Donald v. Garry

Opinion

THOMPSON, J.

This is an appeal from a judgment of dismissal entered after the trial court sustained respondent’s demurrer to appellant’s complaint without leave to amend. We reverse the judgment.

Appellant filed his complaint in the case at bench on September 24, 1970. Respondent is named as a defendant only in the second cause of action. The pertinent portion of the complaint alleges the following. Respondent is an attorney at law admitted to practice in California. In 1966, appellant “forwarded” to Mutual Credit Bureau (Mutual), a licensed collection agency, a contract debt owed him in the amount of $10,634.40 plus interest at the rate of 7 percent per annum. Through respondent acting as its attorney, Mutual caused an action to be filed in the Los Angeles Superior Court to collect the debt. By reason of respondent’s negligence, the action was dismissed for lack of diligent prosecution. By reason of the dismissal, appellant has lost recovery on a valid and collectible claim.

[771]

Respondent filed a general demurrer to the second count of the complaint claiming that it fails to state a cause of action and that it shows on its face that the claim alleged is barred by the statute of limitations. The trial court sustained the demurrer without leave to amend on the first, ground apparently on the theory that respondent, having been retained by Mutual, owed no duty of care to the appellant. We conclude that it erred in doing so.

The Restatement Second of Torts provides in section 324A: “One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.”

The second cause of action of the complaint here considered alleges facts meeting the test of section 324A of the Restatement. Respondent undertook to render services to another (Mutual) which he should have recognized as necessary for the protection of the property of a third person (appellant). Appellant suffered harm in the loss of his collectible account by reason of respondent’s negligence in the performance of the undertaking assumed by him. Respondent’s failure to exercise reasonable care increased the risk of harm; he undertook but negligently failed to perform a duty owed by another (Mutual) to appellant; and there is a fair inference from the facts alleged that the harm suffered by appellant was due to the reliance of another (Mutual) upon respondent’s undertaking. Tested by the standards of the Restatement Second of Torts, the second cause of action of the complaint at bench, while somewhat inartfully drawn, is adequate to withstand a general demurrer.