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Keywords

contractattorneyliabilityappealtrialsummary judgment
contractplaintiffdefendantattorneylawyerappealtrialmotionsummary judgmentfiduciarycommon law

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Liggett v. Young, 877 N.E.2d 178

Facts

Ronald Liggett, a contractor, was sued by a materials supplier during the construction of a home for his attorney, Dean Young, and Young's wife. Liggett filed a third-party complaint against the Youngs, claiming the contract was void due to Young's dual role as both attorney and contracting party. The trial court granted summary judgment in favor of the Youngs, leading to Liggett's appeal, where he argued that the contract was invalid under the Indiana Professional Conduct Rules.

The plaintiff, Ronald Liggett, d/b/a Liggett Construction Company, brings this appeal to challenge a trial court summary judgment ruling in a contract dispute arising from Liggett's construction of a private residence for his attorney, defendant Dean Young, and Young's wife, Elisabeth.

Issue

Whether the trial judge erred in finding no genuine issue of material fact with respect to the enforceability of a contract drafted and entered into between an attorney and his builder/client.

Whether the trial judge erred in finding no genuine issue of material fact with respect to the enforceability of a contract drafted and entered into between an attorney and his builder/client.

Rule

The Indiana Professional Conduct Rule 1.8(a) prohibits attorneys from entering into business transactions with clients unless certain conditions are met, including fairness and full disclosure. However, the Preamble to the Rules states that violations do not create a cause of action for civil liability.

A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless: (1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client; the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and the client consents in writing thereto.

Analysis

The court analyzed whether the contract between Liggett and Young fell under the standard commercial transaction exception to the Professional Conduct Rule. It found that the Youngs did not provide evidence that the transaction was fair and honest, nor did they demonstrate that it was a standard commercial transaction. The court concluded that the presumption of undue influence in attorney-client transactions applied, and thus, summary judgment was inappropriate.

The designated evidence on the Youngs' motion for partial summary judgment did not affirmatively establish the absence of a genuine issue of material fact as to whether, in light of Dean Young's fiduciary relationship as Liggett's attorney, the building contract transaction was fair and honest so as to overcome the common law presumption that the contract was fraudulent.

Conclusion

The Supreme Court of Indiana reversed the trial court's summary judgment in favor of the Youngs and remanded the case for further proceedings, indicating that genuine issues of material fact existed regarding the contract's enforceability.

We now reverse both (a) the trial court's final judgment in favor of the Youngs and against Liggett as to all of Liggett's claims against the Youngs and (b) the grant of the Youngs' motion for partial summary judgment as to Liggett's claims.

Who won?

The prevailing party was Ronald Liggett, as the Supreme Court reversed the trial court's decision in favor of the Youngs, allowing Liggett's claims to proceed.

The Supreme Court of Indiana reversed the trial court's summary judgment in favor of the Youngs and remanded the case for further proceedings, indicating that genuine issues of material fact existed regarding the contract's enforceability.

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