Multilist Service of Cape Girardeau, Missouri, Inc. v. Wilson

Citations: 14 S.W.3d 110; 2000 Mo. App. LEXIS 18; 2000 WL 14470Docket: ED 74880

Court: Missouri Court of Appeals; January 11, 2000; Missouri; State Appellate Court

SummaryOriginalCytator Case TreatmentAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Multilist Service of Cape Girardeau, Missouri, Inc. (MLS) and its members appealed two summary judgments favoring Stephen Wilson and his law firm regarding a legal malpractice claim. The trial court ruled that the members had no attorney-client relationship with Wilson and that MLS lacked the capacity to sue. The Missouri Court of Appeals affirmed the judgment regarding the absence of an attorney-client relationship but reversed the ruling on MLS's capacity to sue, remanding the case for further proceedings.

MLS, a not-for-profit corporation, had engaged Wilson for legal advice on membership applications. Following a DOJ investigation into potential antitrust violations, MLS entered a consent judgment with the DOJ. In April 1991, MLS voted to dissolve and transferred its assets to another entity. However, the Missouri Secretary of State dissolved MLS in January 1992 for failing to file its annual report, before Wilson filed the Articles of Dissolution in March 1992. Subsequently, a lawsuit was filed against MLS for antitrust violations, which was settled in April 1993.

In February 1993, MLS's statutory trustees and members sued Wilson for malpractice. Wilson's law firm successfully argued in two motions for summary judgment: first, that there was no attorney-client relationship, and second, that MLS lacked the capacity to sue due to its dissolution. The appellate court conducted a de novo review of the summary judgment and outlined the criteria for establishing a right to judgment, including demonstrating the absence of a genuine dispute over material facts.

A genuine issue arises when competent evidence presents two conflicting accounts of essential facts, focusing not on the truth of these facts but on whether they are disputed. Members contend the trial court erred in granting the defendants' first motion for summary judgment on January 3, 1996, which stated there was no attorney-client relationship between members and defendants. They argue they provided adequate evidence to establish such a relationship or, alternatively, that MLS employed Wilson with the intent to benefit members, thereby creating the relationship.

Defendants argue that the trial court's decision was correct, asserting that the attorney-client relationship existed solely with MLS, not the members, and claim members failed to demonstrate a genuine dispute. The first element of a legal malpractice claim can be satisfied by proving either that an attorney-client relationship existed or that an attorney performed services intended to benefit the plaintiffs. The relationship between Wilson and MLS indicates representation of the corporation rather than the members individually, as Wilson primarily interacted with corporate officers. Members acknowledge that MLS hired Wilson and that he billed the corporation for services.

Members’ affidavits expressing their understanding of the relationship are insufficient to create a genuine issue of material fact, as the necessary elements of an attorney-client relationship are absent. An attorney-client relationship is defined as a form of agency, and agency must be established through the parties' conduct, not conjecture. In this case, Wilson's interactions with members were part of his duty to MLS, and mere discussions with members do not imply an attorney-client relationship. Members' perceptions do not change this conclusion, as evidenced by case law stating that belief in the existence of a relationship does not suffice to establish it.

Members' argument that an attorney-client relationship with defendants exists because MLS employed them to benefit members is incorrect. The court in *Donahue* established that MLS must intend for members to benefit from retaining Wilson to establish such a relationship, which is not the case here, as MLS hired Wilson solely for the corporation's benefit. Missouri's Rules of Professional Conduct state that a lawyer employed by an organization represents that organization, not its individual members. Thus, recognizing an attorney-client duty to individual members would contradict this rule. Additionally, conflicting interests between the corporation and its members would likely arise, further undermining the claim. Consequently, the court found no genuine issue of material fact regarding the existence of an attorney-client relationship, affirming the trial court's decision to grant defendants' first motion for summary judgment.

Regarding the second motion for summary judgment, the trial court ruled on July 16, 1998, that MLS lacked the capacity to sue since it had dissolved before filing its malpractice suit, and that most alleged damages occurred post-dissolution, negating the ability to incur those damages. On appeal, MLS argued that it provided sufficient evidence of damages incurred before dissolution, that an expert affidavit raised factual issues on causation and damages, and that its statutory trustees could collect assets, including damages from defendants' negligence. Defendants countered that MLS failed to show it sustained recoverable damages and reiterated the capacity issue stemming from dissolution. 

To resolve the capacity question, it is necessary to determine if MLS was a forfeited corporation due to administrative dissolution or a voluntarily dissolved corporation. Defendants claimed MLS voluntarily dissolved, asserting it took necessary steps but did not file articles of dissolution. However, the court disagreed, stating that under RSMo 355.250.1, a not-for-profit corporation's voluntary dissolution requires filing articles with the secretary of state, which MLS did not do. Therefore, the dissolution was not final, and the defendants' argument for "de facto" dissolution was found to be misplaced, as this concept applies only when a corporation has effectively ceased obligations without following statutory procedures.

MLS executed Articles of Dissolution but did not file them before its charter was forfeited by the secretary of state, resulting in a failure of voluntary dissolution despite asset liquidation. Missouri law stipulates that forfeiture of a corporate charter ends its legal existence, rendering it unable to sue or be sued. Consequently, the statutory trustees of the forfeited corporation must bring any legal actions on behalf of the corporation. The court found that the statutory trustees had the capacity to sue for legal malpractice, which is permissible under the Missouri statute governing forfeited corporations. The statute grants trustees authority to manage the corporation's affairs, including pursuing claims for recoverable damages. A genuine dispute exists regarding whether MLS suffered damages due to allegedly negligent advice given by Wilson, necessitating further proceedings rather than summary judgment.

Section 355.507.1 permits MLS to pursue recovery through a legal malpractice lawsuit. MLS contends that the trial court incorrectly granted summary judgment for Wilson's law firm partners, arguing that Wilson's actions were within his authority, making the partners liable under agency principles. The trial court's ruling did not explicitly state that the partners are not liable; it granted summary judgment based on its finding that Wilson was not liable. On remand, MLS may continue its lawsuit against Wilson and the law firm. The trial court's decision to grant the defendants' first motion for summary judgment is affirmed, while the second motion's judgment is reversed and remanded for further proceedings. The concurrence of Judges Kathianne Knaup Crane and Sherri B. Sullivan is noted. Additional statutory references are to RSMo 1994 unless specified otherwise. The excerpt also compares relevant statutes regarding the powers of trustees in corporate dissolution cases.