Block v. Bernard, Cassisa, Elliott & Davis

• Decision Date: 04 November 2005
• Docket Number: No. 2004 CA 1893.,2004 CA 1893.
• Citation: 927 So.2d 339
• Court: Court of Appeal of Louisiana — District of US
• Parties: Jerald P. BLOCK v. BERNARD, CASSISA, ELLIOTT & DAVIS, Stephen N. Elliott, Sentry Insurance Company and Keith J. Labat.

927 So.2d 339

Jerald P. BLOCK v. BERNARD, CASSISA, ELLIOTT & DAVIS, Stephen N. Elliott, Sentry Insurance Company and Keith J. Labat.

No. 2004 CA 1893.

Court of Appeal of Louisiana, First Circuit.

November 4, 2005.

COPYRIGHT MATERIAL OMITTED

Matthew F. Block, Thibodaux, Counsel for Plaintiff/Appellant Jerald P. Block.

David S. Daly, M. Sean Reid, Metairie, Counsel for Defendants/Appellees Bernard, Cassisa, Elliott & Davis and Stephen N. Elliott.

Terry Christovich Gay, Kevin R. Tully, H. Carter Marshall, New Orleans, Counsel for Defendant/Appellee Sentry Insurance A Mutual Company.

Keith J. Labat, Thibodaux, In Proper Person.

Albert J. Derbes, III, Eric J. Derbes, Melanie M. Mulcahy, Metairie, Counsel for Third-Party Defendants/Appellees Keith J. Manning and Susan P. Manning.

Howard B. Kaplan, Metairie, Counsel for Defendant/Appellee Stephen N. Elliott.

Before: CARTER, C.J., DOWNING, and GAIDRY, JJ.

GAIDRY, J.

This appeal involves an action by an attorney to recover an unpaid fee owed by former clients in a personal injury action from attorneys representing an adverse party in that underlying action. The plaintiff-appellant, Jerald P. Block, seeks the reversal of the trial court's judgment sustaining a peremptory exception of no cause of action in favor of the defendants-appellees, Stephen N. Elliott and the law firm of Bernard, Cassisa, Elliott & Davis. We affirm the trial court's judgment for the following reasons.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On March 17, 1993, Keith J. Manning was seriously injured in a motor vehicle accident. In December 1993, he and his wife, Susan P. Manning, retained an attorney, Jerald P. Block, to represent them in the assertion of personal injury claims arising from the accident. Mr. Block filed suit for damages on behalf of the Mannings on January 21, 1994. The Mannings later executed a written contingent fee agreement with Mr. Block on January 31, 1997 ("effective" that date), providing for a one-third (33 1/3%) contingent fee, in addition to reimbursement of litigation expenses and costs.

During the course of Mr. Block's representation of the Mannings, he delegated certain aspects of the handling of the case to Keith J. Labat, an associate attorney employed by him. Mr. Labat left Mr. Block's employment in April 1997. The Mannings subsequently decided to retain Mr. Labat to represent their interests, but offered to continue to be represented by Mr. Block as co-counsel. Mr. Block declined the offer, and was notified that he had been discharged by the Mannings on November 29, 1997. He properly recorded his written contingent fee agreement with the trial court's clerk of court on December 22, 1997, and also filed a petition of intervention in the Mannings' personal injury action the same day.

The Mannings' claims against the tortfeasors and their liability insurer were ultimately settled for the latter's liability coverage limits of $100,000.00, and the Mannings settled with their own underinsured motorists insurer for its applicable coverage limits of $10,000.00. The primary focus of the litigation, however, was the potential liability of Sentry Insurance A Mutual Company (Sentry), which provided underinsured motorists coverage under primary and umbrella policies issued to Mr. Manning's employer.

Sentry was represented in the underlying action by the defendant attorneys herein, Stephen N. Elliott and the firm of Bernard, Cassisa, Elliott & Davis (the defendant attorneys). Sentry eventually made an unconditional tender of $350,000.000 in December 1997 as part of a broader settlement agreement, and thereafter paid another $1,500,000.00 in compromise of the Mannings' claim against it.

On December 14, 1999, Mr. Block sent a letter by mail and facsimile telecopier to Mr. Elliott, confirming his understanding that the underlying action had been settled and that his name would be included as a payee on the settlement check. In the meantime, Mr. Labat had advised his clients to refuse to agree to the inclusion of Mr. Block as a payee on the check, and advised Mr. Elliott by letter dated December 16, 1999 that the Mannings would not agree to the proposed compromise if Mr. Block's name was included on the check. On December 20, 1999, Mr. Elliott advised Mr. Block via mail and facsimile telecopier that he and his client "have been informed by Keith Labat that the Mannings will not settle this case if your name is included on the check," and that the check would be issued payable to Mr. Labat and the Mannings. Mr. Elliott also conveyed Mr. Labat's supposed agreement to "take care of all of [Mr. Block's] costs in this matter."

Mr. Block promptly replied to Mr. Elliott's letter of December 20, 1999 later that day, via the same media. He advised Mr. Elliott that he intended "to hold you, your firm and Sentry Insurance Company [sic] liable for all of my costs, fees, etc." and that he intended "to take action necessary to nullify the settlement."¹ Finally, he emphasized that the dispute as to his fee could be resolved "by including my name on the check or draft ...."

Mr. Block also filed a petition for injunctive relief on December 20, 1999, seeking to enjoin the negotiation of the settlement check or draft or any other disposition of the total attorney fee portion of the settlement funds. The trial court denied injunctive relief, and the final release and settlement agreement between the Mannings and Sentry was signed the following day, December 21, 1999. As part of the settlement agreement, the Mannings agreed to indemnify Sentry from any further claims related to their causes of action, including claims for attorney's fees, and Mr. Labat expressly agreed to personally indemnify Sentry and the defendant attorneys for any claim made by Mr. Block for his fee and costs.

Mr. Block's intervention was tried on April 1-3, 2002. The trial court found that the Mannings discharged Mr. Block for cause, and that he was entitled to $32,666.65 as his fee, with the balance of $620,666.65 being apportioned to Mr. Labat. The judgment in favor of Mr. Block was rendered against Mr. Labat, rather than the Mannings, although Mr. Labat was not a defendant in intervention, and was signed on May 6, 2002.

Mr. Block appealed the judgment on his intervention. In an unpublished opinion, this court held that the trial court erred in finding that Mr. Block was discharged for cause, and amended the amount of Mr. Block's attorney fee award by increasing it to $489,999.99, representing 75% of the total one-third amount attributable to attorney's fees. Manning v. T.H.E. Insurance Company, et al., 02-1999 (La.App. 1st Cir.9/26/03) (unpublished opinion).² This court further amended the judgment to reflect that the Mannings were the parties cast, rather than Mr. Labat, citing La. C.C.P. art. 2164's authority to "render any judgment which is just, legal, and proper upon the record on appeal." In doing so, we noted that all other issues and claims asserted by Mr. Block were pretermitted.³

On December 1, 2003, Mr. Block instituted the present action, seeking recovery of his unpaid fee of $489,999.99, together with legal interest from the date of filing of his prior intervention and all costs. Named as defendants were the defendant attorneys, Sentry, and Mr. Labat. Mr. Block alleged that by "knowingly and purposely" omitting his name from the settlement check, the named defendants "purposely and consciously ignored [his] intervention," and that they "violate[d] Louisiana law and the Rules of Professional Conduct," thereby rendering them solidarily liable to him.

In response to Mr. Block's petition, Sentry filed a combined pleading incorporating dilatory and peremptory exceptions, its answer, a cross-claim for indemnity against Mr. Labat, and a third-party demand for indemnity against the Mannings. The defendant attorneys responded with combined dilatory and peremptory exceptions, consisting of a dilatory exception of discussion and a peremptory exception raising the objections of no right of action, no cause of action and peremption, and res judicata.

The hearing on the defendant attorneys' exceptions, together with other exceptions and motions, took place on April 16, 2004. The trial court ruled that Mr. Block had not stated a viable cause of action against Sentry, but granted him leave to amend his petition to do so. As to the defendant attorneys, the trial court sustained their peremptory exception on the grounds that Mr. Block had not stated, and could not properly state, a cause of action against them, and dismissed his petition against those defendants with prejudice. The other exceptions at issue were overruled or continued as moot. The trial court's judgment in that regard was signed on April 29, 2004, as were its written reasons for judgment.⁴ This appeal followed.

ASSIGNMENT OF ERROR AND ISSUES PRESENTED

Mr. Block contends the trial court erred in holding that he did not state a cause of action against the defendant attorneys in his petition. He frames the issues presented for our review as follows:

1. Whether a discharged attorney has a cause of action against the tortfeasor's [sic] counsel when the name of the discharged attorney is deliberately left off a settlement draft payable to the plaintiff and new plaintiff's counsel;

2. Whether a discharged attorney may hold the tortfeasor's [sic] counsel liable for the fee owed by the plaintiff when a settlement draft is issued which deliberately omits the name of the discharged plaintiff attorney.

APPELLATE REVIEW OF JUDGMENT SUSTAINING PEREMPTORY EXCEPTION OF NO CAUSE OF ACTION

The objection that a petition fails to state a cause of action is properly raised by the peremptory exception. La. C.C.P. art. 927(A)(4). A trial court's judgment sustaining the peremptory exception of no cause of action is subject to de novo review by an appellate court, employing the same principles applicable to the trial court's determination of the...