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Larson v. Norkot Manufacturing11/5/2002
REVERSED AND REMANDED.
Norkot Manufacturing, Inc., Western Industries, Inc., and James Page (collectively, "Page") appealed a district court memorandum and order granting a renewed motion for summary judgment dismissing Page's legal malpractice claims against Mark V. Larson and the law firm of McGee, Hankla, Backes & Wheeler, P.C., ("McGee"). We conclude there are genuine issues of material fact precluding summary judgment, and we reverse and remand for further proceedings.
I.
This is the second appeal from a summary judgment dismissing Page's legal malpractice claims against Larson and McGee on the ground they were barred by the statute of limitations. See Larson v. Norkot Mfg., Inc., 2001 ND 103, 2, 627 N.W.2d 386.
While a member of the McGee law firm, Larson represented Page in negotiating a business asset sale involving grinders and the right to manufacture grinders to Rexworks, Inc., and drafted an asset purchase agreement and other agreements, which were signed on February 2, 1993. No indemnification provision protecting Page from liability for damage caused by Maxigrinders manufactured by Rexworks was included in the sale agreements.
A Maxigrinder manufactured by Page and purchased from Rexworks by the City of Rapid City, South Dakota, caught fire and was destroyed. Rapid City sued Rexworks. In a third-party complaint, Rexworks sued Page as a third-party defendant, seeking indemnification or contribution for any damages for which Rexworks might be found liable to Rapid City. That complaint was served upon Page's agent on January 8, 1996. On February 21, 1996, Page's attorneys filed an answer, counterclaim, and cross-claim seeking indemnity or contribution in the South Dakota suit. Larson, 2001 ND 103, 11, 627 N.W.2d 386. A Texas company that purchased from Rexworks a Maxigrinder manufactured by Rexworks sued Rexworks in Texas for damages caused when the Maxigrinder caught fire. Rexworks served Page with a third-party complaint in April 1996.
On June 26, 1996, Page and Rexworks agreed Rexworks would pay a reduced amount to Page as full payment for all amounts due under the 1993 agreements; Page would indemnify Rexworks for claims arising out of products manufactured by Norkot and sold by Rexworks (specifically including the machine involved in the South Dakota litigation); and Rexworks would indemnify Page for losses arising out of machines manufactured by Rexworks (specifically including the machine involved in the Texas litigation).
Larson and Page became involved in litigation in 1998:
Larson sued Page on January 12, 1998, to recover unpaid legal fees. On February 6, 1998, Page answered and counterclaimed for legal malpractice for failing to include in the sale contracts with Rexworks "any provision in the contract to protect Norkot and Page from liability to parties who may be injured, physically or financially, as a consequence of the use of any of the assets transferred from Norkot to Rexworks." Id. at 4.
Page alleged he entered into an indemnity agreement with Rexworks on June 26, 1996, and "lost $379,316 plus other damages caused by Larson's and McGee's legal malpractice." Page asserted the same malpractice claim against McGee in a third-party complaint.
The trial court granted motions by Larson and McGee for dismissal of Page's legal malpractice claims on the ground they were barred by the statute of limitations. Page appealed. We concluded there was "a genuine issue of material fact precluding summary judgment on the question of when Page knew, or with reasonable diligence should have known, of the injury, its cause, and the defendants' po
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