Blue Water Corp., Inc. v. O'TOOLE
| Citation | 336 NW 2d 279 |
| Decision Date | 10 August 1983 |
| Docket Number | No. C4-82-1074.,C4-82-1074. |
| Parties | The BLUE WATER CORPORATION, INC., et al., Respondents, v. Terrance S. O'TOOLE, Appellant. |
| Court | Supreme Court of Minnesota (US) |
Irving Nemerov, Sean Rice, Minneapolis, for appellant.
Hansen, Dordell, Bradt, Odlaugh & Bradt and J. Mark Catron, St. Paul, for respondents.
Considered and decided by the court en banc without oral argument.
The Blue Water Corporation, Inc. (Blue Water) and its incorporators individually brought this legal malpractice suit against defendant Terrance O'Toole, claiming that his negligence had caused their failure to obtain a bank charter from the Minnesota Commerce Commission. A jury found negligence and awarded damages of $100,000 for lost profits that the bank might have earned had the charter been obtained. O'Toole appeals from an order of the Ramsey County District Court denying his motion for judgment notwithstanding the verdict or a new trial. We reverse.
The individual plaintiffs, a group of mostly local businessmen in Longville, Minnesota, had hoped to open a bank in Longville because there were no banking facilities within a distance of 22 miles. Longville, located in a lake resort-logging area of north central Minnesota, has a population of 171, which swells to 10,000 during the resort season. The group, seeing the possibility of a successful business venture, retained O'Toole, who had been recommended as having expertise in the bank charter application process. Each of the ten original members of the group contemplated investing between $20,000 and $50,000 and was capable of investing that amount.
O'Toole first met with the group in October 1974, at which time he outlined the steps necessary to launch their venture. They were to incorporate Blue Water for the purpose of obtaining a bank charter, assemble $10,000 to finance a feasibility study, commission the study, and locate a banker, as none of them had banking experience. O'Toole gave them the incorporation papers, which they completed and returned to him in March 1975. He filed the papers immediately thereafter.
The parties next met in July 1975, when the group, now incorporated as Blue Water, supplied O'Toole with $4,500 of the $10,000 necessary for the feasibility study. The group decided to do an inexpensive preliminary study before incurring the expense of a full-scale study, as a similar effort to obtain a Longville bank charter in the past had been unsuccessful. They did not wish to proceed absent a good probability of success.
In September 1975, O'Toole contracted with Development Concept Corporation of Minneapolis (DCC) for the preliminary feasibility study, to be followed by a full-scale study if the initial results proved to be positive. DCC does market research for bank charter applications, including attitudinal studies to determine public demand and to identify specific community needs. DCC also gathers information for the application relating to the demographics of the area, potential commercial and household growth, and anticipated deposits, profits and losses, inter alia. If the charter application is opposed by neighboring banks, DCC provides expert testimony at the hearings that take place before the Commerce Commission.
Lee Maxfield, one of the founders of DCC, who had experience with 15 to 20 bank charter applications, had responsibility for the Longville study. He began work on the study in October 1975, meeting with members of the group in Longville. When no report was forthcoming from Maxfield by June 1976, O'Toole wrote for a status report. In response to O'Toole's inquiry, Maxfield indicated a probable "go-ahead" for the Longville application as planned but recommended delaying the application process pending action by the Commerce Commission on the Nisswa, Minnesota bank charter application. Nisswa, a small resort town near Longville, had a history of two unsuccessful bank charter attempts. Maxfield felt that the similarities between the two towns were sufficient to warrant awaiting the Commission's ruling on Nisswa, as a favorable Nisswa result would be indicative of Longville's chances for success. O'Toole relayed this recommendation to the group by letter on July 8, 1976. There is no indication in the record that the group was unwilling to follow this advice.
The Nisswa application was approved in September 1976, 10 months after it was filed, and Maxfield related this news to O'Toole in a letter dated October 27, 1976, in which he recommended that the Blue Water group proceed with the application and indicated that his preliminary study would be completed within the following few weeks. O'Toole sent a copy of Maxfield's letter to the group immediately, asking them to inform him when they would be available to meet with him and Maxfield.
Robert Blais, president of the Blue Water corporation, testified that upon receipt of O'Toole's letter, the group authorized Blais' wife to write back to appellant requesting a meeting as soon as possible. Mrs. Blais wrote notes on O'Toole's letter indicating that she mailed letters to him on November 2, 1976, and again on March 25, 1977, but the letters or copies thereof could not be located at time of trial. Nor could anyone, including Maxfield, produce a copy of the preliminary feasibility study that Maxfield testified he completed within one month of his October 27th letter to O'Toole. In apparent response to the group's March 25, 1977 letter, O'Toole wrote, on March 30, 1977, that he would set up a meeting within a week, but there is no evidence that he did so, and members of the group testified that they could not reach him by phone.
Blais, whose father was a director of the Security State Bank of Remer, Minnesota at that time, testified that the impetus for the March 25th letter to appellant was that Blue Water had information that the two banks closest to Longville, the First National Bank of Walker and the Remer bank, planned to establish branch banks in Longville if a current bill in the legislature allowing branch banks within 25 miles of the main bank became law. Blais admitted under cross-examination that this information was "very possibly" never conveyed to O'Toole. O'Toole was unaware of both the impending change in the law and the Walker-Remer branch rumors until Blue Water member William Koons wrote him on July 27, 1977 that both banks had leased property with option to buy in Longville for the purpose of installing branch banks.
Minnesota Statutes § 47.52 (1982), enacted in 1977 Minn.Laws ch. 378 §§ 1 and 2, was approved June 2, 1977 and became law on August 1, 1977. The Remer and Walker branch applications had been submitted to the Commerce Commission prior to the effective date of the law and were approved on August 21-22, 1977. O'Toole had taken no steps to submit an application after receiving Koons' July 27th letter, nor did he travel to Longville at his clients' urgings to discuss the proper action to take. As late as August 10, 1977, he wrote to Koons as follows:
I am sure that, if you wish to proceed, the Commerce Department would look more favorably on you than it would on the Remer or Walker banks. To proceed would necessitate the Development Concept Corporation doing a study, and I could arrange for a meeting sometime next week to get started.
Blue Water's reason for existence, to provide banking facilities in Longville, was preempted by the approval of the Remer and Walker branch applications. The group, blaming the lost opportunity on O'Toole's failure to file a timely application, brought this suit. O'Toole argues on appeal that the trial court erred in denying his motion for judgment notwithstanding the verdict or a new trial on the ground that there was insufficient competent evidence as to causation and damages to sustain the jury verdict and that there was error in the jury instructions and special verdict.
We have stated frequently in recent cases that the applicable standard to be applied in determining the propriety of the trial court's granting or denying a motion for judgment notwithstanding the verdict is whether there is any...
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