Attorney Represented Partner, Not Partnership

The Idaho Supreme Court affirmed the grant of summary judgment to the defendants in a legal malpractice case, concluding that the plaintiff had failed to establish the existence of an attorney-client relationship with the defendants.

In August of 2011, Hughes and Andrew Diges entered into a 50-50 partnership, under the name H-D Transport, to haul hydraulic fracturing fluid. Hughes contributed money to the partnership and Diges contributed his experience. The partners did not create a written partnership agreement. Sometime prior to October 21, 2011, disagreements arose between the partners concerning the operation and finances of the partnership. On October 21, 2011, Diges hired Michael D. Pogue, an attorney with Lawson, Laski, Clark & Pogue, PLLC, to draft a formal partnership agreement. Diges told Hughes that he had hired an attorney to prepare a partnership agreement, and on November 21, 2011, Pogue, Hughes and Diane Barker, the partnership bookkeeper, participated in a conference call regarding the partnership.

Hughes contended that the partnership had retained attorney Pogue

The district court concluded that Hughes failed to establish that an attorney-client relationship existed between himself and Pogue. The district court explained that there was neither evidence nor any claim in the record that there was any express agreement between Hughes and Pogue. Thus, the district court reasoned that any attorney-client relationship would have to have been based upon an implied-in-fact contract. Based on the rule pronounced in Berry, the district court considered: “(1) Subjectively, did Hughes have a good faith belief that Diges hired Pogue and Pogue agreed to represent not only Diges’ interest but also the interests of Hughes and the Partnership?; (2) Objectively, was the belief of Hughes reasonable in light of the facts and record presented?”

Answering these questions, the district court explained that the evidence in the record showed that the “relationship between Diges and Hughes was very strained and that there was a great deal of distrust between the two of them.” Further, the district court reasoned that while Pogue had participated in a telephone conference with Hughes and the partnership’s bookkeeper, there was no evidence in the record as to the contents of that conversation or why that would lead Hughes to reasonably believe that Pogue was representing his interests or the interests of H-D Transport. Finally, the district court noted that Hughes himself admitted that on November 21, 2011, the same day as the telephone conference, Hughes “became aware that Pogue only represented the interests of Diges . . . .” The district court concluded that it was not “subjectively or objectively reasonable for Hughes to believe that Pogue was his attorney or representing his interest under the circumstances . . . .” On appeal, Hughes argues that the district court erred in the standard it applied and that a genuine issue of material fact exists as to the existence of an attorney-client relationship…

Hughes’ testimony is unambiguous; no later than November 21, 2011, Hughes was aware that Pogue represented Diges, not him or the partnership. We find no error in the district court’s conclusion that it was not reasonable for Hughes to believe that he had an attorney-client relationship with Pogue.

Hughes must pay the law firm’s appeals costs. (Mike Frisch)