Facts
- Clyde Reynolds, a naturopathic physician, and Donna Schrock were joint venturers who each held a one-half interest in two real properties: a timber parcel and a “lodge property.”
- Schrock sued Reynolds over the real estate venture and later sued him for alleged sexual misconduct arising from their doctor–patient relationship; the suits were consolidated.
- Schrock retained attorney Charles Markley, who negotiated and drafted a settlement addressing the property disputes.
- Under the settlement, Reynolds conveyed his lodge-property interest to Schrock; the timber property was to be sold with proceeds paid to Reynolds; and if proceeds were under $500,000, Schrock would pay the shortfall and provide Reynolds a security interest in the lodge property.
- After Reynolds transferred his lodge interest, Schrock sold the lodge property, allegedly based on Markley’s advice that the settlement did not require her to keep it; Markley also requested confidentiality from the escrow officer.
- Schrock later revoked consent to the timber-property sale, allegedly on Markley’s advice, leaving Reynolds without the expected timber-sale proceeds and without any lodge-property interest.
- Reynolds sued Schrock for breach of fiduciary duty and conversion and sued Markley and his firm on a theory that Markley substantially assisted Schrock’s torts and acted in concert with her.
Issues
- Whether an attorney may be liable to a nonclient for aiding and abetting a client’s breach of fiduciary duty.
- Whether a nonclient must show the attorney acted outside the scope of the attorney–client relationship to impose such liability.
- Whether the summary-judgment record permitted a reasonable inference that Markley acted outside the scope of representing Schrock.
Decision
- The Oregon Supreme Court reversed the Court of Appeals and affirmed summary judgment for Markley and his firm.
- The court held that a lawyer generally is not jointly liable to a third party for a client’s breach of fiduciary duty when the lawyer acts within the scope of representation and in furtherance of the client’s interests.
- The court concluded the record showed Markley engaged in ordinary representational acts—negotiating and drafting the settlement, advising on its meaning, and counseling post-settlement decisions—and contained no evidence that he acted outside that role.
- Because Reynolds failed to produce evidence creating a triable issue on the “outside the scope of representation” requirement, Markley was entitled to judgment as a matter of law.
Legal Principles
- Aiding-and-abetting liability against a lawyer by a nonclient is limited: the nonclient must show the lawyer acted outside the scope of the lawyer–client relationship.
- Conduct within the scope of representation includes legal counseling, negotiation, document drafting, and strategic advice directed to advancing the client’s objectives, even if that advice facilitates the client’s alleged breach of fiduciary duty.
- A lawyer may face third-party liability only when the lawyer steps outside the professional role, such as by pursuing primarily personal interests or committing independent wrongful acts not legitimately tied to providing legal services to the client.
- On summary judgment, absent evidence supporting an inference that the lawyer departed from representational functions, the lawyer is protected from nonclient claims premised on assisting the client’s fiduciary breach.
Conclusion
The court established that nonclients cannot impose aiding-and-abetting liability on opposing counsel for a client’s alleged breach of fiduciary duty unless the lawyer’s conduct falls outside the scope of representation; routine legal advocacy and advice for the client is not enough.