Martin v. Chapel, Wilkinson, Riggs, and Abney

• Decision Date: 10 November 1981
• Docket Number: No. 53846,53846
• Citation: 1981 OK 134,637 P.2d 81
• Parties: Doug MARTIN, Appellant, v. CHAPEL, WILKINSON, RIGGS, AND ABNEY, et al., Appellees. L. Mark NARDYZ, Jr., Appellant, v. CHAPEL, WILKINSON, RIGGS, AND ABNEY, et al., Appellees.
• Court: Oklahoma Supreme Court

Page 81

637 P.2d 81

1981 OK 134

Doug MARTIN, Appellant, v. CHAPEL, WILKINSON, RIGGS, AND ABNEY, et al., Appellees.

L. Mark NARDYZ, Jr., Appellant, v. CHAPEL, WILKINSON, RIGGS, AND ABNEY, et al., Appellees.

No. 53846.

Supreme Court of Oklahoma.

Nov. 10, 1981.

Appeal from the District Court, Tulsa County; Ray Lee Wall, Judge.

Trial court consolidated two separate professional malpractice actions and rendered summary judgment in favor of all defendants. Plaintiffs bring a single appeal.

REVERSED AND REMANDED.

Doug Martin, pro se.

John W. Klenda, Tulsa, for appellant Nardyz.

Deryl L. Gotcher, Jones, Givens, Gotcher, Doyle & Bogan, Inc., Tulsa, for appellees.

OPALA, Justice:

The issue presented in this appeal is whether the trial court erred in granting summary judgment. We answer in the affirmative. While this cause must be remanded for further proceedings, the trial court did not err under the facts before it in determining there was no genuine controversy as to the issue of joint venture.

This is an appeal from summary judgment in two legal malpractice actions brought by former clients against a law firm. ¹ The conflict between the former clients-Doug Martin (Martin) and Mark Nardyz (Nardyz) (also referred to as Buyers)-and the law firm stems from the firm's representation of their interests and that of a third party, Jason Ott (Ott), in the purchase of a majority block of capital stock in a bank. The cases were consolidated for trial.

The parties are in strong disagreement as to whether Martin, Nardyz and Ott were acting in concert qua partners or joint venturers-as urged by the firm-or whether they were acting in their individual capacities-as alleged by the buyers-when they sought legal representation in the bank stock transaction. At a partial closing of the stock purchase, Ott, with the law firm's assistance, had 4,300 shares of the bank stock placed in his name only. Martin and Nardyz alleged this was done without their knowledge or approval; and upon their discovery that their names were not shown on any of the stock certificates, the buyers immediately voiced their objections to Ott and to the law firm. When the law firm allegedly failed to represent the buyers' interests at a stockholders' meeting five months later, the buyers terminated their attorney-client relationship with the law firm. The buyers then brought separate actions for professional malpractice against the law firm.

Both the law firm and the buyers moved for summary judgment under District Court Rule 13. ² Their motions were overruled. Pretrial conferences were held, and the case was set for jury trial. At the law firm's request, to which the buyers excepted, the court held an evidentiary hearing on the issue of an agency relationship between the buyers and Ott.

After the hearing the court granted summary judgment in favor of the law firm and determined that (1) the buyers and Ott entered into a joint venture to purchase the bank stock, and collectively employed the law firm to represent them, without disclosing the details of their relationship inter se. (2) Ott instructed the law firm concerning the stock transfer at the time the transfer was made and, from the facts and circumstances, he was also acting for the buyers. There was no evidence that the law firm knew that the buyers disagreed with Ott's instructions either before or after the stock transfer. The trial court's determinations clearly indicated that summary judgment was based solely on the fact that the buyers were bound by the acts of Ott as a co-venturer with the buyers. The buyers bring this appeal from the summary judgment in favor of the law firm.

I.

Summary judgment is provided for in Rule 13, Rules of District Courts for Oklahoma. ³ It was formulated to allow prompt disposition of cases in which material facts are not in dispute and in which a court could decide the case as a matter of law. ⁴ The summary judgment procedure is properly invoked when it serves to eliminate a useless trial but, of course, not when it would defeat a litigant's right to have a jury resolve a factual issue bearing significantly on the outcome of the case. The party moving for summary judgment bears the burden of demonstrating the absence of a genuine issue as to any material fact.

Since a summary judgment is an adjudication on the merits, affirmative defenses that go to the merits can be raised by this motion. When a defendant moves for a summary judgment on the basis of an affirmative defense, he must show that there is no substantial controversy as to the facts that are material to the affirmative defense and that the facts and inferences that may reasonably be drawn from them are in his favor. ⁵ When the moving party makes the appropriate showing, the adverse party must then demonstrate the existence of a material fact that would justify a trial of the issue. ⁶

In the instant case, there is little doubt that the pleadings indicate the presence of conflicting issues of fact. Allegations in Martin's first cause of action are: (a) acts of the law firm constituted negligence-based professional malpractice by its involvement in transferring the bank stock (sought to be acquired by three of its clients) in the name of only one client without securing approval of the other two; (b) withholding legal advice and assistance after objections to the stock transfer were made known to the law firm, and (c) failing to protect Martin's interests at a stockholders' meeting. In Martin's second cause of action, he alleges a wilful tort by malicious and fraudulent acts of the law firm in connection with matters arising from the bank stock purchase which occurred after the termination of the attorney-client relationship. Nardyz also sought damages for negligence-based professional malpractice as set out in four causes of action. ⁷ In answer to these petitions, the law firm denied the allegations and interposed the possible defenses of (a) the existence of an agency relationship between Ott and the buyers which authorized the law firm's obedience to the directions of Ott, (b) laches on the part of the buyers in waiting too long to assert their claim and (c) waiver and estoppel by acquiesence and ratification of the alleged negligent acts. As to Martin's second cause of action for wilful tort, the law firm interposed the defense of misjoinder of actions.

II.

In both of these legal malpractice cases, the principal defense of the law firm was that the buyers could not be regarded to have been legally harmed because they were in the status of co-venturers with Ott. Although we agree that under the facts and circumstances in the record the issue of joint venture is not in genuine controversy, this does not make the summary judgment impervious to reversal. This is so because there was a genuine issue of material fact as to whether the law firm had knowledge of Ott's limited authority to act for the buyers. See part III infra.

In assessing the trial court's disposition of the joint venture issue, we must view the evidence in the framework of the applicable law.

A joint venture is generally a relationship analogous to, but not identical with, a partnership, and is often defined as an association of two or more persons to carry out a single business enterprise with the objective of realizing a profit. ⁸ The essential criteria for ascertaining the existence of a joint venture relationship are: (1) joint interest in property, (2) an express or implied agreement to share profits and losses of the venture and (3) action or conduct showing cooperation in the project. None of these elements alone is sufficient. ⁹ The contributions of the respective parties need not be equal or of the same character, but there must be some contribution by each co-adventurer of something promotive of the enterprise. ¹⁰ Each member of a joint venture acts for himself as principal and as agent for the other members within the general scope of the enterprise. ¹¹ The law of partnership and of principal and agent underlies the conduct of a co-adventurer and governs the rights and liabilities of co-adventurers and third parties as well. ¹² The law requires little formality in the creation of a joint venture and the agreement is not invalid because it may be indefinite with respect to its details. ¹³

The essential test in determining the existence of a joint venture is whether the parties intended to establish such a relation. In the absence of an express agreement setting forth the relationship, the status may be inferred from the conduct of the parties in relation to themselves and to third parties. ¹⁴ As to third parties, it is the legal and not the actual intent which controls. ¹⁵ The parties may be estopped in favor of third persons from denying that they are joint venturers, even though they never intended to become such. As to third parties, it is the intent to do those things which constitutes a joint venture that usually determines whether the relation exists. ¹⁶

In placing the conduct of these parties in the framework of a joint venture, no one factor is determinative; the facts must be examined as a whole. The buyers (Martin and Nardyz) had initially secured an option to purchase stock in the First Bank. They wanted to acquire a controlling interest in the bank stock and brought Ott into the undertaking to help them secure the necessary financing in exchange for a share of the stock. The buyers and Ott used the legal services of the defendant law firm to prepare the necessary legal papers for the purchase of the bank stock as well as of the stock in an investment building corporation and all the interest in an insurance agency. The record does not reveal that the parties had a clear understanding as to how the stock would be divided at the time it was transferred to Ott's name. Absence of this fact is not critical as joint venture property may be held in the name of one member in a fiduciary capacity for the...