Klem v. Greenwood

• Decision Date: 18 January 1990
• Docket Number: No. 890188,890188
• Citation: 450 N.W.2d 738
• Court: North Dakota Supreme Court
• Parties: Ernest E. KLEM, Plaintiff and Appellant, v. Mark L. GREENWOOD and Greenwood, Greenwood & Greenwood, P.C., Defendants and Appellees. Civ.

Page 738

450 N.W.2d 738

Ernest E. KLEM, Plaintiff and Appellant, v. Mark L. GREENWOOD and Greenwood, Greenwood & Greenwood P.C., Defendants and Appellees.

Civ. No. 890188.

Supreme Court of North Dakota.

Jan. 18, 1990.

Ernest E. Klem, Belfield, pro se.

Zuger, Kirmis, Bolinske & Smith, Bismarck, for defendants and appellees; argued by James S. Hill.

ERICKSTAD, Chief Justice.

Ernest Klem appealed from a district court order ¹ dismissing his legal malpractice action against the defendants, Mark L. Greenwood and the law firm of Greenwood Greenwood & Greenwood, P.C. We reverse and remand.

After a mistrial on two counts of gross sexual imposition, Klem retained the Greenwood law firm to defend him in a second trial on those charges. A jury found Klem guilty on both counts, and he was incarcerated in the State Penitentiary in January 1988. Klem retained a different attorney and appealed his conviction to this court. In State v. Klem, 438 N.W.2d 798 (N.D.1989), decided on March 22, 1989, a majority of this court reversed Klem's conviction and remanded for a new trial, holding that the trial court erred in closing the trial to the public during the child victim's testimony without conducting an evidentiary hearing and making findings in accordance with Waller v. Georgia, 467 U.S. 39, 104 S.Ct. 2210, 81 L.Ed.2d 31 (1984). Klem was released from the State Penitentiary, and the State ultimately dismissed the criminal charges against him.

While Klem was incarcerated in the State Penitentiary, the Greenwood law firm initiated a collection action against him in Stark County Court on July 7, 1988, for $2,655.60, the unpaid balance of attorney fees for legal services incurred in Klem's second trial. Klem answered that complaint on July 13, 1988, admitting that the Greenwood firm rendered legal services but disputing the amount due. No counterclaim was filed in that collection action. On March 12, 1989, Klem mailed a summons and complaint in this legal malpractice action to the Greenwood law firm. The action was filed in district court on March 17, 1989. The county court was aware of the malpractice action and, prior to the trial of the collection action on March 17, 1989, the following colloquy occurred:

"[THE COURT] Additionally there was one other matter that I wanted to bring up to the parties. I was informed by the Clerk of the District Court that an attempt was made to file an action regarding Mr. Greenwood this last week, in the District Court, which may be the basis of a compulsory counter claim. Can you shed any light on that Mr. Klem, and your effort to file.

"MR. KLEM: I--my claim against Mr. Greenwood is--is due to the fact that I did not receive a effective assistance of counseling during my trial and that is--those are my grounds and Mr. Greenwood probably is aware of now--I filed the papers with the Clerk of Court and I've got them with me as evidence--documented evidence, notarized, and I will deliver them to the Clerk of District Court today. I did not make a $20.00 filing fee. And--what I've got--that it--I can present--that is evidence to the Court and you may identify it and that is why I am basically here is--because I wish to file a counter claim or a counter suit against Mr. Greenwood in behalf of the amount that I am--that he is asking from me. And I'm asking that the amount--not this particular amount--but the amount that I have paid him--I would wish--I wish to file then.

* * * * * *

"MR. KLEM: I will just file a counter claim for this--for the amount that Mr. Greenwood is asking me. And the other legal malpractice case that I have filed against Mr. Greenwood, I wish that to be a separate entity from this.

"THE COURT: Mr. Buresh?

"MR. BURESH: Well, Your Honor, I think the Court is aware that as of this time there has been no counter claim filed with this Court. Nor has Mr. Greenwood been served with any counter claim regarding the issues of this action. And to attempt to do so at this point would clearly be untimely. And would not comport with Rule 13 of the North Dakota Rules of Procedure.

"THE COURT: I recognize that's true. I guess I have some concerns about if there is going to be an action file. It is in fact a compulsory counter claim and if, in fact, then, this matter should be heard separately or in tandem with that in the District Court. What's your position on that?

"MR. BURESH: We haven't been served with anything and we're not aware that there is an action pending.

"THE COURT: My only awareness comes from a conversation with the Clerk of the District Court who informed me that an action was attempted to be filed by this--

"MR. BURESH: We're aware of that too. But we haven't been served with anything, it's hard to respond to it. Because we don't know what the substance of the action is. Or whether it's more appropriately tried in this form or in another form.

"I guess we're ready to proceed today with the issues that are before the bench.

* * * * * *

"MR. KLEM: The [legal malpractice] lawsuit is for three million dollars ($3,000,000.00) total.

"THE COURT: Well, if that is a compulsory counter claim, I guess that exceeds the jurisdiction of the County Court. In fact, it is a compulsory counter claim.

"Well, Mr. Buresh, what is your suggestion then as to how to proceed here today?

"MR. KLEM: Your Honor, I guess that will go into the--during the trial.

"MR. BURESH: Could we have a few minutes research--ah--recess? To discuss this matter.

"THE COURT: I think we should. We're going to recess for a few minutes.

"(Court recesses for a short period of time.)

"THE COURT: Stark County Court will come back to Order in C88-160. Record should show all of the parties present as were present prior to the recess. Mr. Buresh?

"MR. BURESH: Your Honor, Mr. Klem has stated, I think made it emphatic to the Court, his preference that his claim for malpractice against Mr. Greenwood, not be a part of this action and be made a separate entity, under those conditions I don't think it should be considered a counter claim. And we should proceed with the issues before the Court today.

"THE COURT: Mr. Klem?

* * * * * *

"THE COURT: You wish to proceed then at this time, Mr. Klem?

"MR. KLEM: Yes, I do.

"THE COURT: You wish to proceed as well, Mr. Buresh?

"MR. BURESH: Yes, Your Honor."

After a bench trial in the collection action, the county court found that Klem owed the Greenwood firm $2,655.60 plus interest and costs and disbursements. The county court further found:

"3. The court was informed prior to the commencement of this trial that defendant had filed a legal malpractice action against the plaintiff corporation in the District Court of the Southwest Judicial District; the defendant was informed that the same constituted a compulsory counterclaim and offered the defendant an opportunity for continuance of the above entitled matter and the opportunity to transfer this collection suit for consideration by the District Court together with the malpractice action, but that Defendant Klem requested that the issues before this court be heard as a separate matter."

We affirmed the county court judgment in Greenwood, Greenwood & Greenwood v. Klem, 450 N.W.2d 745 (N.D.1990).

In this malpractice action against Mark Greenwood and the Greenwood law firm, Klem alleges that they were negligent in their representation of him during the second criminal trial in November 1987. The defendants answered, denying the allegations of negligence.

The defendants moved to dismiss the malpractice action, asserting that it constituted a compulsory counterclaim to the collection action in county court. The defendants contended that by failing to plead the alleged acts of negligence as a counterclaim, Klem was barred as a matter of law from asserting that claim as a separate action. Relying on language in State v. Klem, supra, the defendants also moved for summary judgment, contending that, as a matter of law, Mark Greenwood had met the appropriate standard of care by objecting to the closure of the second criminal trial and therefore was not negligent. The district court granted the defendants' motion to dismiss and also granted their motion for summary judgment. Klem has appealed.

We initially consider whether Klem is precluded from bringing this legal malpractice action because he did not assert it as a counterclaim in the county court collection action. He argues that his legal malpractice action is not a compulsory counterclaim to the collection action in county court. The defendants respond that Klem's legal malpractice action is a compulsory counterclaim under Rule 13, N.D.R.Civ.P., ² and was required to be heard with the collection action.

Generally, if a claim is a compulsory counterclaim to another party's pleading, the claim must be pleaded in response to the other party's pleading or it is precluded from being raised in a subsequent action. Leo Lumber Company v. Williams, 191 N.W.2d 573 (N.D.1971); Rule 13(a), N.D.R.Civ.P. However, if a claim is a permissive counterclaim to another party's pleading, the claim is not barred by the failure to plead it in response to the other party's pleading. Dangerud v. Dobesh, 353 N.W.2d 328 (N.D.1984); Rule 13(b), N.D.R.Civ.P.

Professor Moore notes that Rule 13, F.R.Civ.P., ³ does not expressly state that the penalty for failure to plead a compulsory counterclaim is to bar its later assertion, but that that result follows from the principle that res judicata applies to all issues raised, or issues that could have been raised. 3 Moore's Federal Practice p 13.12 at 13-52 (2d ed.1989); see 6 Wright & Miller, Federal Practice and Procedure, Sec. 1417 (1971). However, some exceptions to the strict application of the doctrine of res judicata have been recognized in the area of compulsory counterclaims. 3 Moore's Federal Practice, supra, at 13-56. Thus, res judicata does not bar a subsequent action which is based upon a compulsory counterclaim where the...