House v. Kelbel
| Decision Date | 12 July 2000 |
| Docket Number | No. Civ 99-915 DSD/JMM.,Civ 99-915 DSD/JMM. |
| Parties | JoAnne C. HOUSE and William P. House, Plaintiffs, v. Kevin J. KELBEL and Smith & Gesteland, LLP, Defendants, and Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc., Plaintiffs, v. Smith & Gesteland, LLP, Defendant. |
| Court | U.S. District Court — District of Minnesota |
Thomas J. Vollbrecht, Faegre & Benson, Minneapolis, MN, for plaintiffs Jeffrey W. House, Janet M. House, Infi-Shield, Inc., Infi-Shield International, Inc.
Benjamin S. Houge, Houge Law Office, Minneapolis, MN, for plaintiffs JoAnne C. House, William P. House.
Thomas J. Shroyer, Mathew M. Meyer, Moss & Barnett, Minneapolis, MN, for defendants Kevin J. Kelbel, Smith & Gesteland, L.L.P.
This matter is before the court on the objections of plaintiffs Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc. (hereinafter "plaintiffs" or "Infi-Shield plaintiffs") to Magistrate Judge John M. Mason's report and recommendation dated May 11, 2000. In his report, the magistrate judge recommended that the motion of defendant Smith & Gesteland LLP to dismiss the Infi-Shield plaintiffs' complaint [Docket No. 36] be granted. The recommended dismissal is based on the Infi-Shield plaintiffs' failure in this professional malpractice action to provide a second expert affidavit within the 180-day time period set by Minn.Stat.Ann. § 544.42, subd. 4. Plaintiffs object to the dismissal, arguing that the statute requires that the court first provide plaintiffs notice and a 60-day period to satisfy the disclosure requirement.
In his report the magistrate judge furnished a thorough and well-reasoned analysis of the notice and 60-day cure period provision, including a complete review of the legislative history of that provision. The court agrees with the magistrate judge's conclusion that the while the statute does provide for notice and an opportunity to cure any "claimed deficiencies" of the expert's affidavit, Minn.Stat.Ann. § 544.42, subd. 6(c), that provision is inapplicable here, where plaintiffs failed to timely provide any affidavit whatsoever.
The Infi-Shield plaintiffs also object to the magistrate judge's finding that they offered no justification for their failure to file the second affidavit within the requisite period. Plaintiffs assert here that good cause does exist to grant an extension. Extensions of the 180-day disclosure period may be provided by the court for good cause shown. See Minn.Stat. Ann. § 544.42, subd. 4(b). However, as the magistrate judge explained in his report, plaintiffs made no request to the court to waive or modify the disclosure requirement for good cause. Indeed, at the hearing, the magistrate judge specifically inquired whether good cause had been asserted, to which plaintiffs' counsel replied, "There is nothing listed in our papers at this time." (Transcript of 2/15/200 Mtn. Hrg., p. 19).
Plaintiffs now offer several bases for a good faith extension, including their need to obtain a substitute expert, their good faith belief in the existence of a 60-day cure period and their ultimate compliance with the both letter and spirit of the expert review provisions. While the court is sympathetic to problems that plaintiffs may have experienced in securing a second expert affidavit, the fact remains that they did not properly seek an extension under subd. 4(b) and the court will not overrule the magistrate judge on the basis of plaintiffs' belated attempts to establish good cause for their inaction.
After conducting a de novo review of the file and record, the court adopts the magistrate judge's report and recommendation.
Accordingly, IT IS HEREBY ORDERED that:
1. The motion of defendant Smith & Gesteland, LLP to dismiss the complaint of plaintiffs Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc. [Docket No. 36] is granted and the complaint of the Infi-Shield plaintiffs is dismissed with prejudice. This dismissal does not affect the claims of plaintiffs JoAnne C. House and William P. House against defendants Kevin J. Kelbel and Smith & Gesteland, LLP.
LET JUDGMENT BE ENTERED ACCORDINGLY as to the claims of Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc. against Smith & Gesteland, LLP.
The above matter came on for hearing before the undersigned on February 15, 2000 upon the Motion of Defendant Smith & Gesteland, L.L.P., to Dismiss the Complaint of Plaintiffs Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc. [Docket No. 36]. Benjamin S. Houge, Esq. appeared on behalf of Plaintiffs JoAnne C. House and William P. House; Thomas J. Vollbrecht, Esq. appeared on behalf of Plaintiffs Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc.; and Thomas J. Shroyer, Esq. and Mathew M. Meyer, Esq. appeared on behalf of Defendants Kevin J. Kelbel and Smith & Gesteland, L.L.P.
The matter is before the undersigned for a Report and Recommendation to District Court Judge David S. Doty, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B). Upon the following Findings of Fact/Report, it is recommended that the Motion of Defendant Smith & Gesteland, L.L.P., to Dismiss the Complaint of Plaintiffs Jeffrey W. House, Janet M. House, Infi-Shield, Inc. and Infi-Shield International, Inc. [Docket No. 36] be granted.
William P. and JoAnne C. House incorporated Infi-Shield, Inc. in September of 1993. They allege that Infi-Shield was to be a vehicle by which they planned to develop and commercially exploit a product that William P. House and his son, William K. House, patented. In December of 1994, William and JoAnne House agreed to sell Infi-Shield to their son and daughter-in-law, Jeffrey and Janet House for $55,000. A separate agreement was made in which a Royalty would be paid to William P. House and William K. House for use of their patent.
Kevin Kelbel, an accountant for Smith & Gesteland, L.L.P., prepared a letter on September 1, 1994 which advised William and JoAnne House on structuring the sale to minimize the tax consequences resulting to them. This letter made reference to the sale of Infi-Shield at a price of $55,000.
On January 4, 1995, Kelbel and Smith & Gesteland provided Jeffrey and Janet House an estimate of the value of Infi-Shield for the purpose of valuing a Grantor Retained Annuity Trust (GRAT). This valuation appraised Infi-Shield at a sum of $16.6 million.
William P. House brought suit against Jeffrey House, Infi-Shield, Inc., and Infi-Shield International, Inc. in the United States District Court for the District of Minnesota in December of 1996. William P. House, et al. v. Jeffrey W. House, et al., No. 4-96-1264 (DSD/JMM). Smith & Gesteland and Kevin Kelbel were also brought into the suit as Defendants. Plaintiffs alleged that the sale of the company was invalid because Defendants engaged in fraud, theft, racketeering and federal and state securities violations during the transaction. This suit was dismissed with prejudice upon agreement of the parties.
William P. and JoAnne C. House filed a new action against Kevin Kelbel and Smith & Gesteland, L.L.P. in Minnesota State Court, Tenth Judicial District on May 20, 1999. The suit alleged accounting malpractice: that Defendants were aware that Infi-Shield was worth $16.6 million, but failed to notify Plaintiffs that the sale price of $55,000 was grossly inadequate; and that Defendants were also representing Jeffrey and Janet House, but failed to disclose this conflict of interest to Plaintiffs. Defendants removed this case to the United States District Court for the District of Minnesota on June 16, 1999, pursuant to 28 U.S.C. § 1441.
Jeffrey House, Janet House, Infi-Shield, Inc. and Infi-Shield International, Inc. brought suit against Smith & Gesteland, L.L.P. in Minnesota State Court, Tenth Judicial District on June 8, 1999. This suit alleged accounting malpractice: that Defendant also represented William and JoAnne House, but failed to notify either party of their conflict of interest; and that Defendant refused to indemnify Plaintiffs in the prior suit brought by William and JoAnne House against them. This forced Plaintiffs to use funds to defend itself rather than "invest substantial resources in the marketing and development of Infi-Shield" which resulted in substantial diminution in value. Defendant removed this case to the United States District Court for the District of Minnesota on June 29, 1999 pursuant to 28 U.S.C. § 1441. See Jeffrey W. House, et al. v. Smith & Gesteland, L.L.P., Civ. No. 99-1000 (MJD/JGL).
On October 27, 1999, the two cases were consolidated. Jeffrey W. House, et al. v. Smith & Gesteland, L.L.P., Civ. No. 99-1000, was consolidated into William C. House, et al. v. Kevin J. Kelbel, et al., Civ. No. 99-915 (DSD/JMM) by Court Order [Docket No. 20].
On December 28, 1999, Defendant Smith & Gesteland served upon Plaintiff a Notice of Motion and Motion to Dismiss the Complaint of Jeffrey and Janet House, Infi-Shield, Inc. and Infi-Shield International, Inc. [Docket No. 31]. On January 18, 2000, Plaintiffs filed an Affidavit [Docket No. 35] pursuant to Minn.Stat. § 544.42, subd. 4, which provided the identity of two expert witnesses expected to testify at trial, as well as the substance of the testimony of the experts.
On January 25, 2000, Defendant Smith & Gesteland filed the prior noticed Motion to Dismiss the Complaint of Jeffrey W. House, Janet M. House, Infi-Shield, Inc. & Infi-Shield International, Inc. [Docket No. 36] with the Court. Defendant alleges that Plaintiffs failed to submit an affidavit providing the identity of an expert that would testify at trial and the substance of his or her testimony within 180 days of service of the Complaint, as...
To continue reading
Request your trial
-
Brown-Wilbert, Inc. v. Copeland Buhl & Co.
...was "submitted in good faith," even though the affidavit was not "sufficiently specific or procedurally perfect." House v. Kelbel, 105 F.Supp.2d 1045, 1048, 1053 (D.Minn.2000) (emphasis added). But House is unpersuasive because the plaintiff in House did not file any affidavit within 180 da......
-
Lake Superior v. Hammel, No. A05-800.
...parallel reasoning used in construing requirements of Minn.Stat. § 145.682 and Minn.Stat. § 544.42); see also House v. Kelbel, 105 F.Supp.2d 1045, 1051 (D.Minn.2000) (stating that the Minnesota legislature "used § 145.682 as a blueprint in drafting the language of § The affidavit statute fo......
-
Fontaine v. Steen, No. A07-2327.
...requirements of Minn. Stat. § 145.682 and Minn.Stat. § 544.42 in context of engineering-malpractice claim); see also House v. Kelbel, 105 F.Supp.2d 1045, 1051 (D.Minn.2000) (stating that the Minnesota legislature "used § 145.682 as a blueprint in drafting the language of § 544.42"). We conc......
-
Meyer v. Dygert
...frivolous lawsuits, like the predecessor statute governing medical malpractice claims, Minn.Stat. § 145.682. House v. Kelbel, 105 F.Supp.2d 1045, 1051 (D.Minn.2000)(citing Appendix: Senate Judiciary Committee Hearing on Senate File 627, march 25, 1997, p. 3-4). In fact, § 145.682 was used a......