NOTICE: NOT FOR PUBLICATION.

UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT

AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

IN THE

ARIZONA COURT OF APPEALS DIVISION ONE

JOHN KLEE and CATHERINE KLEE, Plaintiffs/Appellants,

v.

DAVID W. LUNN and GALLAGHER & KENNEDY, P.A., 

Defendants/Appellees.

No. 1 CA-CV 13-0060

Appeal from the Superior Court in Maricopa County

No. CV 2009-054004

The Honorable Alfred M. Fenzel, Judge

AFFIRMED IN PART; VACATED IN PART; REMANDED

COUNSEL

The Nathanson Law Firm, Scottsdale

By Philip J. Nathanson

Counsel for Plaintiffs/Appellants

Broening Oberg Woods & Wilson, P.C., Phoenix

By Donald Wilson, Jr. and Brian W. Purcell

Counsel for Defendants/Appellees
KLEE v. LUNN, et al.

Decision of the Court

2

MEMORANDUM DECISION

Judge Margaret H. Downie delivered the decision of the Court, in which 

Presiding Judge Kent E. Cattani and Judge Michael J. Brown joined.

D O W N I E, Judge:

¶1 This appeal arises out of a legal malpractice action filed by 

John and Catherine Klee1 against attorney David Lunn and the law firm of 

Gallagher & Kennedy, P.A. (“G&K”) (collectively, “Appellees”). The 

superior court granted summary judgment to Appellees on the Klees’ 

complaint. It also granted summary judgment to G&K on its 

counterclaim. We affirm the grant of summary judgment on the 

malpractice claim but vacate summary judgment on the counterclaim and 

remand for further proceedings. 

FACTS AND PROCEDURAL HISTORY2

¶2 On December 5, 2005, John Klee, Thomas W. Anderson, and 

Alan Scott Ferguson (“the Borrowers”) borrowed $90,000 from the Robert 

Nichols Family Trust (“the Trust”) and signed a promissory note agreeing 

to repay $135,000 by March 8, 2006. If the Borrowers did not pay in full by 

the stated date, late fees would apply, and the note provided for a default 

interest rate of 18% and recovery of attorneys’ fees and costs. Anderson

individually signed a second promissory note when he borrowed 

additional sums from the Trust.

¶3 Defaults occurred under both promissory notes. The Trust 

sued Klee, Anderson, and Ferguson under the first note and Anderson 

under the second note (“the underlying litigation”). Ferguson settled with 

the Trust and was dismissed from the lawsuit.

¶4 Anderson and Klee consulted with Lunn, who was then an 

attorney at G&K. Lunn concluded that representing both Anderson and 

 

1 References to “Klee” in the singular are to John Klee.

2 We view the facts in the light most favorable to the Klees. See 

AROK Constr. Co. v. Indian Constr. Servs., 174 Ariz. 291, 293, 848 P.2d 870, 

872 (App. 1993).
KLEE v. LUNN, et al.

Decision of the Court

3

Klee was permissible because they had co-signed the first note and were 

jointly and severally liable under it. Lunn advised Anderson and Klee, 

though, that he would have to withdraw in the future if a conflict of 

interest arose. Anderson agreed to pay the legal fees and costs for the 

joint representation. 

¶5 Appellees entered an appearance on behalf of the Klees and 

Anderson in the underlying litigation. The Trust moved for summary 

judgment. Appellees responded in opposition, arguing that “[a]lthough it 

is undisputed that certain amounts of principal remain outstanding for 

each promissory note, the terms of repayment are so unconscionable the 

total amount owed under the promissory notes is greatly disputed.” The 

superior court granted the Trust’s motion for summary judgment “as to 

every issue raised therein . . . except for the issue of unconscionability 

which must abide the further development of the record or an evidentiary 

hearing.” 

¶6 The parties reached a settlement agreement in July 2008 that 

required Anderson and the Klees to pay the Trust $95,000. The settlement 

agreement stated that they were jointly and severally liable and obligated

them to pay $47,500 by August 18, 2008, and an additional $47,500 by 

October 2, 2008. If the required payments were not made, the Trust would 

be entitled to $200,000, less any payments previously made under the 

settlement agreement. 

¶7 Anderson and the Klees wished to allocate their respective

obligations under the settlement agreement. Lunn suggested they sign an

agreement setting forth their responsibilities and stating that the failure of 

one party to make required payments would give the other an indemnity 

claim. Lunn advised the Klees to consult independent counsel regarding 

such an agreement. Klee told Lunn that he had done so and wished to 

proceed with the agreement. The ensuing indemnity agreement required 

Anderson to remit the first $27,500 of each payment due under the 

settlement agreement, with the Klees paying the remaining $20,000. 

¶8 As the deadline neared for the first settlement payment,

G&K attorney Maureen Welsh e-mailed the Klees to remind them of the 

amount and the due date. However, she mistakenly stated that they owed 

$17,500 — $2500 less than their actual obligation. Klee sent $17,500 to 

attorney Welsh. By the time Welsh notified Klee of her error, it was too 

late for him to obtain additional funds. G&K forwarded $20,000 to the 

Trust, using $2500 of the firm’s funds.
KLEE v. LUNN, et al.

Decision of the Court

4

¶9 Anderson did not make his required payments under the 

settlement agreement. Lunn notified the Klees that there was now a 

conflict of interest between them and Anderson such that G&K could no

longer represent them. Appellees later withdrew as counsel from the 

underlying litigation. 

¶10 The Trust successfully moved to enforce the settlement 

agreement. The superior court entered judgment in favor of the Trust and 

against the Klees and Anderson for $170,000. The Klees retained new 

counsel, who negotiated a second settlement whereby the Klees agreed to 

pay the Trust $55,000. The Klees did not fulfill their obligations under that 

agreement. In November 2011, the Klees entered into a third settlement 

agreement, this time agreeing to pay the Trust $185,000. 

¶11 The Klees sued Appellees for legal malpractice. G&K filed a 

counterclaim, seeking to recover legal fees from the Klees, as well as the 

$2500 G&K sent to the Trust on the Klees’ behalf. 

¶12 Appellees moved for summary judgment on both the 

complaint and counterclaim. The superior court granted Appellees’ 

motion, assessed costs of $22,800.11 against the Klees, and entered a

signed judgment. The Klees filed a motion to alter, amend, and vacate the 

judgment under Arizona Rule of Civil Procedure 59, which the court 

denied. 

¶13 The Klees timely appealed. We have jurisdiction pursuant 

to Arizona Revised Statutes (“A.R.S.”) sections 12-120.21(A)(1), -

2101(A)(1), and ARCAP 9.

DISCUSSION

¶14 We review a trial court’s grant of summary judgment de 

novo. Schwab v. Ames Constr., 207 Ariz. 56, 60, ¶ 17, 83 P.3d 56, 60 (App. 

2004). Summary judgment is appropriate only when “no genuine issues 

of material fact exist and the moving party is entitled to judgment as a 

matter of law.” Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement 

Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 482, ¶ 14, 38 P.3d 

12, 20 (2002). 

¶15 A party alleging legal malpractice must establish the four 

basic elements of negligence: duty, breach of duty, causation, and 

damages. Glaze v. Larsen, 207 Ariz. 26, 29, ¶ 12, 83 P.3d 26, 29 (2004) 

(citation omitted). In the case at bar, only the latter two elements —

causation and damages — are at issue. Appellees’ motion for summary 
KLEE v. LUNN, et al.

Decision of the Court

5

judgment was “based solely upon the absolute vacuum of proof (1) that 

any assumed breach of the standard of care was the actual and proximate 

cause of any injury to [the Klees] and (2) that [the Klees] sustained any 

damages.” 

I. Causation

¶16 In what is sometimes called the “case within the case” 

doctrine, the plaintiff in a legal malpractice suit must “prove that but for 

the attorney’s negligence, he would have been successful in the 

prosecution or defense of the original suit.” Phillips v. Clancy, 152 Ariz. 

415, 418, 733 P.2d 300, 303 (App. 1986); see also Glaze, 207 Ariz. at 29, ¶ 12, 

83 P.3d at 29 (plaintiff must prove attorney’s negligence “was the actual 

and proximate cause of injury,” i.e., that plaintiff would have succeeded in 

the original action but for the negligence). Expert testimony is generally 

required in professional negligence cases. See Asphalt Eng’rs, Inc. v. 

Galusha, 160 Ariz. 134, 135, 770 P.2d 1180, 1181 (App. 1989). An exception 

to this general rule exists “where the negligence is so grossly apparent that 

a lay person would have no difficulty recognizing it.” Id. at 135-36, 770 

P.2d at 1181-82; see also Mann v. GTCR Golder Rauner, LLC, 351 B.R. 685, 

703 (D. Ariz. 2006) (“[I]n the absence of specific evidence establishing 

causation, a claimant must present expert testimony to substantiate the 

link between the claimed breach and the alleged injury.”); 4 Ronald E. 

Mallen & Jeffery M. Smith, Legal Malpractice § 37:24 (2014) (“Expert 

testimony may be essential for the plaintiff to establish causation. . . . 

[U]nless the causal link is obvious or can be established by other evidence, 

expert testimony may be essential to prove what the lawyer should have 

done.”). 

¶17 The Klees contend they settled with the Trust based on 

Lunn’s advice that their unconscionability defense was “very bad.”

According to the Klees, had Lunn competently defended them, they could

have avoided their entire obligation under the promissory note.

¶18 The causation alleged by the Klees is not so obvious that a 

lay person could recognize it. The Klees, though, failed to offer any 

competent evidence of causation. See Orme Sch. v. Reeves, 166 Ariz. 301, 

309, 802 P.2d 1000, 1008 (1990) (To survive summary judgment, the

proponent must produce evidence which would allow a reasonable trier 

of fact to agree with the proponent’s conclusion.). In moving for summary 

judgment, Appellees offered detailed expert opinions from Thomas 

Zlaket, who stated, inter alia:
KLEE v. LUNN, et al.

Decision of the Court

6

The unconscionability defense [Appellees] managed to 

preserve for trial had little or no chance of success, and at 

most might have caused a reduction in fees, interest and/or 

penalties. It would not, in my opinion, have eradicated the 

entire debt. Nonetheless, the lawyers’ success on this 

motion was important in forestalling a judgment and 

providing an opportunity for the clients to secure a favorable 

settlement. 

¶19 To defeat summary judgment, the Klees were required to

come forward with controverting evidence, which they failed to do. Their 

only expert opinions appear in a preliminary affidavit of Paul Friedman, 

who states in conclusory fashion that Appellees “did not develop a case 

for the underlying Defendants’ theory that the interest rates of 267% and 

400% were unconscionable and, therefore, lost the Motion for Summary 

Judgment.” Not only is Friedman’s affidavit factually incorrect 

(Appellees persuaded the trial court to preserve the unconscionability 

claim and defeated summary judgment on that basis), it does not suggest, 

let alone establish, that but for a breach of duty, the Klees could have 

avoided all liability under the promissory note — including the principal 

sum that they borrowed. See Phillips, 152 Ariz. at 418, 733 P.2d at 303. 

Friedman did nothing to counter Zlaket’s specific opinion that the 

unconscionability defense had “little or no chance of success” and that, at 

best, the defense could have reduced fees, interest, and/or penalties, not 

relieved the Klees of all obligations under the note. 

¶20 “When the party moving for summary judgment makes a 

prima facie showing that no genuine issue of material fact exists, the 

burden shifts to the opposing party to produce sufficient competent 

evidence to show that an issue exists.” Kelly v. NationsBanc Mortg. Corp., 

199 Ariz. 284, 287, ¶ 14, 17 P.3d 790, 793 (App. 2000). Based on the record 

before it, the superior court could properly conclude that the Klees failed 

to proffer causation evidence sufficient to defeat summary judgment on 

the malpractice claim. 

II. Damages

¶21 The lack of causation evidence is fatal to the Klees’ 

malpractice claim. But even if they had demonstrated a genuine issue of 

material fact regarding causation, they failed to establish actual injury or 

damages. 
KLEE v. LUNN, et al.

Decision of the Court

7

¶22 “A claim of legal malpractice requires more than negligence 

by an attorney; in addition, ‘actual injury or damages must be sustained 

before a cause of action in negligence is generated.’” Glaze, 207 Ariz. at 29, 

¶ 15, 83 P.3d at 29. A plaintiff must establish both the fact of damages 

attributable to the defendant and the amount of damages. “[T]he amount 

of damages may be established with proof of a lesser degree of certainty 

than required to establish the fact of damages.” Rancho Pescado, Inc. v. Nw. 

Mut. Life Ins. Co., 140 Ariz. 174, 184, 680 P.2d 1235, 1245 (App. 1984); see 

also Farr v. Transam. Occidental Life Ins. Co. of Cal., 145 Ariz. 1, 6, 699 P.2d 

376, 381 (App. 1984) (“Speculative or uncertain damages, however, will 

not support a judgment and proof of the fact of damages must be of a 

higher order than proof of the extent thereof.”).

¶23 The Klees established neither the fact of damages nor an 

amount of damages attributable to Appellees’ conduct. In responding to a 

question about damages at his deposition, Klee responded, “until I have 

consultants’ interpretation back and a study done on it, I don’t think I can 

answer that question.” In response to a different question regarding 

damages, he stated, “I’m not an accountant or an economist. And I don’t 

believe I can calculate or make that assessment. . . .” Catherine Klee

similarly testified that she had not computed any damages and “wouldn’t 

even know where to begin.”3

¶24 Nor did the Klees offer competent evidence of the fact of 

damages. Their expert’s preliminary affidavit makes only passing 

reference to damages, stating in conclusory fashion that Appellees’

“failure to comply with the standards of care and conduct caused the 

Klees’ damages.” An expert’s conclusory statements are insufficient to 

defeat summary judgment. Nolde v. Frankie, 192 Ariz. 276, 282, ¶ 28, 964 

P.2d 477, 483 (1998); see also Florez v. Sargeant, 185 Ariz. 521, 526, 917 P.2d 

250, 255 (1996) (“[A]ffidavits that only set forth ultimate facts or 

conclusions of law can neither support nor defeat a motion for summary 

judgment.”). In contrast, Zlaket’s affidavit avowed that the 

unconscionability defense would not have relieved the Klees of their 

obligation to repay principal sums owing under the promissory note and 

 3 The Klees suggest they were damaged because they had to liquidate 

investments and borrow funds to make payments due under the 

settlement agreement. The relevant inquiry, though, is whether the Klees 

were damaged by having to pay more than they would have paid but for 

the alleged malpractice. 
KLEE v. LUNN, et al.

Decision of the Court

8

that, as a result, they suffered no damages by entering into the settlement 

agreement that Appellees negotiated with the Trust.

¶25 The Klees’ failure to offer competent evidence of the fact or 

measure of damages provided an independent basis for granting 

summary judgment to Appellees on the malpractice claim.

III. Counterclaim

¶26 G&K’s counterclaim alleges breach of contract and unjust 

enrichment claims against the Klees.4 Lunn and Klee both testified that 

Anderson agreed to pay G&K’s fees and to be financially responsible for 

the defense of the underlying litigation. Appellees had no separate 

retainer agreement with the Klees, as Lunn testified at his deposition: 

Q. . . . [D]id the firm of Gallagher & 

Kennedy have a separate attorney 

representation agreement with John and 

Catherine Klee?

A. Not to my knowledge.

Q. Was there a written representation or retention 

agreement with Mr. Anderson?

A. Yes.

Q. Did that document refer to the Klees?

A. I believe so.

Q. Did the Klees sign it?

A. I don’t know.

The record does not include any representation agreement, including the 

one reportedly signed by Anderson.

 

4 Although G&K also asserted a quantum meruit cause of action, 

“[q]uantum meruit is actually a measure of damages, not a remedy. . . . The 

claim for relief is for unjust enrichment.” Landi v. Arkules, 172 Ariz. 126, 

135, 835 P.2d 458, 467 (App. 1992). 
KLEE v. LUNN, et al.

Decision of the Court

9

¶27 It is undisputed that Anderson failed to pay G&K for its 

services. Lunn testified that “at some point,” Klee said he wanted G&K to 

continue representing him “and that he would be responsible for their 

portion of the fees.” According to Lunn, Klee confirmed that he would 

pay G&K in an e-mail message. No such message is in the record, though, 

and Klee denied under oath ever promising to pay G&K’s fees. Similarly, 

although Lunn testified that Klee agreed to repay the $2500 G&K 

advanced, Klee testified he never promised to repay G&K, “wasn’t billed 

for it,” and “didn’t pay it.”

¶28 To prevail on a breach of contract claim, a plaintiff must 

establish: (1) a contract; (2) breach thereof; and (3) resultant damages.

Thunderbird Metallurgical, Inc. v. Ariz. Testing Labs., 5 Ariz. App. 48, 50, 423 

P.2d 124, 126 (1967). The record reveals a factual dispute as to the 

existence of an enforceable agreement between the Klees and G&K, 

making summary judgment on the breach of contract counterclaim

inappropriate. See Corbin-Dykes Elec. Co. v. Burr, 18 Ariz. App. 101, 102-03, 

500 P.2d 632, 633-34 (1972) (enforcement of contract for services requires 

showing of offer and acceptance). 

¶29 Similarly, the elements of G&K’s unjust enrichment claim 

are fact-intensive. That claim requires proof of: (1) the Klees’ enrichment; 

(2) G&K’s impoverishment; (3) a link between the enrichment and the 

impoverishment; (4) lack of justification for the enrichment and the 

impoverishment; and (5) absence of a remedy provided by law. See City of 

Sierra Vista v. Cochise Enters., Inc., 144 Ariz. 375, 381, 697 P.2d 1125, 1131 

(App. 1984). Furthermore, the amount of any award under an unjust 

enrichment theory is a question of fact. 

¶30 Because factual disputes are apparent from the record, the 

superior court erred by granting summary judgment to G&K on its

counterclaim. We vacate that judgment and remand for further 

proceedings regarding the counterclaim.

IV. Cost Award

¶31 The superior court’s cost award was based on its grant of 

summary judgment on all claims, which concluded the litigation entirely 

in Appellees’ favor. However, we have vacated summary judgment on 

the counterclaim. As a result, the cost award is premature and must be 

vacated. See Aida Renta Trust v. Maricopa County, 221 Ariz. 603, 614, ¶ 39, 

212 P.3d 941, 952 (App. 2009) (reversal of summary judgment vacates
KLEE v. LUNN, et al.

Decision of the Court

10

related cost award). Once the entire case is resolved on the merits, the 

superior court may revisit the issue of costs. 

CONCLUSION

¶32 We affirm the grant of summary judgment to Appellees on 

the Klees’ malpractice claim. We vacate the entry of summary judgment 

on G&K’s counterclaim and remand for further proceedings regarding the 

counterclaim. 

¶33 We deny G&K’s request for attorneys’ fees incurred on 

appeal pursuant to A.R.S. § 12-341.01(A). Section 12-341.01(A) permits an 

award of fees to the successful party in a contested action arising out of a 

contract. However, we have vacated summary judgment on the 

counterclaim, so neither party has yet prevailed on a contract-based claim. 

On remand, the superior court has the discretion to award attorneys’ fees 

incurred in this appeal to the party ultimately prevailing on the 

counterclaim. 

¶34 Lunn is the only party to entirely prevail on appeal. We 

therefore award Lunn his appellate costs upon compliance with ARCAP 

21. We do not award appellate costs to the Klees or G&K. See Concannon 

v. Yewell, 16 Ariz. App. 320, 322, 493 P.2d 122, 124 (1972) (“As a general 

rule, where both parties prevail on a material question on appeal, each 

must bear his own costs.”).