Lundstrom, Jr. v. Homolka, P.A. et. al.

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
NORTHERN DIVISION
LOWELL LUNDSTROM,JR., 1:I9-CV-01006-CBK
Plaintiff,
vs.
MEMORANDUM
AND ORDER
DANIEL M.HOMOLKA,P.A., DANIEL
M.HOMOLKA,AND WATTS GUERRA
LLP,
Defendants.
Defendant Watts Guerra LLP ("defendant") renewed its motion for judgment as a
matter of law pursuant to Federal Rule of Civil Procedure 50(b) on December 22, 2021.
Doc. 197. Defendant argues that(I)because plaintiff Lundstrom ("plaintiff) did not
plead a theory of agency liability in his Complaint, it was not a proper theory of liability
to be considered by the jury; and(2)that neither actual nor ostensible agency can bind
Watts Guerra for the broken promises made by Mr. Daniel Homolka that are at the crux
of the oral breach of contract in this matter, thus requiring a judgment as a matter of law
against the decision ofthe jury. Mr. Lundstrom filed his response brief on January 12,
2022, doc. 201, which Watts Guerra replied to on January 26, 2022, doc. 203. This
matter, and the end of this litigation before the Court, is ripe for adjudication.
I. BACKGROUND
The issues in this case were many. For brevity's sake, this Court discusses those
facts most relevant to this motion. At the heart of this dispute is another bout of
litigation, the multi-district litigation("MDL")concerning Syngenta and its 2011
decision to commercialize genetically modified corn seed in the absence of Chinese
approval to import corn with the modified trait, causing com prices to drop dramatically
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in the United States. See In re Svngenta AG MIR162 Com Litig., 65 F. Supp. 3d 1401
(J.P.M.L. 2014). The Judicial Panel on Multistate Litigation condensed the flurry of suits
around the country into the District Court for the District of Kansas. But that did not stop
Syngenta-related litigation elsewhere.
Watts Guerra LLP and Mikal Watts("Watts defendants"), lawyers with a focus on
mass tort litigation, decided mass tort lawsuits against Syngenta would be more
advantageous than taking part in the MDL,and proceeded in finding potential plaintiffs
elsewhere. These other lawsuits were filed in Minnesota state court, where Syngenta's
North American seed business is based. The Syngenta MDL rejected removing these
state proceedings into the Kansas-based federal proceedings. Instead, these state suits
were consolidated in Hennepin County, Minnesota. Watts defendants would eventually
file nearly 60,000 suits in state court against Syngenta.
On December 7, 2018, the MDL Court certified a settlement class and approved a
global settlement of claims against Syngenta, including claims that had been pending in
the MDL,in the consolidated proceeding in Minnesota state court, and in federal court in
Illinois. In re Svngenta AG MIR 162 Com Litig.. 357 F. Supp. 3d 1094(D. Kan. 2018).
The litigation was settled for $1.5 billion.
As part of its project to market the Syngenta litigation, the Watts defendants
contacted hundreds of attorneys in many states, entering into agreements to act as co-
counsel on behalf ofthe affected farmers and grain shippers, agreeing to split attorneys'
fees. The attorneys orchestrated town hall meetings where interested plaintiffs could
learn about the litigation and sign contingency fee agreements with the Watts defendants
and local counsel. One such local law firm with whom the Watts defendants entered into
a joint representation agreement was the firm Daniel M. Homolka,P.A.
In November 2014, the Watts defendants and Daniel M. Homolka,P.A. and Mr.
Daniel Homolka("Homolka defendants") entered into a fee-sharing agreement where
they agreed to share attorneys' fees recovered on behalf of any farmer who agreed to
participate in litigation against Syngenta and hire the Watts and Homolka defendants as
their attorneys. Homolka in turn contacted attorneys James Hovland and Dan Rasmus,
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inviting them to participate in the project. In December 2014, Rasmus contacted
Lundstrom to see if he would be interested in helping to market the Syngenta corn
litigation project to farmers. Lundstrom, a farmer, also had marketing experience.
On December 15, 2014, Lundstrom, Rasmus, Hovland, Homolka, and Hector Eloy
Guerra met in a law office in Minnesota to discuss enlisting Lundstrom to assist in
marketing the Syngenta com litigation. Lundstrom alleged that Homolka asked
Lundstrom how much money he would require per month to free him up to work on the
project. Plaintiff also alleged that Homolka agreed to pay Lundstrom $10,000 per month
"through the end ofthe project," that is, until the litigation was dismissed or settled, to
lease the web site LostComlncome.com and for Lundstrom's services in brokering and
placing media on the site. The question of when these web-leasing payments were
agreed to end were heatedly debated in the November 2021 jury trial and a centerpiece of
this litigation.
Plaintiff also claims that he agreed to engage in a host of other marketing related
activities in exchange for fiirther compensation. In addition to establishing and
maintaining a web domain (lostcornincome.com), plaintiff claims he produced a 30-
minute-long infomercial("LOST CORN INCOME: Special Report"), arranged and
managed a toll-free telephone number for prospective clients to call, managed all media
buys (for formats including radio, newspapers, and television), prepared fact sheets to
give prospective agricultural clients, and prepared budgets for all ofthe above. Plaintiff
also participated in town hall meetings used to solicit and attract Syngenta litigation
clients.
In addition to the question of how much Lundstrom was owed for these web-
leasing payments, namely, when were they agreed to eease, two other promises were
alleged to have been made. Plaintiff asserted that a promise was made by Mr. Homolka
that he would be reimbursed for his traveling to participate in these town hall meetings
with $50,000 for a new truck. Finally, and most importantly to Lundstrom, he argued
before this Court and a jury of his peers that defendant Homolka promised him a $3.4
million bonus if he could sign up plaintiff farms whose claims totaled six million acres,
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i.e., that this bonus was non-discretionary. The theory presented by Lundstrom was that
he was told by Homolka that if he accepted less money monthly "up front," he would
receive a higher bonus at the end of the project. Whether this promise of a multi-million-
dollar bonus existed and was non-discretionary posed a critical question at trial. Despite
the serious financial stakes at hand, no written agreement was ever drafted, because of
purported concerns by defendants about fee-sharing between the defendants and
Lundstrom, a non-lawyer. Without such an agreement on paper, the oral contract made
by Homolka and what exactly it entailed, was the crux of this litigation.
On November 12, 2021, a jury of eight found that Daniel M.Homolka P.A and
Watts Guerra LLP were liable to the plaintiff for a breach of contract made by Mr.
Homolka. However,the jury did not find that the fourth defendant, Mikal Watts, was
culpable because Mr. Homolka was not acting as agent of Watts, but rather only Watts'
limited liability partnership. The jury also did not find that Mr. Homolka- and thus, any
ofthe defendants - had fraudulently induced Mr. Lundstrom. Accordingly, the jury
awarded Lundstrom $175,000 in compensatory damages and decided that he was not
entitled to prejudgment interest. The Court entered an amended judgment in favor of Mr.
Lundstrom against defendants Daniel M. Homolka,P.A. and Watts Guerra LLP jointly
and severally.'
The critical inquiry in this Memorandum and Opinion is first, whether this theory
of agency liability was properly before the jury, and second, whether Watts Guerra can be
bound by the broken promises made by Mr. Homolka, under either an actual or ostensible
agency theory. To invade the province of the jury should only be done in the rarest of
occasions. This case does not rise to the high bar to disrupt the place of the jury in our
civil justice system.
'Because the jury found that Mr. Homolka was acting as an agent for Daniel M. Homolka, P.A.,(a professional
association), only the professional association is liable for the acts of its agent, i.e., Mr. Homolka, not the individual
in his personal capacity.
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II. WHETHER AGENCY THEORY LIABILITY WAS PROPERLY HEARD
BY JURY
Watts Guerra argues that this Court should not even entertain theories of ageney
liability because Lundstrom failed to plead such a theory in his Complaint. See Fed. R.
Civ. p. 8(a)(2)(requiring plaintiff to include "a short and plain statement of the claim
showing that the pleader is entitled to relief."). In turn, plaintiff contends the matter was
tried with the explicit or implicit content ofthe defendant, thus satisfying Federal Rule of
Civil Procedure 15(b)(2)'s exception to the general requirement of pleading all theories in
the party's Complaint. Rule 15(b)(2) states:
When an issue not raised by the pleadings is tried by the parties' express or
implied consent, it must be treated in all respects as if raised in the
pleadings. A party may move—at any time, even after judgment—to
amend the pleadings to conform them to the evidence and to raise an
unpleaded issue. But failure to amend does not affect the result of the trial
of that issue
"The goal of Rule 15(b) is to promote the objective of deciding cases on the merits rather
than on the relative pleading skills of counsel." Am.Familv Mut. Ins. Co. v. Hollander,
705 F.3d 339, 348(8th Cir. 2013). See also Baker v. John Morrell & Co., 266 F. Supp.
2d 909, 927(N.D. Iowa 2003)affd. 382 F.3d 816(8th Cir. 2004)("The intent of Rule
15(b) is to 'provide the maximum opportunity for each claim to be decided on its merits
rather than on procedural niceties.'"){quoting Hardin v. Manitowoc-Forsvthe Corp., 691
F.2d 449, 456(10th Cir. 1982)). Here, the question is whether, within the liberal
construction ofthe Federal Rules favoring all relevant claims to be put forward in one
bout of litigation, this theory of liability may stand under Rule 15(b)(2). See Standard
Title. Ins. Co. v. Roberts. 349 F.2d 613, 622(8th Cir. 1965)("The federal courts have
generally and consistently recognized that, as a general rule, amendments under Rule 15
should be allowed with liberality."). The United States Court of Appeals for the Eighth
Circuit has identified two steps necessary to allow such an amendment to the pleadings
during or after trial on grounds of implied consent:(1) did the "'parties have [] actual
notice of an unpleaded issue;" and (2)have they "'been given an adequate opportunity to
cure any surprise resulting from the change in the pleadings?"' Dunne v. Libbra. 448
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F.3d 1024, 1030 (8th Cir. 2006)(quotinz Gamer v. Mo. Dept. of Mental Health. 439 F.3d
958, 960(8th Cir. 2006)). See also Am. Family Mut. Ins. Co.. 705 F.3d at 348("[W]e
have held a party will be deemed to have acquiesced in trying an unpleaded issue when
the issue is 'not inconsistent with' the position taken by the non-moving party earlier in
the proceedings.'"){quoting Baker. 382 F.3d at 831).
First, Watts Guerra had "actual notice" of this unpleaded issue. True, Lundstrom
would have been wise to simply plead agency theory in his original Complaint, but
subsequent events paved way for this theory of liability to stand. Lundstrom first raised
an agency theory of liability for Watts Guerra in his memorandum in opposition to the
defendant's motion for summary judgment, filed nearly six months before the ultimate
jury trial. Doe. 94 at 21-23. Watts Guerra accordingly resisted the plaintiffs theory
of agency liability in its reply brief on June 3, 2021. See doc. 104 at 13-15. And in its
Memorandum and Order addressing the varying claims on summary judgment, this Court
specifically addressed agency theories of liability. See doc. 121 at 11-12. Realizing that
this agency theory was a heated dispute in this matter. Watts Guerra's own proposed jury
instructions offered explanations of a purported agency relationship. See doc. 133 at 37-
42. Clearly the defendant had adequate notice that such a theory would be presented at
trial.
Next, Watts Guerra had '"an adequate opportunity to cure any surprises resulting
from the change in the pleadings.'" Brand v. Nat'l Union Fire Ins. Co. ofPittsburgh, PA.
934 F.3d 799, 803(8th Cir. 2019)(quotinz Cook v. City of Bella Villa. 582 F.3d 840,
852(8th Cir. 2009)). The defendant had nearly six months from being first presented
with this theory of agency liability before ultimately presenting its case before the jury in
November 2021. Watts Guerra was represented by well-seasoned and well-respected
counsel more than capable of attacking this theory of liability.^ The defendant made a
^ Further, the ultimate disposition ofthe jury showed counsel was partially successful in contesting the question of
agency liability at trial. Daniel Homolka was found not to be an agent of Mikal Watts, evidencing that the jury
accepted part of counsel's arguments on questions of agency liability.
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forcefiil case against agency liability in its reply brief to its motion for summary
judgment, as well as in front of the jury.
Finally, this is buoyed by the "liberal backdrop" ofthe Federal Rules of Civil
Procedure. See generally Popp Telcom v. Am. Sharecom. Inc., 210 F.3d 928, 943 (8th
Cir. 2000)(noting that federal courts have a "liberal viewpoint towards leave to amend,"
which "should normally be granted absent good reason for a denial.") Rule 15(b) stands
so that piecemeal litigation may be avoided. See Baker v. John Morrell & Co., 266 F.
Supp. 2d 909, 927(N.D. Iowa 2003)affd, 382 F.3d 816 (8th Cir. 2004)("The intent of
Rule 15(b) is 'to provide the maximum opportunity for each claim to be decided on its
merits rather than on procedural niceties.'"){quoting Hardin v. Manitowoc-Forsvthe
Corp., 691 F.2d 449,456 (10th Cir. 1982)). To reject a possible theory of agency liability
when all parties have briefed and argued the issue would be to allow the "tyranny of
formalism" to reign over the litigated substance of this case. Wright & Miller, § 1491,
Amendments to Conform to the Evidence-In General,(3d ed.). Because Watts
Guerra had actual notice of Lundstrom's theory of agency liability and adequate notice to
respond (an opportunity they forcefully pursued), the theory was properly permitted
under Rule 15(b).
III. WHETHER WATTS GUERRA CAN BE FOUND CULPABLE AS
MATTER OF LAW ON AGENCY THEORY OF LIABILITY
A. Legal Standard
Pursuant to Federal Rule of Civil Procedure 50, a court should render judgment as
a matter of law "'when no reasonable jury could have found for the nonmoving party.'"
Monohon v. BNSF Rv. Co.. 17 F.4th 773, 780(8th Cir. 2021){quoting S. Wine & Spirits
of Nev. V. Mountain Valley Spring Co., 646 F.3d 526, 533(8th Cir. 2011)). Judgment as
a matter of law is appropriate "'after a party has been fully heard on an issue'" so that the
Court can "'enter judgment accordingly if a reasonable jury could not find in that party's
favor.'" Jacobson Warehouse Co., Inc. v. Schnuck Mkts., Inc., 13 F.4th 659,674(8th
Cir. 2021)(quotins Adeli v. Silverstar Auto, Inc., 960 F.3d 452,458(8th Cir. 2020)).
Like on considering motions for summary judgment, this Court must assess whether the
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evidence is '"so one-sided that one party must prevail as a matter of law.'" Adeli, 960
F.3d at 458(auotins White v. Union Pac. R.R. Co.. 867 F.3d 997, 1000 (8th Cir. 2017)).
It bears emphasizing that '"the law places a high standard on overturning a jury verdict
because ofthe danger that the jury's rightful province will be invaded when judgment as
a matter oflaw is misused.'" Washington v. Dennev. 900 F.3d 549, 558 (8th Cir. 2018)
(quotins Bavlsik v. Gen. Motors. LLC,870 F.3d 800, 805 (8th Cir. 2017)). When
deciding a motion for judgment as a matter of law, this Court must:
(1)consider the evidence in the light most favorable to the prevailing party,
(2)assume that all conflicts in the evidence were resolved in favor of the
prevailing party,(3) assume as proved all facts that the prevailing party's
evidence tended to prove, and (4) give the prevailing party the benefit of all
favorable inferences that may reasonably be drawn from the facts proved.
Rvan Data Exchange. Ltd. v. Graco. Inc., 913 F.3d 726, 732-33 (8th Cir. 2019). When
exercising diversity jurisdiction, state law controls on motions for judgment as a matter of
law. See Roberson v. AFC Enters.. Inc., 602 F.3d 931, 934 (8th Cir. 2010). After the
close of evidence and the jury has rendered its verdict, a party may renew its prior motion
for judgment as a matter of law. Fed. R. Civ. P. 50(b). Defendant has properly preserved
its motion for judgment as a matter of law, which is now renewed.
B. Discussion
In South Dakota, agency is "the representation of one called the principal [Watts
Guerra] by another called the agent[Dan Homolka] in dealing with third persons [Lowell
Lundstrom]." SDCL 59-I-I. See Dakota Provisions, LLC v. Hillshire Brands Co., 226
F. Supp. 3d 945,952(D.S.D. 2016)("'Agency is a creature of state law and, in South
Dakota, is governed by both statutory and common law.'"){quoting Babinski Props, v.
Union Ins. Co., 833 F. Supp. 2d 1145, 1150(D.S.D. 2011)). In discerning whether there
is an agency relationship, courts look to "the relations of the parties as they exist under
their agreement or acts." Kasselder v. Kannerman. 316 NW2d 628,630(S.D. 1982).
The agency relationship ean be actual or ostensible. A.P. & Sons Const, v. Johnson. 657
NW2d 292, 297(S.D. 2003). This Court will analyze whether either theory of liability is
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proper in this matter against Watts Guerra under the deferential standard of review
required on a Rule 50(b) motion.
1. Whether Daniel Homolka was an Actual A^ent of Watts Guerra when Makins the
Broken Promises
Watts Guerra asserts that Mr. Homolka exceeded his actual authority as the law
firm's agent when making the broken promises to Mr. Lundstrom. Plaintiff counters,
arguing that Homolka was equipped with actual authority to bind Watts Guerra on all
negotiations for Lundstrom's payment, including the promises at the core of the breach of
oral contract. The question here is whether Homolka's actual agency to bind the
defendant on certain expenses related to the mass tort claims lends actual authority for
subsequent promises, such as reimbursement for the truck and continued web-leasing
payments.
Actual agency "exists when a principal and agent expressly agree to enter into an
agency relationship." Id.(citins Dahl v. Sittner. 429 NW2d 458,462(S.D. 1988)). See
SDCL 59-1-4. Unlike for ostensible agency,the inquiry here is the authority created "by
manifestations from the principal to the agent." Fed. Land Bank of Omaha v. Sullivan,
430 NW2d 700, 701 (S.D. 1988){citing SDCL 59-3-2). Simply put, the level of inquiry
is the relationship between the principal and agent without consideration of the
perceptions of any third party. When an actual agency relationship exists, "the principal
may be held liable for the agent's negligent or wrongful acts." Dakota Provisions, LLC
V. Hillshire Brands Co.. 226 F. Supp. 3d 945, 952(D.S.D. 2016). To find the existence
of an actual agency relationship, Lundstrom must prevail on all the following elements:
'(1) manifestation by the principal that the agent shall act for him,(2)the
agent's acceptance of the undertaking, and (3)the understanding ofthe
parties that the principal is to be in control ofthe undertaking.'
Id. {quoting A.P. & Sons Const, v. Johnson,657 NW2d 292, 297(S.D. 2003)). As the
party advocating for an actual agency relationship, Mr. Lundstrom held the burden to
assert such a theory of liability at trial, measured against Watts Guerra's steep burden to
disrupt the jury verdict. See Kasselder v. Kapperman. 316 NW2d 628,631 (S.D. 1982)
(explaining the party asserting agency has burden of proof to "affirm[] its existence.").
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See also Am.Prairie Const. Co. v. Hoich, 560 F.3d 780, 793 (8th Cir. 2009)("South
Dakota courts have held,'[i]n the law of agency, a principal will be liable for contracts
made in its behalf by an agent if the agent was authorized to enter into the agreements.'")
(emphasis in original)(quotins Fed. Land Bank of Omaha.430 NW2d at 701 (S.D.
1988)).
Here, defendant readily admits that Homolka was acting as an actual agent of the
law firm. However, that is not the end of the inquiry. Yes, Homolka was an agent of
Watts Guerra "regarding certain expenses related to the mass tort claims," but that does
not mean that any action Homolka pursued related to the Syngenta litigation is part ofthe
parties' actual agency relationship. Defendant Watts Guerra,LLP's Brief
Supporting Renewed Motion for Judgment as a Matter of Law, doe. 198 at 9.
Lundstrom failed to provide ample evidence that Mr. Homolka was within his mutually
agreed authority when making offers for a truck reimbursement, non-discretionary
bonuses, or web-leasing payments stretching into 2017. No substantive evidence asserted
that the defendant's representatives were in a room with Homolka and Lundstrom when
Homolka made these broken promises, or offered sufficient evidence that Watts Guerra
was aware of these additional promises stretching beyond the budgets defendant
approved. Rather, there is not sufficient evidence for the jury to consider that Watts
Guerra was approving budgetary requests after September 2015; any promise for further
compensation, reimbursement, or bonus was made by Homolka without the backing of an
actual agency relationship with defendant.
Watts Guerra rightly points this Court's attention to one ofthe South Dakota
Supreme Court's principal cases on actual agency authority. In Kasselder v. Kapperman,
Jerome Kapperman (the principal) authorized his agent, James Schladweiler, to pay no
more than $3,000 to have his road grader's defective engine repaired. 316 NW2d 628,
629(S.D. 1982). Kapperman was clear: the upper bounds that he would pay for the
repair was $3,000. Nevertheless, agent Schladweiler had the engine repaired at a total
cost of$6,441.06. Id. Because the agent only had actual authority up to $3,000, any
subsequent purchase beyond this price would have exceeded Schladweiler's authority.
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Accordingly, Kapperman could only be found liable for the clearly demarcated $3,000.
Crucial to Kasselder. and different from this matter, is that there was no lack of ordinary
care on the part of Kapperman to the third party which could provide support for an
alternative ground ofrelief under ostensible agency theory. Because Homolka exceeded
his actual authority when making promises(beyond the approved budgets) to Lundstrom,
Watts Guerra cannot be found liable under such a theory. But that is not where this
dispute ends.
2. Whether There was an Ostensible Asency Relationship Between Watts Guerra and
Daniel Homolka Based upon Interactions between Watts Guerra and Lowell
Lundstrom. Jr.
Ostensible authority, or agency, is "such as a principal intentionally, or by want of
ordinary care, causes or allows a third person to believe the agent to possess." SDCL 59-
3-3.^ For there to be ostensible agency,"the evidence should indicate that the principal,
by its representations or actions, caused a third party to believe that a person was its
agent." Dakota Provisions, LLC v. Hillshire Brands Co., 226 F. Supp. 3d 945,953
(D.S.D. 2016)(citin2 Kasselder v. Kapperman, 316 NW2d 628,630(S.D. 1982)).
Crucially,"[ojstenisble agency for which a principal may be held liable must be traceable
to the principal and cannot be established solely by the acts, declarations or conduct of an
agent." Kasselder, 316 NW2d at 630(emphasis added). See Dahl v. Sittner, 429 NW2d
458,462(S.D. 1988)("Whether an agency relationship has in fact been created depends
upon the relations ofthe parties as they exist under their agreement or acts."){citing id. at
630).
Finally,'"[a] principal is bound by acts of his agent under ostensible authority, to
those persons only who have in good faith, and without negligence'" been injured by the
^ Ostensible agency is in reality,"no agency at all," but rather is "in reality based entirely upon an estoppel."
Hartford Accident & Indem. Co. v. Bear Butte Valley Bank. 257 NW 642,644(S.D. 1934). As noted by a leading
agency treatise cited favorably by the South Dakota Supreme Court in Dahl v. Sittner. 429 NW2d 458(S.D. 1988):
"Apparent authority is authority imposed by equity; it was jurisprudentially created to protect third parties from
unauthorized acts of an apparent agent." American Jurisprudence, Agency,§ 71 (2d Ed.). Because of
similarities in analysis and oftentimes presented together with actual authority, the two matters are often grouped
together under the umbrella of"agency."
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actions or broken promises ofthe agent. Haberer v. Radio Shack, a Div. of Tandy Corp..
555 NW2d 606, 609(S.D. 1996)(alteration in original){quoting SDCL 59-6-3). See also
Am. Prairie Const. Co. v. Hoich. 560 F.3d 780, 794(8th Cir. 2009)("'The third person
dealing with the agent, therefore, must show not only damages resulting from his reliance
on the appearance of authority, but also reasonable diligence and prudence in ascertaining
the fact ofthe agency and the nature and extent ofthe agent's authority.'")(interpreting
South Dakota law){quoting Dahl, 429 NW2d at 462). Thus, not only must(1) Watts
Guerra have caused a representation to Lundstrom that Homolka could make these
broken promises and bind the defendant, but plaintiff also (2) must have not been
negligent or acted in bad faith when being injured by this breach of contract. In regard to
a renewed motion for judgment as a matter of law, this Court bears in mind that "'the law
places a high standard on overturning a jury verdict because of the danger that the jury's
rightful province will be invaded when judgment as a matter oflaw is used.'"
Washington v. Dennev. 900 F.3d 549, 558 (8th Cir. 2018)(quoting Bavlsik v. Gen.
Motors, LLC. 870 F.3d 800, 805 (8th Cir. 2017)). Lundstrom's burden to prove that
there was ostensible authority will be viewed (1)in the light most favorable to bim as the
prevailing party;(2) with all conflicts resolved against Watts Guerra;(3)assuming all
facts that were in equipoise in the plaintiffs favor; and (4) giving the plaintiff the benefit
of all favorable inferences that this Court can reasonably draw from the facts presented at
trial. Rvan Data Exchange. Ltd. v. Graco. Inc.. 913 F.3d 726, 732-33 (8th Cir. 2019).
i. Whether There was Want ofOrdinary Care on Watts Guerra's Part
First, the Court must examine whether, under the deferential standard on a
renewed motion for judgment as a matter of law, Lundstrom met his burden to assert
Watts Guerra acted with want of ordinary care in its actions for plaintiff to believe Mr.
Homolka could make tbese binding (and broken) promises. Unlike for actual agency, the
critical inquiry here is the relationship between the actions and acquiescence of Watts
Guerra in the presence ofthe third party, Lundstrom.
Challenging for Lundstrom is the limited personal interaction between him and
Watts Guerra's attorney Mikal Watts. Mr. Watts did not have personal interaction with
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Lundstrom since 2014 and 2015, several years before the series of facts that led to this
litigation. Further, Watts Guerra rightly points out there was no communications from
the defendant to Lundstrom asserting Homolka's ability to bind the law firm beyond the
approved expenses. But that is only half the inquiry.
From the outset oftheir business dealings. Watts Guerra and the Homolka
defendants offered patently false assertions of legal ethics rules barring them from
offering a written agreement to Lundstrom. The defendants claimed they could not enter
a contract with a non-attorney out of concerns of sharing legal fees with a non-lawyer
like Lundstrom. But Lundstrom's asserted breaches of contract had nothing to do with
the outcome ofthe litigation: the truck reimbursement and the web-leasing payments
were in no way hinging upon the outcome of the Syngenta litigation. Further, even the
purported non-discretionary bonus, as articulated by the plaintiff, had nothing to do with
the ultimate settlement or verdict of the Syngenta work; instead, it was based upon
signing up six million eligible acres, not on the ultimate disposition of the lawsuits.
Watts Guerra is a sophisticated law firm, one ofthe most respected mass tort firms in the
country; this fundamental error on informing Lundstrom of applicable legal ethics rules is
the first step on the firm's path to becoming wanting in ordinary care with its subsequent
dealings.'^ True, plaintiff has previously asserted that Homolka is the one who stated the
arrangement could not be on paper. ^Plaintiff's Brief in Opposition to
Defendants Daniel M.Homolka,P.A.and Daniel M.Homolka's Motion for
Summary Judgment, doc. 97 at 10. However, under the deferential standard of review
this Court must apply on a Rule 50(b) motion. Watts Guerra's acquiescence to a non-
written arrangement for Lundstrom's marketing efforts without taking corrective action
The rules of professional conduct are as clear in South Dakota as they are in defendant's home state of Texas. See
Texas Disciplinary R.of Prof. Conduct 5.04. And even if the jury did find merit in plaintiffs argument
concerning the bonus(which is questionable based on the ultimate award of damages provided), that still would not
be a violation of rules of professional conduct here in South Dakota or in defendant's home jurisdiction. See Reich
& Binstock. LLP v. Scates. 455 SW3d 178, 182(Tex. App. 2014)(analyzing Comment 3 to Rule 5.04, explaining
that a bonus "does not constitute the sharing of legal fees if the bonus is neither based on a percentage ofthe law
firm's profits or on a percentage of particular legal fees."){quoting TEXAS DISCIPLINARY R. OF PROF. CONDUCT
5.04, Cmt.3.) Lundstrom's alleged bonus was directly tied to signing up six million eligible acres, not on the final
disposition ofthe Syngenta litigation.
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was wanting in ordinary care. See Dakota Provisions, LLC v. Hilishire Brands Co.. 226
F. Supp. 3d 945, 953 (D.S.D. 2016)("[T]he evidence should indicate that the principal,
by its representations or actions, caused a third party to believe that a person was its
agent.")(emphasis added)(citins Kasselder v. Kapperman. 316 NW2d 628,630(S.D.
1982)).
It is worth noting the inconsistent method of payment for Lundstrom's Aliant
Media entity. Instead of operating under a uniform method of compensation by one
specific firm, there appears to have been alternating sources of payment. For example,
while in 2015 Watts Guerra signed Lundstrom's 1099-Misscelaneous Income form,
Daniel M.Homolka, P.A. would pay Aliant for expenses sourced from January 2016-
December 2017. Compare Exhibits 6, 10. And under the highly deferential standard of
review that this Court must apply, it must give Lundstrom the benefit of all favorable
inferences, even if it would have ruled differently than the jury on questions of ostensible
agency. While plaintiff wrongly argues in its opposition brief that this Court should look
at "the communications between Homolka and others" for findings of apparent authority,
instead ofthe actual test of representations or actions between Watts Guerra and
Lundstrom for questions of delegating managerial authority, he nevertheless has met his
burden when assessed under Rule 50's standard. Brief in Opposition to Watts
Defendants' Renewed Motion for Judgment as a Matter of Law, doe. 201 at 12-
13(emphasis added). Because Lundstrom was not paid by a single source and was
instead Watts Guerra allowed the plaintiff to receive compensation from both law firms
void of any written agreement. The defendants made it a cognizable question of fact
whether Mr. Homolka could bind Watts Guerra on the broken promises.
Watts Guerra offers ample evidence from Lundstrom himself on who the plaintiff
thought he was dealing in business. In what appears contradictory to the core of
Lundstrom's case against this defendant, he emailed Mr. Rob Roos on April 23, 2016,
stating "my agreement was not with Mikal [Watts'] & we always knew there was the
possibility of[Mr. Watts' unrelated indictment]. The verbal agreement was made
between yoM and I[sic] Dan [Homolka] in the Hovland/Rasmus law office." EXHIBIT 75
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(emphases added). Seven months later, paid by different sources, Lundstrom again made
a similar assertion; when emailing Mr. Homolka he wrote "I understand all that happened
with Mikal, but our deal, the one you and I made didn 't involve him ... It wasjust you &
me" Exhibit 49(emphases added)(alteration in original). While this Court finds these
statements damning, it is not enough to toss aside the jury's verdict under all the facts,
ii. Whether Lundstrom Acted in Good Faith and was not Negligent
Next, under the deferential view this Court must take on a renewed motion for
judgment as a matter of law, Lundstrom put forward sufficient evidence to meet his
burden that he acted in good faith and was not negligent for believing Mr. Homolka could
bind Watts Guerra, viewed Ifom the perspective of Watts Guerra's representations and
actions directed at the plaintiff. When dealing with such a sophisticated law firm as
Watts Guerra, a farmer with a marketing background like Mr. Lundstrom could be within
the realm of reason to believe its partner professional association's principal attorney
could make such binding financial promises related to the joint litigation efforts. This is
especially so when measured against the assertions that any agreement could not be
written due to false arguments about legal ethics and fee-splitting. Similarly, the jury
could have found that Lundstrom was acting in good faith in believing Mr. Homolka
could bind Watts Guerra to some ofthese broken promises.
This Court cannot invade the province of the jury simply because it would have
found differently on the question of ostensible agency. Rather, the Court is bound to first
consider this evidence in the light most favorable to the prevailing party, Lundstrom.
Letterman v. Does, 859 F.3d 1120, 1124 (8th Cir. 2017). When doing so. Watts Guerra's
acquiescence for perceptions ofjoint managerial authority with Mr. Homolka when both
would sign compensation-related documents for Lundstrom's Aliant Media, among the
other evidence presented by the plaintiff at trial, could be found by the jury that there was
a wanting of ordinary care, even though plaintiff made repeated contradictory assertions
over email. Second, this is supported by resolving conflicts in the evidence -
representations ofjoint managerial authority and ability to make financial contributions
and promises to Lundstrom measured against plaintiffs own damning messages - in
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Lundstrom's favor and recognizing he may not have been negligent in his due diligence
when hampered by a lack of any written agreement. Id. The testimony and evidence
presented by Lundstrom at trial could have proved this authority on the part of Mr.
Homolka to bind Watts Guerra, when giving the plaintiff the benefit of all favorable
inferences that can reasonably be drawn. While the evidence perhaps tilted in favor of
Watts Guerra when only looking at the relationship between Watts Guerra and
Lundstrom, not the actions or representations of Homolka himself, it was not'"so one
sided that [the defendant] must prevail as a matter oflaw.'" Axelson v. Watson. 999 F.3d
541, 546(8th Cir. 2021)(quotin2 Kinserlow v. CMI Corp.. 217 F.3d 1021, 1025 (8th Cir.
2000)).
IV. CONCLUSION
There are great risks to oral contracts. We see that "in spades" here. Over time
members ofthe contract may remember promises - or their very existence - differently.
See Inf1 Auction & Appraisal. LLC v. R & M Metals. Inc.. 2010 WL 4181457, at *7
(M.D. Pa. Get. 20, 2010)(warning the danger of oral contracts and how they are "subject
to both the vagaries of human recollection, and the limitations ofthe spoken word as a
vehicle for communicating subtle, complex concepts."). This bout of litigation proves
the point many times over. If Mr. Lundstrom was simply offered a written agreement
from these two sophisticated law firms from the inception of this working relationship,
this suit likely never would have occurred, and Watts Guerra would not have needed to
devote its resources to defending this breach of contract.
While the evidence did not permit the jury to establish an actual agency
relationship for Mr. Homolka to bind Watts Guerra on these broken promises, it did allow
for some liability under an ostensible agency theory. This Court cannot supplant its own
views for that of the jury. See Washington v. Dennev,900 F.3d 549, 558 (8th Cir. 2018)
("'[T]he law places a high standard on overturning a jury verdict because of the danger
that the jury's rightful province will be invaded when judgment as a matter oflaw is
misused.'")(quotins Bavlsik v. Gen. Motors. LLC. 870 F.3d 800, 805 (8th Cir. 2017)).
Under the deferential standard owed to the jury's verdict on a renewed motion for
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judgment as a matter of law, Lundstrom met his burden on establishing a theory of
ostensible ageney based upon the representations and aetions of Watts Guerra directed
towards him. Accordingly, the province of the jury should not be invaded in this matter.
IT IS HEREBY ORDERED that defendant Watts Guerra LLP's renewed motion
for judgment as a matter of law. Doe. 197, is denied.
DATED this day of February, 2022.
BY THE COURT;
CHARLES B. KORNMANN
United States District Judge
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