Nesvig v. Nesvig

Decision Date25 February 2004
Docket NumberNo. 20030041,20030041
PartiesRichard John Nesvig, Plaintiff and Appellant v. R. Gordon Nesvig, Defendant and Appellee.
CourtNorth Dakota Supreme Court
Opinion of the Court by VandeWalle, Chief Justice.

VandeWalle, Chief Justice.

[¶1] Richard Nesvig appealed from a judgment entered upon a jury verdict dismissing his action against Gordon Nesvig for breach of a fiduciary duty. We hold the jury instructions and special verdict erroneously limited the jury's consideration of Richard Nesvig's claims for legal malpractice and breach of a fiduciary duty. We reverse the judgment and remand for further proceedings.

I

[¶2] Richard Nesvig, a self-employed farmer living near Buxton, North Dakota, was severely injured in a 1984 automobile accident in Traill County. Gordon Nesvig, Richard Nesvig's cousin and an attorney in Cottage Grove, Minnesota, represented Richard Nesvig in settlement negotiations with the automobile insurer and in a personal injury action against Traill County and Anderson Brothers Construction. See Nesvig v. Anderson Bros. Constr. Co., 490 N.W.2d 478 (N.D. 1992). As a result of a settlement with the automobile insurer, Richard Nesvig received $235,000. Gordon Nesvig deducted attorney fees and other expenses, and, through an investment broker, deposited $175,000 of that settlement in a Franklin fund for Richard Nesvig.

[¶3] In the action against Traill County and Anderson Brothers, Richard Nesvig settled with Anderson Brothers for $50,000 and obtained a 1993 jury verdict of more than $900,000 against Traill County. After deductions for attorney fees and other expenses, Richard Nesvig received a net award of $611,768.18 in December 1993, and Gordon Nesvig deposited the money in a Minneapolis bank in an interest bearing money market account that listed Richard Nesvig as beneficiary and Gordon Nesvig as trustee. There was no written documentation between Gordon and Richard Nesvig regarding the deposit of the money in the interest bearing money market account.

[¶4] According to Richard Nesvig, he met with Gordon Nesvig in East Grand Forks in December 1993 to endorse a check for the money:

A. I don't remember exact words, but I think that he just said that he could get me more interest in Minneapolis. So I signed the check and I signed off on a couple of other papers, whatever, and he sent the money to Minneapolis which was what I thought that we were going to do for a short time or whatever or you know.
Q. Okay, and so what was your understanding about what he was going to do with the money?
A. Well, I thought he was going to invest it somewhere down the road or give it to me or whatever, but I thought he was going to invest it somewhere where we could get some more money.
. . . .
Q. Okay, and when you got the money and signed the check with Gordon in December of 1993, did you give Gordon any specific instructions on what he was to do or not to do with the money.
A. No, not at the time.
Q. What did you think was going to happen with the money, based on your contact with Gordon?
A. Well, I guess we did talk a little bit. He told me he could give me more interest in Minneapolis is why I figured I could send it down there and I figured he could sent [sic] me whatever I wanted. I did not think that there was any problem.
Q. Okay, and did you subsequently start getting statements from something like the Franklin Fund for the money that you sent down to Minneapolis with Gordon?
. . . .
A. No, I did not.
Q. Okay. How did you—what was the process for you to get money from Gordon of the money that you had left with Gordon.
A. I would have to call him and call him and give him a, tell him what I wanted it for and give him—you know, he was tough. He would not just hand it out to me for any reason. I had to give him a good reason then sometimes he would give me some, other times he would not.

[¶5] According to Gordon Nesvig, he did not believe Richard Nesvig could manage the money and he received specific instructions from Richard Nesvig about the money:

A. Well, to summarize them, the one probably paramount instruction was that he wanted it readily available. He wanted, if he called me and he needed this money for something, he did not want to wait for it. And the second —
. . . .
Q. Let's go through this list, we will have you explain what was said.
A. All right. And the second item was that and I don't remember which order they were, but he did not want to lose any principal.
Q. Okay, any more?
A. Third one was that he did not want to be in the stock market is the word that we used, but I took that to mean any publicly traded security where you could lose money.
Q. How about bonds?
A. It would include bonds.
Q. Any more?
A. That is as far as I can remember. Those were the three cardinal rules.

[¶6] Gordon Nesvig testified he did not send Richard Nesvig statements regarding the money market account, but he normally had monthly telephone conversations with him regarding money. According to Gordon Nesvig, in early 1995 he discovered the money market account was earning interest at a lower rate than expected and he informed the bank:

you have got to do better than this or we are moving the money. Well, we have got this other account and it will produce a higher interest rate and they told me it does equate to about a thousand dollars a month. And I called Richard and I told him what had happened and I said that the bank says I have to open a new account, I have got to close the one that you have and open a new one and asked him if that was okay and he said that it was.
And then a few days or weeks later, he sent me his 1994 tax information because I did not have anything other than the 1099. He had his farm income, his Franklin fund statement, and he had his property taxes, whatever all he paid. And in that envelope is when he sent me that letter . . . because he knew about the change in the bank account and that is where that thousand dollars a month—and he was really confirming that he wanted it in there. He wanted that extra thousand dollars a month, just interest.

[¶7] Richard Nesvig testified that, in March 1995, he sent Gordon Nesvig information for his 1994 taxes and a handwritten letter asking for a copy of his monthly statement and indicating he "would like $1,000.00 more per month when invested, just interest. Seems fair to me." According to Richard Nesvig, he got a July 1995 statement from Gordon Nesvig, and he never got another monthly statement or $1,000.00 a month after his handwritten letter to Gordon Nesvig. According to Richard Nesvig, he was unable to get money from Gordon Nesvig when he wanted it.

[¶8] In November 1997, George Longmire, on behalf of Richard Nesvig, wrote Gordon Nesvig:

Reference is made to previous correspondence and telephone conferences we have had in connection with [funds belonging to Richard Nesvig]. Rick is still insisting funds belonging to him should be returned to the Norwest Bank in Hillsboro, ND.
. . . .
As indicated in our initial telephone conference, he has a good relationship with a capable woman at this time. I learned recently she had had some banking experience. Further, I feel Rick has changed greatly in the two years I have had contact with him. I feel confident his wife to be and his banker can keep him soundly managing his business affairs. You and I could also keep an eye over his shoulder and prevent him from throwing away his money.
As intimated, I do not feel he needs a conservator at this time. In fact, it is felt he would fight the appointment of a conservator.
It is also felt unless his funds are returned to this state under at least partly his supervision he will have me or some other attorney commence litigation to get this accomplished. Rick requests the funds be transferred to the Norwest Bank in Hillsboro, ND. Hope you will immediately arrange for this to be done.
Am sure in view of his family relation with you, it is understood you feel some obligation to keep him from foolishly spending this money if it is returned to this jurisdiction.

[¶9] In July 1998, Richard Nesvig petitioned for appointment of a "limited and special conservator." Gordon Nesvig filed a "concurrence in the need for conservator" which stated he had been acting as an "informal conservator" for Richard Nesvig since 1983 and "the portion of [Richard Nesvig's] brain that allows him to make decisions is impaired." Gordon Nesvig's concurrence stated Richard Nesvig needed a conservator who would say no to most of his requests and Gordon Nesvig had intended to make different investments, but Richard Nesvig did not want any funds at risk, did not want funds tied up for extended periods of time, and had recently indicated he wanted control of his funds, and Gordon Nesvig therefore "decided to wait until the situation stabilized." In July 1998, Norwest Bank was appointed as conservator for Richard Nesvig. In August 1998, Gordon Nesvig transferred the $548,100.88 balance in Richard Nesvig's money market account to the conservatorship.

[¶10] Richard Nesvig subsequently sued Gordon Nesvig, alleging Gordon Nesvig breached a fiduciary duty to Richard Nesvig by investing his money in the money market account instead of some other prudent investment. A jury returned a special verdict finding there was no agreement between Richard and Gordon Nesvig to invest the money in something other than the money market account, and Gordon Nesvig acted in good faith in failing to return money to Richard Nesvig.

II

[¶11] Richard Nesvig argues on appeal to this Court that the trial court erred in including a good faith defense in the special verdict form, because good faith is not a defense to a professional malpractice action. He argues ...

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