*1 364
BABCOCK PLACE LIMITED PARTNERSHIP, Partnership,
a Montana Limited Appellant, Plaintiff and v.
BERG, LILLY, & P.C., ANDRIOLO TOLLEFSEN,
n/k/a & BERG, LILLY TOLLEFSEN, P.C.; INDIVIDUAL JOHN DOES 1 20; THROUGH DOE JOHN PARTNERSHIPS A Z; THROUGH JOHN DOE PROFESSIONAL
CORPORATIONS OR OTHER
ENTITIES AA TO ZZ, Respondents. Defendants No. 02-365. January 23, Submitted on Briefs 2003. Rehearing Denied June 2003. April 25, Decided 2003. MT 111. Mont. 364. P.3d 1145. *2 Heitz, Firm, Appellant: Parker, Casey
For Mark D. Parker Law Billings. Harman, Margy Bonner, Steven J. Brown Respondents:
For Firm, P.C., Law Billings. Opinion
JUSTICE delivered the of the Court. TRIEWEILER Plaintiff, (“Babcock”), Place Partnership Limited filed District Judicial complaint a Court Fourteenth alleged County, District in Musselshell which it that the Defendant firm”) (“the Tollefsen, P.C., Lilly, professionally Andriolo & Berg, summary parties the Plaintiff. Both moved for negligent damaged summary judgment. judgment The District Court awarded appeals the District defendant and dismissed the action. Babcock the District summary We reverse granting judgment. Court’s order Court’s order and remand for further proceedings. The issue on appeal is whether the District Court erred when it
granted the law firm’s motion for summary judgment.
FACTUAL AND PROCEDURAL BACKGROUND Babcock is a partnership established for the purpose ofdeveloping and selling real in Bozeman, estate In Montana.
purchased real along estate West Babcock Street in Bozeman on which develop residential subdivision that would be known as “Babcock In Meadows.” the spring Crutcher, Anson partner limited Babcock, contacted Sue Haggerty, the owner of an approximate four- acre parcel of property along West Babcock Street that was “not necessary but desirable” for the development of Babcock Meadows and purchase offered to her property. An important issue in their negotiations desire to keep one acre of her and her home after the parcel was added to the Babcock Meadows subdivision. Crutcher reached a preliminary agreement on the
terms of a agreement, and Crutcher Lilly, contacted Mike partner at Berg firm, to draft the agreements the purchase. August 5,1993, letter Lilly Combs, and Bruce a recent law school graduate who was not yet admitted practice Montana, law *3 Crutcher general the terms for the proposed purchase. Lilly Crutcher informed and Combs that he needed “iron-clad” terms because Haggerty was “a perfect example ‘give inch, take a ”mile,’ “[tjime and that while the property desirable, was is of the essence.” He stated that if Haggerty would not agree by to terms the August, end of Babcock would abandon plans purchase to the Haggerty parcel and resume their initial subdivision plan. Lilly assigned
¶5 Combs to draft an initial purchase agreement with the supplied by Crutcher, terms and legal Combs used descriptions supplied by Morrison-Maierle, engineering firm by hired Babcock to help plan and develop However, Babcock Meadows. after Combs agreement, drafted the Lilly substantially revised it he because saw potential problems with property the method of transfer. In the revised agreement, Haggerty
¶6 agreed convey to the entire four-acre parcel to and Babcock retain an option irrevocable purchase parcel to, of property amounting by description, its “1.0Ac. more or less.” In exchange, agreed $5,000 Babcock to pay in earnest money and two promissory $55,000 notes in the amounts of and 140,000which $ were secured a trust indenture on the The property. and Loan would Savings Empire Federal agreement provided of Babcock and an Haggerty agent. the escrow serve as 30, 1993. September on purchase the application filed an later, 28,1997, Babcock on June years Several 1" of the for “Phase plat to amend the Bozeman City the with Haggerty included the subdivision, now which Meadows Babcock portion on a a trust indenture retained Haggerty Since property. of the amendment. necessary approval for her property, signature Haggerty property, the However, plan the for presented acres, .88 parcel her would be acreage for proposed realized that the or less” the “1.0 Ac. more inconsistent with she concluded was agreement. pinchase in the in the printed error made Morrison-Maierle resulted from an apparently deviation Haggerty refused to boundaries. drafting proposed property the while acreage the to increase plat Babcock altered sign application. sign application. acres, again, Haggerty refused to .96 but interest in the sought buy Haggerty’s out then Babcock in the outstanding balance payment made a on property and to it a Empire transfer Empire requested and escrow account plat that Babcock could submit Reconveyance, Deed of so However, Haggerty Haggerty’s signature. application without objected to told that she planned payment and when informed of payment Empire accept refused to payments, such Reconveyance. Deed of release the in the Haggerty Empire and complaint against filed a Babcock County, District in Gallatin Eighteenth Judicial
District Court for late signature application. on compel Haggerty’s and that sign application ordered that District Court the “1.0 acres” Haggerty the difference value pay actually .96 acres she agreement and the listed received. filed February litigation, on During firm, professionally that it had been Berg alleging against
claim between Babcock handling the transaction negligent when years delay several negligence its caused Haggerty to amend application signature on to secure expense unpaid The firm counterclaimed plat. Meadows the Babcock fees. *4 expert its disclosed discovery, Babcock the course of During provided attorney, who
witness, a Montana Murphy, James firm that the opinion of his disclosure supplemental preliminary had failed to meet the requisite standard of care for attorneys in similar land transactions. In particular, Murphy that, opined with knowledge of Babcock’s need for expediency and accuracy in the drafting of the purchase agreement Haggerty, Berg violated the (1) standard of care when Combs, it: had a non-attorney with no contract-drafting experience, draft the initial agreement and obtain an inaccurate description of the Haggerty property from Morrison- (2) Maierle; used “more or less” to cure defects the property description when the included legal description of the Haggerty (3) deficient; was clearly failed to include a provision that would require Haggerty to sign future applications for a plat; final (4) failed to proper execute escrow prevent documents that would Haggerty from having power “veto over proposed developments” and would “complete transfer power control and over the land” escrow as soon as the escrow account balance paid. With respect area, to the fourth agreement, escrow provided: disclosure In a normal real this, estate situation such as agreements escrow are established with deeds and other placed documents therein so that as soon money as the is paid, then complete control and power over the land by the purchaser is transferred way of deed) (usually escrow so that the benefits of ownership buyer without the necessity of further litigation or complications. 11, 2002, On January the firm moved summary for judgment. Babcock later filed its own motion summary judgment. In its against summary defense judgment, the affidavit of Murphy, that restated opinion his regarding the firm’s breach of the standard of care. respect With agreements, he declared that:
“The use of an would not have resolved the conflict between Haggerty and Babcock Place.” argue Defendants use of an escrow agent would [not] have resolved the conflict. Of course, the wrong. Defendants are
As the fully aware, Court is in any action, real estate party one is usually giving up money and the other party giving land. up party Neither wants give up their consideration without insuring party the other receives the benefit of that consideration. case, In this clearly we have a situation where gave up money all of its but never received in exchange the land could have pursuant been subdivided to the Subdivision Platting Act. District Court heard oral argument summary on the
judgment April 29,2002, motions and on issued its memorandum and *5 granting and summary judgment denying motion for order Babcock’s final The District Court entered summary judgment. for Berg’s motion 30, 2002, dismissing with complaint judgment May on by Berg. incurred ordering certain costs prejudice, pay Babcock summary granting the District Court’s order appeals judgment.
STANDARD OF REVIEW summary judgment a award We review district court’s decision to 14, Allen, 160, 14, 139, MT 295 Mont 983 Spinler ¶ de novo. v. 1999 ¶ applies a 348, apply 14. the same criteria district court We ¶ summary set judgment, it a motion for which is forth considers 56(c), in Rule M.R.Civ.P.: sought
The if judgment pleadings, shall be rendered forthwith file, depositions, interrogatories, and admissions on answers affidavits, together any, genuine with the if show that there is no any moving party issue as to material fact and that the is entitled to a a judgment as matter of law. party moving summary judgment The for the initial has burden proving genuine
of
that there are no
issues of material fact that would
non-moving party
the merits
the case.
permit
succeed on
of
(1997),
15;
Spinier,
Buildings,
Shapiro
Inc. v.
Montana Metal
¶
474,
694,
471,
If
meets
moving party
Mont.
942 P.2d
696.
burden,
evidence
non-moving party
provide
then the
must
substantial
fact,
genuine
summary
issue of material
to avoid
raises
Metal,
15;
judgment
moving
Spinier,
in favor of the
Montana
party.
¶
474,
fact
DISCUSSION granted Did it law firm’s motion the District Court err when summary judgment? for summary The Court the firm’s motion for District considered by analyzing Murphy’s allegations negligence each of
judgment by this Court in legal malpractice standards set forth applying 1335, 1337. 21, 24, After 767 P.2d Epstein Lorash v. fact there issues of material doing so, it concluded that were no that, law, professional the firm did not commit as a matter of law, that, as a matter there concluded negligence. District Court nothing wrong Combs, having supervised non-attorney, a preliminary draft agreement and noted that did not allege that Combs was negligently supervised Lilly. The District Court 28-10-601, MCA,precluded concluded that succeeding § Babcock from its claim on that the firm was negligent using expression “more legal description less” when the actually Morrison-Maierle, provided by Babcock.Addressing allegation, the third the District Court concluded that Babcock could not meet the requirement “but for” set forth in Lorash because prior deposition testimony affidavit and demonstrated she would not have an application for an plat Therefore, amended “under circumstances.” that any held contractual provision her requiring signature would have been no Finally, benefit. the District Court concluded that the testimony *6 established already that there was an in agent escrow involved the transaction, and that was not able to resolve the underlying dispute fiduciary and still meet its to Haggerty. duties because, that the District among contends Court erred liability, expert other bases for the affidavit of its created issues of material fact as to a provision requiring Haggerty’s signature whether a proper agreement and would delay have avoided the litigation transaction, that from Haggerty property resulted whether reasonable care would recognized have defective description. Babcock contends the testimony Haggerty that that she would not plat application have a “under any circumstances” is evidence had drafted, that been properly have, least, would at the to sign purchase agreement refused at all and Babcock could have avoided the Haggerty transaction resulting delay to plat application. the Babcock Meadows The firm that properly contends the District Court dismissed claims for the reasons stated in its order and that are there no remaining issues of material fact to decide. What constitutes “material of fact” in an issues action for
professional liability attorney an Epstein is discussed in Lorash v. (1989), 1335, 21, 767 P.2d where we held that: a pursuing negligence or breach of contract action an against
attorney,
plaintiff
initially
must
establish the existence of an
attorney-client
must then
relationship.
plaintiff
establish that
constituting
occurred,
the acts
the negligence or breach ofcontract
proximately causing damages to the
The final
plaintiff.
requirement
plaintiff
is the
‘but
“[t]hat
need
establish
client
have
or breach of contract the
would
negligence
for’ such
defense of
action.”
prosecution
been successful
Christy v.
24,
(quoting
767 P.2d
Lorash, 236 Mont. at
at
(Minn.
288, 293-94);
Fang v.
1970),
see also
179 N.W.2d
Saliterman
456,
15-17, 305
322,
15-17, 28
Bock,
In those
which do
involve issues
cases
a
by proof
party’s
satisfied
conduct was
proof of causation is
alleged
a
damage
party’s
...
conduct is
cause-in-fact
if
but
cause-in-fact of an event “the event would not
occurred
conduct; conversely,
for that
the defendant’s conduct is not a
event,
if the
would have occurred
it.”
cause
event
without
Busta,
139 (quoting
there
client
Babcock and the
relationship
test,
Berg
part
firm and
to the second
of the Lorash
proceed
Lorash,
requires
negligent.
Babcock establish that
firm was
firm’s negligence was injuries. the “cause-in-fact” of Babcock’s The firm contends that there were three facts which a preclude finding (1) that its conduct injuries: was “cause-in-fact” of Babcock’s agent provided legal Babcock’s description the erroneous of the (2) Haggerty property that injuries; led to Babcock’s eventual Haggerty’s sign circumstances;” refusal to the application any “under (3) agent’s fiduciary adherence to its to Haggerty duties required refuse transfer the Deed Reconveyance where the parties disputed acreage subject that was the of their contract. respect With erroneous we description, conclude remaining that there is a issue of material as to fact whether the firm’s independent recognize failure to with problem the legal description contributed as a cause of damages. Murphy’s Babcock’s affidavit states: requires attorney
The standard of care practicing real estate recognize description law Montana to delivered engineer could never be a tract Mrs. could Haggerty receive - by option or otherwise. The failure of Combs caused confusion delay. She did not understand “acre” what she would receive. either, did Combs not understand it he obligation but had the his client to avoid misunderstanding part on the ofMrs. Haggerty, not create it.
It alleged by is supported by Murphy, attorney Babcock and that an exercising requisite standard of care would have noticed that the inadequate was requested purchase agreements. clarification or refused to draft It alleged recognition would have in spite any occurred engineer. Therefore, misinformation provided we conclude that there is an issue of regarding material fact the merits of the claim that the firm negligent failing to recognize the incorrect legal description. respect provision requiring Haggerty’s With to a signature future plat
on we applications, agree nothing firm that there is such suggest provision record its failure include injuries. Nothing “cause-in-fact” of suggests record plat sign any obstinate refusal documents “under proposed acreage apportioned circumstances” due to the to her changed by express signature, would been for her requirement *8 have been litigation to would subsequent delay pursue nor that may M.R.Civ.P., party “an 56(e), that adverse requires shortened. Rule party’s of the adverse allegations or denials upon not the mere rest partial the firm is entitled to we conclude that pleadings.” Accordingly, summary judgment on issue. note agreement, to we Finally, the escrow respect
District Court stated: established hold the an escrow was
It is immaterial whether
Haggerty
history
the transaction with
documents as
titled
any
the release of
documents
object
that she would
showed
long
acreage
she was to receive
agent
from the escrow
so
as
and as
disputed
industry,
.... As is common in the real estate
was
agent
will not
Empire,
the actions of
escrow
evidenced
dispute
the middle of a
between the
typically place itself into
agent
agreement, each of whom the escrow
parties to the escrow
expert,
fiduciary duty.
The contention of Babcock’s
owes
prevented
dispute
has no
type
some
escrow would
he
Perhaps
opinion
regard,
he
his
in this
gave
basis.
had
and that such an
not aware that an escrow
been established
not
dispute
escrow
effective to resolve the
event,
In
any
apparent
Empire,
and Babcock.
is
as escrow
documents without
agent,
going
was not
release
escrowed
full agreement
parties.
of all affected
essence,
prove
In
District Court
that Babcock could not
concluded
agreement
of the
and/or escrow
was the
language
of the
damages
regardless
of Babcock’s
because
“cause-in-fact”
used,
language
agent
an escrow
not have released the
would
agreement
parties
without the
of the
or later court order.
documents
Therefore,
obligations
agent
we must consider the
the escrow
dispute
agents “occup[y]
escrow
this transaction.
It is without
fiduciary
parties
[an]
escrow transaction.”
responsibility
256, 28,
Sande,
98, 28,
1 P.3d
v.
2000 MT
299 Mont.
¶
Brandt
¶
omitted).
(citations
However,
duty
“the
of an
we have held that
28¶
comply
An
narrowly
agent
defined
bound to
agent is
law.
escrow
agreement only
parties
instructions of the
to the escrow
with the
omitted).
(citation
Brandt,
In
may
authority.”
28 ¶
not exceed this
addition,
legal, fiduciary
“fulfilled a
agent
we have held that
duty
following
principals
[an]
instructions of the
by strictly
Brandt,
account.”
29.
¶
we
v.
761 P.2d
In Turbiville Hansen
agreement
purpose.
created for a similar
considered an escrow
Turbiville,
parties entered into
placed
contract for deed and
documents in escrow. The escrow
included an instruction
buyer
deed,
that if the
defaulted on the contract for
“upon
seller
demand shall be entitled to the immediate return from the escrow
deed,
warranty
abstracts,
contract for
deeds and
so that
they may pursue such
provided by
remedies as
law the foreclosure
*9
Turbiville,
for
contract
deed.”
Mont.
233
at
[T]he obligation strictly of the escrow holder was to adhere to the as provided agreement. instructions in the escrow The agent’s] duty, [escrow paragraph under 4 of the escrow agreement, “upon was to demand” immediately return the escrow documents to the the agreement sellers in event of The default. require does not the agent escrow to ascertain whether the demand for return of the escrow documents is technically justified. require Neither does it the escrow to determine whether the legally notice was sufficient or ... whether the contract and default notice are for vagueness.... void These law, determinations are appropriate for court of not for the remedy escrow agent. for omission of these requirements was suit against [sellers]... the These issues do not create an issue claim against ofmaterial fact as [escrow to the the agent], they because are unrelated the agent] [escrow to whether strictly adhered the instructions as in the escrow agreement. (citation omitted).
Turbiville, 233 Mont. at Applying Turbiville, our ¶29 decision we conclude that the District analysis Court’s regarding agents was incorrect and that the agent’s fiduciary as parties provided by duties are the written agreement. instructions and Furthermore,
¶30 we conclude that Babcock offered sufficient proof drafted, that if the language agreement negligently of the escrow it damages. “cause-in-fact” The language that Murphy contends should have agreement been included would given “complete over power and control” paying purchase price. Reconveyance after The Deed of Haggerty’s signature would have eliminated the need for on the therefore, and, have eliminated plat, to amend the application damage. him contends caused delay summary, there is issue material conclude we of care requisite firm followed standard fact as to whether the Haggerty agreement it drafted the escrow terms of purported and whether the property, issue, in addition to the care. This requisite satisfied the standard of firm of care when of whether the law violated standard issue Morrison-Maierle, are legal descriptions provided adopted by the trier-of-fact. issues to be determined reasons, judgment of the District foregoing For the we reverse the proceedings and remand further consistent with Court for Opinion. GRAY, DISTRICT
CHIEF JUSTICES REGNIER and JUSTICE LANGTON, LEAPHART sitting JUDGE JUSTICE concur. dissenting. COTTER JUSTICE Court and dissent from judgment I would affirm the of District
our refusal to do so. First, fact as to disagree I there is issue material recognize problem whether Firm’s failure to independent (the property being described as “1.0 acres more less”) as Court damages, contributed as a cause of Babcock’s *10 out, engineering points finds at 24. As the Court Babcock hired the ¶ Morrison-Maierle, plan develop Firm of to Babcock Meadows. help Morrison-Maierle, Firm, agent, and that It was Babcock’s not The Firm did legal description devised the of “1.0 acres more less.” by nothing place paper legal description given than on to it more Moreover, neglects point to out that while agent. Court less,” there legal description property of the was “1.0 acre more or tract in also metes and bounds of one-acre was Thus, easily its boundaries ascertainable. question. were However, analysis of this larger problem I find a with the Court’s poor in of case that Babcock made a general. case essence is buy in to back place giving Haggerty option decision the first it. as acre, to blame the Firm for Babcock admits one and now wants wanted to sell stating: in on “Babcock never appeal, much its briefs only buy to three acres... her own house. Babcock wanted Haggerty one buyer up warranting to instead ended wanted be a but Babcock Lilly’s it had interest of [sic] never because Haggerty acre to which Firm Berg had the Law argues It further that"... [the Firm’s] mistake.” for... parties bargained that the together precise agreement put then the parties would have they known in 1993 whether had a meeting of the argues minds.” Babcock thus appeal on that acquisition acre, of last which became the stumbling ultimate transaction, in block accomplished was because of the Firm’s I significant mistake. have a problem logic. with Babcock’s As the Court points out Babcock is a partnership ¶ purpose selling established for the developing real estate in Bozeman, Haggerty’s Montana. It found “not property necessary but desirable” the development ofBabcock goes Meadows. As the Court state, on important to issue in the negotiations and Babcock keep desire to one acre her property and her after parcel home her to added the Babcock Meadows Thus, Subdivision. it is clear that Babcock was well aware of Haggerty’s desire to her retain one acre of property it hired the before Berg agreements. to draft the purchase Firm even Babcock advised the might Firm that Haggerty be difficult to deal with. Given Babcock’s as sophistication a real developer, estate its of the knowledge requisites of the residential subdivision it wished develop, and its understanding dealings difficulties that Haggerty might present, one would think that Babcock would scrutinize the purchase Berg drafted Firm paramount with these concerns reason, But for its mind. whatever the revised purchase agreement, specifically obligated purchase which it to parcel entire four-acre from Haggerty, allowing while Haggerty to option retain an parcel irrevocable amounting acres, 1.0 more or less. allegation buy-sell agreement There is no was so difficult comprehend did not what signing. know it was This so, I
being would conclude that Babcock in no position to now sue its own law firm for malpractice way drafted an agreement Babcock, being sophisticated estate, buyer evidently real signed. understood and still Babcock wanted three acres no If all option along, argues as it on appeal, sign it should have declined to the document as drafted. It is a maxim of “acquiescence well-established law error 1-3-207, away right objecting
takes Section MCA. In it.” Realty, Goodman Inc. v. Monson 883 P.2d *11 this Court person acting held “a who not under mistake or fraud right object and who loses acquiesces an error his to the error.” 346). (citing Schillinger 80, 320 v. Huber While factually Goodman and are the Schillinger distinct from case before rule. the the application not minimize us1, does such distinction purchase in the it wanted the terms and conditions knew that did not signed purchase agreement It nonetheless agreement. so, now be Having done it should and conditions. contain those terms finger at someone else. from the of blame estopped pointing above, I Court’s disagree also with the expressed the reasons For as whether the is an issue of material fact conclusion that there it drafted the escrow requisite Firm standard care followed all, Haggerty property. First purchase parties are not in the record escrow instructions Court, whether the instructions impossible this it is determine so drafted The record also fails to reflect who poorly were or well-drafted. Often, supply their own form sets of agents the instructions. Firm However, if we that it was the presume instructions. even instructions, problems fact remains that drafted agreement. It was Babcock’s execution of started with spawned problems between Babcock that document nothing implement did more than Haggerty. The escrow instructions its terms. complicated. I this far too Because it think we have made case read what it problems Haggerty,
foresaw Babcock should have Instead, accomplished its signed to ensure that document wishes. I place the instrument of its own demise. would not I would ensuing problems anyone’s feet but Babcock’s. blame summary and dissent from our judgment, therefore affirm the order of refusal to do so. join foregoing dissent.
JUSTICES NELSON and RICE cases, contracting parties applied dispute rule to a In both sign party of the contract but chose one error the details wherein knew anyway.