Swanson v. Larson

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
DECEMBER 9, 2021
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2021 ND 216Leland Swanson, Plaintiff and Appellant
v.
Mark E. Larson and
Mark E. Larson, CPA, PLLC, Defendants and Appellees
No. 20210125
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Susan L. Bailey, Judge.
AFFIRMED.
Opinion of the Court by Crothers, Justice.
Ryan James (argued), Pittsburgh, PA, and Barton J. Cahill (appeared),
Moorhead, MN, for plaintiff and appellant.
Michael T. Andrews, Fargo, ND, for defendants and appellees.
Swanson v. Larson
No. 20210125
Crothers, Justice.
[¶1] Leland Swanson appeals from a judgment dismissing his breach of
contract and professional negligence claims against Mark Larson and Mark
Larson, CPA, PLLC. Swanson argues the district court prematurely and
improperly granted summary judgment in Larson’s favor. We affirm.
I
[¶2] In 2017, Swanson hired Larson to provide a forensic accounting of
various entities owned by Swanson. Larson provided the accounting services
in anticipation of litigation against Swanson’s former business partner. The
engagement agreement stated Larson was retained as a consulting expert and
would provide expert witness testimony upon request.
[¶3] During discovery in subsequent litigation against Swanson’s former
business partner, Larson was identified as an expert witness in a July 2018
response to interrogatories. Larson ended his engagement in January 2019 by
providing written notice to Swanson’s attorney. After Larson’s termination,
Swanson retained another expert to testify in the pending litigation.
[¶4] In January 2020, Swanson sued Larson for breach of contract and
professional negligence. Swanson alleged Larson breached their agreement
and committed professional negligence by terminating his services and
refusing to testify as an expert witness in the litigation against Swanson’s
former business partner.
[¶5] Larson moved for summary judgment, arguing the agreement did not
require him to testify at trial. He also argued the agreement was terminable
at will by either party, and he did not breach the agreement by terminating his
services. Swanson resisted the motion and requested more time for discovery.
[¶6] In December 2020, the district court denied Swanson’s request for
additional discovery and granted Larson’s summary judgment motion,
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concluding the agreement only required Larson to provide consulting services
for Swanson. The court concluded Larson did not breach the agreement by
terminating his services in January 2019 because the agreement did not have
a fixed term or expiration date. The court also concluded Swanson’s
professional negligence claim against Larson failed. The court entered
judgment dismissing Swanson’s lawsuit.
II
[¶7] 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.”
Dwyer v. Sell, 2021 ND 139, ¶ 6, 963 N.W.2d 292 (quoting Krebsbach v. Trinity
Hosps., Inc., 2020 ND 24, ¶ 7, 938 N.W.2d 133).
[¶8] “A party’s request for additional time for discovery under N.D.R.Civ.P.
56(f) is within the district court’s sound discretion.” PLS Servs., LLC
v. Valueplus Consulting, LLC, 2021 ND 99, ¶ 22, 960 N.W.2d 780. A court
abuses its discretion if it acts in an arbitrary, unreasonable, or unconscionable
manner, it misinterprets or misapplies the law, or its decision is not the
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product of a rational mental process leading to a reasoned
determination. Ryberg v. Landsiedel, 2021 ND 56, ¶ 21, 956 N.W.2d 749.
III
[¶9] Swanson argues the district court prematurely granted summary
judgment. In its December 2020 order, the court addressed
Swanson’s N.D.R.Civ.P. 56(f) request for additional discovery:
“This action commenced on January 28, 2020. The parties
have had ample time to conduct discovery. James’ affidavit asserts
that Swanson would request information from Larson on the scope
of the Engagement Agreement, facts regarding the termination of
the Engagement Agreement, and facts regarding Larson’s fees. In
short: James has failed to adequately explain the specific
information sought, how the information would have precluded
summary judgment, or why the information had not been
previously obtained. In any event, because the Engagement
Agreement is not ambiguous, its interpretation is limited to its
four corners, and extrinsic/parole [sic] evidence is inadmissible to
alter, change, or explain the contract contrary to its plain terms.
“The Court declines to order additional time for discovery
before deciding the motion for summary judgment. Swanson
cannot establish a claim for breach of contract under the plain,
unambiguous terms of the Engagement Agreement.”
[¶10] On appeal, Swanson does not address how the district court abused its
discretion by denying Swanson’s request for additional discovery. As the court
explained, Swanson failed to describe what information was sought and how it
might preclude summary judgment. The court did not abuse its discretion by
denying Swanson’s request for additional discovery.
IV
[¶11] Swanson argues the district court erred in its interpretation of the
engagement agreement. Swanson asserts the agreement was breached by
Larson terminating the agreement and refusing to testify after being disclosed
as a testifying expert. Swanson also contends the agreement was effective for
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the duration of the litigation, and Larson breached the agreement by
terminating his services before the litigation concluded.
A
[¶12] Chapter 9-07, N.D.C.C., governs the interpretation of contracts. The
parties’ intent is ascertained from the writing alone if possible. N.D.C.C. § 9-
07-04. “The language of a contract is to govern its interpretation if the language
is clear and explicit and does not involve an absurdity.” N.D.C.C. § 9-07-02.
“Matters of contractual interpretation present questions of law that are fully
reviewable on appeal.” Bismarck Fin. Grp., LLC v. Caldwell, 2020 ND 207, ¶ 9,
950 N.W.2d 155.
[¶13] The engagement agreement provides:
“You have requested, as a consulting expert witness in anticipation
of litigation, me to conduct a forensic examination of various
entities owned by Lee Swanson involving examination of Mr.
Swanson’s various companies’ books & records, including financial
statements and income returns for the purposes of determining
and communicating the result of my examination and my opinions
with respect to the economic damages in the related litigation. As
requested I am also available to provide expert witness testimony
but understand I will commence this engagement as a consulting
expert and be available for testimony if so requested.
“The engagement objective is to perform as a ‘finder [of] facts’ and
express various opinions for the ‘trier of facts.’”
[¶14] The district court concluded Larson did not breach the agreement by
terminating his services in January 2019 and refusing to provide opinion
testimony:
“Larson was only obligated to provide consulting services, that is,
conduct a forensic examination and communicate the results of
that examination, under the terms of the Engagement Agreement.
Larson could also possibly testify for Swanson, but only at
Swanson’s later request. The only reasonable interpretation of the
Engagement Agreement between Swanson and Larson was for
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consulting services of an indefinite duration, and the Engagement
Agreement was terminable at will, by either party, as a matter of
law. The Engagement Agreement is unambiguous, and extrinsic or
parole [sic] evidence is not admissible to alter, vary, explain or
change the contract.”
[¶15] The engagement agreement required Swanson to request Larson to
testify as an expert. The record does not show Swanson specifically requested
Larson to testify. However, in a July 2018 response to interrogatories, Swanson
named Larson as an “expert witness you have consulted or retained in relation
to this action.” Swanson’s response to interrogatories also mentioned Larson’s
attached affidavit “which describes with specificity the facts and opinions to
which he will testify.” Larson’s April 2018 affidavit offers his preliminary
opinions, but does not mention testifying at trial.
[¶16] Viewing the evidence in a light most favorable to Swanson, the disclosure
of Larson as an expert witness and Larson’s affidavit may raise a genuine issue
of material fact as to whether Swanson requested Larson to testify under the
engagement agreement. However, even assuming there was a request to
testify, Larson did not breach the agreement by terminating his accounting
services in January 2019 because the agreement was terminable at will by
either party.
B
[¶17] Swanson claims the engagement agreement had a definite duration. He
argues the agreement remained effective for the duration of the litigation, and
Larson’s termination before the litigation concluded was a material breach of
the agreement. Swanson asserts the agreement specified that Larson could
terminate only on Swanson’s failure to meet his payment obligations.
[¶18] “This court has held that where parties enter into an agreement by the
terms of which one party is to perform services for the other, and the contract
neither expressly nor impliedly fixes the time of its duration, it may be
terminated by either party by the giving of notice to the other.” N. Am. Pump
Corp. v. Clay Equip. Corp., 199 N.W.2d 888, 894 (N.D. 1972) (citing Myra
Found. v. Harvey, 100 N.W.2d 435, 437 (N.D. 1959)). In this state, the “general
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rule establishes that [an] [a]greement’s silence as to its duration is, without
more, an unambiguous declaration that it is terminable at will by either party.”
Olander v. State Farm Mut. Auto. Ins. Co., 317 F.3d 807, 810-11 (8th Cir. 2003).
[¶19] The district court concluded “[t]he Engagement Agreement does not fix
a date or set a duration on which it will terminate.” The court concluded that
under the plain language of the agreement, “Larson only agreed to conduct a
forensic examination of various entities . . . for the purposes of determining
and communicating the result of my examination and my opinions with respect
to the economic damages in the related litigation.” The court further concluded:
“At most, one could imply a term for so long as it took Larson to
complete the defined object of the Engagement Agreement, that is,
so long as it took Larson to conduct a forensic examination and
communicate the result of his examination and opinions. Larson
did complete the forensic examination and communicated the
results and his opinions to Swanson prior to terminating the
Engagement Agreement. Any implied term was met.”
[¶20] We agree with the district court. While the engagement agreement
allows Larson to terminate for “delinquent payment,” the agreement does not
“expressly . . . [fix] the time of its duration.” N. Am. Pump Corp., 199 N.W.2d
at 894. The agreement states Larson was retained “in anticipation of
litigation,” but it does not specify Larson was retained for the duration of the
litigation. The agreement cannot be interpreted to say Larson was employed
for the entirety of the litigation. Nor could the agreement be read to require
Swanson to use Larson for the duration of the litigation if Larson’s opinions
would have been unfavorable or unhelpful to Swanson. The court did not err
in concluding Swanson failed to establish a breach of contract claim under the
plain language of the engagement agreement.
V
[¶21] Swanson claims Larson committed professional negligence by failing to
render expert witness services under the proper standard of care.
[¶22] Professional negligence, or malpractice, is:
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“[T]he failure of one rendering professional services to exercise the
degree of skill and learning commonly applied under all the
circumstances in the community by the average prudent reputable
member of the profession, which results in injury, loss, or damage
to the recipient of those services or to those entitled to rely upon
them.”
Krebsbach, 2020 ND 24, ¶ 10. To establish a professional negligence claim, a
plaintiff must show the professional has a duty to protect another from injury,
a breach of the duty and a resulting injury proximately caused by the breach
of duty. Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Eng’g,
P.C., 419 N.W.2d 920, 921-22 (N.D. 1988).
[¶23] The district court dismissed Swanson’s professional negligence
claim, concluding Swanson’s complaint did not allege Larson breached a duty
by providing substandard forensic accounting services that caused Swanson to
suffer damages. The court concluded Larson’s termination of the engagement
agreement was “not conduct sufficient to make out a claim of professional
negligence as a matter of law.”
[¶24] A breach of contract does not, by itself, provide a basis for a negligence
action. Dakota Grain Co., Inc. v. Ehrmantrout, 502 N.W.2d 234, 236 (N.D.
1993). Conduct constituting a breach of contract does not subject the defendant
to an action in tort for negligence, unless the defendant’s conduct also
establishes a breach of an independent duty that does not arise from the
contract. Id. at 236-37; see also D & A Dev. Co. v. Butler, 357 N.W.2d 156, 158
(Minn. Ct. App. 1984) (to prevail on a negligence claim, a plaintiff must prove
as one element the defendant breached a duty imposed by law, not merely one
imposed by contract).
[¶25] Swanson’s complaint alleged Larson committed professional negligence
by:
“(a) unilaterally terminating the Engagement Agreement and
abandoning Swanson; (b) refusing to provide further litigation
support services to Swanson; (c) refusing to either meet or further
communicate with Swanson and/or his counsel regarding the
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further provision of litigation support services and the Litigation;
and (d) refusing to complete performance of the agreed upon
litigation support services, including, without limitation, by
testifying at trial in the Litigation.”
[¶26] Swanson’s allegations against Larson arise from the duties imposed by
the engagement agreement. As the district court concluded, Swanson did not
claim Larson breached an independent professional duty imposed by law by
providing substandard forensic accounting services. The district court properly
dismissed Swanson’s professional negligence claim against Larson.
VI
[¶27] Swanson’s remaining arguments are not necessary to our decision or are
without merit. The judgment is affirmed.
[¶28] Daniel J. Crothers, Acting C.J.
Gerald W. VandeWalle
Lisa Fair McEvers
Jerod E. Tufte
William A. Neumann, S.J.
[¶29] The Honorable William A. Neumann, S.J., sitting in place of Jensen, C.J.,
disqualified.
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