This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Frances Harmeyer, individually, and
Frances Harmeyer, Personal Representative
of the Estate of Gordon Harmeyer
deceased, joint and severally,
W.M. Gustafson, individually, and
MacKenzie & Gustafson, Ltd.,
individually, joint and severally,
Filed February 5, 2001
Nicollet County District Court
File No. C799568
John M. Riedy, Paul J. Simonett, Maschka, Riedy & Ries, 201 North Broad Street, Suite 200, P.O. Box 7, Mankato, MN 56002 (for appellants)
Kenneth R. White, Farrish Johnson Law Office, 201 North Broad Street, Suite 107, P.O. Box 550, Mankato, MN 56002 (for respondents)
Considered and decided by Willis, Presiding Judge, Shumaker, Judge, and Mulally, Judge.*
U N P U B L I S H E D O P I N I O N
Appellants challenge adverse summary judgment. Because the district court did not err in concluding that (1) appellants' claim against respondent and his law firm for legal malpractice in drafting trust documents was barred by the statute of limitations and (2) damages are too remote and speculative to allow recovery for malpractice in drafting a quitclaim deed, we affirm.
In June 1990, respondent W.M. Gustafson, an attorney practicing in Minnesota, prepared irrevocable trust documents for appellant Frances Harmeyer (Harmeyer) and her husband, Gordon. The Harmeyers signed the trust documents and funded the trusts. Nearly four years later, the Harmeyers again sought legal counsel from Gustafson. He prepared a quitclaim deed that transferred to certain nieces and nephews interests in the Harmeyers' homestead, but gave the Harmeyers a life estate.
In February 1996, Gordon Harmeyer died, and Harmeyer inherited substantial assets. Harmeyer sought legal assistance from a new lawyer. Shortly thereafter, she sued Gustafson for legal malpractice, claiming that he improperly prepared both the irrevocable trust documents and the quitclaim deed, thereby increasing the taxes that Harmeyer's estate will have to pay upon her death. Gustafson included language in the trust documents that gave the Harmeyers annual income from the trusts. Harmeyer argues that because she is the survivor, this provision, along with the life estate granted to the Harmeyers by the quitclaim deed, will cause substantial negative tax consequences for her estate.
In February 2000, Gustafson moved for summary judgment, arguing that Harmeyer's claim that the trust documents were improperly drafted was barred by the statute of limitations under Minn. Stat. § 541.05, subd. 1(5) (2000), and any damages arising from improper preparation of the quitclaim deed were too remote and speculative to allow recovery. The district court agreed and granted Gustafson summary judgment. Harmeyer appeals.
On appeal from summary judgment, this court considers whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). No genuine issue of material fact exists where the record could not lead a rational trier of fact to find for the nonmoving party. DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997). But the party opposing summary judgment must do more than rest on mere averments; a genuine issue for trial must be established by substantial evidence. Id. at 69-71. On appeal, the reviewing court views the evidence in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
The statute of limitations for a legal-malpractice claim is six years. Minn. Stat. § 541.05, subd. 1(5) (2000); Herrmann v. McMenomy & Severson, 590 N.W.2d 641, 643 (Minn. 1999). A cause of action accrues and the statute of limitations begins to run when the cause of action will survive a motion to dismiss for failure to state a claim on which relief can be granted. Herrmann, 590 N.W.2d at 643. A cause of action will survive a motion to dismiss so long as some damage has occurred as a result of the alleged malpractice. Id.
Harmeyer challenges the district court's conclusion that the statute of limitations bars her malpractice claim against Gustafson relating to the trusts. The court determined that the statute began to run in 1990, when Harmeyer and her husband signed the trust documents. Harmeyer argues that it did not begin to run until Gordon's death in February 1996, reasoning that it was not possible to ascertain damages until either she or her husband died. Her husband's death, she argues, is the event which first caused prejudice or damage sufficient for the limitations period to commence, and that her claim is therefore not time-barred.
The statute of limitations begins to run when the cause of action comes into being, even though the ultimate damage is unknown or unpredictable. Grimm v. O'Connor, 392 N.W.2d 40, 43 (Minn. App. 1986) (quotation omitted). In Grimm, this court affirmed the district court's conclusion that the appellants were damaged as soon as they executed a contract for deed, not when they discovered nine years later that a refinancing clause had been omitted. Id. Here, it is irrelevant whether Harmeyer could have determined, when she signed the trust documents, the damage that she would incur from Gustafson's allegedly negligent work; the statute of limitations began to run when the documents were signed. Some damage, as required by Herrmann, occurred when the Harmeyers signed the trust documents because they did not receive the expected benefit of those trusts, which Harmeyer alleges was to transfer assets out of the taxable estates of both Gordon and Frances Harmeyer, thereby saving estate taxes. Cf. May v. First Nat'l Bank, 427 N.W.2d 285, 289 (Minn. App. 1998), review denied (Minn. Oct. 26, 1988) (holding actual damage occurred when lawyer erred, not when IRS assessed deficiency). Further, the running of the statute is not tolled by ignorance of the cause of action. Herrmann, 590 N.W.2d at 643. Thus, it is irrelevant that Harmeyer did not know that the trust documents included a provision that she now claims has negative tax consequences.
Harmeyer also argues that the discovery rule, which tolls the statute of limitations until the plaintiff knows or should know of the existence of the cause of action, should apply to this case. But it is established that the discovery rule does not apply to legal malpractice actions in Minnesota. Id.
Harmeyer's claim for legal malpractice against Gustafson would have survived a motion to dismiss for failure to state a claim when the trust documents were signed in 1990 because the documents then included the language that Harmeyer claims adversely affects her. See id. at 643-44 (holding that, because of attorneys' alleged failure to advise respondents regarding prohibited transactions, respondents became immediately liable for excise tax and their cause of action would thus have survived motion to dismiss). Because Harmeyer did not commence her action until 1999, it is time-barred. Therefore, the district court did not err in granting summary judgment on Harmeyer's claim relating to the trusts.
Harmeyer next argues that the district court erred in concluding that damages for Gustafson's alleged negligence in drafting the quitclaim deed in 1994 were too remote and speculative to allow recovery. She contends that a tax-law expert who submitted an affidavit on her behalf was able to determine what the damages would be by calculating the additional assets that will unnecessarily be included in Harmeyer's taxable estate at her death and then calculating the additional tax due as a result.
Speculative, remote, or conjectural damages are not recoverable at law. Lassen v. First Bank, 514 N.W.2d 831, 839 (Minn. App. 1994), review denied (Minn. June 29, 1994). To recover, Harmeyer must prove the fact of loss to a reasonable, although not absolute, certainty. Leoni v. Bemis Co., 255 N.W.2d 824, 826 (Minn. 1977). There is no general test for determining whether damages are remote and speculative, so such matters are generally left to the judgment of the district court. Olson v. Aretz, 346 N.W.2d 178, 183 (Minn. App. 1984), review denied (Minn. Oct. 30, 1984).
The district court found that whether estate taxes will have to be paid at Harmeyer's death will depend on the deductions available under the law to her estate at the time of her death and that it would presently be too speculative as to whether or not any damages would result based upon the homestead transfer. (Emphasis added.) In other words, any additional tax liability, or damages, that Harmeyer's estate might incur will not be determinable until her death. Cf. Anderson v. Benson, 394 N.W.2d 171, 175 (Minn. App. 1986) (stating that damages from alleged failure by former shareholder to file income-tax return were too remote and speculative, and therefore not recoverable, where plaintiff shareholder introduced no evidence of present or threatened tax liability); Olson, 346 N.W.2d at 183 (holding in legal-malpractice action that whether wife would have received smaller lien on homestead had attorney completed dissolution proceedings sooner was pure conjecture); see also Herrmann v. McMenomy & Severson, 583 N.W.2d 283, 289 (Minn. App. 1998) (The mere breach of a professional duty, causing only nominal damages, speculative harm, or the threat of future harm not yet realized does not suffice to create a cause of action for damages (quotation omitted)), rev'd on other grounds, 590 N.W.2d 641 (Minn. 1999).
Attempting to calculate future tax consequences requires speculation as to when Harmeyer will die, what the value of her estate will be, and what the tax law will be at the time of her death. The district court did not err in concluding that damages to Harmeyer's estate resulting from Gustafson's drafting of the quitclaim deed are too remote and speculative to determine.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.