This week, plaintiff Scott Schmidt, represented by attorney Scott A. Wilson, won a rare reversal of a trial court’s grant of summary judgment in favor of legal malpractice defendant, Thomas P. Harlan. As all experienced Minnesota civil litigators know, legal malpractice claims are very difficult cases to win. (And this one may be far from over, of course.) But frequently legal malpractice claims that are not quickly/quietly settled die on the altar of summary judgment, never to be revived. In fact, in Schmidt’s case, the defendants were so confident they would win on summary judgment that they not only moved for summary judgment but also moved for sanctions against the plaintiff.
Schmidt’s claim against Harlan arose in the context of the interplay between litigation in Hennepin County District Court and related counseling about going into personal bankruptcy.
Schmidt was defending a claim in district court that included several counts, including claims of fraud and misrepresentation. Schmidt won partial summary judgment on the fraud claims but he still faced a claim for unjust enrichment.
Schmidt alleges that, at that point, Harlan counseled him to enter into bankruptcy, while the district court case was still pending, rather than waiting until that case reached final judgment. Schmidt went forward with this allegedly recommended strategy. The bankruptcy court was not bound by the district court’s non-final decision finding no fraud. Worse, the bankruptcy court found that the debtor had engaged in fraud. Based on that finding, the bankruptcy court found that Schmidt had a $168,000 debt that could not be discharged in the bankruptcy.
Perhaps the most surprising aspect of the case is that Attorney Harlan told Schmidt that he was not a bankruptcy lawyer and that Schmidt should hire and consult with a bankruptcy lawyer. And Schmidt did. Nevertheless, Schmidt’s expert, Kurt A. Anderson, offered the opinion that Mr. Harlan’s advice failed to meet the appropriate standard of care.
I take no position as to whether the alleged conduct was or was not professional malpractice but highlight the case as useful to Minnesota civil litigators to proceed with great caution when crossing the intersection of civil litigation and bankruptcy law.