## Facts

- Jerry’s Enterprises, Inc., a grocery-store operator, retained Larkin, Hoffman, Daly & Lindgren, Ltd., and its attorneys to assist in acquiring and developing two parcels of property in Woodbury, Minnesota, including a parcel owned by Bruggeman.
- The negotiated option agreement for the Bruggeman parcel contained a buy-back provision allowing Bruggeman to repurchase if Jerry’s failed to develop within two years after exercising the option, at a price covering purchase costs, improvements, taxes/assessments, and interest.
- At closing, the closing documents did not include the buy-back option, and Larkin did not research or advise Jerry’s whether the buy-back right would nonetheless survive closing under Minnesota’s merger doctrine.
- More than two years after closing, Bruggeman attempted to exercise the buy-back provision; Jerry’s refused, and Bruggeman sued to enforce it.
- In the enforcement litigation, the trial court ruled for Jerry’s on merger grounds, but the court of appeals reversed, holding that agreements to perform acts after closing are not merged into the deed.
- Jerry’s settled the enforcement dispute for $4.2 million to retain the property.
- Jerry’s then sued Larkin for legal malpractice, alleging failures to research, advise, and take transactional steps to eliminate or expressly extinguish the buy-back provision; Jerry’s presented expert testimony that Larkin fell below the standard of care.
- The trial court directed a verdict for Larkin at the close of Jerry’s case; the court of appeals reversed; the Minnesota Supreme Court granted review.

## Issues

1. Whether an attorney is categorically insulated from malpractice liability when the governing law was unsettled at the time of the representation.
2. Whether a jury could reasonably find breach of the professional standard of care where counsel allegedly failed to research, analyze, and advise the client about an unsettled legal issue affecting a transaction.
3. Whether the evidence was sufficient to preclude a directed verdict and require submission of the malpractice claim to a jury.

## Decision

- The Minnesota Supreme Court affirmed the court of appeals and held the directed verdict for Larkin was improper.
- Unsettled law does not automatically bar malpractice liability; the “error of judgment in unsettled law” protection applies only when the attorney actually exercised reasonable legal judgment.
- Viewing the evidence favorably to Jerry’s, a reasonable jury could find Larkin failed to research the merger question, failed to recognize and disclose legal uncertainty, and failed to advise or protect Jerry’s at closing.
- The case was remanded for further proceedings, including a jury trial on malpractice.

## Legal Principles

- An attorney is not liable for an error of judgment on an unsettled legal question only if the attorney exercised reasonable professional judgment (including appropriate research, analysis, and client advice) concerning that uncertainty.
- A lawyer may be liable for malpractice for failing to exercise legal judgment and for failing to inform the client of material legal uncertainty and associated transactional risk.
- A directed verdict is improper where, taking the evidence in the light most favorable to the nonmoving party, reasonable jurors could find negligence, causation, and damages.
- In real-estate practice, counsel’s standard of care may require addressing whether contractual obligations will survive closing and advising the client about steps to eliminate or allocate that risk.

## Conclusion

The court held that unsettled law does not immunize attorneys from malpractice claims when the evidence permits a finding that counsel failed to exercise reasonable legal judgment—by not researching the issue, not recognizing uncertainty, and not advising the client—so the malpractice claim had to be decided by a jury rather than disposed of by directed verdict.


Jerry’s Enters., Inc. v. Larkin, Hoffman, Daly & Lindgren, Ltd., 711 N.W.2d 811 (Minn. 2006)