• June 17, 2014

Pinch-Points-Clear-Caution-Sign-S-2874Update (June 17, 2014)How did Hawley Troxell manage to get itself so badly enmeshed in the transactional gears of the Exergy and Fagen Blue Earth, Minnesota wind farm deal?

According to the battling litigants, Exergy and Fagen, Hawley Troxell allegedly gave an opinion letter to Fagen that Fagen took as assurances of critical aspects of the business deal with Exergy. Then Hawley Troxell advised Exergy that Fagen’s understanding of the deal was erroneous…

One of the two pieces of advice has to have been wrong (right?) and now Hawley Troxell is being sued by both Exergy and Fagen.

In addition to the claim that Hawley Troxell gave an opinion, contradicted that opinion, gave it again, then retracted it again, there are also some rather unflattering allegations of double-billing and false billing. Hawley Troxell’s “customized approach,The Hawley Troxell Way, provides you with a team of attorneys or one-to-one counsel to meet your specific legal needs” but here, unfortunately, it is claimed that the firm provided one-to-two counsel to undermine rather than meet everyone’s specific legal needs.

It seems that Burke & Thomas, P.A, Hawley Troxell’s lawyers, will have their work cut out for them on this one. (In fairness, though, I should also add that I am a lawyer who takes on plaintiff’s side legal malpractice claims. I likely view such allegations with a somewhat cynical bias. I also have been known to rush to judgment, later needing to “walk it back.” So, in short, I suggest my post be taken with a grain of salt and a bowl of patience. At the end of the day, it could be Exergy or Fagen who do not look so good.)

Update (September 30, 2013):  A builder sought to protect itself from default on an agreement with regard to a large construction project through a contract saying to the project owner, essentially, “If you do not pay us, we get to take ownership of 99% the project.”  To protect itself further, the builder insisted on a law firm opinion letter.  In essence, a law firm drafted a letter, apparently, saying, “If borrower does not pay as promised, its interest will be reduced to 1% of the project.”

Does the opinion letter offer an opinion as to whether the builder would get 99% ownership in the event of default or must it be read to only provide that borrower would get 1%, and is entirely silent on who would get the 99%?

As counsel for the law firm puts it: “[T]he essential question: is an opinion ambiguous simply because it does not address a subject it might have?”

I expect counsel for the builder (Fagen) might respond that the essential question is more appropriately, “Is an opinion ambiguous because it is silent as to the key question that it was created to make clear?”  If, in a dispute over ownership of Asset B, Jane Roe asks Law Firm to opine as to whether Asset B belongs to John Doe or Jane Roe and Law Firm answers, “Asset B does not belong to Jane Roe.”  Can it be argued that this opinion is ambiguous as to whether the opinion letter is opining that Asset B belongs to John Doe?  Maybe context (also known in civil litigation as “discovery”?) would be particularly important?

U.S. Mag. Judge Steven E. Rau (D. Minn.) recently issued a “Report and Recommendation” (“R&R”) that, given the ambiguity and the need for context, Fagen’s legal malpractice claim against the Boise, Idaho law firm, Hawley Troxell, may go forward (check out its website — cute).  Counsel for counsel has objected.  Minnesota Litigator prediction: counsel for counsel (Burke & Thomas for Hawley Troxell) will lose on their objections to R’s R&R to Chief U.S. District Court Judge Michael J. Davis (D. Minn.).

Original Post (March 25, 3013):  Desperate borrowers sometimes make promises that they will later go to great lengths to re-neg on.  People and businesses who are owed a lot of money have to make sure that significant transactions are comprehensively documented and secure.  Otherwise, desperate debtors may go to great lengths for an out.

Minnesota Litigator has already covered the Fagen v. Exergy battle, in which wind farm developers, pinned down and jeopardized by raging economic headwinds, made a promise to General Contractor, Fagen.  When it came time to square up, the deflated developers balked.  At least that’s Fagen’s view.

Where the Fagen v. Exergy dispute gets interesting is that Fagen did undertake measures to ensure that it would not end up empty-handed.

That is, Fagen insisted on a legal opinion in its deal with Exergy making clear that, if Exergy could not pay Fagen by a certain date, then Fagen would take ownership of Big Blue Wind Farm Project.

Exergy’s lawyers, Hawley Troxell, allegedly provided that assurance to Fagen with an opinion letter.  But then, in this litigation on behalf of Exergy, Hawley Troxell allegedly later turned around and disavowed their own assurance.  So now the firm finds itself dragged in to the Fagen/Exergy dispute.

Fagen argues that Hawley Troxell issued a legal opinion that Fagen would become 99% owner of a property and then 100% owner of the project under certain conditions (i.e., if the developers cannot come up with the money by a certain date).  Hawley Troxell, on the other hand, argues that their opinion only said that Exergy would only own 1% of the project and made no statement at all as to who would own the 99%.

That sounds quite clever, maybe a little too clever.

Imagine Party A and Party B enter into an agreement about a joint project — of the joint project and Party B’s debt owed to A, Party B says, “I will abandon all claims to the project but for 1% from today until 6/1/2013.  And, if I do not come up with your $$ by then, I will walk away from that 1%, as well.”  Party B’s lawyer offers an opinion that this transaction, as structured, does indeed result in Party B surrendering all claim to the property but for 1% and, as of 6/1/2013, surrendering all claims if it has not paid off its debt by then.  Then, when the piper is to be paid, the Party B’s lawyer argues, “We said Party B would only have 1%. We did not say that Party A would have 99%.”

It’s a brave (brazen?) stance. Will it work?  Hawley Troxell is represented by the powerhouse legal malpractice defense firm of Burke & Thomas, P.A. We’ll have to wait and see if they can manage this maneuver.  (Here is Fagen’s brief in opposition to HT’s motion to dismiss.)

Leave a Reply

Your email address will not be published. Required fields are marked *