Ginter ex rel. Ballard v. Belcher, Prendergast & Laporte
| Decision Date | 18 July 2008 |
| Docket Number | No. 07-30201.,07-30201. |
| Citation | 536 F.3d 439 |
| Parties | Lisa Marie GINTER, on behalf of her minor child, Rachel Elizabeth BALLARD; Paul Edward Ginter, Plaintiffs-Appellees, v. BELCHER, PRENDERGAST & LAPORTE; Fred H. Belcher, Jr., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Jerald P. Block, Matthew F. Block (argued), Block Law Firm, Thibodaux, LA, for Plaintiffs-Appellees.
John Conway Miller (argued), Maricle & Associates, Mandeville, LA, Jennifer Aaron Hataway, Kantrow, Spaht, Weaver & Blitzer, Baton Rouge, LA, for Defendants-Appellants.
Before REAVLEY, SMITH and DENNIS, Circuit Judges.
Paul and Lisa Ginter, husband and wife, hired Fred Belcher (an attorney) to help guide them through Louisiana's complicated process for adopting a child. The attorney-client agreement memorializing Belcher's representation contained a forum-selection clause requiring that any suit related to the contract be filed in Louisiana state court. After a dispute arose between the parties, however, the Ginters filed suit in federal court. Belcher moved to have the case dismissed, citing the forum-selection clause. The district court held that the clause was unenforceable and certified the decision for interlocutory appeal under 28 U.S.C. § 1292(b). We accepted the appeal and now enforce the forum-selection clause.
The Ginters, residents of South Carolina, hired Belcher — a family law attorney at Belcher, Prendergast & Laporte in Louisiana — to assist them in the adoption of a child. Later, the Ginters adopted a second child and Belcher again represented them. With respect to the second adoption, the agreement between the Ginters and Belcher contained a choice-of-law provision (Louisiana law would govern) and a choice-of-forum provision ("Any action at law, suit in equity, or other judicial proceeding for the enforcement and/or breach of this contract, or any provision thereof, shall be instituted only in the 19th Judicial District Court of the State of Louisiana."). Belcher did not suggest to the Ginters that they seek independent counsel to review the fee agreement. The Ginters, however, did have the opportunity to ask questions.
The Ginters filed this suit against Belcher and his law firm in federal district court in Louisiana after it was determined the second child suffered from fetal alcohol syndrome because of the birth mother's use of illegal drugs and alcohol. The Ginters alleged that Belcher had made misrepresentations (both negligent and intentional) about the health of the birth mother and that he had breached his fiduciary duty to them by failing to thoroughly investigate the mother's health.
Belcher responded by filing a motion to dismiss. He argued, among other things, that the choice-of-forum clause in the attorney-client agreement required the Ginters to file suit in the "19th Judicial District Court of the State of Louisiana," not federal court, as the Ginters had done. The district court denied the motion.
Our only issue is whether the forum-selection clause in the attorney-client agreement between the Ginters and Belcher is enforceable and requires this suit to be dismissed. We review the district court's decision to enforce the forum-selection clause de novo. Haynsworth v. The Corp.1 We hold that the forum-selection clause is enforceable and that the motion to dismiss should have been granted.
We begin with federal law, not state law, to determine the enforceability of a forum-selection clause.2 Under federal law, forum-selection clauses are presumed enforceable, and the party resisting enforcement bears a "`heavy burden of proof.'"3 In cases such as this one, where a litigant in federal court attempts to have a case dismissed based on a contractual provision requiring suit to be filed in state court, the forum-selection clause should be upheld unless the party opposing its enforcement can show that the clause is unreasonable.4 The clause might be unreasonable when, among other things, its inclusion is the product of "overreaching" or when its enforcement would "contravene a strong public policy of the forum state."5 If the contractual forum-selection clause is not unreasonable, we must determine whether it covers the tort claims at issue in this case. Marinechance Shipping Ltd. v. Sebastian.6
Two different reasons have been offered to rebut the presumption that the forum-selection clause here is enforceable — that it was the result of overreaching and that it is against Louisiana public policy. We address each in turn.
The district court invalidated the forum-selection clause because it determined that it was the result of overreaching. The court reasoned that the agreement at issue consummated a "business transaction" between the parties and therefore, Belcher — as an attorney — had a professional obligation to advise the Ginters that they should seek independent counsel. Because Belcher did not do that, the district court held that the forum-selection clause was the result of overreaching. To support its conclusion, the district court relied on Louisiana State Bar Association v. Bosworth, where the Louisiana Supreme Court upheld the suspension of an attorney who had entered into a loan agreement with a current client without advising the client to seek independent counsel.7 According to the court, "when a lawyer enters into a business transaction with his client where they have differing interests and when the client expects the lawyer to exercise his professional judgment in that transaction for the protection of the client, the lawyer should at least advise the client to seek outside counsel."8
But the agreement at issue in this case is not a separate "business transaction" between an attorney and client requiring application of the business-transaction rules; instead, all parties agree that it is merely an agreement consummating the attorney-client relationship.9 The Ginters had no reason to believe that Belcher was using his professional judgment to zealously protect their interests in the very agreement that memorialized their relationship. They might as well argue that Belcher had to look after their interests in determining how much he should be paid. Belcher did not overreach by failing to advise the Ginters that they should seek independent legal counsel before signing the attorney-client agreement.
The Ginters argue that even if the forum-selection clause was not the result of overreaching, it is unenforceable because it violates Louisiana public policy. The Ginters contend that the clause is a limitation on Belcher's malpractice liability, and Louisiana forbids its lawyers from entering into such agreements "unless the client is independently represented in making the agreement."10 Here, the Ginters were not separately represented, so if a forum-selection clause is a limitation on malpractice liability, it would be unenforceable as a violation of Louisiana public policy. We do not see this forum-selection clause as a limitation on malpractice liability.
The thrust of the Ginters' argument is that a forum-selection clause limits Belcher's liability because it forces the Ginters to litigate in a forum favorable to Belcher. The clause, if enforced, would require the Ginters — out-of-state plaintiffs — to file suit in Louisiana state court against a Louisiana attorney. The Ginters contend that as out-of-state plaintiffs they would be at a disadvantage to Belcher in Louisiana state court. Indeed, the need for diversity jurisdiction rests, in part, on the recognition that a "state tribunal might not be impartial between its own citizens" and citizens of another state.11 The potential advantage to Belcher is underscored by the fact that he is a local attorney. Thus, the Ginters argue, they are less likely to recover in state court, and Belcher's attempt to have this case litigated in state court is therefore a limitation on his malpractice liability.
Louisiana law is silent on the contours of what constitutes limiting malpractice liability. Nevertheless, we have some conceptual difficulty in stretching the concept of limiting liability to cover situations where an attorney selects a forum where he or she might have some conceivable advantage. Our skepticism is supported by examining how other jurisdictions have handled a related issue: whether including mandatory-arbitration provisions (a type of forum-selection clause) in an attorney-client agreement is a form of limiting malpractice liability. While no Louisiana authority has addressed this issue, we find Maine's treatment instructive. Maine's Professional Ethics Commission, in opining that attorneys may include arbitration provisions in their fee contracts without running afoul of their obligation not to include limitations on their malpractice liability, stated the following:
An agreement to limit liability is, in substance, an agreement that says that even though the lawyer errs in fulfilling certain duties to the client, the lawyer will not be liable to the extent that common and statutory law would otherwise make the lawyer liable. Perhaps if a particular forum had rules that themselves limited liability, then selection of such a forum could fairly be said to limit liability indirectly. Or if the arbitration agreement were a sham, such as an agreement to arbitrate before the lawyer's partner, then one could argue that its practical effect was to limit liability.12
Three members of the Commission dissented, arguing that arbitration provided subtle advantages to an attorney, "which potentially limit the attorney's liability for malpractice ...."13
We find the majority's reasoning persuasive and believe Louisiana courts would as well. A mandatory-arbitration clause (or any forum-selection clause) might in a particular case give the lawyer an advantage over the client. But a clause that has only the possibility of...
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