This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C3-96-1819

David P. Webb,

Appellant,

vs.

Frank R. Berman, P.A.,

Respondent.

Filed February 11, 1997

Affirmed

Short, Judge

Ramsey County District Court

File No. C9941444

Jan Stuurmans, Law Offices of Jan Stuurmans, P.A., 1800 Rand Tower, 527 Marquette Avenue, Minneapolis, MN 55402 (for appellant)

Ronald I. Meshbesher, Meshbesher & Spence, Ltd., 1616 Park Avenue, Minneapolis, MN 55404 (for respondent)

Considered and decided by Short, Presiding Judge, Amundson, Judge, and Harten, Judge.

U N P U B L I S H E D O P I N I O N

SHORT, Judge

This breach of fiduciary duty action arises from attorney Frank R. Berman's legal representation of David P. Webb and a number of corporate entities of which Webb was majority shareholder. Webb sought monetary damages from a jury for the attorney's foreclosure of a mortgage on Webb's homestead, obtained by the attorney as security for current and future legal fees. Following Webb's case-in-chief, the trial court granted a directed verdict in favor of the attorney and charged attorneys' fees against Webb. On appeal, Webb argues fact issues preclude the trial court from directing a verdict, and the imposition of sanctions was an abuse of discretion. We affirm.

D E C I S I O N

I.

On appeal from a directed verdict, this court reviews the evidence and its inferences to determine whether the evidence could reasonably sustain a contrary verdict. Northwestern State Bank v. Gangestad, 289 N.W.2d 449, 453 (Minn. 1979). We will sustain the directed verdict if a contrary verdict would have to be set aside as against the evidence or contrary to law. Nemanic v. Gopher Heating & Sheetmetal, Inc., 337 N.W.2d 667, 670 (1983).

This case does not require us to decide whether the attorney's conduct in obtaining and foreclosing the mortgage on Webb's homestead violated the Minnesota Rules of Professional Conduct. See Minn. R. Prof. Conduct 1.8 (a) (forbidding attorney's acquisition of property interest adverse to client absent reasonable and fair terms, communicated in writing, and client's written consent after opportunity to seek independent counsel). Rather, the issue before us is whether Webb presented a prima facie case of breach of fiduciary duty, precluding the trial court from directing a verdict in favor of the attorney. See Carlson v. Fredrikson & Byron, P.A., 475 N.W.2d 882, 889 (Minn. App. 1991) (holding attorney's violation of professional conduct rule alone does not give rise to civil cause of action for client), review denied (Minn. Oct. 31, 1991); Minn. R. Prof. Conduct pmbl. (providing violation of a rule does not create presumption legal duty has been breached).

The law requires absolute good faith on the part of an attorney toward a client because of the confidential and fiduciary nature of an attorney-client relationship. See Colstad v. Levine, 243 Minn. 279, 286-87, 67 N.W.2d 648, 654 (1954) (holding relation between attorney and client is one of highest trust and confidence, requiring utmost good faith and candor). When an attorney engages in a transaction with a client in which the attorney's private interests conflict with the client's interests, the attorney must be frank and fair with the client and must not take advantage of the confidential relationship. In re Boss, 487 N.W.2d 256, 260 (Minn. App. 1992), review denied (Minn. Aug. 11, 1992); see, e.g., Mercer v. McHie, 141 Minn. 144, 147, 169 N.W. 531, 532 (1918) (finding no evidence of overreaching by attorney). Accordingly, a transfer of property between an attorney and client does not breach the attorney's fiduciary duties, provided the attorney demonstrates perfect fairness, adequacy of consideration, and absolute good faith of the transaction. Mercer, 141 Minn. at 146, 169 N.W. at 531; see Colstad, 243 Minn. at 287, 67 N.W.2d at 654 (permitting attorney-client dealings upon proof attorney acted in good faith and took no unfair advantage).

In summary judgment proceedings, Webb claimed the attorney violated his fiduciary duties by threatening to withhold legal services if Webb refused to grant him a mortgage on Webb's homestead as security for legal fees for which Webb was not properly responsible. However, before and during trial, Webb conceded: (1) he had no conversation with the attorney about who would be responsible for payment of legal fees in matters in which Webb and his majority-owned corporations both benefitted from the attorney's services; (2) the attorney initially represented Webb personally; (3) Webb himself requested the attorney's legal services; (4) when the attorney sent 29 monthly invoices to Webb personally, Webb signed checks for partial payments on the account of a corporation not involved with the attorney's representation, and never objected that he was not personally liable for the fees; (5) Webb does not dispute the value of the attorney's legal services; (6) the attorney never threatened to withhold services in order to obtain the mortgage; (7) Webb and his wife gained a clear understanding of the ramifications of executing the mortgage during a congenial discussion with the attorney; (8) the mortgage was to secure fees for legal services requested by Webb; (9) Webb understood a default on the mortgage would result in personal liability; (10) the attorney continued to provide legal services despite Webb's nonpayment, until the amount of fees secured by the mortgage was exhausted; and (11) Webb assumed responsibility for the mortgage in his divorce proceedings and named the attorney as a secured creditor in personal bankruptcy proceedings.

Webb presented no credible evidence that the attorney was less than frank and fair, or that the attorney obtained the mortgage in bad faith. See Bakken v. Lewis, 223 Minn. 329, 335, 26 N.W.2d 478, 481 (1947) (permitting trial court to determine credibility where plaintiff's testimony was "so unsatisfactory and contradictory and so thoroughly discredited" it would not support verdict for plaintiff if one were given). Under these circumstances, we conclude Webb failed to present a prima facie case of breach of fiduciary duty. We cannot say the trial court erred in directing a verdict for the attorney.

II.

Webb also challenges the trial court's charge of attorneys' fees against him under Minn. Stat. § 549.21, subd. 2 (1996), which provides for the charge of fees and costs against an opposing party who acted in bad faith or asserted a frivolous claim that is costly to the other party. A plaintiff's lack of credibility can form an additional basis for sanctions under the statute. Faribo Oil Co. v. Tatge Oil Co., 501 N.W.2d 699, 702 (Minn. App. 1993), review denied (Minn. Aug. 24, 1993). We will not reverse a trial court's decision to award fees unless the award constitutes an abuse of discretion. Uselman v. Uselman, 464 N.W.2d 130, 145 (Minn. 1990).

In trial, Webb provided contradictory and unbelievable testimony, even after the trial court explicitly warned him that his continued inconsistent testimony might result in the imposition of sanctions. The trial court's finding on Webb's lack of candor is amply supported by the record. Under these circumstances, the trial court's award of bad faith sanctions against Webb, in an amount equivalent to attorneys' fees incurred after the trial court's verbal warning, did not constitute an abuse of discretion.

The attorney also seeks attorneys' fees and costs on appeal. Webb's untrustworthiness in trial, which justified sanctions in the trial court below, also supports the imposition of sanctions for Webb's continued bad-faith prosecution of this claim. Therefore, we award the attorney $3,000 for reasonable legal fees incurred in defending Webb's appeal.

Affirmed.