Title: Banco Popular North America v. Suresh Gandi a/k/a Suresh Gandi, et al.
Citation: N/A
Docket Number: a-5-03
State: new-jersey
Issuer: new-jersey Supreme Court
Date: June 27, 2005

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). During the late 1990 s, Suresh Gandhi operated a series of fast-food restaurants under Arby s and Burger King franchises. Separate corporations, of which Gandhi was the sole shareholder, ran each of three restaurants. One ran the Arby s. Priya Fast Foods, Inc. (Priya I) and Priya Fast Foods II, Inc. (Priya II) each operated a Burger King. In May of 1997, Banco Popular loaned Priya I $500,000. Gandhi executed a personal guaranty with regard to that loan. At that time, Gandhi jointly owned two homes with his wife along with securities in a mutual fund. At some point, Gandhi became enmeshed in a dispute with Arby s. He retained Freedman to represent him in connection with that dispute. According to Gandhi, Freedman advised him to transfer all of his assets into his wife s name in order to place them beyond Arby s reach. On April 20, 1998, Freedman prepared the deeds for both parcels and the documents that effectuated the transfer. A few months later, the bank issued another loan to Priya I for $15,000. In connection with that loan, and despite the asset transfer two months earlier, Gandhi executed a guaranty in which he represented that he has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all or substantially all of Guarantor s assets, or any interest therein . . . . Gandhi also warranted that no event has occurred which may materially adversely affect Guarantor s financial condition . On July 21, 1998, the bank issued a $750,000 loan to Priya II. That loan would not have been granted except for the fact that Gandhi executed a guarantee of payment, which represented among other things: that he had provided financial statements to the bank to obtain the loan and during the term of the loan, provided Guarantor shall maintain a minimum net worth of not less that $950,000. Guarantor shall have the right to transfer, sell or assign any real or personal property owned by him, without any requirement of obtaining Lender s consent. Freedman negotiated Gandhi s guaranty with the bank as well as other terms and documents relating to the $750,000 loan. Freedman also issued an opinion letter in which he stated, After due investigation, we are unaware of any material matters contrary to the representations and warranties of the Borrower or the Guarantor contained in the Loan Documents. Gandhi defaulted on all of the loans. The bank obtained a judgment against Gandhi for $1,251,574.58 and instituted an action against Gandhi and his wife, claiming that the transfers of the houses and the mutual fund violated the Uniform Fraudulent Transfer Act (UFTA). The bank filed an amended complaint joining Freedman as a defendant after Gandhi testified at a deposition that Freedman had advised him to make the transfers. The bank alleged that Freedman breached the duty he owed to the bank by negligently advising Gandhi to transfer assets, making him unable to fulfill his financial obligations to the bank and that Freedman conspired with Gandhi to defraud his creditors. The bank filed another amended complaint in which it alleged that Freedman perpetrated common-law fraud, negligence, creditor fraud, and ethical violations in advising Gandhi to transfer his assets to defraud Arby s, in effectuating the transfer, and in issuing the misleading opinion letter on which he intended the bank to rely. Another count of the complaint alleged civil conspiracy. The trial judge granted Freedman s motion to dismiss for failure to state a claim upon which relief could be granted. The Appellate Division, in a reported opinion, reinstated the bank s claims for creditor fraud and civil conspiracy but upheld the dismissal of the claims for common-law fraud and negligence. This Court granted the Banco Popular s petition for certification with respect to the Appellate Division s resolution of the negligence claims and Freedman s cross-petition for certification in connection with creditor fraud. HELD: There is no cause of action for creditor fraud in this jurisdiction but the attorney may be liable for conspiracy to violate the Uniform Fraudulent Transfer Act for his participation in the transfer. Such an action would require the creditor to prove that the conspirator agreed to perform the fraudulent transfer, which, absent the conspiracy, would give a right of action under the UFTA. The attorney also may be liable for misrepresentations he made in connection with the opinion letter he issued on the subsequent loan. To establish common-law fraud, a plaintiff must prove: (a) a material misrepresentation of a presently existing or past fact; (b) knowledge or belief by the defendant of its falsity; (c) an intention that the other person rely on it; (d) reasonable reliance thereon by the other person; and (e) resulting damages. Two reported Appellate Division opinions conclude that it is not necessary for the plaintiff to establish legal fraud to have a viable cause of action when it is otherwise demonstrated that actions have been taken for the purpose of defrauding a creditor. We disagree. Misrepresentation and reliance are the hallmarks of any fraud claim, and a fraud cause of action fails without them. A creditor fraud claim that requires plaintiffs to prove neither reliance nor misrepresentation does not exist in New Jersey. Our conclusion dovetails with the state of the law in other jurisdictions. Creditor fraud is not recognized anywhere else in the country, and we see no warrant to acknowledge its existence here. (pp. 14-18) 2. The question then becomes what remedies are available to address Freedman s part in the asset transfer and in issuing the opinion letter. Banco Popular alleges that Freedman counseled Gandhi to violate and assisted him in violating the UFTA. In New Jersey, a civil conspiracy is a combination of two or more persons acting in concert to commit an unlawful act, or to commit a lawful act by unlawful means, the principal element of which is an agreement between the parties to inflict a wrong against or injury upon another, and an overt act that results in damage. The gist of the claim is not the unlawful agreement, but the underlying wrong which, absent the conspiracy, would give a right of action. Following this definition, a creditor in New Jersey may bring a claim against one who assists another in executing a fraudulent transfer. Such an action would require the creditor to prove that the conspirator agreed to perform the fraudulent transfer, which, absent the conspiracy, would give a right of action under the UFTA. (pp. 21-22) The fact that Freedman was representing Gandhi during that transaction does not insulate him from liability. The allegations indicate that Freedman counseled Gandhi to transfer his assets to defraud a creditor, and, if proved, his assistance in facilitating the transfer reflects implicit, if not explicit, agreement to further that purpose. The Appellate Division properly declined to dismiss the conspiracy count of the complaint to the extent that it was based upon a UFTA violation. Thus if proved, the conspiracy count would subject Freedman to the remedies provided in the UFTA. (p. 23) We have recognized that there are circumstances in which an attorney may owe a duty to a third party with whom the attorney does not have a contractual relationship. If the attorney s actions are intended to induce a specific non-client s reasonable reliance on his or her representations, then there is a relationship between the attorney and the third party. If the attorney does nothing to induce reasonable reliance by a third party, there is no relationship to substitute for the privity requirement. Put differently, the invitation to rely and reliance are the linchpins of attorney liability to third parties. (pp. 23-26) Banco Popular s negligent misrepresentation claims regarding the asset transfer exceed the reach of a 1995 Supreme Court decision in which this Court recognized that there are circumstances in which an attorney may owe a duty to a third party. The duty recognized in the Court s opinion in 1995 arose because an attorney, engaged in dealings involving a non-client, made misrepresentations to the non-client knowing that they would induce her reliance. In aiding Gandhi in the asset transfer, not only did Freedman make no representations to the bank seeking to induce reliance, but the entire transaction was intended to be and was carried out without the bank s knowledge. The lack of a misrepresentation by Freedman and reliance by the bank fatally undermines the existence of any duty between them. We affirm the Appellate Division s conclusion to that effect. (pp. 28-29) Banco Popular s intentional and negligent misrepresentation claim against Freedman in respect of his role in negotiating the terms of the July loan and guaranty and in issuing an opinion letter stands on different footing from the asset transfer. Representations in negotiations are made to induce reliance. The purpose of a legal opinion letter is to induce reliance by others. To the extent that the loan negotiations or the opinion letter contained misstatements of material facts on which Freedman knew or should have known the bank would rely, they will support a negligence cause of action. The question is whether the complaint pleaded that cause of action. It is the existence of the fundament of a cause of action in those documents that is pivotal; the truth of plaintiff s allegations and the ability of the plaintiff to prove its allegations not at issue. Here, the Appellate Division erred. The appellate panel limited its consideration to two examples of misstatements by Gandhi advanced by the bank (paragraph 2(j) and the June guaranty) and ruled on the merits of those allegations. The panel concluded that the former was not a representation of net worth and also held that the guaranty was not incorporated into the July loan and that Freedman was not involved in that guaranty. The issue was not whether the bank s allegations were true or whether they could be proved, but only whether they were made. The court noted that under relevant standards, the Appellate Division s conclusions regarding paragraph 2(j) were incorrect; the bank was entitled on a Rule 4:6-2 motion to the inference that the $950,000 trigger in paragraph 2(j) was related to Gandi s representations. (pp. 29-31) That Freedman intended the bank to rely on his misrepresentation that we are unaware of any material matters contrary to the representations and warranties of the Borrower or the Guarantor contained in the Loan Documents cannot be disputed. In the face of Gandi s financial representations to obtain the loans (any representation was false because of his divestiture of assets. The assertion that Freedman was unaware of any material matters contrary to the representations and warranties of the borrower or the guarantor provided the basis for a direct misrepresentation claim against Freedman, which may be characterized as negligent or intentional. Moreover, the bank asserted a breach of duty by Freedman that was not limited to outright misrepresentations in the opinion letter. If the facts alleged are proved, he had a duty either to counsel Gandhi to tell the bank the truth and see to it that he did so or to discontinue his representation. Freedman may have some explanation for what he did. We rule only that the bank s claims, with all inferences accorded to them, were sufficient to pass the pleadings stage of the litigation. The bank s claim for conspiracy in connection with the asset transfer may proceed, as may the bank s claims of negligent and intentional misrepresentation and negligent investigation. The bank s claims for creditor fraud were properly dismissed. (pp. 32-34) Judgment of the Appellate Division is AFFIRMED in part and REVERSED in part. CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, ALBIN, WALLACE and RIVERA-SOTO join in JUSTICE LONG S opinion. Plaintiff-Appellant and Cross-Respondent, v. SURESH GANDI a/k/a SURESH GANDHI, MADHU S. GANDI a/k/a MADHU S. GANDHI, Defendants, and RICHARD P. FREEDMAN, ESQ., ANGELINI, VINIAR &amp; FREEDMAN, a New Jersey General Partnership, MICHAEL A. ANGELINI, ESQ., a Partner, and CARL B. VINIAR, ESQ., a Partner, Defendants-Respondents and Cross-Appellants. Argued January 20, 2004 - Reargued November 8, 2004 Decided June 27, 2005 On certification to the Superior Court, Appellate Division, whose opinion is reported at 360 N.J. Super. 414 (2003). Samuel Feldman argued the cause for appellant and cross-respondent (Orloff, Lowenbach, Stifelman &amp; Siegel, attorneys). Lance J. Kalik argued the cause for respondents and cross-appellants (Riker, Danzig, Scherer, Hyland &amp; Perretti, attorneys; Mr. Kalik, Ronald Z. Ahrens and Luciana P. Lalande on the briefs). Karol Corbin Walker, Past President, argued the cause for amicus curiae New Jersey State Bar Association (Edwin J. McCreedy, President, attorney; Ms. Walker and Christopher J. Carey of counsel; Mr. Carey and Kathleen A. Murphy on the briefs). JUSTICE LONG delivered the opinion of the Court. This matter involves claims by a bank against an attorney for creditor fraud, common-law fraud, and negligence. Banco Popular North America (the Bank) avers that the attorney assisted his client in transferring assets to defraud a creditor. The Bank s interests are implicated because it issued the client loans before and after the fraudulent transfer, in reliance on the client s representations and on an opinion letter issued by the attorney. Ultimately, the client-debtor was unable to make payment on his debts to the Bank. The first issue is whether a cause of action exists in this jurisdiction for creditor fraud that would encompass the attorney s conduct. The second is whether the attorney violated any duty to the Bank, a non-client, in connection with the fraudulent transfer or a subsequent loan. We hold that there is no cause of action for creditor fraud in this jurisdiction but that the attorney may be liable for conspiracy to violate the Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34, for his participation in the transfer. We also hold that the attorney may be liable for misrepresentations he made in connection with the opinion letter he issued on the subsequent loan. I This appeal ensues from a dismissal of counts of the Bank s complaint. We thus proceed gingerly because Rule 4:6-2(e) motions to dismiss should be granted in only the rarest [of] instances. Lieberman v. Port Auth. of N.Y. &amp; N.J., 132 N.J. 76, 79 (1993)(quoting Printing Mart Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 772 (1989)). Trial courts are cautioned to search the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary. At this preliminary stage of the litigation [a] [c]ourt [should not be] concerned with the ability of plaintiffs to prove the allegation contained in the complaint. . . . [P]laintiffs are entitled to every reasonable inference of fact. The examination of a complaint s allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach. [Printing Mart, supra, 116 N.J. at 746 (internal quotations and citations omitted).] See also Glass, Molders, Pottery, Plastics, &amp; Allied Workers Int l Union v. Wickes Cos., 243 N.J. Super. 44, 46 (Law Div. 1990) ( The test for determining the adequacy of a pleading is whether a cause of action is suggested by the facts. ). Obviously, if the complaint states no basis for relief and discovery would not provide one, dismissal is the appropriate remedy. Pressler, Current N.J. Court Rules, comment 4.1 on R. 4:6-2 (2005) (citing Camden County Energy Recovery Assocs. v. N.J. Dep t of Envtl. Prot., 320 N.J. Super. 59, 64 (App. Div. 1999), aff d o.b., 170 N.J. 246 (2001)). In ruling, courts must assume the facts as asserted by plaintiff are true and give her the benefit of all inferences that may be drawn in her favor. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988). We therefore treat the Bank s version of the facts as uncontradicted and accord it all legitimate inferences. We pass no judgment on the truth of the facts alleged; we accept them as fact only for the purpose of reviewing the motion to dismiss. R. 4:6-2(e). 2. Representations, Warranties and Covenants. Guarantor hereby represents, warrants and covenants as follows: . . . . (d) Guarantor will promptly comply with all conditions of this Guarantee. Guarantor will promptly (upon transmittal or receipt) deliver to Lender copies of all notices and correspondence with respect to: (i) this Guarantee, (ii) any material adverse change in the financial condition of Guarantor, (iii) Lender s security and (iv) any violation or potential violation of any approval, authorization, or permit issued in regard to the Premises. Guarantor will promptly and fully respond to any inquiry of Lender made with respect to any of the matters described in the preceding sentence and will permit Lender, upon Lender s written request, to participate in any inquiry, hearing or meeting with regard to any of the foregoing. . . . . (h) Guarantor shall provide to Lender (i) not later than March 31 of each calendar year, updated annual financial statements in form similar to that previously provided to Lender; (ii) not later than thirty (30) days after filing, copies of his federal and state income tax returns; and (iii) such other financial information relating to Guarantor as may be requested from time to time by Lender. (i) Guarantor shall promptly provide Lender with written notice of any pending or threatened litigation involving claims against Guarantor or the commencement of any proceedings or investigations by any governmental or regulatory agency with respect to Guarantor. (j) During the term of the Loan, provided Guarantor shall maintain a minimum net worth of not less than $950,000.00, Guarantor shall have the right to transfer, sell or assign any real or personal property owned by him, without any requirement of obtaining Lender s consent. [(Emphasis added).] Freedman negotiated Gandhi s guaranty with the Bank as well as other terms and documents relating to the $750,000 loan. As with the previous loans, the financial information Gandhi supplied to secure that loan is not contained in the record. In any case, Freedman issued an opinion letter on July 21, 1998, in relation to the $750,000 loan, in which he stated, 10. After due investigation, we are unaware of any material matters contrary to the representations and warranties of the Borrower or the Guarantor contained in the Loan Documents. (Emphasis added). The Bank issued a final loan to Priya II, in the amount of $100,000, for which Priya II made and executed a Promissory Note on or about November 13, 1998. As with the previous loans, the record is devoid of information regarding that loan. The restaurants were unsuccessful, and Gandhi defaulted on all of the Bank loans sometime after October 1999. On August 28, 2000, the Bank obtained a judgment against Gandhi for $1,251,574.58. [Ibid.] We granted the Bank s petition for certification with respect to the Appellate Division s resolution of the negligence claims and Freedman s cross-petition for certification in connection with creditor fraud. See footnote 4 Banco Popular North Am. v. Gandi, 177 N.J. 495 (2003). We also granted amicus status to the New Jersey State Bar Association. II The parties reassert the arguments advanced below. The Bank contends that Freedman negligently advised and assisted Gandhi to become insolvent through the asset transfer, which caused foreseeable harm to existing creditors; issued a misleading opinion letter in connection with the $750,000 loan; and performed a negligent investigation with respect to loan documents. The Bank further alleges that Freedman violated his duty of candor and honesty in failing to disclose the asset transfer and that, in any event, the trial judge s pre-discovery dismissal of its negligence claims was premature in light of the strict standard governing motions to dismiss. In addition, the Bank contends that creditor fraud is a legitimate cause of action that is simply the tort of fraud adapted to address the misconduct of improperly thwarting a creditor. The Bank asserts that Freedman triggered that tort by orchestrating the transfer and facilitating the Bank s issuance of the $750,000 loan with the opinion letter. Freedman disputes the validity of a cause of action for creditor fraud because its existence would ignore fraud principles, impermissibly extend attorneys liability to third parties, and compromise the attorney-client relationship. Furthermore, Freedman characterizes creditor fraud as duplicative in light of common-law civil conspiracy. Moreover, Freedman argues that all varieties of fraud require a misrepresentation, and the lack of a misrepresentation in this case negates any claim of creditor fraud against him. With respect to negligence, Freedman maintains that he owed no duty to the Bank, a non-client, to disclose his client s financial condition or the asset transfer. Furthermore, Freedman argues that the Appellate Division was correct in holding that the opinion letter contains no misrepresentation to serve as a basis for liability. Lastly, Freedman contends that the Bank did not engage in sufficient due diligence before issuing loans to Gandhi and should not be permitted to foist responsibility onto its borrower s attorney. Amicus curiae, the New Jersey State Bar Association, contends that a creditor fraud cause of action will place undefined duties on attorneys that directly contradict current law and hinder attorneys ability to fulfill their professional and ethical obligations. The Bar Association urges us to carve out an exception for attorneys if we recognize a cause of action for creditor fraud because our disciplinary system provides sufficient protection against an attorney s fraudulent acts. If we rule otherwise, the Association asks that we provide guidance to attorneys on those parties to whom a duty is owed when counseling clients in connection with financial transactions. [Ibid.] The court concluded that it is not necessary for the plaintiff to establish legal fraud to have a viable cause of action when it is otherwise demonstrated that actions have been taken for the purpose of defrauding a creditor. Id. at 441. Citing Jugan, supra, the court held that the defendants conduct was close enough to legal fraud to give rise to a cause of action. Id. at 442; see also Morganroth &amp; Morganroth v. Norris, McLaughlin, &amp; Marcus, P.C., 331 F.3d 406 (3d Cir. 2003) (suggesting New Jersey would recognize an action for creditor fraud). We disagree. The misconduct of the defendants in Jugan and Karo was unlike misconduct constituting common-law fraud. Four of the five elements required to establish fraud under Gennari, supra, 148 N.J. at 610, were absent: a misrepresentation, knowledge of the falsity of the misrepresentation, intent that a party rely on the misrepresentation, and reasonable reliance. Misrepresentation and reliance are the hallmarks of any fraud claim, and a fraud cause of action fails without them. See Gennari, supra, 148 N.J. at 610 (requiring misrepresentation and reliance in legal fraud action); Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 609-10 (1989)(requiring misrepresentation and reliance for contract rescission based on third-party fraud); Jewish Ctr. of Sussex County v. Whale, 86 N.J. 619, 624-25 (1981)(requiring misrepresentation and reliance for equitable fraud); United Jersey Bank v. Wolosoff, 196 N.J. Super. 553, 564 (App. Div. 1984)(noting that fraud requires misrepresentation and reliance). Although the word fraud is used in common parlance to connote any practice involving shady or underhanded dealing, in the law it is a term of art with a clear definition. We hold that an amorphous creditor fraud claim that requires plaintiffs to prove neither reliance nor misrepresentation does not exist in New Jersey. We conclude, as well, that its absence will wreak no injustice on litigants in this State. As will be demonstrated below, the scenarios to which our courts have applied the creditor fraud label are remediable by way of other recognized causes of action. Our conclusion dovetails with the state of the law in other jurisdictions. Indeed, creditor fraud is not recognized anywhere else in the country, and we see no warrant to acknowledge its existence here. We therefore reverse the Appellate Division s contrary conclusion. The question then becomes what remedies are available to address Freedman s part in the asset transfer and in issuing the opinion letter. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor: Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor s ability to pay as they become due. [N.J.S.A. 25:2-25(a), (b).] Those standards apply whether the creditor s claim arose before or after the transfer was made or the obligation was incurred. N.J.S.A. 25:2-25. The Act sets forth the indicia of actual intent for use in interpreting subsection a. of N.J.S.A. 25:2-25(a): In determining actual intent under subsection a. of R.S. 25:2-25 consideration may be given, among other factors, to whether: a. The transfer or obligation was to an insider; b. The debtor retained possession or control of the property transferred after the transfer; c. The transfer or obligation was disclosed or concealed; d. Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; e. The transfer was of substantially all the debtor's assets; f. The debtor absconded; g. The debtor removed or concealed assets; h. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; i. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; j. The transfer occurred shortly before or shortly after a substantial debt was incurred; and k. The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor. [N.J.S.A. 25:2-26.] The remedies available to a successful claimant under the UFTA are broad. Obviously, avoidance of the transfer is primary. N.J.S.A. 25:2-29(a)(1). Other remedies include attachment against the asset transferred or other property of the transferee, N.J.S.A. 25:2-29(a)(2); a money judgment against the transferee where the transfer cannot be undone, N.J.S.A. 25:2-30(a), (b); and injunctive relief. N.J.S.A. 25:2-29(a)(3)(a). The statute also contains a catch-all provision, affording a creditor [a]ny other relief the circumstances may require. N.J.S.A. 25:2-29(a)(3)(c). The UFTA was designed as a vehicle by which creditors may recover from debtors and others who hinder their collection efforts. Yet, in enacting the UFTA, the Legislature specifically opted not to preclude related causes of action. N.J.S.A. 25:2-32 states, Unless displaced by the provisions of this article, the principles of law and equity, including the law merchant See footnote 5 and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement its provisions. Thus, to the extent that the facts undergirding a UFTA claim also establish other recognized causes of action, for example, breach of contract, negligence, or common-law fraud, a creditor may pursue that claim as well. Here, the Bank alleges that Freedman counseled Gandhi to violate and assisted him in violating the UFTA. In New Jersey, a civil conspiracy is a combination of two or more persons acting in concert to commit an unlawful act, or to commit a lawful act by unlawful means, the principal element of which is an agreement between the parties to inflict a wrong against or injury upon another, and an overt act that results in damage. Morgan v. Union County Bd. of Chosen Freeholders, 268 N.J. Super. 337, 364 (App. Div. 1993), certif. denied, 135 N.J. 468 (1994)(quoting Rotermund v. U.S. Steel Corp., 474 F.2d 1139, 1145 (8th Cir. 1973)(internal quotations omitted)). It is enough [for liability] if you understand the general objectives of the scheme, accept them, and agree, either explicitly or implicitly, to do your part to further them. Jones v. City of Chicago, 856 F.2d 985, 992 (7th Cir. 1988). Most importantly, the gist of the claim is not the unlawful agreement, but the underlying wrong which, absent the conspiracy, would give a right of action. Morgan, supra, 268 N.J. Super. at 364 (quoting Bd. of Educ. v. Hoek, 38 N.J. 213, 238 (1962)); see also Weil v. Express Container Corp., 360 N.J. Super. 599, 614 (App. Div.), certif. denied, 177 N.J. 574 (2003). Following the Morgan definition, a creditor in New Jersey may bring a claim against one who assists another in executing a fraudulent transfer. Such an action would require the creditor to prove that the conspirator agreed to perform the fraudulent transfer, which, absent the conspiracy, would give a right of action under the UFTA. Morgan, supra, 268 N.J. Super. at 364 (quoting Hoek, supra, 38 N.J. at 238). A creditor asserting a claim against a conspirator must satisfy the agreement and knowledge aspects of civil conspiracy and all of the underlying components of a UFTA claim: An unwitting party may not be liable under a conspiracy theory. Civil conspirators are jointly liable for the underlying wrong and resulting damages. See Hoek, supra, 38 N.J. at 238. In this case, the Bank alleged a conspiracy cause of action against Freedman for encouraging Gandhi to violate the UFTA and for assisting him in transferring assets to avoid a creditor. The fact that Freedman was representing Gandhi during that transaction does not insulate him from liability. Wahlgren v. Bausch &amp; Lomb Optical Co., 68 F.2d 660, 664 (7th Cir.), cert. denied, 292 U.S. 615, 54 S. Ct. 862, 78 L. Ed. 1474 (1934). The allegations indicate that Freedman counseled Gandhi to transfer his assets to defraud a creditor, and, if proved, his assistance in facilitating the transfer reflects implicit, if not explicit, agreement to further that purpose. As such, the Appellate Division properly declined to dismiss the conspiracy count of the complaint to the extent that it was based upon a UFTA violation. See footnote 6 . . . . (2) To a non-client when and to the extent that the lawyer or (with the lawyer s acquiescence) the lawyer s client invites the non-client to rely on the lawyer s opinion or provision of other legal services, the non-client so relies, and the non-client is not, under applicable law, too remote from the lawyer to be entitled to protection . . . . [Petrillo, supra, 139 N.J. at 483 (quoting Restatement of the Law Governing Lawyers 73 (Tentative Draft No. 7, 1994)).] We further stated: We also recognize that attorneys may owe a duty of care to non-clients when the attorneys know, or should know, that non-clients will rely on the attorneys[ ] representations and the non-clients are not too remote from the attorneys to be entitled to protection. The Restatement s requirement that the lawyer invite or acquiesce in the non-client s reliance comports with our formulation that the lawyer know, or should know, of that reliance. No matter how expressed, the point is to cabin the lawyer s duty, so the resulting obligation is fair to both lawyers and the public. [Id. at 483-84.] We relied as well on section 552 of the Restatement (Second) of Torts: In effect, section 552 of the Restatement (Second) of Torts (1977) imposes pecuniary liability for negligent misrepresentation when an attorney "supplies false information for the guidance of others in their business transactions, . . . if he fails to exercise reasonable care or competence in obtaining or communicating the information." [Restatement (Second) of Torts] at 552(1) [(1977)]. The same section limits liability to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction. [Petrillo, supra, 139 N.J. at 484 (quoting Restatement (Second) of Torts 552(2) (1977)).] Obviously infusing Petrillo was a focus on the first Hopkins element the nature of the relationship between the attorney and the third party. If the attorney s actions are intended to induce a specific non-client s reasonable reliance on his or her representations, then there is a relationship between the attorney and the third party. Contrariwise, if the attorney does absolutely nothing to induce reasonable reliance by a third party, there is no relationship to substitute for the privity requirement. Indeed, in Petrillo, we noted that when courts relax the privity requirement, they typically limit a lawyer s duty to situations in which the lawyer intended or should have foreseen that the third party would rely on the lawyer s work. Id. at 482 (citing Jay M. Feinman, Economic Negligence: Liability of Professionals and Businesses to Third Parties for Economic Loss 131-34 (1995)). Put differently, the invitation to rely and reliance are the linchpins of attorney liability to third parties. In Petrillo, we proceeded to apply those principles to the facts. The plaintiff, a buyer of property, alleged that the seller s attorney negligently provided her with excerpts from reports of two series of percolation tests, which she relied on to her detriment. Id. at 474-75. More particularly, the proffered composite report indicated that eight percolation tests were administered, out of which two were successful, when in fact thirty tests were administered to reach two successful results. Id. at 475. The plaintiff alleged that, relying on the misleading report, she signed a contract to purchase the property and incurred engineering expenses. Id. at 477. We held that by compositing the report, the attorney effectively made a representation to the plaintiff to provide reliable information regarding the percolation tests and should have foreseen that the plaintiff would rely on the total number of tests when making the decision whether to sign the contract. Id. at 487. Application of Petrillo in later cases has engaged courts in evaluating whether the attorney invited a non-client s reliance. See Hewitt v. Allen Canning Co., 321 N.J. Super. 178, 186 (App. Div.) (finding no duty where non-client did not rely on law firm s discovery violation and there was no misrepresentation), certif. denied, 161 N.J. 335 (1999); Atl. Paradise Assocs. v. Perskie, Nehmad, &amp; Zeltner, 284 N.J. Super. 678, 685 (App. Div. 1995) (holding plaintiff-purchasers could pursue claim against law firm because reliance on misrepresentations in content of public offering statement was foreseeable), certif. denied, 143 N.J. 518 (1996). It is on that backdrop that the Bank s negligence counts should be evaluated. BANCO POPULAR NORTH AMERICA, Plaintiff-Appellant and Cross-Respondent, v. SURESH GANDI a/k/a SURESH GANDHI, MADHU S. GANDI a/k/a MADHU S. GANDHI, Defendants, and RICHARD P. FREEDMAN, ESQ., et al., Defendants-Respondents and Cross-Appellants. DECIDED June 27, 2005 Chief Justice Poritz PRESIDING OPINION BY Justice Long CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY