## Facts

- Attorneys Edward A. Dacy and Bruce P. Sherman were retained by a mortgagee to conduct foreclosure sales of two properties.
- H. Manning Clagett and another purchaser were the high bidders at the first foreclosure sale and paid a $5,000 deposit.
- The record owner filed exceptions asserting required notice of foreclosure had not been given under Maryland procedural rules.
- Before those exceptions were resolved, the attorneys re-advertised and held a second sale; the same bidders again were high bidders and paid another $5,000 deposit.
- Additional exceptions alleged defects including a misaddressed property and failure to notify the owner’s counsel of the sale date and payoff amount needed to stop the foreclosure.
- The court sustained the owner’s exceptions and refused to ratify the sales; the debtor then paid off the loan and redeemed the properties.
- The bidders sued the attorneys for negligence, claiming lost profits from the failed opportunity to buy and resell, and argued the attorneys owed bidders a duty to conduct the sales carefully; they also argued an implied attorney-client relationship because attorney fees would be paid from sale proceeds.

## Issues

1. Whether attorneys conducting a foreclosure sale for a mortgagee owe a duty of care to prospective or successful bidders to support a negligence action for economic loss when the sale is set aside.
2. Whether an attorney-client relationship, privity, or intended third-party beneficiary status can be inferred from the fact that attorney fees are paid from foreclosure sale proceeds funded by bidders.

## Decision

- The Court of Special Appeals of Maryland affirmed the order sustaining the attorneys’ demurrer without leave to amend.
- The court held the bidders alleged no legally cognizable duty owed to them by the foreclosure attorneys that would support an action for damages.
- The court rejected the theory that indirect payment of attorney fees from sale proceeds created an attorney-client relationship or privity with bidders.

## Legal Principles

- In Maryland, an attorney’s professional duty of care generally runs only to the client; non-clients cannot recover for professional negligence absent privity or an applicable exception.
- A narrow exception may exist for intended third-party beneficiaries of the legal services contract, but incidental or foreseeable benefit to a third party is insufficient.
- Courts are reluctant to impose attorney duties to non-clients where interests may conflict with the attorney’s obligations to the client, because such a duty risks inconsistent loyalties and expanded liability to an open-ended class.

## Conclusion

Because the bidders were neither clients nor intended third-party beneficiaries of the mortgagee’s engagement of the foreclosure attorneys, the attorneys owed no actionable duty to them for alleged procedural mishandling of the sales, and the dismissal of the negligence complaint was properly affirmed.


Clagett v. Dacy, 47 Md. App. 23, 420 A.2d 1285 (Md. Ct. Spec. App. 1980)