Petrillo v. Bachenberg

In Petrillo v. Bachenberg, 139 N.J. 472, 479, 655 A.2d 1354 (1995), the Supreme Court held that a prospective purchaser of real estate could maintain an action against an attorney who had prepared and delivered to the seller, in its prior capacity as a real estate broker, the composite report of some, but not all, of the percolation tests performed on the property. The Court held that the attorney assumed a duty to the purchaser to provide reliable information regarding the percolation tests and a jury question was presented as to whether the attorney breached that duty and whether such breach caused the purchaser harm. Id. at 487-89, 655 A.2d 1354. The New Jersey Supreme Court approved some of our rulings in which attorneys were found to "owe a limited duty in favor of specific non-clients." 139 N.J. at 479-80, 655 A.2d 1354. In Petrillo, a buyer of real property alleged that the seller's attorney made a negligent misrepresentation by not providing complete information about the results of percolation tests conducted on the property. In determining that the seller's attorney owed a duty to the buyer, the Court "recognized that attorneys may owe a duty of care to non-clients when the attorneys know, or should know, that non-clients will rely on the attorneys' representations and the non-clients are not too remote from the attorneys to be entitled to protection." Id. at 483-84, 655 A.2d 1354. The Court said that the existence of a "duty to a non-client third party in these circumstances depends on balancing the attorney's duty to represent clients vigorously, Rules of Professional Conduct, Rule 1.3 (1993), with the duty not to provide misleading information on which third parties foreseeably will rely, Rules of Professional Conduct, Rule 4.1 (1993)." Id. at 479, 655 A.2d 1354. The Supreme Court ruled that an attorney for the seller of a parcel of real estate could be held liable to a prospective purchaser based upon the attorney's actions in compiling a facially-misleading composite report of percolation tests performed on the land. In reaching that conclusion, the Court noted that "when courts relax the privity requirement, they typically limit a lawyer's duty to situations in which the lawyer intended or should have foreseen that the third-party would rely on the lawyer's work." 139 N.J. at 482, 655 A.2d 1354. Further, the Court stressed that the attorney in that case "controlled the risk that the composite report would mislead a purchaser." Id. at 487, 655 A.2d 1354.