RYAN v. BELIN MCCORMICK LC (2021)

Court of Appeals of Iowa.2021-06-16No. No. 20-1016

Summary · law.co

Holding. The court affirmed the grant of summary judgment, holding that Ryan's broad release agreement barred his fraud claims against Belin and Risewick because Ryan had actual knowledge of the facts supporting his fraud theory before signing the settlement, and his malpractice claim against Belin and its attorneys failed as a matter of law because professional conduct rule violations do not automatically create civil liability.

Mike Ryan, an inventor and patent holder, sued the Belin McCormick law firm and two of its attorneys, alleging they conspired with his longtime investor Christopher Risewick to effectuate fraudulent settlements. Ryan had signed a broad release and settlement agreement in 2014 that purported to release all claims, both known and unknown, against the defendants. The district court granted summary judgment in favor of Belin and Risewick, finding that the release barred Ryan's claims. Ryan appealed, arguing that the settlement itself was procured through fraud—specifically, that discovery documents were withheld—and that violations of attorney professional conduct rules supported a malpractice claim.

The appellate court affirmed the district court's judgment. The court distinguished Ryan's reliance on precedent allowing collateral attacks on fraudulent settlements, noting that Ryan had knowledge of the facts underlying his fraud allegations as early as 2003 and had previously raised those concerns in his 2011 lawsuit against Risewick. Because Ryan was aware of the supposed fraud before executing the 2014 release yet chose to sign it anyway and release the claims, the court held he could not later attack the settlement on fraud grounds. The court also rejected Ryan's malpractice theory, finding that alleged violations of attorney ethical rules do not automatically create civil liability and that Ryan failed to adequately develop this argument in opposition to summary judgment.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a party may collaterally attack a settlement agreement based on intrinsic fraud when the party had prior knowledge of the alleged fraudulent conduct
Whether a broad release covering all claims 'known or unknown' prevents subsequent fraud claims
Whether violations of attorney professional conduct rules establish civil liability for malpractice absent additional showing of damages

Procedural posture

The district court granted summary judgment in favor of Belin McCormick and Christopher Risewick on Ryan's claims for fraudulent settlement and attorney malpractice, and Ryan appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

“Mike Ryan has shown to be a tireless litigant.”

So argued counsel representing the Belin McCormick law firm (Belin) at the hearing on its motion for summary judgment. In this litigation, Ryan—an inventor and patent holder—accuses Belin and two of its attorneys of conspiring with his long-time investor, Christopher Risewick, to reach fraudulent settlements. Risewick also moved for summary judgment. The district court granted those motions, reasoning that the release and settlement agreement Ryan signed barred his claims.

Because we approve of the reasons and conclusions in the district courts ruling, we affirm in this memorandum opinion. See Iowa Ct. R. 21.26(1)(d), (e).

It would detract from the streamlined format of this opinion to present an exhaustive history of the business entanglements between Ryan and Risewick. Its enough to say that “Risewick and his company, Seneca Distribution, L.C. were long-time clients of Belin. Beginning in 1999, Seneca began investing in Rydex, which held patents concerning a wireless fluid delivery control system. Belin performed legal work pertaining to the relationship between Seneca and Rydex.” Ryan v. Belin McCormick, P.C., No. 16-1345, 2018 WL 348089, at *1 (Iowa Ct. App. Jan. 10, 2018) (footnote omitted). In that action, Belin admitted having an attorney–client relationship with Rydex for certain matters between 2000 and 2006. Id.

By 2007, Risewick had advanced over one million dollars to Ryans patent projects. Their shifting business structure led to a series of disputes. Those disputes came to a head in 2011 when Ryan sued Risewick for breach of fiduciary duty, interference with business prospects, and negligent and fraudulent misrepresentation. Represented by Belin, Risewick counterclaimed to enforce a promissory note and forbearance agreement. In October 2012, Ryan and Risewick jointly consented to judgment of $1,786,794 in favor of Risewick. Then in March 2014, Ryan signed a release and settlement agreement. That agreement included broad terms, releasing the parties from liability for all claims “whether known or unknown.” That agreement also reduced the remaining amount Ryan owed on the 2012 judgment to $550,000.

Now, seven years later, that agreement fuels this litigation. Ryan contends he has a valid claim for fraudulent settlement against Risewick and Belin. He asserts withholding discovery documents was fraud. See Phipps v. Winneshiek Cnty., 593 N.W.2d 143, 145 (Iowa 1999) (“[S]ettlement agreements are essentially contractual in nature․ [W]e utilize contract principles when interpreting settlement agreements and considering other challenges. Thus, like a contract, we enforce a settlement agreement absent fraud, misrepresentation, or concealment.” (citations omitted)). He relies on Phipps for the proposition that “a party who dismisses a petition with prejudice following a settlement of the issues in the case may maintain an action for intrinsic fraud perpetrated by the other party in the settlement and dismissal.” Id. at 147.

The district court distinguished Phipps. The court noted the Phippses were not aware of any fraud before voluntarily dismissing their personal injury lawsuit. By contrast, Ryan knew the facts underlying his fraud theory since 2003 and alleged fraud in his 2011 suit against Risewick. Ryan discussed the alleged fraud at various times with different attorneys representing him. As the district court analyzed, Ryan “had reason to believe fraud had occurred prior to entering into the subject release and settlement agreement, ․ therefore [he] cannot leave the release and settlement agreement in place and then pursue a claim that had already been released.” That analysis is compelling. Unlike the Phippses, Ryan knew the basis for his fraud claim against Risewick and Belin but chose to release it. See Thorton v. Hubill, Inc., 571 N.W.2d 30, 32–33 (Iowa Ct. App. 1997) (enforcing terms of settlement agreement). We share the district courts view that Phipps does not support Ryans claim. In any case, the agreement released all claims “known or unknown.” Ryans allegation of intrinsic fraud cannot be the basis for his collateral attack. See Phipps, 593 N.W.2d at 147.

In a separate division of his appellants brief, Ryan contests the dismissal of his malpractice claim against Belin and its attorneys. In his trial brief, Ryan alleged a litany of ethical breaches by several Belin attorneys. Ryan claimed he did not suffer damage from their malpractice until the settlement agreement. The district court held that alleged violations of professional-conduct rules did not lead to civil liability. See Iowa Sup. Ct. Atty Disciplinary Bd. v. Daniels, 838 N.W.2d 672, 678 (Iowa 2013). Now Ryan insists he has a valid claim against Belin and the attorneys beyond “a simple conflict of interest.” But he did not pursue that position in opposition to summary judgment. Like the district court, we see no genuine issue of material fact and agree that Belin and its attorneys are entitled to judgment as a matter of law.

Finding no grounds for reversal, we affirm without further opinion.

AFFIRMED.

FOOTNOTES

. Michael Ryan is the founder of Ryan Data Exchange (doing business as Rydex). For brevity, we will refer to the plaintiffs as Ryan.

. Along with fraud, Ryans petition alleged defamation, negligent misrepresentation, unjust enrichment, and breach of fiduciary duties. The district court found he abandoned those claims before the summary judgment hearing. Ryan did not contest that abandonment finding in the district court. Nor does he try to resurrect those claims on appeal.

TABOR, Presiding Judge.