Court Opinion

ID: 2824482
Source: CourtListenerOpinion
Date Created: 2015-08-11 04:57:07.271894+00
Date Added: 2024-06-11T11:31:13.574440
License: Public Domain

FACTS
                             In 2003, OHM hired Wacht to act as managing member of
                 OHM and to provide architectural services for the development of real
                 property located in Laughlin, Nevada. While executing his duties as
                 managing member of CRM, Wacht secured a $5.5 million loan by signing a
                 deed of trust against the property, which named the Bank as beneficiary.
                 As a result of his work, Wacht also held a mechanic's lien against the
                 property.
                             Later, Wacht retained Peel & Brimley as counsel to foreclose
                 on his $670,846.96 mechanic's lien against CRM and to assert priority in
                 interest against the Bank's deed of trust. CRM filed counterclaims
                 against Wacht, and the Bank filed a motion for summary judgment,
                 arguing that as a matter of law its deed of trust against the property had
                 first priority. The district court granted summary judgment, concluding
                 that there were no genuine issues of material fact regarding the Bank's
                 priority position as first deed of trust holder. Thereafter, the Bank
                 foreclosed on its first priority deed of trust, leaving OHM without assets.
                             Wacht and OHM agreed that it made no sense for them to
                 pursue claims against one another and entered into a settlement
                 agreement. 2 Pursuant to the settlement agreement, each party's claims
                 against the other would be dismissed with prejudice. The agreement
                 noted that the dismissal was based upon Wacht's inability to maintain his
                 lien against the property, as a result of the Bank's foreclosure.

                       2At
                         some point before the settlement agreement between Wacht and
                 OHM, Peel & Brimley withdrew as counsel.

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                   Consequently, the district court filed an order dismissing Wacht's case
                   with prejudice.
                               Wacht then filed a legal malpractice claim against Peel &
                   Brimley, alleging that their negligent failure to conduct discovery led to
                   the district court's decision to award the Bank priority. Wacht contended
                   that, after the Bank's foreclosure, he had no alternative but to settle. In
                   response, Peel & Brimley filed a motion for summary judgment that the
                   district court granted. Wacht now appeals the district court's order
                   granting summary judgment.
                                                   DISCUSSION
                               This court reviews a district court order granting summary
                   judgment de novo.      Yeager v. Harrah's Club, Inc., 111 Nev. 830, 833, 897
P.2d 1093, 1094 (1995). "Where a motion for summary judgment under
                   NRCP 56(c) has been granted, the essential question on appeal is whether
                   genuine issues of material fact were created by pleadings and proof
                   offered." Id. "The nonmoving party is not entitled to build a case on the
                   gossamer threads of whimsy, speculation, and conjecture."          Wood v.
                   Safeway, Inc., 121 Nev. 724, 732, 121 P.3d 1026, 1031 (2005) (internal
                   quotations omitted).
                               Wacht contends that Peel & Brimley's failure to engage in
                   discovery caused the district court to award the Bank's deed of trust
                   priority over his mechanic's lien. Wacht further contends that the Bank's
                   subsequent foreclosure left CRM without assets and he was thereby forced
                   to settle his mechanic's lien claim against CRM. "In Nevada, legal
                   malpractice is premised upon an attorney-client relationship, a duty owed
                   to the client by the attorney, breach of that duty, and the breach as
                   proximate cause of the client's damages." Semenza v. Nev. Med. Liab. Ins.

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                 Co., 104 Nev. 666, 667-68, 765 P.2d 184, 185 (1988). "Establishing
                 causation . . . requires the plaintiff to prove what has been characterized
                 as a 'case within a case,' that is, the plaintiff must demonstrate that the
                 claim underlying the malpractice action would have been successful if the
                 attorney had acted in accordance with his or her duties."        Luttgen v.
                 Fischer, 107 P.3d 1152, 1154 (Colo. App. 2005) (citing Bebo Constr. Co. v.
                 Mattox & O'Brien, P.C., 990 P.2d 78, 83 (Colo. 1999)).
                             We cannot conclude that if Peel & Brimley had participated in
                 discovery, Wacht's mechanic's lien action would have been successful.
                 First, even if Peel & Brimley had participated in discovery, the Bank's
                 deed of trust would have maintained its priority position over Wacht's
                 mechanic's lien. Wacht secured the Bank's priority position by signing the
                 deed of trust on CRM's behalf, representing that there were no liens with
                 priority over the Bank's and that no work had commenced on the property.
                 Thus, even if Peel & Brimley had engaged in discovery, the Bank still
                 could have foreclosed on its first priority deed of trust, leaving CRM
                 without assets from which Wacht could collect. And in that event, it is
                 likely that Wacht would have still chosen to settle. Second,
                 notwithstanding discovery, Wacht's mechanic's lien claim might have been
                 successful, had he maintained it. 3 But the parties agreed to completely
                 "walk away" from their claims against one another. Thus, it was Wacht's
                 settlement agreement that shaped the outcome, not Peel & Brimley's
                 failure to engage in discovery.

                       3 Wacht's argument that it was useless to pursue his mechanic's lien
                 claim after the Bank's foreclosure left CRM defunct does not affect the
                 outcome here.

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                             It is important to distinguish this case from Hewitt v. Allen,
                 where we held that, to withstand summary judgment in a litigation
                 malpractice action, a client was not required to pursue a fruitless appeal
                 in an underlying personal injury action. 118 Nev. 216, 224, 43 P.3d 345,
                 350 (2002). In Hewitt, the district court dismissed the client's underlying
                 personal injury action because her attorney failed to properly notice a
                 required party. Id. at 218-19, 43 P.3d at 346-47. Hence, the client could
                 offer evidence in the malpractice action that her attorney was the
                 proximate cause of her harm without further litigating the personal injury
                 action. Here, however, Wacht cannot offer evidence that Peel & Brimley
                 were the proximate cause of his harm because his abandonment of the
                 mechanic's lien action was the proximate cause of his harm. Therefore, we
                 are not persuaded that Wacht could not have achieved a better outcome in
                 the underlying action.
                             In addition, although we have not expressly adopted the better
                 outcome standard, see Herrington v. Superior Court, we note that sound
                 policy favors limiting litigation malpractice claims to cases where evidence
                 can be offered to show that a better result would have been achieved "but
                 for" the attorney's malpractice. 132 Cal. Rptr. 2d 658, 661 (2003). That is
                 not the case here, where "but for" Wacht's election to settle, there may
                 have been a better outcome. A conclusion in the alternative would be
                 based on speculation or conjecture, whereas, to survive summary
                 judgment, Wacht must demonstrate that there are genuine issues of
                 material fact in dispute. Here, there are none.

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                            Based on the foregoing, we ORDER the judgment of the
                district court AFFIRMED.

                                                  2       1site‘=traa j.
                                                  Parrag uirre

                                                  D   t77,4-e
                                                  Douglas
                                                                      ,   J.

                                                                          J.

                cc:   Hon. Stefany Miley, District Judge
                      Israel Kunin, Settlement Judge
                      Joseph Y. Hong
                      Lipson Neilson Cole Seltzer & Garin, P.C.
                      Eighth District Court Clerk

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