Court rejects horse breeder’s legal malpractice appeal

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In Brief

• The 8th Circuit upheld dismissal of legal malpractice claims filed by Everest Stables and owner Jeffrey Nielsen.
• The court enforced an Ohio choice-of-law clause applying Ohio’s one-year malpractice statute of limitations.
• Claims tied to Foley & Mansfield and Dorsey & Whitney matters were ruled time-barred.
• The court found plaintiffs failed to serve required expert disclosure affidavits.

After filing three failed legal malpractice claims, a horse breeding and racing company filed suit against another law firm and attorney for purportedly mishandling those cases. Agreeing with the district court, the 8th U.S. Circuit Court of Appeals affirmed dismissal of all claims against the firm and attorney.

The appellant is Everest Stables Inc., a thoroughbred horse breeding and racing company that has its principal place of business in Stillwater. Jeffrey Nielsen is owner and chief executive officer. The defendants-appellees are the Porter Wright law firm and attorney Christopher Cathey.

Setting the stage for the current case, Everest and Nielsen engaged counsel to handle several legal matters. In 2008, Everest hired Kentucky-based attorney William Rambicure to draft a contract for the sale of equine assets and to provide related legal advice. In 2009, Everest retained Foley & Mansfield LLP for two lawsuits involving the 2008 contract and a separate dispute with a horse trainer. In 2010, Nielsen retained Dorsey & Whitney LLP to handle four lawsuits arising from Nielsen’s removal of election campaign signs.

However, Everest and Nielsen were dissatisfied with the work provided by all of the attorneys and firms. Subsequently, they hired Christopher Cathey shortly before he started working for the Porter Wright firm, for the purpose of pursuing legal malpractice claims against Rambicure, Foley, and Dorsey.

Nielsen signed an engagement letter with Ohio-based Porter Wright for the Dorsey and Foley lawsuits, including an Ohio choice-of-law clause. Everest retained Cathey for the Rambicure lawsuit; Cathey’s prior firm’s engagement letter had no choice-of-law provision.

In 2015, Everest, represented by Cathey, sued Rambicure, two related law firms, and a malpractice insurer in the Western District of Kentucky, alleging legal malpractice. Everest claimed Rambicure failed to include a fiduciary duty provision and gave incorrect advice about fiduciary duties and reserve bids. In June 2018, the court granted summary judgment for Rambicure for lack of causation, and Porter Wright withdrew from the appeal on in May 2019.

In 2016, Nielsen, represented by Porter Wright, sued Dorsey and two attorneys in Minnesota state court for alleged legal malpractice. Dorsey moved for summary judgment, and Porter Wright withdrew from representing Nielsen a month later. The court granted summary judgment in part, finding Nielsen’s claims were barred due to deficiencies in a required expert affidavit.

In 2017, Everest sued Foley & Mansfield and one of its attorneys in Minnesota state court for alleged malpractice, including mismanaging the litigation and failing to obtain required expert testimony and discovery. Foley moved to dismiss based on deficiencies in the expert affidavit. Porter Wright withdrew about a month later. Everest claimed to have suffered harm from that withdrawal because it needed to find new counsel while a critical motion was pending.

In 2021, Everest and Nielsen filed this legal malpractice action against Porter Wright and Cathey. Although Everest and Nielsen filed an expert review affidavit three days later, they never served the required expert disclosure affidavit. The district court dismissed the Foley and Dorsey claims as time-barred. It ruled for Porter Wright and Cathey on the remaining claims due to the missing expert disclosure affidavit.

Everest and Nielsen argued that Minnesota’s six-year statute of limitations, rather than Ohio’s one-year statute of limitations, should apply in their suit against Porter Wright. The agreement regarding representation by Foley and Dorsey had a choice-of-law provision stating that Ohio law applied. Everest and Nielsen argued that the clause should not apply to the agreement with Porter Wright due to Minnesota’s Uniform Conflict of Laws–Limitations Act, which allows Minnesota’s limitations period to apply if Ohio’s is substantially different and does not provide a fair opportunity to sue. Had Minnesota’s statute of limitations applied, the claims would have been filed in time.

Everest and Nielsen contended that they were not aware of their injuries, or could not have discovered their injuries, until after judgments were entered and all possible appeals were exhausted.

However, the 8th Circuit panel was unpersuaded, finding that Everest and Nielsen’s lack of exhausted appeals did not prevent them from bringing malpractice claims. It held that appellate review does not bar a separate malpractice action. It also found no unfairness in applying Ohio’s statute of limitations and enforced the parties’ agreement.

An action for legal malpractice in Ohio must be filed within one year after the claim accrues, which is when the client discovers or should have discovered the injury and its connection to the attorney’s conduct. The panel found that the plaintiffs discovered their alleged injuries caused by Cathey and Porter Wright more than a year before filing suit in both the Dorsey and Foley matters. It concluded that these legal malpractice claims are barred by Ohio’s statute of limitations.

Under Minn. Stat. § 544.42, if expert testimony is required, a legal malpractice plaintiff must serve an expert disclosure affidavit within 180 days, and failure to do so generally requires dismissal. The panel found that appellants did not timely serve the required disclosures and that expert testimony was necessary to prove negligence and causation in the Rambicure matter. It concluded that the district court properly dismissed the malpractice claims under the statute.

The district court dismissed the fraud claims arising from the Dorsey, Foley, and Rambicure matters for failure to comply with Minn. Stat. § 544.42. The fraud claims relied on the allegation that Cathey misrepresented that he had “sufficient experience” to handle the underlying malpractice lawsuits and that he was complying with filing deadlines and obtaining needed experts.

The 8th Circuit panel held that claims labeled as fraud are still subject to the statute when they are based on the same facts as legal malpractice and require expert testimony. It found that the alleged misrepresentations about experience, deadlines, and expert retention implicate the standard of care and therefore require expert evidence to prove. It also concluded that Everest and Nielsen could not establish causation or harm without expert testimony, making the fraud claims derivative of malpractice and properly dismissed.