Jerry’s Enterprises v. Larkin, Hoffman, Daly & Lindgren, Ltd.

Jerry’s Enterprises, Inc. (Jerry’s) (plaintiff) sought to purchase property in Woodbury, Minnesota, and retained the law firm of Larkin, Hoffman, Daly & Lindgren Ltd. (Larkin) (defendant) to assist. The property consisted of two parcels, one owned by William Bruggeman and the other by Hardy Morningstar. The Bruggeman purchase agreement included a buy-back option drafted by Larkin, allowing Bruggeman to repurchase the property if Jerry’s had not begun construction within two years. At closing, Larkin reviewed Bruggeman’s documents. The documents did not include the buy-back option, and Larkin neither advised Jerry’s about the option’s potential survival nor conducted any research to determine whether the buy-back option survived closing. Just over two years later, Bruggeman attempted to exercise the buy-back option. When Jerry’s refused to sell, Bruggeman sued. The trial court initially granted summary judgment for Jerry’s, but the appellate court reversed. Addressing the issue for the first time, the appellate court held that agreements to perform acts after closing are not merged into the deed. Jerry’s ultimately settled, paying Bruggeman $4.2 million to retain ownership. Jerry’s sued Larkin for legal malpractice, alleging that Larkin failed to warn Jerry’s about the possible survival of the buy-back option or take any steps to extinguish it. At trial, Jerry’s presented expert testimony from a real estate attorney, who opined that Larkin’s conduct fell below the applicable standard of care. At the close of Jerry’s case, the trial court granted Larkin’s motion for a directed verdict. The appellate court reversed, finding sufficient evidence of malpractice to create a jury question. Larkin petitioned for further review, arguing that, as a matter of law, its conduct did not fall below the standard of care because Minnesota’s merger doctrine was settled at the time of closing.