Fox v. Pollack

• Citation: 226 Cal.Rptr. 532,181 Cal.App.3d 954
• Court: California Court of Appeals
• Decision Date: 30 May 1986
• Parties: Earl J. FOX, et al., Plaintiffs and Appellants. v. Harry POLLACK, Defendant and Respondent. A030330.

Page 532

226 Cal.Rptr. 532

181 Cal.App.3d 954

Earl J. FOX, et al., Plaintiffs and Appellants. v. Harry POLLACK, Defendant and Respondent.

A030330.

Court of Appeal, First District, Division 5, California.

May 30, 1986.

Rehearing Denied June 24, 1986.

Review Denied Sept. 10, 1986.

Cindy W. Frazier, Robert W. Lazzarini, Lazzarini & Frazier, Walnut Creek, for plaintiffs and appellants.

Victoria B. Henley, Ronald E. Mallen, Lynn Flaisher, Long & Levit, San Francisco, for defendant and respondent.

HANING, Associate Justice.

Plaintiffs/appellants Earl J. and Barbara L. Fox appeal a summary judgment in favor of defendant/respondent Harry Pollack, attorney at law, in appellants' action for legal malpractice and negligent misrepresentation. We are asked to determine whether an attorney owes a duty of professional care to an unrepresented party to a real estate exchange in which the attorney represents the opposite party. We hold that in the absence of contrary representations by the attorney, no such duty arises. We conclude that the trial court ruled correctly as a matter of law that respondent attorney owed no duty to non-clients in this situation.

This legal malpractice action arises out of a real estate exchange transaction wherein appellants exchanged parcels of real property with Dennis and Tawana Bennett. ¹ Appellants and the Bennetts originally entered into an oral agreement to exchange parcels of real property. Mr. Bennett then advised appellants that he would have his attorney, respondent herein, prepare the necessary documents and that he would bear all attorney fees, to which appellants agreed. Appellants' only contact with respondent was at a meeting in respondent's law offices on the date the exchange agreement was executed. Respondent prepared the agreement solely from information given to him by the Bennetts, whom respondent considered to be his clients. Appellants knew that respondent was the Bennetts' attorney; they had no prior contact with him; they had not furnished him any information concerning the exchange; respondent did not tell them he was acting as their attorney; they did not request any legal advice from respondent and respondent did not render any. By the same token, neither appellants nor respondent specifically recall respondent advising them to seek independent counsel, and there is no written notice or advice to such effect. ² However, when appellants met at respondent's office with the Bennetts, respondent read the agreement to them out loud, gave them time to review it, asked periodically if they understood its terms and received their assurances that they did. Appellants and the Bennetts executed the exchange agreement at that time. Subsequently, respondent prepared a promissory note which the Bennetts executed in favor of appellants.

Appellants claim that neither the written agreement nor the note complied with their prior oral agreement with the Bennetts. They contend that an attorney-client relationship arose between them and respondent; that respondent breached a fiduciary duty to them by failing to advise them fully about the transaction, and that he negligently misrepresented the facts and details to them.

The rules for review of summary judgment are well known and require no repetition. (See, e.g., Empire West v. Southern California Gas Co. (1974) 12 Cal.3d 805, 808, 117 Cal.Rptr. 423, 528 P.2d 31; 6 Witkin, Cal. Procedure (3d ed. 1985), Proceedings Without Trial, § 274 et. seq.) Primary among them is the rule that summary judgment cannot be granted if triable issues of material fact exist, but in the absence of such must be granted if the moving party is entitled to judgment as a matter of law. (Code Civ.Proc., § 437c, subd. (c).) In reviewing the affidavits supporting and opposing the motion the court considers only evidentiary facts, not ultimate facts or conclusions. (6 Witkin, op. cit. supra, § 288.)

Appellants advance alternative theories of recovery: the first is based on the existence of an attorney-client relationship, and the second on the duty of an attorney to non-clients. To state the obvious, an attorney's duty to his or her client depends on the existence of an attorney-client relationship. If that relationship does not exist, the fiduciary duty to a client does not arise. (Shelly v. Hansen (1966) 244 Cal.App.2d 210, 214, 53 Cal.Rptr. 20, disapproved on different grounds in Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 190, fn. 29, 98 Cal.Rptr. 837, 491 P.2d 421.) Except for those situations where an attorney is appointed by the court, the attorney-client relationship is created by some form of contract, express or implied, formal or informal. (See, e.g., Neel v. Magana, Olney, Levy, Cathcart & Gelfand, supra, at p. 181, 98 Cal.Rptr. 837, 491 P.2d 421; Purdy v. Pacific Automobile Ins. Co. (1984) 157 Cal.App.3d 59, 75, 203 Cal.Rptr. 524; Houston Gen. Ins. Co. v. Superior Court (1980) 108 Cal.App.3d 958, 964, 166 Cal.Rptr. 904; Miller v. Metzinger (1979) 91 Cal.App.3d 31, 39-40, 154 Cal.Rptr. 22; Neblett v. Getty (1937) 20 Cal.App.2d 65, 68-69, 66 P.2d 473; Brydonjack v. Rieck (1935) 5 Cal.App.2d 219, 222-223, 42 P.2d 336; 1 Witkin, Cal. Procedure (3d ed. 1985) Attorneys, § 52.)

The affidavits supporting and opposing the motion for summary judgment contain no allegations of evidentiary facts, nor any facts permitting any reasonable inferences from which the existence of an attorney-client relationship between appellants and respondent could be found. Appellants did not hire or retain respondent; they knew he was the Bennetts' attorney; they did not pay him for his services; they did not seek his legal advice; respondent did not render any legal advice to them; and they had no contact with respondent other than the single occasion when they visited his office for the sole purpose of executing the exchange agreement.

Appellants did allege that they "thought" respondent was representing their interests because he was an attorney. However, they allege no evidentiary facts from which such a conclusion could reasonably be drawn. Their states of mind, unless reasonably induced by representations or conduct of respondent, are not sufficient to create the attorney-client relationship; they cannot establish it unilaterally. (See, e.g., Houston Gen. Ins. Co. v. Superior Court, supra, 108 Cal.App.3d at pp. 962-963, 166 Cal.Rptr. 904; Connelly v. Wolf, Block, Schorr and Solis-Cohen (E.D.Pa.1978) 463 F.Supp. 914, 919.) Consequently, as to the causes of action based on breach of a fiduciary duty or other duty arising from an attorney-client relationship, the summary judgment was properly granted.

Appellants contend, however, that respondent owed them a duty of professional care even if they were not his clients. With certain exceptions, an attorney has no obligation to a non-client for the consequences of professional negligence--that is, the attorney is not burdened with any duty toward non-clients merely because of his or her status as an attorney. ³ The existence of such a duty is a question of law dependent upon "a judicial weighing of the policy considerations for and against the imposition of liability under the circumstances. [Citations.]" (Goodman v. Kennedy (1976) 18 Cal.3d 335, 342, 134 Cal.Rptr. 375, 556 P.2d 737; Banerian v. O'Malley (1974) 42 Cal.App.3d 604, 612, 116 Cal.Rptr. 919; Starr v. Mooslin (1971) 14 Cal.App.3d 988, 998, 92 Cal.Rptr. 583.) The imposition of a duty of professional care toward non-clients has generally been confined to those situations wherein the non-client was an intended beneficiary of the attorney's services, or where it was reasonably foreseeable that negligent service or advice to or on behalf of the client could cause harm to others. "[T]he determination whether in a specific case the [attorney] will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the [attorney's] conduct and the injury, and the policy of preventing future harm. [Citation.]" (Lucas v. Hamm (1961) 56 Cal.2d 583, 588, 15 Cal.Rptr. 821, 364 P.2d 685; Heyer v. Flaig (1969) 70 Cal.2d 223, 227, 74 Cal.Rptr. 225, 449 P.2d 161; Mason v. Levy & Van Bourg (1978) 77 Cal.App.3d 60, 67-68, 143 Cal.Rptr. 389.)

In Lucas the Supreme Court followed its earlier lead in Biakanja v. Irving (1958) 49 Cal.2d 647, 320 P.2d 16 abandoning privity of contract as a basis for liability founded on professional negligence, and held that beneficiaries under a will could maintain a cause of action against the attorney whose negligence in drafting the will caused a reduction in the share they would have received had the will been properly drawn. Lucas permitted them to recover as third party beneficiaries of the attorney-client contract between the attorney and the testator. An attorney representing a trustee also "assumes a relationship with the beneficiary akin to that between trustee and beneficiary" (Morales v. Field, DeGoff, Huppert & MacGowan (1979) 99 Cal.App.3d 307, 316, 160 Cal.Rptr. 239; Bucquet v. Livingston (1976) 57 Cal.App.3d 914, 921-922, 129 Cal.Rptr. 514), and thus acquires a duty of care toward the beneficiaries.

Following Lucas, attorneys acting for their clients have been held liable to third parties in other transactions which were intended to directly benefit the third party, or in which potential harm to the third party from professional negligence was reasonably foreseeable. Illustrative are Donald v. Garry (1971) 19 Cal.App.3d 769, 97 Cal.Rptr. 191, wherein an attorney for a collection agency who allowed a complaint to be dismissed for lack of prosecution was held liable to the creditor who assigned the claim to the agency for collection. ...