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//Sommeren v. Gibson

Court of Appeals of Ohio, Sixth District

June 21, 2013

Gijbertus D.M. van Sommeren, et al. Appellants
Thomas A. Gibson, et al. Appellees

Trial Court No. CI0200905169.

Harold M. Steinberg, C. William Bair, and Fan Zhang, for appellants.

Kenneth J. White and John F. Bodie, Jr., for appellees.



{¶ 1} Appellants, Gijbertus D.M. van Sommeren, Elly van Sommeren and Noord Zuid Dairy LLC, are the plaintiffs in a legal malpractice action and have timely appealed the summary judgment rendered against them by the trial court. Appellees are the defendant-attorney, Thomas A. Gibson, and his law firm, Robison, Curphey & O'Connell LLC ("RCO").

I. Record on Summary Judgment

{¶ 2} Gijbertus D.M. van Sommeren[1] is a Dutch dairy farmer who emigrated with his family from the Netherlands, first to Canada and then to the United States, to develop and run dairy farms. After purchasing a Canadian dairy farm in 1994 but encountering restrictions unique to Canada's "milk quota system, " he came to Ohio in 2004, where he was introduced to the principals of Vrebra-Hoff Dairy Development ("VHDD"), all of whom are similarly of Dutch heritage. VHDD acquires, develops, and manages dairy farms and their assets in this region. Its corporate operations are located in Wauseon and its principal owner is W.M.H. van Bakel. Van Sommeren consulted van Bakel about dairy farming under a free-market system and the prospect of selling his dairy in Canada to start one here. Van Bakel, in turn, made the newcomer feel welcome, telling him "we can help you" and indicating that VHDD offered a "total package" for "people [coming] from Canada from the Netherlands." Assisted by another VHDD principal, Gerrit Kreugal, van Sommeren traveled to a number of VHDD-developed farms to meet the operators and to assess productivity. Much of the discussion on these visits centered on "good farms" and "happy cows" and "help with financing."

{¶ 3} In August 2004, he entered into a multimillion dollar contract with VHDD for the construction of a dairy farm consisting of 2100 cows. It is not disputed that before entering this contract, van Sommeren did not seek the advice of an attorney nor had he yet met attorney Gibson. The contract required him to make a non-refundable security deposit of $398, 750.00 to VHDD, which he did, also without benefit of an attorney's consultation or review. Various properties and sites in the area were then considered for the construction of the dairy farm, but after searching for almost a year van Sommeren found none that could be made suitable within a reasonable time.

{¶ 4} Meanwhile, another dairy farm operator, Koos den Ouden, was struggling financially and decided to leave the business. He approached VHDD about marketing his farm for sale. By then van Sommeren had sold his farm in Canada. Sensing an opportunity, van Bakel introduced the two men, and eventually they reached an agreement for van Sommeren to purchase den Ouden's farm, called Corey Dairy, which operated with 622 cows. Van Sommeren was attracted to Corey Dairy's smaller size, feeling that it would be easier to manage and enlarge, as funding permitted, than to incur the start-up costs and time involved in constructing a new farm. This transaction too occurred before van Sommeren met Gibson.

{¶ 5} The parties dispute whether VHDD was formally acting as the seller's (den Ouden's) agent for this transaction, or whether it merely introduced the parties from an expedient desire to see Corey Dairy kept operational because VHDD had originally built the farm and a farm sitting idle was significantly less marketable. This agreement required VHDD to "assist" van Sommeren in taking over the operation of Corey Dairy. His long-term plan for Corey Dairy was to expand the farm into a 3, 000-cow operation. Once the real-estate portion of the purchase was completed, he and VHDD would develop the 160-acre farm jointly, and this engendered the signing of another agreement with VHDD. [2]

{¶ 6} In early November 2005, van Sommeren met van Bakel in Wauseon where they signed the Corey Dairy development agreement for a total purchase price of approximately $12.3 million (including $8.8 million in improvements). Under its terms, and until he was able to purchase the real estate, van Sommeren would lease Corey Dairy from den Ouden with an option to purchase. Thereafter, in the joint development phase, VHDD would construct or add "buildings, fixtures, machinery and equipment" as needed to operate a 3000-cow farm. This agreement also was signed before van Sommeren met Gibson or others at RCO.

{¶ 7} In order to acquire the Corey Dairy real estate under the purchase option, the November 2005 development agreement called for van Sommeren to secure financing. As an "ancillary service, " the agreement provided that VHDD would "attempt to assist" him in "finding suitable financing." VHDD, however, would not be deemed "a third party, guarantor, or surety" to any lending agreement he entered, and liability was expressly disclaimed except for "gross recklessness or willful conduct." A different provision in this agreement excluded VHDD from liability to van Sommeren for "indirect damages or losses, " such as lost profits, lost savings, or consequential damages.

{¶ 8} Although the parties disagree on the precise date of van Sommeren's first "contact" with attorney Gibson, the record references a meeting in late November 2005. It is not disputed that Gibson had a long-standing relationship with VHDD, nor that van Bakel referred van Sommeren to Gibson because of his past experience with similar transactions involving VHDD. At this meeting van Sommeren indicated that he wanted Gibson to represent him in the purchase of all the assets of Corey Dairy (cows, farming equipment, real estate, etc.). He told Gibson about the non-refundable security deposit from 2004, asking that it be withdrawn from escrow and applied toward the purchase. He also "told [Gibson] what the plan [for the farm] was" and "to go over the papers [i.e., the agreements], check them." According to van Sommeren, Gibson did not mentioned that he and RCO also represented VHDD.[3] Before this meeting, van Bakel had apparently forwarded to Gibson the Corey Dairy purchase documents. These were already signed and contained the terms to which den Ouden and van Sommeren had agreed.

{¶ 9} Afterward, two separate closings took place at which van Sommeren signed agreements with den Ouden to acquire the Corey Dairy assets. He also agreed to assume, along with den Ouden, certain preexisting loans relating to farm assets, an obligation totaling about $5 million dollars. It appears that VHDD had no interest or commitment in these assets or the loans. Van Sommeren signed the first agreement on December 22, 2005, and took over management of the farm, now known as NZDF, while attempting to find a lender, an effort with which he claims Gibson was supposed to assist.

{¶ 10} Things began optimistically at Corey Dairy, but over several months of managing the farm van Sommeren encountered problems affecting the cows. Some of these involved sanitary conditions. Excess manure, which accumulated around the farm due to inadequate storage capacity, had to be removed. Then lagoons on the property were found to be clogged by manure. He paid $60, 000 to have them drained and after the manure dried, to have it hauled away. Dirty sand bedding in the cow stalls had to be replaced with clean fill, a time-consuming process. Finally, it was discovered that about fifty percent of den Ouden's cows had contracted leptospirosis, a disease which affects the kidneys and liver and impairs conception. It caused a number of den Ouden's cows to abort and the pregnancy rate for the herd declined. Since the afflicted cows could not be milked before recovering fully from treatment, milk production decreased significantly. The veterinary bills were steep, the cows "weren't happy, " and these and other problems eventually cost van Sommeren about $500, 000 to remediate. Nonetheless, as he later testified, he believed the farm could still be made successful.

{¶ 11} On May 26, 2006, he signed the second agreement with den Ouden to assume the pre-existing loan obligations for the Corey Dairy cows, their feed grain, and the farm equipment. Den Ouden then received some of the previously escrowed funds as a down payment on the lease. Because van Sommeren now wanted to enlarge the cow population on the farm from the initial 3000 to 3, 575, he decided to seek a greater level of financing than first envisioned.

{¶ 12} In October 2006, he applied with AgStar Financial Services, ACA ("AgStar"), which finances dairy farms throughout the United States and had financed others owned by VHDD. Benardus Huiskamp, the financial manager for VHDD, assisted him with the submission of his loan application. Huiskamp had experience with dairy farm transactions and the financing of large agribusiness projects. Van Sommeren's application now requested loans approaching 15 million dollars.

{¶ 13} On March 2, 2007, AgStar issued a commitment letter to van Sommeren for $5.4 million and one to VHDD for $11.4 million. Van Sommeren's commitment letter explicitly conditioned his loan on 19 "conditions precedent, " one of which required VHDD "to be [a] co-maker on all loans" to him and NZDF. Another condition precedent required van Sommeren "to cause [VHDD] to execute documentation" subordinating any indebtedness he then owed VHDD to AgStar's rights and interests in its loans. This letter had an acceptance deadline of March 12, 2007, and required VHDD to accept the conditions and sign it as well.

{¶ 14} Although van Sommeren signed his loan commitment letter, VHDD refused to sign either letter. He later testified that he did not know why the principals at VHDD refused to sign the letters, stating that he "never got a right answer." Nor did Huiskamp give him an explanation. According to van Sommeren, Huiskamp quit VHDD in disgust and returned to the Netherlands "because [of] the way they treated people, he [could] not accept that." Other sources of financing evaporated. Van Sommeren felt set up and "abused, " abandoned to a cash-strapped dairy farm and mounting debt. Angry at his predicament, he looked to Gibson to explain VHDD's refusal, after attempting to reach van Bakel himself.

{¶ 15} Both in the trial court and on appeal, the parties have offered accounts which conflict about the events and the deteriorating relationships that ensued.

{¶ 16} Van Sommeren testified that he never received a response from Gibson or his concurrent client, van Bakel, who was "always in a meeting, " on the phone, or otherwise unavailable. He named four Dutch families, and suggested there were as many as seventeen others, who, having "lost everything" in a similar fashion, all formed a certain tragic pattern: they had immigrated to Ohio to run a dairy farm, became involved with VHDD to get started, a beginning that was "all smiles" with much talk of "good farms, " productive cows, and "help with financing." The carrot thus dangled, the newcomer would sign on to a "package deal" of agreements for an existing farm, agreements that insulated VHDD, and when these farms were later discovered to have "problems" and could not be made profitable, VHDD would distance itself, insinuating the newcomer was a "bad manager." Financing would stall or loan defaults would occur, and inevitably the newcomer would "lose the farm."[4]

{¶ 17} Gibson, in contrast, claims he offered to find another lawyer for van Sommeren if he wanted to pursue a claim against VHDD for loss of the AgStar financing, but that he declined. Van Sommeren remembered no such offer, but rather told Gibson "to keep going with this [financing]" and "we were trying to find other [private] investors."

{¶ 18} But financing was not to be found, and by early 2008 den Ouden wanted his farm back. Van Sommeren still owed him more than $200, 000, having fallen behind on the lease payments and his share of the loan repayments. Healthy cows bought to replace sick ones had added more debt, and now he was struggling to buy feed grain. At that point Gibson proposed a settlement with den Ouden. For a much smaller payment toward the lease debt, and letting den Ouden keep the cows and the equipment to pay off the loans, van Sommeren "could walk away." However, on the advice of a different attorney, he rejected that option. Gibson continued to advise him on Corey Dairy matters until March 2008 when their relationship ended.

{¶ 19} Appellants commenced their legal malpractice suit on June 26, 2009, and after extensive discovery and motion practice, the trial court granted Gibson and RCO's motion for summary judgment on April 24, 2012. In doing so the court ruled, first, that the proximate-cause element of appellants' legal malpractice claim was not so "obviously" apparent from the facts that expert testimony was unnecessary, and second, that the expert testimony appellants had offered on that element was insufficient to survive summary judgment.

{¶ 20} Specifically, the trial court ruled that even if it was assumed that van Sommeren and VHDD had conflicting interests in the Corey Dairy transaction, and that Gibson (and his firm) had thereby departed from the applicable standard of care in representing both, the testimony of appellants' experts could not proximately connect that conflict, through some act or omission by Gibson, to appellants' claimed financial losses. In an earlier order, dated March 16, 2012, the court also granted Gibson's motion to strike the untimely disclosure of appellants' proximate-cause expert, thereby prohibiting his opinion testimony. This appeal followed.

II. Analysis

{¶ 21} Appellants have assigned three errors for our review, the third of which states:

III. The trial court erred as a matter of law when it granted summary judgment to appellees because expert testimony is not always necessary to prove proximate cause in legal malpractice when the breach of duty is so obvious that a lay person could understand it.

A. General standard of review

{¶ 22} On appeal, a grant of summary judgment is reviewed de novo by this court. Bonacorsi v. Wheeling & Lake Erie Ry. Co., 95 Ohio St.3d 314, 2002-Ohio-2220, 767 N.E.2d 707, ¶ 24. We apply the same standard as the trial court, viewing the facts in a light most favorable to the nonmoving party and resolving any doubts in favor of that party. Viock v. Stowe-Woodward Co., 13 Ohio App.3d 7, 12, 467 N.E.2d 1378 (6thDist. 1983). Civ.R. 56 sets forth the standard for summary judgment and puts the initial burden on the moving party. It requires that no genuine issues of material fact exist, that the moving party be entitled to judgment as a matter of law, and that reasonable minds be ...

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