Savell v. Duddy

• Decision Date: 01 September 2016
• Docket Number: Docket: BCD-15-470
• Parties: David L. Savell v. Michael A. Duddy et al.
• Court: Maine Supreme Court

147 A.3d 1179

2016 ME 139

David L. Savell

v.Michael A. Duddy et al.

Docket: BCD-15-470

Supreme Judicial Court of Maine.

Argued: June 8, 2016

Decided: September 1, 2016

As Corrected January 31, 2017

Barry K. Mills, Esq. (orally), Hale & Hamlin, LLC, Ellsworth, for appellant David L. Savell

James M. Bowie, Esq. (orally), and Hillary J. Bouchard, Esq., Thompson & Bowie, LLP, Portland, for appellees Michael A. Duddy and Kelly, Remmel & Zimmerman

Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

MEAD, J.

[¶ 1] David L. Savell appeals from a summary judgment entered in the Business and Consumer Docket (Cumberland County, Horton, J. ) in favor of attorney Michael A. Duddy and the law firm of Kelly, Remmel & Zimmerman on Savell's complaint alleging attorney malpractice and a breach of fiduciary duty. On appeal, Savell contends that the court erred in concluding that he failed to adduce prima facie evidence of an attorney-client relationship between himself and Duddy. We affirm the judgment.

I. BACKGROUND

[¶ 2] Viewing the summary judgment record in the light most favorable to the nonprevailing party, the record contains the following facts. Estate of Smith v. Salvesen , 2016 ME 100, ¶ 2, ––– A.3d ––––. Savell was the chief executive officer of Sunbury Primary Care, P.A. (SPC), a medical practice in Bangor with three shareholders: Drs. Michael B. Bruehl, Kenneth G. Simone, and Thomas D. Hayward (the doctors). Savell was also a manager of Sunbury Medical Properties, LLC (SMP), whose sole business was owning and managing the real estate where SPC was located. Michael A. Duddy is an attorney licensed to practice in the State of Maine and is associated with the Portland law firm of Kelly, Remmel & Zimmerman (KRZ).

[¶ 3] Savell had no ownership interest in SPC, but had a one-fourth “economic interest” in SMP. As a holder of an economic interest in SMP, Savell's status was essentially the same as “members” of SMP, with the principal difference being that Savell lacked the right to participate in the management of the company and lacked the right to vote. Like members, Savell's interest in SMP included an agreement by which he guaranteed payment of one-fourth of certain secured debts owed by SMP to a bank, on which the three doctors were also guarantors.

[¶ 4] From early February 2013 until mid-August 2013, Savell, on behalf of both SPC and SMP, and with the doctors' approval, negotiated with Eastern Maine Medical Center for the sale of the SPC practice and SMP's real estate (where SPC was located). On August 12, 2013, the shareholders of SPC and members of SMP tentatively agreed to sell both entities to EMMC for a total purchase price of $4,600,000—$1,000,000 for the SPC practice and $3,600,000 for SMP's real estate. EMMC was represented by the Eaton Peabody law firm at all relevant times.

[¶ 5] After the tentative agreement was reached in mid-August, SMP and SPC retained the services of Duddy and the KRZ law firm to represent their interests in the transaction. Savell had less involvement in the negotiations after Duddy became involved, but continued to act in his capacity as CEO of SPC and manager of SMP throughout the remainder of the negotiations and closing.

[¶ 6] KRZ and SPC entered into an attorney/client relationship in 1999, and the firm, through Duddy, undertook legal representation of SMP as well in 2005. KRZ's representation of each entity was not detailed in any fee agreement or letter of representation, other than a letter dating back to 1999 when KRZ first started representing SPC. That letter, however, was limited to the six-month period following its transmittal, at which point the parties would then decide whether “to continue the retainer system, or use [their] experience by that point in time to enter into a fixed fee arrangement.”

[¶ 7] On September 13, 2013, EMMC, SPC, and SMP executed an Asset Purchase Agreement. The agreement identified EMMC as “Buyer,” and SPC and SMP as “Seller.” The three doctors signed the agreement as owners of the corporate entities, and Savell signed the agreement in his capacity as a manager of SMP.

[¶ 8] On September 27, 2013, an Eaton Peabody attorney, on behalf of EMMC, informed Duddy that there were too many risks with the transaction and that EMMC sought further refinement of terms of the agreement if the acquisition were to go forward. On October 1, 2013, the parties entered into an amended Asset Purchase Agreement. The amended agreement made three central changes. First, the closing was divided into two parts: (1) the sale of SMP's real estate, and (2) the sale of the SPC medical practice. The sale of SMP's real estate took place on the day of execution of the amendment for a purchase price of $3,950,000, a $350,000 increase from the initial sale price; the sale of the practice, they agreed, would be deferred for about a month. Second, although the sale price of the SMP real estate was increased, the amended agreement also provided for an unspecified reduction in the price of the SPC practice. Third, the net proceeds from the sale of SMP's property would be held in escrow by Eaton Peabody to satisfy certain specified anticipated debts or liabilities. Ultimately, after most of the debts were satisfied, including mortgages, legal fees, and pensions, the remaining balance held in escrow was about $387,530.

[¶ 9] Pursuant to SMP's Operating Agreement, SMP “shall be dissolved upon the occurrence of any of the following events[:] ... the sale or other disposition of all or substantially all of the assets of the Company or the permanent cessation of the Company's business operations.” SMP's only asset was the real estate where SPC was located, which was sold on October 1, 2013.

[¶ 10] Upon dissolution, SMP agents were required to “immediately proceed to wind up the affairs of the Company in accordance with the requirements of [the statutes] and other applicable law.” (Alteration in original.) Upon the liquidation of assets and payments of company liabilities, SMP was to distribute the remaining assets to each member and economic interest owner “with respect to the cumulative amount of all accrued but unpaid pre-dissolution distributions.”

[¶ 11] On October 9, 2013, Savell sent an email to Duddy saying, “I want my [$]187[,]402 paid directly to me, leaving only [$]216,154 to pay [SPC] debts.” (Fourth alteration in original.) Duddy did not respond. On October 11, 2013, Savell sent another email to Duddy, saying,

Additionally, I would like to have my share of the net proceeds received and placed in escrow after [SMP's] closing. I am not sure what authority EMMC has to retain monies due an equal owner who is not part of [SPC] and definitely has not signed any personal guarantees for any outstanding [SPC] debt. Thank you for your anticipated cooperation.

Again, Duddy did not respond. On October 14, 2013, Savell sent a third email to Duddy, saying,

Again, I am requesting that EMMC's legal council [sic ] be made aware that $187,402 of [SMP's] remaining ... escrow [funds] belongs to me as a private investor with no ownership or financial responsibility for [SPC]. I am requesting that I receive my minimum investment before the end of [the] business [day] on Friday[,] October 18, 2013. I appreciate your assistance. Please let me know if there is something I should do with respect to receiving my [SMP] funds.

[¶ 12] On October 14, 2013, Duddy responded to Savell, saying,

So, [a third party's] attorney is threatening action by the 17th, you are making demands by the 18th, and we are trying to get to closing on the 23rd. Good grief. I am out of the office today and will call you tomorrow.

The same day, Duddy forwarded his email exchange with Savell to the three doctors, saying,

Gentlemen, please see the below email exchange with [Savell]. I need to talk with you about the arrangements you may have made with [Savell], and how you want to handle his expectation.

[¶ 13] Savell alleges that on October 23, 2013, one day before the scheduled closing for the sale of the SPC practice, Duddy called Savell and told him that the sale price of SPC was reduced to $400,000—a price equivalent to the practice's outstanding liabilities. When Savell reminded Duddy that he was owed around $200,000 from the sale of SMP, Duddy responded, “[T]he only thing that matters right now is that this deal get done.... We'll deal with your issue later.”

[¶ 14] At the closing for the sale of the SPC practice the next day, Savell signed, in his capacity as CEO of SPC, an authorization and second amendment to the Asset Purchase Agreement, resulting in about $372,774 being applied to SPC's liabilities and leaving a remaining balance of $14,756.

[¶ 15] On May 1, 2014, Savell filed a complaint in the Superior Court (Penobscot County) against the three doctors, Duddy, and KRZ, and the case was accepted for transfer to the Business and Consumer Docket. On August 28, 2014, Savell filed a nine-count, third amended complaint. Savell's claims against Duddy and KRZ were founded upon his assertion that an attorney-client relationship existed between himself and Duddy.

[¶ 16] In November 2014, Savell filed a motion for summary judgment. On December 12, 2014, the doctors jointly filed a cross-motion for summary judgment, and on December 15, 2014, Duddy and KRZ also filed a cross-motion for summary judgment. After a hearing, the court granted Duddy and KRZ's motion for summary judgment, concluding that Savell failed to demonstrate an attorney-client relationship between himself and Duddy.

[¶ 17] On February 27, 2015, the court granted in part and denied in part the three doctors' joint motion. The doctors and Savell eventually settled the remaining claims, resulting in a final judgment. Upon the entry of a final judgment, Savell timely appealed the earlier order granting Duddy and KRZ's motion for summary judgment. Savell's argument on appeal is limited to the entry of a summary judgment as to Count IX, alleging attorney malpractice...