Update (October 5, 2016): From time to time, I brag about Minnesota Litigator successful predictions (here and here, for example). In fairness to readers, I have to fess up and take my lumps when my predictions fail. I thought that Exergy’s defenses to Fagen’s lawsuit were worse than anemic from the get-go but U.S. District Court Judge John R. Tunheim (D. Minn.) denied Fagen’s motion for summary judgment in part and tossed out Fagen’s complaint against the Hawley Troxell law firm, which firm managed the pretty neat trick of advising a client that Article 9 of the Uniform Commercial Code (“Article 9”) did not apply to a transaction then arguing later, on behalf of that client’s adversary, that Article 9 did in fact apply to the transaction, without triggering liability.
Without an expert on damages, Fagen contends that Exergy’s Article 9 claim cannot survive summary judgment. Though it may very well be that Exergy will be unable to produce admissible evidence of its damages at trial, the Court is unwilling to make this finding at the present time. Exergy contends that it has another expert who can opine on its Article 9 damages – James Carkulis. And Fagen has not argued that Carkulis’ opinions on this topic should be excluded. The Court will accordingly wait to resolve this issue until a later date.
(Order at p. 19. Emphasis added.) This was the most surprising part of Judge Tunheim’s order, to my mind. Summary judgment is “put up, or shut up” time in civil litigation. It is the time when the other side can point to a part of your case and say, “You have no evidence on key element, X, so you lose,” and, in response, under the rules, you must come forward with admissible evidence on key element, X to survive summary judgment.
Typically, contentions of what one hopes to show at trial, effectively an I.O.U., do not hold water in responding to a motion for summary judgment, yet Exergy’s I.O.U., on evidence as central to the case as damages, seems to have been granted full faith and credit.
And let’s dig a little deeper into Hawley Troxell’s (“HT”) aforementioned and surprisingly permissible advisorial flip-floppery. HT originally gave Fagen an opinion letter in which it held Article 9 did not apply to a transaction which eventually became the subject of this litigation. Now representing Fagen’s opponent Exergy, HT currently holds that Article 9 did in fact apply to that transaction, an obvious about-face. The Court held that Fagen could not hold HT liable for professional malpractice because HT’s diametrically-opposed subsequent opinion was offered to a different client. (Order at p. 41-44.)
“While Hawley Troxell unquestionably owed Fagen a duty of care in drafting and rendering the opinion letter, Fagen has not cited, and the Court cannot find, any authority supporting the proposition that this duty extended to prevent Hawley Troxell from filing counterclaims for Exergy during this litigation.” (Order at p. 43.)
But if HT owed Fagen a duty of care in drafting and rendering its opinion letter in which it found Article 9 inapplicable, does it not seem HT breached that duty because the advice it gave was dead-wrong? At least, the Court held that HT was wrong when it advised Fagen and was right when it contradicted its own opinion on the Fagen/Exergy transaction….
Update (May 10, 2016) (under the headline, “Fagen v. Exergy: Exergy is Sucking Wind…”): Things have gone from bad to worse for Exergy in its long fight over a failed wind energy project. This week, even Exergy’s lead
gladiator lawyer seeks the Court’s permission to retreat from the field of battle…
The extraordinarily drawn out and futile exercise brings the conclusion of an old comedy sketch: “What a senseless waste of human life…”
Original post (April 20, 2106): (under the headline, “Fagen v. Exergy: Is it Time to Call the Fight?”): The Fagen v. Exergy lawsuit has drawn a disproportionate amount of my attention on Minnesota Litigator in the past couple of years. That is not only because the case presents some particularly interesting legal issues (the legal malpractice sideshow is particularly interesting to me), but also because it seems to be something of a noteworthy civil brawl — with motion after motion, emergency motions, motions for expedited rulings, requests for more time, requests for more pages to brief more motions, motions for reconsideration, objections to magistrate’s rulings, etc., etc.
When multi-million-dollar construction projects fail, developers, builders, property owners and other stakeholders can be compelled to spend millions of dollars on lawyers to avoid spending multiples of that on the investment duds.
Imagine the anguish if you were locked in such a multi-year multi-million-dollar struggle and your expert witness dropped their weapon and walked off the field of battle. And the court refused to let you substitute another expert….
In the immortal words of comedian Billy Crystal, “I hate it when that happens.”
This is the latest devastating tiger feint crucifix armbar inflicted on Exergy in the Fagen v. Exergy death-match that has Exergy dangerously close to pinned and down for the count.
As all Minnesota civil litigators know, the decision of U.S. Magistrate Judge Steven E. Rau (D. Minn.) refusing to extend the case scheduling order to allow the switch-out is entitled to Chief Judge John R. Tunheim’s “extreme deference,” under established law. On the other hand, Judge Tunheim’s been known to flip a Magistrate Judge decision in his day and Judge Rau’s been flipped from time to time himself. So we will have to wait and see.
I am going to go out on a limb here and predict, however, that Exergy’s fate is sealed either way….