IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
BENJAMIN L. BROWN,
Plaintiff and Appellant,
-vs-
FLOYD SMALL and JOHN C. DOUBEK,
Defendants and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Jeffrey M. Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gerald J. Neely, Attorney at Law, Billings, Montana
For Respondent:
Douglas A. Ruxbaum and Mark Mattioli; Poore, Roth
and Robinson, Butte, Montana
Submitted on Briefs: July 25, 1931
Clerk
Justice Terry N. Trieweiler delivered the opinion of the Court.
On March 17, 1988, Benjamin Brown filed a legal malpractice
complaint against Floyd Small and John Doubek in the ~ i r s t
Judicial
District Court in Lewis and Clark County. The ~istrict Court
granted summary judgment for Small and Doubek and dismissed the
complaint on October 9, 1990. Brown appeals. We affirm.
The issues are:
1. Did the ~istrict Court err when it granted summary
judgment against Brown on his claim of professional negligence?
2. Did the District Court err when it granted summary
judgment against Brown on the portions of his complaint that
attempted to reopen an earlier lawsuit that Brown had dismissed
with prejudice?
In 1981, Brown owned several commercial properties in Helena,
including the Denver Block Apartment Building. During the early
morning of May 26, 1981, the Denver Block was badly damaged by
fire. Brown, who had previously employed Helena attorney Carl
Hatch, retained Hatch's partners, Floyd Small and John Doubek, to
assist him in recovering payment from his insurer. For a number of
reasons, coverage was vigorously disputed.
Brown settled his claim with the insurer on August 19, 1981,
for $315,000, and executed a settlement agreement. Claims against
Brown's recovery by other parties reduced Brown's share to
$109,963.80. Small and Doubek then charged Brown a contingent fee
of $25,000. Brown claimed he had not agreed to a contingent fee,
but he paid the fee despite his objection.
On March 15, 1984, Brown filed a complaint against Small and
Doubek, alleging that they had overcharged him for their services.
In that action, Brown claimed that by charging a contingent fee
Small and Doubek had breached an oral contract to bill only by the
hour. During the preparation of their defense in that action,
Small and Doubek discovered that in 1980 Brown's insurer had issued
a mid-term endorsement to Brown's fire insurance policy on the
Denver Block. The 1981 settlement with the insurer did not include
the additional coverage available under this mid-term endorsement.
The reasons why this endorsement was not originally considered are
now disputed by the parties.
Small and Doubek then arranged for a settlement conference
with Brown on March 19, 1985. Brown attended with his attorney
R. J. Sewell, Jr., to whom he had transferred his business after
leaving Small, Hatch, and Doubek. At this meeting, Doubek
explained that he had come across Itworkproduct1'that might result
in recovering more money from Brownts insurer. Doubek offered to
use this "work product" on Brown's behalf in exchange for Brown's
agreement to dismiss his complaint against Small and Doubek.
Doubek refused to disclose the nature of the "work producttt had
he
discovered.
Sewell protested vehemently. He took Brown aside and advised
him that Brown should refuse to accept the offer. Sewell refused
to sign any such agreement between Brown and his former attorneys
and left the meeting.
Doubek had originally suggested that he could recover as much
as $15,000 with the "work product.I1 Brown, however, insisted that
he would not agree to dismiss the first lawsuit unless Doubek would
promise to recover $20,000. Brown then signed an agreement in
which he gave Small and Doubek four months to recover an additional
$20,000 from the insurer. In this agreement, Brown specifically
consented to a contingent fee arrangement. The agreement also
provided that if Small and Doubek succeeded in recovering $20,000
from the insurer, Brown would dismiss his first lawsuit with
prejudice .
Subsequently, Small and Doubek used the mid-term endorsement
to recover another $112,500 from the insurer. It appears from the
record that this amount was based at least in part on Brown's
allegation that his insurer had fraudulently and in bad faith
concealed the existence of the mid-term endorsement. Brown further
alleged that the insurer had misrepresented the available coverage
as $277,200 instead of the true amount, $325,000. Brown netted
almost $75,000 after deduction of costs and the contingent fee. On
August 16, 1985, Brown stipulated to a dismissal of his first
lawsuit with prejudice. Small and Doubek regarded the matter as
finally settled.
Brown then filed the present complaint on March 17, 1988. In
this second lawsuit, Brown sought (1) damages for the allegedly
negligent failure of Small and Doubek to discover the mid-term
endorsement before the 1981 settlement with the insurance company;
and (2) rescission of the 1985 settlement with Small and Doubek and
reinstatement of the first lawsuit. The pretrial order clearly
indicates that Brown was unprepared to present expert testimony on
the standard of care applicable to Small and Doubek.
Both parties moved for summary judgment. The District Court
granted summary judgment for Small and Doubek, noting that the new
negligence theory was fatally flawed due to Brown's failure to
arrange for expert testimony and that reinstatement of the first
lawsuit was barred under the doctrine of resjudicata. The court then
dismissed Brown's complaint. It is from this order of summary
judgment and dismissal that Brown appeals.
Did the District Court err in granting summary judgment on
Brown's claim of professional negligence?
Brown's position on his negligencetheory is inconsistent with
the theory his agents used to obtain a second recovery from the
insurance company. Acting as his attorneys, Small and Doubek filed
a second action against Brown's insurer. Pertinent portions of the
complaint in that action read as follows:
VIII.
That ... [the insurer] did not fulfill its clear
responsibility to [Brown] at the time of said resolution
of the underlying claim bv not informins rBrownl that the
said endorsement was in effect when rBrownl submitted his
proof of loss statement.
IX.
That said breach of responsibility was false,
fraudulent, done in bad faith and for the purpose of
producins a substantial loss to rBrownl.
That [Brown] did in fact rely upon the false,
fraudulent. and bad faith misrewresentations of [the
insurer] to his detriment and was damaged thereby.
[Emphasis added.]
Small and Doubek settled this second action with the insurer for
$112,500, and Brown accepted his share of almost $75,000 without
protest. Now, however, he claims that it was the negligence of his
attorneys, rather than the bad faith of the insurer, that resulted
in the inadvertent exclusion of the mid-term endorsement from the
first settlement with the insurance company. If the insurer
actively concealed the endorsement in bad faith, it is difficult to
see how Small and Doubek were negligent in not discovering it.
This attempt by Brown to take inconsistent positions is barred
by judicial estoppel. In Rowland v. Hies (1986), 223 Mont. 360, 726
P.2d 310, we said:
Judicial estoppel may arise when a person
has taken a position or asserted a fact under
oath in a judicial proceeding contrary to the
position he is taking in the present
litigation . . .The rule's purpose is to
suppress fraud and prevent abuse of the
judicial process by deliberate shiftins of
positions to suit the exigencies of a
particular action, and it will not be applied
when the previous act or statement is
uncertain or based on undetermined facts, but
only when it is clear and certain. (Citations
omitted.) [Emphasis added.]
Rowland, 726 P.2d at 316 (quoting LaChancev. McKown (Tex. Ct. App.
1983), 649 S.W.2d 658, 660). In Rowland, we applied judicial
estoppel against a party who sought to take a position contrary to
an earlier sworn affidavit. Rowland, 726 P.2d at 316.
Judicial estoppel is equally applicable to a party like Brown
who seeks to take a position contrary to his pleadings in an
earlier judicial proceeding. Fey v. AA. Oil C o p . (1955), 129 Mont .
300, 323, 285 P.2d 578, 590. The doctrine applies with additional
force here because Brown's allegation in the second complaint
against the insurer resulted in a net recovery by him of almost
$75,000. After accepting the benefits of that allegation, Brown
cannot now change his position and allege that negligence by Small
and Doubek was the real reason they did not discover the mid-term
endorsement sooner.
Furthermore, Brown failed to alleviate this apparent
inconsistency by arranging for expert testimony. In Carlson v. Morton
(1987), 229 Mont. 234, 745 P.2d 1133, we held that expert testimony
is ordinarily required in legal malpractice cases. We said:
To expect a jury to sit through hours of examination and
cross-examination, without the guidance of an attorney's
expert testimony and then arrive at a verdict consistent
with the evidence is asking much. This is not because
the average juror is not capable of understanding such
matters but only because he or she has never had the
occasion or desire to study such matters. The attorney's
standard of care depends upon the skill and care
ordinarily exercised by attorneys, a criteria that rarely
falls within the common knowledge of laymen. ...
It is true that there are instances in which legal
malpractice actions have been submitted for fact
determination without the use of expert testimony. The
theory in such cases is that the attorney's misconduct is
so obvious that no reasonable juror could not comprehend
the lawer's breach of duty. [Emphasis added.]
Brown attempts to bring his case within the exception rather
than the general rule by arguing that jurors would not need expert
assistance in deciding ''whether a lawyer hired to collect insurance
proceeds ought to look at the piece of paper which says how much
insurance there is." We note, however, that the "piece of paper"
to which Brown refers is the very same document he previously
accused the insurance company of concealing from Small and Doubek
in bad faith. Based on that inconsistent representation Brown has
already been compensated.
In analyzing Brown's argument that the case is too simple to
require expert testimony, the District Court said:
The allegations of Count One are very complicated.
The allegations deal with matters of insurance coverage
and an attorney's duty to seek out the maximum coverage
possible for his client for a loss. The allegations also
deal with the duty owed a former client, since in the
view of this Court, these parties were not in an
attorney/client relationship in March 1985. Rather, on
March 19, 1985, they were engaged in a hotly contested
lawsuit and it cannot be said that the duty owed by
Doubek to his former client Brown is one that is commonly
known by lawyers, let alone by lay people.
Indeed, the complexity of this matter can be seen by
looking at page 5 of Plaintiff's supplemental memorandum
filed on September 14, 1990. At page 5, Plaintiff
indicates that Doubekls duty was to determine the
existence, nature, and amount of any midterm endorsement
to the primary policy issued afte; the primary policy.
Plaintiff has not directed this Court to any authority
that shows that this duty is commonly known to lay
people.
We agree. In a case such as this one, in which the plaintiff has
already been compensated based upon an allegation that his insurer
took affirmative steps to conceal the key document from the
defendant attorneys, expert testimony on the standard of care is
critical.
We hold that the District Court did not err when it granted
summary judgment against Brown on his professional negligence claim
on the basis of Brown's failure to provide expert testimony.
I1
Did the District Court err when it granted summary judgment
against Brown on the portions of his complaint that attempted to
reopen the earlier lawsuit that Brown had dismissed with prejudice?
In counts two through ten of the complaint in the case at bar,
Brown sought to set aside the March 1985 settlement agreement and
the accompanying dismissal with prejudice of the first lawsuit.
Because Brown cannot resurrect the first lawsuit unless he can show
grounds to set aside the dismissal, we turn first to the question
of whether Brown has shown sufficient grounds for setting aside the
dismissal. We conclude that he has not.
A party who seeks relief from a final order can either file a
Rule 60(b) motion for relief or file an independent equitable
action based on the grounds enumerated in that Rule's residual
clause. Rule 60(b), M.R.Civ.P. Brown has not filed a Rule 60(b)
motion so we treat his action as arising under the residual clause.
See Salway v. Arkava (1985), 215 Mont. 135, 695 P.2d 1302.
In Salway, we held that the residual clause of Rule 60(b)
provides one who seeks relief from a judgment with three avenues of
attack: extrinsic fraud, lack of personal notification, and fraud
upon the court. Salway, 695 P.2d at 1305-06. We do not consider
lack of personal notification here because it is inapplicable.
In Salway, we characterized extrinsic fraud as "some
intentional act or conduct by which the prevailing party has
prevented the unsuccessful party from having a fair submission of
the controversy." Salway, 695 P.2d at 1306. In this case, Brown
was not misled by his former attorneys. He acted contrary to the
advice of his new attorney based on what he perceived to be in his
best interest at that time. Small and Doubek did not prevent him
from obtaining a fair submission of the controversy. It was
Brown's own action in stipulating to the dismissal that resulted in
the case not being submitted to the District Court. We conclude
that Brown has not made out a case of extrinsic fraud.
Fraud upon the court is Itthat species of fraud which does or
attempts to subvert the integrity of the court itself.It Salway, 695
P.2d at 1306. Examples of fraud upon the court include bribery,
evidence fabrication, and improper attempts to influence the court
by counsel. SU~WUY,
695 P.2d at 1306. Generally, fraud between the
parties, without more, does not rise to the level of fraud upon the
court. Salway, 695 P.2d at 1306.
Brown was an active and informed participant in what he now
seeks to characterize as fraud upon the court. He stipulated to
the dismissal of his own lawsuit with prejudice despite his
attorney's advice to the contrary. Brown may have made a bad
bargain with Small and Doubek but it does not rise to the level of
10
a fraud that "subvert[s] the integrity of the court itself. I t We
conclude that Brown has not made out a case of fraud upon the
court.
Because Brown has shown neither extrinsic fraud nor fraud upon
the court, we hold that the District Court did not err when it
granted summary judgment against Brown on his attempt to set aside
his dismissal of the first lawsuit.
The judgment of the District Court is affirmed.
We concur: