Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-01645/USCOURTS-ca10-88-01645-0/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 Partnersh_ip, 

Defendants-Appellees. 

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FILED 

Uoited States Court of Appeals 

Tenth Ci,r:-~!i~ 

NOV 2 9' 1989 

ROBERT L. f:IOECK.ER 

Clerk 

No. 88-1645 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF OKLAHOMA 

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

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

Tulsa, Oklahoma, with him on the 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, McGivern & 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 Ames, Ashabranner, 

Taylor, Lawrence, Laudick and Morgan, a Partnership. 

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

TACHA, Circuit Judge. 

Appellate Case: 88-1645 Document: 010110136483 Date Filed: 11/29/1989 Page: 1 
Plaintiff Vanguard Production, Inc. ("Vanguard") appeals _tt. 

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

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

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

("Ames, Ashabran·ner"} (collectively "defendants"}. Vanguard 

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

a matter of law under Allred Y..!. 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, lnc. ~ 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 and establishes 

that an attorney may be liable for malpractice to nonclients who 

foreseeably rely on the attorney's legal work. We further hold 

that Vang-uard·has pleaded sufficient facts under Bradford to. 

establish a jury question on the issue of foreseeability. 

In early 1985, vanguard began negcitiations for an assignmertt 

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 

property dated June 25, 1985, that 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 lease. Around August 9, 1985, Vanguard executed a 

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Appellate Case: 88-1645 Document: 010110136483 Date Filed: 11/29/1989 Page: 2 
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 ~nd 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 pr6perty 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 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 

Glenfe.d had 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 

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Appellate Case: 88-1645 Document: 010110136483 Date Filed: 11/29/1989 Page: 3 
duty to Vanguard because there was no attorney/client ~elationship 

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 

Martin, when Martin was in fact working for Glenfed. 

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

the rule of Allred v. Rabon governs. See Carey Y..!. 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 ev~n if Bradford applies 

we determine whether, viewed in the light most favorable to 

Vanguard, a material question of fact exists. See McKenzie v. 

Mercy Hosp., 854 F •. 2d 3Q5, 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 

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 

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Appellate Case: 88-1645 Document: 010110136483 Date Filed: 11/29/1989 Page: 4 
·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 preparing his opinion which made 

representacions, inter alia, of payment of 

consideration, legality of the bona·. 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 189. 

The Oklahoma Supreme Court replied the pledgee's complaints 

stated a cause of action under Oklahoma law. Privity of contract 

does not apply to tort situations under Oklahoma law. 

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

See Keel v. 

The 

Bradford court stated that to determine an attorney's negligence 

the jury mus·t 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). 

We hold that Bradford controls the case before us, and look 

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

Vanguard pleaded sufficient evidence to establish·a question of 

material fact regarding the foreseeability of Vanguard's reliance 

on the title opinion and legal advice given to Vanguard by the 

defendants, Morgan, Martin, and Ames, Ashabranner. James C. 

Hadsell, the officer and director of Vanguard who conducted the 

negotiations for Vanguard, stated in his affidavit that Martin 

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Appellate Case: 88-1645 Document: 010110136483 Date Filed: 11/29/1989 Page: 5 
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 oii 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 that 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 also 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. 

17. That the final, 

reference to the 

by and at the 

consultation with 

fatal decision. to delete 

Texas Rose title problem was 

insistence of Mr. Morgan, 

Mr. Martin. 

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all 

made 

in 

Appellate Case: 88-1645 Document: 010110136483 Date Filed: 11/29/1989 Page: 6 
Although no single incident definitively ~hows that Vanguard's 

reliance was foreseeable, ~n the aggregate we find that this 

affidavit states sufficient evidence to create a question of 

material fact concerning the foreseeability of Vanguard's 

reliance. The district court's grant of summary judgment was in 

error. 

REVERSED and REMANDED for further proceedings in accordance 

with this opinion. 

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