Opinion ID: 1989670
Heading Depth: 1
Heading Rank: 3

Heading: Attorney McKinney.

Text: Shivvers contends the district court erred in granting McKinney summary judgment on her claim of professional negligence. She concedes she was not McKinney's client but argues that she was a third-party beneficiary of the services McKinney contracted to provide for the Zenor interests. Ordinarily, an attorney owes a duty of care only to his or her client. Holsapple v. McGrath, 575 N.W.2d 518, 520 (Iowa 1998) ( Holsapple II ). The limits of an attorney's duty of care have proceeded from a strict requirement of privity of contract. Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 7.2, at 491 (4th ed.1996) [hereinafter Mallen & Smith]. The privity requirement is derived from the following concerns: First, absent a requirement of privity, parties to a contract for legal services could easily lose control over their agreement. Second, imposing a duty to the general public upon lawyers would expose lawyers to a virtually unlimited potential for liability. Schreiner v. Scoville, 410 N.W.2d 679, 681 (Iowa 1987); see also Joan Teshima, Annotation, Attorney's Liability, To One Other than Immediate Client, for Negligence in Connection with Legal Duties, 61 A.L.R.4th 615, 624 (1988). We have recognized an exception to the privity requirement in situations involving specifically identifiable beneficiaries of testamentary and non-testamentary instruments. Holsapple v. McGrath, 521 N.W.2d 711, 713-14 (Iowa 1994) ( Holsapple I ) (third-party recovery for malpractice in preparation of nontestamentary instrument); Schreiner, 410 N.W.2d at 682-83 (beneficiary of will has cause of action against testator's attorney). The critical factors in our decisions to extend liability have been the frustration of the testator's or donor's intent and the nonclient's status as the direct, intended, and specifically identifiable beneficiary of the lawyer's services. Holsapple I, 521 N.W.2d at 713-14; Schreiner, 410 N.W.2d at 682-83. The key inquiry is whether the principal purpose of the attorney's retention was to provide legal services for the benefit of the plaintiff. See Mallen & Smith § 7.13, at 532. In American State Bank v. Enabnit, 471 N.W.2d 829, 832 (Iowa 1991), we discussed as follows the possibility of a party, who was not the client of an attorney, relying on a third-party beneficiary theory: Lawyer liability to anyone but a client is extremely rare, though it sometimes exists pursuant to a third-party beneficiary theory. For such liability to exist it must appear that the client intended to benefit the third party in the transaction. (Emphasis added.) We are convinced that the intent to benefit required for a third-party beneficiary relationship cannot arise if the instructions from the lawyer's client conflict with the wishes of the third-party claimant. That was clearly the situation here. Although Shivvers at times alludes to McKinney's omission of the Geiger easement in drafting her purchase agreement, that is not the gravamen of her claim. A reading of paragraphs 26 and 27 of her petition reveals that her complaint against McKinney is in regard to his role in including the easement in Geiger's contract. As to that matter, McKinney prepared the Geiger contract exactly as his clients' agent, Hertz, instructed him to do. The Geiger contract was so prepared in the face of a dispute with Shivvers concerning what Geiger acquired at the sale. Even in a nonlitigation context, if the parties to a real estate transaction intend differing results, the sellers' attorney cannot owe a duty to the buyer without encroaching on the essential obligations of undivided loyalty, independent judgment, and confidentiality owed to his or her client. See Mallen & Smith § 7.2, at 491; § 7.13, at 536; see also Clagett v. Dacy, 47 Md.App. 23, 420 A.2d 1285, 1290 (1980) (because bidder's interest would likely be in conflict with seller, attorney for seller had no duty to buyers at foreclosure sale). Shivvers argues an issue of material fact exists on the question of her reliance, and she would show, if we remand, that she relied on McKinney to properly prepare the contract. The fact of her reliance, however, is not a circumstance that would defeat summary judgment absent some indication that the Zenor interests intended to specifically benefit Shivvers through its use of McKinney's legal services. As we have previously discussed, such an intention may not be found under the circumstances of the disputed transaction. Shivvers also contends the district court erred in granting McKinney summary judgment on her claim of breach of fiduciary duty. The existence of a fiduciary relationship necessarily assumes one of the parties has a duty to act for or to give advice for the benefit of the other upon matters within the scope of the fiduciary relationship. See Kurth v. Van Horn, 380 N.W.2d 693, 695 (Iowa 1986). We have already concluded McKinney owed no duty to Shivvers. Summary judgment was properly granted on this claim as well.