Opinion ID: 888148
Heading Depth: 2
Heading Rank: 3

Heading: Three Approaches for Ascertaining Duty to Third Parties

Text: ¶89 The specific question ALPS faced in evaluating Redies' third-party theory of liability against Addy, therefore, was not whether the two of them were in privity but, rather, whether he owed her a duty of care. In this regard, having acknowledged that [s]ome courts . . . have extended the duty of an attorney to certain non-clients, ALPS proffered a second theory in support of Addy's motion for summary judgmentnamely, that such a duty should not be extended to a protected person in a conservatorship. As support for this position, ALPS relied solely on the Trask multi-factor balancing test. Yet, given our equivocal language in Rhode specifically, that a multi-factor balancing test, such as that set out in Trask, may be effective when used to address the duties of attorneys in transactional matters or estate planning and probate practice, Rhode, ¶ 17 (emphasis added)it was not reasonable for ALPS to ignore completely, as it did, then-existing alternative approaches for ascertaining the duty of care owed by a professional to third parties. ¶90 Again, the rule enunciated by Prosser and adopted by this Court in Hawthorne provides as follows: [B]y entering into a contract with A, the defendant may place himself in such a relation toward B that the law will impose upon him an obligation, sounding in tort and not in contract, to act in such a way that B will not be injured. The incidental fact of the existence of the contract with A does not negative the responsibility of the actor when he enters upon a course of affirmative conduct which may be expected to affect the interests of another person. Prosser, The Law of Torts § 93, at 622. Given our reaffirmations of this rule in Tynes, 224 Mont. at 359-60, 730 P.2d at 1121, Jim's Excavating, 265 Mont. at 502, 878 P.2d at 253, and Turner, 283 Mont. at 125-26, 938 P.2d at 1373-74, it cannot be disputed that the rule was firmly established in our caselaw by 2001. ¶91 However, we have not always invoked Prosser's rule for ascertaining whether a professional owed a duty of care to a nonclient. For instance, in Thayer, we considered three different approaches for determining the extent of an accountant's duty of care to third parties: The first approach limits the duty of care to those third parties who are actually known to the accountant, the second limits the duty to those who are actually foreseen and the third expands the duty to all those who are reasonably foreseeable.  Thayer, 243 Mont. at 144, 793 P.2d at 788 (emphases added). Ultimately, given the facts of the case, we applied a modified version of the first approach: [An accountant's duty of care to third parties with whom he is not in privity of contract] exists only if the accountant actually knows that a specific third party intends to rely upon his work product and only if the reliance is in connection with a particular transaction or transactions of which the accountant is aware when he prepares the work product. Thayer, 243 Mont. at 149, 793 P.2d at 791 (emphases added). Notably, this approach is consistent with Prosser's observation that the incidental fact of the existence of a contract between the defendant and A does not negative the defendant's responsibility when he enters upon a course of affirmative conduct which may be expected to affect the interests of another person. Prosser, The Law of Torts § 93, at 622. ¶92 With respect to attorneys, we stated in Rhode that a multi-factor balancing test, such as that set out in Trask, may be effective when used to address the duties of attorneys in transactional matters or estate planning and probate practice. Rhode, ¶ 17. (We further clarified that this model is not appropriate to define an attorney's duties while representing clients in adversarial proceedings. Rhode, ¶ 17.) Yet, while we did not identify Thayer or Prosser's rule in Rhode, we did not reject these approaches either. Thus, for the purpose of ascertaining in 2001 and 2002 whether an attorney owes a duty of care to a nonclient, our long-standing endorsement of Prosser's rule and our actual-knowledge-of-intent-to-rely approach in Thayer were still essential considerations. ¶93 Indeed, when we ultimately held in Watkins Trust that a drafting attorney owes a duty to nonclient beneficiaries named in the drafted instrument, we cited cases representing all three approaches. Specifically, we explained that a finding of duty is consistent with existing Montana law, and we cited Rhode (the Trask multi-factor balancing test), Jim's Excavating (Prosser's rule), Turner (Prosser's rule), and Thayer (the actual-knowledge-of-intent-to-rely approach), as examples. Watkins Trust, ¶ 22. ¶94 For these reasons, I cannot agree that ALPS proffered a reasonable basis in law for contesting Redies' claims against Addy by relying on one of these approaches and completely ignoring the other twoparticularly since the approach relied on by ALPS was the very one we had not actually adopted, having stated merely that it may be effective for ascertaining the duty owed by an attorney to a nonclient. (Indeed, at the outset of applying the Trask test in Addy's motion for summary judgment, ALPS acknowledged that the Supreme Court has not unequivocally adopted the multi-factor balancing test.) Moreover, we had already applied Prosser's rule, which is stated in general terms, in a variety of contexts.