Peterka v. Dennis, No. A07-165.

• Decision Date: 07 May 2009
• Docket Number: No. A07-165.
• Citation: 764 N.W.2d 829
• Parties: Catherine F. PETERKA, Respondent, v. Stephen G. DENNIS, Certified Public Accountant, et al., Appellants, Todd R. Haugan, Attorney at Law, Defendant.
• Court: Minnesota Supreme Court

764 N.W.2d 829

Catherine F. PETERKA, Respondent, v. Stephen G. DENNIS, Certified Public Accountant, et al., Appellants Todd R. Haugan, Attorney at Law, Defendant.

No. A07-165.

Supreme Court of Minnesota.

May 7, 2009.

John M. Degnan, Diane B. Bratvold, Jonathan P. Schmidt, Briggs & Morgan, P.A., Minneapolis, Minnesota, for appellants.

Richard E. Bosse, Law Offices of Richard E. Bosse, Chtd., Henning, Minnesota, for respondent.

Thomas J. Shroyer, Peter A. Koller, Moss & Barnett, P.A., Minneapolis, Minnesota,

for amicus curiae Minnesota Society of Certified Public Accountants.

Mary Catherine Lauhead, Law Offices of Mary Catherine Lauhead, St. Paul, Minnesota; Michael D. Dittberner, Clugg, Linder, Dittberner & Bryant, Ltd., Edina, Minnesota; Cheryl M. Prince, Hanft Fride, P.A., Duluth, Minnesota; and Joan H. Lucas, Lucas Family Law, LLC, St. Paul, Minnesota, for amici curiae Family Law Section of the Minnesota State Bar Association and American Academy of Matrimonial Lawyers, Minnesota Chapter.

OPINION

PAGE, Justice.

Respondent Catherine F. Peterka sued appellant, Stephen G. Dennis, CPA, alleging breach of contract and that Dennis committed professional malpractice by applying an incorrect method to value marital property in the form of business assets during Catherine Peterka's divorce from her former husband. Catherine Peterka also named Dennis's employer, appellant Baune, Dosen & Co. (Baune Dosen), as a defendant in the suit. The district court granted Dennis and Baune Dosen summary judgment, holding that Dennis was protected by quasi-judicial immunity and that, absent liability on Dennis's part, Baune Dosen was also immune. The court of appeals reversed. Based on our conclusion that Dennis is immune from civil suit as a Rule 706 expert, we reverse the court of appeals and reinstate the district court's order for summary judgment.

The divorce proceedings giving rise to these claims commenced in April 1996, with dissolution of the marriage occurring in March 1998. As part of the proceedings, Catherine Peterka, her spouse, and their respective counsel agreed to have the couple's business assets, including interests in two home-building companies, valued by a neutral evaluator. See Minn. Stat. § 518.58, subd. 1 (2008) (requiring the district court in a marriage dissolution proceeding to "value marital assets for purposes of division between the parties").

On March 17, 1997, the district court issued an Order for Temporary Relief, stating, "[t]he parties' business will be valued by an independent evaluator from Judge Davidson's list of neutrals. Each party shall advance one-half of the retainer with final responsibility for the [entire] fee reserved."

The neutral evaluator initially selected by the Peterkas withdrew. When asked, Dennis agreed to serve as the neutral evaluator on the condition that he be court appointed. Acting on Dennis's request for court appointment, Mr. Peterka's counsel drafted an Order and Stipulation for Order appointing Dennis as an independent neutral. Both Peterkas stipulated to Dennis's appointment and the district court signed the Order and Stipulation for Order on September 30, 1997.

In an affidavit in this litigation, Dennis indicated that, to insure his immunity from malpractice suits, he typically requires court appointment before performing valuations in divorce proceedings and that he would not have evaluated the Peterka business entities if he had not been court appointed. Another affidavit indicates that Dennis believed that he was appointed under Minnesota Rules of Evidence 706 and was immune from suit. In her affidavit, Roselyn Nordaune, divorce counsel for Catherine Peterka, stated her understanding that because Dennis was appointed "to act as an independent, neutral evaluator in the valuation of the Peterka business entities, the valuation conducted by Mr. Dennis was performed on behalf of the Court as agreed to by the parties." In his affidavit, Douglas Nill, divorce counsel for Mr. Peterka, indicates that "the valuation conducted by Mr. Dennis was performed on behalf of the Court as agreed to by the parties." Finally, Todd Haugan, who succeeded Nordaune as counsel for Catherine Peterka sometime before the court issued its September 30, 1997, order appointing Dennis, testified in his deposition that, although the court's order appointing Dennis did not specifically reference Evidence Rule 706, it was his understanding that Dennis was authorized to do the valuation as a Rule 706 expert.

In the divorce proceeding, Dennis provided his analysis and valuation opinion of the Peterka business entities to the court and to each of the Peterkas. After receiving Dennis's report, Catherine Peterka's counsel had the report reviewed by another CPA After reviewing the report, that CPA was of the opinion that Dennis had used the proper methodology in his valuation. That CPA was not called to testify about Dennis's report in the divorce proceeding. The record indicates that Dennis testified about his valuation of the Peterka business entities and was subject to cross-examination at a hearing during the divorce proceedings. The district court ultimately awarded Catherine Peterka 50% of the businesses' value, as determined by Dennis's valuation. During the divorce proceedings, Catherine Peterka did not dispute the valuation of the businesses. Nor did she seek review of the district court's March 20, 1998, Findings of Fact, Conclusions of Law, Order for Judgment, and Judgment and Decree that dissolved the Peterkas' marriage and allocated the Peterkas' marital assets based in part on Dennis's valuation of the two businesses.

On May 10, 2004, Catherine Peterka filed suit against Dennis¹ in district court alleging that (1) Dennis breached his contract with her by failing to provide accurate accounting and appraisal services, and (2) that Dennis committed professional malpractice in his valuation. The complaint makes these same allegations against Baune Dosen. According to Catherine Peterka, Dennis should have valued the businesses using the fair market value of the businesses' inventory rather than the inventory's book value. She claims that, as a result, her share of the value of the two businesses was undervalued by $746,672. The district court dismissed the claims on summary judgment, finding that Dennis was entitled to quasi-judicial immunity and that, as a result, Baune Dosen was also immune. As noted, the court of appeals reversed.

I.

On appeal from summary judgment, we review de novo whether "a genuine issue of material fact exists, and whether the district court erred in its application of the law." STAR Ctrs., Inc. v. Faegre & Benson, L.L.P., 644 N.W.2d 72, 76-77 (Minn.2002). We view the evidence in the light most favorable to the one against whom summary judgment was granted. Offerdahl v. Univ. of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn.1988). "[I]mmunity is a question of law," which we review de novo. Sletten v. Ramsey County, 675 N.W.2d 291, 299 (Minn.2004).

Dennis's claim to immunity from Catherine Peterka's lawsuit is based on two independent but somewhat related grounds. Dennis argues that he is entitled to immunity under Rule 706 of the Minnesota Rules of Evidence because, at the time he valued the Peterka business entities, he was acting as a court-appointed neutral evaluator pursuant to that rule. Alternatively, Dennis argues that he is entitled to quasi-judicial immunity under our case law. For the reasons discussed below, we conclude that Dennis is entitled to immunity under Rule 706 and therefore reverse the decision of the court of appeals and reinstate the district court's order for summary judgment.²

Rule 706(a) provides:

The court may appoint any expert witnesses agreed upon by the parties, and may appoint expert witnesses of its own selection. An expert witness shall not be appointed by the court unless the witness consents to act. A witness so appointed shall be informed of the witness' duties by the court in writing, a copy of which shall be filed with the clerk, or at a conference in which the parties shall have opportunity to participate. A witness so appointed shall advise the parties of the witness' findings, if any; the witness' deposition may be taken by any party; and the witness may be called to testify by the court or any party. The witness shall be subject to cross-examination by each party, including a party calling the witness.

Catherine Peterka argues that Dennis was not appointed under Rule 706 because the court's order appointing Dennis makes no mention of "appointment" or "Rule 706."³ She further argues that language from the judgment and decree confirms that Dennis was jointly retained by the parties and, therefore, was not appointed under the Rule.

We conclude, on the record presented, that, although the district court did not specifically indicate that it was appointing Dennis under Rule 706, the practical effect of the court's order, as well as the conduct of the parties and Dennis, was such an appointment. First, Rule 706 provides that "[t]he court may appoint any expert witnesses agreed upon by the parties." Here, the Peterkas mutually agreed on Dennis's appointment and the court appointed him. Second, Rule 706 requires the expert to consent to his or her appointment. Here, Dennis consented to the appointment and would not have consented to evaluating the Peterka business entities absent appointment by the court. Third, Rule 706 requires that the expert be informed of his or her duties in writing by the court. Here, the court's written order instructed Dennis to conduct a neutral evaluation of the Peterka business entities. Fourth, Rule 706 requires a copy of the written instructions to be filed with the clerk. Here, the court's order was filed with the Hennepin County District Court. Fifth, Rule 706 requires the expert to advise the parties of the expert's findings. Here, the record indicates that Dennis...