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….