Moen v. Thomas

• Decision Date: 08 June 2001
• Docket Number: No. 20000111.,20000111.
• Citation: 2001 ND 110,628 N.W.2d 325
• Court: North Dakota Supreme Court
• Parties: Carol Kay MOEN and LaRae A. Thomas, Co-Trustees of the Jay V. Thomas Family Trust, Plaintiffs, v. Laurie THOMAS, individually and as surviving spouse, heir and personal representative of Jerry J. Thomas, deceased, and his estate, and Kisten Thomas and Tessa Thomas, their minor children, by Laurie Thomas, their guardian, Defendants, Third-Party Plaintiffs and Appellants, v. Fred C. Rathert and Neff Cresap Rathert Eiken & Irigoin, P.C., Third-Party Defendants and Appellees.

628 N.W.2d 325

2001 ND 110

Carol Kay MOEN and LaRae A. Thomas, Co-Trustees of the Jay V. Thomas Family Trust, Plaintiffs, v. Laurie THOMAS, individually and as surviving spouse, heir and personal representative of Jerry J. Thomas, deceased, and his estate, and Kisten Thomas and Tessa Thomas, their minor children, by Laurie Thomas, their guardian, Defendants, Third-Party Plaintiffs and Appellants, v. Fred C. Rathert and Neff Cresap Rathert Eiken & Irigoin, P.C., Third-Party Defendants and Appellees.

No. 20000111.

Supreme Court of North Dakota.

June 8, 2001.

Greg W. Hennessy, Hennessy Law Office, P.C., Williston, ND, for defendants, third-party plaintiffs and appellants.

Frederick E. Whisenand (on brief) and Shane D. Peterson (argued), Crowley, Haughey, Hanson, Toole & Dietrich, P.L.L.P., Williston, ND, for third-party defendants and appellees.

NEUMANN, Justice.

[¶ 1] Laurie Thomas, Kisten Thomas, and Tessa Thomas have appealed from a summary judgment dismissing their legal malpractice claim against Fred Rathert and his firm, Neff Cresap Rathert Eiken & Irigoin, P.C. We reverse and remand, concluding there are genuine issues of material fact which preclude summary judgment.

I

[¶ 2] Laurie was married to Jerry Thomas and the couple had two daughters, Kisten and Tessa. Jerry's father, Jay Thomas, owned a ranch in Williams County. During their marriage, Jerry and Laurie lived on the Thomas family ranch and worked the ranch with Jay.

[¶ 3] Fred Rathert was Jay's attorney. Between 1987 and 1994 Rathert prepared several wills and codicils for Jay. Under the terms of the final will, executed in 1994, Jay devised the ranch headquarters and some additional land to Jerry. The will also gave Jerry the option to purchase the surface of other ranch land on a contract for deed. If Jerry did not exercise that option, the will provided he could lease the land for $3 per acre annually for seven years, with an option to purchase during the lease term. In addition to other bequests to individuals, the residue of Jay's estate was bequeathed in equal shares to Jay's wife and six children.

[¶ 4] Jay died on October 19, 1995. Shortly thereafter Rathert met with Jay's wife and children to discuss probate of the will. The will was admitted to probate on November 6, 1995, and Jay's daughter, Donna Sneva, was appointed personal representative. Jay's wife and children held several family meetings, with and without Rathert, to discuss various estate and tax issues. Laurie concedes that during one of these early family meetings Rathert advised the family members there might be possible conflicts and they all should consult with their own attorneys. During a December 1995 family meeting Jerry declined the option to purchase the property on a contract for deed but stated he wanted to exercise his right to lease the property.

[¶ 5] As the probate progressed, Rathert suggested to the family that they place the property in trust to administer the surface and mineral interests of the estate. Further family meetings were held, with Rathert advising the family members about the "pros and cons" of the trust arrangement. Rathert drafted the trust agreement which was signed by the family members, including Jerry, on December 3, 1996. The trust agreement provided that Jerry had the "right and option to lease the property for agricultural purposes as provided in the Last Will and Testament of Jay V. Thomas." Jay's daughters, LaRae Thomas and Carol Moen, were named co-trustees of the trust.

[¶ 6] Although Rathert originally intended to draft a written lease between the trust and Jerry, one of the co-trustees advised the office staff at Rathert's firm that the family would prepare their own lease with Jerry. LaRae Thomas subsequently delivered to Rathert's office a handwritten note which stated: "It is Carol's and my intention to draw up our own lease agreement following terms stated w/in the Will." In compliance with these instructions Rathert did not draft a written lease agreement, and no written agreement between Jerry and the trust was ever executed.

[¶ 7] Jerry died in a ranching accident on May 12, 1997. Laurie continued in possession of the property, and in December 1997 tendered a check for rent for 1998 to the trustees. The trustees returned the check, notifying her there was no valid lease agreement.

[¶ 8] When Laurie continued in possession, the trustees brought an action against Laurie, Kisten, and Tessa (collectively "Laurie") to quiet title to the property, to recover possession, and seeking damages for the value of use and occupation of the premises. Laurie answered and counterclaimed, and filed a third-party complaint against Rathert and his law firm (collectively "Rathert") for legal malpractice. Rathert answered and moved for summary judgment, arguing there was no attorney-client privity between Rathert and Jerry, Laurie, or their daughters. The trial court granted Rathert's motion, holding that there was no attorney-client relationship between Rathert and Jerry, Laurie, or their daughters, and that attorney-client privity was required to bring a legal malpractice action. Summary judgment dismissing Laurie's legal malpractice claim against Rathert was entered on February 4, 2000.

[¶ 9] The quiet title action proceeded to trial, and judgment was entered quieting title in the trust, ordering the trust was entitled to exclusive possession of the property, and awarding damages for the use and occupation of the property for 1998 and 1999. Laurie appealed from the summary judgment dismissing the malpractice claim against Rathert.¹

II

[¶ 10] Summary judgment under N.D.R.Civ.P. 56 is a procedural device for promptly and expeditiously disposing of a controversy without a trial if there is no genuine issue of material fact, or if the law is such that resolution of the factual disputes will not alter the result. Schaefer v. Souris River Telecomm. Co-op., 2000 ND 187, ¶ 8, 618 N.W.2d 175; Grinnell Mut. Reinsurance Co. v. Farm & City Ins. Co., 2000 ND 163, ¶ 18, 616 N.W.2d 353. The party moving for summary judgment bears the burden of establishing that there is no genuine issue of material fact and that, under applicable principles of substantive law, he is entitled to judgment as a matter of law. Finstrom v. First State Bank of Buxton, 525 N.W.2d 675, 678 (N.D.1994). In considering a motion for summary judgment, the court must view the evidence in the light most favorable to the party opposing the motion, who must be given the benefit of all favorable inferences which can reasonably be drawn from the evidence. Mougey Farms v. Kaspari, 1998 ND 118, ¶ 12, 579 N.W.2d 583. When there are relevant unresolved issues of fact, the granting of summary judgment is improper. Midwest Cas. Ins. Co. v. Whitetail, 1999 ND 133, ¶ 10, 596 N.W.2d 341. We have previously cautioned summary judgment is generally inappropriate in legal malpractice actions. Klem v. Greenwood, 450 N.W.2d 738, 743 (N.D.1990). On appeal, whether the trial court properly granted summary judgment is a question of law and is reviewed de novo. Garofalo v. St. Joseph's Hosp., 2000 ND 149, ¶ 6, 615 N.W.2d 160.

III

[¶ 11] The trial court granted summary judgment based upon its conclusion a legal malpractice action may only be brought when there was attorney-client privity between the parties.² The court concluded Rathert never represented Jerry, Laurie, or their daughters, and therefore determined one of the essential elements of legal malpractice under North Dakota law was missing. In its order granting Rathert's motion for summary judgment, the trial court determined there was no attorney-client relationship between Rathert and Jerry:

Rathert was the attorney for the personal representative of Jay Thomas's estate and the attorney for the Co-Trustee [sic] of the trust which was set up for the distribution of Jay Thomas's estate. Rathert was not hired by Jerry to be his attorney. Jerry was one of the settlors and one of the beneficiaries of the trust, but he was not trustee. Therefore, no legal duty may be placed upon Rathert in his relationship with Jerry because there was no privity.

[¶ 12] The trial court's analysis is far too simplistic within the context of the complex facts and circumstances of this case. The record on summary judgment establishes that Rathert represented different clients at different times during the course of events leading to this litigation. Rathert was Jay Thomas's long-time attorney and drafted the 1994 will. After Jay's death, Rathert became the estate attorney and represented the personal representative in probating the will. After the trust came into existence, Rathert apparently represented the co-trustees. On this record, however, there is conflicting evidence regarding who Rathert was representing when he advised the family members to set up a trust and when he drafted the trust documents.

[¶ 13] The existence of an attorney-client relationship is ordinarily a question of fact. See, e.g., Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 536 N.E.2d 344, 348 (1989); Admiral Merch. Motor Freight, Inc. v. O'Connor & Hannan, 494 N.W.2d 261, 265 (Minn.1992); Keegan v. First Bank of Sioux Falls, 519 N.W.2d 607, 611 (S.D.1994); Stiley v. Block, 130 Wash.2d 486, 925 P.2d 194, 202 (1996); cf. Wall v. Lewis, 393 N.W.2d 758, 763 (N.D.1986) (determination of the date of termination of an attorney's representation of a client is a question of fact). It is not necessary that there be an express contract or payment of fees; an attorney-client relationship may be implied from the conduct of the parties. See Stormon v. Weiss, 65 N.W.2d 475, 520 (N.D.1954); Robertson, 536 N.E.2d at 348; Keegan, 519 N.W.2d at 611.

[¶ 14] A factfinder could draw various inferences from the evidence in this record about whom Rathert was representing when the trust was discussed, drafted, and executed. The record demonstrates Rathert was present at several family...