Johnston Law Office, P.C. v. Brakke

919 N.W.2d 733

JOHNSTON LAW OFFICE, P.C., a North Dakota Professional Corporation, Plaintiff and Appellant

v.Jon BRAKKE, an Attorney at Law, and Vogel Law Firm, Ltd., a North Dakota Professional Corporation, Defendants and Appellees

No. 20180029

Supreme Court of North Dakota.

Filed November 19, 2018

David C. Thompson (argued) and DeWayne A. Johnston (appeared), Grand Forks, ND, for plaintiff and appellant.

Stephen F. Rufer (argued) and Ryan D. Fullerton (appeared), Fergus Falls, MN, for defendants and appellees.

Crothers, Justice.

[¶1] The Johnston Law Office appeals from a judgment dismissing its claims against Jon Brakke and Vogel Law Firm (collectively "Vogel"). Johnston argues the district court erred in granting summary judgment and dismissing its claims. We affirm.

I

[¶2] Vogel represented PHI Financial Services, Inc. in an action against Johnston to recover damages for a fraudulent transfer. The district court entered judgment against Johnston for $167,203.24 in that action. Our decisions in PHI Fin. Servs., Inc. v. Johnston Law Office, P.C. , 2016 ND 20, 874 N.W.2d 910, and PHI Fin. Servs., Inc. v. Johnston Law Office, P.C. , 2016 ND 114, 881 N.W.2d 216, set out the factual background of that action.

[¶3] In April 2016 Johnston sued Vogel for tortious interference with a business relationship, tortious interference with attorney-client business relationships, and abuse of process. Johnston alleged Vogel violated state law while attempting to execute on the judgment entered against Johnston in PHI Fin. Servs. v. Johnston Law Office . Johnston claimed Vogel improperly attempted to garnish funds from Johnston’s IOLTA lawyer trust account, operating account and fees owed by Johnston’s clients, and Vogel’s unlawful actions interfered with Johnston’s business relationships with its lending bank and clients.

[¶4] In July 2017 Vogel moved for summary judgment. Vogel alleged it was undisputed they served Johnston’s clients with garnishment summons and garnished Johnston’s bank accounts on behalf of PHI Financial, but no money was ever recovered as a result of the garnishments. Vogel argued Johnston was unable to prove the required elements of its claims and Vogel was entitled to summary judgment dismissal of the claims. Johnston opposed the motion.

[¶5] Vogel also moved to quash a subpoena duces tecum Johnston served on PHI Financial seeking billing information between Vogel and PHI Financial. Vogel argued PHI Financial was not a party to this action, Johnston was seeking disclosure of privileged information, Vogel’s billing statements for PHI Financial were not relevant to any claim or defense, and the subpoena placed an undue burden on PHI Financial. Johnston opposed the motion.

[¶6] The district court granted Vogel’s motion for summary judgment and dismissed Johnston’s claims. The court concluded summary judgment was appropriate on the claim of interference with a business relationship because Johnston failed to present any evidence Vogel’s attempts to garnish Johnston’s accounts proximately caused the lending bank to sever its business relationship with Johnston, or that any actual damages were caused by Vogel’s interference. The court granted summary judgment dismissing Johnston’s interference with attorney-client business relationship claim, concluding Johnston failed to produce evidence of an independent tortious or unlawful action, evidence of harm proximately caused by Vogel’s acts or evidence of actual harm. The court also dismissed Johnston’s abuse of process claim, stating that Vogel violated N.D.R.Civ.P. 62 by garnishing Johnston’s bank accounts, but that Johnston failed to provide evidence of actual damages. The court also determined Vogel’s motion to quash the subpoena duces tecum was moot.

II

[¶7] Summary judgment is a procedural device "available for promptly and expeditiously disposing of a controversy without a trial if there is no dispute as to either the material facts or the inferences to be drawn from the undisputed facts, or whenever only a question of law is involved." First Nat’l Bank of Hettinger v. Clark , 332 N.W.2d 264, 267 (N.D. 1983). The moving party has the initial burden of showing there are no genuine issues of material fact and it is entitled to judgment as a matter of law. Barbie v. Minko Constr., Inc. , 2009 ND 99, ¶ 5, 766 N.W.2d 458. If the moving party meets its initial burden, the opposing party may not rest on mere allegations or denials in the pleadings, but must present competent admissible evidence to show the existence of a genuine issue of material fact. Id. at ¶ 6.

[¶8] "Rule 56 requires the entry of summary judgment against a party who fails to establish the existence of a material factual dispute as to an essential element of the claim and on which the party will bear the burden of proof at trial." Barbie , 2009 ND 99, ¶ 6, 766 N.W.2d 458. "When no pertinent evidence on an essential element is presented to the trial court in resistance to the motion for summary judgment, it is presumed that no such evidence exists." Id. (quoting Riemers v. City of Grand Forks , 2006 ND 224, ¶ 8, 723 N.W.2d 518 ). Speculation is not enough to defeat a motion, and a scintilla of evidence is not sufficient to support a claim. Barbie , at ¶ 6.

[¶9] On appeal from a district court’s order granting summary judgment we view the evidence in the light most favorable to the party opposing the motion and give that party the benefit of all favorable inferences which can be reasonably drawn from the record. Barbie , 2009 ND 99, ¶ 5, 766 N.W.2d 458. We also decide whether the information available to the court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Id. Whether summary judgment was properly granted is a question of law, which we review de novo on the entire record. Id.

III

[¶10] Johnston argues the district court erred in granting summary judgment on its claim Vogel unlawfully interfered with the business relationship with its lending bank. Johnston contends the court erred by failing to consider the sworn statements of DeWayne Johnston, the president of the law firm, about the firm’s injury and damages.

[¶11] North Dakota recognizes a tort action for unlawful interference with a business relationship. Trade ‘N Post, L.L.C. v. World Duty Free Americas, Inc. , 2001 ND 116, ¶ 36, 628 N.W.2d 707. To prevail on a claim the plaintiff must prove the following essential elements:

"(1) [T]he existence of a valid business relationship or expectancy; (2) knowledge by the interferer of the relationship or expectancy; (3) an independently tortious or otherwise unlawful act of interference by the interferer; (4) proof that the interference caused the harm sustained; and (5) actual damages to the party whose relationship or expectancy was disrupted."

Id.

[¶12] The district court held it was undisputed Johnston had a valid business relationship with the bank and Vogel knew of the relationship. The court assumed for purposes of its decision that Vogel committed an independent or otherwise unlawful act by attempting garnishment in violation of N.D.R.Civ.P. 62, and that the garnishment interfered with Johnston’s relationship with the bank by requiring the bank to respond to the wrongful garnishment proceeding. However, the court concluded Johnston failed to establish a genuine issue of material fact on the two remaining elements. The court explained that Johnston asserted the bank severed its relationship with Johnston as a result of the garnishment but it only offered the "self-serving" statements of DeWayne Johnston, which were "nothing more than hearsay." The court concluded Johnston was required to show actual, real loss, but failed to present evidence of any damage.

[¶13] Johnston argues the court ignored favorable inferences from the evidence, including testimony in DeWayne Johnston’s affidavit that the firm’s lending relationship with the bank was severed as a result of Vogel’s misconduct. Johnston claims the United States Supreme Court has held evidence submitted opposing a motion for summary judgment need not be admissible at trial, and any evidence presented should be believed.

[¶14] Under N.D.R.Civ.P. 56(e)(1), an affidavit opposing summary judgment "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated." "Hearsay statements are generally not admissible and will not be considered in deciding a motion for summary judgment unless the statements fall within an exception to the hearsay rule." Alerus Fin., N.A. v. Erwin , 2018 ND 119, ¶ 20, 911 N.W.2d 296 (quoting Markgraf v. Welker , 2015 ND 303, ¶ 13, 873 N.W.2d 26 ). Hearsay is a statement the declarant makes outside of the current hearing or trial and is offered to prove the truth of the matter asserted. Alerus, at ¶ 20 ; see also N.D.R.Ev. 801(c).

[¶15] DeWayne Johnston’s affidavit states:

"8. That due to the aggressive and unlawful acts of the defendant’s [sic] in the form of the unprecedented violative use of the ‘Garnishee Summons and Continuing Lien’ [Johnston] has been informed that it will not be offered any new credit and in essence the lending relationship previously enjoyed by [Johnston] and DeWayne Johnston, its president has been severed due to the actions of the defendants.

"9. That in conversation with [the bank] it was discovered that Mr. Brakkes’ repetitious and highly charged use the ‘Garnishee Summons and Continuing Lien’ as a tool to alienate the bank from its customer—in this case [Johnston]—based upon the cost and liability associated with the requisite response to any Garnishee Summons and high potential of liability due many times to an inadvertent non-compliance in light of the legal requirements of Disclosure and Capture of the funds that may be subject to any ‘Garnishee Summons and Continuing Lien’ as required by law outweighs the value of a continuing

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