ANGEL, COHEN AND ROGOVIN, PETITIONER,
v.
OBERON INVESTMENT, N.V., ETC., RESPONDENT
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The Florida Supreme Court reviewed a case where a law firm was sued for negligence by a third party (Oberon Investment) who was not their client. The court held that attorneys are generally only liable to clients with whom they have privity, and this exception does not extend to incidental third-party beneficiaries, even if the attorney knew of a potential conflict of interest.
No, an attorney's knowledge of a client's fiduciary duty to a third party and a potential conflict of interest does not create a duty to that third party sufficient to overcome the requirement of privity for a negligence claim. The exception to privity for third-party beneficiaries is narrowly defined and does not apply here.
[1] Attorneys are generally liable for negligence only to clients with whom they share privity of contract.
[2] The privity requirement for attorney negligence actions may be relaxed when the client's intent is to benefit a third party, such as in will drafting.
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Join FLexlaw to unlock all legal intelligence“Florida courts have uniformly limited attorneys’ liability for negligence in the performance of their professional duties to clients with whom they share privity of contract.”
Establishes the general rule of privity for attorney negligence claims in Florida.
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Join FLexlaw to unlock all legal intelligenceRespondent (Oberon) sued petitioner (a law firm) alleging negligence in preparing documents for a transaction where their agent, Treister, defrauded O…
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PER CURIAM.
We review Oberon Investments v. Angel, Cohen and Rogovin, 492 So. 2d 1113 (Fla. 3d DCA 1986), because of direct and express conflict with Amey, Inc. v. Henderson, Franklin, Starnes & Holt, P.A., 367 So. 2d 633 (Fla. 2d DCA), cert. denied 376 So. 2d 68 (Fla.1979) and Drawdy v. Sapp, 365 So. 2d 461 (Fla. 1st DCA 1978).
Art. V, § 3(b)(3), Fla. Const. This case deals with the actions of petitioner in its representation of one Leonard Treister. Respondent brought suit against Treister alleging that, while acting as attorney and agent for respondent, Treister arranged a transaction whereby respondent sold its wholly-owned subsidiary to an undisclosed principal, actually Treister, for a certain sum while concurrently arranging a second transaction reselling the same property to a third-party buyer for a larger sum, thus defrauding respondent. In a separate count, respondent Oberon alleged that the petitioner law firm represented Treister in preparing the sale documents and should have foreseen the damage to Oberon; ergo the petitioner was negligent in preparing the documents or failing to inform respondent of the nature and extent of the transactions or in permitting Treis-ter to use the documents for defrauding petitioner. There was no allegation that the petitioner engaged in fraudulent or conspiratorial conduct.
The trial court granted summary judgment in favor of the petitioner.
On appeal, the district court reversed, holding that a lack of privity did not bar recovery if petitioner knew that Treister was a fiduciary for respondent and knew of the potential conflict between the interests of Treister and respondent. The court reasoned that should the issues of fact be resolved in respondent’s favor, petitioner had a duty to act in the best interest of respondent.
Accordingly, because there were material facts in dispute relative to Treister’s capacity and petitioner’s knowledge, the summary judgment was reversed and the case remanded.
Assuming as we must in the posture of the case that the petitioner was aware that Treister was a fiduciary of respondent and was obligated to act in the best interests of respondent, the issue before this Court is whether such knowledge subjects the petitioner to an action in negligence brought by the third-party respondent.
Florida courts have uniformly limited attorneys’ liability for negligence in the performance of their professional duties to clients with whom they share privity of contract. Ginsberg v. Chastain, 501 So. 2d 27 (Fla. 3d DCA 1986); Drawdy; Adams v. Chenowith, 349 So. 2d 230 (Fla. 4th DCA 1977).
The only instances in Florida where this rule of privity has been relaxed is where it was the apparent intent of the client to benefit a third party. The most obvious example of this is the area of will drafting. Lorraine v. Grover, Ciment, Weinstein, & Stauber, P.A., 467 So. 2d 315 (Fla. 3d DCA 1985); DeMaris v. Asti, 426 So. 2d 1153 (Fla. 3d DCA 1983); McAbee v. Edwards, 340 So. 2d 1167 (Fla. 4th DCA 1976).
Florida courts have refused to expand this exception to include incidental third-party beneficiaries. For the beneficiaries’ action in negligence to fall within the exception to the privity requirement, testamentary intent as expressed in the will must be frustrated by the attorney’s negligence and as a direct result of such negligence the beneficiaries’ legacy is lost or diminished. We see no reason to expand this limited exception and specifically reject the invitation to adopt California’s balancing of factors test. Biakanja v. Irving, 49 Cal.2d 647, 320 P. 2d 16 (1958).
In the instant case, respondent was not the client of the petitioner and thus lacked the requisite privity customarily required to maintain an action sounding in negligence against an attorney. Nor does the respondent, as an incidental third-party beneficiary, fit within Florida’s narrowly defined third-party beneficiary exception. Respondent’s assertion that the petitioner knew or should have known of potential conflict between the interests of Treister and the respondent further undercuts his reliance on the third-party beneficiary exception. If, as respondent alleges, the petitioner knew of the conflict of interest between Treister and respondent, it was equally apparent that the professional services rendered Treister were not to benefit respondent. If, on the other hand, the petitioner did not know of the conflicting interest of Treister and respondent, petitioner’s only duty was to its client, Treister.
Accordingly, even should the material facts in dispute be resolved in the respondent’s favor, they would not support its cause of action.
The trial court correctly granted summary judgment.
The district court’s opinion is quashed and the case remanded for proceedings consistent with this opinion.
It is so ordered.
McDonald, C.J., and OVERTON, EHRLICH, SHAW, BARKETT, GRIMES and KOGAN, JJ., concur.
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Citator
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Philippe H. Moransais v. Heathman, 744 So. 2d 973 (Fla. 1999)…ar, 660 So. 2d at 631 (noting same). . This Court also appeared to limit the decision in A.R. Moyer to the specific facts in that case. See id. at 1248 n. 9. . See A.R. Moyer, 285 So. 2d at 402. . See Angel, Cohen, & Rogovin v. Oberon Inv., N.V., 512 So. 2d 192 (Fla.1987). . See First American Title Ins. Co. v. First Title Serv. Co., 457 So. 2d 467 (Fla.1984). . Section 552 reads in pertinent part: (1) One who, in the course of his business, profession or employment, or in any other transaction in which…
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First Fla. Bank, N.A. v. MAX Mitchell & Co., 558 So. 2d 9 (Fla. 1990)…yer in the absence of privity has been limited to eases where the legal service negligently performed was apparently initiated by the lawyer’s client to benefit a third party, such as in the drafting of a will. Angel, Cohen & Rogovin v. Oberon Inv., 512 So. 2d 192 (Fla.1987); McAbee v. Edwards, 340 So. 2d 1167 (Fla. 4th DCA 1976). [*14] Most significant, however, to the instant case is this Court’s decision in First American Title Insurance Co. v. First Title Service Co., 457 So. 2d 467 (Fla.1984), which modi…
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The Sandarac Ass'n, Inc. v. W.R. Frizzell Architects, Inc., 609 So. 2d 1349 (Fla. 2d DCA 1992)…s. Under restricted circumstances, attorneys, abstractors, and accountants may be liable to specific plaintiffs for economic damages arising from their negligent performance of professional services. See Angel, Cohen & Rogovin v. Oberson Inv., N.V., 512 So. 2d 192 (Fla.1987) (declining to extend attorneys’ liability to incidental beneficiary of services); Max Mitchell; First American. The supreme court’s analysis of these three exceptions share several concerns. First, relying upon Ultramares Corp. v. Touche…
Previewing 3 of 46 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Jacquelyn Yon McABEE v. Edwards, 340 So. 2d 1167 (Fla. 4th DCA 1976)
- Olive Lorraine v. Grover, Ciment, Weinstein & Stauber, P.A., 467 So. 2d 315 (Fla. 3d DCA 1985)
- Adams v. Reuben J. Chenowith, 349 So. 2d 230 (Fla. 4th DCA 1977)
- Demetra DeMARIS v. Asti, 426 So. 2d 1153 (Fla. 3d DCA 1983)
- Drawdy v. Sapp, 365 So. 2d 461 (Fla. 1st DCA 1978)
- Ginsberg v. Chastain, 501 So. 2d 27 (Fla. 3d DCA 1986)
- Oberon Invs., N.V. v. Angel, 492 So. 2d 1113 (Fla. 3d DCA 1986)
- Amey, Inc. v. Henderson, Franklin, Starnes & Holt, P. A., 367 So. 2d 633 (Fla. 2d DCA 1979)
- Abelson v. State, 367 So. 2d 633 (Fla. 2d DCA 1979)