Feltman v. Gaustad , 2020 ND 89 ( 2020 )

Filed 5/7/20 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2020 ND 89
Roger Feltman, Plaintiff and Appellant
and
TRRP, LLC, Plaintiff
v.
Daniel Gaustad and Pearson, Christensen
& Clapp, PLLP, Defendants and Appellees
No. 20190247
Appeal from the District Court of Grand Forks County, Northeast Central
Judicial District, the Honorable Stacy J. Louser, Judge.
AFFIRMED.
Opinion of the Court by Crothers, Justice.
DeWayne A. Johnston, Grand Forks, ND, for plaintiff and appellant.
Peter W. Zuger (argued) and Ronald H. McLean (on brief), Fargo, ND, for
defendants and appellees.
Feltman v. Gaustad
No. 20190247
Crothers, Justice.
[¶1] Roger Feltman and TRRP LLC (Feltman) appeal a district court
judgment dismissing their malpractice lawsuit against attorney Daniel
Gaustad and the Pearson, Christensen & Clapp law firm (Gaustad). The court
concluded summary judgment was appropriate because Feltman failed to
establish a factual dispute as to the elements of legal malpractice. We affirm.
I
[¶2] Feltman retained Gaustad to represent him in matters relating to
numerous loans with Washington Mutual Bank. In 2007, Feltman sued the
bank in state court and the bank removed the case to federal district court.
After Feltman sued, the bank was placed into receivership and the Federal
Deposit Insurance Corporation (FDIC) was appointed the bank’s receiver. JP
Morgan Chase later acquired the bank’s assets and became a party to
Feltman’s lawsuit.
[¶3] In March 2012, Feltman and Chase executed a settlement agreement
covering eight loans Feltman had with Washington Mutual Bank. In April
2012, Gaustad, on Feltman’s behalf, filed a stipulation to dismiss the federal
lawsuit.
[¶4] In July 2015, Feltman brought a legal malpractice lawsuit against
Gaustad. Feltman alleged Gaustad breached his fiduciary duties by providing
improper legal advice and failing to act in Feltman’s best interests. Feltman
claimed Gaustad acted negligently because he dismissed the federal lawsuit
against Chase before Chase satisfied the terms of the settlement agreement.
[¶5] Gaustad and the law firm denied the allegations, claiming Feltman was
appropriately represented. Both parties moved for summary judgment.
Gaustad argued the statute of limitations barred Feltman’s case, and Gaustad
1
had no duty to enforce the settlement agreement that Feltman voluntarily
agreed to.
[¶6] The district court granted Gaustad’s motion, concluding Feltman did not
establish that he suffered damages or that Gaustad breached a duty when he
dismissed the federal lawsuit. The court dismissed Feltman’s lawsuit against
Gaustad.
II
[¶7] Feltman argues the district court erred by granting Gaustad’s motion for
summary judgment. This Court’s standard of review for summary judgments
is well established:
“Summary judgment is a procedural device for the prompt
resolution of a controversy on the merits without a trial if there
are no genuine issues of material fact or inferences that can
reasonably be drawn from undisputed facts, or if the only issues to
be resolved are questions of law. A party moving for summary
judgment has the burden of showing there are no genuine issues
of material fact and the moving party is entitled to judgment as a
matter of law. In determining whether summary judgment was
appropriately granted, we must view the evidence in the light most
favorable to the party opposing the motion, and that party will be
given the benefit of all favorable inferences which can reasonably
be drawn from the record. On appeal, this Court decides whether
the information available to the district court precluded the
existence of a genuine issue of material fact and entitled the
moving party to judgment as a matter of law. Whether the district
court properly granted summary judgment is a question of law
which we review de novo on the entire record.”
Pennington v. Cont’l Res., Inc., 2019 ND 228, ¶ 6, 932 N.W.2d 897 (quoting
Horob v. Zavanna, LLC, 2016 ND 168, ¶ 8, 883 N.W.2d 855).
[¶8] The elements of a claim against an attorney for legal malpractice are: “1)
the existence of an attorney-client relationship, 2) a duty by the attorney to the
client, 3) a breach of that duty by the attorney, and 4) damages to the client
2
proximately caused by the breach of duty.” Davis v. Enget, 2010 ND 34, ¶ 7,
779 N.W.2d 126.
III
[¶9] Feltman claims Gaustad was negligent when he dismissed the federal
lawsuit before Chase satisfied all terms of the settlement agreement. Feltman
argues that since Gaustad dismissed the lawsuit before Chase satisfied the
terms of the agreement, Chase was relieved from complying with the
agreement and Feltman lacked a remedy against Chase.
[¶10] The district court concluded:
“One of the elements of legal malpractice is damages.
Feltman has not established any duty by Gaustad that was
breached when the federal case was dismissed. The dismissal
‘with prejudice’ did not leave Feltman without a remedy, because
Feltman had six years after the Agreement was executed to file an
action to have the Settlement Agreement enforced.
....
“As determined in Section II of this Order, Feltman has not
established one of the elements of legal malpractice, i.e., that
Feltman suffered damages when Gaustad breached a duty and
‘prematurely’ dismissed the federal lawsuit, because, as a matter
of law, Feltman had six years within which to sue Chase for
enforcement of the Settlement Agreement and dismissal did not
foreclose that remedy.
“‘Rule 56 requires the entry of summary judgment against a
party who fails to establish the existence of a material factual
dispute as to an essential element of the claim and on which the
party will bear the burden of proof at trial.’ Barbie v. Minko Const.,
Inc., 2009 ND 99, ¶ 6, 766 N.W.2d 458. Because Feltman has failed
to establish a factual dispute as to an element of legal malpractice,
summary judgment dismissing Feltman’s claims is appropriate.”
3
[¶11] Paragraph 8 of the settlement agreement, “Dismissal of Federal
Litigation,” provided that, “Within 10 days of the completion of the items
delineated in Paragraphs 2-6 above, the Feltmans shall cause the Federal
Litigation to be dismissed, with prejudice.” Gaustad executed the stipulation
to dismiss on April 12, 2012, and the court dismissed the federal lawsuit on
April 13, 2012.
[¶12] Feltman argues Chase failed to satisfy certain terms contained in
paragraphs 2-6 of the settlement agreement before Gaustad dismissed the
federal lawsuit. Specifically, Feltman claims Chase did not comply with
paragraph 4 relating to escrow balances associated with the loans. Paragraph
4 stated Chase would forgive all negative escrow balances and would refund
all positive escrow balances. Even assuming without deciding Gaustad
breached a duty when he dismissed the lawsuit before Chase satisfied
paragraphs 2-6 of the settlement agreement, Feltman provided no evidence of
damages that were proximately caused by the breach.
[¶13] Feltman asserts his damages are that he lacks a remedy against Chase
when Gaustad dismissed the federal lawsuit before Chase satisfied paragraphs
2-6 of the settlement agreement. We disagree.
[¶14] The settlement agreement does not state it becomes valid and enforceable
upon Chase’s satisfaction of paragraphs 2-6. Paragraph 22 of the agreement
states the terms and conditions are “contractual in nature,” and “when fully
executed, shall constitute a legal, valid and binding obligation of the parties,
enforceable in accordance with its terms.” The agreement became valid and
enforceable when Feltman, Chase and the FDIC executed it in March 2012.
[¶15] Paragraph 10 of the settlement agreement, “Release by Feltmans of
Chase,” states in part:
“Upon full execution of this Settlement Agreement, the
Feltmans release and forever discharge Chase of and from any and
all claims, demands, actions, causes of action, liabilities, [and]
suits . . . with respect to any and all matters relating to the Loans
and the Properties as of the date of this Settlement Agreement.”
4
Paragraph 17, titled “Non-Litigation Covenant,” provides:
“Except to enforce any obligation, term or condition of this
Settlement Agreement the parties agree that none of the parties
shall in any manner challenge this Settlement Agreement. . . .
Notwithstanding the mutual releases found at Paragraphs 10, 11,
12 and 13 nothing in this Settlement Agreement is, nor shall it be
deemed to be, a release of the obligations, terms and conditions of
this Settlement Agreement, and nothing herein shall in any
manner limit or otherwise preclude the parties from commencing
an action solely for the purpose of enforcing any obligation, term
or condition of this Settlement Agreement.”
[¶16] Paragraph 22 provides the settlement agreement is valid and
enforceable on execution. Under paragraph 10, Feltman released all of his
original claims against Chase when he executed the agreement on March 22,
2012. Paragraph 17 plainly states that regardless of the release, Feltman may
bring an “action solely for the purpose of enforcing any obligation, term or
condition of [the agreement].” Although paragraph 8 required Chase to satisfy
certain conditions before dismissal of the federal lawsuit, the failure to satisfy
those conditions did not prohibit Feltman from bringing an action against
Chase for noncompliance with the agreement following dismissal of the
lawsuit. Additionally, Feltman has not claimed enforcement of the settlement
agreement would be more costly than his original cost of pursuing remedies
against Chase, or that enforcing the settlement agreement left him with an
inferior remedy against Chase.
[¶17] Feltman has not established that Gaustad’s dismissal of the federal
lawsuit before Chase satisfied paragraphs 2-6 of the settlement agreement
foreclosed an action against Chase for breaching the agreement. Feltman
cannot show Gaustad’s alleged breach of duty was the proximate cause of
damages resulting from Chase’s noncompliance with the agreement. The
district court did not err in granting summary judgment dismissing Feltman’s
lawsuit.
5
IV
[¶18] Feltman’s remaining arguments have been considered and are either
without merit or not necessary to our decision. The judgment is affirmed.
[¶19] Daniel J. Crothers, Acting C.J.
Gerald W. VandeWalle
Bruce B. Haskell, S.J.
Dale V. Sandstrom, S.J.
Jerod E. Tufte
[¶20] The Honorable Bruce B. Haskell, S.J., sitting in place of McEvers, J.,
disqualified.
[¶21] The Honorable Dale V. Sandstrom, S.J., sitting in place of Jensen, C.J.,
disqualified.
6