Phil Rosemann v. Martin Sigillito

Phil Rosemann appeals the district court's adverse grant of summary judgment

in this diversity action alleging legal malpractice against now-disbarred attorney

Martin Sigillito. We agree with the district court that in negligence cases like this

one, Missouri law requires expert-witness testimony about the duty of care owed.

Without providing an expert, Rosemann's claim is invalid. Thus, we affirm the

judgment.2

I. Background

The following facts are construed in the light most favorable to Rosemann, the

non-moving party. Quinn v. St. Louis County, 653 F.3d 745, 750 (8th Cir. 2011).

Rosemann hired Sigillito in 2002 to help him invest millions of dollars from the sale

of Rosemann's shares in a family business, after Sigillito falsely informed Rosemann

that he was an expert in international investments. Sigillito assured Rosemann that

there would be no risk in investing the money in a foreign company and that

Rosemann's interest would be protected. As part of this investment, Sigillito charged

Rosemann $15,000 to incorporate Braithwaite Consulting Limited, a Belize company;

Braithwaite purportedly would invest the money to reduce taxes on the investment.

Rosemann was elected director and secretary of Braithwaite.

In January 2007, Rosemann received a $15.6 million buyout from the sales of

shares of his family's company. Sigillito instructed Rosemann to loan $5 million of

the buyout to METAG Insaat Ticaret A.S., a Turkish contractor, referred to by both

parties as "Metis.” When Rosemann resisted, Sigillito told him "the loan was

guaranteed by [North Atlantic Treaty Organization] contracts and that Sigillito would

structure the deal to protect Rosemann and defer taxes.” Sigillito assured Rosemann

the NATO contracts could be seized if Metis did not repay the loan. Rosemann

transferred the entire $15.6 million to Sigillito, who then wrote a $5 million check to

Metis. For that service, Sigillito charged Rosemann $100,000. Sigillito took other

portions of the $15.6 million for his own use and loaned $10.8 million to another

party in England. Only approximately $2.75 million was repaid.

2We have jurisdiction over this appeal under 28 U.S.C. § 1291.

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Two years later, in January 2009, Metis defaulted on the loan. In

September 2009, Metis filed for bankruptcy protection in Turkey. Sigillito filed suit

against Metis but assigned Braithwaite's interest to a St. Louis-based company owned

by Sigillito. The district court in St. Louis transferred that lawsuit to New York

because of venue problems. The suit eventually was dismissed. The loan remains in

default, and according to Rosemann, the total owed in principal and interest is

$7,464,041.

In April 2012, Sigillito was convicted of nine counts of wire fraud, four counts

of mail fraud, six counts of money laundering, and one count of conspiracy to commit

mail and wire fraud. He was sentenced to a total term of 480 months' imprisonment.

See United States v. Sigillito, 759 F.3d 913, 922 (8th Cir. 2014).3 After Sigillito's

convictions, Rosemann brought this suit against Sigillito for legal malpractice

regarding the handling of Rosemann's investments.4

Rosemann alleged in his complaint that the NATO contracts do not exist, and

thus Rosemann was unable to recover the loaned $5 million. Rosemann says he

"justifiably relied” on Sigillito's assurance that the contracts existed and that the

investment was risk-free. He says he would not have entered into the loan had he

3Sigillito moved in this court to exclude any reference in Rosemann's brief to

Sigillito's criminal trial. We may take judicial notice of judicial opinions, especially

our own, and thus may reference the fact of Sigillito's conviction and his sentence in

our consideration of this case. See Stutzka v. McCarville, 420 F.3d 757, 760 n.2 (8th

Cir. 2005). Because we need not rely on the challenged section of Rosemann's brief

to consider the merits of this appeal, we dismiss Sigillito's motion to strike as moot.

See Stewart v. Prof'l Computer Ctrs., Inc., 148 F.3d 937, 940 n.3 (8th Cir. 1998).

4This suit, filed only by Rosemann and against only Sigillito, was preceded by

a class-action suit by numerous plaintiffs, including Rosemann and Braithwaite,

against numerous defendants, including Sigillito. The district court consolidated the

cases for discovery purposes but not for trial purposes.

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known that it was not guaranteed, and as a result of Sigillito's negligence in

completing the loan, Rosemann suffered damages.

After discovery had concluded, Sigillito filed a motion in limine to exclude

various sections of Rosemann's complaint, a trial brief, and a motion to strike

witnesses. Relevant to this appeal, Sigillito moved to exclude any evidence of his

alleged malpractice because, he asserted, Missouri law requires expert testimony to

establish a claim of legal malpractice, and Rosemann had failed to name an expert.

Because Rosemann had not named an expert to testify regarding Sigillito's alleged

negligence in handling the $5 million loan to Metis, Sigillito concluded, any evidence

about that subject should be excluded.

The district court informed the parties that it planned to convert Sigillito's three

filings collectively into a motion for summary judgment and ordered Rosemann to

respond with his own trial brief, addressing why Braithwaite was not a named

plaintiff and why he had not named an expert witness. The court also ordered

Rosemann to respond to the arguments in Sigillito's motion in limine. Rosemann did

not object to the court's proposed course of action.

The court held a telephone status hearing on Rosemann's response and

Sigillito's reply to the response and, one week later, issued a written order granting

summary judgment for Sigillito. Although Rosemann sought to add a claim for

negligent misrepresentation, the court rejected that new claim because Rosemann had

attempted to add the claim in his amended jury instructions, which were struck by the

court when Rosemann filed them past the deadline for proposed jury instructions.

Additionally, nothing in Rosemann's complaint suggested he would "pursue separate

claims for negligent misrepresentation and legal malpractice.” Thus, the court

concluded, the "only possible claim in this case is a professional negligence claim.”

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The district court reviewed the law on professional negligence in Missouri,

which governs in this diversity suit. See Payne v. Grinnell Mut. Reinsurance Co., 716

F.3d 487, 490 (8th Cir. 2013). With few exceptions, the court noted, "an expert

witness is generally necessary to tell the jury what the defendant should or should not

have done under the particular circumstances.” One relevant exception, the court

added, is when the alleged negligence is "clear and palpable.” But the court rejected

application of that exception because in cases allowing it, a jury of lay persons could

determine a party's negligence without additional information. The court compared

that scenario with this case, in which an expert would be necessary to testify

regarding "whether Rosemann would have recovered the amount due on the loan if

not for Sigillito's alleged negligence.”

In this case, the district court explained, Rosemann is not alleging a simple

situation of negligence: Rosemann is not saying that Sigillito was negligent because

he falsely told Rosemann the loan was guaranteed by the NATO contracts, which

acted as collateral. Instead, the court concluded, Rosemann is alleging that Sigillito

negligently advised him that the loan was a safe—i.e., not risky—investment because

there were assets that could be seized in case of a default. That second situation, the

court continued, raises a complex question, the answer to which requires a showing

(1) whether Sigillito exercised the appropriate standard of care when investigating

whether the collateral existed and when attempting to seize assets after Metis

defaulted, and (2) that Rosemann would have recovered on the defaulted loan but for

Sigillito's negligence. That claim was not submissible to a jury, the court ruled,

because Rosemann failed to name an expert who would testify about the appropriate

standard of care. Thus, the court granted Sigillito summary judgment.

II. Discussion

On appeal, Rosemann argues that his complaint focuses on Sigillito's false

representation that the Metis loan was guaranteed by the NATO contracts. An expert,

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Rosemann asserts, is not required for that claim, which can be proven with

Rosemann's testimony that he relied on Sigillito's false advice. Thus, Rosemann

concludes, summary judgment improperly was granted to Sigillito, and the case

should have been presented to a jury.5

We review de novo the grant of summary judgment and may affirm the

judgment on any basis supported by the record. See Curtis Lumber Co. v. La. Pac.

Corp., 618 F.3d 762, 771 (8th Cir. 2010). Because this is a suit under diversity

jurisdiction, we apply the law of the forum state—here, Missouri. See Payne, 716

F.3d at 490 .

Rosemann's complaint frames the action as one of legal malpractice based on

negligence. To establish a claim of negligence under Missouri law, a plaintiff must

show, among other things, the existence of a legal duty and a breach by the defendant

of that duty. Freight House Lofts Condo Ass'n v. VSI Meter Servs., Inc., 402 S.W.3d

586, 597 (Mo. Ct. App. 2013). Missouri law also provides that in cases of

professional negligence, "the specific duty is defined by the profession, itself”; thus,

an expert witness is generally necessary to tell the jury what the

defendant should or should not have done under the particular

circumstances of the case and whether the doing of that act or the failure

Rosemann also contests the district 5 court's conversion of Sigillito's three

filings (motion in limine, motion to strike, and trial brief) into a motion for summary

judgment. The court notified the parties two months in advance that it planned to

convert the filings into a motion for summary judgment and ordered Rosemann to

demonstrate why summary judgment would be improper, even though the time to file

a resistance to Sigillito's motion had long since passed. In his response, Rosemann

did not object to the court's proposed action. Though the conversion was unusual,

we see no error in the district court's decision. See Madewell v. Downs, 68 F.3d

1030, 1048 (8th Cir. 1995).

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to do that act violated the standards of care of the profession (and, thus,

constituted negligence).

Ostrander v. O'Banion, 152 S.W.3d 333, 338 (Mo. Ct. App. 2004). The negligent act,

therefore, is the act or failure to act, the standards for which must be presented by an

expert. Id. at 338–39; Parra v. Bldg. Erection Servs., 982 S.W.2d 278, 285 (Mo. Ct.

App. 1998). Expert testimony also is required in actions alleging legal malpractice.

See Roberts v. Sokol, 330 S.W.3d 576, 581 (Mo. Ct. App. 2011). "To establish that

an attorney was negligent, a plaintiff must show that he failed to exercise that degree

of skill and diligence ordinarily used under the same or similar circumstances by

members of the legal profession.” Id. at 580 (quotation omitted).

There are exceptions to this rule. Expert testimony is not required if the

negligence in question is "clear and palpable to a jury of laymen.” Zweifel v. Zenge

& Smith, 778 S.W.2d 372, 374 (Mo. Ct. App. 1989); see Hart v. Steele, 416 S.W.2d

927, 932 (Mo. 1967) (explaining exception to expert-testimony requirement applies

if "the want of skill or lack of care is so apparent as to be within the comprehension

of laymen and requires only common knowledge and experience to understand and

judge it”). A claim of legal malpractice would not require expert testimony if, for

example, a lawyer failed to file a claim within the statute of limitations or allowed

"some other time limit to pass.” See Zweifel, 778 S.W.2d at 374.

In his complaint, Rosemann alleged that Sigillito negligently prepared the

Promissory Note sent from Braithwaite—a Belize corporation—to Metis—a Turkish

contractor. That is not the same argument Rosemann proffered to this Court during

oral argument that Sigillito simply lied about the existence of the NATO contracts.

To determine whether Sigillito negligently handled the Note, a jury would need to

know what an attorney, "under the same or similar circumstances,” would have done

and why Sigillito's actions were unacceptable. Roberts, 330 S.W.3d at 580. That

technical standard is similar to the standard allegedly not met by the attorneys in

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Zweifel, who did not raise on appeal the trial court's failure to instruct the jury about

excusable homicide. Both involve "somewhat arcane subjects to the ordinary juror,”

Zweifel, 778 S.W.2d at 374, subjects that go beyond the "common knowledge and

experience” of most lay persons, Steele, 416 S.W.2d at 932. Because the alleged lack

of care would not be "clear and palpable” to most lay persons in this case, this

exception does not apply.

Rosemann alternatively argues that Sigillito's negligence would be within the

"common knowledge” of the jury, thus invoking another potential exception to the

requirement of expert testimony in cases alleging professional negligence. But the

cases Rosemann cites in support of this argument are distinguishable because they

discuss a professional who did not adhere to a contract or guide, rather than a

particular standard of care. In Aetna Ins. Co. v. Hellmuth, Obata & Kassabaum, Inc.,

392 F.2d 472 (8th Cir. 1968), the alleged negligence concerned a contractor who

failed to supervise the filling of a sewer ditch, as was required under contract; to

correct misaligned forms used to retain and support a poured concrete wall; and to

recognize that a sewer pipe was improperly positioned and crooked. We held that a

jury could understand these "commonplace factual situations,” and thus no expert

witness testimony was needed. Id. at 478. Similarly, in Jaeger v. Henningson,

Durham & Richardson, Inc., 714 F.2d 773, 775 (8th Cir. 1983), an architect followed

the directions in a shop drawing to craft a steel landing pan with 14-gauge steel and

no angle stiffeners, even though earlier specifications required that the landing pad

be fabricated from 10-gauge steel with angle supports. We concluded that the action

against the architectural firm was one for negligent failure to supervise the shop

drawings; because a jury of laypersons alone could determine whether failure to

supervise an employee was negligent, the case did not require expert testimony on the

appropriate standard of care. Id. at 776; see also Bartak v. Bell-Galyardt & Wells,

Inc., 629 F.2d 523, 530 (8th Cir. 1980) (noting that action for negligence in

supervision of architects "come[s] within the 'general knowledge' exception” to

requirement of expert testimony).

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Sigillito did not simply fail to follow instructions, a guide, or written

specifications. Instead, by Rosemann's own words, Sigillito allegedly failed to

exercise "the reasonable degree of knowledge and skill that is ordinarily possessed

and exercised by attorneys in the preparation of a Promissory Note between two

foreign corporations.” Whatever knowledge or skill Sigillito allegedly should have

had to prevent the collapse of the loan and loss to Braithwaite of $5 million is not

obvious or common knowledge; rather, it is technical and based on the nature of the

deal and the profession. Whether Sigillito improperly followed that standard requires

the testimony of an expert in international law and/or international transactions.

We thus agree with the district court that Rosemann was required to name an

expert who would testify regarding the proper standard of care in this case.

Rosemann's failure to name an expert, under Missouri law, rendered his claim of

professional negligence not submissible.6

Last, Rosemann asserts that his complaint contained a claim for negligent

misrepresentation, which would not require expert testimony regarding the standard

of care. Rosemann attempted to add this claim in his amended jury instructions,

which he filed almost two weeks after the district court's imposed deadline for filing

jury instructions. The court struck Rosemann's amended instructions and ordered the

parties to consult with each other to develop proper joint instructions. Rosemann

persisted in this claim, but the court concluded that any potential claim for negligent

misrepresentation was properly treated as a claim for professional negligence.

Under Missouri law, when liability depends on an attorney's "negligent

performance of professional services” to a client, the claim must be treated as one for

Sigillito asserts Rosemann is not the proper plaintiff 6 to bring this suit.

Because we affirm the district court's judgment on a different basis, we, as the district

court did, decline to address this argument.

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attorney malpractice (i.e. professional negligence). Beare v. Yarbrough, 941 S.W.2d

552, 557 (Mo. Ct. App. 1997) (citing Donahue v. Shughart, Thomson & Kilroy, P.C.,

900 S.W.2d 624, 629–30 (Mo. banc 1995)). In other words, a party may not clothe

an attorney-malpractice claim as a claim of breach of contract or breach of a fiduciary

duty. Donahue, 900 S.W.2d at 629–30; see also Klemme v. Best, 941 S.W.2d 493,

496 (Mo. banc 1997) ("If the alleged breach can be characterized as both a breach of

the standard of care (legal malpractice based on negligence) and a breach of a

fiduciary obligation (constructive fraud), then the sole claim is legal malpractice.”).

We agree with the district court's conclusion. The basis for Rosemann's claims

is that Sigillito mishandled the Promissory Note, failed to protect Rosemann from

risk, and otherwise committed legal malpractice. Rosemann labeled the headings in

his complaint "Pre-Loan Negligence” and "Post-Default Negligence”; nowhere is

"misrepresentation” discussed. Rosemann does allege that "Sigillito violated his

fiduciary obligation to Rosemann, with incompetent or negligent behavior.” But this

allegation of a breach of a fiduciary duty is based only on Sigillito's alleged

"negligent behavior,” i.e. his malpractice. So although Rosemann characterizes the

alleged breach "as both a breach of the standard of care . . . and a breach of a

fiduciary obligation,” the only claim he can pursue, under Missouri law, is legal

malpractice. Klemme, 941 S.W.2d at 496.

For the reasons discussed above, we affirm the district court’s grant of

summary judgment in favor of Sigillito.