Hunt v. Dresie

• Decision Date: 17 July 1987
• Docket Number: No. 59064,59064
• Citation: 740 P.2d 1046,241 Kan. 647
• Parties: Jack R. HUNT, Appellant, v. Grey DRESIE; David J. Wood; and Dresie, Jorgensen and Wood, P.A., A Professional Corporation Formed Under the Laws of the State of Kansas, Appellees.
• Court: Kansas Supreme Court

Page 1046

740 P.2d 1046

241 Kan. 647

Jack R. HUNT, Appellant, v. Grey DRESIE; David J. Wood; and Dresie, Jorgensen and Wood, P.A., A Professional Corporation Formed Under the Laws of the State of Kansas, Appellees.

No. 59064.

Supreme Court of Kansas.

July 17, 1987.

Syllabus by the Court

1. Summary judgment is proper if no genuine issue of fact remains, giving the benefit of all inferences which may be drawn from the admitted facts to the party against whom judgment is sought. A trial court, in ruling on motions for summary judgment, should search the record to determine whether issues of material fact do exist.

2. When a motion for summary judgment is filed, a mere surmise or belief by the trial court, no matter how reasonably entertained, that a party cannot prevail upon a trial will not justify refusing that party his day in court.

3. When summary judgment is challenged on appeal, an appellate court must read the record in the light most favorable to the party who defended against the motion for summary judgment.

4. To maintain an action for malicious prosecution, a plaintiff must prove the following elements: (a) that the defendant initiated, continued, or procured civil procedures against the plaintiff; (b) that the defendant in so doing acted without probable cause; (c) that the defendant acted with malice, that is, he acted primarily for the purpose other than that of securing the proper adjudication of the claim upon which the proceedings are based; (d) that the proceeding terminated in favor of the plaintiff; and (e) that the plaintiff sustained damages.

5. Probable cause for instituting a proceeding exists when there is a reasonable ground for suspicion, supported by circumstances sufficiently strong in themselves to warrant a cautious, or prudent man in the belief that the party committed the act of which he is complaining.

6. A termination of civil proceedings by a competent tribunal adverse to the person initiating them is not conclusive evidence they were brought without probable cause.

7. To establish the advice of counsel defense in a malicious prosecution action, the client must prove he disclosed all the facts he knew, and all he could have learned with diligent effort, and that he acted on the attorney's advice in good faith.

8. The duty of an attorney to make a reasonable investigation of the facts prior to the filing of a civil action is discussed.

9. A claim of legal malpractice, like claims of other types of professional malpractice, is normally a matter to be determined by the trier of fact rather than as a question of law, notwithstanding the district court's familiarity with the standards of conduct involved in the legal profession.

10. An attorney's failure to raise the advice of counsel defense in a malicious prosecution case as a basis for a claim of legal malpractice is discussed.

11. The advice of counsel defense in a malicious prosecution action based upon the filing of civil actions is discussed and held not to constitute a complete defense as a matter of law.

12. Where a judgment is entered against a defendant in a malicious prosecution action for actual and punitive damages and said defendant subsequently sues his attorney for legal malpractice alleging, inter alia, that his attorney failed to assert an advice of counsel defense, the client is not barred from recovering all damages assessed against him in the malicious prosecution action.

John Terry Moore, of Moore & Rapp, P.A., Wichita, argued the cause and was on the brief, for appellant.

Darrell D. Kellogg, of Kahrs, Nelson, Fanning, Hite & Kellogg, Wichita, argued the cause, and Forrest James Robinson, Jr., of the same firm, was with him on the brief, for appellees.

McFARLAND, Justice:

This is a legal malpractice action brought by Jack R. Hunt against Grey Dresie, David J. Wood, and Dresie, Jorgensen and Wood, P.A. The case was resolved by the district court over a period of time by the entry of multiple summary judgments. Each party has appealed from the summary judgment or summary judgments adverse to him or it. The Court of Appeals affirmed the district court in part, reversed in part, and remanded the case for further proceedings in an unpublished opinion filed February 12, 1987. All parties filed petitions for review which were granted by this court.

The factual background giving rise to this action is extraordinarily complex involving a number of other legal actions spanning a period of many years. An excellent summary of the prior litigation is contained in Sampson v. Hunt, 233 Kan. 572, 665 P.2d 743 (1983), hereafter Sampson, which will be set forth in this opinion. Before proceeding thereto, however, a brief statement concerning the claims involved in the case before us should render the recitation from Sampson more meaningful. Sampson was a malicious prosecution action predicated upon the filing of two actions against Sampson (the so called Note and Bank cases). In Sampson, the plaintiff was awarded a judgment against Hunt for $20,000 actual damages and $600,000 punitive damages. In the action before us, Hunt claims the defendants: (1) were negligent in filing the Bank and Note cases; (2) were negligent in failing to assert the advice of counsel defense in Sampson; and (3) are liable to him for the $620,000 judgment entered against him in Sampson.

The factual statement contained in Sampson is set forth as follows:

"This lawsuit is the culmination of a long history of business association and litigation between the plaintiff and defendants. In 1960 or 1961 the plaintiff and defendant Hunt became business partners and formed Construction and Development, Inc. (C &amp D). They were also partners in several other business projects, including Bonanza, Inc., which owned the Sweetbriar Shopping Center in Wichita. In 1970 Hunt and Sampson agreed to separate their joint business interests. Hunt became the sole owner of C & D. Hunt also purchased Sampson's interest in Bonanza, Inc., and the Sweetbriar Shopping Center.

"Prior to this time C & D had entered into a contract with Seneca Square, Inc., to construct an addition to the Seneca Square Shopping Center in Wichita, which was owned by Seneca Square, Inc. Seneca Square, Inc., was wholly owned by Western Land and Development, Inc. (Western). Due to problems encountered during construction, it became necessary for Seneca Square, Inc., to arrange additional financing so the project could be completed. The Fourth National Bank and Trust Company in Wichita was unwilling to advance additional financing unless the indebtedness could be personally guaranteed by financially responsible people. Frank Malone, a stockholder in Western and Seneca Square, Inc., asked Hunt to approach Sampson about the possibility of these three individuals personally guaranteeing the note for Seneca Square, Inc. Sampson agreed, and in exchange for their participation, Hunt and Sampson each received one-third of Malone's stock in Western. In addition, Malone, Sampson and Hunt entered into an indemnity agreement wherein they each assumed equal liability (one-third) of any indebtedness owed by Seneca Square, Inc. For its work on the project C & D received a promissory note from Seneca Square, Inc., in the amount of $50,000. This note was personally guaranteed by Sampson, Malone and Hunt to enable C & D to pledge it as collateral for other loans.

"In 1971, Sampson, Malone and Seneca Square, Inc., in three separate lawsuits, sued Hunt and C & D for fraud, misrepresentation and breach of fiduciary duty arising out of the financing of the Seneca Square project. C & D filed a counterclaim against the plaintiff for collection of the $50,000 promissory note. These actions were consolidated for trial and eventually resulted in a stalemate, with judgment denied on all claims of the parties. In denying judgment to C & D on the promissory note the trial court ruled:

'The note given to Construction and Development, Inc., by Seneca Square, Inc., for $50,000 is a valid, legal obligation of the plaintiff, Seneca Square, Inc.; endorsements and guarantees of the plaintiffs, Sampson and Malone, were made with consideration; and further, the note in question is covered by the terms of the so-called "Indemnity Agreement" of July, 1970.'

In addition the trial court made the following specific finding of fact:

'The plaintiffs, Sampson and Malone, and the defendant, Hunt, jointly and severally, endorsed and guaranteed payment to the Fourth National Bank and Trust Company, Wichita, Kansas on behalf of Seneca Square, Inc., but the maximum amount that such endorsements and guarantees reached was $2,200,000.00. That at the present time there is still due and payable to the Fourth National Bank a sum of around $15,000.00. That all three of the above-named parties have paid their proportionate share of the amounts of such debts. The defendant, Hunt, is responsible for the $15,000.00.' (Emphasis added.)

"During the course of discovery in the Seneca Square case, Sampson learned that Hunt had withheld information and made misrepresentations concerning the financial situation of Bonanza, Inc., when Hunt purchased Sampson's interest in that enterprise. Sampson and other family members who had owned shares of Bonanza, Inc., commenced a second lawsuit against Hunt while the Seneca Square case was pending, alleging fraud and breach of fiduciary duty. Sampson and his family were awarded a judgment against Hunt in the amount of $93,000. This case was appealed by Hunt to the Supreme Court and affirmed in Sampson v. Hunt, 222 Kan. 268, 564 P.2d 489 (1977). Sampson ultimately collected approximately $120,000 from Hunt on the judgment and accumulated interest.

"In November 1973, while the Bonanza, Inc., lawsuit was pending, the Fourth National Bank and Trust Company of Wichita filed a lawsuit against Malone, Sampson and Hunt to collect the balance of $15,000 due on a promissory note guaranteed by them in...