A Utah jury has awarded a former Stoel Rives client $12.8 million after determining that the Portland, Oregon–based Am Law 200 firm and the Salt Lake City–based chair of its national real estate and construction practice group botched an application that would have allowed developers to turn the man's sprawling ranch into a resort.
The plaintiff in the suit, 910 Cattle Ranch owner David Bernolfo, had sought a judgment of $21.4 million—the sum he claimed Stoel Rives real estate and construction chair Thomas Ellison's mishandling of the application in question cost him. After a two-week trial, the jury hearing the case issued a verdict on June 21 that found the firm liable for 60 percent of Bernolfo's losses, and Bernolfo responsible for the rest.
The events at issue in the litigation date to 2005, when Bernolfo decided to sell his 8,674-acre ranch—which court documents showed is one of Summit County, Utah's largest undeveloped tracts—to developers interested in building on it. With the help of his longtime counsel, Stoel Rives partner Richard Johnson, Bernolfo used proceeds from the sale to establish a charitable fund. According to Bernolfo, Johnson then recommended that the rancher hire Ellison to maximize the land's value by securing certain development rights from the county.
In his suit, Bernolfo claimed Ellison never filed a "vested rights" application for the property. Doing so successfully, the plaintiff argued, would have protected the land's value in the event the county changed its property development laws. County lawmakers did indeed revise those laws in 2006, limiting the number of dwelling units that could be constructed on the ranch—and therefore reducing the property's overall value—in the process. Bernolfo also argued that the change made it unlikely that the development-rights application Ellison prepared would win approval since it was based on obsolete calculations. He accused Ellison of failing to inform him about the benefit of a "vested rights" application, about the changes in the law and other setbacks to the application, and about the fact that his file was ultimately closed due to inactivity.
Land appraisals submitted to the court in the course of the trial showed that between 2005 and 2008, when Bernolfo became aware of problems with the application, the land's value decreased from more than $35 million to $13 million. The loss in value served as the basis for Bernolfo's claim that Stoel Rives pay him $21.4 million.
Stoel Rives—which, along with Ellison, was represented by Thomas Karrenburg of Salt Lake City's Anderson & Karrenburg—said in a statement issued by firm counsel Brad Tellam that it was disappointed in the jury's verdict and plans to appeal the award.
Asked about the jury's decision to place some of the responsibility for the failed application on Bernolfo, his lawyer, Michael Mimh of Denver-based Ogburn & Mihm, says "blame the client" arguments are common defense in legal malpractice cases, but that the defense in this instance had offered no evidence that Bernolfo failed to follow his attorney's advice or interfered with the representation in any way. Overall, though, Mihm says he is pleased with the verdict: “Tom Karrenburg did an excellent job, but you know, the facts favored us.”