Opinion
No. C0-03-115.
Filed: July 29, 2003.
Appeal from Hennepin County District Court, File No. MP0112106.
Brian E. Butler, Stafford Rosenbaum LLP, and James P. Cullen, Cullen Law Firm, Ltd., (for appellant)
Michael A. Klutho, Charles E. Lundberg, Kelly A. Putney, Bassford, Lockhart, Truesdell Briggs, P.A., (for respondents Scott Suter and Sawicki, Neese Phelps, P.A.)
Jeanne H. Unger, Rider, Bennett, Egan Arundel, LLP, (for respondent Milwaukee Mutual Insurance Co.)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant challenges the summary judgments granted to respondents, its attorney and his law firm, on the ground that appellant's affidavits did not meet the statutory requirements for a prima facie malpractice case and to respondent, appellant's insurer, on the ground that an insurer is not vicariously liable for an attorney's alleged negligence. Because we see no error of law in the district court's determinations, we affirm.
Appellant also argues that the case should be remanded to a different judge. Our determination of the case makes this issue moot, but in any event we see no basis for involving a different district court judge at this point.
FACTS
The facts relevant to this appeal are undisputed.
The action underlying this malpractice case began when appellant Trenchers Plus, Inc., was sued by a customer, Tri-State Boring, Inc. (Tri-State). Tri-State alleged, among other things, defamation. Trenchers retained its own attorney, Michael Kallas of Kallas MacDonald, P.A., to defend.
Trenchers' insurer, respondent Milwaukee Mutual Insurance Co. (Milwaukee), was notified of the action. Because Milwaukee considered its only potential liability to be on the defamation claim, it agreed to defend under a reservation of rights. Milwaukee retained a two-person firm, Webster Suter, P.A., to defend Trenchers. Webster, the senior partner, had represented Milwaukee for many years, and he took primary responsibility for the case; Kallas assisted him. Shortly thereafter, Webster retired, and respondent Scott R. Suter took over the defense. Suter later joined respondent Sawicki, Neese, Phelps, P.A. (collectively, Suter) law firm.
Following trial in the underlying action, the jury awarded Tri-State $3,984,000 in compensatory damages and $1,500,000 in punitive damages. Before the hearing on posttrial motions, and without involving Suter, Trenchers settled with Tri State for 53% of the total award. Trenchers then began the instant action, alleging legal malpractice against Suter and negligence and liability for Suter's alleged malpractice against Milwaukee. Later, the complaint was amended to add a claim against Suter for breach of fiduciary duty and a claim against Milwaukee for breach of contract.
To establish the proximate cause element of its malpractice claim, Trenchers sought a trial-within-a-trial and moved to bifurcate and to restrict evidence at the trial-within-a-trial. The district court denied both motions. Suter and Milwaukee each moved for summary judgment, seeking dismissal of Trenchers's claims.
The district court found that the experts' affidavits offered by Trenchers to satisfy the statutory malpractice claim requirements of Minn. Stat. § 544.42 lacked factual foundation and allowed Trenchers 60 days in which to cure the deficiencies. Trenchers declined to cure the deficiencies and instead moved for reconsideration of the district court's order. The district court denied the motion and granted summary judgment to Suter, dismissing the malpractice and breach of fiduciary duty claims, and to Milwaukee, dismissing the negligence and breach of contract claims.
Trenchers appeals, arguing that the district court erred in concluding that Trenchers's affidavits did not meet the statutory requirements for a malpractice claim and in dismissing the breach of fiduciary duty claim against Suter and the negligence and breach of contract claims against Milwaukee.
DECISION 1. Experts' Malpractice Affidavits
The application of law to stipulated facts is a question of law, which an appellate court reviews de novo. Morton Bldgs., Inc. v. Comm'r of Revenue, 488 N.W.2d 254, 257 (Minn. 1992). The district court applied Minn. Stat. § 544.42 (2002) to the affidavits presented by Trenchers's experts and concluded that the affidavits did not meet the statutory requirements. Trenchers was given 60 days to cure the defects. Trenchers failed to cure the defects, and the district court dismissed its malpractice claims. Trenchers contends that this was an error of law.
Minn. Stat § 544.42, subd. 2 (2002), requires the plaintiff in a malpractice action to provide two affidavits. The first must be drafted by the plaintiff's attorney and state that
the facts of the case have been reviewed by the party's attorney with an expert whose qualifications provide a reasonable expectation that the expert's opinions could be admissible at trial and that, in the opinion of this expert, the defendant deviated from the applicable standard of care and by that action caused injury to the plaintiff.
Minn. Stat. § 544.42, subd. 3(a)(1) (2002). The second affidavit must be signed by the plaintiff's attorney and set forth
the identity of each person whom the attorney expects to call as an expert witness at trial to testify with respect to the issues of negligence, malpractice, or causation, the substance of the facts and opinions to which the expert is expected to testify, and a summary of the grounds for each opinion.
Id., subd. 4(a) (2002). Failure to comply with these requirements results in mandatory dismissal. Id., subd. 6 (2002).
Trenchers offered the affidavits of two expert witnesses, both qualified attorneys. The district court found that the experts "lack[ed] adequate factual foundation to render a competent and admissible opinion" on Suter's alleged negligence and malpractice because they did not review, among other things, the trial transcript, Suter's case file, Kallas's case file and deposition, and the depositions of the Trenchers principals, Dan and Brian Folkman.
Trenchers does not dispute the experts' failure to review these documents, but argues that the documents were irrelevant because the experts' affidavits concerned only "the applicable standard of care and Suter's breach of that standard" and they "needed only to know the basic facts about [the underlying action] and what Suter did and didn't do in the course of that litigation." We disagree. At least parts of Suter's case file and a trial transcript necessarily would be relevant to a determination of whether Suter breached the applicable standard of care in preparing the case and conducting the trial.
Trenchers cites Minn.R.Evid. 703(a), providing that an expert's opinion has adequate foundation if it is based on information "of a type reasonably relied upon by experts in the particular field," but offers no support for its view that a competent expert in a litigation malpractice case would not rely to some degree on the trial transcript or the attorney's case file.
The district court also noted that neither expert satisfied the requirements of Minn. Stat. § 544.42 with respect to causation because they did not address the impact on the jury's verdict of the actions and inactions of the lawyers who were representing Trenchers. Trenchers argues that Minnesota law does not require expert testimony to establish causation. But Minn. Stat. § 544.42, subd. 3(a)(1), requires that an affidavit state that the defendant's deviation from the applicable standard of care "caused injury to the plaintiff" and Minn. Stat. § 544.42, subd. 4(a), requires that an affidavit provide a summary of the grounds for the expert's opinion on causation. One expert's affidavit said nothing about causation; the other expert's affidavit said both that
While our holding that Trenchers's experts' affidavits did not meet one statutory criterion makes it unnecessary for us to consider whether they also failed to meet a second criterion, we nevertheless address the causation issue in the interests of completeness.
[i]t is impossible for me, or any party, to offer an opinion that Suter's failure to comply with the applicable standard of care directly caused the verdict in the Litigation, or that his compliance with the standard of care would have changed the result and that "Suter's compliance with the standard of care would have significantly increased the likelihood that a better result would have occurred." The contradiction inherent in these statements substantially detracts from the value of the expert's affidavit. Moreover, "significantly increasing the likelihood of a better result" falls far short of proving that the plaintiff would have been successful. See Blue Water Corp. v. O'Toole, 336 N.W.2d 279, 281 (Minn. 1983) (to prevail in a legal malpractice action, a plaintiff must prove, among other things, that but for the defendant's conduct, the plaintiff would have been successful in the action).
Minn. Stat. § 544.42, subd. 6, makes dismissal mandatory if a plaintiff does not file the prescribed affidavits. We conclude that the district court did not err in finding that appellant's affidavits did not meet the statutory requirements, ordering summary judgment, and dismissing the malpractice claim.
Trenchers also argues that it need not prove causation at the summary judgment stage. To support this argument, Trenchers relies on Rouse v. Dunkley Bennett, P.A., 520 N.W.2d 406, 410 (Minn. 1994) (to survive summary judgment in legal malpractice action, plaintiff must show he would have survived summary judgment on claim in underlying action that was allegedly foregone through attorneys' negligence). But Trenchers's reliance is misplaced for two reasons. First, Rouse, a 1994 case, does not supercede the requirements of Minn. Stat. § 544.42, enacted in 1997. Second, Rouse is distinguishable: here, there was no "underlying, but foregone claim"; all claims in the underlying action were resolved at trial.
2. Breach of Fiduciary Duty Claim Against Suter
On an appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). A claim for breach of fiduciary duty in the attorney-client context requires a showing that the attorney failed to represent the client with undivided loyalty, failed to preserve client confidences, or failed to disclose material matters bearing on the representation. Rice v. Perl, 320 N.W.2d 407, 410 (Minn. 1982). Trenchers does not contend that Suter failed in any of these three duties; instead, Trenchers contends that Suter breached an additional duty to disclose "information that a client would need in order to evaluate whether the attorney has discharged his duties of loyalty and confidentiality." Trenchers offers no law establishing this additional duty or its imposition upon Suter.
Specifically, Trenchers asserts that (1) Suter failed to disclose that he had engaged in conduct inconsistent with the fact that Trenchers, not Milwaukee, was his client; (2) Suter advised Milwaukee regarding Trenchers' coverage and Milwaukee's reservation of rights; (3) Suter did not disclose to Trenchers all of its communication with Milwaukee; and (4) Suter made decisions about trial preparation based on minimizing expense to Milwaukee. Trenchers provides no support for any of these assertions in its argument; in the fact section of its brief, the only support Trenchers cites for these alleged "facts" is its own brief opposing summary judgment. The district court did not err in finding that "[Trenchers's] allegation that [Suter was] controlled by Milwaukee, so that [Suter] failed to represent Trenchers with undivided loyalty is not supported by the evidence" and that "[t]here is no evidence that Mr. Suter provided any coverage advice to Milwaukee, limiting Milwaukee's obligation to Trenchers in the underlying case."
Trenchers does not dispute the district court's finding that "Trenchers acknowledges that they were kept informed [by Suter] of key developments, including settlement negotiations, and the punitive damages claim asserted against them, and Suter's evaluation of the claim." However, Trenchers argues that, with this finding, the district court "missed the point." But if the point is Suter's alleged failure to keep Trenchers properly informed, this finding is relevant.
3. Summary Judgment for Milwaukee
On an appeal from summary judgment, this court asks whether there are any genuine issues of material fact and whether the district court erred in its application of the law. Cooper, 460 N.W.2d at 4. Trenchers argues that the district court erred in granting Milwaukee summary judgment on Trenchers's claims of negligence (actually, vicarious liability for Suter's negligence) and breach of contract (actually, failure to defend). Both claims depend on Trenchers's premise that Suter's "real client" was not Trenchers, the insured, but Milwaukee, the insurer, and that Suter defended Milwaukee's interests rather than Trenchers's interests.
The relationship among insurer, insured, and defense counsel hired by the insurer for the benefit of the insured was recently examined in Pine Island Farmers Coop. v. Erstad Riemer, P.A., 649 N.W.2d 444, 451 (Minn. 2002) (attorney-client relationship can exist between insurer and defense counsel only if there is no conflict of interest between insured and insurer and if insured expressly consents to the representation of the insurer after consultation with counsel). These conditions did not obtain here: as the district court found, "[t]here is no evidence in this case to support Trenchers' allegations that Milwaukee was the real client of [Suter]."
Trenchers alternatively argues that Suter was Milwaukee's agent based on two evidentiary documents, the "Expectations" document and the "Litigation Policy Statement," and on testimony that Milwaukee controlled Suter. But both Webster and Suter testified that, although the "Expectations" document required defense counsel to get Milwaukee's consent before incurring expenses of more than $250 and before undertaking legal research, neither of them had ever sought Milwaukee's permission for anything other than the retention of experts for the underlying action. Moreover, the "Litigation Policy Statement," which provided that Milwaukee in-house counsel would be the supervising attorney, was no longer in use at the time of the underlying action, and no Milwaukee in-house counsel was involved in the underlying action. Trenchers does not specify what testimony supports its claim that Milwaukee controlled Suter, but both Suter and Webster testified that they acted to defend Trenchers independently of Milwaukee's control.
Trenchers's final argument is that Minnesota should join the 19 states that Trenchers claims have expressly or implicitly held that defense counsel is the insurer's agent by imposing imputed liability on the insurer. But the task of extending existing law falls to the supreme court or the legislature, not to this court. Tereault v. Palmer, 413 N.W.2d 283, 286 (Minn.App. 1987), review denied (Minn. 18 Dec. 1987).
The district court did not err in granting Milwaukee summary judgment.