Case Title: Meyer v. Mulligan

Citation: 

Docket Number: 93-249

State: wyoming

Court: Wyoming Supreme Court

Date: 1995-01-30T00:00:00Z

Document:
Meyer v. Mulligan1995 WY 6889 P.2d 509Case Number: 93-249, 93-260Decided: 01/30/1995Supreme Court of Wyoming

Morris E. MEYER and Toni T. Meyer, husband and wife, 
and individually; and Link, Inc., a Wyoming corporation, Appellants 
(Plaintiffs),

v. 

Richard J. MULLIGAN, Appellee 
(Defendant).

 

 Richard 
J. MULLIGAN, Appellant (Defendant),

v. 

Morris E. MEYER and Toni T. Meyer, as husband and 
wife, and individually; and Link, Inc., a Wyoming corporation, Appellees 
(Plaintiffs).

 

Appeal 
from District Court, Teton County, H. Hunter Patrick, J. 

 

Patrick M. Hunter, Casper, 
for Meyers and Link, Inc.

Richard E. Day and Ann M. 
Rochelle of Williams, Porter, Day & Neville, Casper, for 
Mulligan.

 

Before GOLDEN, C.J., and THOMAS, CARDINE,* MACY and TAYLOR, JJ.

 *Retired July 6, 1994.

 

CARDINE, 
Justice, Retired.

[¶1]      This case 
concerns an agreement between two couples, Rustin and Jolyn Johnson and Morris 
and Toni Meyer, to purchase a motel in Jackson, Wyoming and to form a 
corporation to own and operate the motel. The agreement began coming apart when 
the Meyers were unable to pay their half of the down payment at closing as 
agreed and, instead, executed a promissory note payable to the Johnsons. The 
Johnsons, having paid the entire down payment, took title to the motel 
personally and, soon after, demanded payment on the note. The Meyers refused to 
pay the note until the motel was assigned to the corporation. The Meyers sued 
the Johnsons for breach of contract and sued the corporate attorney, employed to 
form the corporation and create documents to transfer the motel to the 
corporation, for malpractice. The trial court granted summary judgment to the 
attorney, concluding: (1) that no attorney-client relationship existed between 
the corporate attorney and the Meyers; (2) that the attorney had caused no 
injury to the corporation; and (3) denying the attorney's motion for W.R.C.P. 11 
sanctions. Both the attorney and Meyers appeal.

[¶2]      We affirm in part 
and reverse in part.

I. 
ISSUES

[¶3]      In Appeal No. 
93-249, appellants Morris and Toni Meyer raise the following 
issues:

A. Did the trial court err in its finding that there 
was no issue of fact as to whether the Appellee Mulligan and the Appellants 
Meyers had an attorney-client relationship[?]

B. Did the trial court err in its finding that no 
issue of fact existed as to whether the Appellee breached his duty to the 
Appellant Link Inc.[?]

C. Did the trial court abuse its discretion in 
granting Summary Judgment prior to allowing the Plaintiffs/Appellants to conduct 
reasonable discovery, including and particularly depositions of the 
parties?

[¶4]      In Appeal No. 
93-260, appellant Richard Mulligan raises one issue:

A. Did the Trial Court Err in Denying Defendant 
Mulligan's Motion for Sanctions Under Rule 11 of the Wyoming Rules of Civil 
Procedure?

II. 
FACTS

[¶5]      On November 25, 
1989, Morris and Toni Meyer (Meyers) and Rustin and Jolyn Johnson (Johnsons), 
all residents of Louisiana, met and discussed potential investment properties 
available in Teton County, Wyoming. On December 10, 1989, the Meyers and the 
Johnsons viewed the Sagebrush Motel (motel) located in Teton County, Wyoming. On 
that same day, the Meyers contacted Dorothy Mercer (Mercer), the owner of the 
motel, about purchase terms. Mercer related that she would sell the motel for 
$775,000.00 with earnest money of $50,000.00, if closing occurred by the first 
week of January 1990, and if the buyers would tender $325,000.00 as down payment 
at closing with the remaining to be paid in yearly 
installments.

[¶6]      The Meyers and 
Johnsons discussed the proposal, agreed to buy the motel, and to employ a local 
attorney to form a corporation. The Johnsons and Meyers agreed that the motel 
would be transferred to the corporation and the Meyers and Johnsons would each 
own 50 percent of its stock. According to the Meyers, on December 11, 1989, they 
and the Johnsons met over breakfast and discussed the terms of the agreement 
between them. The Meyers contend that, at that meeting, the Johnsons agreed to 
pay the entire down payment at closing and that the Meyers would give the 
Johnsons a note for their half of the down payment.

[¶7]      On December 10, 
1989, the Meyers and Johnsons hired Attorney Richard Mulligan (Mulligan) to 
prepare the necessary legal documents to form the corporation which was to 
purchase and hold the motel, "to assist in the closing [on the motel,] * * * 
provide advice and counsel as to the effect of Wyoming law on those transactions 
and * * * to represent the corporation." Previously, Meyer had retained Mulligan 
to form a totally separate and unrelated river tubing corporation. On December 
12, 1989, the Johnsons paid the $50,000.00 earnest money, which was placed in 
the trust account of Mercer's attorney.

[¶8]      Mulligan prepared 
and filed with the Secretary of State articles of incorporation for Link, Inc. 
(Link). On December 18, 1989, the Secretary of State issued Link a certificate 
of incorporation. The articles of incorporation named Morris Meyer and Rustin 
Johnson as the two members of the board of directors and named Mulligan the 
incorporator and registered agent. On December 14, 1989, Mulligan billed Link 
$1,750.00 for "[p]reparation of documents for purchase of Sagebrush Motel and 
Contract for Deed regarding property[,] [p]reparation of Warranty Deed, 
Quitclaim Deed, Memorandum Of Sale, Same day service [and] incorporation of 
Link, Inc. of Wyo."

[¶9]      The Johnsons 
claim that on the date scheduled for closing on the motel, January 5, 1990, at a 
meeting in Mulligan's office, Mercer's attorney informed the Meyers, the 
Johnsons, and Mulligan that Mercer would not sell the motel to the Meyers but 
would sell it to Rustin Johnson individually. After "much discussion" among the 
Meyers, the Johnsons and Mulligan, the Meyers and Johnsons agreed that Rustin 
Johnson would take title to the motel individually, then assign his rights and 
obligations under the contract to Link and that the Meyers would contribute 
equally through Link.

[¶10]   Then, also according to the 
Johnsons, after this change in the manner of purchase, the Meyers, for the first 
time on January 5, 1990, informed the Johnsons that they did not have funds 
available in Wyoming to pay their half of the down payment. After learning about 
the Meyers' lack of funds, the Johnsons claim that Mr. Meyer suggested that "the 
Johnsons remit the entire amount of down payment ($375,000.00) and that the 
Meyers would execute a promissory note for one half of this down payment"; that 
the parties discussed the proposition and Mulligan explained the different types 
of notes and their consequences. Mulligan then drafted the note, and the Meyers 
executed it.

[¶11]   Later, on January 5, 1990, Mercer 
and Rustin Johnson closed on the sale of the motel. At the same time, Rustin 
Johnson and Mercer executed an agreement, prepared by Mulligan (Assignment and 
Guarantee), which was personally guaranteed by Rustin Johnson, and granted 
Johnson the right to assign the contract for deed to Link.

[¶12]   On January 7, 1990, the Meyers paid 
the Johnsons $1,125.00 for half of Mulligan's fees and for the initial 
capitalization of Link. On January 18, 1990, Morris Meyer faxed Mulligan a 
letter requesting a copy of the demand note and expressing dismay that he had 
not "seen any writings indicating an effort to place the [motel] and business 
into [Link]." That same day, Mulligan faxed the Meyers a reply with a copy of 
the demand note attached. In that reply, Mulligan explained to the Meyers the 
nature of a contract for deed transaction, informed the Meyers "[e]verything has 
been done to protect you in this matter" and that the motel sales contract had 
been assigned to Link by Rustin Johnson in the assignment and guarantee 
document.

[¶13]   On February 16, 1990, the Johnsons 
orally demanded payment of the note. The Meyers refused to pay the note. On 
March 2, 1990, after receiving a letter from the Meyers stating their position, 
the Johnsons wrote the Meyers explaining that Rustin Johnson owned 100 percent 
of the rights and obligations under the motel sales contract and indicating that 
they did not intend to assign those rights to Link. Along with that letter, the 
Johnsons enclosed a check for $1,125.00, the amount the Meyers had paid toward 
attorney fees and capitalization of Link. Meanwhile, on February 26, 1990, the 
Johnsons had written Mulligan a letter explaining that the Meyers had refused to 
honor their demand for payment of the note, documenting the deteriorating 
relationship between the couples, and seeking advice from Mulligan clarifying 
the rights, duties and obligations of the Meyers, Johnsons, and 
Link.

[¶14]   On January 9, 1992, the Meyers sued 
the Johnsons, in their individual capacity and as officers of the corporation 
for Link for breach of contract and sued Mulligan for malpractice. In their 
complaint, the Meyers allege that the Johnsons breached their agreement by 
failing to assign the motel contract to Link and that Mulligan was negligent and 
had breached the contract retaining him by failing to draft the legal documents 
to reflect the parties' agreement. On August 6, 1992, after the Johnsons and 
Mulligan had answered and after answering interrogatories, Mulligan moved for 
summary judgment and for sanctions against the Meyers under W.R.C.P. 
11.

[¶15]   On August 20, 1993, the trial court 
granted Mulligan summary judgment against the Meyers personally, finding no 
attorney-client relationship between the Meyers and Mulligan and against Link, 
finding that Mulligan did not cause injury to Link. In addition, the trial court 
granted summary judgment to the Meyers on Mulligan's claim for sanctions. On 
August 25, 1993, the Meyers moved the trial court to reconsider the summary 
judgment order and attached a deposition of Mulligan which was taken for 
purposes of establishing minimum contacts with the state of Louisiana involving 
a suit filed by the Meyers against Mulligan in Louisiana.1 On October 26, 1993, the trial 
court issued an order denying the Meyers' motion for reconsideration. The Meyers 
appeal the grant of summary judgment to Mulligan on the personal and the 
corporate claim, and Mulligan appeals the denial of W.R.C.P. 11 
sanctions.

III. 
DISCUSSION

A. 
STANDARD OF REVIEW

[¶16]   A grant of summary judgment will be 
affirmed "when there are no genuine issues of material fact and the prevailing 
party is entitled to judgment as a matter of law." Moore v. Lubnau, 855 P.2d 1245, 1248 (Wyo. 1993) (quoting Zmijewski v. Wright, 809 P.2d 280, 282 (Wyo. 
1991)). When reviewing a grant of summary judgment, we look at the record in the 
"light most favorable to the party opposing the motion" and give to that party 
"all favorable inferences that can be drawn from the facts." Id. (quoting Clark 
v. Industrial Co. of Steamboat Springs, Inc., 818 P.2d 626, 628 (Wyo. 
1991)).

B. 
ATTORNEY-CLIENT RELATIONSHIP

[¶17]   In most claims of legal malpractice 
it is essential to establish an attorney-client relationship. Brooks v. Zebre, 
792 P.2d 196, 201 (Wyo. 1990); see also Bowen v. Smith, 838 P.2d 186, 198 (Wyo. 
1992) (Brown, J., concurring). The attorney-client relationship is necessary 
because it creates a professional duty on the part of the attorney. Skarbrevik 
v. Cohen, England & Whitfield, 231 Cal. App. 3d 692, 282 Cal. Rptr. 627, 632 
(1991); Warmbrodt v. Blanchard, 100 Nev. 703, 692 P.2d 1282, 1285 (1984); 
Goerlich v. Courtney Industries, Inc., 84 Md. App. 660, 581 A.2d 825, 827 
(1990). In very limited situations, some courts have imposed a professional duty 
on attorneys even though there was no attorney-client relationship. See 
discussion, Brooks, 792 P.2d  at 201; see also Skarbrevik, 282 Cal. Rptr.  at 
632-33 and Goerlich, 581 A.2d  at 827. The Meyers, however, base their claim 
solely on a duty allegedly created through the existence of an attorney-client 
relationship with Mulligan.

[¶18]   Determining the existence of an 
attorney-client relationship "depends on the facts and circumstances of each 
case" and "may be implied from the conduct of the parties, such as the giving of 
advice or assistance, or such as failing to negate the relationship when the 
advice or assistance is sought if the attorney is aware of the reliance on the 
relationship." Chavez v. State, 604 P.2d 1341, 1346 (Wyo. 1979), cert. denied 
446 U.S. 984, 100 S. Ct. 2967, 64 L. Ed. 2d 841 (1980). The determination of 
whether there is an attorney-client relationship is one of fact and, typically, 
is for the trier of fact and cannot be resolved by summary judgment. 2 R.E. 
Mallen and J.M. Smith, Legal 
Malpractice §§ 27.10, 27.22 (3d ed. 1989).

[¶19]   In a Formal Opinion, the American 
Bar Association addressed the question: "When does a partnership's lawyer have 
an attorney-client relationship with an individual partner?". That opinion 
suggested:

Whether such a relationship has been created almost 
always will depend on an analysis of the specific facts involved. The analysis 
may include such factors as whether the lawyer affirmatively assumed a duty of 
representation to the individual partner, whether the partner was separately 
represented by other counsel when the partnership was created or in connection 
with its affairs, whether the lawyer had represented an individual partner 
before undertaking to represent the partnership, and whether there was evidence 
of reliance by the individual partner on the lawyer as his or her separate 
counsel, or of the partner's expectation of personal 
representation.

ABA Standing Comm. on Ethics 
and Professional Responsibility, Formal Opinion 91-361 (1991). These factors are 
relevant to and offer guidance in the determination of when a closely-held 
corporation's attorney has established an attorney-client relationship with one 
of the corporation's incorporators, shareholders, or managers because 
partnerships and closely-held corporations combine many similar characteristics. 
See generally 1 O'Neal & 
Thompson, O'Neal's Close Corp. § 1.08 
(3rd ed. 1991-1994) and Lawrence E. Mitchell, Professional Responsibility and the Close 
Corporation: Toward a Realistic Ethic, 74 Cornell L.Rev. 466, 468-69 
(1989).

[¶20]   Also bearing on this case is the 
entity rule, i.e., "[a]n attorney who 
represents a corporation does not, because of that corporate representation, 
also represent the individual stockholders[, officers or directors]." Bowen, 838 P.2d  at 197 (Brown, J., concurring) (citing Skarbrevik, 282 Cal.Rptr. at 634); 
Bowen, 838 P.2d  at 195 (rule stated in majority opinion); see also Robertson v. 
Gaston Snow & Ely Bartlett, 404 Mass. 515, 536 N.E.2d 344, 348 (1989) 
(citing 1 R.E. Mallen & J.M. Smith, Legal Malpractice § 7.6 (3d ed. 1989)). 
In addition, Rule 1.13(a) of the Wyoming Rules of Professional Conduct 
provides:

(a) A lawyer employed or retained by an organization 
represents the organization acting through its duly authorized 
constituents.

Thus, "the duty of the 
corporate attorney is to his client - the corporate entity." Bowen, 838 P.2d  at 
195, (citing Brooke Wunnicke, Ethics 
Compliance for Business Lawyers § 8.2 (1987)).

[¶21]   It should be noted that the "entity 
rule" has been criticized as unworkable when applied to the representation of 
closely-held corporations. Lawrence E. Mitchell, Professional Responsibility and the Close 
Corporation: Toward a Realistic Ethic, 74 Cornell L.Rev. 467, 469-72 (1989). 
Unlike representing large publicly-held corporations, when representing the 
traditional closely-held corporation - where all the shareholders are also the 
managers of the corporation - it is very difficult to distinguish the entity 
from the shareholders and, therefore, difficult to determine who is the client. 
Id.

[¶22]   To whom an attorney hired to form a 
corporation owes a professional duty is not settled. Wunnicke, at § 8.4. One 
commentator has written:

[P]reparation of articles of incorporation and bylaws 
may be a routine task, * * * but the lawyer-client relationship in the course of 
organizing a corporation is complex.

* * * * * *

* 
* * The appealing reality is that often the lawyer who is organizing a 
corporation is representing the group. Hence, absent an actual conflict of 
interest or patent unfairness to a member of the group, the same ethical rules 
that apply to representing the corporate entity should apply to the group who 
are the incorporators.

Wunnicke, at §§ 8.4 and 8.5. 
An Illinois Appeals Court reached this same conclusion when it 
stated:

In setting up a corporation, an attorney would 
represent the incorporators, not the 
person who might later buy shares in the corporation.

Michel v. Gard, 181 Ill. 
App.3d 630, 130 Ill. Dec. 164, 170, 536 N.E.2d 1375, 1381 (1989) (dismissal 
affirmed in an action where a shareholder in a closely-held corporation sued the 
attorney hired to form the corporation for malpractice, in part, because it 
found no attorney-client relationship between the shareholder and the attorney 
hired by the incorporators).

[¶23]   In a treatise on close 
corporations, the authors suggest that an attorney retained to form a 
corporation represents each of the incorporators, when they 
write:

When an attorney is asked to represent prospective 
shareholders (if more than one) in organizing a close corporation, or when the 
attorney is later asked to represent all the shareholders in preparing a 
shareholders' agreement or any document affecting corporate control or the 
transfer of shares, he should discuss with them possible conflicts of interests 
and let each participant decide if he wants the attorney to serve as his 
counsel.

1 O'Neal's Close Corp. § 
2.02.

[¶24]   Our analysis begins by noting that 
the Meyers contend that a genuine issue of fact exists concerning the existence 
of an attorney-client relationship between them and Mulligan because Mulligan 
had previously represented the Meyers; because Mulligan advised the Meyers in a 
letter concerning their query about the status of the corporation; and Mulligan 
stated in his deposition that his representation "involved [the] Meyers, * * * 
Johnsons and the corporation Link, Inc."

It is undisputed that Mulligan

was retained to prepare the legal documents necessary 
to form Link, Inc. as well as the Contract for Deed to provide for the purchase 
of the Sagebrush Motel by Rustin D. Johnson with a provision in that contract 
whereby Rustin D. Johnson had the right to assign that contract for purchase to 
Link, Inc. as long as Rustin D. Johnson personally guaranteed payment of the 
purchase price to the sellers.

It is also undisputed that 
Mulligan incorporated Link, drafted documents for the purchase of the motel by 
Link and billed those services to Link; and then, because the Meyers and the 
Johnsons decided to change the agreement for the purchase of the motel, Mulligan 
prepared the demand note for one half of the motel's down payment payable to the 
Johnsons from the Meyers and prepared the "Agreement to the Assignment of Real 
Estate Sales Contract and Personal Guarantee."

[¶25]   Based on the facts, it is not clear 
who Mulligan represented. When Mulligan was retained, Link did not exist; 
instead, he was hired by both the Johnsons and Meyers to create Link, as well as 
draft documents for the purchase of the motel. Based on that fact alone, it 
could be argued that Mulligan represented both the Johnsons and Meyers and, 
therefore, owed each a professional duty. Also, it is not clear from this record 
what occurred at the meeting between Mulligan, the Meyers and the Johnsons on 
the day of the motel closing. Did the Meyers and Johnsons agree, by themselves, 
to change the purchase process and simply have Mulligan act as a scrivener or 
did Mulligan advise both couples as to the best way to accomplish their goals? 
The Johnsons' "Answers to Interrogatories" suggest that Mulligan offered 
continuing advice to both the Meyers and the Johnsons throughout the entire 
transaction.

[¶26]   The limited evidence in this record 
is not so conclusive that reasonable persons would not differ concerning the 
question of the existence of an attorney-client relationship between the Meyers 
and Mulligan. Since the record is devoid of the specifics of any conversation 
concerning representation, we cannot discern whether Mulligan disclaimed 
representation of the Meyers or if the Meyers' claimed reliance is valid. 
Therefore, we hold that a genuine issue of material fact remains concerning the 
existence of an attorney-client relationship between the Meyers and 
Mulligan.

[¶27]   There is no dispute that an 
attorney-client relationship existed between Mulligan and Link, the corporation, 
and that Mulligan owed Link a professional duty. Therefore, we must next 
determine whether Mulligan was entitled to summary judgment because the 
undisputed facts demonstrate that Mulligan did not breach his duty to the Meyers 
or to Link.

C. BREACH 
OF DUTY AND CAUSATION

[¶28]   The Meyers contend that summary 
judgment was improper because Moore, 855 P.2d 1245, requires that Mulligan 
present expert evidence as to the standard of care required of an attorney and 
that he failed to do so, and that the trial court improperly acted as the expert 
in setting the applicable standard of care when it granted summary judgment 
against Link. In Moore, we stated that an attorney-defendant moving for summary 
judgment in a legal malpractice action must make a prima facie showing of the 
absence of legal malpractice. Moore, 855 P.2d  at 1248. Additionally, we held 
that the elements in a legal malpractice case are: "(1) the accepted standard of 
[legal] care or practice, (2) that the [lawyer's] conduct departed from the 
standard, and (3) that [the lawyer's] conduct was the legal cause of the 
injuries suffered." Moore, 855 P.2d  at 1248 (citing Metzger v. Kalke, 709 P.2d 414, 421 (Wyo. 1985)). Therefore, it was Mulligan's burden, as the movant, to 
make a showing of undisputed material facts with respect to these elements and 
that he was entitled to judgment as a matter of law.

[¶29]   Concerning elements (1) and (2), 
Mulligan, as the movant, "was required to demonstrate that his conduct conformed 
to the accepted standard of legal care." Moore, 855 P.2d  at 1248. In most legal 
malpractice cases, the establishment of the standard of care can be accomplished 
only through expert testimony. Id., at 1249. However, "[a]n exception exists * * 
* when a lay person's common sense and experience are sufficient to establish 
the standard of care." Id. This is not a case which fits that exception, 
however; and because Mulligan, in his motion for summary judgment, did not 
include any expert evidence as to the applicable standard of care, he failed to 
make a prima facie showing that his conduct conformed to the accepted standard 
of care.

[¶30]   Next, we must determine whether 
Mulligan made a prima facie showing that there were no disputed material facts 
concerning causation and that, as a matter of law, his conduct was not the legal 
cause of Link's damages. In both medical and legal malpractice actions, as in 
all negligence cases, the plaintiff must prove that the breach of the standard 
of care was both the cause in fact and the proximate cause of the injury. Harris 
v. Grizzle, 625 P.2d 747, 753 (Wyo. 1981), and see Moore, 855 P.2d  at 1248 
(stating that the elements of legal malpractice mirror those of medical 
malpractice as designated in Harris). In medical malpractice cases we require 
expert opinion to prove proximate cause. Harris, 625 P.2d  at 753 (citing Keller 
v. Anderson, 554 P.2d 1253 (Wyo. 1976)). We have not decided whether expert 
evidence is required in legal malpractice cases to prove 
causation.

[¶31]   "[I]n the vast majority of legal 
malpractice actions in which expert testimony is required, the plaintiff must 
establish through expert testimony not only the applicable standard of care and 
the breach of that standard, but also that the alleged breach of the standard of 
care was the proximate cause of his injury." Dennis J. Horan and George 
Spellmire Jr., Attorney Malpractice: 
Prevention and Defense at 13.6 (1987); see also 2 R.E. Mallen & J.M. 
Smith Legal Malpractice §§ 27.14, 
27.15, 27.22 and Jarman v. Hale, 112 Idaho 270, 273, 731 P.2d 813, 816 (App. 
1986). The reasoning for requiring expert evidence to prove the standard of care 
is because "lay people are not competent to pass judgment on legal questions." 
Moore, 855 P.2d  at 1249. That same reasoning supports requiring expert testimony 
concerning proximate cause in this case. Whether Mulligan could have drafted the 
documents differently so that this dispute and its damaging effects would have 
been avoided is not a question that lay people could competently determine. 
Therefore, in this case, expert evidence is necessary to prove proximate cause, 
and Mulligan was required to provide expert evidence on the lack of proximate 
cause to succeed at summary judgment.

[¶32]   Because Mulligan's motion for 
summary judgment failed to include expert evidence showing that his alleged 
breach was not the proximate cause of Link's or the Meyers' injury, he was not 
entitled to summary judgment as against either.

D.W.R.C.P. 
11 SANCTIONS

[¶33]   In Appeal No. 93-260, Mulligan 
contends that the trial court abused its discretion when it refused to impose 
sanctions under W.R.C.P. 11. Mulligan argues that because the Meyers neglected 
to consult an expert concerning the standard of care before filing the 
malpractice claim against him, they failed to make "reasonable inquiry," which, 
under Rule 11, is certified as being made when the complaint is 
signed.

[¶34]   Rule 11 provides, in relevant 
part:

(a) Signing of pleadings. - Every pleading, motion, 
and other paper of a party represented by an attorney shall be signed by at 
least one attorney of record in the attorney's individual name, whose address 
and telephone number shall be stated and who shall be a member of the Wyoming 
State Bar. A party who is not represented by an attorney shall sign the party's 
pleading, motion, or other paper and state the party's address. Except when 
otherwise specifically provided by rule or statute, pleadings need not be 
verified or accompanied by affidavit. The rule in equity that the averments of 
an answer under oath must be overcome by the testimony of two witnesses or of 
one witness sustained by corroborating circumstances is abolished. The 
signature of an attorney or party constitutes a certificate by the signer that 
the signer has read the pleading, motion, or other paper; that to the best of 
the signer's knowledge, information, and belief formed after reasonable inquiry 
it is well grounded in fact and is warranted by existing law or a good faith 
argument for the extension, modification, or reversal of existing law, and that 
it is not interposed for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation. If a 
pleading, motion, or other paper is not signed, it shall be stricken unless it 
is signed promptly after the omission is called to the attention of the pleader 
or movant. If a pleading, motion, or other paper is 
signed in violation of this rule, the court, upon a motion or upon its own 
initiative, shall impose upon the person who signed it, a represented party, or 
both, an appropriate sanction, which may include an order to pay to the 
other party or parties the amount of the reasonable expenses incurred because of 
the filing of the pleading, motion, or other paper, including a reasonable 
attorney's fee.

(Emphasis added.) We affirm 
a ruling concerning W.R.C.P. 11 sanctions unless it is demonstrated that the 
trial court abused its discretion. L.C. v. T.L., 870 P.2d 374, 381 (Wyo. 1994). 
A trial court abuses its discretion if it acts outside the bounds of reason 
under the circumstances and we determine that it could not have reasonably 
concluded as it did. Id.

[¶35]   Because Wyoming's Rule 11 parallels 
Rule 11 in the Federal Rules of Civil Procedure, federal precedent offers able 
guidance in review of decisions concerning Rule 11. Concerning the purpose of 
Rule 11, the United States Supreme Court has stated:

It is now clear that the central purpose of Rule 11 
is to deter baseless filings in district court and thus, consistent with the 
Rules Enabling Act's grant of authority, streamline the administration and 
procedure of the federal courts.

Cooter & Gell v. 
Hartmarx Corp., 496 U.S. 384, 393, 110 S. Ct. 2447, 2454, 110 L. Ed. 2d 359 (1990). 
The federal courts uniformly apply an objective test - reasonableness under the 
circumstances - to determine whether the Rule 11 duty of a "reasonable inquiry" 
has been satisfied. Georgene M. Vairo, 
Rule 11 Sanctions §§ 5.01, 5.02(b) at 5-3, 5-10 (2d ed. 1993); Charles A. 
Wright & Arthur R. Miller, 5A Federal 
Practice and Procedure: Civil 2d § 1335 at 59-60 (1990); see, e.g., Burkhart 
through Meeks v. Kinsley Bank, 804 F.2d 588, 589-90 n. 3 (10th Cir. 1986). We 
adopt that objective standard for determining whether "reasonable inquiry" has 
been made. Thus, the question we must answer is, could the district court have 
reasonably concluded that the Meyers' attorney acted as a reasonably competent 
attorney when he inquired into the facts and law and filed this malpractice 
complaint against Mulligan.

[¶36]   Mulligan would have this court hold 
that one who files a legal malpractice action, where expert evidence will be 
required, must consult with an expert before filing the action or be subject to 
sanctions under Rule 11. We agree that before an attorney files a legal 
malpractice action where the underlying case of alleged malpractice involves a 
complex or specialized area of the law, with which they are unfamiliar, that 
attorney should first consult with an expert in the complex or specialized legal 
arena about the standard of care. See 
generally Vairo § 6.03(g) at 6-53. That is not the case here, however, where 
the underlying case of alleged malpractice involves drafting documents to form a 
corporation and the transfer of real property.

[¶37]   Since the practice of Meyers' 
attorney involves "business planning and real estate," it was not necessary for 
him to consult an expert in order to make the "reasonable inquiry" required by 
Rule 11. Because Mulligan rests his claim for sanctions solely on the Meyers' 
attorney's failure to consult an expert before filing, we hold that the district 
court did not abuse its discretion in refusing to impose Rule 11 sanctions 
against the Meyers.

IV. 
CONCLUSION

[¶38]   Viewing the record in the light 
most favorable to the Meyers, we conclude that: (1) genuine issues of material 
fact remain concerning whether an attorney-client relationship existed between 
the Meyers and Mulligan; (2) Mulligan failed to meet his burden of demonstrating 
the absence of a prima facie case of legal malpractice; and (3) the district 
court properly denied sanctions against the Meyers. Therefore, we reverse the 
district court's order granting summary judgment but affirm its order denying 
sanctions.

[¶39]   Reversed in part and affirmed in 
part.

Footnote

1 The Meyers had failed to establish 
minimum contacts, and the Louisiana court dismissed their action against 
Mulligan. Thereafter, the Meyers filed this suit in 
Wyoming.

 

GOLDEN, 
Chief Justice, concurring, joined by MACY, J.

[¶40]   While I concur in the decision to 
reverse the trial court's entry of summary judgment, I write separately to 
express my concerns with that court's entry of summary judgment on a ground 
different from that pursued by the movant (Mulligan), and with this court's 
review of materials not before the trial court on the original motion for 
summary judgment.

[¶41]   Mulligan originally sought summary 
judgment contending that because the Meyers had failed to produce expert 
testimony concerning Mulligan's breach of duty, they had not presented facts 
sufficient to raise a genuine question of his negligence. In support of his 
motion for summary judgment, Mulligan attached a copy of the Meyers' answers to 
interrogatories. These materials were submitted to support Mulligan's contention 
that no genuine question of fact existed concerning the breach of duty 
issue.

[¶42]   The Meyers opposed Mulligan's 
motion for summary judgment, submitting with that response two affidavits, one 
by their attorney attesting to his good faith belief that Mulligan had breached 
his duty and the other by Mr. Meyers attesting to his belief that Mulligan had 
undertaken to represent the Meyers' interests and had failed in his efforts. 
They also submitted two letters between the parties concerning the transaction 
in question.

[¶43]   Mulligan's motion for summary 
judgment did not seek judgment on the ground that no genuine issue of fact 
existed concerning the existence of an attorney-client relationship, and neither 
party submitted materials concerning the question whether that relationship 
existed. Nonetheless, this is the ground upon which the trial court awarded 
summary judgment to Mulligan. Only upon the Meyers' motion for reconsideration, 
was the trial court presented with materials concerning the existence of an 
attorney-client relationship between the Meyers and 
Mulligan.

[¶44]   The Meyers filed a motion for 
reconsideration, to which they attached two letters and a transcript of 
Mulligan's deposition taken in a different state, the thrust of which deposition 
was to establish his minimum contacts with that state. In their motion for 
reconsideration, the Meyers pointed out that they were unaware the court was 
considering the question whether an issue of fact existed concerning the 
existence of the attorney-client relationship. They urged the court to allow 
them more time to conduct discovery to obtain the information necessary to 
demonstrate the existence of a genuine issue of material fact concerning the 
existence of the relationship.

[¶45]   Mulligan responded to the motion 
for reconsideration, but submitted no additional materials for the court's 
consideration. The trial court ruled on the motion for reconsideration as 
follows:

This court has read the additional material submitted 
by plaintiffs in support of their motion for reconsideration, but fails to find 
in the supporting material any admissible evidence which would alter the 
decision already entered by this Court. * * * If the Court assumes for a moment 
that counsel for plaintiffs failed to discover the issue of whether there was an 
attorney-client relationship between Mulligan and the plaintiffs individually, 
such that the decision of this Court came as a total surprise, it remains 
readily apparent, that after receiving the decision letter of the Court and 
having scrounged up everything that he had to try to raise a question of fact on 
this issue, it still is simply not there.

[¶46]   I cannot condone the trial court's 
disposition of the motion for summary judgment in this fashion. Our rules 
governing summary judgment provide a definite procedure to be followed by the 
movant, the party opposing the motion and the trial court. WYO.R.CIV.P. 
56.

[¶47]   The rules contemplate one party 
will move for summary judgment on the ground that the absence of any genuine 
issue of fact concerning a particular material allegation in the pleadings 
entitles him to judgment as a matter of law. Rule 56(c) requires the motion and 
supporting proof to be served at least ten days before the hearing on the 
motion. This provides the party opposing the motion with notice of the material 
allegation at issue and the proof to which he must respond. WYO.R.CIV.P. 
56.

[¶48]   Following submission of all 
materials by the parties, the trial court's task is two-fold. The trial court 
must first determine whether a genuine issue of fact exists concerning the 
material allegations in question. If the trial court determines no genuine issue 
of material fact exists concerning the material allegation, it must next 
determine whether in light of that absence the moving party is entitled to 
judgment as a matter of law.

[¶49]   In this case, Mulligan moved for 
summary judgment alleging no genuine issue of fact existed concerning a material 
allegation of the complaint - breach of duty. Mulligan submitted his motion and 
supporting proof within the prescribed time period. The Meyers responded to the 
particular allegation set forth in Mulligan's motion and to the materials 
attached to his motion.

[¶50]   This court has 
commented:

The Rules of Civil Procedure provide an orderly 
process for the determination of controversies. They are intended to provide 
notice to a party of the other's contentions, a fair opportunity to discover and 
develop the entire case and meet those contentions, and to avoid surprise - all 
to the end that a just result is more probable.

Larsen v. Roberts, 676 P.2d 1046, 1048 (Wyo. 1984) (reversing portion of summary judgment entered in 
reliance upon late-filed affidavits); Hickey v. Burnett, 707 P.2d 741, 744 (Wyo. 
1985) (reversing summary judgment entered in reliance upon materials never 
filed).

[¶51]   The trial court strayed from its 
task of answering the questions presented by Mulligan's motion for summary 
judgment - whether a genuine issue of material fact existed concerning 
Mulligan's breach of duty, and, if not, whether Mulligan was entitled to 
judgment as a matter of law. This deprived the Meyers of notice and a fair 
opportunity to conduct discovery and respond to the 
motion.

[¶52]   I would limit this court's review 
to the motion for summary judgment as originally presented to the trial court, 
and I agree with the majority's disposition of that issue. I would not address 
the question whether a genuine issue of material fact exists concerning the 
existence of an attorney-client relationship. When this court reviews a motion 
for summary judgment, it has exactly the same duty as the trial court and 
considers the question in the same light as the trial court. Four Nines Gold, 
Inc. v. 71 Constr., Inc., 809 P.2d 236, 238 (Wyo. 1991). The question of the 
existence of an attorney-client relationship was not properly before the trial 
court and is thus not properly before this court.