## Facts

- Patrick T. Manion, Jr. worked to form a boat-dealer buying cooperative and retained attorney Stephen E. Nagin and associated law firms in connection with creating Boat Dealers’ Alliance, Inc. (BDA).
- Nagin incorporated BDA and prepared its bylaws and Manion’s employment agreement to manage BDA.
- The bylaws allocated general management/voting control to common-stock holders and restricted voting rights of preferred-stock holders; Manion held preferred stock and questioned whether he would control BDA.
- Nagin received additional compensation tied to enhanced dividends from BDA, which Manion alleged reduced what he otherwise would have received.
- About three years later, BDA terminated Manion after allegations of serious misconduct.
- In arbitration between Manion and BDA, the arbitrator found Manion fraudulently overpaid himself (and others), tried to conceal the conduct, acted in bad faith against BDA’s interests, and was properly terminated; the award was final and binding.
- After losing in arbitration, Manion sued Nagin and the law firms in federal court alleging legal malpractice/negligence, breach of fiduciary duty, and tortious interference with contract, claiming Nagin acted as his personal attorney and caused or enabled Manion’s loss of control and termination.
- The defendants asserted, among other defenses, that they represented BDA (not Manion), and that the arbitration findings collaterally estopped Manion’s claims.
- The district court dismissed the complaint; Manion appealed.

## Issues

1. Whether factual determinations essential to the prior arbitration award precluded Manion from litigating tortious interference, malpractice/negligence, and fiduciary-duty theories based on an allegedly wrongful termination and related harms.
2. Whether Manion plausibly established an attorney–client or fiduciary relationship running to him personally, as distinct from representation of BDA as an entity.
3. Whether, under applicable state law, Manion stated viable claims for malpractice, breach of fiduciary duty, or tortious interference given the arbitration’s findings and the asserted duty and causation elements.

## Decision

- The Eighth Circuit affirmed dismissal of all claims.
- The court held that the arbitration award had issue-preclusive effect as to findings actually litigated and necessary to the award, including Manion’s bad faith and the justification for his termination.
- Those precluded findings defeated Manion’s theories to the extent they depended on relitigating whether he was wrongly terminated or harmed by others’ unjustified actions.
- The court concluded Manion failed to establish that Nagin owed him personal attorney–client or fiduciary duties; Nagin’s professional obligations were confined to representation of BDA.
- Even assuming some duty to Manion, the claims were not viable because they would require imposing liability on counsel for failing to protect Manion from consequences of Manion’s own adjudicated misconduct.

## Legal Principles

- A final arbitration award may support collateral estoppel (issue preclusion) in later litigation when the party had a full and fair opportunity to litigate, and the issue was actually decided and necessary to the award.
- Issue preclusion bars later claims that depend on factual premises inconsistent with the prior adjudication (e.g., recasting a justified termination as wrongful through tort or malpractice labels).
- A lawyer representing an organization generally owes duties to the entity, not to promoters, officers, or shareholders, absent a distinct attorney–client relationship or specific undertaking to represent the individual.
- Malpractice and fiduciary-duty claims require a duty running to the plaintiff and causation; adjudicated findings of the plaintiff’s fraud or bad faith may defeat causation and foreclose liability theories seeking to shift responsibility for resulting consequences to counsel.

## Conclusion

The court affirmed dismissal because the arbitration’s binding findings that Manion acted in bad faith and was properly terminated precluded relitigation central to his tort and malpractice theories, and because corporate counsel’s duties ran to BDA rather than to Manion individually; in any event, the law did not support holding counsel liable for failing to prevent consequences flowing from Manion’s own adjudicated misconduct.


Manion v. Nagin, 394 F.3d 1062 (8th Cir. 2005)