Greuel v. Burlingame CV-92-378-L 03/06/95 THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Robert J. Greuel

v. #C-92-37 8-L

Roger Burlingame

ORDER

Currently before the court is defendant, Roger Burlingame's

motion for summary judgment. Doc. 43. For the reasons set forth

below, the motion is denied.

BACKGROUND

Prior to 1986, the plaintiff and an individual by the name

of William C. Barnsley (Barnsley) owned several parcels of real

estate as tenants in common in the towns of New Ipswich and

Temple, New Hampshire. On or around August 11, 1986, the

plaintiff met with the defendant regarding ownership interests in

the above mentioned properties. Specifically, plaintiff

indicated to defendant his concerns relating to personal

liabilities to certain financial institutions for loans used to

purchase these properties. Following the August 11th meeting,

plaintiff maintains the defendant undertook to represent him

concerning the ownership of the New Ipswich and Temple, New

Hampshire properties. Pursuant to this representation, the

plaintiff reguested that the defendant prepare a plan protecting and otherwise insulating plaintiff's assets from liability. The

defendant's work culminated on or around March 2 9 , 1988, when the

plaintiff and Barnsley signed an Agreement to Purchase and Sell

Real Estate Interest (Agreement), whereby the plaintiff agreed to

convey his interests in the real estate to Barnsley and

Timberland Design, Inc., a New Hampshire corporation wholly owned

by Barnsley.

Under the terms of the Agreement, the plaintiff received a

mortgage which was subordinate only to any new financing obtained

by Barnsley and Timberland Design, Inc. for certain parcels

needing new financing. In addition, the plaintiff was supposed

to receive a first mortgage on those parcels which were part of

the Agreement and which would not need to be used as security to

acguire new financing. Therefore, according to plaintiff,

pursuant to the terms of the Agreement, plaintiff, as mortgagee,

was entitled to receive either a first or second mortgage on

every parcel conveyed to Barnsley and Timberland Design, Inc.

Early in 1989, the attorney-client relationship between the

plaintiff and defendant terminated. In August, 1989, as a result

of a title search, the plaintiff learned for the first time that

the mortgages held by him as mortgagee did not cover all the

parcels conveyed by him under the Agreement and were in a

secondary position, inferior to other mortgages, contrary to the

2 terms of the Agreement.

On July 20, 1992, plaintiff filed suit against defendant

alleging breach of duty owed by defendant, negligent exercise of

degree of care and skill by defendant and fraud.

Defendant now moves for summary judgment with respect to

plaintiff's claim. Defendant moves for summary judgment on two

theories. First, defendant maintains that because plaintiff

cannot prove any damages in relation to defendant's actions,

plaintiff is not entitled to any form of recovery. Second,

defendant maintains that plaintiff's action is barred by the

statute of limitations.

DISCUSSION

Summary judgment under Fed. R. Civ. P. 56(c) is proper only

if, viewing the record in the light most favorable to the non­

moving party, the documents on file disclose no genuine issue of

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

matter of law. Jorge Rivera Surillo & Co. v. Falconer Glass

Indus.,

(1st Cir. 1994). "Only disputes over

facts that might affect the outcome of the suit" are material.

Anderson v. Liberty Lobby, Inc.,

(1986) . A

dispute over a material fact is genuine "if the evidence is such

that a reasonable jury could return a verdict for the non-moving

party." .Id.; Oliver v. Digital Equipment Corp.,

,

3 105 (1st Cir. 1988). The moving party initially must

"demonstrate the absence of a genuine issue of material fact."

Celotex Corp. v. Catrett,

(1986) . Once the

moving party has made the reguired showing, the adverse party

must "go beyond the pleadings" and designate specific facts to

demonstrate the existence of a genuine issue for trial. Fed. R.

Civ. P. 56(e); Oliver,

.

I. Absence of Causation of Damages

As a threshold consideration, it is generally accepted

within the judicial community that an attorney may be liable to

his client for failure to properly record security instruments,

including mortgages. 7 Am.Jur.2d, Attorneys at La w , Section 209-

210 (1980). In order to recover for an attorney's negligence,

the attorney's conduct "must have been necessary to produce the

plaintiff's subseguent harm, without which the harm would not

have occurred, and the (negligence) must have been a substantial

factor, rather than a slight one, in producing it." North Bay

Council v. Bruckner,

(1989); Pillsbury-Flood v.

Portsmouth Hospital,

(1986). Further, the

plaintiff has the burden of proving 1) the attorney-client

relationship, or some other basis to establish the existence of a

duty; 2) the attorney's neglect of a reasonable duty; 3) that

4 such negligence proximately resulted in and was the proximate

cause of the loss to the client, where the issue of causation is

susceptible to different results the issue is typically one of

fact for the jury to decide. Witte v. Desmarais,

(1992); Pillsbury-Flood,

.

Analogous to the above-mentioned principles, defendant

offers to the court that basic tort law prohibits recovery

"[w]here it cannot be shown with reasonable certainty that any

damage resulted from the act complained of." 25 C.J.S. Damages

§ 27, at 683 (1966), cited approvingly in Witte v. Desmarais,

(1992). Relying on this principle, defendant

maintains that even if he had created and recorded all the

mortgages to which the plaintiff now claims entitlement,

plaintiff still would have lost his investment. It is the

defendant's position that any security interest plaintiff might

have received under the Agreement was subject to pre-existing

mortgages securing principal amounts well in excess of any likely

fair market value for those parcels and, therefore, plaintiff

could not reasonably expect his second mortgage status to protect

his security interest should default occur.

Correspondingly, within his motion for summary judgment, the

defendant attempts to gualify the significance and importance of

plaintiff's statements, intentions and allegations by offering

5 that under the terms of the Agreement (1) plaintiff's mortgage

was to be subordinate to any and all other existing mortgages on

the properties, and (2) plaintiff agreed to subordinate his

mortgage to any and all future mortgages Barnsley deemed desir­

able for the purpose of obtaining additional financing vis-a-vis

the properties. Defendant further attempts to narrow plaintiff's

allegations by offering that plaintiff voluntarily released his

first mortgage on Lot 9A on or about November 10, 1988 so Barns­

ley could grant a mortgage to P & M Associates, thereby obtaining

a secondary mortgage position. Moreover, according to defendant,

the facts indicate that the Hillsborough Bank and Trust held a

pre-existing lien on Lot 9A-5, granted in April, 1988. With

respect to the parcels within Lot 7, First Service Bank for

Savings had a mortgage lien as of December, 1987, thereby

entitling plaintiff to a subordinate position due to the bank's

mortgage preceding the Agreement. Finally, defendant points out

that in May 1988 and April 1988, First Service Bank for Savings

and Hillsborough Bank were granted $500,000 and $350,000 mortgage

liens, respectively, on certain lots.

In summarizing the aforementioned facts, defendant contends

that from whatever angle one chooses to evaluate and determine

plaintiff's security position, plaintiff's interests were

subordinate to all others. Thus, according to defendant, summary

6 judgment is appropriate because plaintiff cannot show with

reasonable certainty that any damages actually and directly

resulted from his conduct. The court does not agree.

Viewing the record in the light most favorable to the non­

moving party (plaintiff ) , the court opines there are genuine

issues of material fact to be resolved, as well as a reasonable

possibility of attributing ascertainable damages to defendant's

conduct. See Snow v. Harnischfeger Corp.,

(1st Cir.

1993); Vasapolli v. Rostoff,

(1st Cir. 1994); Morris

v. Government Dev. Bank,

(1st Cir. 1994); Maldonado-

Denis v. Castillo-Rodriquez,

(1st Cir. 1994).

In the case at hand and of omnipotent importance to

determining whether this motion for summary judgment should be

granted, the court notes plaintiff's contention that he "made it

guite clear . . . that he expected to have a first lien on

certain properties, but did not, as a direct result of the

Defendant's negligence." Doc. 44. Similarly, within deposition

testimony, there are indications of plaintiff's intentions and

expectations concerning his mortgage status. For example, during

the course of a deposition conducted on April 1, 1994, the

plaintiff offered the following responses to guestions:

Q: . . . Did you contemplate in March of 1988 that you were going to be number one on any of this property?

7 A: Oh, definitely.

Q: Is the essence of your complaint that you weren't in number one position with regards to your mortgage?

A: The essence of my complaint is that my interests were not covered, that the mortgage - by the end, the place I had mortgages I was not in number one position anyplace, and if you're not in number one position, then it's a worthless mortgage. So my interest was not protected.

This evidence, when viewed in a manner amenable to

plaintiff's claim, is sufficient to warrant a finding that there

is a genuine fact concerning defendant's conduct, i.e. defendant

may have failed to properly record certain instruments or

defendant may have failed to notify plaintiff of the subordinate

nature of certain mortgages when there may have been a duty to do

so .

Although defendant offers a host of facts and explanations

concerning his relationship with plaintiff and the interests

plaintiff held, this court is persuaded that there is evidence to

warrant a reasonable conclusion that a causal link exists between

the defendant's act and the plaintiff's harm. Fundamentally, if

the defendant had the duty to protect plaintiff's interest by

recording certain interests, then it is certainly foreseeable and

reasonable to expect that the failure of the defendant to so record could result in recognized damages to plaintiff. Such

damages are not speculative, but are in fact likely to be readily

ascertainable by plaintiff. See Fairhaven Textile, Corp. v.

Sheehan, Phinnev, Bass, & Green, Professional Asso.,

(D.N.H. 1988); Clipper Affiliates, Inc. v. Checovich,

(1994) .

Similar to the "causal link" discussion previously

mentioned, although plaintiff himself admits that under the terms

of the Agreement, he would receive a mortgage which would be

subordinate to any new financing obtained by Barnsley and

Timberland Design, Inc., there remains a substantial guestion

whether there were properties which did not reguire new

financing. If so, then under the terms of the Agreement,

plaintiff should, seemingly, be entitled to a first mortgage on

properties. Further, if plaintiff was entitled to a first

mortgage on properties, then defendant's contention concerning

the lack of damages suffered by plaintiff would be fallacious.

At this juncture, the court is less concerned with exact amounts

of damages suffered by plaintiff and is more concerned whether

plaintiff reasonably can allege any form of damages resulting

from defendant's conduct. Damages in tort must be proven "with

as much certainty as the nature of the tort and the circumstances

permit." Clipper Affiliates, Inc.,

. Recognizing the genuine issues presented in this case and

the possibility of ascertainable damages, the court will not

subscribe to defendant's notion that plaintiff has suffered no

damages directly resulting from defendant's conduct.

II. Statute of Limitations

Defendant next contends he is entitled to summary judgment

because the statute of limitations period bars plaintiff from

recovering. In support of this contention, defendant maintains

that New Hampshire Revised Statute Annotated 508:4 establishes a

three-year period of limitation on all personal actions occurring

after July 1, 1986. Defendant asserts that because the Agreement

under which plaintiff predominantly seeks relief expired on

September 30, 1988, plaintiff had until September 30, 1991 to

bring his action. Thus, according to defendant, because

plaintiff did not bring his action until July 22, 1992, well

after the three year limitation period had run, plaintiff is not

entitled to continue this suit and summary judgment is

appropriate.

As indicated by N.H.R.S.A. 508:4,

I. Except as otherwise provided by law, all personal actions . . . may be brought only within 3 years of the act or omission complained of, except that when the injury and its causal relationship to the act or omission were not discovered and could not reasonably have been discovered at the time of the act or

10 omission, the action shall be commenced within 3 years of the time the plaintiff discovers, or in the exercise of reasonable diligence should have discovered, the injury and its causal relationship to the act or omission complained of.

See also McLean v. Gaudet,

(D.N.H. 1990).

The statute of limitations is a procedural matter and the

specific point at which a cause of action accrues is a judicial

determination. Sinclair v. Brill,

(D.N.H.

19 93); University System of New Hampshire v. United States Gypsum

Co.,

(D.N.H. 1991). Under R.S.A. 508:4, an

action is deemed to have accrued when a plaintiff discovers or in

the exercise of diligence should have discovered his injury and

that injury may have been caused by the defendant. McLean, 7 69

F. Supp. at 31. "Whether the plaintiff did in fact exercise

reasonable diligence is a guestion of fact." Black Bear Lodge v.

Trillium Corp.,

(1993). The guestion of

whether a plaintiff should have discovered that the allegedly

unlawful conduct of a defendant caused injury can be decided

following a plenary scan of a fully developed record. See

Johnson v. Johnson,

(N.D.I11. 1988) ("The

point at which the statute of limitations commences under the

discovery rule is a guestion of fact."). Further, if there are

sufficient facts sufficient for a jury to decide that a plaintiff

discovered his injury and sued a defendant within the limitations

11 period then summary judgment must be precluded. Hildebrand v.

Hildebrand,

(S.D.Ind. 1990) .

In the case at hand, plaintiff repeatedly has stated that he

did not learn of the improper recording of the mortgages until

August, 1989. The court opines that a reasonable person, in

plaintiff's situation, would likewise not have discovered or

anticipated injury anytime previous to plaintiff's discovery. If

the court subscribed to defendant's assertion that plaintiff

should have been aware of his injury on or around September 30,

1988, such a recognition would likely create a catch-22 for legal

clients. On the one hand, a client not versed in legal matters

may, in employing legal counsel, reasonably defer to the legal

expertise and judgment of his lawyer and expect his

representative to zealously and prudently represent certain

concernments. However, on the other hand, this same client,

faced with the possibility of having any malpractice claims

barred by the limitations period, would nonetheless have to

freguently scrutinize and review the attorney's work to insure

the attorney has adeguately and reasonably provided

representation. Naturally, reguiring a client to perform this

latter type of scrutiny would be absurd. After all, a client

cannot reasonably be expected to serve as, both, a shepherd and a

member of the flock. The better approach, and the one adopted by

12 R.S.A. 508:4, is to view plaintiff's action under a reasonable

person standard and determine when a reasonable person,

exercising diligence, would logically have discovered his injury.

As the plaintiff points out, he only became aware of his

injury, resulting from defendant's conduct, in August 1989

following consultation with another attorney. It was during this

consultation that the other attorney pointed out the subordinate

nature of plaintiff's mortgages. Up to that point, plaintiff had

no reason to believe defendant's actions were anything but

zealous and prudent representation. Given this evidence and the

determination that plaintiff's actions comport with those of a

reasonable person, the court opines that the limitation period

began to run in August, 1989, the date plaintiff became aware of

his situation. Due to the fact the plaintiff filed suit against

defendant in July, 1992, plaintiff's claim is not barred by the

applicable limitations period.

CONCLUSION

Viewing the record in a light most favorable to the

plaintiff, the documents presented to the court disclose genuine

issues of material facts. Fundamentally, according to

plaintiff's complaint, deposition, etc., there are issues

presented concerning entitlement to first mortgages on certain

property and whether the entitlements or interests were

13 adequately understood, protected and recorded by the defendant.

Therefore, as there are genuine issues of material fact in need

of resolution, summary judgment must be denied.

Additionally, based on plaintiff's complaint and subsequent

documents submitted by the parties, there are substantial

indications that plaintiff did not become aware of the effects of

defendant's conduct until August, 1989. This being the case,

plaintiff's claim is not barred by the statute of limitations and

summary judgment on this issue must likewise be denied.

In light of the aforementioned discussion, defendant's

motion for summary judgment (Doc. 43) is denied.

March 6, 1995

Martin F. Loughlin Senior Judge

William Saturley, Esq. Paul J. Haley, Esq.

14