Clagett v. Dacy
420 A.2d 1285 (Md. Spec. App. 1980) (1980)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An attorney's duty of professional care is owed only to their client. A non-client may only sue an attorney for negligence if they were the specifically intended third-party beneficiary of the attorney's services, a relationship which cannot be inferred when the third party's interests are adverse to the client's interests.
Facts:
- Appellee attorneys, representing a mortgagee, advertised two properties for a foreclosure sale.
- Appellants attended the sale, submitted the highest bid, and paid a $5,000 deposit.
- The property's owner filed exceptions to the sale, citing improper notice.
- Before a court ruling, the attorneys readvertised and conducted a second sale of the properties.
- Appellants again were the high bidders and paid another $5,000 deposit.
- The owner again filed exceptions, this time due to a misaddressed property and failure to notify the owner's counsel of the sale date and payoff amount.
- A court sustained the second set of exceptions, invalidating the sale.
- Subsequently, the property owner paid off the loan and 'redeemed' the properties, preventing any further sale.
Procedural Posture:
- Appellants (bidders) sued Appellees (attorneys) in the Circuit Court for Prince George’s County, alleging negligence.
- Appellees filed a demurrer, arguing they owed no duty to the Appellants.
- The Circuit Court sustained the demurrer without leave to amend, dismissing the Appellants' case.
- Appellants, as the appellants, appealed the dismissal to the Court of Special Appeals of Maryland, the intermediate appellate court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an attorney conducting a foreclosure sale owe a duty of care to a successful bidder, such that the bidder can sue the attorney for negligence when procedural errors cause the sale to be invalidated?
Opinions:
Majority - Wilner, J.
No. An attorney conducting a foreclosure sale does not owe a duty of care to a successful bidder because no attorney-client relationship exists and the bidder is not an intended third-party beneficiary of the attorney's services. The traditional rule in Maryland requires strict privity for an attorney malpractice claim, meaning only the direct client can sue. While a narrow exception exists for a third-party beneficiary, the bidder does not qualify because the attorney's services were not intended for their benefit. The interests of the bidders and the attorney's actual client, the mortgagee, are in direct conflict; the mortgagee wants the highest price, while the bidder wants the lowest. An attorney cannot represent such conflicting interests, and a court will not infer such a prohibited employment relationship. The fact that attorney's fees are paid from the proceeds of the sale does not create a relationship, as this cost is ultimately borne by the debtor/mortgagor.
Analysis:
This decision reinforces Maryland's adherence to the strict privity rule in attorney malpractice actions, limiting liability to non-clients. It clarifies that the third-party beneficiary exception is narrow and will not apply where the non-client's interests are adversarial to those of the actual client. By highlighting the inherent conflict between a seller's desire for the highest price and a buyer's desire for the lowest, the court effectively precludes bidders in foreclosure sales from suing the seller's attorney for negligence. This holding protects attorneys from exposure to a wide range of potential plaintiffs whose interests conflict with their client's.
Unlock the full brief for Clagett v. Dacy