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Thompson v. Harrie

United States District Court, D. South Dakota, Southern Division

August 1, 2019

TERESA ANN THOMPSON, INDIVIDUALLY AND AS SPECIAL ADMINISTER OF THE ESTATE OF WINFIELD THOMPSON, SR., DECEASED; MELISSA PROCHNOW, AS SPECIAL ADMINISTRATORS/PERSONAL REPRESENTATIVES OF THE ESTATE OF NICHOLAS HELGESON; AND JAMIE HELGESON, AS SPECIAL ADMINISTRATORS/PERSONAL REPRESENTATIVES OF THE ESTATE OF NICHOLAS HELGESON; Plaintiffs,
v.
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 MOTION TO DISMISS

          KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE.

         Plaintiffs Teresa Ann Thompson, individually and as special administer of the estate of Winfield Thompson, Sr., deceased, the estate of Winfield Thompson, and Melissa Prochnow and Jamie Helgeson, as special administrator(s)/personal representative(s) of the estate of Nicholas Helgeson, filed a complaint in state court alleging legal malpractice, fraud and deceit, civil conspiracy, barratry/abuse of process, breach of contract, breach of duty of good faith and fair dealing, bad faith, breach of fiduciary duty, and claims for attorney fees, exemplary damages, and punitive damages 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 1-2. Defendants removed the case to this court. Docket 1. The lawyer defendants move to dismiss all claims asserted against them by plaintiffs under Fed.R.Civ.P. 12(b)(6). Docket 5.[1] The lawyer defendants also move the court to take judicial notice of the entire court file in Thompson v. Harrie, 4:18-cv-04022-KES. Docket 7. Both Nodak and plaintiffs oppose the lawyer defendants' motion to dismiss. Dockets 18, 19. For the reasons that follow, the court grants the lawyer defendants' motion to dismiss.

         BACKGROUND

         The facts alleged in the complaint, accepted as true, are as follows: Winfield Thompson passed away as a result of injuries sustained in a 2009 motor vehicle accident with Nicholas Helgeson in South Dakota. In 2012, Teresa Thompson, daughter of Winfield Thompson, brought a wrongful death action in South Dakota against Helgeson, a resident of North Dakota. At the time of the motor vehicle accident, Helgeson (now deceased) was an insured under Nodak's automobile insurance policy. Nodak hired the lawyer defendants, located in Fargo, North Dakota, to defend Helgeson in the wrongful death action brought by Teresa Thompson. In 2014, Teresa Thompson's attorney sent a letter to Harrie, which included a settlement demand to Winfield Thompson's estate for the policy limit of $100, 000. There was no response from Harrie, the Nilles Law Firm, Nodak, or Helgeson.

         Harrie filed pleadings on behalf of Helgeson and appeared as counsel for Helgeson at a deposition and in two court hearings. Harrie was and is licensed to practice law in North Dakota, but he was not licensed to practice law in South Dakota and was not admitted pro hac vice to practice in South Dakota for the wrongful death action. As a result, the state court entered a default judgment against Helgeson. At a trial on damages, a jury awarded $127, 000 to Winfield Thompson's estate, and a judgment was entered in favor of Thompson's estate and against Helgeson's estate.

         Plaintiffs Teresa Thompson, individually and as special administer of the estate of Winfield Thompson, and the estate of Winfield Thompson brought four causes of action against the lawyer defendants and Nodak in Thompson v. Harrie, 4:18-cv-04022-KES: unauthorized practice of law, fraud and deceit, civil conspiracy, and barratry/abuse of process. This court granted the lawyer defendants' motion to dismiss all counts and Nodak's motion to dismiss all counts. See id., Dockets 21, 22.

         The Thompson plaintiffs subsequently entered into an agreement with the Helgeson estate. Thompson's estate agreed not to execute on its judgment against Helgeson's estate in exchange for an assignment of the Helgeson estate's potential claims against the lawyer defendants and Nodak. The parties entered into a written agreement formalizing the assignment on December 26, 2018. Melissa Prochnow and Jamie Helgeson, special administrators of the Helgeson estate, and the Helgeson estate are now listed as plaintiffs in this lawsuit. Other than the assignment of claims against the lawyer defendants and Nodak, plaintiffs' current lawsuit alleges the same underlying facts as the previous lawsuit and brings the same claims, with a few additional claims against Nodak.

         LEGAL STANDARD

         A court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “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. “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

         The court determines plausibility by considering the materials in the pleadings and exhibits attached to the complaint, by drawing on experience and common sense, and by viewing the plaintiff's claim as a whole. Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012). Inferences are construed in favor of the non-moving party. Id. at 1129 (citing Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 595 (8th Cir. 2009)). The court may also “consider ‘those materials that are necessarily embraced by the pleadings.' ” Hughes v. City of Cedar Rapids, 840 F.3d 987, 998 (8th Cir. 2016) (quoting Schriener v. Quicken Loans, Inc., 774 F.3d 442, 444 (8th Cir. 2014)). “Those materials include ‘documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleadings.' ” Id. (quoting Kushner v. Beverly Enters., Inc., 317 F.3d 820, 831 (8th Cir. 2003)). 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).

         DISCUSSION

         The lawyer defendants contend that only two claims in plaintiffs' complaint are asserted against the lawyer defendants: legal malpractice in count 1 and punitive damages in count 5. Docket 6 at 8. In response, plaintiffs do not appear to object to this contention. See Docket 19. Thus, the court will only address these two claims.

         I. Legal Malpractice

         Under South Dakota law, a claim for legal malpractice requires four elements: (1) an attorney-client relationship that creates a duty, (2) the attorney breached that duty, (3) the attorney's breach proximately caused an injury to the client, and (4) the client sustained damages. Hamilton v. Sommers, 855 N.W.2d 855, 862 (S.D. 2014). In the previous lawsuit, this court determined that the Thompson plaintiffs failed to state a claim against the lawyer defendants for legal malpractice because the lawyer defendants, as counsel for Helgeson in the underlying litigation with Thompson, did not have an attorney-client ...


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