Ryan Contracting Company v. O'Neill & Murphy, LLP , 2015 Minn. App. LEXIS 53 ( 2015 )

STATE OF MINNESOTA
IN COURT OF APPEALS
A14-1472
Ryan Contracting Company,
Appellant,
vs.
O’Neill & Murphy, LLP, et al.,
Respondents.
Filed July 27, 2015
Affirmed in part, reversed in part, and remanded
Smith, Judge
Hennepin County District Court
File No. 27-CV-13-14570
Paul A. Sortland, Sortland Law Office, PLLC, Minneapolis, Minnesota (for appellant)
Kay Nord Hunt, Phillip A. Cole, Lommen Abdo, P.A., Minneapolis, Minnesota (for
respondents)
Considered and decided by Worke, Presiding Judge; Hudson, Judge; and Smith,
Judge.
SYLLABUS
When determining whether a mechanic’s lien is exempt under Minn. Stat.
§ 514.011, subd. 4c (2014) from the pre-lien notice requirement in Minn. Stat. § 514.011,
subd. 1 (2014), the focus is whether the intended improvement to real property is “wholly
or partially nonresidential in use” and not the existing use at the time the improvement is
commenced.
OPINION
SMITH, Judge
We reverse and remand the district court’s grant of summary judgment to
respondent because appellant raised genuine issues of material fact regarding whether its
2007 lien-foreclosure action would have been successful but-for the negligence of its
attorney. In the interests of judicial economy, we affirm the district court’s analysis in its
alternative holding, challenged in respondents’ related appeal, that appellant raised
genuine issues of material fact precluding summary judgment regarding whether its 2010
settlement agreement precluded its malpractice suit.
FACTS
In 2003 and 2004, appellant Ryan Contracting Company contracted with Farr
Development Corporation and Darrel A. Farr Development Corporation (Farr) to perform
utility and street improvements for the first two phases of a mixed-use development plan
approved by the City of Otsego. The contracts for the work did not contain the pre-lien
notice set out in Minn. Stat. § 514.011, subd. 1 (2014). The work was to be performed on
previously unimproved or “raw” land.
In July 2006, Ryan terminated the contracts due to Farr’s nonpayment of amounts
owed. Farr sued Ryan, alleging breach-of-contract and slander of title. Ryan retained
Meagher & Geer, P.L.L.P. to record mechanic’s liens for the work it had performed,
valued at $356,073.23. Ryan had not provided a pre-lien notice before retaining Meagher
& Geer. Meagher & Geer advised Ryan that no pre-lien notice was required because
“Ryan’s work arguably fell within the pre-lien notice exception for multiple
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dwellings . . . allowing Ryan to record its liens within 120 days of furnishing its last item
of work or materials.” Based on Ryan’s reported last day of work on the project,
Meagher & Geer believed that it had “a little over two weeks to record Ryan’s
mechanic[’s] liens.” Based on its conclusion that “Ryan was unable to apportion the
value of the improvements to any particular lot or outlot, given the nature of the street
and utility improvements” it had made, and the fact that Farr no longer owned all the lots,
Meagher & Geer “adopted a conservative approach and recorded a blanket lien in the
amount of $356,073.23 on the parcels that Farr still owned, and also blanket liens in the
same amount . . . on each parcel that had been sold.” Meagher & Geer amended the lien
statements on two occasions, once to separate the amounts of work performed under
phase 1 and phase 2 of the project, and again to amend the last day of work performed.
In April 2007, Meagher & Geer commenced a lien-foreclosure action on Ryan’s behalf in
district court.
The district court consolidated Farr’s and Ryan’s actions and considered their
competing motions for summary judgment. Quoting Minn. Stat. § 514.03, subd. 1(b)
(2006), the district court ruled that, “with regard to properties not owned by Farr, Ryan’s
lien is limited to the ‘reasonable value of the work done, and of the skill, material, and
machinery furnished.’” Since each lien claimed the entire amount that Farr purportedly
owed Ryan, the district court ruled that the liens on property not owned by Farr violated
Minn. Stat. § 514.74 (2006) because, “to the extent Ryan knowingly claimed liens in the
amount of the entire contract price against lots not owned by Farr . . . Ryan knowingly
demanded more than [was] justly due.” Accordingly, it granted summary judgment to
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Farr with regard to the liens on parcels no longer owned by Farr. It denied, however,
Farr’s motion for summary judgment regarding lots still owned by Farr.
The district court acknowledged Ryan’s argument that it could not apportion the
value of its work to each lot. It opined, however, that “Ryan could have filed one lien for
the entire amount claimed and listed all properties which would share a burden of the
claim.” It concluded that Minn. Stat. § 514.09 (2006) “provided Ryan a means of filing a
timely lien statement while reserving decisions about apportionment for a later time.”
In December 2010, Ryan settled its remaining claims against Farr for $280,000.
In the settlement agreement, Ryan released its liens and Farr released all its claims
against Ryan. But Ryan reserved its claims against Meagher & Geer.
In March 2012, Ryan, represented by respondents Patrick H. O’Neill and O’Neill
& Murphy, LLP (collectively O’Neill), commenced a malpractice action against Meagher
& Geer. O’Neill failed to timely file an expert-disclosure affidavit as required by Minn.
Stat. § 544.42, subds. 2(2), 4 (2010). Accordingly, the district court dismissed Ryan’s
malpractice claim against Meagher & Geer with prejudice.
In July 2013, Ryan commenced a malpractice action against O’Neill. In July
2014, the district court granted O’Neill’s motion for summary judgment. It ruled that
Ryan’s “failure to file [pre-lien] notice as required by Minn. Stat. § 514.011 rendered all
its liens . . . void and obviate[d] any error by [O’Neill] in its attempt to assert the liens
after the work was done.” It reasoned that the exception to the pre-lien requirement in
Minn. Stat. § 514.011, subd. 4c did not apply because the land that Ryan worked to
improve was “undeveloped/raw land not in use” and was therefore not “nonresidential in
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use” as the exception requires. Since Ryan’s failure to give pre-lien notice preceded any
failure by Meagher & Geer, the district court explained, Ryan could not have prevailed in
a malpractice action against Meagher & Geer even if O’Neill had timely filed the expert-
disclosure affidavit.
The district court also based its grant of summary judgment on the alternative
ground that Meagher & Geer was not at fault for Ryan’s inability to record liens against
the non-Farr-owned lots on the property. It determined that Ryan’s inability to apportion
the value of the improvements was caused by Ryan’s choice of when to file the liens,
rather than by Meagher & Geer’s methods. In addition, it ruled that a blanket lien was
not possible because Ryan had failed to pursue its liens until after Farr had sold some of
the lots. As such, the district court ruled that any damages Ryan suffered from its
inability to record liens against the non-Farr-owned properties were caused by Ryan, not
Meagher & Geer.
Although it granted summary judgment to O’Neill for lack of causation, the
district court also stated that, if it had not done so, it would have ruled that Ryan’s
decision to settle with Farr did not preclude Ryan from pursuing a malpractice action.
The district court opined that “the reasonableness of the settlement would be a jury issue
at trial if [Ryan] prevailed on the lien issues as a matter of law” because “the amount of
damages suffered by [Ryan] as a result of [O’Neill’s] negligence, as well as the
reasonableness of the settlement [with] Farr, are questions to be determined by the jury.”
It also predicted that, “[i]f [Ryan] had prevailed in the Farr litigation, there would, in all
likelihood, have been an award of reasonable costs and attorneys’ fees” and “if [Ryan’s]
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malpractice case [against] Meagher [&] Geer had gone forward and [Ryan] prevailed,
there is a probability that costs and attorneys’ fees would have been awarded, at some
level.”
Ryan appealed the district court’s grant of summary judgment to O’Neill and, in a
properly noticed related appeal, O’Neill appealed the district court’s dicta stating that
Ryan’s settlement with Farr did not preclude its pursuit of a malpractice action.
ISSUES
I. Did the district court err by granting summary judgment to O’Neill?
II. Did the district court err by stating that Ryan’s settlement agreement with Farr
did not preclude it from suing for malpractice?
ANALYSIS
I.
Ryan challenges the district court’s grant of summary judgment to O’Neill,
arguing that it erred by ruling that Ryan’s own failure to give pre-lien notice obviated any
harm from O’Neill’s negligence. We review a district court’s grant of summary
judgment de novo. Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d
167, 170 (Minn. 2010). “In doing so, we determine whether the district court properly
applied the law and whether there are genuine issues of material fact that preclude
summary judgment.” Id.
To survive summary judgment in a legal-malpractice case, a plaintiff must show
that, “but for defendant’s conduct, the plaintiff would have been successful in the
prosecution or defense of the action.” Jerry’s Enters., Inc. v. Larkin, Hoffman, Daly &
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Lindgren, Ltd., 711 N.W.2d 811, 816 (Minn. 2006) (quotation omitted). This requires
that we assess the merits of the case underlying a malpractice action to determine if there
was a “win[n]able case-within-a-case.” Rouse v. Dunkley & Bennett, P.A., 520 N.W.2d
406, 409 (Minn. 1994) (quotation omitted). Here, the merits of Ryan’s malpractice
action against O’Neill depend on the merits of its malpractice action against Meagher &
Geer, which in turn depend on the potential enforceability of its liens against the non-
Farr-owned lots in the development project.
The parties implicitly agree that O’Neill’s conduct was negligent. They dispute,
however, whether O’Neill’s negligence caused damage to Ryan because they disagree
about whether Ryan’s liens on the non-Farr-owned properties were void as a matter of
law before Meagher & Geer got involved in the matter and whether Meagher & Geer’s
attempts to file the liens represented the best course of action in light of the timing of
Ryan’s direction to file the liens. We must therefore consider not merely a “case-within-
a-case,” but a “case-within-a-case-within-a-case,” determining if the district court erred
in its analysis of whether pre-lien notice was required by Minn. Stat. § 514.011 (2014)
and, alternatively, whether Ryan’s damages from its inability to record liens against the
non-Farr-owned properties were caused by Meagher & Geer’s errors rather than Ryan’s
delays in pursuing the liens.
A. Application of Minn. Stat. § 514.011, subd. 4c
Ryan argues that the district court erroneously concluded that Ryan was required
to give pre-lien notice because the exception in Minn. Stat. § 514.011, subd. 4c did not
apply.
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Every person who enters into a contract with the owner for
the improvement of real property and who has contracted or
will contract with any subcontractors or material suppliers to
provide labor, skill or materials for the improvement shall
include in any written contract with the owner the notice
required in this subdivision and shall provide the owner with
a copy of the written contract.
Minn. Stat. § 514.011, subd. 1. “A person who fails to provide the notice shall not have
the lien and remedy provided by this chapter.” Id. But “[t]he notice required by this
section shall not be required to be given in connection with an improvement to real
property which is not in agricultural use and which is wholly or partially nonresidential in
use if the work or improvement” meets one of three conditions. Id., subd. 4c. The
district court did not find (and O’Neill does not claim) that the development project failed
to meet any of the three specified conditions. Rather, the district court found that the
property was not real property wholly or partially “nonresidential in use” because it was
raw land not currently being used for any purpose. Ryan argues that the intended use of
the property, as established by the plat for the project, included commercial uses and that
the district court erred by focusing exclusively on the use of the land prior to the
improvement. Resolution of this appeal therefore turns on the meaning of
“nonresidential in use” in Minn. Stat. § 514.011, subd. 4c.
“Interpretation of a statute presents a question of law, which we review de novo.”
Swenson v. Nickaboine, 793 N.W.2d 738, 741 (Minn. 2011).
Our goal when interpreting statutory provisions is to ascertain
and effectuate the intention of the legislature. If the meaning
of a statute is unambiguous, we interpret the statute’s text
according to its plain language. If a statute is ambiguous, we
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apply other canons of construction to discern the legislature’s
intent.
Brua v. Minn. Joint Underwriting Ass’n, 778 N.W.2d 294, 300 (Minn. 2010) (quotation
and citations omitted).
We must first determine whether Minn. Stat. § 514.011, subd. 4c is ambiguous.
“A statute is only ambiguous when the language therein is subject to more than one
reasonable interpretation.” Am. Family Ins. Grp. v. Schroedl, 616 N.W.2d 273, 277
(Minn. 2000) (quotation omitted). The district court ruled that “nonresidential in use”
referred to the use of the property before the planned improvement, and Ryan contends
that the “use” should be determined by the anticipated improvement. In essence, the
parties differ about the item referred to that must be “nonresidential in use.” The district
court’s ruling assumes that it is the real property that must be nonresidential in use, and
Ryan’s argument assumes that it is the improvement that must be nonresidential in use.
Because both interpretations follow directly from the text of subdivision 4c and differ
only regarding where they place emphasis, we conclude that both interpretations are
reasonable and that subdivision 4c is ambiguous.
When interpreting an ambiguous statute, we seek to “ascertain and effectuate the
intention of the legislature.” Minn. Stat. § 645.16 (2014). We read the statute as a whole
and “interpret each section in light of the surrounding sections to avoid conflicting
interpretations.” Schroedl, 616 N.W.2d at 277. We seek to give effect to all of the
statute’s provisions, and avoid interpretations that render any “word, phrase, or
sentence . . . superfluous, void, or insignificant.” Id. (quotation omitted). We also
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“interpret the statute . . . in a sensible manner that avoids unreasonable, unjust, or absurd
results.” Minn. Mining & Mfg. Co. v. Nishika Ltd., 565 N.W.2d 16, 20 (Minn. 1997).
“When the language of a mechanic’s lien statute is unclear or ambiguous, we have
liberally construed the statute in favor of the mechanic’s lien claimant.” Premier Bank v.
Becker Dev., LLC, 785 N.W.2d 753, 759 (Minn. 2010).
Under these principles, Ryan has the better interpretation of the statute. Minn.
Stat. § 514.011, subd. 4c(a) provides that one scenario in which pre-lien notice is not
required is when the improvement “is to provide or add more than 5,000 usable square
feet of floor space.” (Emphasis added.) The district court’s analysis would require that
only improvements that add to an existing nonresidential use could qualify for the
exception in subdivision 4c(a). This would render the word “provide” superfluous.
Reading subdivision 4c(a) to give meaning to the word “provide,” Ryan’s improvements
took place in the context of an improvement plan that would provide more than 5,000
square feet of floor space. Accordingly, Ryan was exempt from the pre-lien notice
requirement.
This interpretation of the statute also fits how subdivision 4c has implicitly been
interpreted in our caselaw. In Christle v. Marberg, we held that a “property was wholly
residential in nature” for purposes of Minn. Stat. § 514.011, subd. 4c where the property
was “unimproved” but platted for solely residential development. See 421 N.W.2d 748,
749-51 (Minn. App. 1988). We noted that a map showing that “the property [was] for
residential development” was the key piece of evidence. Id. at 751. Thus, it was the
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planned-for use of the property that determined the property’s character for purposes of
Minn. Stat. § 514.011, subd. 4c, not its existing use or nonuse.
Similarly, in C. Kowalski, Inc. v. Davis, we held that “[p]re-lien notice is
unnecessary where the area of an improvement exceeds 5,000 square feet of usable floor
space and the improvement is intended wholly or partially to be used for non-residential
purposes.” 472 N.W.2d 872, 873 (Minn. App. 1991) (emphasis added), review denied
(Minn. Sept. 13, 1991). We concluded that the contractor was exempt from the pre-lien
notice requirement because the record indicated that operation of a business was the
“planned” use of the improvement and “[t]he fact that the use of the room changed at a
later date has little relevance to the issue of whether pre-lien notice should have been
given.” Id. at 877. That a planned-for commercial use of a property never materializes
does not mean that pre-lien notice is then required.
O’Neill argues that the district court in the original lien-foreclosure action made a
fact finding that the property was residential. This argument is unavailing. The portion
of the district court’s order that O’Neill quotes is not a fact finding, but rather a prefatory
reference introducing the development project at issue. Although a district court’s fact
findings may be implicit, see Pechovnik v. Pechovnik, 765 N.W.2d 94, 99 (Minn. App.
2009), the record does not indicate that the district court in the original lien-foreclosure
action considered arguments contesting whether the property was residential or mixed-
use. The district court did not reference Minn. Stat. § 514.011 at all. Rather, it focused
on the validity of the liens under Minn. Stat. §§ 514.74, .09, and .08 (2006). Its passing
reference to the development as a “residential property development” cannot therefore be
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fairly interpreted as a factual finding resolving whether Minn. Stat. § 514.011, subd. 4c
applies. Additionally, that the property was intended for mixed-use development is
evident from the city’s approval of the development plan, the plat documents, and the
accompanying maps. We therefore conclude that the district court erred when it
determined that Ryan’s liens would have been void for failure to provide pre-lien notice.
B. Cause of Ryan’s Inability to Record Liens on Non-Farr-Owned Properties
Ryan also challenges the district court’s alternative basis for granting summary
judgment, arguing that the district court misstated the law when it concluded that
Meagher & Geer was not at fault for failing to file a blanket lien against the properties
because such a blanket lien was not available as a matter of law. A party “who has
contributed to . . . improvements situated upon . . . adjoining lots, under or pursuant to the
purposes of one general contract with the owner, may file one statement for the entire
claim, embracing the whole area so improved; or, if so electing, . . . may apportion the
demand between the several improvements.” Minn. Stat. § 514.09 (2014). In accord
with the district court’s analysis, O’Neill argues that neither option was available at the
time Ryan sought to file the liens and that Meagher & Geer’s efforts therefore reflected
the best available methods for attempting to file them. Ryan contends that Meagher &
Geer misanalysed whether a blanket lien was available and, alternatively, whether the
improvements could be apportioned, thereby causing Ryan’s potential liens on the non-
Farr-owned properties to be lost. We must therefore address whether either alternative
was available to Meagher & Geer on Ryan’s behalf.
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1. Blanket Lien
“[W]hen a lien claimant elects to file a blanket lien pursuant to section 514.09, one
lien is created which encumbers the whole area improved.” Premier Bank, 785 N.W.2d
at 762-63. O’Neill argues that this option was not available to Meagher & Geer because
“Ryan performed the work under two separate contracts and there was an issue as to
whether the lots were all adjoining.” But the district court in the original lien-foreclosure
matter found that “there are material issues of fact regarding whether the contracts
constitute two separate contracts requiring separate liens, as opposed to one continuing
contract.” Accordingly, the district court’s grant of summary judgment to O’Neill was
erroneous to the degree that it rests on the contention that Meagher & Geer could not
have filed a blanket lien because Ryan had two contracts with Farr instead of one.
O’Neill’s doubts about whether the lots were adjoining are similarly insufficient to
support summary judgment.
All liens, as against the owner of the land, shall attach and
take effect from the time the first item of material or labor is
furnished upon the premises for the beginning of the
improvement . . . . As against a bona fide purchaser,
mortgagee, or encumberer without actual or record notice, no
lien shall attach prior to the actual and visible beginning of
the improvement on the ground . . . .
Minn. Stat. § 514.05, subd. 1 (2014). Under this subdivision, when a lien is filed after
work is done, it relates back to the beginning of the improvement work notwithstanding
an intervening recording of other property interests. See Big Lake Lumber, Inc. v. Sec.
Prop. Invs., Inc., 836 N.W.2d 359, 363 (Minn. 2013) (stating that a lien relates back to
the beginning of the improvement, giving it priority over an intervening mortgage
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recording). Similarly, whether improvements benefit contiguous tracts of land is
determined at the time a lien claimant begins work, not at the time the liens are filed. See
LaValle v. Bayless, 257 N.W.2d 283, 285 (Minn. 1977) (“The crucial time for
determining contiguity . . . was at the time plaintiff began construction.”).
O’Neill contends, however, that LaValle requires the opposite conclusion when
read in concert with Minn. Stat. § 514.03, subd. 1(b) (2014). Subdivision 1(b) of section
514.03 limits lien amounts against noncontracting owners to “the reasonable value of the
work done, and of the skill, material, and machinery furnished.” Since Ryan could not
determine that value with regard to any particular parcel, O’Neill contends, a blanket lien
was not available. But the supreme court held in Premier Bank that the apportioned
value of a blanket lien was the “pro rata amount of the lien.” 785 N.W.2d at 763
(emphasis added). O’Neill states no reason that the prorata process could not be applied
to a lien amount calculated based on “the reasonable value of the work done, and of the
skill, material, and machinery furnished, see Minn. Stat. § 514.03, subd. 1(b), just as the
supreme court in Premier Bank applied it to a lien amount calculated based on the value
of the contract, see 785 N.W.2d at 762-63.
The fact that Farr no longer owned some of the lots at the time that Ryan sought to
file its liens is therefore irrelevant; the issue is whether the lots were sold before or after
“the actual and visible beginning of the improvement on the ground.” See Minn. Stat.
§ 514.05, subd. 1. Neither the district court’s order in the original lien-foreclosure action
nor the district court’s order in the malpractice action addresses this issue. The dates of
sale of the lots by Farr and the question of “[w]hether the work done also constituted the
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actual and visible beginning of the improvement” at that time are questions of fact, see
Kloster-Madsen, Inc. v. Tafi’s, Inc., 303 Minn. 59, 64, 226 N.W.2d 603, 607 (1975), so a
genuine issue of material fact exists as to whether a blanket lien was unavailable to
Meagher & Geer as a matter of law.
2. Apportionment
O’Neill also contends that it “is undisputed that Ryan was not able to apportion the
value of the improvements to any particular lot.” O’Neill cites the district court’s finding
in the lien-foreclosure matter that Ryan had conceded the impossibility of apportionment
and the testimony of a non-Meagher & Geer attorney opining that the “apportionment of
that lien was not a possibility.” But O’Neill’s argument highlights the factual dispute that
precludes summary judgment. The district court in the lien-foreclosure matter noted
Ryan’s concession that apportionment was impossible in the context of discussing the
refusal by Meagher & Geer attorneys of the district court’s invitation to amend the liens.
It did not find that apportionment was impossible; rather, it found that Ryan’s attorneys
had represented it as impossible. As such, it does not act as an admission to bar Ryan’s
malpractice claim.
O’Neill also contends that apportionment was impossible as a matter of law. In
accordance with the district court in the lien-foreclosure matter, O’Neill argues that
Minn. Stat. § 514.03, subd. 1(b) limits any amount apportioned to a noncontracting owner
in a lien claim to the “reasonable value of the work done,” and implies that it was
impossible for Ryan to determine that value with regard to each non-Farr-owned
property. As discussed above, such a calculation is possible. We therefore conclude that
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a genuine issue of material fact exists regarding whether an apportionment method was
available. Accordingly, we reverse the district court’s grant of summary judgment to
O’Neill and remand for further proceedings.
II.
After granting summary judgment to O’Neill, the district court went on to
alternatively address whether Ryan would be entitled to a jury trial on damages if it had
not lost the summary-judgment motion. We address this holding in the interests of
judicial economy because it is likely to arise on remand. See In re Estate of Vittorio, 546
N.W.2d 751, 756 (Minn. App. 1996) (“Because this issue will arise on remand, we
address it here in the interest of judicial economy.”).
O’Neill argues that Ryan obtained the full value of all of its claims related to its
contracts with Farr, discounted by the inherent risks of litigation, when it settled for
$280,000, that its attempt to obtain more by pursuing a malpractice action is therefore
barred, and that O’Neill is entitled to summary judgment on that ground. The district
court held, however, that the question of whether Ryan received the maximum reasonable
value available to it in the settlement agreement was an issue of fact that precluded
summary judgment for O’Neill.
The district court’s analysis is correct. Although O’Neill cites the testimony of
Ryan’s attorney during the settlement period opining that Ryan obtained everything it
could reasonably expect to recover on its claims against Farr, that opinion is not
dispositive. A fact-finder could conclude that Ryan’s settlement and its failure to recover
the entire value of its claim were caused by Meagher & Geer’s negligence. As the
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district court noted, a fact-finder could also award Ryan its costs and attorney’s fees, and
these were not included in the settlement agreement.
O’Neill cites caselaw expressing disapproval towards “settle-and-sue” strategies
where a client enters into a settlement agreement and then brings a malpractice action to
attempt to recover more. See, e.g., Rouse, 520 N.W.2d at 410 n.6; Glenna v. Sullivan,
310 Minn. 162, 170 n.3, 245 N.W.2d 869, 873 n.3 (1976). The supreme court’s
disapproving comments, however, relate to situations where a client settles a claim under
the advice of an attorney and then sues that same attorney, alleging that, but for the
attorney’s advice to settle, the client could have received more. See Rouse, 520 N.W.2d
at 410 n.6 (limiting the supreme court’s disapproval to situations where the client “thinks
the [settlement] might have been more favorable had the attorney advised him
differently”); Glenna, 310 Minn. at 170 n.3, 245 N.W.2d at 873 n.3 (disavowing the
notion of “leaving to a jury the opportunity to second-guess the attorney on questions of
professional judgment and trial tactics which arise every day in every lawsuit” (quotation
omitted)). Ryan alleges that the settlement value was undermined by a prior attorney’s
negligent acts, so this case easily distinguishable.
O’Neill contends, however, that the real factor that undermined Ryan’s settlement
value was the risk posed by intervening court decisions that called its arguments into
question. But the cases O’Neill cites do not undermine Ryan’s arguments. In S.M.
Hentges & Sons, Inc. v. Mensing, the supreme court held that the exception to pre-lien
notice in Minn. Stat. § 514.011, subd. 4b (2008) applied only to multi-unit apartment
buildings, condominiums, and townhomes, not to multiple housing units in the form of
17
aggregated single-family dwellings in a development. 777 N.W.2d 228, 231-32 (Minn.
2010). As explained previously, Ryan’s claim to an exemption from pre-lien notice is
grounded in subdivision 4c, not 4b. Although Ryan might have believed that subdivision
4b related to its claim at the time of the settlement, any risk to its claim posed by Hentges
was obviated by the fact that the development plat also included plans for townhomes.
Thus, the notion that Hentges posed a risk affecting the settlement value of Ryan’s claim
is at least sufficiently doubtful to raise a fact question that precludes summary judgment.
O’Neill’s argument that Premier Bank posed a risk to Ryan is correct, but only in
a way that bolsters Ryan’s argument rather than undermines it. In Premier Bank, the
supreme court held that a blanket lien applying to an entire improvement results in a pro
rata share applied to each lot in the area covered. 785 N.W.2d at 762-63. Thus, Premier
Bank tends to support Ryan’s argument that the loss of the liens on the non-Farr-owned
lots that Ryan attributes to Meagher & Geer’s negligence undermined the value of its
claim, resulting in a settlement amount less than the full value of its claim. O’Neill’s
allegation that Ryan’s settlement attorney negotiated a settlement amount greater than
what remained under Premier Bank may reflect positively on that attorney, but it only
mitigates the loss that Ryan alleges it suffered due to Meagher & Geer’s purported
negligence. Because the amount Ryan obtained in the settlement did not reflect the full
value of what it claims it was due but for Meagher & Geer’s negligence, we conclude that
summary judgment for O’Neill on the grounds O’Neill asserts in its related appeal was
not appropriate, and we affirm the district court’s dicta explaining as such.
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DECISION
Genuine issues of material fact exist as to whether, but for Meagher & Geer’s
negligence, Ryan would have been able to enforce mechanic’s liens against the non-Farr-
owned properties in the development. We therefore reverse the district court’s grant of
summary judgment to O’Neill and remand for further proceedings consistent with this
opinion.
Genuine issues of material fact also exist as to whether, but for O’Neill’s
negligence, Ryan would have been able to recover more than the $280,000 it received
from its settlement with Farr. We therefore affirm the district court’s dicta in the interests
of judicial economy.
Affirmed in part, reversed in part, and remanded.
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