity. The cases in both jurisdictions find that a plaintiff not a party to a contract lacks standing, not capacity. See, Midwestern Health Mgmt. v. Walker, 208 S.W.3d 295, 297 (Mo. App. 2006) (denial of assignment of account raised issue of standing, not capacity); Byers v. Snyder, 44 Kan. App.2d 380 at 385, 237 P.3d 1258 (Kan. App. 2010) (defense that plaintiffs not intended beneficiaries of contract raised issue of standing, implicating court’s jurisdiction).

This distinction has a difference. The rules of civil procedure lead to different methods of addressing lack of capacity vs. lack of standing.

Under the Federal and Kansas rules a plaintiff need not allege capacity to sue (except to establish jurisdiction in the federal court). F.R.Civ.P. 9(a)(1)(A), K.S.A. 60-209(a)(A). Under Missouri’s fact pleading rules a plaintiff need only plead the “ultimate fact” of capacity. Mo.R.Civ.P. 55.13. But, all of these rules require a party raising an issue of capacity to do so by specific denial supported by facts. F.R.Civ.P. 9(a)(2), K.S.A. 60-209(a)(2), Mo.R.Civ.P. 55.13.

On the other hand, the waiver provision of the rules does not apply to the defense of lack of subject matter. See, F.R.Civ.P. 12(h)(1), K.S.A. 60-212(h)(1), and Mo.R.Civ.P. 55.27(g).

In other words, the defense of lack of jurisdiction due to lack of standing cannot be waived. But, lack of capacity is waivable if not presented by specific denial. See, City of Wellston v. SBC Communs., Inc., 203 S.W.3d 189, 192 (Mo. en banc 2006); Douglas Landscape & Design, L.L.C. v. Miles, 51 Kan. App.2d 779 at Syl. ¶2, 355 P.3d 700 (Kan. App. 2015).

Since the cases in Missouri and Kansas treat the right to sue on a contract as providing standing for purposes of subject matter jurisdiction, a party can raise the issue at any time, even on appeal. See, Verni, supra, at 153; Byers, supra, at 385.

Texas courts handle this issue differently. In Texas, the right to sue as a party, intended beneficiary, or assignee of a contract provides capacity to sue.[1] If a defendant establishes that a plaintiff has no right to sue on a contract, the court must dismiss the plaintiff’s case on the merits, not for lack of subject matter jurisdiction. See, e.g., John C. Flood of DC, Inc. v. Supermedia, L.L.C., 408 S.W.3d 645, 650 (Tex.App.-Dallas 2013, pet. denied).

This difference means that in Texas a party must address the plaintiff’s right to sue on a contract immediately by a verified denial or waive the defense. Tex. R.Civ.P.93. But, in Kansas, Missouri, or federal courts not applying Texas law, a party can theoretically wait.

[1] Under Texas law a plaintiff must have standing and capacity. Coastal Liquids Transportation, L.P. v. Harris County Appraisal District, 46 S.W.3d 880,884 (Tex. 2001).

The normal rule is that a non-client may state a claim for legal malpractice against a lawyer only if the client intended the lawyer’s services to benefit the non-client. Donahue v. Shughart, Thomson & Kilroy, 900 S.W.2d 624, 628-629 (Mo. 1995) (establishing a balancing test for determining whether a lawyer owes a duty to a non-client). This is consistent with hornbook third party beneficiary law.

What if the client retained a lawyer to prepare or modify a trust or will naming beneficiaries but died without expressly stating (or including in the instrument) that he intended the lawyer’s services to benefit those beneficiaries?  The Missouri Court of Appeals has applied Donahue to imply such an intent from the settlor’s designation of the beneficiaries in the trust. Johnson v. Sandler, Balkin, Hellman, & Weinstein, P.C., 958 S.W.2d 42, 50 (Mo. App. 1997).

In Johnson, the beneficiaries under a trust established by their deceased father with the assistance of the father’s first lawyer sued the father’s second law firm for negligence in modifying the trusts to allow the father’s second wife to elect against the trust and deprive them of some of the proceeds. The Court of Appeals addressed the law firm’s contention that it had not performed services to benefit the plaintiffs, claiming that the decedent had not even instructed them to consider the plaintiffs:

“To satisfy Donahue, it is not necessary that the client advise the attorney drafting a will or a trust that he ‘intends to benefit’ the beneficiaries. The main purpose of retaining an attorney to prepare a testamentary trust is to ensure the future transfer of the settlor’s estate to the beneficiaries designated by the settlor…Therefore, an intent to benefit is inherent in designating persons as beneficiaries of a trust or will.” 958 S.W.2d at 50.

A few jurisdictions continue to hold that, absent fraud or collusion or malice, an attorney is not liable to a non-client for harm caused by the attorney’s negligence in drafting a will or trust. But, the majority of jurisdictions, like Missouri, recognize that intended beneficiaries harmed by a lawyer’s malpractice may maintain a cause of action against the lawyer even absent an attorney client relationship. See, Leak-Gilbert v. Fahle, 55 P.3d 1054, 1060 (Ok. 2002) (collecting cases at footnotes 15 and 16 and citing Johnson v. Sandler).