Case Alert: Can You Sue (or Be Sued by) Someone You Didn’t Have a Direct Contract With?

In Dufrene vs. Murphy Appraisal Services, LLC, contract rights and real estate law pose an interesting problem.

Can You Sue Someone Without a Contract?
Robert M. Steeg

Robert M. Steeg

April 2, 2019 10:50 AM

When a business transaction goes bad, can the person who has suffered a loss sue other persons involved in the transaction even though the injured person had no contractual relationship with those other persons? A recent case by the Louisiana First Circuit Court of Appeal, Dufrene vs. Murphy Appraisal Services, LLC, demonstrates that the answer is yes, but there are important limits on this ability.

The Facts

The basic facts of the case in question are that the plaintiff purchased a piece of property for use as a maintenance yard for his fleet of concrete trucks. He did not independently verify the zoning, and it turned out that the property was zoned single-family residential. The property was essentially worthless to the buyer, who had paid $87,500 for it.

Needless to say, the buyer sued everyone in sight. The prime defendants were the parties whom you would expect to see—the seller, the seller’s real estate agent, and the buyer’s real estate agent.

The buyer went further and sued the appraisal company who had appraised the property for the buyer’s lender. The appraisal performed by the appraisal company contained an error whereby the appraisal company indicated that the property was in fact zoned for commercial use that would have permitted the buyer’s truck maintenance yard.

The Proceedings

At an early stage in the proceedings, the appraisal company asked the court to dismiss it from the case. The appraisal company argued that its sole involvement was its contract with the lender. It had entered into a contract with the lender for the delivery of an appraisal. The appraisal was to be used by the lender exclusively for the purposes of deciding whether or not to make a loan to the plaintiff. The appraisal report was issued directly to the lender, and no one else.

This absence of a contractual relationship was conceded. The issue was whether or not the appraisal company could nevertheless be found liable to the buyer if it were determined that the appraisal company had been negligent stating in its report that the property enjoyed commercial zoning suitable for the plaintiff’s intended use.

The Ruling

The answer is that in theory, the appraisal company could be found liable to the buyer, but based upon the facts of the case, such a claim would not be upheld in this particular instance.

The legal theory was that of “negligent misrepresentation.” This legal theory does not require a contract. Every person is liable for the consequences of his or her own negligence, (1) if it was reasonably foreseeable that another person would be injured as a result of that negligence and (2) if the injured person was in fact harmed by the negligent conduct.

The first prong of the theory is very important to anyone involved in a business transaction. Who might you be liable to, beyond the person with whom you have a direct contract? Conversely, whom might you sue if the business transaction goes bad? In the Dufrene case, the court held that it was reasonably foreseeable to a property appraiser that persons other than its lender client could come into possession of the appraisal and rely on it, so that those persons could have a right to sue if the appraisal report negligently misled them to an injury or loss. So, in theory, the appraiser could have been found liable to the buyer.

On the facts of the case, however, the court found that there was no possible way for the buyer to prove that its loss was caused by a mistake in the appraisal report, and for this reason the appraisal company was dismissed from the case at an early stage. The buyer admitted that it had never seen the appraisal report prior to its purchase of the property, and that it had not relied upon the erroneous zoning designation in the appraisal report. In addition, none of the other parties who provided information to the buyer (such as the real estate agents) had reviewed or relied upon the appraisal report either.

Thus, the court concluded, the buyer’s loss was not caused in any possible way by the error in the appraisal report.

The facts of each case are different, so this is a cautionary tale for everyone involved in a business transaction. If, for example, the lender had furnished the appraisal report to the buyer, and the buyer had foregone an independent examination of the zoning because that subject was already covered in the appraisal report, the result might well have been different. The lesson: a provider of goods or services in a business deal could have liability to persons well beyond the persons with whom it executed a contract.


As one of the most experienced real estate lawyers in New Orleans, Steeg Law Firm Managing Partner Robert Steeg is highly respected for his handling of a wide variety of real estate transactions.

Rob has assisted hundreds of clients with handling thousands of purchases, sales, loans and leases for all sizes and kinds of real estate throughout the southeast Louisiana region, including industrial, office, multi-family, and retail properties.

Related Articles

When Purchasing Property, Take Note of What You See

by Robert M. Steeg

A recent case in the Louisiana Court of Appeal highlights an area of law anyone in real estate needs to know.

What Are Apparent Servitudes?

Client Service in Real Estate Law: Identifying Attorneys Who Truly Care

by Best Lawyers

What is client service in real estate law, and why is it important? Learn more about the value a real estate lawyer who emphasizes client service can provide.

Two unseen individuals shake hands with miniature house models in background


Foiled Plans: How Adam Leitman Bailey, P.C. Thwarted A Famous Building’s Trickery

by Rebecca Blackwell

When the Frick building, planned renovations that would threaten the welfare of nearby residents, Adam Leitman Bailey, P.C. jumped in to uncover the truth.

Front of the Frick Building in New York City

4 Essential Steps for Commercial Real Estate Due Diligence

by Best Lawyers

Due diligence in real estate is essential for all parties. Best Lawyers walks through the key steps of effective due diligence in commercial real estate.

Animated magnify glass in front of building and checklist

The Role of Title Insurance in Real Estate Transactions

by Best Lawyers

Title insurance can provide benefits, protection and peace of mind in a real estate transaction, which can often be complex. Best Lawyers take a closer look.

Individual signing a document with house keys in background

Leasing Commercial Real Estate

by Best Lawyers

We have compiled this “leasing commercial real estate checklist” to help guide discussions with a commercial real estate lawyer before signing a lease.

Unseen figure with pen points to apartment building model


A Street Fight in the Bronx

by Adam Leitman Bailey

Adam Leitman Bailey’s firm helped settle a Bronx brawl over land between two parties and brought victory against a long-standing powerful family in New York.

Warehouse in New York at night


Heroes Among Men: How Adam Leitman Bailey, P.C. Saved Lives of the Lifesaving

by Rebecca Blackwell

When a 911 Center in New York City was put in danger, Adam Leitman Bailey, P.C. went to work against the unlawful and hazardous actions of a developer whose construction threatened the peace and safety of all who worked for the Fortune 500 company.

Danger construction site no trespassing sign on fence

The Role of Flood Zones in Florida Real Estate Transactions

by Best Lawyers

Get a comprehensive understanding of flood zones in Florida real estate. Learn about the risks, insurance requirements and disclosure obligations.

Trees blowing in flood waters and storm

How Real Estate Transactions in the Residential Sector Work

by Best Lawyers

Discover how real estate transactions in the residential sector work with this guide. Learn about the stages, parties involved and legal requirements.

Man looking at houses on computer


Adam Leitman Bailey Saves Upper East Cooperative From Forced NYU Combination With Neighboring University Building

by Rebecca Blackwell

When a New York resident of an iconic building was faced with a potentially devastating renovation to his beloved home, powerhouse real estate lawyer Adam Leitman Bailey tightened the knot on the loophole others said didn’t exist.

Large brownstone building with blue sky above in New York City


Residential Real Estate Slowdown Expected To Continue in 2023

by Mick Harris

Rising housing costs and mortgage rates were becoming the norm in 2022. Experts anticipate that 2023 may show much of the same.

Apartment buildings with yellow haze


How To Run a Board Meeting

by Adam Leitman Bailey

Adam Leitman Bailey explains how using Robert's Rules of Order can assist with effective and productive board meetings in real estate matters.

Several people sitting in chairs around boardroom table


The Wolf Near Wall Street

by Rebecca Blackwell

When tensions among shared real estate owners reached their tipping point, Adam Leitman Bailey P.C. stepped in and solved a modern issue with an ancient remedy.

Mortgage documents on desk

Different Types of Business Contracts

by David Goldberg

If you're a business owner or looking at starting a new business, you'll need to know the different types of business contracts required by law.

Different Types of Business Contracts

There’s Hope for the Canadian Real Estate Market Post COVID-19

by Steven Tulman

Clover Mortgage offers advice and predictions on the Toronto real estate market as we move on post-pandemic.

Canadian Real Estate Market Post COVID-19

Trending Articles

How Palworld Is Testing the Limits of Nintendo’s Legal Power

by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

Announcing the 2023 The Best Lawyers in America Honorees

by Best Lawyers

Only the top 5.3% of all practicing lawyers in the U.S. were selected by their peers for inclusion in the 29th edition of The Best Lawyers in America®.

Gold strings and dots connecting to form US map

The U.S. Best Lawyers Voting Season Is Open

by Best Lawyers

The voting season for the 31st edition of The Best Lawyers in America® and the 5th edition of Best Lawyers: Ones to Watch® in America is officially underway, and we are offering some helpful advice to this year’s voters.

Golden figures of people standing on blue surface connected by white lines

How To Find A Pro Bono Lawyer

by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

Announcing the 2022 Best Lawyers® in the United States

by Best Lawyers

The results include an elite field of top lawyers listed in the 28th Edition of The Best Lawyers in America® and in the 2nd Edition of Best Lawyers: Ones to Watch in America for 2022.

2022 Best Lawyers Listings for United States

2021 Best Lawyers: The Global Issue

by Best Lawyers

The 2021 Global Issue features top legal talent from the most recent editions of Best Lawyers and Best Lawyers: Ones to Watch worldwide.

2021 Best Lawyers: The Global Issue

What the Courts Say About Recording in the Classroom

by Christina Henagen Peer and Peter Zawadski

Students and parents are increasingly asking to use audio devices to record what's being said in the classroom. But is it legal? A recent ruling offer gives the answer to a question confusing parents and administrators alike.

Is It Legal for Students to Record Teachers?

Best Lawyers: Ones to Watch in America for 2023

by Best Lawyers

The third edition of Best Lawyers: Ones to Watch in America™ highlights the legal talent of lawyers who have been in practice less than 10 years.

Three arrows made of lines and dots on blue background

The Best Lawyers in Australia™ 2024 Launch

by Best Lawyers

Best Lawyers is excited to announce The Best Lawyers in Australia™ for 2023, including the top lawyers and law firms from Australia.

Australian Parliament beside water at sunset

The Upcycle Conundrum

by Karen Kreider Gaunt

Laudable or litigious? What you need to know about potential copyright and trademark infringement when repurposing products.

Repurposed Products and Copyright Infringemen

Inflation Escalation

by Ashley S. Wagner

Inflation and rising costs are at the forefront of everyone’s mind as we enter 2023. The current volatile market makes it more important than ever to understand the rent escalation clauses in current and future commercial lease agreements.

Suited figure in front of rising market and inflated balloon

Wage and Overtime Laws for Truck Drivers

by Greg Mansell

For truck drivers nationwide, underpayment and overtime violations are just the beginning of a long list of problems. Below we explore the wages you are entitled to but may not be receiving.

Truck Driver Wage and Overtime Laws in the US

A Celebration of Excellence: The Best Lawyers in Canada 2024 Awards

by Best Lawyers

As we embark on the 18th edition of The Best Lawyers in Canada™, we are excited to highlight excellence and top legal talent across the country.

Abstract image of red and white Canada flag in triangles

Announcing The Best Lawyers in South Africa™ 2024

by Best Lawyers

Best Lawyers is excited to announce the landmark 15th edition of The Best Lawyers in South Africa™ for 2024, including the exclusive "Law Firm of the Year" awards.

Sky view of South Africa town and waterways

Best Lawyers Voting Is Now Open

by Best Lawyers

Voting has begun in several countries across the globe, including the United States, the United Kingdom and Europe. Below we offer dates, details and answers to voting-related questions to assist with the voting process.

Hands holding smartphone with five stars above phone

8 Different Types of Criminal Defenses in Law

by Best Lawyers

Learn about the different types of criminal defenses available in law, including innocence, self-defense, insanity and more. Protect your rights today.

Silver handcuffs laying on finger printed papers