Opinion
No. A03-2060.
Filed September 21, 2004.
Appeal from the District Court, Hennepin County, File No. MC 03-007300.
Floyd Siefferman, Jr., Boris Parker, Saliterman Siefferman, P.C., (for appellants)
Robert F. Henson, Bruce C. Recher, Henson Efron, P.A., (for respondents Albert A. Andrews and Gray, Plant, Mooty, Mooty Bennett, P.A.)
Susan D. Thurmer, Tamara L. Novotny, Cousineau McGuire Anderson Chartered, (for respondents Kimberly A. Colgate and Colgate Santi, P.A.)
Considered and decided by Anderson, Presiding Judge; Toussaint, Chief Judge; and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellants challenge the summary judgment dismissal of their claims, arguing that the district court (1) erroneously determined that respondent Kimberly Colgate and appellants did not have an attorney-client relationship; (2) erroneously concluded that trustee Deborah Jecha's failure to bring a breach-of-trust claim against Colgate, the trustee's attorney, did not provide a basis for a direct claim against Colgate; (3) erroneously concluded that appellants did not have a direct cause of action against Colgate under Minn. Stat. § 501B.152 (2002); (4) misstated the standard of conduct applicable to trustee Andrews and clearly erred in finding that his conduct was reasonable; (5) erroneously concluded that appellants waived their equitable rights or acquiesced in respondents' conduct; (6) made clearly erroneous findings of fact based on conflicting evidence; (7) erred in impliedly concluding that appellants' experts did not present genuine issues of material fact for trial; (8) erred in denying appellants' motion to delay a ruling on respondents' motions to allow them additional time for discovery; (9) erred in dismissing appellants' complaint with prejudice; and (10) erred in granting respondent Colgate's motion for a protective order without a hearing. We affirm.
FACTS
On October 31, 2000, Ronald Jecha ("Ronald") died. He was survived by his wife, Deborah Jecha ("Deborah"), and his three sons from an earlier marriage, Steven, Richard, and David ("Jecha sons"). The focus of this case is on the alleged unlawful administration of the assets of Ronald's estate and the alleged failure of the trustees to fulfill Ronald's explicit wishes.
Ronald was the sole stockholder of Precision Diversified Industries, Inc. ("PDI"). Prior to his death, he retained attorney Albert Andrews of Gray, Plant, Mooty, Mooty Bennett, P.A. ("Gray Plant") to create a revocable trust, an irrevocable insurance trust, an agreement between the revocable and irrevocable trusts for assets, and a will. Andrews summarized Ronald's estate planning goals in a letter stating, "I understand your desires to be are [sic] (i) to provide adequately for Debbie for the rest of her life, (ii) to provide that the value of your Company pass down to your children, and (iii) to reduce estate taxes as much as possible."
First, Ronald's approximately $3.8 million in insurance proceeds were placed into the irrevocable trust. The irrevocable trust provided that after Ronald's death, the trustee was to divide the trust assets equally among living children, and distribute the proceeds in accordance with the language of the trust. The irrevocable trust specifically provided that when a child reached the age of 30 years, the trustee was to distribute the remaining principal and undistributed income to such child. This agreement also contained a "Statement of Intent," which provided:
In exercising the discretionary powers herein conferred on the Trustee by this Article, the Trustee shall be guided by the following statement of my purposes and intentions. . . . [I]t is my primary purpose to make provisions for my children and that they ultimately receive shares of my company, Precision Diversified Industries, Inc., and I desire that the Trustee shall liberally exercise its discretion to distribute income and principal of the trust for my children's benefit until they attain the age of thirty (30) years. . . . I desire the Trustee to exercise the discretionary powers conferred on it in a manner which will provide flexibility in the administration of the trust under conditions from time to time existing, and in exercising such powers, the discretion of the Trustee shall be conclusive as to the advisability of any distribution of income or principal, and as to the person to or for whom such distribution is to be made, and the same shall not be subject to judicial review.
Two years later, Ronald executed the revocable trust. He was the sole trustee of this trust during his lifetime, and he transferred all stock and assets of PDI into this trust, among other assets. The revocable trust provided for the creation of two sub-trusts, a marital trust and a residuary-family trust. The latter provided for transfers of income and principal to Deborah. The remainder from both sub-trusts was to pass to the Jecha sons after Deborah's death.
Ronald's will was essentially a pour-over will, making the same gifts and transfers as his revocable trust did and provided that all assets not in his revocable trust were to be poured into that revocable trust after his death. Ronald named Deborah as his personal representative.
A few years later, the trustees of both trusts entered into an agreement that provided that the irrevocable trust had the right to purchase the assets of the revocable trust and also granted the irrevocable trust a "right of first refusal" to purchase or acquire for value any and all assets held by the revocable trust within 60 days from the receipt of a notice from the revocable trust of its intent to transfer assets to any third party. The agreement stated that the irrevocable trust "shall pay full value for assets purchased" or acquired.
This agreement, in light of the original trust agreements, provided for two different options. First, the co-trustees of the irrevocable trust could use the insurance proceeds to purchase the PDI stock from the revocable trust. The revocable trust would then be funded with cash from the sale of the business, and this cash would be distributed to Deborah for her lifetime benefit, and then to the Jecha sons after her death. The irrevocable trust would then own the business, subject to the distribution of the stock to the Jecha sons. The second option was to distribute the insurance proceeds to the sons directly under the irrevocable trust, which would enable the sons to proceed in any way they saw fit with respect to a purchase of PDI.
In January 2000, Ronald retained attorney Kimberly Colgate of Colgate Santi, P.A. to revise the revocable trust and his will. The revisions, executed in early May, 2000, provided that Deborah was to become the trustee of the revocable trust after Ronald's death, and Andrews was nominated for a nine-month term to the sub-trust described as a marital deduction trust.
Although nominated, Andrews contends that he never accepted this position or assumed its duties, and to the best of his knowledge, this portion of the revocable trust was never funded.
Upon Ronald's death, Deborah became successor trustee of the revocable trust, and Deborah and Andrews were co-trustees of the irrevocable trust. The Jecha sons were beneficiaries of both trusts and all three sons had reached the age of 30.
Following Ronald's death, Deborah and the Jecha sons met with Colgate, who gave everyone copies of Ronald's estate documents and provided an overview of his estate, noting issues or decisions that would need to be addressed. At this meeting, Colgate explained that her role was to protect the assets within the estate plan and to give Deborah advice on how to go about protecting the assets. Colgate further stated, "Technically, Deb, I work for you." After the meeting, Colgate sent a letter to Deborah and the Jecha sons confirming the discussions that took place during this meeting and explaining the various ramifications of Ronald's estate plan. The letter stated the following:
I encouraged Richard, Steven and David to contact an estate attorney who could review my analysis of the documents, and make recommendations to them regarding their estates.
. . . .
Finally, I feel that if one or more of Ron's sons intend to be active in the business. [sic] They should locate competent business counsel in the area to assist with the many decisions associated with the operation of a complex business.
Colgate also noted that she "contacted Dave [McGraw] at Precision, to let him know that [she was] handling the estate matters for Deb".
After a few days passed, Colgate sent a private letter to Deborah, advising her individually as to her personal rights under the estate plan, explaining her options, and advising her not to step down as trustee of the trusts, but to retain professionals to advise her. Colgate then sent another letter to both Deborah and the Jecha sons providing a summary of the loan documents she had reviewed and presenting issues that may need to be addressed with Andrews. She also stated in this letter that she would "be more than happy to assume the role or roles you direct regarding these matters." Colgate accounted for the time spent preparing this letter by listing "Prepare Summary for everyone's advice" on her invoice. This invoice was only sent to Deborah. Deborah thereafter formally employed Colgate to provide ordinary legal advice and assistance in handling her husband's estate.
On November 6, 2000, Andrews met with Deborah and the Jecha sons. At this meeting, Steve volunteered to help oversee the business. Prior to Ronald's death, Deborah had not been involved in the management of PDI. Also at this meeting, one of the Jecha sons asked Andrews whether the insurance proceeds had to go to pay for the business, or whether the sons could receive the cash. Andrews explained that neither the Jecha sons nor the irrevocable trust were required to purchase the company, and he encouraged the Jecha sons to explore whether, and if so how, they each wanted to proceed with respect to the ownership of PDI. Andrews told them that, ultimately, the decision was theirs.
On November 9, 2000, Deborah elected herself, David McGraw, and Steve to the board of directors of PDI. The board of directors then appointed Deborah as acting president, and Steve and McGraw as vice presidents. Also in November, Steve requested that a neutral CEO run the company, but Andrews rejected his request.
The Jecha sons assert that they believed that from November to December 2000, both Andrews and Colgate were their attorneys. The Jecha sons neither formally asked for nor paid Colgate or Andrews for any legal work they performed.
The record reflects evidence that the Jecha sons did ask Gray Plant to represent them. J.C. Anderson of Gray Plant drafted a conflict letter concerning representation. This letter was never signed.
For the fiscal year ending October 31, 2000, PDI's audited financial statements reported a $475,530 loss. Andrews raised the issue of PDI's financial problems with Colgate stating the following in an e-mail:
[I] think it is essential that we have a valuation done of the company; so we know what we are dealing with — [I] talked to [J]im [C]opland who was recovering from an operation and he said unfortunately this was a bad time to value the company because it has not been doing well lately. . . .
In November 2000, John Edson, an appraiser recommended by PDI's accounting firm, was retained to do an appraisal of PDI. Then, on December 4, 2000, Andrews suggested that Deborah allow PDI's management access to information to make an offer to buy the company. Andrews contends that he made this suggestion because there was a need to sell the business, and at that time it was uncertain whether the Jecha sons had a plan with how to proceed with respect to the business. Andrews contacted David McGraw, the vice president and general manager of PDI, and Jim Copeland, PDI's accountant, to begin negotiations for the sale of PDI. Andrews contends that his actions were consistent with Ronald's estate plan because under the irrevocable trust and the agreement between the two trusts, the Jecha sons still had a right of first refusal to purchase the stock of PDI. On December 14, 2000, appellants retained attorneys at the Maslon, Edelman, Borman Brand law firm to represent them regarding the purchase of the PDI stock.
Edson stated his only substantive contact was with Steve Jecha. In early 2001, Edson gave Steve a draft of his analysis and his tentative conclusion that 100% of the equity interest in PDI is valued at $1,600,000. Steve told Edson that this conclusion was excessive. Edson requested additional information oriented to future prospects, but this information was never received by Edson.
In mid-December, the Jecha sons indicated that they wanted to buy PDI. In an e-mail to a Gray Plant attorney dated December 16, 2000, Steve stated, "I met with my brothers this morning to discuss a plan of action and they have all agreed to the plan I laid out — and will be participating." The Jecha sons contend that Andrews' actions constituted a breach of his duty of loyalty; they assert that Andrews and Colgate were plotting to create a bidding war between the beneficiaries and management. The record indicates, however, that Steve had no problem with the idea of management making an offer. In a December 20, 2000 e-mail to a Gray Plant attorney, Steve stated, "My brothers and I would have no problem with Mr. McGraw buying this company at the right price. . . ." Then, on December 28, 2000, the specifics of Steve's plan to buy PDI were presented to Deborah and Colgate. Neither Andrews nor anyone else from Gray Plant were party to this presentation.
By December 21, 2000, McGraw had submitted a letter of intent to purchase the assets of PDI for a purchase price of $3,526,412, which Colgate interpreted as providing a net $711,634 offer. In late-December, however, the co-trustees of the irrevocable trust decided to pay out the insurance proceeds to the Jecha sons so that they could proceed with a purchase of PDI if they wished to do so. On January 4, 2001, McGraw was fired, and Steve became president and CEO of PDI. On January 19, 2001, the insurance proceeds in the irrevocable trust were paid out to the Jecha sons. The Jecha sons did not object to receiving these funds and all three sons cashed their checks. The Jecha sons then created appellant Precision Diversified Industries, LLC to purchase PDI, and on March 22, 2001, the Jecha sons purchased PDI.
In December 2001, appellants brought a lawsuit against Deborah alleging breach of representations and warranties, fraud, and breach of fiduciary duty, asserting that Deborah had improperly performed her duties as trustee. In early May 2003, appellants commenced a second lawsuit against Deborah, Colgate, Andrews, and the attorneys' respective law firms. Colgate filed a motion to dismiss and Andrews filed a motion for summary judgment. Approximately one week after filing the second suit, appellants executed a settlement agreement with Deborah, dismissing all claims against her in both lawsuits with prejudice.
The dispositive motions were heard on October 8, 2003. On October 27, 2003, the district court issued a protective order generally providing that Colgate would not need to respond to additional discovery until after a ruling on Colgate's motion. The district court thereafter granted respondents' motions. Appellants filed a motion to reconsider or vacate the order; the motion was denied. This appeal follows.
DECISION I.
The first issue is whether the district court erred in granting (1) Colgate and her firm's motion to dismiss, and (2) Andrews and his firm's motion for summary judgment. When evidence and documents outside the pleadings are considered, the district court regards a motion to dismiss as a summary judgment motion and the appellate court reviews the district court's determination under a summary judgment standard. Northern States Power Co. v. Minn. Metro. Council, 667 N.W.2d 501, 506 (Minn. App. 2003).
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. Id. A motion for summary judgment shall be granted when the "pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no issue of material fact and that either party is entitled to a judgment as a matter of law. Minn. R. Civ. P. 56.03; Asmus v. Ourada, 410 N.W.2d 432, 434 (Minn.App. 1987). "On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). A genuine issue of material fact exists when the nonmoving party presents evidence that creates a doubt as to a factual issue that is "probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions." DLH, Inc. v. Russ, 566 N.W.2d 60, 71 (Minn. 1997). "[T]he party resisting summary judgment must do more than rest on mere averments." Id. A genuine issue for trial must be established by substantial evidence. Id. at 69-70. Any doubt as to the existence of a material fact must be resolved in finding that the fact issue exists. Rathbun v. W.T. Grant Co., 300 Minn. 223, 230, 219 N.W.2d 641, 646 (1974).
A. Claims specific to Colgate and her law firm
(i) Did the district court erroneously determine that there was no attorney-client relationship between Colgate and appellants?
In order to recover in a legal malpractice action, a plaintiff must establish three elements: "(1) that an attorney-client relationship existed; (2) that the attorney acted negligently or in breach of contract; and (3) that the negligence or breach proximately caused damage to the plaintiff." TJD Dissolution Corp. v. Savoie Supply Co., 460 N.W.2d 59, 62 (Minn.App. 1990). "[F]ailure of proof as to any one of the enumerated [legal malpractice] elements defeats recovery." Godbout v. Norton, 262 N.W.2d 374, 376 (Minn. 1977). Whether an attorney-client relationship exists is a factual determination based on the communications and circumstances of each case. Admiral Merchs. Motor Freight, Inc. v. O'Connor Hannan, 494 N.W.2d 261, 265 (Minn. 1992). This court accepts the district court's findings of fact unless they are clearly erroneous. Minn. R. Civ. P. 52.01; Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999). But it is improper for a district court to weigh facts or determine the credibility of affidavits and other evidence on summary judgment. Anderson v. Liberty Lobby, 477 U.S. 242, 249, 106 S. Ct. 2505, 2511 (1986).
In Minnesota, an attorney-client relationship can be created under a "contract theory" or a "tort theory." TJD, 460 N.W.2d at 62; Schuler v. Meschke, 435 N.W.2d 156, 161 (Minn.App. 1989), review denied (Minn. Apr. 19, 1989). An attorney-client relationship exists under the "contract theory" if the parties explicitly or implicitly agree that the attorney will provide legal services to the client. TJD, 460 N.W.2d at 62 (finding no attorney-client relationship under the contract theory where appellants never requested attorney to represent them, attorney never promised to represent them, and appellants were never billed for attorney's services); Schuler, 435 N.W.2d at 161. An attorney-client relationship exists under the "tort theory" whenever a person "seeks and receives legal advice from an attorney in circumstances in which a reasonable person would rely on such advice." TJD, 460 N.W.2d at 62 (quotation omitted). "[A]s a matter of law, a party's mere expectation [or assumption] that an attorney will represent him or her, is insufficient to create an attorney-client relationship." Gramling v. Mem'l Blood Ctrs. of Minn., 601 N.W.2d 457, 460 (Minn.App. 1999), review denied (Minn. Dec. 21, 1999); Schuler, 435 N.W.2d at 162 (finding no attorney-client relationship under the tort theory where parties did not seek advice from an attorney nor had the attorney ever previously represented the plaintiff).
Appellants assert that Colgate met and advised the Jecha sons in early November 2000, Colgate sent letters to the Jecha sons, all three of the Jecha sons believed Colgate was acting as their attorney, and an expert retained by appellants, Professor Geoffrey C. Hazard, Jr., opined that an attorney-client relationship was created between Colgate and the Jecha sons. Appellants argue that this evidence shows that Colgate and the Jecha sons had an attorney-client relationship and that the district court improperly weighed the evidence. We disagree, under either the contract or tort theory, and determine there is not a genuine issue of material fact present on this issue for trial.
The Jecha sons never requested legal advice from Colgate, nor did Colgate ever represent the Jecha sons in the past. The record reflects that Colgate met with the Jecha sons in early November to deliver copies of Ronald's estate documents and to give an overview of the Jecha estate. In addition, the letters written by Colgate to the Jecha sons after the meeting were informational, and did not include specific advice. See Schuler, 435 N.W.2d at 162 (stating that information provided in a letter explaining various documents to members of a cooperative is not the type of information that would establish an attorney-client relationship even if relied upon).
Furthermore, even if the letters did constitute legal advice, appellants failed to establish that they relied upon the purported advice and that their reliance was reasonable given the circumstances. See TJD, 460 N.W.2d at 62 (stating that reliance on legal advice must have been reasonable before an attorney-client relationship may be created under the tort theory). Generally, the issue of whether appellants reasonably relied on the representations or advice of the attorney is for the trier of fact. Veit v. Anderson, 428 N.W.2d 429, 433 (Minn. App. 1988). But here, there are no genuine issues of material fact to show that any reliance by the Jecha sons would have been reasonable. First, the Jecha sons were aware that Colgate was representing Deborah. See TJD, 460 N.W.2d at 62 (stating that appellant's knowledge that attorney had represented a corporation in the past was a factor reflecting that reliance upon attorney's advice was unreasonable as a matter of law). Second, Colgate advised the Jecha sons to retain counsel for the estate and business matters. See id. (noting that reliance is unreasonable where attorney advised purported client to retain own counsel). Third, the fact that the Jecha sons retained their own attorney within a month and a half of the initial meeting with Colgate, before they purchased PDI, and before commencing a malpractice lawsuit, reflects that no reliance occurred. Fourth, the fact that the Jecha sons did not pay for any legal services Colgate provided reinforces that no attorney-client relationship existed.
A movant is entitled to summary judgment where the nonmoving party has failed to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986). Because the facts establish that any reliance by the Jecha sons would have been unreasonable as a matter of law, the district court did not clearly err in concluding that there was no attorney-client relationship between Colgate and the Jecha sons and that summary judgment was appropriate.
(ii) Did the district court erroneously determine that Deborah's refusal to bring an action for breach of trust on behalf of the beneficiaries (the Jecha sons) against Colgate did bar the beneficiaries from bringing a direct action against Colgate?
"When the trustee fails to bring suit against a third[-]party tortfeasor, the beneficiaries may properly bring an action against the trustees and third parties as co-defendants." Uselman v. Uselman, 464 N.W.2d 130, 137-38 (Minn. 1990). Appellants assert the Uselman exception applies to this case because Steve advised Deborah to pursue claims against Colgate for injuries she caused to the estate, and Deborah refused. We conclude that the Uselman exception does not apply here.
In order for the Uselman exception to apply, Deborah's decision to not pursue a lawsuit against Colgate must be improper. See id. (relying on Restatement (Second) of Trusts § 282). Restatement (Second) of Trusts § 282 provides, "If the trustee improperly refuses or neglects to bring an action against the third person, the beneficiary can maintain a suit against the trustee and the third person." Here, appellants have not shown that Deborah's decision was in any way improper. Furthermore, in Witzman v. Gross, 148 F.3d 988, 991 (8th Cir. 1998), the court explained that the Uselman decision "described, at most, a mechanism for holding both trustees and third parties responsible when trustees fail to carry out their fiduciary duty. . . . The court neither described nor attempted to create any third party duties to a trust beneficiary." Because appellants are trying to assert a direct claim against Colgate under this theory for her breach of duty, or for malpractice on her part, and are not attempting to assert a claim against Colgate because Deborah breached her duties, the Uselman exception does not apply here.
Appellants assert in the alternative that "a nonclient may maintain a cause of action against an attorney for professional malpractice as an intended third-party beneficiary in those limited situations where the client's sole purpose in retaining the attorney is to benefit the nonclient directly, and the attorney's negligence instead causes the nonclient to suffer a loss." Goldberger v. Kaplan, Strangis and Kaplan, 534 N.W.2d 734, 738 (Minn.App. 1995), review denied (Minn. Sept. 28, 1995).
Determining whether an attorney owes a duty to a nonclient involves a balancing of factors, including: (1) the extent to which the transaction was intended to affect the nonclient; (2) the foreseeability of harm to the nonclient; (3) the degree of certainty that the nonclient suffered injury; (4) the closeness of the connection between the attorney's conduct and the injury; (5) the policy of preventing future harm; and (6) whether recognition of liability under the circumstances would impose an undue burden on the profession.
Id. Appellant asserts that under these factors, Colgate owes a duty to appellants. We disagree.
Here, like in Goldberger, the attorney's duties were to Deborah and the estate, and appellants were merely incidental beneficiaries and therefore lack standing to sue the trustee's attorney. See id. at 739 ("[A]t best, individual beneficiaries of the estate are only `incidental beneficiaries' of the attorneys' services."); see also Witzman, 148 F.3d at 990 ("[A]s a general rule of trust law, a beneficiary cannot bring an action at law in a trust's stead against a third party for torts or other wrongs. In Minnesota, this principal extends to beneficiaries who attempt to sue a trustee's attorney for legal malpractice." (citations omitted)). Also, the Jecha sons' interests were protected because if Deborah breached her duties, the Jecha sons could hold Deborah responsible. And if any decision by Deborah was based upon negligent advice from Colgate, Colgate would be liable to Deborah for malpractice. Goldberger, 534 N.W.2d at 739. Following Goldberger, we conclude that the Jecha sons do not have standing to sue Colgate directly as a third-party beneficiary.
(iii) Did the district court erroneously conclude that appellants could not maintain a direct cause of action against Colgate under Minn. Stat. § 501B.152 (2002)?
Statutory construction is a question of law, which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998). Appellants argue that under Minn. Stat. § 501B.152, they could maintain a direct cause of action against Colgate arising out of Deborah's delegation of her duties to Colgate. Appellants assert that there is a material fact issue surrounding the delegation of duties because Deborah asserts that she did delegate a majority of her duties and actions as trustee of the trusts to Colgate and Andrews and their respective law firms.
Minn. Stat. § 501B.152(a)(2) allows a trustee to delegate any trust functions that a prudent person could delegate to another person and to do so by establishing clearly the scope and terms of such delegation. Once the trustee properly delegates trust functions according to the statute, the trustee "is not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the trust function was delegated." Minn. Stat. § 501B.152(c). The statute also provides that once a proper delegation has occurred under "a trust that is subject to the laws of this state, an agent submits to the jurisdiction of the courts of this state." Minn. Stat. § 501B.152(d). The statute therefore implies that the agent to whom the duties were delegated becomes liable for misconduct.
Here, appellants did not provide any evidence as to the scope and terms of the purported delegation, which are essential elements of a proper delegation. Therefore, the district court did not err in concluding that appellants could not maintain a direct cause of action against Colgate under Minn. Stat. § 501B.152.
Appellants also assert the Deborah failed to meet her obligation with respect to the administration and management of the revocable trust assets, specifically with the Schwab account and the condominium. Appellants similarly argue that Deborah delegated her duties to Colgate, and therefore Colgate should be liable for Deborah's breach. This argument fails for the same reason stated earlier; there was not evidence of a proper delegation under the statute.
B. Claims specific to Andrews and his law firm
(i) Did the district court apply the wrong standard of conduct to Andrews as trustee and erroneously make factual determinations as to the reasonableness of Andrews' actions?
The district court's analysis of Andrews' conduct as trustee is limited to whether Andrews abused his discretion. See United States v. O'Shaughnessy, 517 N.W.2d 574, 577 (Minn. 1994) ("So long as the trustees act in good faith, from proper motives, and within the bounds of reasonable judgment, the court will not interfere with their decisions."); see also Restatement (Second) of Trusts § 187 ("Where discretion is conferred upon the trustee with respect to the exercise of a power, its exercise is not subject to control by the court, except to prevent an abuse by the trustee of his discretion."). The district court's analysis as to the claims against Andrews is consistent with this standard.
Appellants argue that Andrews, as trustee of the irrevocable trust, owed a duty of loyalty to the Jecha sons as beneficiaries. Appellants assert that Andrews breached that duty by taking into consideration his own advantages and the advantages of his co-trustee, Deborah. Specifically, appellants assert that (1) Andrews' emails indicate that his loyalty and primary concerns were for Deborah, and not the Jecha sons, (2) Andrews concealed certain information from the Jecha sons when dealing with the prospective sale of PDI, (3) Andrews denied several of Steve's requests, including the request to not allow management the right to buy PDI and the request for a temporary CEO for PDI, and (4) Andrews' suggestion to allow management to review the company's confidential information for purposes of submitting a bid was in direct conflict with Andrews' role as trustee of the irrevocable trust.
Minnesota law imposes a duty on a trustee to act with loyalty to the trust and the beneficiaries. In re Lee's Estate, 214 Minn. 448, 457-58, 9 N.W.2d 245, 250 (1943). But where a trust agreement empowers a trustee to exercise discretion with conflicts of interest, the trustee's duty of loyalty can be modified by the trust agreement, and the trustee can act free of liability for breach of fiduciary duty. In re Irrevocable Inter Vivos Trust Established by R.R. Kemske by Trust Agreement dated Oct. 24, 1969, 305 N.W.2d 755, 760 (Minn. 1981) (concluding the trust agreement may waive or modify the trustee's duty of loyalty to the beneficiaries).
Here, Andrews did not breach a duty of loyalty to the Jecha sons because the irrevocable trust modified his duty of loyalty. The irrevocable trust authorized the trustees to "enter into any transaction authorized by this Article with . . . the Trustees of any other trust estate notwithstanding the fact that a Trustee hereof may also be . . . a trustee of any other such trust estate." In other words, the irrevocable trust agreement authorized a purchase of PDI from the revocable trust. The irrevocable trust also provided that "discretion of the trustee shall be conclusive as to the advisability of any distribution of . . . the principal, . . . and the same shall not be subject to judicial review." Therefore, the irrevocable trust agreement empowered Andrews to exercise discretion even with the inherent conflicts of interest. When considering the plain language of the trust agreements, Andrews' duty of loyalty was modified and he did not breach that duty.
Appellant also argues that Andrews abused his discretion in administering the irrevocable trust because Andrews' actions were not consistent with Ronald's intent. See O'Shaughnessy, 517 N.W.2d at 577 ("Any attempt to violate the settlor's intent or the trust's purposes is considered an abuse of that discretion."). Six factors are to be considered when determining whether a trustee abused his discretion:
(1) the extent of the discretion conferred upon the trustee by the terms of the trust; (2) the purposes of the trust; (3) the nature of the power; (4) the existence or non-existence, the definiteness or indefiniteness, of an external standard by which the reasonableness of the trustee's conduct can be judged; (5) the motives of the trustee in exercising or refraining from exercising the power; and (6) the existence or nonexistence of an interest in the trustee conflicting with that of the beneficiaries.
In re Trusts A B of Divine, 672 N.W.2d 912, 919-20 (Minn. App. 2001) (quotation omitted).
We conclude that under these factors, Andrews' actions as trustee were within his discretion, and were reasonable decisions made under the circumstances. First, Ronald was aware that he was appointing the same people as trustees of both the irrevocable and revocable trusts. He intended them to have control over making decisions as both a purchaser and as the seller of the stock of PDI. Second, the distribution of the irrevocable trust principal, which enabled the Jecha sons to negotiate their own deal for the purchase of PDI or to use the proceeds in other ways, is consistent with Ronald's estate planning goals. Third, once the trust principal was distributed, the Jecha sons were represented by competent independent counsel, and could have either performed additional research as to the advisability of purchasing PDI or retained the proceeds from the distribution and declined to purchase PDI. And finally, as to the ultimate decision to be made here, whether to buy the business, motive is not at issue, given the pre-distribution recognition by Andrews that it was ultimately "the boys' choice" to purchase the business and by the fact that Andrews did not personally benefit from the distribution to the Jecha sons. Therefore, after applying the factors discussed in Divine, we conclude that the district court did not err in concluding that Andrews did not abuse his discretion as trustee by distributing the trust principal to the Jecha sons.
Similarly, we conclude that Andrews did not breach a fiduciary duty or abuse his discretion in his dealing with any financial information regarding PDI, in his suggestion to allow management access to company information, or in his participation in the appraisal of PDI. First, as to PDI's financial information, the record reflects that Andrews did not conceal material financial information from appellants. It is true that Copland did e-mail Andrews expressing his view that PDI was not doing well. But there is no evidence that any specific financial information was disclosed to Andrews.
Second, as to making the suggestion regarding management's potential offer, it was reasonable for Andrews to explain sale options to Deborah because a sale was in Deborah's interests considering the financial condition of PDI and it was not clear at the time whether the Jecha sons wanted to purchase PDI. Also, the agreement between the two trusts provided that the irrevocable trust had the right of first refusal to purchase the stock of PDI in the event the revocable trust had a third-party offer it was willing to accept. Therefore, the language of the agreement contemplated having Deborah accept offers for the purchase of the PDI stock. In addition, this issue essentially became moot after the Jecha sons indicated they wanted to purchase PDI. At that time, negotiations ensued and PDI was sold to the Jecha sons. Furthermore, Steve commented in an e-mail that he and his brothers "would have no problem with Mr. McGraw buying this company at the right price." It is inconsistent for appellants to now contend that encouraging an offer by a third party is a breach of fiduciary duty when at the time, they were encouraging the offer.
Third, as to Andrews' participation with the appraisal, it was reasonable for Andrews to request an appraisal under the circumstances in order to obtain a more accurate estimate of the fair market value of PDI, which was required under the trust agreements.
Accordingly, Andrews neither breached a duty of loyalty nor abused his discretion in his actions as trustee, and the district court's grant of summary judgment on those claims is appropriate.
(ii) Did the district court erroneously determine that appellants have waived any rights or remedies available to them at law or that appellants knowingly acquiesced in respondents' conduct?
"Waiver is the intentional relinquishment of a known right. . . ." Hedged Inv. Partners, L.P. v. Norwest Bank, Minn., N.A., 578 N.W.2d 765, 771 (Minn.App. 1998). The question of waiver is largely one of intention and "[t]he burden of proving it rest[s] upon the defendant, and, to justify a finding of waiver, an intention to waive should be clearly shown." Pruka v. Maroushek, 182 Minn. 421, 424, 234 N.W. 641, 642 (1931). "[I]ntention can be inferred from conduct." Hedged Inv. Partners, 578 N.W.2d at 771. "Waiver is ordinarily a question of fact for the jury." Meagher v. Kavli, 251 Minn. 477, 486, 88 N.W.2d 871, 878 (1958). "It is only where there is but one inference which can be drawn from the facts that the question of waiver becomes one of law." Id.
A beneficiary cannot hold a trustee liable for an act or omission of the trustee as a breach of trust if the beneficiary prior to, or at the time of the act or omission, consented to the act or omission. Restatement (Second) of Trusts §§ 216(1), 218. Here, appellants accepted the $3.8 million in distributions from the irrevocable trusts. Because the cashing of the checks is enough to constitute acceptance, Lundeen v. Cozy Cab Mfg. Co., 288 Minn. 98, 101, 179 N.W.2d 73, 76 (1970), other instruments of consent or waiver are not needed to constitute actual waiver. Appellants' acceptance of the money constituted consent and bars any claims that they might have had for breach of fiduciary duties for that distribution. Appellants' actual knowledge of the status of PDI at the time of the distribution is irrelevant.
C. Claims pertaining to both Colgate and Andrews, and their law firms
(i) Did the district court clearly err in its findings of fact?
When reviewing a district court's findings of fact, this court may not set such findings aside unless they are clearly erroneous. Minn. R. Civ. P. 52.01; Rogers, 603 N.W.2d at 656. "If there is reasonable evidence to support the district court's findings, we will not disturb them." Rogers, 603 N.W.2d at 656.
Appellants argue that the district court made several erroneous findings of fact and assert that because of those errors, in combination with evidence in favor of appellants, we must reverse. We disagree. The several facts that appellants take issue with or raise are either not relevant to respondents' motions or are not supported by the record. Because the fact-findings are either not clearly erroneous or can be viewed as harmless error, reversal is not justified. See Minn. R. Civ. P. 61 (stating harmless error to be ignored).
(ii) Did appellants' experts' opinions create a genuine issue of material fact?
Appellants argue that the expert testimony of Hazard, among others, created genuine issues of material fact as to whether Andrews and Colgate breached their duties. Hazard opined that Colgate and Andrews were acting under a "conflict of interest that could have improperly influenced their judgment and assistance on behalf of the trusts and of the trustees in their capacity as such." Hazard also stated, "[I]n my opinion Mr. Andrews' conduct fell below recognized standards of conduct for a trustee situated as Mr. Andrews was situated . . . his conduct constituted negligence," and, "Ms. Colgate established a lawyer client relationship with Steven, David and Richard Jecha, and as well with Deborah Jecha."
First, the mere fact that the district court did not specifically address the expert testimony in its order does not imply that the testimony was not given appropriate consideration by the district court. And second, Hazard only opined that Colgate and Andrews' acting under conflict of interest could have improperly influenced their judgment and assistance, not that the conflict of interest did improperly influence Colgate and Andrews. In addition, Hazard's declaration regarding Andrews' negligence does not go on to explain what the recognized standards of conduct were. In a breach of fiduciary duty case against a professional trustee, "the plaintiff must present evidence of the standard of care, and that the standard of care was breached." In re Trusts A B of Divine, 672 N.W.2d at 917 (quotation omitted). Minnesota courts disregard conclusory opinions of experts in summary judgment motions that have no adequate foundation. See Potter v. Pohlad, 560 N.W.2d 389, 395 (Minn.App. 1997) (noting that conclusory statements of an expert cannot sustain an appellant's claim), review denied (Minn. June 11, 1997). Because Hazard's opinions are conclusory and do not explain the recognized standard of care allegedly violated here, they do not create a genuine issue of material fact which survives summary judgment.
II.
The next issue is whether the district court abused its discretion in denying appellants' motion requesting the court to delay ruling on respondents' motions and to allow for additional discovery. A district court's decision to deny a motion for a continuance to conduct discovery is reviewed under an abuse of discretion standard. Cherne Contracting Corp. v. Wausau Ins. Cos., 572 N.W.2d 339, 346 (Minn.App. 1997), review denied (Minn. Feb. 19, 1998). Summary judgment should not be granted when an opposing party has been unable to complete relevant discovery through no fault of his own. Rice v. Perl, 320 N.W.2d 407, 413 (Minn. 1982). When the nonmoving party has been allowed only minimal discovery and the information that party needs to survive summary judgment is in the moving party's sole possession, summary judgment may be premature. U.S. Bank Nat'l Ass'n v. Angeion Corp., 615 N.W.2d 425, 433-34 (Minn.App. 2000) ( review denied (Minn. Oct. 25, 2000). But summary judgment is appropriate in cases that are not deserving of a trial before the end of discovery deadlines where there is no showing that additional discovery would aid the district court in its Rule 56 analysis. McCormick v. Custom Pools, Inc., 376 N.W.2d 471, 477 (Minn.App. 1985), review denied (Minn. Dec. 30, 1985).
Appellants argue that the district court should have delayed its ruling to provide them with an opportunity to take depositions of the respondents. Appellants also contend they had received certain documents from Colgate which supported their expert opinion, and that these documents justified a continuance of the motions to permit further discovery.
Minnesota courts refuse to continue a summary judgment motion to allow additional discovery when the party is merely conducting a fishing expedition or fails to specify what evidence is sought. See, e.g., Alliance for Metro. Stability v. Metro. Council, 671 N.W.2d 905, 919 (Minn.App. 2003) (stating that an affidavit brought pursuant to Minn. R. Civ. P. 56.06 "must be specific about the evidence expected, the source of discovery necessary to obtain the evidence, and the reasons for the failure to complete discovery to date."). Here, while appellants identified the source from which they sought discovery, they failed to specifically identify what additional discovery was expected. Further, appellants have failed to identify how any evidence sought might change the analysis of any of the issues presented in this case. The district court had considerable documentary evidence and affidavits upon which to base its decision, including numerous documents, affidavits of all the parties, and deposition testimony of appellants and others. The district court's thorough memorandum reflects that it based its decision on the voluminous evidence already in the record. Therefore, the district court did not abuse its discretion in denying appellants' motion.
III.
The next issue is whether the district court abused its discretion in dismissing appellants' complaint with prejudice. Appellants assert that a dismissal with prejudice was error because the district court did not provide a rationale for dismissing appellant's counts for conversion, rights to an accounting, breach of contract, tortious interference with contract, aiding and abetting, and unjust enrichment.
"[A]dismissal with prejudice is a drastic form of relief, it should be granted only in exceptional circumstances where there are considerations of willfulness and contempt for the authority of the court or the litigation process, in addition to prejudice to the parties involved." Peters v. Waters Instruments, Inc., 312 Minn. 152, 155-56, 251 N.W.2d 114, 116 (1977) (quotation omitted). Here, the district court gave a rather cursory explanation for dismissing appellants' claims for interference with contract, breach of contract, unjust enrichment, and aiding and abetting. But legal reasoning need not be given, and the district court's order may be affirmed, if there is not sufficient evidence in the record to create a genuine issue of material fact. See Schumacher v. Schumacher, 627 N.W.2d 725, 728-29 (Minn.App. 2001) (affirming district court's grant of summary judgment on appellant's promissory estoppel claim even when the district court gave no legal reasoning in its order for the grant).
The mere "scintilla of evidence" that may support the non-moving party's position is not sufficient to deny to the moving party a grant of summary judgment. Bondy v. Allen, 635 N.W.2d 244, 248 (Minn.App. 2001). The non-moving party must present enough evidence on which the jury could reasonably find in its favor. Id. Here, Andrews cannot be found liable for aiding and abetting because to be an aider and abettor one must know that the conduct he was aiding and abetting was a tort and the conduct must amount to substantial assistance. Witzman v. Lehrman, Lehrman Flom, 601 N.W.2d 179, 187 (Minn. 1999). The record does not reflect that Andrews knew any conduct was a tort. Also, the record does not support the conclusion that Andrews can be found liable for unjust enrichment because "it must be shown that a party was unjustly enriched in the sense that the term `unjustly' could mean illegally or unlawfully." Custom Design Studio, a Div. of L.B. Baron Properties, Inc. v. Chloe, Inc., 584 N.W.2d 430, 433 (Minn.App. 1998), review denied (Minn. Nov. 24, 1998). Here, receiving fees for services pursuant to an agreement is not illegal or unlawful. Similarly, Andrews cannot be found liable for conversion because he received his fees in a legal manner and he distributed the trust funds legally as well. See DLH, 566 N.W.2d at 71 (stating that conversion occurs when a person willfully interferes with the personal property of another without lawful justification, thereby depriving the lawful possessor of use and possession). In addition, Andrews could not be found liable for interference with a contract or breach of contract because he, along with Deborah, only exercised their authorized discretion to distribute the trust principal to the Jecha sons, and the distribution did not interfere with the Jecha sons' right to purchase PDI. See Bebo v. Delander, 632 N.W.2d 732, 738-39 (Minn.App. 2001) (concluding that when a party has discretion under the contract to do the alleged unlawful act, that party cannot be held liable for breach of contract or tortious interference of the contract), review denied (Minn. Oct 16, 2001). And finally, a claim for an accounting is not justified here because appellants have not provided any evidence explaining what the accounting is for or explaining why an accounting is needed. See Stockmen's Ins. Agency, Inc. v. Guarantee Reserve Life Ins. Co., 217 N.W.2d 455, 459-60 (N.D. 1974), cert. denied, 419 U.S. 869 (1974) (stating that the party claiming a right to an accounting must prove that right).
Because the record does not reflect sufficient evidence to create a genuine issue of material fact as to these additional claims, and because additional evidence would not create a genuine issue of material fact as a matter of law, granting summary judgment with prejudice is justified by the facts and circumstances of this particular case.
IV.
The final issue is whether the district court abused its discretion in granting Colgate's motion for a protective order during a teleconference, which effectively prevented appellants from conducting discovery. Absent a clear abuse of discretion, a district court's decision regarding discovery, including granting protective orders, will not be disturbed by a reviewing court. WDSI, Inc. v. County of Steele, 672 N.W.2d 617, 622 (Minn.App. 2003).
At the time the protective order was issued here, there was ample evidence in the record for the district court to properly analyze respondents' motions. In fact, the district court had already held the hearings on the dispositive motions. Disallowing further discovery, which may prove to be unnecessary and intrusive depending on the district court's ruling on the motions, was therefore not an abuse of the district court's discretion. See id. (citing Minn. R. Civ. P. 26.03, "Upon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court . . . may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.").