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Ciccarello v. Davies

Supreme Court of Idaho

December 23, 2019

MARK CICCARELLO, Plaintiff-Appellant,

          Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada County. Peter G. Barton, District Judge.

         The judgment of the district court is affirmed.

          Points Law, PLLC, Boise, for Appellant. Michelle Renae Points argued.

          Gjording Fouser, PLLC, Boise, for Respondent Marcus, Christian, Hardee, and Davies, LLP. Stephen Lee Adams argued.

          Eberle Berlin Turnbow & McKlveen, Boise, for Respondent Jeffrey Bo Davies. Daniel Richard Knowlton argued.

          BURDICK, Chief Justice.

         Mark Ciccarello and Baus Investment Group, LLC, appeal a decision by the district court granting summary judgment in favor of Respondents Jeffrey Bo Davies and Marcus, Christian, Hardee & Davies, LLP ("MCHD"). The district court ruled that Ciccarello's case lacked the requisite expert testimony to establish a genuine issue of material fact as to legal malpractice. We affirm.


         In February 2012, Mark Ciccarello formed a company named F.E.M. Distribution, LLC, ("F.E.M.") for the purpose of marketing and selling a product line called "Lotus Electronic Cigarettes."

         In 2013, Ciccarello faced federal criminal charges related to his operation of another business that sold and marketed synthetic cannabinoids. As a result of the federal charges, some of F.E.M.'s assets were seized by the federal government. To prevent further seizure of F.E.M.'s remaining assets, Ciccarello contacted attorney Jeffrey Bo Davies, who had previously represented Ciccarello in various business and personal matters.

         Ciccarello and Davies discussed options for safeguarding F.E.M.'s assets, which included the possible sale of F.E.M. to another company. These discussions included several possibilities for structuring the sale, should one occur. A Washington investment group showed interest in F.E.M. and began negotiations with Davies and Ciccarello, but the sale was never completed.

         Shortly thereafter, Davies drafted documents to form two new companies, Vapor Investors, LLC ("Vapor"), and Baus Investment Group, LLC ("Baus"), which collectively owned Lotus Vaping Technologies, LLC ("Lotus"). Vapor had a 55% ownership interest in Lotus, and Baus had a 45% ownership interest. Davies put together a group of investors who each held varying percentages of ownership interests in Vapor and Baus. The members of Vapor and Baus orally agreed with Ciccarello that he would receive $2 million and a majority ownership interest in Baus in exchange for the sale of F.E.M.'s assets to Lotus.

         Because the other investors were concerned about Ciccarello's pending federal criminal charges, the members agreed that Bob Henry would temporarily hold Ciccarello's shares until the federal charges were resolved. However, everyone understood the shares in Bob Henry's name actually belonged to Ciccarello. F.E.M. was then sold to Lotus for the purchase price of $50, 000. Simultaneously, Ciccarello and a representative of Lotus executed an Independent Contractor Agreement ("ICA"), drafted by Davies, that provided for 16 years of $10, 000 monthly installment payments (close to $2 million total) to be paid to Ciccarello for his services to Lotus as an independent contractor. This agreement also contained a termination provision allowing Lotus to stop making monthly payments to Ciccarello during any period of incarceration and allowing Lotus to terminate the agreement if certain conditions were met.

         Following F.E.M.'s sale to Lotus, Ciccarello continued to act as CEO and manage operations. In January 2014, the federal government issued a letter stating it had no further interest in Ciccarello's involvement in Lotus. Soon thereafter, Ciccarello requested that his shares in Baus be returned and that the sale documents be modified to reflect him as the owner of the Baus shares. However, this was never done. In June 2014, Ciccarello was incarcerated due to his federal criminal case. Lotus ceased making monthly payments to Ciccarello in July 2014 and never resumed payments. At some point in 2014, Ciccarello was also ousted from Lotus by its members and Bob Henry took over his role as CEO.

         In April 2016, Ciccarello filed a verified complaint and demand for jury trial against Lotus, Vapor, Davies, Henry, and several other investors involved in the sale of F.E.M. to Lotus. The complaint sought recovery of damages Ciccarello alleged he suffered as a result of the structure of the sale and the conduct of Henry, Davies, and the investors following the sale. In the fall of 2016, Ciccarello moved for-and the district court granted-leave to amend his complaint to add MCHD as a party, as Davies was a partner in that law firm during the period the alleged damages arose. Ciccarello's claims against Davies and MCHD were negligence claims asserting legal malpractice. Ciccarello's claims against Lotus, Vapor, Henry, the other investors, and all other parties except Davies and MCHD were subsequently dismissed with prejudice pursuant to a stipulation for dismissal. Thus, the only remaining claims before the district court were Ciccarello's legal malpractice claims against Davies and MCHD.

         On June 19, 2017, all parties stipulated to a scheduling order setting the case for trial on March 26, 2018, requiring that Ciccarello make his expert witness disclosures at least 150 days before trial, and make any additional expert witness disclosures in rebuttal of the defendants' expert disclosures at least 60 days before trial. On October 25, 2017, Ciccarello timely filed his expert witness disclosure, identifying attorney Brian C. Larsen as an expert witness who was expected to testify that: Davies drafted the F.E.M. sales documents in a way that was adverse to Ciccarello's interests; Davies' representation of Lotus in its purchase of F.E.M. from Ciccarello was a violation of "the applicable standard of care"; proceeding with his representation of Lotus in its purchase of F.E.M. from Ciccarello was also "a breach of the applicable standard of care"; Davies had a duty under Idaho Rule of Professional Conduct 1.9 not to represent Lotus because Ciccarello's interests were adverse to those of Lotus; Davies breached his duty under Idaho Rule of Professional Conduct 1.9 by failing to obtain Ciccarello's consent to represent Lotus in the sale; and, as a result of Davies' breach, Ciccarello suffered $2 million in damages.

         Shortly after Ciccarello made his expert witness disclosure, Davies and MCHD moved for summary judgment. Respondents argued that even if Davies represented Ciccarello at the time of the F.E.M. sale, Davies was not negligent in his representation. Each party briefed the motion and Ciccarello also moved for leave to amend his complaint a second time to add a claim for punitive damages.

         In its memorandum in support of its motion for summary judgment filed on November 20, 2017, MCHD argued that Ciccarello "ha[d] not proffered competent expert testimony establishing that [Davies] failed to meet the applicable standard of care . . . ." In their reply briefing filed on December 11, 2017, Davies and MCHD further refined their argument regarding the deficiency of Ciccarello's expert witness disclosures, explaining that Ciccarello was required to provide expert affidavits[1] under Greenfield v. Smith, 162 Idaho 246, 395 P.3d 1279 (2017) to establish a prima facie case of legal malpractice and survive summary judgment. The district court held a hearing on the motion for summary judgment on December 18, 2017. There, Davies and MCHD argued that Ciccarello's expert witness disclosures were insufficient, and an affidavit previewing the expert's testimony was required. Ciccarello took the position that he did not need an expert affidavit to survive summary judgment and he would have his expert testify at trial. The district court then took the matter under advisement.

         On January 24, 2018, Ciccarello filed a declaration of Brian C. Larsen, which he designated as a "rebuttal expert disclosure." The rebuttal expert disclosure explained that, in light of Davies and MCHD's expert disclosures, Brian C. Larsen was further expected to testify that: the Idaho Rules of Professional Conduct provide a standard of care that Davies was required to meet; Davies was in an attorney-client relationship with Ciccarello at all relevant periods of time; Davies had a duty to take necessary steps to ensure that the F.E.M. sale documents would be modified at a later time; and the sales documents played no part in asset protection.

         The next day, on January 25, 2018, the district court granted Davies' and MCHD's motions for summary judgment. The district court ruled that, under Greenfield, expert testimony was required to overcome a motion for summary judgment on the issues of breach and proximate cause in a legal malpractice case. The district court explained that Ciccarello's expert needed to testify that a non-negligent attorney would have been able to negotiate better deal terms that would have resulted in a better outcome to overcome summary judgment on this issue. In light of this ruling, the district court denied Ciccarello's motion to amend his complaint to add punitive damages as moot.

         Ciccarello moved for reconsideration of the court's summary-judgment ruling pursuant to Idaho Rule of Civil Procedure 11.2 and filed an additional declaration from his proposed expert in support of that motion. The additional declaration specifically provided that Ciccarello's expert would testify that Ciccarello "would have received better deal terms but for [Davies'] negligence." The district court denied the motion, holding that expert testimony was a necessary part of the prima facie case of legal malpractice and because Ciccarello did not provide sufficient expert testimony at the time of the summary-judgment motion, summary judgment was properly granted.

         Then on May 7, 2018, Ciccarello moved for relief from the order granting summary judgment, pursuant to Idaho Rules of Civil Procedure 60(b)(1) and 60(b)(6), arguing mistake and compelling circumstances justifying relief. The district court denied this motion, determining that a final judgment had not yet been entered, and that, in any event, there was no "mistake" of fact suitable for relief under Idaho Rule of Civil Procedure 60(b)(1), nor were there unique and compelling circumstances suitable for relief under Idaho Rule of Civil Procedure 60(b)(6). The district court also ruled that the later declarations of Ciccarello's expert were untimely for consideration at summary judgment. In accord with its prior decisions, the district court entered a final judgment dismissing all of Ciccarello's claims with prejudice on August 31, 2018. Ciccarello timely appealed.

         II. ...

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