Rule 12(b)(6) dismissal of suit against attorney by non-client affirmed. Attorney owes no duty in contested proceeding to the adverse party. Elements of fraud not alleged with particularity.

Felis v. Downs Rachlin Martin, PLLC, 2015 VT 129 [filed October 16, 2015]

DOOLEY, J. This case arises out of a divorce proceeding between plaintiff and his former wife. DRM represented wife in the divorce proceeding. Plaintiff claims that “DRM knowingly submitted false material evidence” or “participated in the submission of false material evidence” to the court with the intent and effect of improperly influencing the outcome of the trial, causing damage and injury to plaintiff. Plaintiff appeals the court’s decision granting defendant’s motion to dismiss plaintiff’s claims of breach of fiduciary duty and fraud. We affirm

The court granted defendants’ Rule 12(b)(6) motions, concluding that: (1) DRM owed no duty to plaintiff on which he could base a claim for breach of fiduciary duty; and (2) plaintiff failed to allege the necessary elements of fraud in his complaint. With respect to the fiduciary duty claim, the court stated that a party to litigation cannot assert negligence or breach of fiduciary duty against opposing counsel. With respect to the fraud claim, the court found that the plaintiff failed to allege that DRM directed the false statements to plaintiff, rather than the court, that he was unaware the statements were false, or that he relied on any allegedly false statements.

1.

It is well established that an attorney owes no duty to an adverse party.  Hedges v. Durrance, 2003 VT 63, ¶ 6. “This privity rule ensures that ‘attorneys may in all cases zealously represent their clients without the threat of suit from third parties compromising that representation.’ ” Id. (quoting  Bovee v. Gravel,, 174 Vt. 486, 487, 811 A.2d 137, 140 (2002) (mem.)). The rationale behind this policy is particularly salient “where, as here, the third party is the client’s adversary who is also represented by her own counsel in the proceedings.” Id.

To maintain such an action against another party’s attorney, the third party must demonstrate that “the primary purpose and intent of the attorney-client relationship itself was to benefit or influence the third party.” Hedges, 2003 VT 63, ¶7. (quotation omitted).  As in Hedges, we will not review DRM’s alleged duty of care to the marital estate “independently of the larger adversarial context.” Id. We therefore affirm the judgment of the superior court that plaintiff has failed to state a claim for breach of fiduciary duty

2.

To maintain a cause of action for fraud, plaintiff must demonstrate five elements: “(1) intentional misrepresentation of a material fact; (2) that was known to be false when made; (3) that was not open to the defrauded party’s knowledge; (4) that the defrauded party act[ed] in reliance on that fact; and (5) that thereby harmed.”  Estate of Alden v. Dee 2011 VT 64, ¶ 32, 190 Vt. 401, 35 A.3d 950. Failure to prove any one of the five elements defeats the fraud claim. Id. We focus on the third and fourth elements, which were central to the superior court’s discussion. We conclude, as did the superior court, that plaintiff has failed to allege facts to support these two elements.

With respect to the third element, plaintiff’s knowledge of the alleged falsity, the statements in his complaint directly contradict the presence of this element. Drawing all reasonable inferences from these statements, plaintiff was fully aware of DRM’s discovery practices early on.

With respect to the fourth element, we find no allegation to support a claim that plaintiff relied on defendants’ alleged misrepresentations. Plaintiff acknowledges that his complaint does not explicitly allege reliance. In essence, plaintiff asks us to assume reliance, but reliance is a required element of fraud that plaintiff has the burden to plead and prove “with particularity.” V.R.C.P. 9(b).  Allegations about defendants’ intent in making the alleged misrepresentations says nothing about plaintiff’s justifiable reliance, a required element of fraud. See  Sugarline Assocs. v. Alpen Assocs.., 155 Vt. 437, 445, 586 A.2d 1115, 1120 (1990) (stating that “with any action in fraud” plaintiff is required to show “justifiable reliance upon the misrepresentation” (quotation omitted)); Restatement (Second) of Torts § 531 (1977) (requiring justifiable reliance for recovery under fraudulent misrepresentation)

In other contexts third-party reliance, without direct reliance by the plaintiff, is insufficient to satisfy the reliance requirement. Glassford v. Dufresne & Assocs.., 2015 VT 77, ¶¶ 22-23. A party cannot bring a private cause of action for tort under a theory of fraud on the court. We can find no case where a court has accepted a third-party reliance claim on the basis that the reliance was by the court and the plaintiff was a litigant who had a full opportunity to respond to the allegedly fraudulent evidence. We need not determine whether we ever would accept a third-party reliance theory in a fraud case to hold that we would not accept it on the factual situation here.