THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, APPELLANT, v. DEWEY BALLANTINE,
BUSHBY, PALMER & WOOD, &C., DEFENDANT, GILMARTIN, POSTER & SHAFTO, &C.,
RESPONDENT, ET AL., DEFENDANT.
80 N.Y.2d 377, 605 N.E.2d 318, 590 N.Y.S.2d 831 (1992).
November 19, 1992
1 No. 168
Decided November 19, 1992
_________________________________________________________________
This opinion is uncorrected and subject to revision before publication
in the New York Reports.
William E. Wallace, III, for Appellant.
Nancy Ledy-Gurren, for Respondent.
TITONE, J.:
Pursuant to its client's instructions, defendant law firm furnished to
plaintiff third party an opinion letter that assertedly contained
false assurances. While a law firm supplying such a letter may have a
duty running to the third parties, the record in this case does not
support the conclusion that the assertion in the opinion letter caused
plaintiff's loss. We thus conclude that summary judgment was properly
awarded to this defendant.
I
The relevant facts are essentially undisputed and can be briefly
summarized. In early 1986, United States Lines ("U.S. Lines"), a major
shipping concern, informed the Prudential Insurance Company of America
("Prudential") and certain of its other key creditors that it was
anticipating difficulty in meeting its debt obligations. Prudential
thereafter agreed to a restructuring of a $92,885,000 debt that U.S.
Lines owed it in connection with a 1978 loan. At the time, that debt
was secured by a first preferred fleet mortgage on certain vessels
owned by U.S. Lines.
In order to implement the debt restructuring, Prudential and U.S.
Lines executed an amendment to the Financing and Security Agreement
that they had entered into when the 1978 loan was made. Section 4 of
that amendment set forth various conditions to Prudential's agreeing
to the restructuring, including a requirement that Prudential receive
"(t)he favorable opinion of Messrs. Gilmartin, Poster & Shafto
("Gilmartin"), counsel to (U.S. Lines), to such effect as shall be
SNIPPETS:
BUSHBY, PALMER & WOOD, &C., DEFENDANT, GILMARTIN, POSTER & SHAFTO, &C., RESPONDENT, ET AL.,
defendant law firm furnished to plaintiff third party an opinion letter that assertedly
While a law firm supplying such a letter may have a duty running to the third parties, the
Lines"), a major shipping concern, informed the Prudential Insurance Company of America and
that debt was secured by a first preferred fleet mortgage on certain vessels owned by U.S.
In order to implement the debt restructuring, Prudential and U.S. Lines executed an amendment
Gilmartin, Poster & Shafto, counsel to (U.S.
Moreover, according to Gilmartin's letter, neither federal nor state law would interfere
The claimed losses also included the related federal court litigation costs associated with
Although Prudential acknowledged that it was not actually in privity with Gilmartin, it
Alternatively, it maintained that Gilmartin could be held liable to it, in contract, on a
Similarly, the court found that, at the very most, Prudential was an incidental beneficiary
Initially, it must be stressed that attorneys, like other professionals, may be held liable
Although the defendants in many of the prior cases addressing this issue have been
Indeed, liability was imposed on engineering consultants in Ossining (supra), and in
We now conclude that in circumstances such as these, a theoretical basis for liability
In Glanzer v Shepard a bean seller retained public weighers and directed them to furnish one
In language that is as applicable now as it was then, this Court concluded that the law
That was so because the accountants' report was primarily intended as a convenient instrument
In Credit Alliance, where we held the allegations insufficient to establish a relationship
the defendants.
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