UPDATED: Court revives malpractice claim against Husch

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UPDATED with information from interview with plaintiff’s attorney.

 A Missouri appeals court resuscitated a claim that Husch Blackwell attorneys’ advice on stock options cost a former software company CFO millions of dollars.

The Missouri Court of Appeals Western District reversed a Jackson County Circuit Court judge’s summary judgment on one claim by former MTW Corp. CFO Brian Nail but upheld the dismissal of another.

The three-judge panel on Tuesday sent back to the trial court Nail’s claim that Husch Blackwell attorneys gave him negligent advice on how to handle the exercise of stock options when his old company merged with a British company. They upheld a summary judgment on a claim that a settlement of the stock option issue was negligently drafted.

Nail claimed that Husch partner Steven Carman and Jon Ploetz, a former associate, should have told him it would be a good idea to try to exercise his stock options after he learned the stock-for-stock merger would affect his option rights. At the time, the attorneys were with predecessor firm Blackwell Sanders, said Nail’s attorney, Timothy Monsees, of Kansas City firm Monsees & Mayer. Claims were dismissed against the attorneys to pursue the case against Husch Blackwell, he said.

The 2001 merger with The Innovation Group called for a one-year “lock up” period during which MTW shareholder Richard Mueller couldn’t sell or transfer any TIG stock he would acquire without board approval, said the opinion written by Judge Mark Pfeiffer and agreed to by Judges Gary Witt and Thomas Newton. The lock-up period was extended to 18 months, Monsees said. That included the stock to which Nail held options.

Nail claimed the Husch attorneys never told him trying to exercise his options immediately would establish that Mueller breached his separation agreement with Nail and establish a measure of damages.

The stock price fluctuated between $8.5 million to “well in excess” of $10 million during the time it would have been relevant to exercise the options, a footnote in the opinion said. Nail, who could have gained as much as $14 million during the peak trading time, instead was able to periodically sell some shares and “salvaged a few hundreds of thousands” of dollars, Monsees said. Nail presented a claim backed up by expert testimony that was qualified to go in front of a jury, the judges said. His claim that a settlement agreement with Mueller was negligently drafted, however, was “nothing but unreasonable conjecture and speculation,” the opinion said.

Larry Ward, a Polsinelli attorney representing Husch, did not return a phone call by press time.

Jefferson City-based MTW, which provides grant management software for state agencies, exited the merger with TIG in 2005 and is now privately-held MTW Solutions, according to the company’s website.

The case is Brian Nail v. Husch Blackwell Sanders, WD75250.