Richard J. Haefele, Respondent, vs. Kimberly Franson, et al., Appellants, Karina Van Beusekom d/b/a Auntie Mur's Attic, Defendant.

Richard J. Haefele, Respondent, vs. Kimberly Franson, et al., Appellants, Karina Van Beusekom d/b/a Auntie Mur's Attic, Defendant. A06-1090, Court of Appeals Unpublished, June 26, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1090

 

Richard J. Haefele,

Respondent,

 

vs.

 

Kimberly Franson, et al.,

Appellants,

 

Karina Van Beusekom d/b/a Auntie Mur's Attic,

Defendant.

 

Filed June 26, 2007

Affirmed

Shumaker, Judge

 

Hennepin County District Court

File No. 27-CV-05-011198

 

 

Michael J. Tomsche, Bryan B. Carroll, Tomsche, Sonnesyn & Tomsche, P.A., 610 Ottawa Avenue North, Minneapolis, MN 55422 (for respondent)

 

Alfred M. Stanbury, Stanbury Law Firm, P.A., 2209 St. Anthony Parkway, Minneapolis, MN 55418 (for appellants)

 

            Considered and decided by Peterson, Presiding Judge; Shumaker, Judge; and Ross, Judge.

U N P U B L I S H E D   O P I N I O N

SHUMAKER, Judge

            Appellants challenge the district court's orders granting summary judgment and dismissing their claims, arguing that the district court erred by (1) granting summary judgment on claims for legal malpractice, defamation, and punitive damages; (2) dismissing a breach-of-contract claim; and (3) dismissing a breach-of-fiduciary-duty claim.  Appellants also argue that the district court abused its discretion in procedural matters and in its discovery orders.  Because the record supports the district court's summary judgment and dismissal of appellants' claims, and because the district court did not abuse its discretion procedurally during the litigation, we affirm. 

FACTS

            Respondent attorney Richard Haefele owned residential and commercial property.  Appellant Kimberly Franson lived in one of Haefele's buildings, and she and her business partner, Karina Van Beusekom, operated a retail business in another.  Both occupancies were under oral leases.

            After her aunt died, Franson was appointed personal representative of the decedent's estate.  During the probate administration, Franson had the roof on the decedent's home replaced.  When the new roof leaked and caused mold damage to the house, Franson hired Haefele to sue the roofing company.  When Franson later decided to assert a personal-injury claim for illness from the mold in the buildings she leased from Haefele, he withdrew from the case.

            Haefele then sued Franson, as personal representative of her aunt's estate, for fees incurred in the roof litigation, and Franson and Van Beusekom for unpaid rent.  Franson and Van Beusekom counterclaimed for damages for breach of contract, professional negligence, breach of fiduciary duty, defamation, and interference with business relations, and they sought punitive damages.

            The district court initially granted summary judgment in favor of Haefele on the claim of professional negligence, punitive damages, and some counts of defamation.  Later, the court dismissed all remaining claims, and this appeal followed in which the appellants allege various errors of law and abuse of discretion as to discovery.

D E C I S I O N

1.         Summary Judgment

Appellants challenge the district court's summary judgment dismissing their legal malpractice, defamation, and punitive-damages claims.

            "On appeal from summary judgment, we ask two questions: (1) whether there are any genuine issues of material fact and (2) whether the [district] court[] erred in [its] application of the law."  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  This court reviews 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, 77 (Minn. 2002).  This court views the evidence in the light most favorable to the party against whom judgment was granted.  Id. at 76-77. 

Summary judgment is appropriate "when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that either party is entitled to a judgment as a matter of law."  Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).  No genuine issue for trial exists "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party."  DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)).  "[T]he party resisting summary judgment must do more than rest on mere averments."  Id. at 71.  A genuine issue for trial exists when the nonmoving party "presents sufficient evidence to permit reasonable persons to draw different conclusions."  Schroeder v. St. Louis County, 708 N.W.2d 497, 507 (Minn. 2006).  Furthermore, "[t]he party opposing summary judgment may not establish genuine issues of material fact by relying upon unverified and conclusory allegations, or postulated evidence that might be developed at trial, or metaphysical doubt about the facts."  Dyrdal v. Golden Nuggets, Inc., 689 N.W.2d 779, 783 (Minn. 2004).

Professional Negligence

            Franson contends that Haefele committed professional negligence in his handling of the roofing litigation.  A professional-negligence claim against an attorney is ordinarily not sustainable absent expert evidence to support it.  Hill v. Okay Constr. Co., 312 Minn. 324, 337, 252 N.W.2d 107, 116 (1977).  To demonstrate that a party has a sustainable claim of professional negligence, the party must serve with the pleadings an affidavit by the party's attorney disclosing information about the expert.  Minn. Stat. § 544.42, subd. 2(1) (2006).  This affidavit must be followed within 180 days by another affidavit disclosing, among other things, "the substance of the facts and opinions to which the expert is expected to testify, and a summary of the grounds for each opinion."  Minn. Stat. § 544.42, subd. 4(a) (2006).

            Franson did not comply with the requirement of the initial expert affidavit.  Nor did she comply with the court's scheduling order requiring disclosure of her expert.  In response to Haefele's motion for summary judgment for noncompliance with the expert-disclosure requirement, the court denied the motion on the condition that Franson remedy the defect by serving the requisite affidavit by August 15, 2005.  Franson's counsel served and filed an affidavit respecting expert evidence, but did not provide the information required by the second mandatory affidavit.

            Haefele moved for summary judgment again for noncompliance with the expert-disclosure requirement.  The court noted that "despite the extraordinary delay" in disclosing expert information, the time limit had previously been extended for good cause, and "the parties face a . . . discovery deadline" and Franson had not yet complied with the request for expert disclosure under the discovery rules, aside from the statutory requirement.  So, the court denied the motion to allow the completion of discovery.  But the court ordered full compliance with the statutory mandate by January 3, 2006, a date that the court on its own extended to January 13.

            On January 13, 2006, Franson's attorney served and filed an affidavit of expert identification that disclosed the identity of the attorney to be called to testify to Haefele's negligence.  But as to the substance of the facts and opinions to which the expert would testify, the affidavit indicated only that he would describe "the ways in which and the extent to which . . . Haefele compromised the Estate's construction/property damage claim from an evidentiary standpoint" in the roofing litigation.  And as to the grounds for the expert opinion, the affidavit recited the expert's "experience as an attorney of twenty years and his personal knowledge of what . . . Haefele did and failed to do while representing" Franson in the roofing litigation.  Franson did not provide any additional information in response to the expert-discovery request.

            Haefele again moved for summary judgment as to the negligence claim and all other claims.  Noting the lengthy history of the effort to obtain expert disclosure in compliance with the statute and discovery, the court ruled the disclosure inadequate and granted the motion dismissing the negligence claim.

            Franson argues that the dismissal was error because she complied with the disclosure deadline and that placed her within the "safe harbor" protection of Minn. Stat. § 544.42, subd. 6(1) (2006).  Franson appears to assert that she sufficiently complied with the disclosure requirements because she filed an affidavit identifying her expert.  But she failed to specify anything about the expert's opinions, except in the most general sense; about the facts the expert would rely on; about the actual substance of his opinions; and about the particular bases of his opinion, including the manner in which the standard of care (which is not identified) was breached.  The court found the affidavit to be cursory and vague and, as such, fatally defective.  We agree.  Both the statute and the discovery requests contemplate enough specificity so that the attorney charged with negligence can have an understanding of the ways in which it is claimed that he breached the standard of care and what facts support that conclusion.  Minn. Stat. § 544.42, subd. 4 (2006).  This affidavit entirely fails to provide the requisite specificity.  Thus, on the basis of either the disclosure statute or the discovery violation, Franson has failed to show the existence of a genuine, material fact for trial on her professional-negligence claim.  Summary judgment was properly granted.

Defamation

            Franson contends that, during the attorney-client relationship, Haefele made defamatory statements about her to his girlfriend and wrote a defamatory letter to Stanley and John Franson, who were beneficiaries of Franson's aunt's estate.  The district court also noted the issue of an allegedly defamatory letter to attorney Thomas Conlin, but that matter is not argued on appeal and we need not address it.  Melina v. Chaplin, 327 N.W.2d 19, 20 (Minn. 1982).

            Haefele argues that the defamation claims are barred by the applicable two-year statute of limitations.  Minn. Stat. § 541.07, subd. 1 (2006).  In the district court, Franson conceded the applicability of the statute but contended that the period was tolled by Haefele's fraudulent concealment of the defamatory statements.  Wild v. Rarig, 302 Minn. 419, 450, 234 N.W.2d 775, 795 (1975).  Ruling that Franson failed to demonstrate the existence of a genuine issue of material fact as to fraudulent concealment, the court applied the statute of limitations as a bar to the defamation claims and granted summary judgment of dismissal.  Franson appears to argue that there is a presumption of fraudulent concealment when an attorney makes a defamatory statement about his client during the fiduciary relationship.  She cites no authority for that proposition.  Furthermore, she offers virtually no analysis of her proposition, stating instead that: "It should be obvious that Haefele's statements to [his girlfriend] during the course of their intimate relationship were concealed from Franson."  And she argues that it is not necessary to show an affirmative act of concealment as the court found to be necessary.

            There is authority in a different type of case that when information is fraudulently concealed from a client during an attorney-client relationship, the client need not show an affirmative act of concealment to toll the statute of limitations.  Cohen v. Appert, 463 N.W.2d 787, 790 (Minn. App. 1990), review denied (Jan. 24, 1991).  But that case does not stand for the proposition that the relationship gives rise to the presumption that Franson seems to urge because it also holds that the client must show that the concealment could not have been discovered sooner and that the lack of discovery was not the product of the client's own negligence.  Id.at 791.  For summary-judgment purposes, Franson would have to show a fact issue at least as to her inability with reasonable diligence to have discovered the allegedly defamatory statements.  The only evidence in the record is Haefele's girlfriend's affidavit stating what the remarks were and that she did not reveal them to Franson.  Implicit in the affidavit is that the affiant knew Franson because she stated that the statements caused her to feel negatively toward Franson and to refrain from speaking to her for nearly two years.  We are left, as was the district court, to speculate as to the nature and closeness of the relationship between Franson and the affiant and as to why the lengthy gap in communications would not reasonably have provoked Franson's further inquiry about the reason for that gap.  Such an inquiry might well have led to an early discovery of the defamation.  But that is speculative, and speculation does not give rise to a genuine fact issue.  Furthermore, there is no evidence of a "concealment" since Haefele made his statement publicly, albeit to one person, without any suggestion that it be kept from Franson.  The court did not err in applying the statute of limitations as a bar to this claim.

With respect to an allegedly defamatory letter Haefele sent to beneficiaries of Franson's aunt's estate, the court held that the statements were published in the course of a judicial proceeding and thus were absolutely privileged.  Dorn v. Peterson, 512 N.W.2d 902, 906 (Minn. App. 1994); Matthis v. Kennedy, 243 Minn. 219, 227-28, 67 N.W.2d 413, 419 (1954).  The record shows that a judicial officer directed Haefele to notify the beneficiaries of his attorney-fee claim that he was asserting in probate.  The judicial officer directed as follows: "Mr. Haefele, here is what I need you to do; you need to give notice [of your claim] to John Franson.  I think you need to give notice to Stanley Franson too, because it's their money we're talking about."  Haefele wrote a letter to the beneficiaries describing the roofing case for which Kimberly Franson retained his legal services and noting her rental of his property.  He stated that "[s]he has refused to pay any apartment rent or for any of the legal work and has stalled collection efforts for almost two years."  He indicated that she settled the roofing claim but failed to disclose the settlement and told the court the claim was not settled.  Although accusatory, these statements all relate directly and precisely to the legal issue pending before the judicial officer, and they give the context of the notice the officer told Haefele to provide.  The communications were privileged, as the district court found, and the court properly granted summary judgment.

Punitive Damages

            Franson also challenges the district court's dismissal of her claim for punitive damages relating to Franson's alleged mold exposure in Haefele's buildings.  The district court ordered summary judgment because Franson did not make any showing that she was harmed as a result of the alleged exposure, and consequently punitive damages are not recoverable.

            Franson argues that the record is sufficient to support her claim for punitive damages and relies on the construction-defect complaint Haefele drafted in which he alleged that Franson suffered harm from mold exposure.  She contends that this shows that Haefele knew that she was susceptible to harm from mold exposure and that he intentionally disregarded her well-being by allowing her to live and conduct business in mold-contaminated buildings.  Allegations in a complaint are not evidence and surely do not obviate the need for medical evidence of injury and causation.  Dyrdal, 689 N.W.2d at 783.

              Although Franson asserted a claim for damages resulting from mold exposure in Haefele's buildings, she did not submit any evidence, other than her own allegations, that the alleged mold exposure caused her harm.  But a showing "of a causal connection must be something more than merely consistent with the plaintiff's theory of the case."  Bernloehr v. Cent. Livestock Order Buying Co., 296 Minn. 222, 224, 208 N.W.2d 753, 754 (1973).  And when a claim involves medical factors beyond the knowledge of laypersons, which is certainly the case here, "there must be expert testimony, based upon an adequate factual foundation that the thing alleged to have caused the result not only might have caused it but in fact did cause it."  Id. at 225, 208 N.W.2d at 755. 

            Franson presented no medical evidence linking the alleged mold exposure in Haefele's buildings to her claimed harm.  Her allegations alone are insufficient to support her claim, and therefore she may not recover damages in any form from her alleged mold exposure, including punitive damages.  See Minn. Stat. § 549.20, subd. 1(a) (2006) (allowing punitive damages only upon a showing that the defendant acted with "deliberate disregard for the rights or safety of others").  We, therefore, conclude that the district court properly granted summary judgment on Franson's claim for punitive damages.

Breach of Contract

            Franson also challenges the district court's dismissal of her breach-of-contract claim, arguing that the statute of frauds does not render the parties' oral agreement unenforceable.

            The parties made an oral agreement in October 2002 that Franson's business would lease space from Haefele beginning January 1, 2003, and ending January 1, 2004.  The parties never reduced the agreement to writing.  In order to maintain an action on an agreement, the statute of frauds requires written evidence of the agreement if, by its terms, it is not to be performed within one year of its making.  Minn. Stat. § 513.01(1) (2006).  Similarly, a lease of real property for a term of longer than one year must be in writing.  Minn. Stat. § 513.05 (2006).  But an oral agreement to lease property for a term of one year to begin in the future is void under the statute of frauds.  Jellett v. Rhode, 43 Minn. 166, 167, 45 N.W. 13, 14 (1890). 

            Here, the parties orally agreed to a one-year lease to commence in the future.  Under Jellett, the agreement must be in writing in order to be enforceable.  Therefore, the district court did not err by holding that the parties' oral lease was unenforceable and properly dismissed appellants' claim on that ground.

The district court also provided an alternative ground for dismissing Franson's breach-of-contract claim, finding that Franson failed to properly disclose information during discovery relating to her claimed damages.  The district court "has wide discretion to issue discovery orders and, absent clear abuse of that discretion, normally its order with respect thereto will not be disturbed."  Shetka v. Kueppers, Kueppers, Von Feldt & Salmen, 454 N.W.2d 916, 921 (Minn. 1990).  This court will not reverse an involuntary dismissal unless the district court abused its discretion.  Bonhiver v. Fugelso, Porter, Simich & Whiteman, Inc., 355 N.W.2d 138, 144 (Minn. 1984).

The parties engaged in protracted discovery that included various sets of interrogatories.  Franson claimed that her business suffered nearly $3,500,000 in damages because of the alleged breach of the oral lease.  She refused to provide evidence to support her damage claim, stating that such information would be "inadmissible" or "would not tend to lead to the discovery of admissible evidence."  Despite her refusal to divulge sources used to calculate her alleged damages, she admitted that she possessed substantial information, but indicated she was still gathering the information.  Franson never produced evidence of her damages, and only provided access to limited information two weeks before trial.

            On this record, we cannot say that the district court abused its discretion by ruling that Franson failed to produce evidence of her claimed damages and that she failed to produce information during discovery.  Franson's breach-of-contract claim was properly dismissed on this ground as well as that noted above.

Breach of Fiduciary Duty

            Franson also challenges the district court's dismissal of her claim that Haefele breached a fiduciary duty.  The district court held that a claim for breach of a fiduciary duty is only a defense to paying attorney fees, not an independent action for damages.

            Minnesota recognizes breach of fiduciary duty as a legal theory of recovery related to attorney misconduct.  Rice v. Perl, 320 N.W.2d 407, 410 (Minn. 1982).  An attorney who breaches a fiduciary duty forfeits compensation related to the services rendered.  Id. at 411.

            Although Rice precludes those who breach a fiduciary duty from recovering fees, it does not limit a plaintiff's recovery.  But here Franson claimed that Haefele breached a fiduciary duty and reflected that breach in her claims for professional negligence, breach of contract, and punitive damages.  As we noted above, however, the district court properly dismissed those claims.  Because Franson could not maintain the underlying claims, the district court properly dismissed the breach-of-fiduciary-duty claim.

Procedure

            Finally, Franson challenges the district court's general handling of the case, arguing that it abused its discretion by allowing multiple summary-judgment motions, ignoring procedural rules, and by dismissing claims based on discovery violations. 

We note that the district court has wide discretion to issue discovery orders.  Shetka, 454 N.W.2d at 921.  The court also "has broad discretion to amend scheduling-order deadlines."  Mercer v. Andersen, 715 N.W.2d 114, 123 (Minn. App. 2006).

We find nothing in the record suggesting that the district court abused its discretion in any procedural matter.  Haefele advanced good-faith legal bases in his summary-judgment motions, and the district court properly granted partial summary judgment on his third motion.  Additionally, there is nothing in the record showing that the district court failed to follow procedure or prejudiced Franson by ignoring Haefele's alleged procedural abuses.  Finally, although the district court did not promise the parties that it would dismiss certain claims for discovery violations, the district court has authority to dismiss a cause of action on its own initiative for failure to follow the rules of civil procedure or an order of the court.  Minn. R. Civ. P. 41.02(a).  Franson has not shown that the district court abused its wide discretion in its discovery orders or by dismissing her remaining claims on Haefele's motion in limine. 

            Affirmed.