Michael Mihm Wins $12.8M Judgment against Law Firm Partner

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On Friday, a Utah Jury decided for Mihm against Portland, Oregon based law firm Stoel Rives LLP and the firm’s Salt Lake City partner. The jury found Stoel Rives and partner Thomas Ellison negligent in the handling of a development rights application filed on behalf of a client. A negligence charge considers that due diligence was not done and that there is a duty not taken seriously.

Deliberating 6 hours before a 14 hour trial, the jury decided that Ellison, chair of its national real estate and construction practice group, mishandled the application, costing David Bernolfo, owner of the 910 Cattle Ranch in Utah, $21.4 million according to the Denver Business Journal.

  

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Michael Mihm represented Bernolfo and asked for full damages, but the jury put 40% of the blame on Bernolfo and gave his award a discount. Defendant Stoel Rives plans on appealing the decision of the court. Brad Tellam, counsel of Stoel Rives’ firm said, “[we are] disappointed in the jury’s decision and will appeal it. We look forward to discussing the ultimate outcome of the case when it occurs.”

A fiduciary’s duty is to give reasonable care to the subject matter of the client in confidence, more or less. Though this case started in 2005, and many changes have happened in our national laws and economy with perturbations and recessions, a fiduciary’s duty has not been redefined. That hasn’t changed in any industry.

In 2005, cattle rancher “Bernolfo began exploring the possibility of developing his ranch into a resort.” This palatial resort would have “more than 100 residential units and 100,000 square feet of commercial space.” Thomas Ellison, who at the time was Bernolfo’s counsel, filed a development application with the county seeking the go ahead for the project, according to the Portland Business Journal. According to Michael Mihm, Ellison neglected to file critical paperwork that would have protected 910 Cattle Company’s development rights. Summit County, the area where Plaintiff Bernolfo’s resort would have been located, changed its laws soon after the application filing. The vested-density code that calculates and determines lot size was amended. This reduced the ranch’s vested-rights density by 40% changing the number of residential units that could be included on the ranch’s property.

Ultimately this was simply an incompetent and unfinished application. Luckily, the incompetence was well understood by the jury. Ellison lost the case because he was negligent of his responsibility as a fiduciary. This clearly is understood to be the primary factor that caused Mihm’s epic win.