Opinion ID: 196676
Heading Depth: 3
Heading Rank: 2

Heading: Potential Conflict

Text: 2. Potential Conflict The conflict requirement of the reasonably foreseeable test does not demand that an actual conflict arise. Rather, Massachusetts and federal case law has consistently found that a potential conflict between an attorney's duty to his or her client and the alleged duty to the nonclient is sufficient to defeat the nonclient's malpractice claim. [I]t is the potential for conflict that prevents the imposition of a duty . . . . Spinner, 631 N.E.2d at 545; see Schlecht v. Smith, No. 92-30099- MAP, 1994 WL 621594 at  5 (D. Mass. 1994); Page, 445 N.E.2d at 153; see, e.g., DaRoza, 622 N.E.2d at 608 (employee's interest in worker's compensation suit could have differed from client insurer's). Thus, any potential conflicts between Antonellis' duty to Milford and his alleged duty to ONB will defeat One National's claim. Before addressing the potential conflicts, we note that the facts in the present case differ in several material ways from the Massachusetts cases we have found that address the foreseeable reliance exception. In those cases, only one transaction is generally at issue, the potential third party -8- nonclient's identity is known from the start of the transaction, and often, the nonclient and client are in an adversary position. See, e.g., Page, 445 N.E.2d at 149-50; Kirkland, 658 N.E.2d at 699-700. Here, there were two independent transactions: the certificate of title prepared for the first transaction -- the second Milani mortgage -- was relied on in the second -- the sale of that mortgage. Also, the third party nonclient's identity was not known until after the legal service was rendered, and the nonclient is attempting to stand in the shoes of the client as mortgagor in the first transaction, not in its adverse position as buyer in the second. In short, we find ourselves facing the dilemma of having to apply the factdependant Massachusetts foreseeable reliance test to factors that have not yet come before the state courts. One National argues that in this context there was no conflict between Antonellis' duty to Milford and the duty he allegedly owed ONB. It asserts that the duty on which it rests its claim is the same duty Antonellis owed Milford: the duty to search properly and to report accurately the state of the title with respect to the 1988 mortgage. It argues that two duties cannot be in conflict with each other if they are identical. Unlike in Page, ONB argues, where the attorney faced a potential conflict between duties to the mortgagee client and mortgagor nonclient because they may have had different concerns about the state of the title, Page, 445 N.E.2d at 153, both ONB and Milford simply wanted an accurate certificate of title. That is true, as -9- far as it goes. However, One National misconstrues the scope of the duty to the client that Massachusetts courts have focused on. [A]n isolated instance identity of interests between ONB and Milford does not suffice to impose duty on Antonellis. Spinner, 631 N.E.2d at 545. Although the particular activity in question may not be adverse, and may actually be beneficial, the appropriate inquiry concerns the purpose of the entire legal representation. 1 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice 7.11, at 387 (3d ed. 1989). Antonellis owed Milford not only an obligation to report on the title, but also a concurrent duty of confidentiality. The Massachusetts and federal courts that have applied the foreseeable reliance exception have repeatedly drawn on the importance of the duty of confidentiality in finding the potential for a conflict, so that an attorney's duty to third parties is circumscribed and limited by the law and the disciplinary rules governing attorney conduct. Schlecht, 1994 WL 621594 at  5; see, e.g., Austin v. Bradley, Barry & Tarlow, P.C., 836 F. Supp. 36, 38 (D. Mass. 1993); Logotheti, 607 N.E.2d at 1018; Spinner, 631 N.E.2d at 545; see also Mallen & Smith, supra, at 7.11 at 388 (The policy considerations against implying a duty are strongest where doing so would detract from the attorney's ethical obligations to the client.). In Logotheti and Spinner the Supreme Judicial Court framed the attorney's duty of confidentiality in terms of the -10- Massachusetts disciplinary rules' requirement that an attorney preserve the secrets and confidences gained in the course of representing a client. Spinner, 631 N.E.2d at 545; see S.J.C. Rule 3:07, Canon 4, DR 4-101 (Preservation of Confidences and Secrets of a Client); S.J.C. Rule 3:07, Canon 7, DR 7-101 (Representing a Client Zealously); see also Schlecht, 1994 WL 621594 at  5 (To impose on a borrower/mortgagor's attorney a duty to the lender/mortgagee can create situations antithetical to the disciplinary rules which govern attorney conduct.); Logotheti, 607 N.E.2d at 1018; Harris v. Magri, 656 N.E.2d 585, 586 n.4 (Mass. App. Ct. 1995). Other cases posit the obligation of confidentiality in more general terms. See Austin, 836 F. Supp. at 38 (citing to attorney's concurrent obligation of confidentiality to his client). Here, contrary to ONB's claim, there is a clear potential conflict rooted in Antonellis' duty of confidentiality. Milford knew that there was a first mortgage that had not been reported. Given this, if we place a duty to ONB on Antonellis' shoulders, we put on him the obligation to inform it of his error. That mistake was made in the first transaction, a transaction to which One National was not a party. Antonellis' purported duty to ONB therefore arose only in the second transaction, where that bank actually was a party. Cf. Hendrickson v. Sears, 310 N.E.2d 131, 135-36 (Mass. 1974) (holding that cause of action for negligent certification of title accrues upon discovery). Ostensibly, having already -11- produced the certificate, his duty would be to check whether Milford subordinated the debt, remind it of his error, and if Milford did not rectify it, to do so himself by informing ONB. Clearly, at that point a conflict in the duty of confidentiality would arise: if his client decided not to pass on the information and Antonellis did so in its stead, he would breach his duty of confidentiality. See S.J.C. Rule 3:07, Canon 4, DR 4-101(B) (stating that a lawyer shall not knowingly . . . [r]eveal a confidence or secret of his client.). If he did not pass on the information, he would breach his duty to ONB. We refuse to place him in that position. Therefore, we find that the potential for conflicts in Antonellis' duty to Milford and to ONB bars liability in this case.4 Cf. Austin, 836 F. Supp. at 4 The court below relied on a different basis in finding that there was a clear potential for conflict in this case. It found that ONB and Milford were in the adverse positions of buyer and seller in August 1988. Since the courts have found that reliance on an adverse party's legal counsel in a business transaction is unreasonable as a matter of law, see Schlecht, 1994 WL 621594 at  7; Robertson, 536 N.E.2d at 350 n.6; Page, 445 N.E.2d at 154- 55, the court found that there was a potential for conflict. It found that Antonellis would be under different pressures if he were representing both Milford and ONB than if he represented ONB alone. The court also commented on One National's failure to use its own counsel in the sales transaction. One National contests that Antonellis was not representing a party adverse to it, because he did not represent Milford in the ONB-Milford sales transaction, but only in the second Milani mortgage. When he rendered the title certificate at issue, Milford and ONB were not yet adverse parties. Because we find that One National fails the potential conflicts prong of the foreseeable reliance exception on other grounds, we do not address here whether the district court was correct in finding that ONB sought to rely on the legal counsel of an adverse party. -12- 38 (refusing to infer a duty to disclose a client's insolvency to nonclient investors where duty would directly conflict with concurrent obligation of confidentiality to client). ONB contests that potential conflicts would only arise if Antonellis had represented Milford as the seller of the mortgages in the second transaction, and if Milford and Antonellis had intended to deceive ONB. We disagree. Neither of these additional facts are necessary for potential conflicts to arise. First, ONB is relying on the work Antonellis did for the first transaction -- whether we consider ONB as Milford's replacement in the first transaction or as a party adverse to Milford in the second is irrelevant to this analysis. Second, as the district court noted, there is no allegation that Milford and Antonellis colluded to deceive ONB. There are many reasons why Milford could fail to inform ONB of the faulty title. Indeed, even if it did tell ONB about the problem, Antonellis could still face a conflict in his duty of confidentiality if Milford made any misrepresentations about the circumstances under which the error was made, i.e. that it too knew of the omission of the first Milani mortgage. Thus we do not accept ONB's contention that there was no potential conflict.