United States District Court, D. South Dakota, Southern Division
TERESA ANN THOMPSON, INDIVIDUALLY, AND AS SPECIAL ADMINISTER OF THE ESTATE OF WINFIELD THOMPSON, SR., DECEASED; AND ESTATE OF WINFIELD THOMPSON, Plaintiffs,
WILLIAM HARRIE, THE NILLES LAW FIRM, NODAK INSURANCE COMPANY, NODAK MUTUAL GROUP, INC., A MUTUAL HOLDING COMPANY; AND N.I. HOLDINGS, INC., AN INTERMEDIATE STOCKHOLDING COMPANY; Defendants.
ORDER GRANTING MOTIONS TO DISMISS
E. SCHREIER, UNITED STATES DISTRICT JUDGE.
Teresa Ann Thompson, individually and as special administer
of the estate of Winfield Thompson, Sr., deceased, and the
Estate of Winfield Thompson filed a complaint in state court
alleging unauthorized practice of law, fraud and deceit,
civil conspiracy, and barratry/abuse of process against
defendants William Harrie, the Nilles Law Firm (collectively
“the lawyer defendants”), Nodak Insurance
Company, Nodak Mutual Group, Inc., and N.I. Holdings, Inc.
(collectively “Nodak”). Docket 1-1. Plaintiffs
also seek punitive damages. Id. Nodak removed the
case to this court under 28 U.S.C. §§ 1332, 1441,
and 1446. Docket 1. Nodak moves to dismiss all counts under
Fed.R.Civ.P. 12(b)(1) and 12(b)(6). Docket 7. The lawyer
defendants move to dismiss all counts under Fed.R.Civ.P.
12(b)(6). Docket 10. The lawyer defendants also move the
court under Federal Rule of Evidence 201 to take judicial
notice of the official court files in the underlying lawsuit
in South Dakota Circuit Court, Fifth Judicial Circuit. Docket
11. Plaintiffs oppose all defendants' motions to dismiss.
Docket 17. Plaintiffs do not appear to object to the lawyer
defendants' motion for judicial notice (see Id.
at 19-21), so the court takes judicial notice of the state
court judgment and entry of order. For the reasons that
follow, the court grants the lawyer defendants' motion to
dismiss all counts and grants Nodak's motion to dismiss
facts alleged in the complaint, accepted as true, are as
follows: Teresa Thompson, a resident of South Dakota, is the
daughter of Winfield Thompson, who passed away as a result of
injuries sustained in a motor vehicle accident on November 6,
2009. The motor vehicle accident occurred in South Dakota. On
or about August 31, 2012, Teresa Thompson brought a wrongful
death action in Roberts County, South Dakota, Fifth Judicial
Circuit Court (the underlying action), against Nicholas
Helgeson, the tortfeasor who caused the motor vehicle
accident with Winfield Thompson. At the time of the accident,
Helgeson was insured by Nodak Insurance Company. Nodak hired
attorney Harrie and the Nilles Law Firm to defend Helgeson in
the wrongful death action.
was and is an attorney employed by the Nilles Law Firm in
Fargo, North Dakota. Harrie was and is licensed to practice
law in North Dakota and Minnesota. Despite not being licensed
to practice law in South Dakota, Harrie noticed his
appearance in the underlying action on October 12, 2012, and
no South Dakota licensed-attorney filed a motion for pro hac
vice on Harrie's behalf at that time. Harrie filed
pleadings on behalf of Helgeson and appeared as counsel for
Helgeson at a deposition and in two court hearings.
about January 21, 2016, plaintiffs discovered that Harrie was
not licensed to practice law in South Dakota. Harrie sought
admission to practice law in South Dakota, but the circuit
court denied the motion for pro hac vice. Finding that Harrie
unlawfully practiced law in South Dakota in violation of SDCL
§ 16-18-2, the circuit court granted plaintiffs'
renewed motion for default judgment on the merits and quashed
all pleadings filed by Harrie. See Docket 18-2.
Following a jury trial on damages, the circuit court entered
an amended judgment in favor of plaintiffs for $127, 219.60.
allege that the lawyer defendants' unauthorized practice
of law in South Dakota caused plaintiffs undue delay and
additional expenses in attorneys fees, costs, and emotional
distress damages. And Nodak, plaintiffs allege, knew or
should have known that Harrie was improperly practicing law
in South Dakota.
may dismiss a complaint for “failure to state a claim
upon which relief can be granted.” Fed.R.Civ.P.
12(b)(6). Inferences are construed in favor of the nonmoving
party. Braden v. Wal-Mart Stores, Inc., 588 F.3d
585, 595 (8th Cir. 2009). “To survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.' ” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550
U.S. at 556). “The plausibility standard is not akin to
a ‘probability requirement,' but it asks for more
than a sheer possibility that a defendant has acted
court assesses plausibility by considering only the materials
in the pleadings and exhibits attached to the complaint,
drawing on experience and common sense, and reviewing the
plaintiff's claim as a whole. Whitney v. Guys,
Inc., 700 F.3d 1118, 1128 (8th Cir. 2012). Materials
that are part of the public record may also be considered in
ruling on a motion to dismiss under Rule 12(b)(6). Porous
Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir.
1999). A well-pleaded complaint should survive a motion to
dismiss “even if it strikes a savvy judge that actual
proof of those facts is improbable, and that a recovery is
very remote and unlikely.” Twombly, 550 U.S.
at 556 (internal quotations omitted).
Count 1: Unauthorized Practice of Law
their unauthorized practice of law claim, plaintiffs argue
that they suffered damages as a result of defendants'
breach “of their duty to properly represent
Helgeson” in the underlying lawsuit. Docket 1-1 ¶
61. Both Nodak and the lawyer defendants argue that this
claim must be dismissed because as a matter of law,
defendants did not owe a duty to plaintiffs. Docket 8 at 4,
Docket 12 at 5.
The Lawyer Defendants
Dakota law provides that “no person shall engage in any
manner in the practice of law” in South Dakota unless
(1) the person is licensed as an attorney and an active
member of the South Dakota Bar in good standing or (2) the
person is a non-resident attorney admitted to practice in
South Dakota through pro hac vice admission. See
SDCL §§ 16-18-1, 16-18-2. The “attorney
general or any citizen of the state” may restrain a
person engaging in the unauthorized practice of law by
permanent injunction. SDCL § 16-18-1. But neither SDCL
§ 16-18-1 nor SDCL § 16-8-2 provide a private cause
of action for damages for the unauthorized practice of law.
Thus, the plain language of SDCL §§ 16-18-1 and
16-18-2 show that there is no statutory basis for
plaintiffs' unauthorized practice of law claim asserted
against the lawyer defendants here.
that there is no statutory cause of action in South Dakota
for damages for an unauthorized practice of law claim,
plaintiffs argue that “there is always a potential
‘common law' basis for a cause of action if the
right, remedy, process or intent for the same, can be derived
from other statutes, regulations, rules or case law
precedent.” Docket 17 at 12. Plaintiffs cite to
Persche v. Jones, 387 N.W.2d 32 (S.D. 1987),
Cournoyer v. Montana, 512 N.W.2d 479 (S.D. 1994),
and Steele v. Bonner, 782 N.W.2d 379 (S.D. 2010) as
common law authority to bring a civil action for an
unauthorized practice of law claim. Docket 17 at 12-13,
17-18. Plaintiffs also cite to numerous South Dakota statutes
and Rules of Professional Conduct. Id. at 14-15. The
court finds, however, that these authorities do not support
plaintiffs' claim for relief.
Persche, the South Dakota Supreme Court concluded
that a bank president oversaw and directed the signing and
witnessing of a person's will, which constituted an
unauthorized practice of law. Persche, 387 N.W.2d at
36-37. Noting that “[o]ne who negligently fails to
direct proper attestation of a will becomes liable in tort to
an intended beneficiary, ” the Court held that the
banker was liable for damages proximately caused by his
unauthorized practice of law. Id. And in
Cournoyer, the South Dakota Supreme Court held that
the chairman of the Yankton Sioux Tribe had standing to bring
an action for a temporary restraining order to prevent
Montana's unlicensed practice of law on behalf of the
tribe in South Dakota. Cournoyer, 512 N.W.2d at 481.
See also Steele, 782 N.W.2d at 387 (affirming the
trial court's ruling after the trial court permanently
enjoined Bonner from continuing to engage in the unauthorized
practice of law).
claim that they “sustained damages as a direct and
proximate cause of [defendants'] breach, of their duty to
properly represent Helgeson and as a result of Harrie's
unauthorized practice of law.” Docket 1-1 ¶ 61. As
noted by the lawyer defendants, this claim is really one for
legal negligence or malpractice. See Hamilton v.
Sommers, 855 N.W.2d 855, 862 (S.D. 2014) (“[A]
successful claim against an attorney for legal malpractice
requires proof of four elements: (1) the existence of an
attorney-client relationship giving rise to a duty, (2) the
attorney, either by an act or failure to act, breached that
duty, (3) the attorney's breach of duty ...