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Keywords

plaintiffdefendantdamagesliabilitymotionsummary judgmentpartnershipmotion for summary judgment
plaintiffdefendantlawyermotionsummary judgmentpartnershipmotion for summary judgment

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Vereins-Und Westbank, AG v. Carter, 691 F.Supp. 704, 57 USLW 2071

Facts

The case centers on four oil and gas limited partnerships formed in 1984, for which the defendants served as special counsel. The plaintiffs, Vereins and Rockwood, extended funds to these partnerships and relied on opinion letters prepared by the defendants, which contained representations about the partnerships' legal standing. The plaintiffs alleged that these representations were false and that they suffered damages as a result of their reliance on the letters.

Each partnership's private placement memorandum and partnership agreement required the limited partners to pay their respective capital contributions in the form of a 20% cash down payment, with the remaining 80% being paid in the form of a promissory note executed to the partnership.

Issue

Whether the plaintiffs, who were not clients of the defendants, could recover for negligent misrepresentations made in opinion letters under the Ultramares doctrine.

The question presented is whether plaintiffs Verines–Und Westbank, AG (“Vereins”) and Rockwood Insurance Company (“Rockwood”), although not clients of defendants, may nonetheless recover against them for allegedly negligent misrepresentations contained in opinion letters sent to Rockwood, and another set of opinion letters upon which Vereins was specifically invited to rely.

Rule

The Ultramares doctrine allows for recovery in cases of negligent misrepresentation to third parties if the misrepresentation was made for the principal purpose of having it relied upon by that third party.

The Ultramares doctrine allows for recovery in cases of negligent misrepresentation to third parties if the misrepresentation was made for the principal purpose of having it relied upon by that third party.

Analysis

The court found that the opinion letters were primarily for the information of the plaintiffs and that the defendants had knowledge that the plaintiffs would rely on these letters. The court applied the Ultramares doctrine, concluding that the plaintiffs had established a sufficient basis for liability against the defendants for their negligent misrepresentations.

Turning to the matter at hand, assuming arguendo that the Ultramares doctrine applies to lawyers as well as weighers and accountants, there could be no doubt that the Vereins complaint fits the Glanzer holding (as expounded in Ultramares) like a glove.

Conclusion

The court denied the defendants' motion for summary judgment, allowing the claims of negligent misrepresentation to proceed.

The court denied the defendants' motion for summary judgment, allowing the claims of negligent misrepresentation to proceed.

Who won?

The plaintiffs, Vereins and Rockwood, prevailed in the motion for summary judgment because the court found that they had adequately stated a claim for negligent misrepresentation under the Ultramares doctrine.

The plaintiffs, Vereins and Rockwood, prevailed in the motion for summary judgment because the court found that they had adequately stated a claim for negligent misrepresentation under the Ultramares doctrine.

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