Babkow v. Morris Bart, PLC
| Decision Date | 16 December 1998 |
| Docket Number | No. 98-CA-0256,98-CA-0256 |
| Citation | 726 So.2d 423 |
| Parties | Grant M. BABKOW, D.C. v. MORRIS BART, P.L.C. |
| Court | Court of Appeal of Louisiana — District of US |
Pamela Brookey Lolan, New Orleans, La, For Plaintiff/Appellant.
Glenn Lieberman, Morris Bart, P.L.C., New Orleans, La, For Defendent/ Appellee.
Court composed of Judge DENIS A. BARRY and Judge JOAN BERNARD ARMSTRONG and Judge STEVEN R. PLOTKIN and Judge MOON LANDRIEU and Judge JAMES F. McKAY.
The sole issue in this appeal is whether the trial court judge properly applied the three-year prescriptive period relative to open accounts to an obligation arising out of a law firm's letter to a chiropractor assuring the protection of the chiropractor's "charges" for a client's chiropractic treatment out of anticipated settlement proceeds. Finding that the letter was a suretyship, the trial court sustained an exception of prescription in favor of the law firm, applying the three-year prescriptive period established by La. C.C. art. 3494 for suits on open accounts, based on the provisions of the La. C.C. art. 3060, which states that "prescription on the principle obligation extinguishes the obligation of the surety." Finding that the letter does not constitute a suretyship, we reverse the judgment dismissing the chiropractor's suit and remand to the trial court for further proceedings consistent with this decision.
Plaintiff, Grant M. Babkow, D.C., allegedly provided chiropractic services totaling $4,465 to Wallace Lane, a client of defendant Morris Bart, P.L.C.,1 between March 26, 1992 and October 27, 1992. On March 31, 1992, five days after Mr. Lane's initial treatment with Dr. Babkow, the Morris Bart law firm sent a letter to Dr. Babkow, which stated as follows:
The letter was signed by Kim Stevenson, Legal Assistant.2
Dr. Babkow claims that he contacted the Morris Bart law firm "numerous" times over the next few years, making sure that the Morris Bart law firm was aware of his ensuing address change. On June 10, 1996, Dr. Babkow reportedly received a check for $2,200 without accompanying correspondence.
Two days later, on June 12, 1996, Dr. Babkow received by facsimile correspondence from the Morris Bart law firm purporting to explain the disbursement of settlement funds. The letter explained that the defendants in the personal injury action had obtained a surveillance videotape which "seriously damaged Mr. Lane's case," then stated, in pertinent part, as follows:
A decision was made to accept a settlement offer which required drastic reductions in the charges and fees of all parties involved, including this office. Specifically, the attorney's fee was reduced by almost 60%. Of all of the medical providers, you were the only one who was paid for their services. All other medical providers wrote off their expenses.
The letter was signed by Wade Kee, Attorney at Law.
Dr. Babkow responded with a bill for the balance due on the account. Citing the March 31, 1992 letter quoted above, plus the fact that Mr. Lane had personally received more than $25,000, Dr. Babkow informed the Morris Bart law firm of his belief that he was due the balance on the account, totaling $2,265. Dr. Babkow also pointed out that no prior discussion concerning reduction of the charges had been attempted.
When the Morris Bart law firm failed to respond, Dr. Babkow contacted an attorney, who sent a demand letter to the firm, then filed the instant suit on December 18, 1996. The Morris Bart law firm answered on March 27, 1997, the day after Dr. Babkow had filed a motion for default. Subsequently, the Morris Bart law firm filed an exception of prescription, which was sustained; Dr. Babkow's suit was dismissed. Dr. Babkow appeals.
Determination of the proper prescription period to be applied in this case depends on characterization of the obligation created by the letter quoted above, which was sent by the Morris Bart law firm to Dr. Babkow. The trial court found that the letter created a suretyship, which is defined by La. C.C. art. 3035 as "an accessory contract by which a person binds himself to a creditor to fulfill the obligation of another upon the failure of the latter to do so." Under the provisions of La. C.C. art. 3060, "[p]rescription of the principal obligation extinguishes the obligation of the surety." The principal obligation in this case is an open account, which is subject to a three-year prescriptive period under the provisions of La. C.C. art. 3494(4).
On appeal, Dr. Babkow's primary argument is that the trial court improperly found that the obligation created by the letter written by the Morris Bart law firm was a suretyship agreement. We agree. In fact, that exact issue was raised in Morehouse Parish Hospital Service District v. Pettit, 25,396 (La.App. 2 Cir. 1/19/94), 630 So.2d 1338, writ denied, 94-0449 (La.4/7/94), 635 So.2d 1135, involving a letter from an attorney to a client's medical provider, similar to the letter at issue in the instant case. In that case, the attorney requested that the medical provider forebear prosecution of its claim against the client pending an expected recovery from the doctor whose alleged malpractice caused the client's health problems. Id. The attorney's letter then stated as follows: "The bills of [the medical provider] have been included in those claims and we will certainly pay them as soon as any recovery has been made." Id. at 1340. When the client's suit settled, the bills of the medical provider were not paid; the medical provider filed suit.
The appellate court deciding the Pettit case failed to address the trial court's finding that the letter did not constitute a suretyship agreement, finding instead that the attorney's offer made in the letter was not accepted by the medical provider, who responded to the letter with a request for a promissory note. Id. The appellate court also found that the attorney had not "personally obligated himself as a result of the language" in the letter. Id. at 1342. That finding was based, however, on the intent of the parties to the case. The medical provider had answered the attorney's letter with correspondence indicating its understanding that the client would pay the bill "as soon as recovery has been made." Id.
Close examination of the letter in question in the instant case in light of the definition of "suretyship" established by La. C.C. art. 3035 reveals the error in the trial court's finding that the letter constituted a suretyship. In fact, the Morris Bart law firm admitted in oral argument before this court that the letter was not a suretyship. We agree. The Morris Bart law firm's letter did not constitute a promise "to fulfill the obligation of another upon the failure of the latter to do so." In fact, the letter says nothing whatsoever about the client paying the chiropractor's bill. The letter at issue in this case specifically promises that the law firm would "protect" the chiropractor's charges out of the expected settlement proceeds. The obvious intent of the letter is to insure the chiropractor that his charges will eventually be paid by the attorney, albeit from the settlement proceeds. In return for that promise, the Morris Bart law firm hoped to receive exactly what it received—the chiropractor's forbearance from pursuing payment of the debt from the client.
Although we agree with the trial court's finding in the Pettit case that letters from attorneys to medical providers promising to pay bills out of settlement proceeds or other money recovered as a result of litigation do not constitute suretyship agreements, we hold that, under the circumstances of the instant case, the Morris Bart law firm did promise to "protect" payment of the client's chiropractor bills. This conclusion is based on the intent of the parties, as demonstrated by Dr. Babkow's forbearance of the debt until after the settlement proceeds were distributed, and on an important fact which clearly distinguishes the attorney's obligation in this case from the attorney's obligation in the Pettit case.
In the Pettit case, the letter from the attorney was written after the medical expenses had already been incurred by the client. However, in the instant case, the letter was written just five days after the client's first visit to Dr. Babkow's office; Dr. Babkow actually provided the services performed subsequent to his receipt of the letter in reliance on the promise of the Morris Bart law firm to pay the charges for those services. In fact, Dr. Babkow's medical services were received by the client more than 50 times after the receipt of the letter despite the fact that Dr. Babkow never received any payment, and apparently never sought payment, from the client. In the first two to three months after his receipt of the letter, Dr. Babkow provided services several times a week, sometimes daily.
Following an exhaustive search of Louisiana law and applicable jurisprudence, we believe that the allegations of Dr. Babkow's petition, coupled with the record evidence, are sufficient to defeat the Morris Bart law firm's exception of prescription. This finding is based on the fact that the allegations and record evidence indicate that Dr. Babkow may be able to prove that the obligation created by his acceptance of the offer made in the letter written by the Morris Bart law firm constitutes a contract. Although no Louisiana cases have previously characterized such an obligation, the allegations and evidence in the record,...
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