Judge’s change of mind ends malpractice trial

September 8-14, 2014

By Scott Lauck

What had been shaping up to be a lengthy and contentious legal malpractice case ended Wednesday morning when the defendants won on summary judgment just as a jury was preparing to be seated.

The case in Jackson County Circuit Court involved prominent Kansas City attorneys Tim Dollar of Dollar, Burns & Becker and Michael Healy of The Healy Law Firm. In 2004, Dollar and Healy had represented a company called Matthew Headley Holdings in a business dispute. A federal jury awarded the company $8.6 million, but after a post-trial order and a subsequent appeal, the verdict was reduced to $2.15 million.

In its malpractice suit, Headley Holdings alleged that Dollar and Healy failed to challenge the verdict form the federal judge had required the parties to use, which ultimately led to the reduced verdict.

After several years of underlying litigation, the parties selected a jury Tuesday and had been scheduled to give opening statements in the case at 9 a.m. Wednesday. But after more than an hour of closed-door conferences, the attorneys held an in-chambers conversation with Judge Sandra Midkiff, who presided over the case.

Moments later, Midkiff announced she had reconsidered several earlier motions for summary judgment in which she had ruled initially against Dollar and Healy and allowed the case to proceed. The judge’s new ruling extinguished all the plaintiffs’ remaining claims.

The jury was dismissed before it was even called to the courtroom. As of Wednesday morning, it was not clear whether two of the jurors would have been able to participate — one fell ill and another was suffering a financial crisis. The attorneys, however, had selected four alternate jurors for the expected two-week trial, so the case likely could have proceeded.

Although the judge’s changed ruling appeared to have come as a result of the attorneys’ earlier discussions, it was not clear if there had been a settlement agreement or if the plaintiffs would — or could — appeal.

Arthur Benson of Benson & Associates in Kansas City, an attorney for Headley Holdings, declined to explain what happened.

“No comment,” he said when approached by a reporter after Wednesday’s hearing. The company was also represented by Brian Harvell of St. Louis.

An attorney for Dollar, John Schultz of Franke Schultz & Mullen in Kansas City, also declined to comment. Mark Kempton of Kempton & Russell in Sedalia, who represented Healy, said after the hearing that the defense had long argued that the case should have ended in summary judgment.

“We were pretty consistent throughout,” Kempton said.

Last year, Kempton had made a similar argument to the Missouri Supreme Court. Dollar and Healy had argued that Headley Holdings missed the five-year statute of limitations for legal malpractice claims. The suit was filed in 2011, not quite five years after the appeal was over but more than six years after the district judge initially reduced the verdict.

The case raised questions about whether clients should have to sue their attorneys as soon as they notice a potential problem, even if an appeal is progressing. But shortly after it heard arguments on the case in March 2013, the Supreme Court sent the case back to Jackson County without explanation, leaving the issue unresolved.

In the original lawsuit, Headley Holdings, which did business as Heartland Snacks, had alleged breach of contract and fraud by a distributor of Guy’s snacks, a Kansas City-based brand. After the 2004 trial, U.S. District Judge Fernando Gaitan Jr. had reduced the verdict to $6.45 million, ruling that two of the claims on the verdict form were duplicative. On appeal in 2006, the 8th U.S. Circuit Court of Appeals knocked the award down to $2.15 million, upholding Gaitan’s earlier ruling and adding that the fraud claim against the distributor couldn’t stand because the distributor’s employees had not been found individually liable.

According to Headley Holdings’ suit, Dollar and Healy were paid more than $1 million for the case.

The case is Matthew Headley Holdings v. Dollar et al., 1116-CV07373.

The Daily Record Newswire