Greycas, Inc. v. Proud
Seventh Circuit
826 F.2d 1560 (1987)
Wayne Crawford sought a $1.3 million loan from Greycas (plaintiff) secured by farm machinery, and Greycas required an attorney's letter confirming no prior liens existed on that machinery; Crawford's brother-in-law, attorney Theodore Proud (defendant), wrote a letter falsely stating he had conducted a UCC lien and judgment search, when in fact he never performed any such search, and the machinery turned out to already be pledged to other lenders. After Crawford defaulted and later died by suicide, Greycas discovered the prior liens and sued Proud for negligent misrepresentation, winning over $800,000 after a bench trial, and Proud appealed, arguing he owed no professional duty to Greycas since it wasn't his client.
Whether an attorney who negligently supplies false information in the course of his professional business, to a party other than his own client, is liable for negligent misrepresentation to that third party if it reasonably relies on the information to its detriment.