FACTS
In 2003, OHM hired Wacht to act as managing member of
OHM and to provide architectural services for the development of real
property located in Laughlin, Nevada. While executing his duties as
managing member of CRM, Wacht secured a $5.5 million loan by signing a
deed of trust against the property, which named the Bank as beneficiary.
As a result of his work, Wacht also held a mechanic's lien against the
property.
Later, Wacht retained Peel & Brimley as counsel to foreclose
on his $670,846.96 mechanic's lien against CRM and to assert priority in
interest against the Bank's deed of trust. CRM filed counterclaims
against Wacht, and the Bank filed a motion for summary judgment,
arguing that as a matter of law its deed of trust against the property had
first priority. The district court granted summary judgment, concluding
that there were no genuine issues of material fact regarding the Bank's
priority position as first deed of trust holder. Thereafter, the Bank
foreclosed on its first priority deed of trust, leaving OHM without assets.
Wacht and OHM agreed that it made no sense for them to
pursue claims against one another and entered into a settlement
agreement. 2 Pursuant to the settlement agreement, each party's claims
against the other would be dismissed with prejudice. The agreement
noted that the dismissal was based upon Wacht's inability to maintain his
lien against the property, as a result of the Bank's foreclosure.
2At
some point before the settlement agreement between Wacht and
OHM, Peel & Brimley withdrew as counsel.
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Consequently, the district court filed an order dismissing Wacht's case
with prejudice.
Wacht then filed a legal malpractice claim against Peel &
Brimley, alleging that their negligent failure to conduct discovery led to
the district court's decision to award the Bank priority. Wacht contended
that, after the Bank's foreclosure, he had no alternative but to settle. In
response, Peel & Brimley filed a motion for summary judgment that the
district court granted. Wacht now appeals the district court's order
granting summary judgment.
DISCUSSION
This court reviews a district court order granting summary
judgment de novo. Yeager v. Harrah's Club, Inc., 111 Nev. 830, 833, 897
P.2d 1093, 1094 (1995). "Where a motion for summary judgment under
NRCP 56(c) has been granted, the essential question on appeal is whether
genuine issues of material fact were created by pleadings and proof
offered." Id. "The nonmoving party is not entitled to build a case on the
gossamer threads of whimsy, speculation, and conjecture." Wood v.
Safeway, Inc., 121 Nev. 724, 732, 121 P.3d 1026, 1031 (2005) (internal
quotations omitted).
Wacht contends that Peel & Brimley's failure to engage in
discovery caused the district court to award the Bank's deed of trust
priority over his mechanic's lien. Wacht further contends that the Bank's
subsequent foreclosure left CRM without assets and he was thereby forced
to settle his mechanic's lien claim against CRM. "In Nevada, legal
malpractice is premised upon an attorney-client relationship, a duty owed
to the client by the attorney, breach of that duty, and the breach as
proximate cause of the client's damages." Semenza v. Nev. Med. Liab. Ins.
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Co., 104 Nev. 666, 667-68, 765 P.2d 184, 185 (1988). "Establishing
causation . . . requires the plaintiff to prove what has been characterized
as a 'case within a case,' that is, the plaintiff must demonstrate that the
claim underlying the malpractice action would have been successful if the
attorney had acted in accordance with his or her duties." Luttgen v.
Fischer, 107 P.3d 1152, 1154 (Colo. App. 2005) (citing Bebo Constr. Co. v.
Mattox & O'Brien, P.C., 990 P.2d 78, 83 (Colo. 1999)).
We cannot conclude that if Peel & Brimley had participated in
discovery, Wacht's mechanic's lien action would have been successful.
First, even if Peel & Brimley had participated in discovery, the Bank's
deed of trust would have maintained its priority position over Wacht's
mechanic's lien. Wacht secured the Bank's priority position by signing the
deed of trust on CRM's behalf, representing that there were no liens with
priority over the Bank's and that no work had commenced on the property.
Thus, even if Peel & Brimley had engaged in discovery, the Bank still
could have foreclosed on its first priority deed of trust, leaving CRM
without assets from which Wacht could collect. And in that event, it is
likely that Wacht would have still chosen to settle. Second,
notwithstanding discovery, Wacht's mechanic's lien claim might have been
successful, had he maintained it. 3 But the parties agreed to completely
"walk away" from their claims against one another. Thus, it was Wacht's
settlement agreement that shaped the outcome, not Peel & Brimley's
failure to engage in discovery.
3 Wacht's argument that it was useless to pursue his mechanic's lien
claim after the Bank's foreclosure left CRM defunct does not affect the
outcome here.
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It is important to distinguish this case from Hewitt v. Allen,
where we held that, to withstand summary judgment in a litigation
malpractice action, a client was not required to pursue a fruitless appeal
in an underlying personal injury action. 118 Nev. 216, 224, 43 P.3d 345,
350 (2002). In Hewitt, the district court dismissed the client's underlying
personal injury action because her attorney failed to properly notice a
required party. Id. at 218-19, 43 P.3d at 346-47. Hence, the client could
offer evidence in the malpractice action that her attorney was the
proximate cause of her harm without further litigating the personal injury
action. Here, however, Wacht cannot offer evidence that Peel & Brimley
were the proximate cause of his harm because his abandonment of the
mechanic's lien action was the proximate cause of his harm. Therefore, we
are not persuaded that Wacht could not have achieved a better outcome in
the underlying action.
In addition, although we have not expressly adopted the better
outcome standard, see Herrington v. Superior Court, we note that sound
policy favors limiting litigation malpractice claims to cases where evidence
can be offered to show that a better result would have been achieved "but
for" the attorney's malpractice. 132 Cal. Rptr. 2d 658, 661 (2003). That is
not the case here, where "but for" Wacht's election to settle, there may
have been a better outcome. A conclusion in the alternative would be
based on speculation or conjecture, whereas, to survive summary
judgment, Wacht must demonstrate that there are genuine issues of
material fact in dispute. Here, there are none.
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Based on the foregoing, we ORDER the judgment of the
district court AFFIRMED.
2 1site‘=traa j.
Parrag uirre
D t77,4-e
Douglas
, J.
J.
cc: Hon. Stefany Miley, District Judge
Israel Kunin, Settlement Judge
Joseph Y. Hong
Lipson Neilson Cole Seltzer & Garin, P.C.
Eighth District Court Clerk
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