Hoffmann Electric Co., et al., Appellants, vs. Thomas J. Undlin, et al., Respondents.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

C9-00-230

Hoffmann Electric Co., et al.,

Appellants,

vs.

Thomas J. Undlin, et al.,

Respondents.

Hennepin County District Court

File No. 998735

Daniel Schermer, John F. Alden, III, Schermer & Schermer, P.A., 700 Lumber Exchange Building, 10 South Fifth Street, Minneapolis, MN  55402 (for appellants)

Gary J. Haugen, Justin H. Perl, Maslon Edelman Borman & Brand, LLP, 330 Norwest Center, 90 South Seventh Street, Minneapolis, MN  55402 (for respondents)

            Considered and decided by Toussaint, Chief Judge, Kalitowski, Judge, and Shumaker, Judge.

TOUSSAINT, Chief Judge

            Appellants argue that the district court erred in granting respondent's motion to dismiss appellants legal malpractice claim.  Appellants contend that the district court erroneously interpreted an earlier order, misconstrued essential facts and law, and failed to rule on its breach of fiduciary duties claim.  We affirm.     

FACTS

            Appellant Hoffmann Electric (Hoffmann), a Minnesota construction company, ran into financial difficulties in 1988.  Hoffmann consulted the law firm of Moore, Costello & Hart, P.L.L.P. (Moore) between January and March 1988 for advice on solving its financial problems.  At that time, Hoffmann received payments from approximately twenty "bonded" construction projects.  The bonds guaranteed the completion of a construction job, and if Hoffmann was unable to complete a project, the issuer of the bond would do so, substituting itself as the recipient of the cash flow from the project.  St. Paul Fire & Marine Insurance Company or one of its affiliates issued the bonds.

             In reliance on advice from Moore, Hoffmann turned the bonded jobs over to St. Paul Fire & Marine, apparently as a way to cut financial losses.  Hoffmann was unaware that Moore also represented St. Paul Fire & Marine.   Additionally, on advice from Moore, Hoffmann filed for Chapter 7 bankruptcy and its assets were liquidated.

Almost six years later, Hoffmann retained the law firm of Robins, Kaplan, Miller & Ciresi, L.L.P., to commence a legal malpractice action against Moore.  The suit alleged breach of fiduciary duty and negligence relating to two actions:

1.                  the advice to turn over the bonded projects to St. Paul Fire & Marine (turn-over claim); and

2.                  the advice to file bankruptcy under Chapter 7 rather than Chapter 11 (bankruptcy claim).

 After discovery was complete, the Ramsey County District Court granted Moore's motion for summary judgment.  The district court concluded, among other things, that the six-year statute of limitations expired prior to the commencement of the action.  When analyzing the question of what competent evidence existed to reasonably support a determination that Hoffmann would have been successful if the attorneys had not been negligent, the court concluded, "a finding in favor of the plaintiffs on the element of causation would rest on impermissible conjecture."

In 1999, Hoffmann commenced another legal malpractice suit, this time against Robins.  The suit alleged breach of contract, breach of fiduciary duties, and negligence for failing to commence the lawsuit against Moore within the applicable six-year statute of limitations.  Robins moved to dismiss Hoffmann's complaint, arguing Hoffmann was not able to establish the element of causation in the original suit against Moore. Hoffman opposed the motion, arguing that the district court's conclusion that the causation element rested on "impermissible conjecture" applied only to the bankruptcy claim and not the turnover claim.  Thus, argued Hoffmann, the turnover claim was dismissed solely because of the statute of limitations and not on the merits.  The district court rejected Hoffmann's interpretation of the earlier order, calling it "strained and contrary to the plain text of the order."  As a result, the district court granted Robins' motion to dismiss with prejudice.  This appeal followed.

I.

On appeal from the judgment of dismissal pursuant to Minn. R. Civ. P. 12.02(e) for failure to state a claim upon which relief can be granted, we review de novo the claim's legal sufficiency.  Leonard v. Northwest Airlines, Inc., 605 N.W.2d 425, 428 (Minn. App. 2000), review denied (Minn. Apr. 18, 2000).  The only question before us is whether the complaint sets forth a legally sufficient claim for relief.  Barton v. Moore, 558 N.W.2d 746, 749 (Minn. 1997).  The facts set forth in the complaint must be accepted as true and the plaintiff is entitled to have the benefit of all reasonable inferences favoring it.  Pullar v. Independent Sch. Dist. No. 701, 582 N.W.2d 273, 275-76 (Minn. App. 1998).  In the context of a legal malpractice claim, a motion for failure to state a claim is not converted into a motion for summary judgment merely because the district court took judicial notice of trial court opinions in an underlying action.  Rohricht v. O'Hare, 586 N.W.2d 587, 589 (Minn. App. 1998).  

To prevail in a legal malpractice action, a plaintiff must prove not only (1) an attorney-client relationship;  (2) fault of the lawyer; and  (3) causation respecting his damages; but also (4) that "but for" the attorney's conduct, the plaintiff would have been successful in the action.  Blue Water Corp. v. O'Toole, 336 N.W.2d 279, 281 (Minn. 1983).  Failure to prove any element defeats the plaintiff's case.  Id. at 282.

Hoffmann interprets the district court's finding that the causation element rests on "impermissible conjecture" as applying only to the bankruptcy claim. Hoffmann argues that as a result, the district court erred in dismissing its claim, because: (1) the turnover claim was separate from the bankruptcy claim; (2) causation and damages were not essential to Hoffmann's claim against Robins; and  (3) the decision to accrue the statute of limitations proves the Moore firm caused Hoffmann's damages.  Hoffmann also argues that the district court erred in failing to address the breach-of-fiduciary-duty claim.

Hoffmann first argues that its case should move forward because, given the generous standard of review on appeal, the inference is reasonable that the turnover and bankruptcy claims were completely separate and distinct actions.  Hoffmann did not cite relevant caselaw in support of this theory.

It is contrary to the principles of construction of a court order to stretch words beyond their plain common sense meaning.  State v. Nerz,587 N.W.2d 23, 25 (Minn. 1998); Kornberg v. Kornberg, 542 N.W.2d 379, 387 (Minn. 1996).  The district court's memorandum does not reveal any "separation" of the bankruptcy and turnover claims.  The discussion intertwines both claims throughout the memorandum, and does not confine the finding that the evidence was "impermissibly conjectural" to the bankruptcy claim.We conclude appellants' contention that the "impermissible conjecture" language only applied to the bankruptcy claim is an interpretation beyond the plain meaning of the district court's order.

Appellants next contends that the district court erred in concluding that the Ramsey County Court dismissed their entire claim as too speculative, because causation and damages were not essential elements of the turnover claim.  In support, appellants argues that the turnover claim involved a breach of fiduciary trust, a claim that does not require "but for" causation as an element of the claim.  See Perl v. St. Paul Fire & Marine Ins. Co., 345 N.W.2d 209, 212 (Minn. 1984) (if attorney breaches fiduciary duty to client, that client is deemed injured even if no actual loss results.)  

Although Hoffmann did contend that the Moore firm breached its fiduciary duties, this claim was part of the malpractice claim.  The district court concluded that the turnover claim was based on negligence, stating "[Moore's] advice, counsel and work leading up to the decision to turn back, or not retain, the bonded jobs constituted ‘tortious conduct' according to [Hoffmann].  It is charged that the defendants were negligent in the giving of this advice and counsel."  Hoffmann also alleged that "[a]s a direct and proximate result of defendants' breach of fiduciary duty, plaintiffs suffered damages in an amount to be established at trial * * *."  Hoffmann cannot make causation an element of its fiduciary claim against the Moore firm and then argue that the claim was not susceptible to for lack of evidence on causation. 

Hoffmann further argues that the district court erred when concluding that the turnover claim could be dismissed under both the statute of limitations and for a lack of causation.  Hoffmann cites Herrmann v. McMenomy & Severson, 590 N.W.2d 641, 643 (Minn. 1999), Dalton v. Dow Chem. Co., 280 Minn. 147, 153, 158 N.W.2d 580, 584 (1968), and Sabes & Richman, Inc. v. Muenzer, 431 N.W.2d 916, 918 (Minn. App. 1988), review denied (Minn. Jan. 25, 1989), arguing that because the statute of limitations begins to run only when damage occurs, the district court must have found causation and could not have dismissed the turnover claim on that basis.

This argument fails for two reasons.  First, Hoffmann's reasoning intertwines the elements of causation and damages in a legal malpractice context, determinations not present in the cited cases.  The Herrmann, Dalton,and Sabes & Richman courts looked to whether and when damages had occurred when deciding whether the statute of limitations had been met, but do not assert that damages automatically result from the defendant's actions.  Hermann, 590 N.W.2d at 643; Dalton, 280 Minn. at 153, 158 N.W.2d at 584; Sabes & Richman, 431 N.W.2d at 918.   Secondly, Hoffmann's argument fails because a district court can dismiss claims on alternate grounds.  See, e.g., Juster Steel v. Carlson Cos., 366 N.W.2d 616, 619 (Minn. App. 1985) (the trial court did not err in dismissing misrepresentation claims on alternate grounds of insufficient particularity and failure to state a claim upon which relief can be granted).

Hoffmann next argues that the district court erred when dismissing its suit without explicitly addressing the breach of fiduciary duty claim.  Hoffmann suggests that a letter written to Hoffmann by Robins that attempted to explain the district court's decision shows a breach of fiduciary duties. 

Under Minnesota law, a complaint must allege facts showing fraud, breach of confidence, or failure to disclose material matters to constitute a claim for attorney breach of fiduciary duty.  Padco, Inc. v. Kinney & Lange, 444 N.W.2d 889, 891-92 (Minn. App. 1989), review denied (Minn. Nov. 15, 1987).  Nothing in the letter reveals fraud, breach of confidence, or suggests a breach of fiduciary duty.  Therefore, the district court's failure to rule on the claim constitutes harmless error.  See Minn. R. Civ. P. 61 (stating harmless error to be ignored).

            Affirmed.