Dan Nelson Const. v. Nodland & Dickson

• Decision Date: 23 March 2000
• Docket Number: No. 990185.,990185.
• Citation: 2000 ND 61,608 N.W.2d 267
• Court: North Dakota Supreme Court
• Parties: DAN NELSON CONSTRUCTION, INC., Dan Nelson Construction, and Dan Nelson, Plaintiffs and Appellants, v. NODLAND & DICKSON, a partnership, and Irvin B. Nodland, P.C., dba Nodland Law Offices, Defendants and Appellees.

608 N.W.2d 267

2000 ND 61

DAN NELSON CONSTRUCTION, INC., Dan Nelson Construction, and Dan Nelson, Plaintiffs and Appellants, v. NODLAND & DICKSON, a partnership, and Irvin B. Nodland, P.C., dba Nodland Law Offices, Defendants and Appellees.

No. 990185.

Supreme Court of North Dakota.

March 23, 2000.

James L. Norris, James L. Norris, PC, Bismarck, N.D., for plaintiffs and appellants.

Rebecca S. Thiem (argued) and James S. Hill (appearance), Zuger Kirmis & Smith, Bismarck, N.D., for defendants and appellees.

KAPSNER, Justice.

[¶ 1] Dan Nelson Construction, Inc., Dan Nelson Construction and Dan Nelson ("Nelson") appealed from a summary judgment dismissing Nelson's legal malpractice action against Nodland & Dickson, a partnership, and Irvin B. Nodland, P.C., doing business as Nodland Law Offices ("Nodland"). We conclude the trial court correctly ruled Nodland's alleged negligent act was not, as a matter of law, the proximate cause of any of Nelson's damages. We affirm.

I

[¶ 2] Nelson, the owner of a Beach, North Dakota-based earth-moving company, was the successful bidder on a Wyoming state project to reclaim a portion of abandoned, open-pit, uranium mines in the Gas Hills area of Wyoming. On October 19, 1990, Nelson entered into a contract with the State of Wyoming, Department of Environmental Quality, Land Quality Division, and began work on the project in November 1990.

[¶ 3] The contract contained two provisions requiring Nelson to give written notice to the State before any changes could be made to the contract. One provision, titled "Unforeseen Physical Conditions," stated, "CONTRACTOR shall promptly notify OWNER and ENGINEER in writing, within 15 days, of any subsurface or latent physical conditions at the site differing materially from those indicated on the Surface or in the Contract Documents." The other provision, titled "CHANGE OF CONTRACT PRICE," stated, "Any claim for an increase in the Contract Price shall be based on written notice delivered to OWNER and ENGINEER within 15 days of the occurrence of the event giving rise to the claim."

[¶ 4] In January 1991, Nelson began encountering problems with rock and difficulty in handling contaminated water. In early May 1991, Nelson realized he was losing money on the project. In a May 28, 1991 letter to the State and the project engineer, Nelson asked for additional compensation based on "unforeseen and changed conditions at the site" because, although he had initially anticipated having to move 600 cubic yards of rock, he had instead uncovered about 120,000 cubic yards of rock. Nelson claimed monetary losses of $481,791.76 for the four-month time period from January 18, 1991 to May 20, 1991, and requested the original $1,906,779.52 contract amount be increased by $731,014.96. Nelson continued working and completed the project in October 1991.

[¶ 5] After Nelson submitted his May 28, 1991 letter, the State exercised a contract option and entered into mediation with Nelson on his claim. Mediation efforts were unsuccessful, and on April 8, 1992, Nelson, who had hired a Wyoming attorney to represent him, filed a claim with the Wyoming Department of Administration and Information and with the Department of Environmental Quality. Also on April 8, 1992, Nelson filed a complaint in Wyoming state district court against the State of Wyoming, the project engineer and the project designer. Nelson's Wyoming attorney attached to the complaint a copy of Nelson's April 8, 1992 claim filed with the State agencies.

[¶ 6] The State filed a motion to dismiss, alleging the Wyoming district court lacked jurisdiction because Nelson failed to file an itemized claim with the State before filing the complaint as required by Wyoming law. Nelson's attorney opposed the motion. The State answered the complaint in July 1992, but did not allege as a defense that Nelson failed to give written notice of his claim to the State within the 15-day contract requirements.

[¶ 7] Nelson's Wyoming attorney withdrew from representing Nelson in October 1992. On November 16, 1992, Nelson signed a contingent fee agreement with Nodland, and in December 1992, Nodland, along with a different Wyoming attorney, entered appearances in the case on behalf of Nelson.

[¶ 8] In June 1993, the State moved for summary judgment, arguing the case should be dismissed because Nelson failed to follow the contractual notice requirements and the statutory notice requirements of the Wyoming Governmental Claims Act. The project engineer also moved for summary judgment. Nodland, through a newly hired associate, opposed the motions. After oral argument, the Wyoming district court in August 1993 granted the State's summary judgment motion. The court granted the State's motion because the provision governing "CHANGE OF CONTRACT PRICE" required Nelson to file his claim within 15 days of the occurrence of the event giving rise to the claim, and because Nelson had encountered excessive rock as early as January 1991, his claim was barred. The court also ruled Nelson's notice of claim filed with the State failed to meet the "itemization" requirement of Wyoming law. In September 1993, the court also granted the project engineer's motion for summary judgment. No final judgment was entered at that time because there were unadjudicated claims remaining against the project designer. Nelson and Nodland discussed eventually appealing the court's dismissal of the State from the action when the judgment became final.

[¶ 9] Nelson settled with the project designer, and on May 10, 1994, the claim against the project designer was dismissed based on a stipulated motion. A final order dismissing all claims with prejudice was issued by the court on May 25, 1994. On August 1, 1994, Nodland wrote to Nelson's Wyoming attorney, stating "we have never received any notice of entry of judgment," and asking, "we would like to know when the time for appeal begins to run, and what the Wyoming rules mandate for the filing of an appeal." The Wyoming attorney responded on September 16, 1994, informing Nodland "Wyoming Rule of Appellate Procedure 2.01 requires that the filing of a Notice of Appeal be accomplished within fifteen (15) days following the entry of `the judgment or final order appealed from ...,'" and "[t]hat time period would have run on June 10, 1994." Nodland did not attempt to appeal the court's final order. [¶ 10] Nelson brought this legal malpractice action against Nodland in North Dakota district court in March 1997, alleging Nodland negligently represented him before the Wyoming courts in the construction contract case against the State of Wyoming. Nelson claimed Nodland negligently failed to appeal the adverse summary judgment ruling to the Wyoming Supreme Court, and negligently failed to make appropriate arguments before the Wyoming district court which would have either prevented a summary judgment dismissal or would have resulted in a reversal in an appeal to the Wyoming Supreme Court. Nelson asserted if he had received proper representation, he would have been able to successfully try his case to a Wyoming jury.

[¶ 11] Both parties moved for summary judgment. Nodland sought dismissal of the legal malpractice action, arguing the Wyoming district court's summary judgment ruling was proper under Wyoming law and would have been upheld on an appeal to the Wyoming Supreme Court even if additional arguments had been made by Nodland. Nelson sought summary judgment, arguing the Wyoming district court decision was incorrect under Wyoming law and would have been reversed on appeal to the Wyoming Supreme Court, resulting in a jury trial on the merits.

[¶ 12] The trial court granted summary judgment in favor of Nodland, concluding:

The Wyoming Supreme Court would not have reversed the trial court's grant of summary judg[ ]ment because of two alternative reasons: 1) the Plaintiffs failed to follow the contractual procedure for giving notice of the changed subsurface conditions, and 2) the Plaintiffs failed to follow the statutory procedure for filing a claim against the State of Wyoming. Since the record shows that there is no genuine issue of material fact regarding those two alternative reasons, the Defendants are entitled to judgment as a matter of law, and summary judgment in their favor is therefore proper.

Nelson appealed.

II

[¶ 13] Summary judgment under N.D.R.Civ.P. 56 is a procedural device for properly disposing of a lawsuit without trial if, after viewing the evidence in the light most favorable to the non-moving party, there are no genuine issues of material fact or conflicting inferences which can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. Jose v. Norwest Bank North Dakota, N.A., 1999 ND 175, ¶ 7, 599 N.W.2d 293.

[¶ 14] The elements of a legal malpractice action against an attorney for professional negligence are the existence of an attorney-client relationship, a duty by the attorney to the client, a breach of that duty by the attorney, and damages to the client proximately caused by the breach of that duty. Richmond v. Nodland, 501 N.W.2d 759, 761 (N.D.1993). When it is alleged that an attorney negligently failed to perform some act on behalf of the client, the plaintiff must allege and prove performance of the act would have benefitted the client. Swanson v. Sheppard, 445 N.W.2d 654, 658 (N.D.1989). In this context, the "case-within-a-case" doctrine applies to alleged negligently-conducted litigation and requires that, but for the attorney's alleged negligence, the litigation would have terminated in a result more favorable for the client. Wastvedt v. Vaaler, 430 N.W.2d 561, 567 (N.D.1988). In a case like this, where the underlying action was concluded by a summary judgment that was not appealed because of an attorney's alleged negligence in failing to perfect an appeal, "a legal malpractice claimant must prove two claims: first, the one that was...