This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Denis E. Grande, et al.,
John M. Harvey, et al.,
Filed June 7, 2005
Hennepin County District Court
File No. MP 03-18491
Arlo H. Vande Vegte, Arlo H. Vande Vegte, P.A., 1850 West Wayzata Boulevard, P.O. Box 39, Long Lake, MN 55356-0039 (for appellant)
Kay Nord Hunt, James M. Lockhart, Lommen, Nelson, Cole & Stageberg, P.A., 2000 IDS Center, 80 South 8th Street, Minneapolis, MN 55402 (for respondents)
Considered and decided by Hudson, Presiding Judge; Shumaker, Judge; and Halbrooks, Judge.
Appellant challenges the district court’s grant of summary judgment to respondents, arguing that the district court erred by holding that she could not show causation as to damages for her underlying claims of legal malpractice, civil conspiracy, and negligent infliction of emotional distress. Appellant also argues that the district court erred by denying her motion to amend her complaint. Because we conclude that the district court did not err by granting summary judgment and denying appellant’s motion to amend, we affirm.
This case centers around a dispute between appellant Patricia Azbill and her former attorney, respondents Denis Grande and his law firm, respondent Mackall, Crounse, & Moore (MCM). On October 25, 1997, Azbill retained Grande to represent her in dissolution proceedings. The retainer agreement provided that Azbill would be charged for legal services on an hourly basis and that monthly bills would be “due upon receipt.”
proceeded to trial and the district court awarded rehabilitative maintenance
and child support to Azbill. In
addition, the court awarded Azbill a retirement account valued at $76,583.15 as
well as the couple’s
After taxes were withheld, Azbill received approximately $60,000 from the retirement account in January 2000. Despite this, she did not pay her attorney fees to Grande, which had reached nearly $60,000 by that time. Instead, Azbill used the funds to pay other “expenses and bills,” including a $10,000 debt owed to a personal friend. When Azbill offered to pay Grande $10,000 and set up a “payment arrangement” thereafter, Grande rejected the offer, explaining to Azbill, “[y]ou got awarded this [retirement] account to pay us [our attorney fees] and you have to pay us.” Grande testified that Azbill responded by saying, “I’m working on it” and “I’ll figure out a way to get you paid.”
In July 2000,
Azbill obtained a $29,250 loan from Equicredit that placed a second mortgage on
her home. She did not use these funds to
pay Grande, but instead “[had] some things done around the house, some repair work.” Later, in September 2000, and in an effort to
raise additional funds, Grande assisted Azbill in securing a third mortgage on
her home through a vice president at U.S. Bank.
Grande’s law firm (MCM) guaranteed the mortgage. Azbill’s knowledge regarding MCM’s status as
the guarantor of the mortgage is disputed.
Because Azbill would be the debtor and Grande would be the creditor
under the arrangement, Grande testified that he advised Azbill to seek the
advice of another attorney. He referred
Azbill to a colleague, John Harvey, and Grande explained, “[T]hat was the end
of it. I never talked to [Azbill] after
Azbill signed the U.S. Bank loan documents on September 27, 2000, agreeing to make monthly payments of $700 over the next five years. At her deposition, Azbill explained her understanding of the transaction:
Q: . . . Do you understand that if someone has a secured obligation or secured debt, for example like a mortgage, that they can collect it by making you sell your home?
A: Yes, I understand the mortgage and the first mortgage and the second mortgage, yes.
Q: People have collateral for those things, right?
Q: And they’re secured because they have collateral.
Q: And you understood that in August and September of 2000?
Q: Nobody had to explain to you that someone who holds a mortgage can make you sell your home to get paid that money?
A: Correct. But I must say though that I did not know that it was going to be [MCM]. That was the thing that was left out.
Azbill received $15,000 of the loan disbursement, which again she used for “expenses.” Grande/MCM received approximately $65,000 to pay their attorney fees.
subsequently defaulted on her mortgage payments. In September 2001, U.S. Bank requested MCM,
as guarantor, to “pay [Azbill’s] loan in full and assume [U.S. Bank’s] place as
creditor,” noting that “[t]he loan has been a delinquency problem from the beginning,
and is now past due since May 27, 2001.”
MCM complied and on October 3, 2001, under the terms of the guaranty,
January 2002, Azbill filed for Chapter 13 protection in federal bankruptcy
court. After failing to make payments to
On April 15, 2003, MCM gave notice of its intent to redeem. MCM subsequently assigned its redemption rights and mortgage to Valley View Property Investments, LLC (VVPI), an entity which MCM had created “for limited liability purposes.” MCM then decided that it did not want to redeem the property, so Grande himself borrowed money to do so. When asked why he decided to borrow money to redeem the property after MCM had declined to do so, Grande explained, “I wanted to collect the fees that were due us.” The property was then conveyed by quitclaim deed to yet another entity, GM Property Management, LLC (GM). This entity was formed “because [Grande] had no idea what the composition of [VVPI] was.” On August 12, 2003, the bankruptcy court lifted an automatic stay from a second Chapter 13 plan that had previously shielded Azbill from the foreclosure and granted GM relief, “to do all things necessary to regain possession and control of [Azbill’s] . . . property.” The bankruptcy court dismissed Azbill’s second Chapter 13 plan after she failed to make payments to the court trustee.
GM commenced an eviction action against Azbill “for the restitution of the [m]ortgaged [p]roperty.” On September 26, 2003, a housing court awarded judgment for the recovery of the premises to GM. That court concluded that
[Azbill] did not lose her right to possession due to [MCM] or any subsequent assignee foreclosing a lien, but rather due to her failure to redeem from foreclosure of the first [Wells Fargo] mortgage. Had [VVPI] not redeemed, [Azbill] would still not be entitled to possession because the redemption period was over for [GM] before [VVPI] redeemed.
(Emphasis added.) Azbill was evicted from her home on October 21, 2003. The housing court’s ruling is not at issue here.
Azbill sued respondents Grande, MCM, Harvey, VVPI, and GM in district court. In her complaint, Azbill asserted claims for: (1) declaratory judgment, (2) civil conspiracy to commit fraud, (3) legal malpractice, and (4) negligent infliction of emotional distress. Respondents moved to dismiss, and the district court granted the motions in part. The suit remained viable against Grande/MCM; the civil-conspiracy claim was dismissed against VVPI and GM.
The district court subsequently granted respondents’ motion for summary judgment and dismissed Azbill’s claims in their entirety. The court also denied Azbill’s motion to amend her complaint because “her proposed claims would not survive summary judgment and are futile.” Respondents argued, among other things, that Azbill could not prove causation as to her claims, urging that there was no proximate cause between their collection efforts and Azbill’s damages “because she caused her own damage by her spending habits.” The district court found this argument dispositive and concluded that
[Azbill] was damaged by her own conduct of not paying the first [Wells Fargo] mortgage and the damages she now claims flow from that conduct.
Because [Azbill] cannot show causation, her claims of legal malpractice and civil conspiracy to commit fraud fail. Her declaratory judgment claim also fails because she seeks to have her home returned but [respondents] did not cause her to lose her home. The negligen[t] infliction of [emotional distress claim] fails as well because it is only an element of damages of her other claims, not an independent tort.
The present appeal pertains only to Grande, MCM, VVPI, and GM.
On appeal from summary judgment, this court determines
whether any genuine issues of material fact exist and whether the district
court erred as a matter of law. State by Cooper v. French, 460 N.W.2d 2,
Azbill ultimately argues that the district court erred by concluding that respondents’ acts were not the proximate cause of the damages that she allegedly suffered. Azbill specifically notes that she does not appeal the district court’s finding that she “was damaged by her own conduct of not paying the first mortgage and the damages she now claims flow from that conduct.” Instead, she appeals “the other classifications of damages” flowing from a litany of respondents’ harmful conduct—including their breach of fiduciary duty, legal malpractice, use of “alter ego entities” to secure the eviction, and their “direct invasion” of Azbill’s rights through fraud and collusion. As respondents highlight, Azbill’s brief focuses only on the actions of Grande and MCM.
In ruling on respondents’ earlier motions to dismiss, the district court noted that Azbill did not assert a breach-of-fiduciary-duty claim. While Azbill moved to amend her complaint to assert this claim, the district court denied the motion and limited its analysis to Azbill’s claims of (1) legal malpractice, (2) civil conspiracy to commit fraud, (3) declaratory judgment, and (4) negligent infliction of emotional distress, concluding that each claim failed because Azbill could not show causation. Azbill appeals all but the declaratory-judgment issue. Thus, the gravamen of this appeal and the basis for the district court’s dismissal of Azbill’s suit centers around the lack of proximate cause for the alleged damages suffered by Azbill—in legal malpractice and fraud.
A. Legal Malpractice
order to prevail in a legal-malpractice action, Azbill must
prove that (1) an attorney-client relationship existed between Grande and
Azbill; (2) Grande’s actions amounted to negligence or breach of contract; (3)
Grande’s acts were the proximate cause of Azbill’s damages; and (4) but for Grande’s conduct, Azbill would have
prevailed in the underlying action. See Rouse
v. Dunkley & Bennett, P.A.,
520 N.W.2d 406, 408 (
malpractice action is barred if Grande/MCM’s negligence was not the proximate
cause of her damages. Wartnick v. Moss & Barnett, 490
N.W.2d 108, 113 (
[I]n order for a party’s negligence to be the proximate cause of an injury “the act [must be] one which the party ought, in the exercise of ordinary care, to have anticipated was likely to result in injury to others, . . . though he could not have anticipated the particular injury which did happen.”
v. Anderson, 539 N.W.2d 398, 401 (
Raske v. Gavin, this court upheld a
district court’s grant of summary judgment in a legal-malpractice action because
proximate cause had not been established.
438 N.W.2d 704, 704 (Minn. App. 1989), review denied (Minn. June 21, 1989). In Raske,
a former client claimed that his attorney had “failed to advise him of the
consequences of becoming a minority shareholder in a close corporation
controlled by a majority shareholder.”
Similarly, as the district court aptly recognized in this case, Azbill has presented no material issue of fact to show that her home would not have been foreclosed on by the other mortgage guarantors had Grande/MCM not served as guarantor to the U.S. Bank mortgage. The record clearly shows that Azbill had fallen behind on her mortgage payments and that as a result, her home was in danger of foreclosure. The potential consequence of a foreclosure—without redemption—is eviction. See Minn. Stat. § 504B.285, subd. 1(1)(ii) (2004) (“The person entitled to the premises may recover possession by eviction when  any person holds over real property . . . on foreclosure of a mortgage and expiration of the time for redemption[.]”).
Therefore, because the record does not contain specific facts to show that Azbill would not have been evicted from her home without Grande/MCM’s actions, there is no material issue of fact as to whether Grande/MCM’s actions were the proximate cause of Azbill’s eviction from her home. Even though Grande employed a circuitous and complicated strategy to obtain the attorney fees owed to him, the fact remains that Azbill would have lost her home anyway—whether Grande guaranteed the mortgage or whether Wells Fargo, U.S. Bank, Equicredit, or some other entity did. Accordingly, the district court did not err by granting summary judgment to respondents.
Azbill maintains that the residual homestead value is no longer at issue and claims that the district court “spent little, if any, time justifying its refusal to acknowledge other classes of damages from [Grande/MCM’s] conduct.” But the real injury suffered by Azbill was the loss of her home through the foreclosure and subsequent eviction proceedings—an event which she inevitably caused by failing to make her mortgage payments. Any other damages suffered flowed from this loss and cannot be said to have been caused by Grande/MCM’s actions. Because Azbill cannot meet the proximate-cause element of her legal-malpractice claim, summary judgment is appropriate on this issue.
B. Conspiracy to Commit Fraud
In order to establish fraud, a complainant must plead
with specificity that  there was a false representation regarding a past or present fact,  the fact was material and susceptible of knowledge,  the representer knew it was false or asserted it as his or her own knowledge without knowing whether it was true or false,  the representer intended to induce the claimant to act or justify the claimant in acting,  the claimant was induced to act or justified in acting in reliance on the representation,  the claimant suffered damages, and  the representation was the proximate cause of the damages.
Martens v. Minn. Mining &
Mfg. Co., 616 N.W.2d 732,
The supreme court has cited favorably to Prosser’s assessment of proximate cause in the fraud context:
In general . . . courts have restricted recovery to those losses which might be expected to follow from the fraud and from events that are reasonably foreseeable. . . . [I]f false statements are made . . . other factors in no way relate[d] to the representations will not afford any basis for recovery.
Specialized Tours, 392 N.W.2d at 537 (alteration in original) (third omission added) (quoting W. Keeton, et al, Prosser and Keeton on the Law of Torts § 110, at 767 (5th ed. 1984) (footnotes omitted)). Here, the proximate-cause element is determinative, and the causation analysis above similarly applies—Azbill simply cannot prove that Grande/MCM’s representations proximately caused her damages in this case. See Wood v. Schlagel, 375 N.W.2d 561, 564-65 (Minn. App. 1985) (concluding that any fraud caused by respondents was not the proximate cause of appellants’ damages). Azbill cannot defeat summary judgment because her claims offer no direct or proximate relationship between the harm she suffered and any alleged misrepresentation or fraud. See Bennett v. United States Trust Co., 770 F.2d 308, 314, 316 (2d Cir. 1985) (concluding that despite trust company’s knowing or reckless misrepresentation, appellants failed to show that their loss was a direct result of the misrepresentation, independent of other causes, including their own “unwise investment decisions”). Because there is no actionable fraud claim here, any claim for civil conspiracy also fails. See D.A.B. v. Brown, 570 N.W.2d 168, 172 (Minn. App. 1997) (noting that a conspiracy count must be supported by an underlying tort).
C. Negligent Infliction of Emotional Distress
Langeland v. Farmers State Bank of Trimont,
319 N.W.2d 26, 31 (
district court’s conclusion is firmly supported by Lickteig v. Alderson, Ondov, Leonard & Sween, P.A., 556 N.W.2d
also argues that the district court erred by denying her motion to amend her
complaint to add claims for breach of fiduciary duty and punitive damages. It is well-established that a district court
has broad discretion to grant or deny leave to amend a complaint, and its
ruling will not be reversed absent a clear abuse of discretion. Fabio,
504 N.W.2d at 761. Whether the district
court has abused its discretion in ruling on a motion to amend may turn on
whether it was correct in an underlying legal ruling.
A. Breach of Fiduciary Duty
In her complaint, appellant refers—on multiple occasions—to respondents’ “breach of fiduciary obligation.” But as the district court noted in its ruling on respondents’ motions to dismiss, Azbill did not specifically assert a breach-of-fiduciary-duty claim. Azbill then moved the court to amend her complaint to add this claim. The district court denied Azbill’s motion to amend because any such amendment would be “futile” because the fiduciary-duty claim would fail for lack of causation.
We agree and conclude that the district court did not abuse its discretion by denying Azbill’s motion to amend her complaint. As we have already concluded, the claims that Azbill originally pleaded cannot survive summary judgment. Because a breach-of-fiduciary-duty claim also includes causation as a necessary element, it would similarly fail on summary judgment. See Padco, Inc. v. Kinney & Lange, 444 N.W.2d 889, 891 (Minn. App. 1989) (noting that a negligence count alleges the same elements required for a claim of breach of fiduciary duty), review denied (Minn. Nov. 15, 1989). It was therefore not error for the district court to deny Azbill’s motion to amend her complaint on this issue.
B. Punitive Damages
In its denial of Azbill’s
motion to amend the complaint to add a claim for punitive damages, the district
court stated that she could not show any “deliberate disregard for the rights
of others” as required by Minn. Stat. § 549.20, subd. 1 (2004). A denial of a motion to amend a complaint to
add a claim for punitive damages is a question of law, which we review de novo. Swanlund v. Shimano Indus. Corp., 459 N.W.2d 151, 155 (Minn. App.
1990), review denied (Minn. Oct. 5, 1990). Because
Azbill has failed to show causation as to her substantive claims, she cannot
sustain her burden to show that a punitive-damage claim would also be
warranted. Cf. Hern v. Bankers Life
 Specifically, the court awarded the account, in part, “so [Azbill] has funds to pay her attorney fees . . . . If [Azbill] liquidates this asset to pay her attorney fees and unpaid bills . . ., after payment of a 10% penalty and all applicable taxes, she will probably net about $46,000.00.”
an interrogatory response,
disagrees and testified that she “was not told, verbally or in writing by
anybody, that there were options and that this [loan] probably wasn’t the best
idea.” She explained that
 An “automatic stay” is defined as “[a] bar to all judicial and extrajudicial collection efforts against the debtor or the debtor’s property. The policy . . . is that all actions against the debtor should be halted pending the determination of creditors’ rights and the orderly administration of the debtor’s assets free from creditor interference.” Black’s Law Dictionary 1425 (7th ed. 1999).
 Other parties had been named in the suit, but they were either removed by stipulation or by the district court’s ruling on respondents’ motions to dismiss.
 This “‘willful conduct’ category” differs from the independent tort of intentional infliction of emotional distress. Lickteig, 556 N.W.2d at 560.