Herzog v. Yuill, 11,189

• Citation: 399 N.W.2d 287
• Decision Date: 20 January 1987
• Docket Number: No. 11,189,11,189
• Parties: James H. HERZOG, Plaintiff, Appellant, and Cross-Appellee, v. William D. YUILL, Defendant, Appellee, and Cross-Appellant, and William A. Hill, Defendant and Appellee. Civil
• Court: United States State Supreme Court of North Dakota

Page 287

399 N.W.2d 287

James H. HERZOG, Plaintiff, Appellant, and Cross-Appellee, v. William D. YUILL, Defendant, Appellee, and Cross-Appellant and William A. Hill, Defendant and Appellee.

Civil No. 11,189.

Supreme Court of North Dakota.

Jan. 20, 1987.

James H. Herzog, pro se.

Mart R. Vogel, of Vogel, Brantner, Kelly, Knutson, Weir & Bye, Fargo, for defendants and appellees William D. Yuill and William A. Hill.

VANDE WALLE, Justice.

James H. Herzog has appealed from partial summary judgments entered pursuant to certification under Rule 54(b), N.D.R.Civ.P., that dismissed most of his claims against William D. Yuill and all of his claims against William A. Hill. Yuill has cross-appealed from that portion of a judgment denying his motion for summary judgment of dismissal on all of Herzog's claims. We affirm the judgments appealed from in part, reverse in part, and remand. We dismiss the cross-appeal.

On December 16, 1983, Herzog commenced an action against Yuill and Hill. Paragraphs 1 through 29 of the complaint alleged breach of contract. Paragraphs 30 through 38 alleged legal malpractice.

On February 12, 1985, Yuill and Hill filed motions for summary judgment based on the two-year statute of limitations provided in Sec. 28-01-18(3), N.D.C.C., failure to state a cause of action, res judicata, and collateral estoppel. While those motions for summary judgment were pending, Herzog moved to amend the complaint by adding four paragraphs and an additional prayer for relief.

In a memorandum opinion dated February 11, 1986, the trial court granted Hill's motion for summary judgment as to paragraphs 1 through 29 and denied Yuill's motion for summary judgment as to paragraphs 1 through 29. The court granted both Yuill's and Hill's motions for summary judgment as to paragraphs 30 through 38.

In an order dated February 18, 1986, the trial court granted Herzog's motion to amend the complaint, but stated:

"The Court notes that the matters alleged in the Amended Complaint were fully considered in reaching the Findings and Conclusions contained in this Court's Memorandum Opinion dated and filed with the Clerk on February 11, 1986."

In an order for judgment dated February 25, 1986, the trial court decreed: "That the plaintiff's case against the defendant Hill be and the same is hereby in all things dismissed with prejudice." In another order for judgment dated February 25, 1986, the trial court decreed: "That the trial of the case against the defendant Yuill shall be confined to the contract cause of action and whatever damages may have resulted therefrom, if any." Separate judgments were entered accordingly on February 26, 1986 (Yuill), and March 6, 1986 (Hill). The trial court certified there was no just reason for delay in the entry of the judgments on March 11, 1986. ¹

The dispositive issue in the appeal is whether or not summary judgments were properly entered. The dispositive issue in the cross-appeal is whether or not the trial court's denial of summary judgment on all of the plaintiff's claims is appealable or reviewable.

1. dismissal of contract claims against Hill

In paragraphs 1 through 29 of the complaint, Herzog generally pleaded a contract and a breach thereof by Yuill and Hill. Herzog asserted in his complaint and affidavit in opposition to the defendants' motions for summary judgment that (1) in November 1978, he employed Yuill to defend him in an expected criminal prosecution arising out of an anticipated indictment for appropriating to his own use monies belonging to bankrupt estates for which he served as trustee; (2) that he paid Yuill $4,000 and gave Yuill a note and mortgage for $26,000 to secure Yuill's fees; (3) that the scope of employment was later expanded to include defense of anticipated civil suits and on January 5, 1979, the provision of legal services by Hill; (4) that the note and mortgage were increased to $46,000 because of the expansion in legal services and the addition of services by Hill; (5) that the note and mortgage for $46,000 were to serve as security for attorney fees which were to be earned at a rate of $50 per hour with any excess for unearned fees to be refunded to Herzog; (6) that Herzog was fraudulently induced into executing the note and mortgage; and (7) that Yuill breached the employment contract by failing to refund unearned fees.

In a deposition Herzog said that: (1) he did not "recall any contact with Mr. Hill until the early part of January '79"; (2) he "didn't have any discussions with Mr. Hill relative to fees whatsoever at any time"; (3) "Hill did not agree to refund any part of the $50,000"; (4) "Mr. Hill had nothing at all to do with the securing of the note and the mortgage"; (5) he pleaded guilty to counts 2, 3, and 5 of the indictment and nolo contendere to count 1 shortly before trial because he "felt that Mr. Yuill was not prepared for trial"; and (6) that Yuill "never intended when he took the note and mortgage to perform the service that he said he would perform or that he would honor his statement that he would refund any unearned portion of it."

The trial court had before it a December 15, 1978, note executed by Herzog, payable to Yuill in the amount of $46,000 due in 90 days. Also before the trial court was a mortgage deed dated December 26, 1978, designating Yuill as the mortgagee in consideration of the sum of $46,000 due Yuill on March 15, 1979. The mortgage deed was executed by Herzog and his wife on December 26, 1978. The mortgage was notarized on December 26, 1978.

Yuill and Hill filed affidavits asserting that they were not partners, that Yuill employed Hill to assist him in representing Herzog, and that Hill was not a party to and did not participate in the contract between Yuill and Herzog or its negotiation.

The holder of the first and second mortgages on the real property, upon which Yuill held an inferior lien, foreclosed its mortgages. Yuill purchased the certificate of sale, obtained a deed, and sold the property. Yuill did not refund any fees.

Viewing the information available to the trial court in the light most favorable to Herzog, as we must on appeal from summary judgment [Binstock v. Tschider, 374 N.W.2d 81 (N.D.1985) ], we conclude that, as to Hill, there were no genuine issues of material fact and Hill was entitled to summary judgment dismissing the contract claims as a matter of law. It is beyond dispute that Hill was not Yuill's partner, was not a party to Yuill's contract with Herzog, and did not participate in the negotiations or the execution of the note and mortgage.

2. paragraphs 30-34 of the complaint

As the trial court succinctly stated in its February 11, 1986, memorandum opinion:

"The Plaintiff, in paragraphs 30-34, alleges that on or about the 17th through the 29th of August, 1979, the Defendant Yuill falsely informed Plaintiff of the date of the hearing regarding Plaintiff's application for compensation in the matter known as Endeco, Inc.; failed to make arrangements for a subpoena for the Plaintiff's appearance at said hearing; fraudulently concealed from Plaintiff that an objection had been filed opposing Plaintiff's application; entered into an unauthorized stipulation of facts; and failed to submit certain exhibits supporting Plaintiff's claim."

The trial court determined that the claims set forth in paragraphs 30-34 of the complaint were barred by the statute of limitations provided in Sec. 28-01-18(3), N.D.C.C. We agree.

"The two-year statute of limitations under Section 28-01-18(3), NDCC, is applicable to an action brought against an attorney for professional malpractice. Johnson v. Haugland, 303 N.W.2d 533 (N.D.1981). The statute commences to run when,

'plaintiff knows, or with reasonable diligence should know, (1) of the injury, (2) its cause, and (3) defendant's possible negligence.'

Phillips Fur and Wool Co. v. Bailey, 340 N.W.2d 448, 449 (N.D.1983)." Wall v. Lewis, 366 N.W.2d 471, 473 (N.D.1985).

It is undisputed that the attorney-client relationship between Yuill and Herzog and between Hill and Herzog, if any, ended in 1979. The statute of limitations was tolled while Herzog was imprisoned. Section 28-01-25, N.D.C.C. "However, the period within which the action must be brought cannot be extended more than five years by any such disability except infancy, nor can it be extended in any case longer than one year after the disability ceases." Section 28-01-25, N.D.C.C.

Herzog was released from the Federal Correctional Institution at Lexington, Kentucky, on March 17, 1981. He learned of the adverse decision in the matter of his claim for compensation in the Endeco, Inc., bankruptcy matter on August 27, 1979. He received a copy of the judgment and findings "most likely before the end of September 1979." He received a copy of the transcript of the hearing in October of 1979. By letter of September 7, 1979, Herzog notified the referee and special master in the compensation matter that he was appealing the judgment pro se. The judgment was affirmed on appeal.

Thus it is clear that Herzog knew of his injury, its cause, and the defendants' possible negligence well before the expiration of the period of limitation provided by Sec. 28-01-18(3), N.D.C.C., even as tolled by Sec. 28-01-25, N.D.C.C. Suit on the claims alleged in paragraphs 30-34 of Herzog's complaint was barred as a matter of law by the applicable statute of limitations. The trial court did not err in entering summary judgments dismissing those claims.

3. paragraphs 35-38 of the complaint

As summarized in the trial court's memorandum opinion:

"The Plaintiff, in paragraphs 35-38, alleges that during May of 1979, he had instructed Defendants to file the necessary motions to effect a release of at least Plaintiff's wife's one-half share of the proceeds of the sale of 160 acres of development land ... subject to a writ of attachment. The Plaintiff alleges that contrary to his instructions Defendants signed and entered into an...