Opinion
No. C2-01-1214.
Filed January 15, 2002.
Appeal from the District Court, Hennepin County, File No. CT00012804.
James H. Kaster, Nicholas George May, Nichols Kaster Anderson, PLLP, (for appellants)
Jon A. Hanson, Candy Bajwa Olson, Hanson, Lulic Krall, (for respondents Stern and Stern Anderson, P.A.)
Robert E. Salmon, Melissa Dosick Riethof, Meagher Geer P.L.L.P., (for respondents Gold and Lane Altman Owens, LLP)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellants challenge the district court decision granting summary judgment on their legal malpractice claims against respondents. The court ruled that (1) the statute of limitations barred the claims against Minnesota respondents Samuel Stern and his law firm, Stern Anderson, P.A.; and (2) the court lacked personal jurisdiction over Massachusetts respondents Arthur Gold and his law firm, Lane Altman Owens, LLP. Because Stern's actions in 1995 provided the basis for a cause of action for legal malpractice that is not barred by the statute of limitations, we reverse and remand. But because the Minnesota court did not have personal jurisdiction over the Gold respondents, we affirm summary judgment dismissing the action against them.
FACTS
In 1981, appellant Bonnie Shapiro and her late husband incorporated their renaissance-themed fair as King's Faires, Inc. (King's Faires I) in Minnesota. A few years later, she purchased 79 acres in Massachusetts on which to operate the fair. After incurring the cost of purchasing and improving the property, the Shapiros and King's Faires I sought to restructure their debt; they were represented in their efforts by attorney Stern. In 1987, they entered into a sale and lease-back agreement with the former property owner, in which King's Faires I leased the property with an option to purchase it back during the terms of the lease, which ran through 2002.
King's Faires I failed to comply with the requirement in Minnesota law that it file annual reports with the state. Pursuant to Minn. Stat. § 302A.821, subd. 5 (Supp. 1991), the corporation was dissolved in 1991. The Shapiros were not notified because the secretary of state did not have their current address. They assert that Stern committed malpractice because he failed to advise them of the filing requirement, leading to the dissolution of their corporation.
In 1994, the Shapiros were offered the opportunity to repurchase the Massachusetts property. Appellants assert that although at some point during these negotiations Stern learned that King's Faires I had been statutorily dissolved in 1991, he did not advise them that King's Faires I could not enforce the lease. Instead, he advised them to form a new corporation, called King's Faire, Inc. (King's Faire II), and advised them that King's Faire II could enforce the lease and option to purchase. The Shapiros did not purchase the property and it was sold to a third party in 1995. Stern advised the Shapiros to execute an estoppel certificate, erroneously confirming that King's Faire II was a party to the lease and that the lease was in full force and effect.
In August 1996, Richard Shapiro passed away. Bonnie Shapiro retained Massachusetts attorney Gold to advise her as to the enforceability of the option to purchase the Massachusetts land. Appellants contend that Gold erroneously advised that King's Faire II had the right to exercise the option of purchasing the Massachusetts property. Relying on this advice, appellants sought to enforce the option, but the property owner refused to participate. After learning that King's Faire II was not the original party to the lease, the property owner sued, seeking a declaratory judgment that King's Faire II was not a party to the 1987 lease and was a tenant-at-large. Ultimately, King's Faire II settled the lawsuit with the property owner under what it described as extremely unfavorable terms so that it could continue to operate the fair on the property.
Appellants then sued Stern and Gold for legal malpractice. The district court dismissed the lawsuit against Stern based on the statute of limitations and dismissed the lawsuit against Gold for lack of personal jurisdiction. This appeal followed.
DECISION I.
A prima facie case of malpractice for negligent legal advice requires a showing of:
(1) the existence of an attorney-client relationship giving rise to a duty; (2) the negligent giving of advice or exercise of judgment on which the client detrimentally relies; and (3) the negligent advice or judgment must be the proximate cause of damage to the client.
Fiedler v. Adams, 466 N.W.2d 39, 42 (Minn.App. 1991) (citation omitted), review denied (Minn. Apr. 29, 1991). The statute of limitations for legal malpractice is six years. Minn. Stat. § 541.05, subd. 1(5); Herrmann v. McMenomy Severson, 590 N.W.2d 641, 643 (Minn. 1999).
A cause of action accrues and the statute of limitations begins to run when the cause of action will survive a motion to dismiss for failure to state a claim upon which relief can be granted. A cause of action survives a motion to dismiss so long as "some" damage has occurred as a result of the alleged malpractice.
Herrmann, 590 N.W.2d at 643 (citations omitted).
The district court ruled that: (1) appellants had experienced some damage from Stern's malpractice in 1991, when King's Faires I was dissolved for failure to comply with the statutory reporting requirements; (2) this legal malpractice claim was barred by the statute of limitations; and (3) all of the damages, including those that appellants asserted arose from the allegedly negligent legal advice in 1995, ran from the 1991 dissolution of the corporation and the corresponding loss of the right to enforce the purchase option. Consequently, the court held that no new cause of action arose in 1995 and the legal malpractice claim based on the 1995 advice was also barred by the statute of limitations.
Respondents contend that in arguing otherwise, appellants seek to have this court adopt the discovery rule, in which the cause of action would accrue upon discovery of the damage. Herrmann, 590 N.W.2d at 643. Minnesota, however, has rejected this doctrine. Id. Respondents also assert appellants incorrectly seek application of the "continuing representation" rule. See Fletcher v. Zellmer, 909 F. Supp. 678 (D.Minn. 1995) (discussing continuing representation doctrine), aff'd, 105 F.3d 662 (8th Cir. 1997). Respondents argue that appellants' claims that additional damages arose as a result of the 1995 malpractice were unsubstantiated.
Appellants assert that Stern committed a separate act of malpractice in 1995 when he advised them regarding their negotiations to enforce the option to buy. Rather than advising them that King's Faire II could not enforce the lease and the option because it was not a party to the lease, he recommended that they execute the estoppel certificate confirming to the new purchaser that King's Faire II was a party to the lease. As a result of this act of malpractice, they allege that they were unable to mitigate damages by obtaining an amendment to their lease acknowledging that King's Faire II was the tenant, or purchasing the property when it was offered in 1995. Loss of opportunity to mitigate potential damages due to an attorney's malpractice can form the basis for a claim of legal malpractice. See First Bank of Minn. v. Olson, 557 N.W.2d 621, 625 (Minn.App. 1997) (alleging malpractice leading to loss of priority right to redeem property, with damages including "some loss due to litigation-related delay in the sale of the property"), review denied (Minn. Mar. 18, 1997). The extent of this loss is a fact question for the jury. Id. at 624. Consequently, the claims from 1995 provided a basis for a new cause of action separate from the 1991 cause of action and are not barred by the statute of limitations.
II.
The next issue is whether Minnesota courts may exercise personal jurisdiction over Gold. Whether a Minnesota court has jurisdiction over a party is reviewed de novo. Northwest Airlines, Inc. v. Friday, 617 N.W.2d 590, 592 (Minn.App. 2000). In making this determination, the court will take the plaintiff's allegations and the facts supporting jurisdiction as true. Id. When in doubt, the jurisdictional issue will be decided in favor of retaining jurisdiction. Id.
Under Minnesota's long-arm statute, Minn. Stat. § 543.19, subd. 1 (2000), courts may "assert jurisdiction over defendants to the extent that federal constitutional requirements of due process will allow." Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn. 1995) (citation omitted). Where the defendant has few contacts with the forum state, due process "requires that the case arise out of or be related to the contacts with the forum" for specific jurisdiction to exist. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992).
Minnesota courts apply a five-factor test to determine whether the defendant has "purposefully availed itself of the privilege of conducting activities within the jurisdiction" such that minimum contacts required by due process exist. Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719 (Minn. 1985). The most important factors are the quantity, nature and quality, and the source and connection of the cause of action with these contacts. Id. at 719-20. The remaining two less important factors are the state's interest in providing the forum and the convenience of the parties. Id. at 720.
The supreme court has applied this test to determine that an out-of-state attorney had sufficient contacts to subject him to personal jurisdiction. Nat'l City Bank v. Ceresota Mill Ltd. Partnership, 488 N.W.2d 248, 254 (Minn. 1992). There, the attorney had numerous contacts with the state, had visited Minnesota four times for business meetings, and the subject of the allegedly defective legal advice concerned a project in Minnesota; while the state interest was limited, the exercise of jurisdiction would promote the convenience of the parties and efficient use of judicial resources. Id.
The facts asserted by appellants will be examined to determine whether they support a determination that specific jurisdiction exists. Gold's contacts with Minnesota included telephone calls, letters, and bills for legal fees to appellant, a telephone call to her daughter, telephone calls and letters to her Minnesota counsel, and telephone calls and letters to the Minnesota Secretary of State. These include the 20-page opinion letter in which Gold discussed the Massachusetts lease and concluded the option to purchase was enforceable. Appellants contend that Minnesota has an interest in seeing that its citizens receive adequate legal representation, and note that those who run King's Faires II work and reside in Minnesota and the corporation's documents are in Minnesota.
The legal advice Gold gave to appellants primarily concerned Massachusetts law related to appellants' Massachusetts property. The Gold respondents were not licensed to practice law in Minnesota, did not maintain an office in Minnesota, had never solicited or advertised in Minnesota, and did not seek business in Minnesota. Gold did not visit Minnesota to transact business for appellants and the property at issue was in Massachusetts. We agree with the district court that the facts fail to show that Gold purposefully availed himself of the benefits and protections of Minnesota by using the mail and telephone to contact appellants primarily about the Massachusetts property.