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Keywords

plaintiffdefendantattorneynegligenceappealpleapartnership

plaintiffdefendantattorneyappealpleapartnership

Related Cases

Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, 57 Cal.App.3d 104, 128 Cal.Rptr. 901

Facts

Plaintiff Roberts filed a complaint against the law firm Ball, Hunt, Hart, Brown & Baerwitz and attorney Harvey Fierstein, alleging fraud and negligent misrepresentation. The complaint included claims that the law firm provided a misleading letter stating that the Burbank Broadcasting Company was a duly organized general partnership, despite knowledge of doubts among some partners regarding their status. Roberts relied on this letter to make loans to the partnership, which were never repaid, leading to his legal action.

Issue

Did the defendants owe a duty to the plaintiff to disclose doubts about the partnership's status, and did the plaintiff adequately plead a cause of action for negligent misrepresentation?

Rule

Under California law, an attorney may owe a duty to a third person and can be liable for negligent misrepresentation if the third person is intended to be benefited by the attorney's performance and suffers injury due to the attorney's negligence.

Under present California law, an attorney may owe a duty to a third person, and may be liable if the third person who was intended to be benefited by his performance is injured by his negligent execution of that duty.

Analysis

The court determined that the law firm had a duty to disclose any doubts regarding the partnership's status, as this information was material to the plaintiff's decision to lend money. The court noted that even if the defendants believed the partnership was valid, their failure to disclose the doubts constituted negligent misrepresentation. The court emphasized that half-truths can be as misleading as outright falsehoods, and the defendants' knowledge of the doubts imposed a duty to inform the plaintiff.

Even though defendants may have believed that there was a general partnership in spite of the claims of some of the general partners, the firm had a duty to reveal to plaintiff this doubt as to the status of the partnership as a general partnership, since the firm knew that disclosure of this doubt might well be determinative of plaintiff's decision to make loans to BBC.

Conclusion

The Court of Appeal reversed the dismissal, allowing the claims of negligent misrepresentation to proceed, while affirming the dismissal of the fraud claims due to insufficient pleading of fraudulent intent.

The judgment (order of dismissal) appealed from is reversed, as indicated herein.

Who won?

Plaintiff Roberts prevailed in the appeal because the court found that he had adequately stated a cause of action for negligent misrepresentation against the defendants.

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