Mayer Brown is not liable for a mistake by a paralegal who accidentially cancelled the security interest of a $1.5 billion loan to General Motors, a US court has decided. The court found that the firm did not represent the lenders and as such did not owe a duty to third parties. JP Morgan Chase acted as lender to the company and its lawyers, Sumpson Thacher & Bartlett, also missed the mistake which was only noticed when GM filed for bankruptcy protection in 2009.
Duty of care
The error occurred when papers prepared in 2008 for the payoff of a 2001 GM loan mistakenly released the lenders’ security interest in the $1.5 billion loan from 2006, as well. The lenders said that because JP Morgan was a client of Mayer Brown on other matters, this meant that the firm owed a duty of care to JP Morgan as well as the lenders for whom the bank was acting.However the judge said that Mayer Brown had no duty to lenders whom it was not representing.
Email your news and story ideas to: [email protected]
