Mattheis Co. v. Richard J. Mulligan, Individually, & Mulligan Law Office, PC

479 P.3d 1213

The MATTHEIS COMPANY, Appellant (Defendant),

v.Richard J. MULLIGAN, individually, and Mulligan Law Office, PC, a Wyoming corporation, Appellees (Defendants).

S-20-0078

Supreme Court of Wyoming.

January 28, 2021

Representing Appellant: Richard R. Thomas of Smith LC, Jackson, Wyoming.

Representing Appellee: Billie LM Addleman and Erin E. Berry of Hirst Applegate, LLP, Cheyenne, Wyoming. Argument by Ms. Berry.

Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

BOOMGAARDEN, Justice.

[¶1] This appeal involves two separate but related Teton County District Court cases. In 2018, the court revoked The Mattheis Company's (the Company's) liquor license.¹ We affirmed.

Mattheis Co. v. Town of Jackson , 2019 WY 78, 444 P.3d 1268 (Wyo. 2019). In 2019, the Company sued Richard J. Mulligan and Mulligan Law Office, P.C., (Mulligan) for legal malpractice related to the revocation. The court granted Mulligan summary judgment, concluding that collateral estopped barred the Company from relitigating causation as would be necessary to recover on its malpractice claim. The Company appeals. We affirm.

ISSUE

[¶2] The dispositive issue is whether the Company is barred from pursuing its legal malpractice claim.

FACTS

[¶3] The facts from Mattheis Co. place the legal malpractice claim in context.

In 2007, brothers Steve and Mike Mattheis formed The Mattheis Company, purchased a liquor license, and began operating the Town Square Tavern (Tavern) in Jackson, Wyoming. The Tavern's 10-year lease was set to expire on March 31, 2017, unless the Company provided notice of its intent to exercise its five-year right-of-renewal 120 days before that date. Between 2007 and 2016, the Company renewed its liquor license annually—nine times in total.

The Company first became aware that its liquor license was in jeopardy when Ms. Sandy Birdyshaw, Town Clerk, informed it that its December 9, 2016 liquor license renewal application was "inaccurate." The renewal application indicated that the Company's lease expired on March 31, 2022, referencing the lease the Town had "on file" and its five-year right-of-renewal provision. Ms. Birdyshaw called Steve Mattheis and told him she could not certify the application complete because its lease expiration date did not match the March 31, 2017 expiration date contained in the Town's "on file" lease. She requested that the Company "provide the lease renewal that went to 2022 or something that would substantiate that's when the lease expired." In a follow-up email to Steve, she stated that "liquor renewal requires a lease be in place for the full renewal liquor year which runs to 3-31-2018."

....

[T]he Company had not secured the anticipated five-year lease extension when it submitted its December 2016 application and failed to ever do so. Worried about the future of its business, the Company hired attorney Richard Mulligan to assist with the dispute. The Company told Mr. Mulligan that it needed to have a lease through March 31, 2018, to renew its liquor license and that it was important that the Tavern remain open during Jackson's summer "prime season," which would require having a lease until at least October 31, 2017. Mr. Mulligan and the landlord's attorney attempted to reach an agreement over the next several weeks.

Meanwhile, uncertain of whether the Company would secure a new lease before the license expired on March 31, 2017, Steve asked Ms. Birdyshaw what he could do to preserve it. Ms. Birdyshaw informed Steve that the Company could transfer the license to another location on a non-operational status for up to two years and transfer it back to the Tavern location when the Company secured a new lease. Steve also confirmed with the Wyoming Liquor Division (Division) that it was possible to "park" a liquor license on non-operational status for up to two years. On February 1, 2017, the Company submitted a transfer application to the Town, explaining that it was parking the license at another location on non-operational status due to a lease dispute with its landlord. The Town Council approved the transfer.

Eventually, the Company and its landlord reached an agreement. On March 3, 2017, the parties executed a lease with a term from April 1, 2017, to March 31, 2018. The same day, the parties executed a "Modification of Lease Term" that reduced the term to a seven-month period ending on October 31, 2017. Three days later, Steve and Mike executed an application to transfer the liquor license back to the Tavern location.

....

The same day, the Company submitted the application to the Town, attaching the one-year lease and the affidavits, among other required documents. It did not submit the modification that shortened the lease term to October 31, 2017.

The Town Council approved the transfer application, and the Tavern conducted business throughout the summer of 2017. During that period, the Tavern's landlord entered into a new lease agreement with a local restaurateur, set to begin after the Tavern's modified lease expired on October 31, 2017.

Mattheis Co. , ¶¶ 3–8, 444 P.3d at 1270–71 (footnotes omitted).

[¶4] When the Town learned of the lease modification in August 2017, it initiated the revocation proceeding.

The Town filed an action to revoke the Company's liquor license, arguing that its omission of the lease modification from its March 2017 application amounted to a "gross violation" of Title 12 and that it violated the "intent and purpose" of Title 12. See Wyo. Stat. Ann. §§ 12-1-101 to 12-10-102 (LexisNexis 2017). The Company admitted that its March 2017 application contained false information but argued that it had neither committed a "gross violation" of Title 12 nor violated the Title's "intent and purpose" because its mistake was not purposeful or flagrant and because it had acted under the advice of counsel. It also requested that the district court suspend the license in lieu of revoking it, in part because other businesses that had committed liquor-license violations had not had their licenses revoked.

The district court held that the "Company's conduct amount[ed] to a gross violation, which violated the intent and purpose of the liquor licensing statute[s][.]"

....

Turning to the Company's advice-of-counsel defense, the district court noted that this Court has never considered whether the defense is available in a liquor-license revocation proceeding. It concluded that even if the defense applied, it would fail in these circumstances. The district court was "unable to find by a preponderance of the evidence" that Mr. Mulligan had advised the Company "that it was legal to provide false information on the license application." Moreover, it found that even if the Company had received that advice, it could not rely on it in good faith[.]

....

Finally, the district court declined to order license suspension over revocation.

Id. ¶¶ 10–12, 444 P.3d at 1272–73 (footnote omitted). The Company appealed. Id. ¶ 12, 444 P.3d at 1273.

[¶5] While its appeal was pending, the Company sued Mulligan for malpractice. First, the Company claimed Mulligan's conduct from December 2016 to August 2017 fell below the accepted standard of care because Mulligan failed to:

(a) Communicate truthfully to [the Company] that [its] landlord had agreed to mediate the lease dispute with [the Company];

(b) Refrain from devising, approving, and putting into action the plan for the execution of the one-year lease and modification as the solution to [the Company's] liquor license renewal;

(c) Advise and disclose to [the Company] that submitting only the one-year lease with its application would jeopardize [the Company's] liquor license;

(d) Advise [the Company] that, under the circumstances, it should retain the liquor license at the 110 East Broadway location rather than submit the application with only the one-year lease attached; and

(e) Refrain from advising or allowing [the Company] to submit the one-year lease to the Town of Jackson, knowing of the existence of the modification, for the purpose of transferring [the Company's] liquor license back to the 20 East Broadway and renewing that liquor license.

[¶6] Second, the Company claimed Mulligan breached the duty he owed the Company, as his former client after August 2017, to give truthful testimony in the revocation proceeding. Mulligan allegedly breached that duty by falsely testifying that the Company did not engage him to advise it on the liquor license, he did not advise the Company on the liquor license, and he never advised the Company to submit only the one-year lease to the Town. According to the Company, Mulligan directly, proximately, and foreseeably caused "at least the following damages: (a) Loss of its valuable liquor license; (b) Loss of its valuable business at the Tavern; and (c) Substantial attorney's fees and costs defending itself in the revocation proceeding[ ]."

[¶7] Mulligan answered, denying that the Company retained him to represent it in the interwoven lease and liquor license matters, and asserting that the Company retained him only to help negotiate a new lease with the landlord. Mulligan asserted numerous affirmative defenses, including collateral estoppel.

[¶8] The district court stayed the malpractice proceeding pending the liquor license appeal. In Mattheis Co. , we held the revocation court correctly decided the Company committed a gross violation of Title 12, notwithstanding its asserted reliance on counsel's advice, and did not abuse its discretion by revoking the Company's liquor license instead of suspending it. Mattheis Co. , ¶ 26, 444 P.3d at 1277–78.

[¶9] After lifting the stay, the district court granted Mulligan summary judgment based on collateral estoppel. The Company timely appealed.

STANDARD OF REVIEW

[¶10] W.R.C.P. 56 governs summary judgment. Succinctly stated,

We review a district court's order granting summary judgment de novo and afford no deference to the district court's ruling. Thornock v. PacifiCorp , 2016 WY 93, ¶ 10, 379 P.3d 175, 179 (

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