Everest Stables, Inc., Appellant,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-1514

Everest Stables, Inc.,
Appellant,

vs.

Foley & Mansfield, LLP, et al.,
Respondents.

Filed September 7, 2021
Affirmed
Worke, Judge

Hennepin County District Court
File No. 27-CV-18-8745

Mark V. Steffenson, Henningson & Snoxell, Ltd., Maple Grove, Minnesota (for appellant)

Charles E. Jones, Megan J. Renslow, Moss & Barnett, P.A., Minneapolis, Minnesota (for
respondents)

Considered and decided by Worke, Presidi ng Judge; Cochran, Judge; and Slieter,
Judge.
NONPRECEDENTIAL OPINION
WORKE, Judge
In this appeal from dismissal of a legal-malpractice action, appellant argues that the
district court erred by (1) denying its motion to extend the expert-disclosure deadline;
(2) granting in part responde nts’ motion to dismiss based on a deficient expert affidavit;
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(3) determining on summary judgment that appellant could not recover a punitive-damages
award allegedly vacated; and (4) granting summary-judgment dismissal of appellant’s
fraud claim. We affirm.
FACTS
Appellant Everest Stables Inc. (Everest) sued respondents Foley & Mansfield LLP
and Thomas W. Pahl, alleging: (1) professi onal malpractice/neglig ence, (2) breach of
contract, (3) breach of fiduciary duty, (4) fra ud, and (5) negligent misrepresentation.
Everest alleged that respondents mishandled their representation of Everest in two
underlying lawsuits in federal court, causing millions of dollars in damages.
Crestwood litigation
The first underlying case was a lawsu it that Everest brought against Crestwood
Farm Bloodstock LLC (Crestwood) in the East ern District of Kentucky. Everest began
boarding broodmares with Crestwood in 1993. In 1997, Everest boarded a stallion named
Petionville with specific protocols for breeding. At trial, “Everest claimed that it rejected
a $6.5 million purchase offer for Petionville based on Crestwood’s alleged promise to take
Petionville to “the next level.”
In 2008, Everest transferred ownership of approximately 100 horses to Crestwood
to sell. Everest maintained ownership of two horses boarded at Crestwood; one of them
was named Island Fashion. In 2009, Crestwood offered Island Fashion for sale by auction,
but Everest sent its own bidding agent who presented the highest bid amount at $900,000
and subsequently nullified the sale. Crestwood learned about this and kept $219,513.89 of
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Everest’s proceeds from other ho rses sold. This amounted to 25% of the failed Island
Fashion bid plus auction fees.
Everest sued Crestwood alle ging: (1) intentional breach of the implied covenant of
good faith and fair dealing, (2) breach of expressed and implied contract, (3) intentional
breach of fiduciary and agency duties, (4) civil conspiracy , (5) fraud, and (6) unjust
enrichment. Crestwood claimed that Everest breached its implied covenant of good faith
and fair dealing and breached the contract regarding the sale of Island Fashion. Both parties
moved for summary judgment, and the federal district court granted summary judgment to
Crestwood.
Canani litigation
Everest also sued Julio Canani, a Califor nia-based horse trainer that Everest used
for several years, in the Central District of California for (1) fraud, (2) breach of fiduciary
duty, (3) breach of implied contract, (4) unjust enrichment, (5) conspiracy, and (6) aiding
and abetting. Everest alleged that Canani misrepresented the physical condition of
Everest’s horses so that he could buy them through a company that he secretly owned for
far below their actual value.
The case proceeded to trial, but Everest did not disclose any expert witnesses.
Canani moved to preclude the owner of Everest from offering lay testimony regarding the
valuation of certain horses. The district c ourt granted Canani’s motion, noting that the
owner explained that he gained his knowledge based on his 25 years of experience breeding
and selling horses. The district court concl uded that “[p]ermitting [the owner] to offer
valuation testimony as a lay witness would do exactly what [Fed. R. Evid.] 701(c) prevents:
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circumvent rule 702 by offeri ng expert testimony as lay op inion.” At trial, Everest
attempted to prove damages by demonstrati ng the difference between what was received
for the horses initially and what they were sold for later. The jury awarded Everest $48,750
in compensatory damages and $50,000 in punitive damages. The federal district court
vacated the punitive-damages award because Everest did not provide evidence of Canani’s
personal finances, which was required for punitive damages under California law.
Current litigation
In the state-court litigation at issue on appeal, Everest submitted an affidavit of
expert identification on the last day of the expert-disclosure deadline, as well as a motion
to extend the deadline. The district court denied Everest’s motion, noting that Everest
“failed to demonstrate any good cause.” The district court noted that Everest’s affidavit of
expert identification “obviates the need for an extended deadline. The motion effectively
seeks permission to supplement its disclosure.”
After the district court’s order, respondents submitted a memorandum in support of
their motion to dismiss that th ey filed after the expert-discl osure deadline. The district
court granted respondents’ motion in part on most of counts one, two, and three. Those
claims were dismissed except to the extent that they related to: (1) intentional breach of the
implied covenant of good faith and fair dealing in the Crestwood litigation, (2) deficient
jury verdict in the Canani litigation, and (3) vacated punitive damages in the Canani
litigation. The district court denied the motion on counts four and five (alleging fraud and
negligent misrepresentation, respectively) entirely. Respondents then moved for summary
judgment on the surviving claims.
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In analyzing respondents’ motion for summ ary judgment, the district court first
concluded that Everest was precluded from offering expert-witness testimony at trial
because its expert affidavit submitted on the disclosure deadline did not comport with
Minnesota Rule of Civil Procedure 26. B ecause Everest would not have any expert
witnesses, none of its claims survived summary judgment. This appeal followed.
DECISION
Motion to extend
Everest first argues that the district cour t abused its discretion in denying its motion
to extend the expert-disclosure deadline and striking its subsequent expert reports.
The district court denied Everest’s motion to extend the expert-disclosure deadline
after finding that there was no good cause to do so. We review a district court’s denial of
an extension of the expert-disclosure deadline for an abuse of discretion. Broehm v. Mayo
Clinic Rochester, 690 N.W.2d 721, 727 (Minn. 2005). A district court abuses its discretion
when its ruling is based on an erroneous view of the law, against the facts in the record, or
exercises its discretion in an arbitrary or capricious manner. City of North Oaks v. Sarpal,
797 N.W.2d 18, 24 (Minn. 2011).
“In an action against a professional allegi ng negligence or malpractice in rendering
a professional service where expert testimony is to be used by a party to establish a prima
facie case, the party must . . . serve upon the opponent within 180 days of commencement
of discovery . . . an affidavit [of expert identification].” Mi nn. Stat. § 544.42, subd. 2(2)
(2020). The district court ma y extend the 180-day deadline based on a showing of good
cause. Id., subd. 4(b) (2020).
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Everest argues that it was greatly prejudi ced by the district court’s decision to deny
an extension. Because the dist rict court denied Everest’s mo tion to extend, it also struck
the expert reports that Everest submitted af ter the deadline that were required by the
Minnesota Rules of Civil Procedure. See Minn. R. Civ. P. 26.0 1(b)(2) (requiring a party
to submit written reports for experts that will testify at trial). Because Everest effectively
did not submit the required expert reports, it was precluded from calling its expert witnesses
to testify. See Minn. R. Civ. P. 26.01(b)(1). Ever est argues that this contradicts the
supreme court’s holding in Dennie v. Metro. Med. Ctr ., 387 N.W.2d 401 (Minn. 1986).
But Dennie was decided before Minn. Stat. § 544.42 (2020) was in effect. See 1997 Minn.
Laws ch. 212, § 2, at 1917-19 (enacting Minn. Stat. § 544.42). The district court properly
decided Everest’s motion under the good-cause standard esta blished by section 544.42.
Everest’s argument is without merit.
Order to dismiss
Everest next argues that the district c ourt erred by granting in part respondents’
motion to dismiss after determining that several of Everest’s claims were not supported by
the expert affidavit. Everest also argues that the district court erred by not letting Everest
cure any defects under section 544.42’s safe-harbor provision.
“A district court’s decision regarding whether to dismiss a malpractice claim for
noncompliance with statutory requirements regarding submission of expert affidavits will
be reversed only upon an abuse of discretion.” Lake Superior Ctr. Auth. v. Hammel, Green
& Abrahamson, Inc. , 715 N.W.2d 458, 468 (Minn. App. 2006), review denied (Minn.
Aug. 23, 2006). “In an action against a professional alleging negligence or malpractice in
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rendering a professional service where expert testimony is to be used by a party to establish
a prima facie case,” the party must serve an affidavit within 180 days of commencement
of discovery that states (1) the identity of eac h expert witness, (2) “the substance of the
facts and opinions to which the expert is expected to testify,” and (3) “a summary of the
grounds for each opinion.” Minn. Stat. § 544.42, subds. 2(2 ), 4(a). The purpose of the
expert-affidavit requirement is to provide early dismissal of frivolous malpractice claims.
Brown-Wilbert, Inc. v. Copeland Buhl & Co., P.L.L.P., 732 N.W.2d 209, 217 (Minn. 2007).
To prevail on a legal-malpractice claim, a plaintiff must establish four elements:
“(1) the existence of an attorney-client rela tionship; (2) acts cons tituting negligence or
breach of contract; (3) that such acts were the proximate cause of the plaintiff’s damages;
and (4) that but for defendant’s conduct, the plaintiff would have been successful in the
prosecution or defense of the action.” Jerry’s Enters., Inc. v. Larkin, Hoffman, Daly &
Lindgren, Ltd. , 711 N.W.2d 811, 816 (Minn. 2006) (quotation omitted). A plaintiff’s
failure to meet any one of these elem ents is fatal to the whole claim. Schmitz v. Rinke,
Noonan, Smoley, Deter, Colombo, Wiant, Von Korff & Hobbs, Ltd., 783 N.W.2d 733, 739
(Minn. App. 2010), review denied (Minn. Sept. 21, 2010). “Expert testimony is generally
required to establish the standard of care applicable to an attorney whose conduct is alleged
to have been negligent, and further to esta blish whether the conduct deviated from that
standard.” Jerry’s, 711 N.W.2d at 817. An expert witness is also required “when a claim
involves complicated issues of causa tion and damages.” Schmitz, 783 N.W.2d at 739
(quotation omitted). And “[b]ut-for causation cannot be established without the assistance
8
of an expert witness when the causal relation issue is not one within the common
knowledge of laymen.” Id. (quotation omitted).
Minn. Stat. § 544.42, subd. 6(c), allows for a 60-day sa fe-harbor period to cure
deficiencies in an expert affidavit. However, the supreme court has “read a limitation into
the safe-harbor provision” to “give life to the second affidavit requirement.” Guzick v.
Kimball, 869 N.W.2d 42, 47 (Minn. 2015). “[T]o qualify for the safe harbor, a disclosure
must provide some meaningful information, beyond conclusory statements.” Id. (quotation
omitted).
Crestwood: breach of express contract (Petionville)
Everest first argues that the district cour t abused its discretion by determining that
the affidavit did not meet the requirements for the express contract of the Petionville claim
because it “not only states the terms of the failed interactions, but also how [respondents’]
action (or lack thereof) resulted in Everest Stables losing the ability to succeed on its fraud
claim in the Crestwood Litigation.”
The district court concluded that the affidavit was deficient because it did not “offer
an adequate explanation or summary regardin g the non-existence of an express contract
relating to Petionville.” Everest relies on three paragraphs in its expert affidavit that state:
(1) the elements for breach of contract under Kentucky law, (2) that respondents failed to
produce evidence so the federal district court dismissed the claim, and (3) that respondents’
failure resulted in Crestwood’s expert testimony going unrebutted. The affidavit concludes
that respondents “should have obtained and introdu ced evidence that the Crestwood
defendants’ marketing efforts were contrary to industry standards through the retention of
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an expert to opine about the industry standards for marketing a stallion such as Petionville,
but failed to do so.”
But, as the district court noted, the affida vit did not explain what the contract was
or present any evidence about the terms of that contract. The only alleged contractual term
related to the Petionville claim is that Crestwood would take the horse “to the next level.”
Everest has not shown how the district court abused its discretion by concluding that the
expert affidavit was not sufficient for this claim to survive. Because the affidavit also did
not provide “meaningful information,” the district court correctly concluded that it did not
qualify for safe harbor. See Guzick, 869 N.W.2d at 47.
Crestwood: breach of implied contract (Petionville)
Everest argues that the district court e rred on this claim because the affidavit
adequately describes but-for causation. Accord ing to the affidavit, but for respondents’
failure to utilize a Uniform Commercial C ode (UCC) statement proving that Crestwood
breached its obligations with regard to Petionville, Everest would have likely prevailed on
its claim.
This claim by Everest is that respondent s should have submitted a UCC form that
showed Crestwood used Petionville as collateral for a loan to show their incentive in lying
to convince Everest not to se ll the horse. The district c ourt dismissed the claim because
the affidavit only discusses the lack of dama ges, which was just one of the many reasons
the federal court denied Everest’s claim. The district court also noted that there was no
summary of how the alleged failings were the but-for cause of Everest’s injuries when both
10
the federal district and appellate courts concluded that there was a lack of clear and definite
terms for an implied contract.
Everest has not shown how the district c ourt abused its discretion. The federal
district court dismissed the claim after dete rmining that an implied contract was not
formed, and the Sixth Circuit affirmed. The expert affidavit only discusses how using the
UCC form would have shown Crestwood’s motive to breach the alleged contract. The
affidavit does nothing to address the formation of the contract. For that reason, the district
court did not abuse its discretion in determining that the affidavit was deficient, and that it
did not qualify for safe harbor.
Crestwood: fraud claim
Next, Everest argues that the district cour t abused its discretion in determining that
the affidavit did not address but-for causatio n relating to Everest’s fraud claim when the
affidavit actually addressed it. Everest relies on a paragraph of the affidavit that explains
that the UCC statement showing a possibl e motive to keep Pe tionville would have
constituted evidence that Crestwood did not intend to perform on its purported promise to
take Petionville to “the next level.” Everest argues that this paragraph establishes that, but
for respondents’ alleged failings, its fraud clai m against Crestwood would not have been
dismissed.
The affidavit, however, only highlights a portion of the federal court’s opinion.
First, the analysis in the affidavit was base d on the assumption that there was an implied
contract, even though the federal court determined that a promise to take a horse to the next
level was too vague to constitute a contract. Next, the federal court also stated that the
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claim was deficient because there was no evidence that Crestwood’s actions caused a drop
in Petionville’s seasons. Even assuming that the affidavit was sufficient to offer a motive,
it did nothing to address malpractice for the ot her concerns raised by the federal court.
Everest has not shown that the district court abused its discretion in determining that the
affidavit did not support Everest’s theory of fraud.
Crestwood: failure to amend
Everest also argues that the district court abused its discretion in dismissing
Everest’s claim that respondents committed malpractice by failing to amend the complaint
before summary judgment to bring additional claims. The district court concluded that the
affidavit was deficient because it merely asse rted that an expert would testify that the
claims respondents waited to bring until af ter summary judgment were viable. The
affidavit was insufficient because it did not pr ovide an explanation of the basis for the
expert’s testimony, and it did not address the federal district court’s conclusion that the
allegations that respondents attempted to bring in the fourth amended complaint were futile
as a matter of law.
Everest claims that the expert’s “willi ngness to testify on these issues itself
essentially shows she has a ba sis for her opinion.” But the statute clearly requires the
affidavit to include “the substance of the facts and opinions to which the expert is expected
to testify,” and “a summary of the grounds for each opinion.” Minn. Stat. § 544.42, subd.
4(a). The district court did not abuse its di scretion in concluding that the affidavit was
insufficient as to this claim and that it did not qualify for safe harbor.
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Canani: Two Step Salsa
Everest next argues that the district c ourt abused its discretion by dismissing its
claim that respondents committed malpractice by failing to properly research, plead, and
prosecute a claim against Canani related to a horse named Two Step Salsa.
The district court concluded that the affi davit was insufficient because it provided
“no meaningful explanation as to ho w [respondents’] failure to obtain [a Canani
defendant’s] bank record de parted from the standard of care,” or how, “but for
[respondent’s] failure to obtain [the defendant’s] records, it would have succeeded on the
Two Step Salsa claims.” The district c ourt concluded that th e affidavit relied on
“implication and speculation.”
Everest argues that the affidavit’s statem ent that Everest would have succeeded had
respondents followed up on their discovery re quest for bank records was sufficient to
establish a prima facie case, and the district court’s opinion was subjective. But the district
court is correct that the e xpert failed to explain why the bank records would have proved
Everest’s claim. Further, Everest did not a ddress the district court’s other reason for
finding the affidavit insufficient—the affidavit did not expl ain how respondents departed
from the standard of care. Everest did not meet its burden in showing how the district court
erred.
Miscellaneous allegations of professional negligence
Finally, Everest argues that the district court erred in determining that the affidavit
was insufficient regarding certain miscellaneous allegations of professional negligence in
the amended complaint. The district court dismissed the claims because the affidavit was
13
“almost silent” on the allegations, and that “[t]here was no discussion of the proper standard
to evaluate any of these miscellaneous issues.”
Everest argues that “[w]hile a standard is not explicitly stated in the Affidavit, it can
be ascertained that such a standard would simply be to actually perform all the duties that
[respondents] failed to perform, all of which can be generally recognized as standard
protocols and requirements to properly represen t a client.” But “[e]xpert testimony is
generally required to establish the standard of care applicable to an attorney whose conduct
is alleged to have been negligent, and furt her to establish whether the conduct deviated
from that standard.” Jerry’s, 711 N.W.2d at 817 (quotation omitted). Everest’s claim fails
because its expert affidavit failed to establish the applicable standard of care.
Safe-harbor arguments
Finally, Everest makes several arguments about how the district court erroneously
applied the safe-harbor provision. We review a district court’s application of a law de
novo. See Harlow v. State, Dep’t of Human Servs. , 883 N.W.2d 561, 568 (Minn. 2016).
But we review the application of the law to the facts for an abuse of discretion. See Lake
Superior Ctr. Auth., 715 N.W.2d at 468.
Everest first argues that the district court abused its discretion because a less-
extensive affidavit was previously determined sufficient for the safe -harbor provision in
Wesely v. Flor. 806 N.W.2d 36 (Minn. 2011). But Wesely is distinguishable because it
was interpreting the safe-harbor provision of Minn. Stat. § 145.682 (2010). Id. at 41 n. 4
(“[T]here are differences between the affidavit requirement found in [section 544.442 and
145.682]”); cf. DeMartini v. Stoneberg, Giles & Stroup, P.A. , No. A11-649, 2011 WL
14
5026392, at *2 n.1 (Minn. App. Oct. 24, 2011) (dismissing an identical argument, noting
that “Wesley is not controlling here because in Wesley, the supreme court distinguished
between Minn. Stat. § 145.682 and Minn. Stat. § 544.42”). Everest’s argument is without
merit.
Everest next argues that section 544.42 “d oes not contain a distinction or reference
a distinction between ‘minor’ and ‘major’ deficiencies.” But the supreme court explicitly
provided restrictions on the safe-harbor provision. Guzick, 869 N.W.2d at 47-48. We are
an error-correcting court bound by supreme court precedent. State v. Curtis, 921 N.W.2d
342, 346 (Minn. 2018). Everest has not shown how the district court erred in its application
of the safe-harbor provision.
Punitive damages
Everest argues that the district court erre d by dismissing, at summary judgment, its
claims to recover the $50,000 punitive damages that the Calif ornia federal district court
struck in the Canani litigation because respondents di d not provide evidence of the
defendant’s personal finances in accordance with California state law.
“We review the grant of summary judgment de novo to determine whether there are
genuine issues of material fact and whether the district court erred in its application of the
law.” Montemayor v. Sebright Prods., Inc., 898 N.W.2d 623, 628 (Minn. 2007) (quotation
omitted). But the function of this court “is limited to identifying errors and then correcting
them.” Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). It is the appellant’s burden
to show how the district court erred. Loth v. Loth , 35 N.W.2d 542, 546 (Minn. 1949).
15
“[W]e may affirm a grant of summary judgment if it can be sustained on any grounds.”
Doe 76C v. Archdiocese of St. Paul, 817 N.W.2d 150, 163 (Minn. 2012).
We acknowledge that Minnesota law is unc lear as to whether a plaintiff in an
attorney malpractice case can recover lost punitive damages. But we do not need to resolve
this issue because the district court correctly found that the punitive-damages award was
speculative. The jury in the Canani litigation did not have all of necessary information to
calculate the appropriate damages. Therefore, Everest cannot show how the district court
abused its discretion by dismissing their claim for lost punitive damages against
respondents.
Fraud claims
Finally, Everest argues that the district court erred in dismissing its fraud claims on
summary judgment because the district cour t incorrectly conclude d that (1) expert
testimony was required, and (2) certain statements by respon dents were statements of
opinion.
We articulated our standard of review of the grant of summary judgment in the
previous section. To establish common-law fraud, a plaintiff must prove
(1) a false representation of a pa st or existing material fact
susceptible of knowledge; (2) made with know ledge of the
falsity of the representation or made without knowing whether
it was true or false; (3) with th e intention to induce action in
reliance thereon; (4) that the representation caused action in
reliance thereon; and (5) pecuni ary damages as a result of the
reliance.

U.S. Bank N.A. v. Cold Spring Granite Co., 802 N.W.2d 363, 373 (Minn. 2011).
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Everest challenges the district court’s gr anting of summary judgment in regards to
five statements by responde nts that purportedly constitute fraud: (1) that the UCC
statement was unnecessary and did not need to be filed, (2) that damages claimed related
to additional facts learned duri ng discovery were before the court and viable, (3) that the
case was ready for trial, (4) that respondents would admit fault to the court in order to
vacate the order, and (5) that the parties en tered into a fee contract with certain
requirements that respondents had no intention of fulfilling.
Everest relies on Hoyt Props., Inc. v. Prod. Res. Grp., L.L.C., to support its general
argument that expert testim ony was not needed to prevail on its claim and that Pahl’s
statements were fraudulent and not statements of opinion. 736 N.W.2d 313 (Minn. 2007).
But Hoyt is distinguishable because it involved incorrect fact ual assertions that one
attorney made to another in order to enter a settlement agreement. Id. at 316, 319. Everest
does not allege that respondents made inaccurate statements of fact to convince Everest to
enter into a contract.
Everest first challenges the district cour t’s determination that it needed expert
testimony to survive summary judgment on its fraud claim about the UCC statement. The
district court concluded that an expert was required to ex plain to a jury of common
knowledge “the importance of the UCC document to [Everest’s] fraud claim in Crestwood
and whether or not [respondents’] statement that it was too late to introduce the UCC
document to the court was an acc urate reflection of procedural law.” Everest argues that
“[t]he fact that the document could have been filed and was not timely is . . . an element of
common knowledge that an expert is unnecessary to expl ain.” But this is not true. The
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rules of evidence, rules of civil procedure, and when documents can be submitted to a court
are not common knowledge. Everest has not shown how the district court erred in
dismissing this claim for lack of expert testimony.
Everest makes a similar argument for its fraud allegation that respondents
intentionally led them to believe that additional facts had been pleaded in the Crestwood
litigation by using them during a mock trial when respondents had not actually moved the
court for leave to add those claims. The district court dismissed the claim because, without
an expert, “a jury of ordinary knowled ge would not understand if and/or how
[respondents’] conduct caused the damages [Eve rest] alleges because the significance of
that decision would require an explanation of how and when a lawyer can amend a
complaint and what happens if they fail to do that in the requisite time.” Everest argues
here that “the fraud is straightforward and easy to understand.” But again, this is not within
the realm of common k nowledge. Everest needed an expe rt to testify about the rules of
procedure and the viability of the additional claims. Everest has not shown how the district
court erred.
Finally, Everest argues that the district c ourt erred by dismissing its claim that
respondents committed fraud by entering into a fee agreement that required monthly billing
statements while never intending to send th e statements. Everest implies that it was
damaged by not accurately knowing the state of the case going into trial because the billing
statements were its way of knowing the work respondents were doing. But to prevail on a
fraud claim, the plaintiff must show pecuniary damages. U.S. Bank N.A. , 802 N.W.2d
18
at 373. Everest has not shown how it was financially harmed. The district court correctly
granted summary judgment on this claim.
Affirmed.