privity requirement in Texas

2014We overrule Kate and Steven’s second, third, and fourth issues. –5– In their fifth issue, Kate and Steven argue “Texas should relax the privity requirement in cases involving beneficiaries.” Citing Barcelo for the proposition that “[t]he majority of other states addressing this issue have relaxed the privity barrier in the estate planning context,” Kate and Steven argue “the time has come for Texas to join the states.” See Barcelo, 923 S.W.2d at 577 .

2009Cox & Smith again relies on our holding in Barce-lo, where we identified the longstanding privity rule barring non-clients from suing for legal malpractice. 923 S.W.2d at 577 .

2021We reasoned in McCamish, however, that permitting a non-client to bring a negligent- misrepresentation claim against an attorney would not “undermine” the privity requirement if that claim arose not from the “duty a professional owes his or her clients or others in privity, but on an independent duty to the nonclient based on the professional’s manifest awareness of the nonclient’s reliance on the misrepresentation and the professional’s intention that the nonclient so rely.” Id. at 791, 792 .

2013“An attorney who personally steals goods or tells lies on a client’s behalf may be liable for ... fraud in some cases.” Chu, 249 S.W.3d at 446 (emphasis added); see McCamish, Martin, Brown, & Loeffler, 991 S.W.2d at 793-94 (noting that the privity requirement prohibits a third party from suing an attorney for legal malpractice but not other torts, such as negligent misrepresentation); Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex.App.-Houston [1st Dist.] 1985, no writ) (holding that “[a]n attorney is liable if he knowingly commits a fraudulent act that injures a third person,

2013“An attorney who personally steals goods or tells lies on a client‟s behalf may be liable for . . . fraud in some cases.” Chu, 249 S.W.3d at 446 (emphasis added); see McCamish, Martin, Brown & Loeffler, 991 S.W.2d at 793–94 (noting that the privity requirement prohibits a third party from suing an attorney for legal malpractice but not other torts, such as negligent misrepresentation); Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex. App.––Houston [1st Dist.] 1985, no writ) (holding that “[a]n attorney is liable if he knowingly commits a fraudulent act that injures a third pers

2013“An attorney who personally steals goods or tells lies on a client’s behalf may be liable for ... fraud in some cases.” Chu, 249 S.W.3d at 446 (emphasis added); see McCamish, Martin, Brown, & Loeffler, 991 S.W.2d at 793-94 (noting that the privity requirement prohibits a third party from suing an attorney for legal malpractice but not other torts, such as negligent misrepresentation); Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex.App.-Houston [1st Dist.] 1985, no writ) (holding that “[a]n attorney is liable if he knowingly commits a fraudulent act that injures a third person,

2014See Johnson v. Johnson, 841 S.W.2d 114, 115 (Tex.App.-Houston [14th Dist.] 1992, no writ) (holding doctrine of virtual representation requires appellant to show “he is bound as a privy to the judgment”). 11 Citing BJVSD Bird Family Partnership, L.P. v. Star Electricity, L.L.C., 413 S.W.3d 780, 785-86 (Tex.App.-Houston [1st Dist.] 2013, no pet.), the plurality opinion concludes Lapiner does not satisfy the privity requirement of the virtual representation doctrine.

2014See Johnson v. Johnson, 841 S.W.2d 114, 115 (Tex. App.— Houston [14th Dist.] 1992, no writ) (holding doctrine of virtual representation requires appellant to show “he is bound as a privy to the judgment”). 11 Citing BJVSD Bird Family Partnership, L.P. v. Star Electricity, L.L.C., 413 S.W.3d 780 , 785–86 (Tex. App.—Houston [1st Dist.] 2013, no pet.), the plurality opinion concludes Lapiner does not satisfy the privity requirement of the virtual representation doctrine.

2014See Johnson v. Johnson, 841 S.W.2d 114, 115 (Tex.App.-Houston [14th Dist.] 1992, no writ) (holding doctrine of virtual representation requires appellant to show “he is bound as a privy to the judgment”). 11 Citing BJVSD Bird Family Partnership, L.P. v. Star Electricity, L.L.C., 413 S.W.3d 780, 785-86 (Tex.App.-Houston [1st Dist.] 2013, no pet.), the plurality opinion concludes Lapiner does not satisfy the privity requirement of the virtual representation doctrine.

2014See Johnson v. Johnson, 841 S.W.2d 114, 115 (Tex. App.— Houston [14th Dist.] 1992, no writ) (holding doctrine of virtual representation requires appellant to show “he is bound as a privy to the judgment”). 11 Citing BJVSD Bird Family Partnership, L.P. v. Star Electricity, L.L.C., 413 S.W.3d 780 , 785–86 (Tex. App.—Houston [1st Dist.] 2013, no pet.), the plurality opinion concludes Lapiner does not satisfy the privity requirement of the virtual representation doctrine.

2013“An attorney who personally steals goods or tells lies on a client‟s behalf may be liable for . . . fraud in some cases.” Chu, 249 S.W.3d at 446 (emphasis added); see McCamish, Martin, Brown & Loeffler, 991 S.W.2d at 793–94 (noting that the privity requirement prohibits a third party from suing an attorney for legal malpractice but not other torts, such as negligent misrepresentation); Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex. App.––Houston [1st Dist.] 1985, no writ) (holding that “[a]n attorney is liable if he knowingly commits a fraudulent act that injures a third pers

2013“An attorney who personally steals goods or tells lies on a client’s behalf may be liable for ... fraud in some cases.” Chu, 249 S.W.3d at 446 (emphasis added); see McCamish, Martin, Brown, & Loeffler, 991 S.W.2d at 793-94 (noting that the privity requirement prohibits a third party from suing an attorney for legal malpractice but not other torts, such as negligent misrepresentation); Likover v. Sunflower Terrace II, Ltd., 696 S.W.2d 468, 472 (Tex.App.-Houston [1st Dist.] 1985, no writ) (holding that “[a]n attorney is liable if he knowingly commits a fraudulent act that injures a third person,

2009See Benson , 468 S.W.2d at 363 ; Maxson , 21 S.W.3d at 316-17 .

2009See Benson, 468 S.W.2d at 363 ; Maxson, 21 S.W.3d at 316-17 .

2008See 192 S.W.3d 780 (Tex. 2006).

2008See id.

1999In so holding, we disapprove of the language in the following Texas cases refusing to permit a nonclient to bring a section 552 claim against an attorney based on a lack of privity: First Municipal Leasing Corp. v. Blankenship, Potts, Aikman, Hagin & Stewart, 648 S.W.2d 410, 413 (Tex.App.—Dallas 1983, writ ref'd n.r.e.), and Bell v. Manning, 613 S.W.2d 335, 338 (Tex.Civ.App.—Tyler 1981, writ ref'd n.r.e.).

1992Bell, 613 S.W.2d at 339 ; see State BaR of Texas, Ethical Considerations on Code of Professional Responsibility, EC 5-1 (1988) (“Neither his personal interests, the interests of other clients, nor the desires of third parties should be permitted to dilute [the] attorney’s loyalty to his client.”). 1 Thus, the privity rule is supported by public policy.

2023See Kroger Co. v. Milanes, 474 S.W.3d 321, 336, n.6 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (declining party’s request to change the law because that is not the function of an intermediate court of appeals); Bren-Tex Tractor Co., Inc. v. Massey-Ferguson, Inc., 97 S.W.3d 155, 161 (Tex. App.—Houston [14th Dist.] 2002, no pet.) (stating that creation of a new tort duty is beyond the province of an intermediate appellate court).

2023See Kroger Co. v. Milanes, 474 S.W.3d 321, 336, n.6 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (declining party’s request to change the law because that is not the function of an intermediate court of appeals); Bren-Tex Tractor Co., Inc. v. Massey-Ferguson, Inc., 97 S.W.3d 155, 161 (Tex. App.—Houston [14th Dist.] 2002, no pet.) (stating that creation of a new tort duty is beyond the province of an intermediate appellate court).

2021See, e.g., Pelham v. Griesheimer, 440 N.E.2d 96, 99 (Ill. 1982) (“[T]he best approach is that the plaintiffs must allege and prove facts demonstrating that they are in the nature of third-party intended beneficiaries of 13 the relationship between the client and the attorney in order to recover in tort.”); Goodman v. Kennedy, 556 P.2d 737, 739 (Cal. 1976) (holding that defendant attorney owed no duty to third parties who relied on faulty advice the attorney gave his clients “in the absence of any showing that the legal advice was foreseeably transmitted to or relied upon by plaintiffs or that

2021See, e.g., Pelham v. Griesheimer, 440 N.E.2d 96, 99 (Ill. 1982) (“[T]he best approach is that the plaintiffs must allege and prove facts demonstrating that they are in the nature of third-party intended beneficiaries of 13 the relationship between the client and the attorney in order to recover in tort.”); Goodman v. Kennedy, 556 P.2d 737, 739 (Cal. 1976) (holding that defendant attorney owed no duty to third parties who relied on faulty advice the attorney gave his clients “in the absence of any showing that the legal advice was foreseeably transmitted to or relied upon by plaintiffs or that

2018See HECI Exploration Co. v. Neel, 982 S.W.2d 881, 890 (Tex. 1998).

2015Litig., 11 F.3d 865, 872 (9th Cir.1993). 35 In Melder, the Fifth Circuit concluded that Rule 9(b) applied to the plaintiffs' 1933 Securities Act claims because their complaint adopted wholesale all their allegations under the securities fraud claims for purposes of their 1933 Securities Act claims. 36 Lead Plaintiff has made such disclaimers in the consolidated complaint regarding its § 11 claims. 37 Economic harm is not identified as a basis for the exception. 38 The Terminology section defines “knows” as “actual knowledge of the fact in question” and states that a “person's knowledge may be

2015Litig., 11 F.3d 865, 872 (9th Cir.1993). 35 In Melder, the Fifth Circuit concluded that Rule 9(b) applied to the plaintiffs' 1933 Securities Act claims because their complaint adopted wholesale all their allegations under the securities fraud claims for purposes of their 1933 Securities Act claims. 36 Lead Plaintiff has made such disclaimers in the consolidated complaint regarding its § 11 claims. 37 Economic harm is not identified as a basis for the exception. 38 The Terminology section defines “knows” as “actual knowledge of the fact in question” and states that a “person's knowledge may be

2004See Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex.1996) (explaining that two of the three ways to establish privity include proof that (1) a party can control an action even if it is not a party to the action and (2) the party’s interests are represented by a party to the action); see also Espeche v. Ritzell, 123 S.W.3d 657, 667 (Tex.App.-Houston [14th] Dist.2003, pet. denied) ("Privity exists if the parties share an identity of interests in the basic legal right that is the subject of the litigation.”).

2004See Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex.1996) (explaining that two of the three ways to establish privity include proof that (1) a party can control an action even if it is not a party to the action and (2) the party’s interests are represented by a party to the action); see also Espeche v. Ritzell, 123 S.W.3d 657, 667 (Tex.App.-Houston [14th] Dist.2003, pet. denied) ("Privity exists if the parties share an identity of interests in the basic legal right that is the subject of the litigation.”).

1999See Savings Bank v. Ward, 100 U.S. 195, 200 , 25 L.Ed. 621 (1879); Barcelo v. Elliott, 923 S.W.2d 575, 577 (Tex.1996) (citing Savings Bank).

1999See Savings Bank v. Ward, 100 U.S. 195, 200 , 25 L.Ed. 621 (1879); Barcelo v. Elliott, 923 S.W.2d 575, 577 (Tex.1996) (citing Savings Bank).

1999In so holding, we disapprove of the language in the following Texas cases refusing to permit a nonclient to bring a section 552 claim against an attorney based on a lack of privity: First Municipal Leasing Corp. v. Blankenship, Potts, Aikman, Hagin & Stewart, 648 S.W.2d 410, 413 (Tex.App.—Dallas 1983, writ ref'd n.r.e.), and Bell v. Manning, 613 S.W.2d 335, 338 (Tex.Civ.App.—Tyler 1981, writ ref'd n.r.e.).

1994Compare Hampshire, 143 S.W. at 150 with Musick, 531 S.W.2d at 586 .