Veit v. Anderson
| Citation | 428 N.W.2d 429 |
| Decision Date | 16 August 1988 |
| Docket Number | No. C3-88-673,C3-88-673 |
| Parties | Louis VEIT, Appellant, v. James R. ANDERSON, et al., Respondents. |
| Court | Court of Appeals of Minnesota |
Syllabus by the Court
1. The trial court erred in granting summary judgment for respondents on appellant's legal malpractice claim, because material facts remain in dispute and it is not clear as a matter of law that an attorney-client relationship is absent between appellant and respondents.
2. The trial court erred in granting summary judgment for respondents on appellant's fraud claim, because respondents' alleged representations do not squarely contradict the terms of the parties' written agreement, and because a number of material facts are disputed.
Steven Rowley, Thomas W. Van Hon, Rowley Law Offices, Redwood Falls, for appellant.
John Sheran, Farrish, Johnson & Maschka, Mankato, Todd M. Johnson, Popham, Haik, Schnobrich & Kaufman, Ltd., Minneapolis, for respondents.
Heard, considered and decided by FOLEY, P.J., HUSPENI and SHORT, JJ.
Appellant Louis Veit brought an action against respondents James R. Anderson and the Farm Company of Lyon County (Anderson) for legal malpractice and fraud. The trial court granted summary judgment for Anderson. We reverse, and remand the case.
Louis Veit is a farmer in Lyon county. James Anderson is an attorney and a licensed real estate broker. Anderson operates his real estate business through a corporation, the Farm Company of Lyon County.
Anderson has done business with Veit both as an attorney and as a realtor. Anderson represented Veit on a medical malpractice claim in 1978. In 1981, Veit and Anderson entered into a real estate listing agreement for sale of some of Veit's farmland. The property was never actually sold.
On June 13, 1983, Veit went to see Anderson at Anderson's law office. Veit was being sued over a past due fuel bill, and asked Anderson for legal assistance. Anderson refused to represent Veit in the collection action. Anderson and Veit then discussed Veit's financial situation, and the possibility that Veit should try again to sell some of his farmland. Veit alleges that Anderson suggested that he sell the land. Anderson does not specifically deny this allegation. Their discussion resulted in a real estate listing agreement under which Anderson agreed to try to find a buyer for 80 acres of Veit's land for $160,000.
Two days later, on June 15, 1983, Anderson presented Veit with a purchase agreement signed by Lynn Beebout, another neighboring farmer. Beebout offered to buy 100 acres of Veit's land for $155,000 ($1,550 per acre). Veit, his wife, and his son went to Anderson's law office to discuss the purchase agreement. Veit alleges that Anderson told him that Veit's signature on the purchase agreement would allow Anderson to investigate whether Veit could convey marketable title to his property, and if it turned out that Veit was unable to convey title, the purchase agreement would not be binding. Anderson denies making this statement. He admits discussing the terms of the purchase agreement with Veit, but alleges that Veit fully understood the terms of the purchase agreement and its legal implications.
Veit alleges that he signed the purchase agreement in reliance on Anderson's representations that it would not be binding if he was unable to convey clear title to the property. On June 16, 1983, the day after he signed the purchase agreement, Veit called the Federal Land Bank and the Production Credit Association, who held mortgages on his property. The agencies were unwilling to release their mortgages under the terms of the purchase agreement. Veit believed that the sale of the farmland was off. However, Beebout threatened to sue him for specific performance of the purchase agreement, and Anderson recorded the listing agreement and the purchase agreement in order to make a claim against Veit for his commission.
Veit retained another attorney to assist in clearing title to his property. Veit also located another buyer who was willing to pay $240,000 for 150 acres of land ($1,600 per acre). Veit alleges that he "paid costs in excess of $12,000" (including a $2,000 payment to Anderson) to avoid the threat of lawsuits arising from the purchase agreement. He therefore brought this action against Anderson, alleging that Anderson committed legal malpractice by advising him that the purchase agreement was not binding if he was unable to clear title, and that Anderson fraudulently induced him to sign the purchase agreement by misrepresenting its legal implications.
The trial court granted Anderson's motion for summary judgment. The trial court ruled that Veit has no claim against Anderson for legal malpractice, because Veit and Anderson did not have an attorney-client relationship, and that Veit has no claim against Anderson for fraudulent misrepresentation of the effect of the purchase agreement, because the purchase agreement is "clear and unambiguous" and "speaks for itself."
1. Did the trial court properly grant summary judgment to Anderson on Veit's legal malpractice claim?
2. Did the trial court properly grant summary judgment to Anderson on Veit's fraud claim?
Summary judgment is appropriate where the record shows that there is no genuine issue as to any material fact, and it is clear that the moving party is entitled to judgment as a matter of law. Minn.R.Civ.P. 56.03. On review of a summary judgment, this court must determine whether there are any genuine issues of material fact, and whether the trial court erred in applying the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). The evidence must be viewed in the light most favorable to Veit, the non-moving party. See, e.g., Grondahl v. Bulluck, 318 N.W.2d 240, 242 (Minn.1982).
Summary judgment was inappropriate in this case. It is not clear as a matter of law that an attorney-client relationship is absent between Veit and Anderson, or that Anderson is entitled to summary judgment on Veit's fraud claim. If there is an attorney-client relationship, the dispute as to whether Anderson misrepresented the legal effect of the purchase agreement becomes a genuine issue of material fact.
To prevail on a claim of legal malpractice, a plaintiff must show: 1) the existence of an attorney-client relationship; 2) negligence or breach of contract on the part of the attorney; and 3) that the attorney's negligence or breach proximately caused the plaintiff damage. See Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686, 692 (Minn.1980). The trial court granted summary judgment for Anderson on Veit's legal malpractice claim, ruling that "it cannot be disputed that no attorney-client relationship existed" between Anderson and Veit.
Minnesota courts have recognized both a "contract theory" and a "tort theory" of the attorney-client relationship. An attorney-client relationship exists under the "contract theory" if the parties explicitly or implicitly agree that the attorney will provide legal services to the client. See Togstad, 291 N.W.2d at 693; Ronnigen v. Hertogs, 294 Minn. 7, 199 N.W.2d 420, 422 (1972); Christy v. Saliterman, 288 Minn. 144, 150, 179 N.W.2d 288, 294 (1970); Gerdin v. Princeton State Bank, 371 N.W.2d 5, 7-8 (Minn.Ct.App.1985),affirmed, 384 N.W.2d 868 (Minn.1986). An attorney-client relationship exists under the "tort theory" even in the absence of an express contract "whenever a person seeks and receives legal advice from a lawyer under circumstances in which a reasonable person would rely on the advice." Langeland v. Farmers State Bank of Trimont, 319 N.W.2d 26, 30 (Minn.1982), (citing Togstad, 291 N.W.2d at 693, n. 4); see Gerdin, 371 N.W.2d at 8. "[I]t must * * * be shown that [the attorney] rendered legal advice (not necessarily at someone's request) under circumstances which made it reasonably foreseeable to the attorney that if such advice was rendered negligently, the individual receiving the advice might be injured thereby." Togstad, 291 N.W.2d at 693, n. 4.
Anderson argues that he and Veit had no attorney-client relationship as a matter of law, because Anderson refused to represent Veit in his collection case, and because Veit did not contract with him to provide legal services in connection with the sale of the farmland. However, even if Anderson and Veit have no attorney-client relationship under a contract theory, they may still have an attorney-client relationship under a tort theory. As a matter of law, Anderson is not entitled to summary judgment if he has shown only the absence of an attorney-client relationship under a contract theory.
Veit alleges that he sought and received inaccurate advice from Anderson about the legal effect of the purchase agreement. Veit knew that Anderson was an attorney, and had consulted him for legal advice in the past. It was arguably reasonable for Veit to rely on Anderson's advice. It is also arguable that Anderson could reasonably foresee that Veit would probably rely on his advice, and might be damaged if the advice was inaccurate. Thus, on a tort theory, there may be an attorney-client relationship.
If Anderson did advise Veit on the legal effect of the agreement, he may have established an attorney-client relationship with Veit. Whether Anderson actually did advise Veit on the legal effect of the agreement remains in dispute and is a material fact. Summary judgment is inappropriate. We therefore reverse the summary judgment for Anderson on the legal malpractice claim, and remand for further proceedings.
Veit also claims that Anderson fraudulently induced him to sign the purchase agreement by...
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