Opinion ID: 835548
Heading Depth: 2
Heading Rank: 1

Heading: Liability for Assisting a Breach of Fiduciary Duty

Text: We begin our analysis, as do the parties, with this court's decision in Granewich v. Harding, 329 Or. 47, 985 P.2d 788 (1999). That case provides a reasonable starting point because it involved claims for breach of fiduciary duty, including a claim against a lawyer for assisting others in breaching fiduciary duties that they owed to the plaintiff. Plaintiff argues that Granewich describes the elements required to state a claim and holds that a lawyer in Markley's position may be liable for assisting in a client's breach of fiduciary duty. In our view, however, Granewich does not provide a complete answer to the questions that this case raises. The plaintiff in Granewich, a minority shareholder in a corporation, alleged that the corporation's two majority shareholders had breached their fiduciary duty to him by effectuating a corporate squeeze-out. The plaintiff also asserted a separate claim against the corporation's lawyer, alleging that the lawyer had assisted the other defendants in that squeeze-out. This court held that the lawyer could be liable for aiding and abetting the other defendants' breach of fiduciary duty, even though the lawyer had no independent fiduciary duty to the plaintiff. However, the Granewich opinion specifically noted that the defendant lawyer in that case had represented the corporation, not the other defendants (the majority shareholders), and that the plaintiff had alleged that the lawyer's actions had fallen  outside the scope of any legitimate employment on behalf of the corporation.  Id. at 59, 985 P.2d 788 (emphasis added). Therefore, in Granewich, this court did not consider or answer the question that is at the core of this case: whether, and under what circumstances, a third party may assert a claim against a lawyer, acting in a professional capacity, for assisting a client in breaching the client's fiduciary duty. The Court of Appeals recognized that Granewich left that question unanswered. However, based on two explanatory s in Granewich, the Court of Appeals interpreted that case as holding that an attorney may be liable for assisting a client's tortious conduct   . Reynolds, 197 Or.App. at 574, 107 P.3d 52. First, the court relied on a in which this court stated that [w]e do not suggest    that it necessarily matters that the corporation, rather than [the majority shareholders], was the client. Granewich, 329 Or. at 59 n. 7, 985 P.2d 788. However, that simply conveyed this court's reluctance to answer a question that was not before it, and it was not an indication that the lack of a lawyer-client relationship in that case was irrelevant. [7] Second, the Court of Appeals observed that, in another, this court quoted a treatise stating that a lawyer could be liable for the torts of the lawyer's client under certain circumstances. Reynolds, 197 Or.App. at 572, 107 P.3d 52 (quoting Granewich, 329 Or. at 56 n. 5, 985 P.2d 788). The Court of Appeals then went on to explain that dicta in its opinion in Roberts v. Fearey, 162 Or.App. 546, 556, 986 P.2d 690 (1999), supported its ultimate determination that Markley could be liable. Reynolds, 197 Or. App. at 573-74, 107 P.3d 52. Although Granewich left unanswered the question of when a lawyer representing a client may be liable for the client's torts, that case usefully describes the circumstances in which a person who assists another in committing a tort ordinarily may be liable for resulting harm to a third party. Granewich stated that section 876 of the Restatement (Second) of Torts ( Restatement ) reflect[s] the common law of Oregon on that subject. 329 Or. at 54, 985 P.2d 788. Section 876 provides: For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he (a) does a tortious act in concert with the other or pursuant to a common design with him, or (b) knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or (c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person. The parties agree that plaintiff's allegations do not state a claim under subsection (c) because plaintiff does not assert that Markley's own conduct, separately considered, constitute[d] a breach of duty to [plaintiff]. The parties further agree, for purposes of this court's review, that Schrock owed a fiduciary duty to plaintiff and that she breached that duty. The specific issue thus is whether plaintiff can recover from Markley for acting in concert with Schrock or substantially assisting her in breaching the fiduciary duty that she owed to plaintiff. [8] Under Granewich and the Restatement, a person who acts in concert with or gives substantial assistance or encouragement to a fiduciary who breaches a duty to a third party may be liable for the resulting harm. Markley argues, however, that that general rule does not apply when a lawyer, in the context of a lawyer-client relationship, advises a client who breaches a fiduciary duty to a third party. The Restatement labels any such exemption from liability that the law otherwise would impose as a privilege. See Restatement § 890 (One who otherwise would be liable for a tort is not liable if he acts in pursuance of and within the limits of a privilege   .). We therefore consider whether the fact that Markley was acting as Schrock's lawyer when he engaged in the challenged conduct created a privilege that protects Markley from liability. If that status does create such a privilege, then we must consider the circumstances in which the privilege applies.