Wednesday, January 5, 2011

No Privity

After the settlement of a divorce case, the ex-wife sued the ex-husband for fraud based on the submission of "deceptive, misleading, and incomplete information" to an independent appraiser who had valued the husband's business. The matter was settled while a judgment in favor of the wife was on appeal.

The wife then sued the husband's attorneys on the same claims. The district court held that the attorneys were in privity with their client for purposes of res judicata and granted summary judgment to the defendants.

The Minnesota Supreme Court agreed with the Court of Appeals that there are issues of material fact that preclude summary judgment. The court rejected the contention that the attorneys and client were in privity because they were not so identified in interest as to represent the same legal right. The court also rejected the principal-agent analogy as a basis to establish privity. While attorney and client have a common interest in achieving a favorable outcome, "that level of common not the kind of estate, blood, or legal interest that would give rise to privity for purposes of the fraud action." (Mike Frisch)

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