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Keywords

plaintiffdefendantdamagesattorneynegligencetrialleasebankruptcycontributory negligenceliens
plaintiffdefendantdamagesattorneynegligencetrialcontributory negligencecomparative negligenceliens

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Greyhound Leasing & Financial Corp. v. Norwest Bank of Jamestown, N.W., 854 F.2d 1122

Facts

Greyhound Leasing, a company that finances farm equipment, proposed a loan of over $1 million to farmer Mutschler, secured by a lien on farm equipment. The loan documents were misleadingly structured to appear as a purchase and lease of new equipment, while most of the equipment was old and already owned by Mutschler, who had created liens on it. Mackenzie, the attorney for Mutschler, signed an opinion letter stating he was unaware of any liens, based on Mutschler's assurances, without conducting a lien search. After Mutschler filed for bankruptcy, Greyhound discovered the existence of the liens and sued Mackenzie for negligence.

The documents prepared by Greyhound for the transaction did not reveal its true nature. The documents were drawn so as to portray Greyhound as having bought the farm equipment in question, all new, from a local farm equipment dealer, Wimbledon Implement Inc. … Mutschler had already owned and possessed all of the other equipment for many months, some for a year or more.

Issue

Whether the lender could recover damages from the borrower's attorney for professional negligence under North Dakota law.

Whether the lender could recover damages from the borrower's attorney for professional negligence under North Dakota law.

Rule

Under North Dakota law, a plaintiff is barred from recovery if their contributory negligence exceeds that of the defendant.

A plaintiff is barred from recovery under North Dakota law where his contributory negligence is greater than the defendant's negligence.

Analysis

The court found that even if Mackenzie was negligent in failing to conduct a lien search, Greyhound's own negligence was greater. Greyhound's broker and employees had knowledge of the true condition of the equipment and failed to conduct an independent investigation. The trial court concluded that Mackenzie's negligence, if any, was outweighed by Greyhound's negligence, which was evident from their actions and knowledge regarding the transaction.

Even if one assumes arguendo that Mackenzie was negligent in signing the opinion letter without an investigation of liens, there is ample evidence in the record to support the trial judge's conclusion that Greyhound was also negligent and that its negligence exceeded that of Mackenzie.

Conclusion

The court affirmed the judgment in favor of Mackenzie, concluding that Greyhound's negligence barred recovery.

The judgment must nevertheless be affirmed if the trial court's alternative ground is correct and free from error.

Who won?

Mackenzie prevailed in the case because the court found that Greyhound's negligence exceeded any potential negligence on Mackenzie's part.

Greyhound was found not liable to Greyhound. Greyhound was awarded a judgment against Wimbledon for $294,000. Greyhound's total loss was fixed at $490,000 and reduced because of comparative negligence.

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