This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Michael J. Beutz,





Joseph B. Marshall, et al.,




Filed ­­­April 8, 2003


Harten, Judge


Anoka County District Court

File No. C4-01-6572


John G. Westrick, Tammy L. Merkins, Westrick & McDowall-Nix, P.L.L.P., 400 Minnesota Building, 46 East Fourth Street, St. Paul, MN 55101 (for appellant)


Stephen C. Rathke, Kay Nord Hunt, Lommen, Nelson, Cole & Stageberg, P.A., 1800 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402 (for respondents)


            Considered and decided by Harten, Presiding Judge, Peterson, Judge, and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N




            Appellant, a former client of respondents, an attorney and his law firm, challenges the jury’s determination that respondents did not convert appellant’s property and the district court’s denial of appellant’s posttrial motions.  Because there is evidence supporting the jury’s determination and no error of law in the denial of the posttrial motions, we affirm.



In 1994, appellant Michael Beutz entered into a retainer agreement with respondents Joseph Marshall, an attorney, and his law firm, Marshall & Associates, P.A., for legal services required by Beutz’s business, CNC Concepts, at a rate of $90 per hour.  Marshall was unaware of the nature of Beutz’s business: providing cable TV boxes that enabled viewers to receive cable channels without paying the fee.  In March 1995, the FBI searched pursuant to a warrant the premises of CNC Concepts. 

Both civil and criminal actions were filed against Beutz and CNC Concepts.  Marshall agreed to represent Beutz in the civil action and to defend him in the criminal action until he could obtain criminal defense counsel.  Marshall’s fee for this was $100 per hour.  Marshall also agreed to maintain a client trust account for Beutz.  Beutz deposited $29,000 in the account; later, additional amounts were deposited that brought the trust account to over $200,000.

In October 1995, Beutz retained attorney Sydney Friedler of New York to defend him in the criminal action.  Marshall agreed to act as local counsel for Friedler and to defend Beutz’s parents in the criminal action arising out of their participation in CNC Concepts.  Friedler told Beutz and Marshall that Beutz’s use of the trust account would leave Beutz open to charges of money laundering.  He said that account should be used only for attorneys’ expenses and suggested that Beutz make a one-time fee payment to Marshall for the work remaining in the civil and criminal actions.  Beutz and Marshall agreed on a fee, and Marshall withdrew $85,576 from Beutz’s account.

Beutz’s civil suit settled.  In April 1996, he claimed to have “won” his criminal case and asked Marshall for the return of the $85,576, claiming this money had been a contingency fee for the criminal matter.[1]  Because Marshall knew that taking a criminal case on a contingency fee violates Minn. R. Prof. Conduct 1.5(d)(2), he reported Beutz’s claim to the Office of Lawyers’ Professional Responsibility (OLPR).  In January 1997, Beutz again sought the return of the $85,576.  Marshall testified that they negotiated, but Beutz refused Marshall’s offer to return $35,000.  Beutz terminated Marshall’s representation in March 1997.

Beutz filed a complaint against Marshall with the OLPR, which found that Marshall had put money in the trust account maintained for Beutz without fraudulent intentions.  The OLPR also found that Marshall had violated Minn. R. Prof. Conduct 1.2(c), 1.5(a), and 1.15(a) and (h).  The OLPR determined that public discipline was not necessary and placed Marshall on private probation for two years.  Marshall agreed that Beutz was entitled to a refund of part of the $85,576, but the two could not agree on an amount.   The OLPR declined to resolve the dispute and suggested arbitration.  Beutz, however, refused to arbitrate and in October 2000 brought this action, claiming $4,282 refund because Marshall raised the $90 rate in the 1994 agreement without written notification.  Beutz also sought the return of the $85,576 fee, plus interest, which he alleged that Marshall had converted from the trust account.  In addition, Beutz asserted associated claims for unjust enrichment, breach of fiduciary duty, consumer fraud, fraud and misrepresentation, and RICO mail fraud.

Marshall demanded an expert affidavit required by Minn. Stat. § 544.42 (2000) for a malpractice action.  Beutz did not provide an affidavit, but, after the discovery deadline had passed,  provided a letter containing the expert opinion of attorney William Wernz. 

In response to the parties’ pre-trial motions, the district court (1) dismissed the RICO claims, the claims relating to fraud or misrepresentation, and the part of the consumer fraud claim that related to attorney fees, (2) limited the expert testimony of Wernz to the reasonableness of attorney’s fees, and (3) denied Beutz’s motion to exclude testimony of Bruce Hanley, Marshall’s expert witness.

At trial, Hanley testified that, in his expert opinion, the $85,576 nonrefundable fee was reasonable based on the information available at the time it was made.   In response to Marshall’s motion for directed verdict, the district court dismissed Beutz’s claims of unjust enrichment and consumer fraud.  The parties agreed not to instruct the jury on fiduciary duty and not to include that issue on the verdict form.

The jury found that: (1) Beutz consented to an increased hourly rate for Marshall in relation to the civil and criminal matters relating to the cable TV converters; (2) Marshall did not breach the hourly rate retainer agreement; (3) Beutz and Marshall had a fixed fee retainer agreement of $85,576 in October 1995; and (4) Marshall did not convert any property or funds of  Beutz.

Beutz brought posttrial motions challenging the jury instructions, the determination that the $85,567 was a reasonable fee, the limitation of expert testimony, and the dismissal of his consumer fraud claim.  These motions were denied.  On appeal, he again raises these issues and also contends that the jury’s findings are contrary to the evidence and precluded by law.




1.         Rejected Jury Instructions

A district court has broad discretion in determining jury instructions.  State Farm Fire & Cas. Co. v. Short, 459 N.W.2d 111, 113 (Minn. 1990). 

            a.         Construction of fee agreements

            Beutz first claims he is entitled to a new trial because the court refused to instruct the jury that  “[f]ee agreements are construed against attorneys and in accordance with the client’s expectations.”  He relies on Cardenas v. Ramsey County, 322 N.W.2d 191, 193-94 (Minn. 1982), to support this instruction, but his reliance is misplaced.  Cardenas concerned the construction of a contingency fee agreement:  the attorney argued that he was entitled to recover his one-third of the settlement immediately from the first payment, and the client argued that the attorney was entitled only to one third of each payment received.  The supreme court held for the client because the client expected that the attorney would receive one-third of each payment and the attorney had not explained to the client that he wanted to be paid from the initial payment.  Cardenas does not support the statement Beutz wanted to use as a jury instruction, and Beutz offers no other support for it.

            b.         Scrutiny

            Beutz also proposed to have the jury instructed that:

                        Retainer agreements made after services have been rendered should be closely scrutinized to see that there has been no overreaching and that the client was fully informed.


The retainer agreements involved here were made before services were rendered, so the proposed instruction would not have been relevant.  There was no abuse of discretion in refusing to give the instruction.

            c.         Fiduciary duty

            Nor was it an abuse of discretion not to instruct the jury on fiduciary duty, because both parties’ attorneys agreed that the instruction should not be given.  The district court noted in its memorandum:

                        In the pre-instruction dialogue, the Court and counsel agreed not to have the jury separately decide whether there was a breach of fiduciary duty.  Rather, it was agreed that if the jury made a finding of conversion, then the Court would make a conclusion of law that there was a breach of fiduciary duty. 


The jury did not make a finding of conversion, however, so the breach of fiduciary duty issue did not arise.  There was no abuse of discretion in refusing to instruct the jury on conversion.


2.         Instruction on Fee Modification


District courts are allowed considerable latitude in selecting the language in jury instructions.  Alholm v. Wilt, 394 N.W.2d 488, 490 (Minn. 1986).  Where instructions fairly and correctly state the applicable law, an appellate court will not grant a new trial.  Alevizos v. Metro. Airports Comm’n, 452 N.W.2d 492, 501 (Minn. App. 1990), review denied (Minn. 11 May 1990). 

            The 1994 retainer agreement provided that Beutz would pay an hourly rate higher than the $90 fee in the agreement “upon receipt of written notification of such increase.”  Marshall sent monthly statements indicating that he was billing $100 hourly on the CNC matters.  Beutz contends that the district court “erroneously instructed the jury that written monthly bills could constitute proper notice to increase fees.”  But the district court did not give that instruction to the jury.  The district court actually instructed:

Breach of contract.  The August 1994 hourly retainer contract was a binding contract between the parties.  Subsequent to the August 1994 hourly retainer agreement, the parties could modify the contract or enter into a new contract.  A change in the terms of the contract or a new contract may be made orally or by actions of the parties or by a combination of an oral agreement and actions.  In deciding whether there was a change in the terms in an existing contract or a new contract, you must consider all of the circumstances.


Beutz makes no claim that this does not fairly and accurately state the applicable law.  See id.

            The jury instructions were not erroneous.[2] 

3.         Estoppel

            In his investigation by the OLPR, Marshall stipulated that

[Beutz] is due a refund for unearned fees from this money [$85,576] but [Marshall] and Beutz cannot agree on the amount.  [Marshall] states that he has offered a refund of at least $35,000, or is willing to arbitrate the dispute.


Beutz moved for JNOV on the grounds that this stipulation both collaterally and judicially estopped the district court from sending the reasonableness of Marshall’s fee to the jury.  

            a.         Collateral estoppel

            The application of collateral estoppel is a mixed question of law and fact; its use is a matter within the discretion of the district court, and the district court’s decision will be overturned only if that discretion was abused.  Colonial Ins. Co. of Cal.  v. Anderson, 588 N.W.2d 531, 533 (Minn. App. 1999).  Collateral estoppel requires a final adjudication on the merits of an issue identical to the issue raised.  In re Discipline of Morris, 408 N.W.2d 859, 862 (Minn. 1987).  “It is the adjudication which operates as a bar and without it a verdict or finding is not of that effect.”  Id. (quotation omitted). 

            Here, there was no prior adjudication as to the reasonableness of the $85,576 fee.  In fact, the OLPR noted in its memorandum that the issue of how much, if any, of the $85,576 Beutz was entitled to recover was unresolved and that “[t]he [OLPR] cannot resolve this issue for the parties.”  Absent a prior adjudication that the $85,576 fee was unreasonable, there was no basis for using collateral estoppel to prevent the jury from considering that issue.[3]

            b.         Judicial estoppel

The doctrine of judicial estoppel forbids a party from assuming inconsistent or contradictory positions during the course of a lawsuit.   * * * [T]he purpose of judicial estoppel is to protect the integrity of the judicial process from a party who plays fast and loose with the courts.  For judicial estoppel to apply, however, a party’s subsequent position must be clearly inconsistent with its original position.  * * * [It] does not apply where distinct or different issues or facts are involved.


We have not expressly recognized the doctrine of judicial estoppel and decline to do so here.  The record contains no evidence that the state ever lied to or attempted to mislead any judicial body.  Furthermore, because of their different purposes, grand jury and warrant application proceedings may legitimately involve different evidentiary and procedural considerations than are relevant to a trial on the merits.  Because of the differing nature of the proceedings and the lack of bad faith on the part of the state, we conclude that judicial estoppel, even if recognized, would be inapplicable in this case.


State v. Profit, 591 N.W.2d 451, 462 (Minn. 1999) (quotations and citations omitted).  Here, as in Profit, there is no evidence that the party sought to be estopped lied or attempted to mislead either the OLPR or the court, and the natures of the two proceedings involved—one before the OLPR and one before the district court—are even more different than in Profit.  Here, judicial estoppel would not have been appropriately applied as an inappropriate basis for JNOV. 

4.         Reasonableness of Fee

            This court will not set aside the answer to a special verdict question unless it is perverse and palpably contrary to the evidence or unless the evidence is so clear that there is no room for differences among reasonable people.  Hanks v. Hubbard Broad., Inc., 493 N.W.2d 302, 309 (Minn. App. 1992), review denied (Minn. 12 Feb. 1993).  The jury found that the $85,576 fee was reasonable. This finding was supported by the testimony of Marshall’s expert witness, a criminal defense attorney who testified that nonrefundable one-time retainer fees are usual in criminal defense work and that Marshall’s fee was not unreasonable given the complexity of the cases, the civil action in Minnesota, and the potential action in another state.  Beutz argues that this finding is contrary to the evidence because Marshall’s stipulation to the OLPR was evidence that the fee was unreasonable.  But Marshall was cross-examined on the stipulation.  When asked if he had told the OLPR that the fee was unreasonable, he testified,

Yes.  But that was based on later considerations.  At the time the fee was negotiated it was not unreasonable.  At the time we entered into that oral agreement * * * it was not unreasonable.  As a matter of fact, it was a very conservative fee.  But changed circumstances subsequent to that made it an overpayment, which I agreed, and I thought Mr. Beutz was entitled to a refund, yes.


The jury’s finding that the fee was reasonable was not palpably contrary to the evidence, and we see no basis for overturning it.

5.         Existence of Fee Agreement

            The jury found that Beutz and Marshall had “a fixed fee retainer agreement in the sum of $85,576 in October 1995.”  Evidence supports this finding: Marshall testified that he and Beutz had agreed orally to this amount and that he had reduced their agreement to writing, but that Beutz had failed to sign and return the agreement. 

Four years prior to this, the Minnesota Supreme Court had said:

We do feel an obligation to advise the bar that this court is getting increasingly alarmed at the numerous cases of trust account violations by lawyers of this state. * * * [T]he purpose of the retainer fee and the consent of the client for the payment and use thereof must be reduced to writing and approved by the client.


 In re Lochow, 469 N.W.2d 91, 98 (Minn. 1991).  Beutz argues that Lochow entitles him to judgment notwithstanding the verdict (JNOV) on this issue.  When a district court has denied a motion for JNOV, this court must consider the evidence in the light most favorable to the prevailing party and must not set the verdict aside if it can be sustained on any reasonable theory.  Pouliot v. Fitzsimmons, 582 N.W.2d 221, 224 (Minn. 1998). 

Beutz argues:

Because * * * the alleged agreement was not in writing, executed by the client in compliance with Lochow, it is unenforceable, irrespective of whether it was agreed to by [Beutz] or not.  See Christensen v. Eggen, 577 N.W.2d 221, 225 (Minn. 1998) (oral fee splitting agreement not enforceable because not compliant with rule such an agreement [must] be in writing).


But Beutz misreads both Lochow and Christensen.   Lochow was an attorney discipline case, not a conversion case brought by a client against his former attorney.[4]  Beutz would have us extend dicta in an attorney discipline case to hold that the penalty for failure to reduce a retainer fee agreement to writing is forfeiture of the fee.[5]  Lochow does not support such a holding.

Christensen involved a fee-splitting dispute.  Christensen, 577 N.W.2d at 222.  An attorney obtained a case, referred it, and died before performing any work on it; his widow then sought to enforce a fee-splitting agreement against the attorney who did perform the work on the case.  Id. At 222-23.  The agreement was held unenforceable.  Id. At 225. 

In this case, while the attorneys may initially have intended to divide the labor and responsibility, [the attorney first hired] performed no work on the case and did not maintain joint responsibility for the case because of his untimely death.  [The client] was neither told of the share that each attorney would receive, nor did he consent to the fee split and joint representation in writing.  The fee-splitting agreement did not comply with two of the three requirements of [Minn. R. Prof. Conduct] 1.5(e). 


Id.  Beutz cites Christensen for the proposition that an agreement is unforceable because it does not comply with a rule requiring agreements of that type to be in writing.  Christensen does not support that proposition.  We conclude that Beutz is not entitled to JNOV on the jury’s verdict that Beutz and Marshall had “a fixed fee retainer agreement in the sum of $85,576 in October 1995.”[6]

6.         Consumer Fraud Claim

            This claim was dismissed on a motion for directed verdict.  This court reviews an appeal from a directed verdict by making an independent determination of whether the evidence was sufficient to present a fact question to the jury, reviewing the evidence in the light most favorable to the nonmoving party.  Boone v. Martinez, 567 N.W.2d 508, 510 (Minn. 1997). 

            The evidence Beutz presented did not meet the standard for consumer fraud.  To meet that standard, Beutz would have to show that, when Marshall promised to perform legal services for $90 an hour, he did not intend to perform services for that amount, and that, when he agreed to a fixed fee of $85,576 for the remaining work on the civil and criminal cases, he did not intend to perform the work for that amount.  See Martens v. Minn. Mining & Mfg. Co., 616 N.W.2d 732, 747 (Minn. 2000) (“Where a representation regarding a future event is alleged [to be fraudulent] * * * an additional element of proof is that the party making the representation had no intention of performing when the promise was made * * *.”  (citation omitted)).  Beutz offers nothing in support of either position.  He asserts in his brief that Marshall promised not to withdraw funds from the trust account without Beutz’s written approval, but there is no support in the record for this assertion.  The record contains insufficient evidence to present this question to the jury.

7.         Breach of Retainer Agreement

            The jury answered, “No,” to the question, “Did [respondents] breach the terms of the Hourly Rate Retainer Agreement by charging an hourly rate of more than $90.00 per hour?”  Beutz challenges this finding, arguing that, as a matter of law, because Marshall did not give notice of the fee increase in the manner provided by the agreement, he breached the agreement.  But Beutz testified that he was notified of the rate increase.

Q.        You’d agree * * * that the retainer agreement * * * provides that [respondents] can raise their rates * * * after providing you with – after written notification of such increase, correct?


A.        Yes.


Q.        And you received written notification of the increase, did you not?


A.        I received billing statements.  I never received a notice that my rates would be going up.


Q.        Well, wouldn’t the billing statements notify you that the rates were at the rate of $100 an hour?


A.        Had I scrutinized them, yes.


Q.        So your complaint is that you just didn’t read them?


A.        (No response.)


Beutz’s testimony supports the jury’s verdict.  The answer to a special verdict question will not be overturned unless it is perverse and palpably contrary to the evidence.  Hanks,493 N.W.2d at 309.   There is no basis for overturning the verdict.

8.         Limitation of Testimony

The district court permitted Beutz’s expert witness to testify only as to the issue of the reasonableness of the $85,576 fee.[7]  His other testimony was excluded “as a sanction for [Beutz’s] failure to timely comply with the obligations to make appropriate disclosures regarding expert witnesses.”  It is undisputed that Beutz did not comply with the district court’s scheduling order.  Minn. R. Civ. P. 16.06 provides that, as a sanction for failure to comply with scheduling orders, a court may refuse to allow a party to support designated claims or defenses.  There is no indication that the court exceeded its authority in limiting the testimony of Beutz’s expert.

Because none of the jury’s findings is palpably contrary to the evidence and none of the district court’s rulings on Beutz’s posttrial motions was either an abuse of discretion or an error of law, we affirm.


[1] Beutz had not “won” the criminal matter; in fact, he pled guilty to conspiracy to assist in the unauthorized reception of cable TV services.

[2] Even if these jury instructions were erroneous, Beutz would not be entitled to a new trial absent a showing of prejudice.  To be entitled to a new trial on the basis of an erroneous jury instruction, a complaining party must be able to show substantial prejudice caused by that instruction.  Stenvik v. Constant, 502 N.W.2d 416, 421 (Minn. App. 1993), review denied (Minn. 24 Aug. 1993).  Beutz has shown no prejudice.

[3] In any event, it is doubtful whether a determination of the OLPR would have a binding effect on a district court.  See Morris, 408 N.W.2d at 862-63.

[4] An attorney’s violation of a professional rule does not give rise to a civil cause of action.  In re Hatch, 628 N.W.2d 125, 127-28 (Minn. 2001). 

[5] The OLPR did decide on the appropriate penalty for Marshall’s failure to reduce the agreement to writing when it responded to the complaint Beutz filed against Marshall.

[6] We hasten to add that, in affirming the jury’s verdict, we do not condone violations of Lochow, 469 N.W.2d at 98 (purpose of retainer fee and client’s consent to payment must be reduced to writing) and of OLPR Opinion 15, (“All availability or non-refundable retainer agreements must be in writing and signed by the client”) (citing Lochow, 469 N.W.2d at 98).

[7] The expert’s other testimony was that Marshall had and breached a fiduciary duty to Beutz.  Beutz decided to limit his fiduciary duty claim to make it co-extensive with his conversion claim.