Norman Goldetsky, Appellant, vs. Edward Winer, et al., Respondents.

Annotate this Case

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. 480A.08, subd. 3 (1994)

STATE OF MINNESOTA

IN COURT OF APPEALS

C1-95-2702

Norman Goldetsky,

Appellant,

vs.

Edward Winer, et al.,

Respondents.

Filed June 4, 1996

Affirmed

Schumacher, Judge

Hennepin County District court

File No. 9414184

Charles A. Cox III, Cox & Goudy, 600A Butler Square, 100 North Sixth Street, Minneapolis, MN 55403 (for Appellant)

Kay Nord Hunt, Phillip A. Cole, Lommen, Nelson, Cole & Stageberg, 1800 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for Respondents)

Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Short, Judge.

U N P U B L I S H E D O P I N I O N

SCHUMACHER, Judge

Norman Goldetsky appeals the district court's grant of summary judgment to Edward Winer and Moss & Barnett (the lawyers), arguing that he submitted sufficient evidence that the lawyers' negligence caused an unfavorable settlement for him, and that there was an issue of material fact regarding the reasonableness of attorney fees and collection costs. We affirm.

FACTS

Goldetsky retained the lawyers in August of 1990 to represent him in dissolving his 34-year marriage to Merna Goldetsky. Winer and his partner, Susan Rhode, both worked extensively on Goldetsky's file.

The Goldetskys held interests in several corporations and real estate partnerships; a 44% interest in Copper Sales, Inc. (CSI) was the single most valuable asset. Merna Goldetsky hired Jerry Bremer, a certified public accountant, to value the parties' interest in CSI. The lawyers retained Steve Dennis, also a C.P.A., to do the same. Dennis interviewed Goldetsky, attended depositions and studied deposition transcripts, talked with CSI's accountant, and conducted industry research. He concluded that CSI was worth approximately $4 million (which would make the Goldetskys' share $1.76 million). Dennis's opinion was based largely on transactions in 1991 and 1992, in which Goldetsky and a partner traded the stock and equipment of another corporation they owned jointly for additional shares of CSI stock. Dennis also relied on Goldetsky's statement that he would not sell his and his wife's shares of CSI for less than $3 million.

Dennis learned Bremer was valuing the Goldetskys' interest in CSI at $1.1 to $1.2 million. Based on this information and Dennis's opinion that Bremer was undervaluing CSI, Winer recommended that Goldetsky accept Bremer's figure and instructed Dennis not to prepare a report. Bremer's report valued Goldetsky's interest at $1,175,000. Winer then negotiated the value down to $1,044,444 by insisting on a greater minority discount. Goldetsky testified at his deposition that he assumed the lawyers and accountants had developed the $1,044,444 figure, but he did not know how. He claimed he was not advised that Bremer's report had been issued, and that he was never advised before settlement of Dennis's opinion on the value of CSI.

Goldetsky also testified that at the time of settlement, he thought $1,044,444 was a fair value of his interest in CSI. Goldetsky's corporate attorney, David Johnson, testified, however, that Goldetsky indicated to him that he thought $1,044,444 was too high, but that he was pleased with the settlement as a "package deal."

Goldetsky refused to pay his legal fees and brought this legal malpractice suit, claiming the lawyers failed to sufficiently inform him of the valuation of CSI. He presented a certified business appraiser's opinion that his interest in CSI was actually only worth $520,000. The lawyers brought a counterclaim seeking payment of Goldetsky's past-due account. The lawyers moved for summary judgment and also sought attorney fees for the present action. The district court granted the lawyers' summary judgment motion, concluding that Goldetsky did not establish that any negligence on the part of the lawyers caused his damages. The court also ordered judgment for the lawyers for fees and costs in Goldetsky's dissolution. The court denied the lawyers' request for fees and costs in defending this lawsuit.

D E C I S I O N

On appeal from summary judgment, we ask whether there are any genuine issues of material fact and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). We "view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).

To prevail in a legal malpractice action, the plaintiff must prove: (a) the existence of an attorney-client relationship; (b) acts amounting to negligence or breach of contract; (c) that such acts were the proximate cause of the plaintiff's damages; and (d) that but for the defendant's conduct, the plaintiff would have been successful in the action. Failure to prove any one of these elements defeats the plaintiff's case.

Rouse v. Dunkley & Bennett, P.A., 520 N.W.2d 406, 408 (Minn. 1994) (citation omitted).

Goldetsky argues that the appropriate standard of proof of causation is whether he "would have survived summary judgment on the underlying * * * claim." See id. at 410 (setting forth standard). The Rouse court noted, however, that this standard was limited to cases where a claim was foregone, such as when a statute of limitations expires. The Rouse court stated:

We recognize that this standard may not apply to cases involving transactions or where the case was tried or settled and the client now believes he could have done better but for his attorney's negligence. * * * We continue to disapprove of allowing a client who has become dissatisfied with a settlement to recover against an attorney solely on the ground that a jury might have awarded him more than settlement. Our holding is confined to the issue before us, the plaintiff's burden in responding to a defendant's motion for summary judgment in a legal malpractice case in which a claim was allegedly foregone.

Id. at 410 n.6 (citation omitted).

The appropriate standard is found in Blue Water Corp. v. O'Toole, 336 N.W.2d 279 (Minn. 1983), in which the supreme court concluded that in order to prove a causal link between an attorney's negligence and damages, a client must establish that absent the attorney's negligence, the client would have obtained a more favorable outcome. Id. at 282; see also Yusefzadeh v. Ross, 932 F.2d 1262, 1264 (8th Cir. 1991) ( to succeed in legal malpractice case in Minnesota, plaintiff must show that but for attorney's violation of professional standard of care, "some distinct advantage would have been obtained by the plaintiff-client."); Glenna v. Sullivan, 310 Minn. 162, 170, 245 N.W.2d 869, 873 (1976) (it would be "unprecedented" to allow client to challenge settlement advised by attorney on basis that jury "might have" awarded more). Thus, in order to withstand the summary judgment motion, Goldetsky must demonstrate by a preponderance of the evidence that but for the lawyers' alleged negligence, he would have achieved a better result in the dissolution. Goldetsky failed to meet this burden.

Even if we assume that CSI was overvalued due to the lawyers' negligence, Goldetsky has not presented any evidence to show that a court would have structured the balance of the decree provisions to achieve a better overall result for him. The appraisal of $520,000, standing alone, does not prove that Goldetsky would have received a better overall distribution of assets.

2. Goldetsky argues that the district court erred in its determination that the lawyers' fees were reasonable. We disagree.

An attorney fee must be reasonable, and a client claiming it is not bears the burden of proof. Continental Casualty Co. v. Knowlton, 305 Minn. 201, 212, 232 N.W.2d 789, 796 (1975). We will uphold a district court's finding on attorney fees unless it is clearly erroneous. Katz & Lange, Ltd. v. Beugen, 356 N.W.2d 733, 735 (Minn. App. 1984).

The district court's finding on attorney fees is not clearly erroneous. The record contains detailed billing statements, and the dissolution was protracted and complex. See id. (attorney fees deemed reasonable where district court had copies of billing statements proving accuracy and amount of fees).

Goldetsky further challenges the district court's conclusion that the lawyers' collection costs were reasonable. The retainer agreement between Moss & Barnett and Goldetsky provides:

Should we be required to bring suit or otherwise expend time trying to collect the amounts due us under this Agreement, you will also be responsible for our court and other costs and reasonable attorneys' fees, including payment of our normal hourly rates if we represent ourselves.

Goldetsky argues that the agreement permits recovery of collection costs only when Moss & Barnett represents itself, and the lawyers are not acting as their own counsel on the counterclaim for fees. The agreement provides that the firm can collect its normal rate if it represents itself; it does not state that a client is responsible for costs only if the firm represents itself. Although the $10,522.50 awarded for collection costs is supported only by Winer's affidavit, Goldetsky did not object to the factual basis for these fees. Because he did not raise the issue of the reasonableness of these fees in the district court, we will not address it. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (appellate court's review limited to those issues that were presented to district court). Our decision also makes it unnecessary to address the lawyers' argument regarding reasonable professional judgment.

Affirmed.