Thomas B. Olson & Assocs., PA v. LEFFERT, JAY & POLGLAZE, PA, No. A07-2165.
| Decision Date | 21 October 2008 |
| Docket Number | No. A07-2165. |
| Citation | 756 N.W.2d 907 |
| Parties | THOMAS B. OLSON & ASSOCIATES, P.A., Appellant, v. LEFFERT, JAY & POLGLAZE, P.A., et al., Respondents. |
| Court | Minnesota Court of Appeals |
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Thomas B. Olson, Matthew H. Jones, Olson & Lucas, P.A., Edina, MN; and Richard J. Sheehan, Harvey & Sheehan, P.A., Minneapolis, MN, for appellant.
Paul C. Peterson, William L. Davidson, Lind, Jensen, Sullivan & Peterson, P.A., Minneapolis, MN, for respondents.
Considered and decided by ROSS, Presiding Judge; JOHNSON, Judge; and HUSPENI, Judge.*
This case concerns $31,000 in settlement proceeds that were held in the trust account of the law firm of Leffert, Jay & Polglaze, P.A. Upon the instructions of clients of the firm, Leffert Jay transferred some of the funds to another attorney who had performed services for the clients and then transferred the balance of the funds to its own operating account. A third law firm, Thomas B. Olson & Associates, P.A., which previously had represented Leffert Jay's clients, did not receive any of the funds, despite having filed an attorney lien against the funds.
Olson brought suit against Leffert Jay and the attorney responsible for the transfers of funds, who are respondents on appeal. The district court granted respondents' motion for summary judgment. We conclude that Olson introduced evidence that creates genuine issues of material fact on his claims of breach of fiduciary duty and breach of contract and, thus, that the district court erred by granting summary judgment to respondents on those claims. We conclude, however, that the district court properly granted summary judgment to respondents on Olson's claim of conversion. Therefore, we affirm in part, reverse in part, and remand for further proceedings on Olson's two viable claims.
In 2004, Elizabeth Howell and Mary Howell, sisters and minority shareholders in the Windsaloft Company, retained Thomas B. Olson to represent them in a lawsuit against Windsaloft and an officer of the company. Olson negotiated a potential settlement with the Windsaloft defendants but was unable to finalize a settlement agreement. In approximately July 2005, after the Howells stopped paying Olson's bills, Olson withdrew from representation. On July 27, 2005, Olson's firm filed a petition for lien and judgment in the district court, alleging that the Howells owed him approximately $29,700.
In August 2005, the Howells retained Terrance C. Newby of the Leffert Jay firm to represent them in the Windsaloft matter and to oppose the lien petition brought by Olson. In October 2005, Newby finalized a settlement agreement that obligated the Windsaloft defendants to pay the Howells $115,000. The Windsaloft defendants were reluctant to pay, however, because of Olson's attorney lien, which asserted a potential claim against the Windsaloft defendants so long as Olson's fees remained unpaid. Newby explained the situation in an e-mail message to the Howells on November 29, 2005:
In early December 2005, Newby, Olson, and Michael E. Keyes, counsel for the Windsaloft defendants, engaged in e-mail communications intended to remove the obstacles to payment by the Windsaloft defendants. On December 2, 2005, Olson sent an e-mail message to Keyes, with a copy to Newby, stating the terms that he required to release his claims against the Windsaloft defendants:
I'll stipulate to a release of the other monies to the Howells and a release of the claims to the shares and the lawsuit settlement itself, subject to the deposit of $32,000 of the settlement funds into the Leffert Jay & Polglaze trust account.
On December 5, 2005, Newby responded to Olson in an e-mail message, as follows:
We will agree to place in an escrow account an amount sufficient to cover the amount of your lien petition request, and any interest that could legally be awarded. Please send a letter to Mike Keyes releasing him from all claims, and advising him that you stipulate to allow him to release the settlement funds to me.
On the same day, Olson asked Newby whether he would pay the amount awarded upon the establishment of his lien "irrespective of any contrary instructions from the Howells." The evidence concerning Newby's response is in conflict. Newby states in an affidavit that, on December 6, 2005, he told Olson in a telephone conversation that he "would not disregard the Howells' instructions" because he was acting on their behalf. But in his deposition, Newby testified that he did not convey such information to Olson "because I did not know that my clients intended on reneging on their agreement."
On December 6, 2005, Olson sent a follow-up e-mail message to Newby, seeking clarification regarding the amount to be deposited: The next day, December 7, 2005, Newby sent an e-mail message to Olson confirming the amount to be deposited and informing Olson that the amount would remain in the firm's escrow account during the pendency of Olson's lien petition:
On December 7, 2005, Olson sent an e-mail message to Keyes, with a copy to Newby, in which he expressed his agreement in principle to a limited release:
At Keyes's request, Olson executed a more formal limited release on December 13, 2005, which states:
This Release of Lien is limited in that said Lien claim shall continue in those settlement cash proceeds to be paid over by Defendants to Leffert, Jay & Polglaze, P.A.'s IOLTA trust account in the sum of $115,000.00. Said continuing claim of an attorney's lien is limited to the total sum of $31,000. The actual amount of any lien will be determined by the District Court.
On December 21, 2005, the settlement amount was deposited into Leffert Jay's trust account. Soon thereafter, Leffert Jay transferred $84,000 of the funds to the Howells.
In December 2005, a dispute arose between the Howells and Leffert Jay concerning the firm's invoices for legal services, which totaled approximately $17,700. For a period of time, the Howells refused to pay Leffert Jay. On December 29, 2005, the Howells instructed Newby to transfer the settlement proceeds remaining in the trust account, $31,000, to Brett Weise, an attorney in the State of Washington, who also was performing legal services for the Howells. Newby decided that Leffert Jay should retain funds in the trust account sufficient to cover the Howells' outstanding debt to Leffert Jay. Thus, Leffert Jay transferred approximately $13,300 to Weise and retained the remaining amount of approximately $17,700. Later, in January 2006, Leffert Jay and the Howells agreed to a $5,000 reduction in the Howells' account balance. Leffert Jay then issued a check to Weise for $5,000 and transferred the remainder of the settlement proceeds, approximately $12,700, to its own operating account. Olson never received any of the settlement proceeds and was unaware of Leffert Jay's disposition of the funds until February 2006.
On February 17, 2006, Leffert Jay withdrew from representation of the Howells. On February 21, 2006, the district court established Olson's lien, securing payment of his unpaid fees and awarding a judgment for the same amount. In April 2006, the district court vacated the judgment but left the attorney lien in effect.
In July 2006, Olson commenced this action against Leffert Jay and Newby. In May 2007, respondents moved for summary judgment on all claims, and Olson moved for partial summary judgment on his contract and conversion claims. In September 2007, the district court denied Olson's motion for partial summary judgment and granted respondents' motion for summary judgment. Olson appeals from the district court's rulings on both motions.
I. Is there a genuine issue of material fact as to whether respondents owed Olson a fiduciary duty with respect to Olson's beneficial interest in settlement proceeds in Leffert Jay's trust account?
II. Is there a genuine issue of material fact as to whether Olson and respondents entered into an enforceable contract obligating respondents to hold settlement proceeds in Leffert Jay's trust account until Olson's lien petition was resolved?
III. Is there a genuine issue of material fact as to whether, at the time Leffert Jay distributed the settlement proceeds from its trust account, Olson had an ownership interest in the funds sufficient to prove a claim of conversion?
A motion for summary judgment shall be granted when "the pleadings, depositions, answers to...
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