Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-01645/USCOURTS-ca10-88-01645-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

VANGUARD PRODUCTION, INC., } 

} 

Plaintiff-Appellant, } 

} 

v. } 

} 

BILLY L. MARTIN, DAVID D. MORGAN, and } 

AMES, ASHABRANNER, TAYLOR, LAWRENCE, } 

LAUDICK and MORGAN, a Partnership, } 

} 

Defendants-Appellees. } 

FI LED 'T . • . - wmred Stutct$ C-oun of Appeals 

Tenth Circuit 

FEB 14 1990 

ROBERT L. E-IOECKER. 

Clerk 

No. 88-1645 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF OKLAHOMA 

(D.C. No. 87-358-C} 

ORDER ON REHEARING* 

John D. Boydston (James R. Hicks, of Merrel & West, Inc., of 

Tulsa, Oklahoma, with him on th~ briefs}, of Boyston & ·Payton, of 

Tulsa, Oklahoma, for the Plaintiff-Appellant. 

Todd Maxwell Henshaw, (Jim F. Gassaway, of Houston and Klein, 

Inc., of Tulsa, Oklahoma; ·Eugene Robinson, of McGivern, Scott, 

Gilliard, McGivetn & Robinson, of Tulsa, Oklahoma; ·and Tom J. 

Laub, of Okmulgee, Oklahoma, with him on the brief}, of Houston 

and Klein, Inc., of Tulsa, Oklahoma, for the Defendant-Appellee 

Billy L. Martin. 

Joseph R. Farris (Michael A. Conger, of Feldman, Hall, Franden, 

Woodard & Farris, of Tulsa, Oklahoma, with him on the brief), of 

Feldman, Hall, Franden, Woodard & Farris, of Tulsa, Oklahoma, for 

the Defendants-Appellees David D. Morgan and Aines, Ashabranner, 

Taylor, Lawrence, Laudick and Morgan, a Partnership. 

Before HOLLOWAY, Chief Judge, MOORE and TACHA, Circuit Judges. 

TACHA, Circuit Judge. 

* The· earlier opinion in this case, Vanguard Production, Inc. 

v. Martin, 890 F.2d 276 (10th Cir. 1989), is hereby withdraw~ 

Appellate Case: 88-1645 Document: 010110159066 Date Filed: 02/14/1990 Page: 1 
Pla-intiff Vanguard Production, Inc. ("Vanguard") appeals the 

district court's grant of a motion for summary judgment in favor 

of defendants, attorneys Billy Martin and David Morgan and the law 

firm of Ames, Ashabranner, Taylor, Lawrence, Laudick and Morgan 

("Ames, Ashabranner") (collectively "defendants"). Vanguard 

contends that the district court erred in its rulings that (1) as 

a matter of law under Allred~ Rabon, 572 P.2d 979 (Okla. 1977), 

an attorney cannot be liable for malpractice to persons other than 

their immediate clients, and alternatively, (2) even if Bradford 

Securities Processing Services, Inc.~ Plaza Bank & Trust, 653 

P.2d 188 (Okla. 1982), applies, defendants are not liable based on 

the facts asserted by Vanguard. We hold that the Oklahoma Supreme 

Court's decision in Bradford controls this case. An attorney owes 

a common law duty of ordinary care and workmanlike performance on 

the underlying contract with his client. When an attorney knows 

or should know that an opinion he prepares may be exhibited to 

nonclients, this common law duty extends to those same nonclients 

that an ordinarily prudent attorney under the circumstances would 

reasonably foresee could be injured by the attorney's advice 

contained in and explanatory of the opinion. We further hold that 

Vanguard has pleaded sufficient facts under Bradford to establish 

a jury question on the element of proximate causation. 

In early 1985, Vanguard began negotiations for an assignment 

of an oil and gas lease covering property in Okmulgee County, 

Oklahoma. James Hadsell, an officer and director of Vanguard, 

represented Vanguard in negotiations with the seller and the 

lender, Glenfed. Vanguard saw a title opinion on the lease 

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Appellate Case: 88-1645 Document: 010110159066 Date Filed: 02/14/1990 Page: 2 
property dated June 25, 1985, which was prepared by Martin, an 

attorney in Okmulgee County, for a third party. This third party 

opinion on the lease property contained a caveat stating that 

Texas Rose Petroleum had filed suit against the seller for damages 

involving the !'ease. Around August 9, 1985, Vanguard executed a 

promissory note for $780,000 in favor of Glenfed, and executed a 

mortgage, security agreement, financing statement, and assignment 

in favor of Glenfed as security for the promissory note. 

Glenfed's loan·agreement with Vanguard provided that Glenfed would 

select the attorneys to do the title and closing work, and that 

Vanguard would pay for the attorneys' fees. Glenfed selected the 

law firm of Ames, Ashabranner. Morgan, a partner in Ames, 

Ashabranner, did the actual legal work and hired Martin, the local 

attorney in Okmulgee County, to assist him. 

Morgan and Martin incorrectly advised Vanguard that the claim 

on the lease by Texas Rose Petroleum described in Martin's third 

party title opinion on the lease property would not adversely 

affect the title because a summons had not been issued. Morgan 

and Martin told Vanguard that after 120 days Texas Rose 

Petroleum's case could be dismissed and that the dismissal would 

cure the defect in the lease title. Morgan and Martin procured 

dismissal of the suit after 120 days. Morgan and Martin then 

deleted any mention of the Texas Rose Petroleum claim in the final 

opinion prepared for Glenfed. The deal was closed around August 

27, 1985. The Texas Rose Petroleum suit was refiled, however, 

about thirty days later. The trial court in the Texas Rose 

Petroleum litigation eventually ruled that Vanguard and Glenfed 

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ha~ actual knowledge of the adverse Texas Rose Petroleum claim 

before entering into the lease transaction, and therefore 

sustained Texas Rose Petroleum's claim to 75% of the lease. 

Vanguard sued Martin, Morgan, and Ames, Ashabranner, for 

malpractice. The district court granted the defendants' motion 

for summary judgment on the grounds that the defendants owed no 

duty to Vanguard because there was no attorney/client relationship 

between the defendants and Vanguard. The district court also 

noted that even under the Bradford rule, liability did not lie 

because it was not reasonably foreseeable to the defendants that 

Vanguard would rely solely on the title opinion, prepared by 

Morgan and Martin, when they were in fact working for Glenfed. 

We review de novo the district court's conclusion of law that 

the defendants owed no duty to Vanguard. See Carey~ United 

States Postal Serv., 812 F.2d 621, 623 (10th Cir. 1987). In 

reviewing the district court's ruling that Vanguard did not plead 

sufficient facts to show reasonable foreseeability even if 

Bradford applies, we determine whether, viewed in the light most 

favorable to Vanguard, a material question of fact exists .. See 

McKenzie~ Mercy Hosp., 854 F.2d 365, 367 (10th Cir. 1988). 

Where a question of material fact exists, summary judgment is 

inappropriate. Id. 

The Oklahoma Supreme Court's decision in Bradford controls 

this case. In Bradford, a pledgee who had foreclosed and become a 

forced purchaser of industrial revenue bonds that proved to be of 

little or no value sued the attorney who prepared the bond opinion 

for alleged negligence. The pledgee was not a client of the 

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attorney. The pledgee alleged that the bond attorney knew that 

his bond opinion would appear on the bond certificates and that a 

purchaser of the bonds foreseeably would rely on his bond opinion. 

The district court dismissed the pledgee's complaint for failure 

to state a claim, ruling in part that there could be no liability 

because the pledgee was not the attorney's client. The pledgee 

appealed to this court and we certified the following question to 

the Oklahoma Supreme Court: 

Does a pledgee who forecloses on bonds state a 

cause of action against bond counsel for alleged 

negligence in prepar1ng his opinion which made 

representations, inter alia, of payment of 

consideration, legality of the· bond issue, and taxexempt status of the bonds, where counsel allegedly knew 

that his legal opinion would appear on the bond 

certificates and be relied on by the purchasers of the 

bonds and where the opinion was also relied on by the 

pledgee? 

Bradford, 653 P.2d at 18~. 

The Oklahoma Supreme Court replied that the pledgee's 

complaints ·stated a cause of action under Oklahoma law. Privity 

of contract does not apply to tort actions under Oklahoma law. 

See Keel~ Titan Constr. Corp., 639 P.2d 1228, 1232 (Okla. 1981). 

The Bradford court stated that to determine an attorney's 

negligence the jury must determine whether the attorney's conduct 

was "the conduct of an ordinarily prudent man based upon the 

dangers he should reasonably foresee TO THE PLAINTIFF OR ONE IN 

HIS POSITION in view of all the circumstances of the case such as 

to bring the plaintiff within the orbit of defendant's liability." 

Id. at 191 (emphases in original). 

Morgan and Ames, Ashabranner argue, however, that the 

Bradford test applies only when there is a duty running from 

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defendants to the plaintiff, and that in this case the defendants 

owed no such duty to Vanguard. We agree that Bradford applies 

only when a duty exists and hold that under the facts of this case 

a duty to Vanguard arose under Oklahoma law. In Keel, 639 P.2d 

1228, the Oklahoma Supreme Court held that 

[a]s a general rule, there is implied in every contract 

for work or services a duty to perform it skillfully,. 

carefully, diligently, and in a workmanlike manner. 

Id. at 1231 (footnote omitted). The court then stated that 

the question of whether Anderson's alleged negligent 

breach of his contract with Titan brings the Keels 

within the orbit of Anderson's liability becomes one of 

proximate cause. It is the doctrine which limits a 

tortfeasor's liability to foreseeable consequences 

flowing from the negligent act which provides both the 

nexus between·Anderson's tortious act and the Keels' 

right to bring suit pgainst him therefore, and the 

safeguard against the exposure of Anderson to liability 

for his acts beyond that which is reasonable and just. 

Id. at 1232. Keel thus stands for the proposition that where 

there is a contract for services a common law duty of workmanlike 

performance arises and that a third party beneficiary is entitled 

to sue for a breach of that duty. 

Bradford extends the rule in Keel to attorneys and refines 

the test for determining the class of persons which may sue for 

breach of the common law duty of workmanlike performance. In its 

interpretation of Keel, the Oklahoma Supreme Court stated: 

3. Whenever the circumstances attending a 

situation are such that an ordinarily prudent person 

could reasonably apprehend that, as the natural and 

probable consequences of his act, another person will be 

in danger of receiving an injury,~ duty to exercise 

ordinary care to prevent such injury arises. 

Bradford, 653 P.2d at 190 (emphasis added). In our view a 

contract for legal services is a contract for services giving rise 

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to the duty of workmanlike performance. The record in this case 

reveals extensive communications between the attorneys, Martin and 

Morgan, and the purchaser, Vanguard, concerning the title opinion. 

The record also shows that all parties, including Martin, Morgan, 

Vanguard, and Glenfed, were concerned about the Texas Rose 

Petroleum suit. Thus, we find that an ordinarily prudent attorney 

in the position of the defendants would reasonably have 

apprehended that Vanguard was among the class of nonclients which, 

as a natural and probable consequence of the attorneys' actions in 

preparing the title opinion for Glenfed, could be injured. 'Thus, 

we hold that the defendants owed a duty of ordinary care, 

Bradford, 653 P.2d at 190, and workmanlike performance, Keel, 639 

P.2d at 1231, to Vanguard in the performance of their contract for 

legal services with Glenfed. We stress that our holding only 

addresses the question of the duty of the defendants owed to 

Vanguard and not the question of whether Martin's, Morgan's, and 

Ames, ·Ashabranner's acts were the proximate cause of Vanguard's 

injuries. See Bradford, 653 P.2d at 190-91; Keel, 639 P.2d at 

1232. 

Our interpretation is consistent with Bradford's treatment of 

Keel and Ultramares Corp.~ Touche, 174 N.E. 441 (N.Y. 1931). 

The Oklahoma Supreme Court rejected the argument that Bradford was 

distinguishable from Keel by the relatively larger number of 

people who might seek redress. Bradford, 653 P.2d at 190. The 

Oklahoma Supreme Court also rejected as unpersuasive a similar 

rationale advanced by then-Judge Cardozo in Ultramares, stating 

we hold that while 

liability "in an 

the apprehensions [of 

indeterminate amount 

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extending 

for an 

Appellate Case: 88-1645 Document: 010110159066 Date Filed: 02/14/1990 Page: 7 
indeterminate time to an indeterminate class"] expressed 

in Ultramares may or may not be a telling argument as to 

whether the harm to a particular plaintiff was 

foreseeable to the defendant, their significance is 

relegated to foreseeability as it relates to proximate 

cause and must be considered only in that light. 

Bradford, 653 P.2d at 190-91 (boldface added; other emphases in 

original).· The boldfaced language indicates that once a plaintiff 

is in the class of persons which could foreseeably be injured by 

the defendants' actions, arguments about remoteness of relation, 

adversity of interest, etc., go to the element of proxim~te 

causation and thus to the"~ quest.ion whether the injurious 

consequences resulting from the negligence could have reasonably 

been foreseen or anticipated." Id. at 190 (emphasis added). 

Having f9und that defendants owed a duty to Vanguard, we next 

look to whether, viewed in the light most favorable to Vanguard, 

Vanguard pleaded sufficient evidence to establish a_ question of 

material fact on the element of proximate causation, i.e., whether 

the type and kind of injury to Vanguard was a reasonably 

foreseeable consequence of the defendants' breach of the duty of 

ordinary care and workmanlike performance. Considerations such as 

the nature of the parties' relationship, the degree of adversity 

between the parties, commercial practices, and the indeterminancy 

of the class of nonclients affected, go to the reasonable 

foreseeability of the type and kind of injury suffered by the 

plaintiff. If the type and kind of injury suffered by the 

plaintiff is not a reasonably foreseeable consequence of the 

defendants' actions, then proximate causation is not established 

and the plaintiff's case will fail. 

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James C. Hadsell, the officer·and director of Vanguard who 

conducted the negotiations for Vanguard, stated in his affidavit 

that Martin claimed he had 25 years of experience and "that my 

forte is titles," that Morgan and Ames, Ashabranner represented 

themselves as being highly qualified in oil and gas matters, and 

that both Martin and Morgan asserted that "they were 'specialists' 

in oil and gas title opinions." Hadsell also stated that the 

agreement between Vanguard and Glenfed specified that the attorney 

hired to examine title for Glenfed "was to work with and to be 

paid by Vanguard.'' Hadsell also averred th~t Morgan directed and 

orchestrated the entire closing. Most importantly, Hadsell stated 

that he had seen the original third party title opinion that 

mentioned the Texas Rose Petroleum lawsuit, that Morgan stated the 

transaction could not close until· the Texas Rose Petroleum lawsuit 

was dismissed, and that Morgan "was very firm in this position 

that dismissal of the Texas Rose lawsuit would cure the title 

defect." Hadsell also stated that Martin concurred that a valid 

closing could occur after the Texas Rose lawsuit was dismissed. 

Hadsell further stated that: 

9. That the final title opinion·dated August 27, 1985, 

made no reference to the Texas Rose lawsuit. It 

was deleted based upon the legal advice of David D. 

Morgan who instructed Billy L. Martin to delete the 

reference to Texas Rose altogether. 

15. That [Hadsell] justifiably relied upon Mr. Morgan's 

and Mr. Martin's assurances that the title was 

legally good and marketable and these attorneys 

knew full well that Vanguard was solely relying on 

their legal services and advice. 

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17. That the final, fatal decision 

reference to the Texas Rose title 

by and at the insiste~ce of 

consultation with Mr. Martin. 

to delete 

problem was 

Mr. Morgan, 

all 

made 

in 

Although no single incident definitively shows that the kind of 

injury suffered by Vanguard was reasonably foreseeable, in the 

aggregate we find that this affidavit states sufficient evidence 

to create a question of material fact concerning the proximate 

cause of Vanguard's injury. The grant of summary judgment was 

thus improper. See McKenzie v. Mercy Hosp., 854 F.2d at 367. 

The petition for. rehearing is GRANTED. We withdraw our 

earlier opinion, substitute this revised opinion, and REVERSE and 

REMAND for further proceedings 'in accordance with this opinion. 

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