Droste v. Julien

• Decision Date: 28 February 2007
• Docket Number: No. 06-2385.,06-2385.
• Citation: 477 F.3d 1030
• Parties: Robert DROSTE; Claudia Droste, Appellants, v. Douglas JULIEN, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

477 F.3d 1030

Robert DROSTE; Claudia Droste, Appellants, v. Douglas JULIEN, Appellee.

No. 06-2385.

United States Court of Appeals, Eighth Circuit.

Submitted: January 9, 2007.

Filed: February 28, 2007.

Janet M. Adams, argued, St. Louis, MO, for Appellants.

William S. Thomas, argued, Rabbitt & Pitzer, St. Louis, MO, for Appellee.

Before LOKEN, Chief Judge, BYE and SHEPHERD, Circuit Judges.

BYE, Circuit Judge.

This is a dispute between homeowners, Robert and Claudia Droste, and an architect, Douglas Julien, over allegedly faulty building plans and other services Julien provided regarding the construction of a home. After the district court¹ dismissed some of their claims and disqualified their lawyer, the Drostes voluntarily dismissed their remaining claim with prejudice in order to appeal several of the district court's rulings. We affirm.

I

Robert and Claudia Droste owned a lot located in the Woodcliffe Estates subdivision in Alton, Illinois. The subdivision is limited to five lot owners. The Drostes hired Dennis Sharp to prepare house plans for the construction of a single family home on their lot. Sharp prepared such plans in November 2000. When the Drostes submitted the plans to the subdivision for approval, three lot owners refused approval because the house was not set back from the street as far as it could be, and the front of the house faced north potentially making the west side of the house visible from the street. The Drostes hired lawyer Jan Adams to represent them and sued Woodcliffe Estates and the refusing lot owners in Illinois state court.

During the course of the state court litigation, the subdivision hired Julien "to deliver a thorough architectural analysis of the plans that have been submitted to the Court" and provide Woodcliffe Estates with a report which "include[s] an analysis of the architectural schemes of the subdivision." App. 852. After Julien became involved, the Drostes asked him to modify the November 2000 plans to include a facade for the west side of the house in order to make it appear to be the front of the home, notwithstanding the fact he was representing the subdivision's interests in the lawsuit.²

Julien prepared modified plans for the house in May 2001. Pursuant to the modified plans, Woodcliffe Estates and the Drostes entered into a settlement agreement which incorporated the modified plans. The settlement agreement also provided Julien would act as the agent of the lot owners to inspect the subsequent construction of the home and to approve any subsequent modifications to the plans. The settlement agreement was approved by the state court judge in a Stipulation and Order dated May 30, 2001.

After entry of the settlement agreement, the Drostes' contractor told them Julien's plans were flawed because they called for the house to be seventeen feet closer to the street in violation of the mandated site plan. In June 2001, Julien modified the house plans. The contractor informed the Drostes the new plans contained numerous errors and omissions which allegedly "forced [them] to choose between being in variance with certain municipal building codes or being in variance with the court order of May 30, 2001." App. 7. Ultimately, the Illinois state court found the Drostes' home to be in variance with the settlement agreement. The Drostes were found in contempt of court and ordered to pay a fine of $2500, as well as a $3500 award of attorney fees to the other subdivision lot owners.

The Drostes next sued Julien in federal district court relying upon diversity jurisdiction (they lived in Illinois, Julien maintained his offices in St. Louis, Missouri). Lawyer Adams again represented the Drostes. The complaint set forth three tort claims for negligence, negligent misrepresentation, and fraudulent misrepresentation. The complaint did not set forth any claims sounding in contract but in a section entitled "Facts Relevant to All Counts" alleged "Plaintiffs entered into a contract with Defendant for architectural services, which contract is memorialized in correspondence, drafts of house plans, drafts of proposed settlement agreements and a Stipulation and Order dated May 30, 2001 . . . ." App. 5.

Before answering the complaint, Julien filed a motion to dismiss, or in the alternative, a motion for a more definite statement. He contended Illinois law should govern, he was immune from suit because he was acting as an expert witness in litigation, and the claims were barred by the Moorman³ doctrine under Illinois law which, subject to limited exceptions, bars a party from suing in tort for purely economic loss. With respect to his economic loss argument, Julien contended the issue depended on whether the Drostes had a contract or were in privity of contract with him. The district court denied the motion to dismiss. The district court agreed Illinois law applied, but because the complaint alleged the Drostes contracted with Julien, he was not entitled to dismissal of the complaint based upon the Moorman doctrine.

During the course of discovery, it appeared lawyer Adams might have paid a portion of the $3500 attorney fees owed to the subdivision when the Drostes were held in contempt of court. Because those fees were part of the damages claimed against Julien in federal court, Julien brought a motion to disqualify Adams under Rule 4-3.7 of the Missouri Supreme Court Rules of Professional Conduct⁴ on the ground she was likely to be a necessary witness at trial. The Drostes opposed the motion contending Julien had not shown Adams was a "necessary" witness (i.e., the "only" person who could testify to a disputed issue). The Drostes also contended it was inappropriate to disqualify Adams during the pretrial stage of the litigation even if she would be a necessary witness later at trial.

The district court held a telephone conference on the motion to disqualify counsel. During the conference, the district court gave the Drostes five days to decide whether they intended to pursue a damage claim in federal court for the fees paid by their lawyer Adams in the Illinois state court proceedings. When the Drostes indicated they wished to pursue those damages, the district court granted the motion to disqualify on the ground Adams was "likely to be a fact witness at any eventual trial." Without addressing the contention regarding pretrial disqualification, the district court made the disqualification effective immediately and gave the Drostes ten days in which to have a new lawyer enter an appearance on their behalf.

Prior to trial, both parties filed several motions in limine, including requests for Daubert⁵ hearings to address the admissibility of expert witnesses. The district court held a full-day hearing to address the numerous motions. One of Julien's motions in limine resurrected the Moorman doctrine and asked for the exclusion of all evidence of negligence because the doctrine barred the Drostes from bringing tort claims for a purely economic loss. This time, Julien further argued the applicability of the Moorman doctrine did not depend on whether Julien had a contract with the Drostes.

Following the hearing, the district court entered an order addressing the outstanding motions in limine. The order also dismissed Counts I and II of Drostes' complaint (the negligence and negligent misrepresentation counts) indicating it was doing so "in accordance with the rulings made during the in-court hearing." Add. 13. The district court also determined expert witness testimony was unnecessary on the remaining count alleging fraudulent misrepresentation and therefore denied as moot a motion Julien brought to exclude the Drostes' expert on that issue. At the same time, the district court denied the Drostes' motion to exclude the testimony of Julien's fraud expert on the ground the motion was untimely.

With two of their three claims dismissed, the Drostes decided to voluntarily dismiss the remaining fraud claim with prejudice in order to pursue an immediate appeal. Julien subsequently filed a motion for costs arguing he was the prevailing party. The district court granted the motion and awarded costs of $9,946.62. The Drostes filed a timely appeal challenging 1) the dismissal of their negligence and negligent misrepresentation claims, 2) the denial of their motion in limine to exclude Julien's fraud expert, 3) the pretrial disqualification of lawyer Adams, and 4) the award of costs.

II

The Drostes ask this Court to address the dismissal of their negligence and negligent misrepresentation claims, contending such claims are not barred by the economic loss doctrine under Illinois law because they fall within the exceptions recognized in Moorman and its progeny. We are unable to review this claim in a meaningful way due to an inadequate record on appeal. The record indicates the district court dismissed the claims at issue "[i]n accordance with the rulings made during the in-court hearing." Add. 13 (emphasis added). A transcript of the pertinent hearing was never requested or prepared, however, so we do not know the actual basis for the district court's rulings.⁶ On appeal, the parties dispute not only the propriety of the dismissal, but even whether the district court dismissed the claims by reconsidering the motion to dismiss it had denied earlier, or by considering evidence outside the pleadings under a summary judgment standard. Without being able to examine the transcript, this Court cannot conduct a meaningful review. See Burull v. First Nat'l Bank of Minneapolis, 817 F.2d 56, 57 (8th Cir.1987) ("Fed. R.App. P. 10(b) makes clear that it is the duty of the appealing party to see that a copy of the transcript or an appropriate substitute is included in the record on appeal . . . . Without a transcript, this Court can conduct no meaningful review of the issue raised by the [appellants]."). Accordingly, we affirm the district court as to this issue. See Carter v. Jacobsen, 748 F.2d...