Allen v. Steele
252 P.3d 476
| Colo. | 2011Background
- Steeles claim Katherine Allen provided incorrect statute-of-limitations information during an initial consultation about a potential negligence lawsuit.
- No attorney-client relationship pleaded between Steeles and Allen.
- District court dismissed both legal malpractice and negligent misrepresentation claims.
- Court of Appeals reversed, allowing negligent misrepresentation claim to proceed.
- Colorado Supreme Court reversed, holding no negligent misrepresentation claim as a matter of law; remanded for proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a non-client may state negligent misrepresentation against an attorney. | Steele argues misrepresentation was for guidance in business transactions and foreseeably relied upon. | Allen argues negligent misrepresentation requires Mehaffy-like facts or an attorney-client relationship; initial consultation insufficient. | No; initial consultation cannot satisfy the 'guidance of others in their business transactions' element. |
| Whether a potential civil lawsuit can constitute a 'business transaction' for negligent misrepresentation. | The potential suit indirectly affects financial interests and can be a business transaction. | A civil lawsuit is not a business transaction; misrepresentation must be for business purposes. | No; a civil lawsuit discussion does not constitute a business transaction. |
| Whether Restatement Third § 15(1)(c) can support negligent misrepresentation when no attorney-client relationship exists. | Section 15(1)(c) creates duty to prospective clients; should support misrepresentation claim. | Section 15(1)(c) pertains to legal malpractice, not negligent misrepresentation; cannot expand tort. | No; § 15(1)(c) cannot be used to base negligent misrepresentation claims. |
Key Cases Cited
- Mehaffy, Rider, Windholz & Wilson v. Central Bank Denver, 892 P.2d 230 (Colo. 1995) (limits non-client liability; outlines negligent misrepresentation elements)
- W. Cities Broad., Inc. v. Schueller, 849 P.2d 44 (Colo. 1993) (negligent misrepresentation recovery tied to business transactions)
- Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69 (Colo. 1991) (examples of misrepresentations in business contexts to non-clients)
- Zimmerman v. Dan Kamphausen Co., 971 P.2d 236 (Colo. App. 1998) (nonclient negligent misrepresentation in real estate context)
- First Nat'l Bank in Lamar v. Collins, 44 Colo. App. 228, 616 P.2d 154 (Colo. App. 1980) (illustrative of misrepresentation in transactional context)