Attorney’s Mistaken Opinion Letter Supports Claim Against Him For Negligent Misrepresentation In Transaction Regardless Of The Attorney’s Intent

On April 25, 2024, Justice Andrew Borrok upheld a claim for negligent misrepresentation brought against an attorney who authored a mistaken opinion letter in connection with the purchase of an interest in a real estate company. In Iintoo Cortland Bronx New York, L.P., v. Daniel Wenger, et al., Index No. 151947/2023, the defendant delivered a legal opinion letter to the purchaser, representing that, based on due diligence that he had completed “to [his] satisfaction,” the seller had the authority to execute the transaction and grant the investment interest. After closing, however, the party learned that opinions expressed in the letter were flawed and the seller had restructured in a way that potentially rendered the investment void.

The defendant pointed out that his opinion was flawed only because certain documents had been concealed from him at the time he authored the letter. He therefore moved to dismiss the claim by arguing the plaintiff had failed to plead the requisite intent. The Court rejected this argument, explaining:

Simply put, Mr. Wenger is incorrect that he is entitled to dismissal based on his argument that the Plaintiff failed to allege the requisite intent, i.e., that Mr. Wenger knew or should have known that the representations in the Opinion Letter were false . . . . Mr. Wenger’s Opinion Letter does not say that his opinion is based on and is limited to the actual documents that he reviewed. Rather, the language of the Opinion Letter indicates that it was Mr. Wenger who performed the necessary due diligence of documents he “deemed necessary” and did so “to [his] satisfaction.” . . . Mr. Wenger did not indicate that his opinion was based solely on the list of documents he relied on. As such Mr. Wenger cannot say, taking the allegations as true as the Court must at this stage of the litigation, that he is entitled to dismissal.

The attorneys at Schlam Stone & Dolan frequently advise clients and litigate disputes concerning intentional and negligent misrepresentations. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.