Nemec v. Deering

• Decision Date: 06 June 1984
• Docket Number: No. 14389,14389
• Citation: 350 N.W.2d 53
• Parties: Jerry NEMEC, Plaintiff and Appellant, v. Harold H. DEERING, Defendant and Appellee.
• Court: South Dakota Supreme Court

Page 53

350 N.W.2d 53

Jerry NEMEC, Plaintiff and Appellant, v. Harold H. DEERING, Defendant and Appellee.

No. 14389.

Supreme Court of South Dakota.

Argued March 21, 1984.

Decided June 6, 1984.

Ramon A. Roubideaux, Rapid City, for plaintiff and appellant.

Joseph H. Barnett of Siegel, Barnett & Schutz, Aberdeen, for defendant and appellee.

RAMYNKE, Circuit Judge.

Jerry Nemec (Nemec) brought this action against attorney Harold Deering (Deering) alleging that Deering was negligent and breached his contract to represent Nemec in an action brought by Texaco Corporation (Texaco) against Nemec. The circuit court granted summary judgment to Deering. Nemec appeals.

Nemec was in the fuel and gasoline business as a consignee with Texaco beginning in 1971. By the mid-seventies Texaco decided to quit the consignee method and have all its dealers become distributors. Dealers were to purchase the equipment owned by Texaco and then operate on a commission basis. Nemec resisted making the change for four years. He alleges that in December 1979 he set out the following conditions as the only ones acceptable to him for becoming a distributor:

(1) A base price quote from Texaco on gas which would allow him a margin of at least 8 cents per gallon;

(2) The equipment would be sold by Texaco to Nemec for $10,000;

(3) Eleven thousand dollars in consignee commissions that were being held back by Texaco during the years 1976 through 1979 would be paid or set off against the purchase price;

(4) A $1500 audit charge on the Texaco books against Nemec would be reversed;

(5) Nemec would be released as a party defendant from an old lawsuit entitled Nellie Iverson vs. Texaco and Nemec.

Mr. Smythe (Smythe), an agent of Texaco, received these conditions. According to Nemec, Smythe's response was that Texaco would meet all of the conditions except for releasing Nemec from the Iverson lawsuit. Believing that Texaco would follow through on all of the conditions he had set out except the Iverson lawsuit, Nemec signed the distributor agreement that Smythe presented to him.

The price quoted by Smythe for gasoline received under the distributorship contract was much lower than Nemec had anticipated. When Nemec asked about the price of the gasoline, Texaco's main office verified a price that failed to consider the state and federal taxes.

On August 29, 1980 Texaco commenced replevin actions against Nemec to take possession of the equipment at the Nemec stations. Texaco alleged that Nemec had agreed to purchase the equipment when he entered into the distributorship agreement and that he had never paid for the equipment.

Nemec hired Deering to represent him in his defense against Texaco. When Nemec talked to Deering, Nemec informed Deering that Texaco was to give him the commissions they had withheld in the amount of over $11,000. Nemec also told Deering about Texaco's price misquote and that after the first two deliveries they had discovered their error and corrected it by raising the price of the gasoline. According to Nemec's figures, which were based on the original price quote, he was entitled to additional profits of $32,017.80 at the time this action was commenced. As time advanced, this rose to a figure of $165,682.38. In telling Deering about these claims, Nemec specified that he wanted a jury trial in federal court and Deering agreed that this would be done. However, Deering used the claim for $11,000 for withheld commissions and the larger claim for lost profits as a setoff in his answer to the replevin action. This was heard before a judge without a jury.

At trial, Texaco introduced their records without objection from Deering and stated that the $11,000 had been credited against Nemec's account and that they owed him nothing. They then introduced evidence to show that the price quoted in the distributorship contract was based on mistake and that they were entitled to have that rectified which would then cancel all of Nemec's claims for lost profits. The judge allowed Nemec's claims to be heard as a permissive counterclaim and ruled against him on all counts. This resulted in res judicata of the claims and the loss of Nemec's right to have them tried to a jury in federal court. There is controversy over whether or not Nemec was told that he would have 60 days within which to appeal the case. Before the 60 days expired, Nemec discharged Deering and talked to other attorneys.

The circuit court that granted the motion for summary judgment determined from all of the evidence of the Texaco trial that Nemec was adequately and satisfactorily represented prior to trial and at trial.

In reviewing a summary judgment to determine whether there is a genuine issue of material fact, this Court follows the guidelines set out in Wilson v. Great Northern Ry. Co., 83 S.D. 207, 157 N.W.2d 19 (1968).

(1) Evidence must be viewed most favorable to the nonmoving party;

(2) The burden of proof is on the movant to show clearly that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law;

(3) Summary judgment is not a substitute for a court trial or for trial by jury where any genuine issue of material fact exists;

(4) Surmise that a party will not prevail upon trial is not sufficient basis to grant summary judgment on issues which are not shown to be sham, frivolous, or so unsubstantial that it is obvious that it would be futile to try them;

(5) Summary judgment is an extreme remedy which should be awarded only when the truth is clear and reasonable doubts touching the existence of a genuine issue as to material fact should be resolved against movant;

(6) When no genuine issue of fact exists, summary judgment is looked upon with favor and is particularly adaptable to expose sham claims and defenses.

"Summary judgment proceedings are not a substitute for trial when the claims asserted are not a sham or frivolous. The remedy is authorized only when the movant is entitled to judgment as a matter of law because there are no issues of material fact." Caneva v. Miners & Merchants Bank, 335 N.W.2d 339, 341 (S.D.1983). Ordinarily whether a defendant has breached the required standard of care is a question of fact for the jury. Where negligence is alleged there are highly disputed facts. As such, this is not a case for summary judgment as a matter of law.

Nemec has alleged substandard representation by his attorney based on ill preparation, misinterpretation of the case, misinterpretation of the law and the way the attorney explained it to him. Nemec told Deering he wanted his claims for commissions and profits to be tried by a jury in federal court. Deering never told him that by using these claims as a permissive counterclaim to answer the replevin action he would lose the right to have them later tried in federal court; in fact, according to Nemec's deposition, Deering assured him that he could still have the jury trial in federal court after this replevin action was over. If it is found that Nemec lost his case and his rights of recovery from Texaco because Deering mishandled the case, then Nemec has been damaged and will be entitled to recover. These are all issues of fact to be determined at a trial before a judge or jury.

In some cases of alleged negligence or breach of contract by an attorney, the plaintiff is required to show by expert testimony that the attorney failed to exercise a reasonable degree of care, skill and dispatch according to the standards of a particular community. However, there are cases where such testimony is not required. Fishow v. Simpson, 55 Md.App. 312, 462 A.2d 540 (1983). If this case is in the class of cases where common knowledge or experience of laymen is extensive enough to recognize or infer negligence from the facts, expert testimony is not necessary. Was it a breach of contract or obvious negligence for Deering to interject Nemec's damage claims as a permissive counterclaim in a court action for replevin when Nemec had specifically requested that these claims be tried before a jury in federal court and Deering had agreed to do this? This is a question of material fact and not one that can be dismissed by summary judgment without being heard by a fact finder.

"A genuine issue of fact exists where, on the basis of facts in the record, reasonable minds could differ on whether defendant's conduct measures up to the required standard." Jackson v. Dabney, 645 P.2d 613, 615 (Utah 1982). Inferences of attorney negligence may be drawn from failures to investigate a case adequately and from a failure to apply or to understand pertinent statutes, court rules or well known case law of the jurisdiction in which an attorney practices law. Woodruff v. Tomlin, 616 F.2d 924 (6th Cir.1980).

In Texaco's action against Nemec, the circuit court threw out all allegations in Nemec's counterclaim because the only evidence regarding the claim was that produced by Texaco's records, which supposedly showed that the commissions claimed by Nemec had already been credited to him. Was Deering negligent in not requiring the production of Texaco's records prior to trial and auditing them? This is a question of material fact.

Was Deering's failure to object to the introduction of Texaco's business records without more foundation negligence on his part? Should he have raised questions as to the materiality, authenticity and hearsay of such records to preserve the case's review for appeal?

Was it negligence for Deering not to bring more forcefully to the trial court's attention the rule of contract law which states that where the relations between the parties had been such as to justify the offeror in expecting a reply, or when the offeree has come under some duty to communicate either a rejection or acceptance, the offeree's failure to communicate his...