Konesky v. Keller

08/24/2021
DA 21-0040
Case Number: DA 21-0040
IN THE SUPREME COURT OF THE STATE OF MONTANA
2021 MT 214N
THOMAS KONESKY,
r -
,n I ;ri 1
Plaintiff, Counter-Defendant, U.=
and Appellant,
AUG 24 2021
v. Bowen Greenwood
Clerk of Suprerne Court
Stete r,f Montana
KEVIN KELLER, KAREN L. REIFF, CHURCH, HARRIS,
JOHNSON & WILLIAMS, P.C., and JOHN DOES A-Z,
Defendants, Counter-Plaintiffs,
and Appellees,
KEVIN KELLER,
Third-Party Plaintiff,
v.
DONITA KONESKY,
Third-Party Defendant.
APPEAL FROM: District Court of the Eighth Judicial District,
In and For the County of Cascade, Cause No. BDV-19-0568
Honorable Elizabeth A. Best, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Samir F. Aarab, Caitlin Boland Aarab, Boland Aarab PLLP, Great Falls,
Montana
For Appellee:
Mikel L. Moore, Eric Brooks, Moore, Cockrell, Goicoechea & Johnson,
P.C., Kalispell, Montana
Submitted on Briefs: June 30, 2021
Decided: August 24, 2021
Filed:
Clerk
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Justice Beth Baker delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating
Rules, this case is decided by memorandum opinion and shall not be cited and does not
serve as precedent. Its case title, cause number, and disposition shall be included in this
Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana
Reports.
¶2 Thornas Konesky appeals an Eighth Judicial District Court order granting
Church, Harris, Johnson, & Williarns, P.C.'s ("CHJW") rnotion for summary judgment on
Count I of Konesky's Arnended Cornplaint, alleging legal malpractice. Konesky argues
that the District Court erred by determining a material fact without considering expert
testirnony, that it misunderstood rnaterial facts related to his malpractice claim, and that it
applied the wrong legal standard. We reverse and remand the matter for further
proceedings.
¶3 Konesky owned a ranch in Great Falls that had been in his farnily since the 1940s.
In 2007 Konesky decided to sell the ranch in order to retire. As a condition of any sale,
however, he and his wife wanted to be able to remain living in the ranch's farmhouse. In
2012 Kevin Keller, a rancher from Stanford, offered to buy the ranch. Keller intended to
use the ranch for cattle only, so he proposed terrns of purchase allowing the Koneskys to
continue residing there. Konesky retained CHJW to help facilitate the sale; Karen Reiff
would be CHJW's prirnary attorney handling the transaction.
¶4 Reiff drafted the majority of the documents effectuating the transaction, including
a promissory note, pasture lease agreernent, warranty deed, and bill of sale. The sale was
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financed by Konesky. One of the prirnary terms Konesky wanted included as part of the
deal was the right to continue living rent-free in the property's residence. As Konesky put
it, he did not want to "pay rent to someplace [he] was born and raised." Reiff, however,
did not draft the final residential lease agreernent. Instead, Keller's attorney sent her a
lease agreernent which she reviewed and presented to Konesky for his signature. The lease
agreement allowed the Koneskys to live rent-free in the ranch house until 2027, but it
contained the following provision:
If the dwelling on the leased premises should be totally destroyed or damaged
by fire or other casualty to an extent that the lease premises is rendered
untenantable and cannot be repaired within thirty (30) working days, then
[Keller] rnay, at [Keller's] option, terminate this Lease by giving written
notice to [Konesky] within ten (10) days after the date of such damage, of
[Keller's] election to terrninate this Lease.
¶5 The parties completed the transaction, and for five years the Koneskys continued to
reside in the ranch house without issue. In Septernber 2017 the ranch house burned down.
Though the Koneskys were uninjured, the house was a complete loss. Konesky hoped that
the fire insurance proceeds would allow for the purchase of a modular home to place on
the property. But six days after the fire, citing the above lease provision, Keller unilaterally
terrninated Konesky's lease. Further, despite the fact that the sale documents Reiff
prepared required Keller to obtain fire insurance in an amount acceptable to Konesky and
jointly payable to both Konesky and Keller, Keller obtained only $175,000 in fire
insurance, payable solely to himself. Keller eventually used these insurance proceeds,
along with a private loan, to reduce his debt to Konesky rather than to rebuild the ranch
house.
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Konesky went to CHJW for advice on how to proceed and how to possibly retain
some right to continue living on the property. While CHJW discussed the possibility of
litigation with Konesky, discussion soon stalled. In May 2019, after discussions with its
malpractice carrier, CHJW ceased representing Konesky. Konesky obtained new counsel
and filed the underlying suit against Keller for breach of contract, breach of implied
covenant of good faith and fair dealing, and violating the Residential Landlord Tenant Act,
and against CHJW for professional negligence.
Konesky alleged CHJW breached its duty to "negotiate, draft, and review the
docurnents involved" in the transaction to ensure they "effectuated the bargain reached by
[Konesky] and Mr. Keller, protected [Konesky's] financial interest in the Property, and
secured [Konesky's] stated interest in living on the Property rent-free through 2027."
Deposition testimony would reveal that Reiff had drafted an unused residential lease
agreement for the transaction that was never shown to Konesky or to Keller's attorney.
This draft lease agreement did not contain the language on which Keller relied to terminate
Konesky's lease, and Reiff did not recall why she did not send it to either Konesky or
Keller's attorney for consideration.
¶8 In June 2020, Konesky moved for summary judgment against Keller on all counts;
the District Court granted the motion as to liability on Konesky's clairns for breach of
contract and breach of irnplied covenant of good faith and fair dealing, leaving the issue of
damages for trial. CHJW then moved for summary judgment on Konesky's professional
negligence claim, arguing that in light of the District Court's summary judgment ruling
against Keller, as a matter of law CHJW's conduct did not cause Konesky any damages.
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Konesky argued that Keller's liability and CHJW's liability are not necessarily rnutually
exclusive, that whether CHJW's representation fell below the standard of care is the subject
of expert testimony, and that the expert disclosure deadline had not yet passed. The
District Court rejected these arguments and granted CHJW's motion. Konesky then moved
for certification of judgment on the CHJW surnmary judgment order pursuant to
M. R. Civ. P. 54(b), which the District Court granted. In the meantime, Keller arnended
his pleadings to assert several counterclaims against the Koneskys related to the fire that
destroyed the residence. Trial on the claims between Konesky and Keller is scheduled for
late 2022.
¶9 "We review a district court's decision to award summary judgment de novo."
Babcock Place P 'ship v. Berg, Lilly, Andriolo & Tollefsen, P.C., 2003 MT 111, ¶ 14,
315 Mont. 364, 69 P.3d 1145 (citation omitted). Summary judgment is appropriate when
"the pleadings, the discovery and disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that the movant is entitled to judgment
as a matter of law." Labair v. Carey, 2012 MT 312, ¶ 15, 367 Mont. 453, 291 P.3d 1160(quoting M. R. Civ. P. 56(c)(3)) (internal quotation rnarks omitted). A rnaterial fact is a
fact that involves "the substantive law which governs a claim." Babcock, ¶ 15 (citation,
internal quotation marks omitted).
¶10 The four elements of a legal malpractice claim are: "(1) the attorney owed the
plaintiff a duty of care; (2) the attorney breached this duty by failure to use reasonable care
and skill; (3) the plaintiff suffered an injury; and (4) the attorney's conduct was the
proximate cause of the injury." Labair, ¶ 20 (citations omitted). "To establish the standard
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of duty required for an attorney, we have held that, with limited exceptions, ' only expert
testirnony can establish the standard of care in a legal malpractice case.'" Babcock, ¶ 21
(quoting Moore v. Does 1 to 25, 271 Mont. 162, 165, 895 P.2d 209, 210 (1995)). The
existence of a legal duty, however, is a question of law. Wood v. Anderson, 2017 MT 180,
¶ 25, 388 Mont. 166, 399 P.3d 304 (citation omitted).
¶11 The District Court concluded that Konesky "offered no authority to support the legal
duties he says CHJW owed." The court explained that drafting a contract irnposes no duty
to ensure its performance, that lawyers have no duty to require certain terms be included
in final documents a client signs, and that lawyers have no duty to prevent a breach of
contract. Konesky did not allege, however, that these were legal duties CHJW owed him.
The specific professional duty Konesky alleged CHJW owed him was "a duty to negotiate,
draft, and review the documents involved in this Property transaction so that they
effectuated the bargain reached by Mr. Konesky and Mr. Keller, protected Mr. Konesky's
financial interest in the Property, and secured Mr. Konesky's stated interest in living
rent-free through 2027." CHJW has characterized its duty owed to Konesky as a duty to
"reasonably secure to Mr. Konesky, under the circurnstances, the rights and remedies
which real estate sale-and-purchase contracts can reasonably be expected to secure."
Konesky agrees that this is, at the rninimum, the duty CHJW owes him. Konesky
emphasizes that he never saw the lease document Reiff had drafted and thus did not choose
instead to sign Keller's lease.
¶12 An attorney's failure "to use reasonable care or skill in handling his client's affairs"
may leave the attorney liable for damages to his client. Carlson v. Morton, 229 Mont. 234,
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237, 745 P.2d 1133, 1135 (1987). An attorney-client relationship—which the parties do
not dispute existed between Konesky and CHJW—is sufficient to establish the existence
of this duty. See Labair, If 17-18 (noting that a signed retainer agreeing to pursue a
client's medical malpractice clairn is sufficient to establish an attorney-client
relationship and demonstrate the attorney owed the client a duty relative to that claim);
Babcock, In 20-21 (concluding there was evidence of an attorney-client relationship and
moving to the second element of professional negligence test); Spencer v. Beck,
2010 MT 256, ¶ 14, 358 Mont. 295, 245 P.3d 21, abrogated in part on other grounds in
Labair, ¶¶ 23-24 (holding the allegation of an attorney-client relationship sufficient to
rneet the first element of a professional negligence claim to defeat a M. R. Civ. P. 12(b)(6)
dismissal). The District Court thus erred as a matter of law by concluding that "[n]o legal
duty has been shown" by Konesky. See Wood, ¶ 25; Babcock, ¶ 15.
¶13 Once a duty is established, the plaintiff must demonstrate that "the attorney
breached this duty by failure to use reasonable care and skill." Labair, ¶ 20. What
constitutes "reasonable care and skill" is established through expert testirnony.
Babcock, ¶ 21. Here, the "duties" the District Court concluded that Konesky failed to
support are better characterized as examples of either how CHJW allegedly breached its
duty to use reasonable care and skill in facilitating the transaction or how that breach
allegedly caused Konesky damages. And because the District Court entered its Order
before the close of discovery and before the deadline to produce expert testirnony, Konesky
cannot at this point be faulted for lacking sufficient evidence regarding a standard of care
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to support these claims.' To that end, because CHJW argues it did not breach its duty to
Konesky, and there is no expert testimony—undisputed or otherwise—establishing the
scope of that duty, there are still disputed issues of material fact relative to any breach.
Because Konesky's damage claims against Keller have not been resolved, there also remain
questions whether CHJW's alleged failures caused Konesky damage. The District Court's
Order granting summary judgment in CHJW's favor was therefore premature and is
reversed. See Labair, ¶ 15; Babcock, ¶ 15; see generally Carlson, 229 Mont. at 240-41,
745 P.2d at 1137-38.
¶14 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our
Internal Operating Rules, which provides for memorandum opinions. We conclude that
disputed issues of rnaterial fact remain on Konesky's legal malpractice claim and decline
to address the parties' additional arguments. We therefore reverse the District Court's
October 14, 2020 order granting summary judgment in CHJW's favor and vacate the final
judgment entered pursuant to that order. The rnatter is remanded for proceedings consistent
with this Opinion.
Justic
CHJW argues that pursuant to M. R. Civ. P. 56(f) and Rosenthal v. County of Madison,
2007 MT 277, ¶¶ 38-43, 339 Mont. 419, 170 P.3d 493, if Konesky sought to oppose surnrnary
judgment with expert testimony he was required to specify by affidavit the specific evidence the
expert testimony would provide and why it could not be timely presented. We do not find this
argument persuasive as applied to the present situation, where Konesky claims he had not yet
submitted his expert report because the District Court entered its Order before the deadline to do
SO.
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We Concur:
Chief Justice
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