Dauterive Contractors, Inc. v. Landry and Watkins

• Decision Date: 13 March 2002
• Docket Number: No. 01-1112.,01-1112.
• Parties: DAUTERIVE CONTRACTORS, INC., v. LANDRY AND WATKINS, A Law Partnership.
• Court: Court of Appeal of Louisiana — District of US

Page 1242

811 So.2d 1242

DAUTERIVE CONTRACTORS, INC., v. LANDRY AND WATKINS, A Law Partnership.

No. 01-1112.

Court of Appeal of Louisiana, Third Circuit.

March 13, 2002.

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James H. Gibson, Allen & Gooch, Lafayette, LA, for Defendant/Appellee: Landry & Watkins, A Law Partnership.

Kai David Midboe, Midboe, Guirard. Davis. and Brinsko, LLP, Baton Rouge, LA, for Plaintiff/Appellant: Dauterive Contractors, Inc.

Court composed of ULYSSES GENE THIBODEAUX, MARC T. AMY and ELIZABETH A. PICKETT, Judges.

THIBODEAUX, Judge.

This is a legal malpractice action instituted under La.R.S. 9:5605 by plaintiff-client, Dauterive Contractors, Inc., against defendant-law firm, Landry & Watkins, A Law Partnership, for failure to timely file proof of claim in bankruptcy court proceedings. In response, Landry & Watkins filed an exception of prescription/peremption, alleging that the legal malpractice action was untimely, having been filed more than one year from the date Dauterive Contractors gained knowledge of the facts sufficient to place them on notice of their potential claim against Landry & Watkins. The trial judge granted the exception and Dauterive Contractors appealed. For the reasons set forth below, we affirm.

ISSUES

We shall consider whether:

(1) Mr. William Repaske, a partner at Landry & Watkins, terminated his attorney-client relationship with Mr. Dauterive on .January 18, 1999.

(2) Mr. Edward Landry, a partner at Landry & Watkins, represented Mr. Dauterive in bankruptcy and/or malpractice proceedings after January 18, 1999.

(3) Landry & Watkins engaged in a continuing tort or separate torts that rendered Mr. Dauterive's suit timely in February 2000.

(4) Landry & Watkins engaged in misleading conduct in representing Mr. Dauterive in the bankruptcy and/or malpractice proceedings which amounted to fraud.

(5) the one-year period of limitation contained in La.R.S. 9:5605(A) is so unreasonably short as to be arbitrary and in violation of Amendments IV and V of the United States Constitution and Article Sections 2 and 22 of the Louisiana Constitution of 1974.

II.

FACTS AND PROCEDURAL HISTORY

Mr. Aubrey Dauterive is the President of Dauterive Contractors, Inc. (hereinafter "Dauterive Contractors"), a business located in New Iberia. Louisiana that leases boats to the oilfield industry. Among Dauterive Contractors' clientele was Grant Geophysical, Inc. (hereinafter "Grant"). In the fall of 1996, Grant became delinquent in account payments to Dauterive Contractors, prompting the plaintiff company to retain Landry & Watkins, A Law Partnership (hereinafter "Landry & Watkins") with a view toward the collection of unpaid invoices in an amount exceeding $300,000. There was no written contract reflecting this retention.

The particular matter for which Dauterive sought legal aid was handled by Mr. William Repaske, a partner at Landry & Watkins. Initially, Mr. Repaske composed collection letters to Grant. These attempts proved unsuccessful. On December 6, 1996, Grant filed for bankruptcy and Landry & Watkins continued to represent Dauterive Contractors through the course of the bankruptcy proceedings.

In order to preserve their claim against Grant in the proceedings, Dauterive Contractors was required to file a proof of claim in the bankruptcy court by May 7, 1997. This filing was Mr. Repaske's responsibility. According to his testimony, he drafted a proof of claim by hand, which his secretary was to type and then arrange for Mr. Dauterive to sign. Mr. Dauterive remembers having signed something, which may or may not have been the original proof of claim. In any event, Mr. Repaske asserts that the proof of claim was completed and mailed. However, the documentation has allegedly been lost. The firm asserts that it never received responsive correspondence from the bankruptcy court.

The deadline, i.e., "bar date," for filing the proof of claim in the bankruptcy proceeding was set for May 7, 1997 by the "Notice of Last Date for Creditors to File Proofs of Claim" which was sent to Landry & Watkins. Mr. Repaske did not realize that a claim had not been filed until an August 5, 1998 telephone conversation with the disbursing attorney. According to his testimony, Mr. Repaske relayed this information to his client shortly thereafter, and agreed to investigate possible alternatives. Mr. Repaske explained to Mr. Dauterive that he had malpractice insurance and his client could make a claim. He could not say for sure, however, whether he told Mr. Dauterive "talk to someone else" at this point. Mr. Repaske did not refer to his error as legal malpractice, nor did he explain that there was a period of time during which malpractice claims must be filed. He did not comment on the potential conflict of interest, nor did he seek to terminate the attorney-client relationship.

Upon investigation, Mr. Repaske was told by a former U.S. bankruptcy trustee that bankruptcy courts had been known, in some instances, to honor late claims. He conferred with Mr. Dauterive and decided to file a new proof of claim. It was signed by Mr. Dauterive on November 9, 1998, and mailed on or about November 11, 1998, roughly 18 months after the original "bar date." Mr. Dauterive testified that filing the new proof of claim indicated to him that there was a chance for recovery in the bankruptcy proceedings; he believed there was only a "minute chance" that Dauterive Contractors would not recover. According to Mr. Dauterive's testimony, he was not told that the claim was forever barred in bankruptcy, nor was he told that the late filing amounted to an act of malpractice. He was not told to seek independent counsel, was not told of any conflict of interest, and, according to his testimony, his attorneys remained silent on the period of limitation for the malpractice suit, and they did nothing to interrupt it.

Ms. Julie Badeaux, secretary in charge of accounts receivable at Dauterive Contractors (and former employee of Landry & Watkins), testified regarding the November 9, 1998 proof of claim that though she knew it could be rejected for being untimely, she nevertheless believed it had as good a chance of being honored as if it had been filed timely. She testified that it was not until November 1998 that she first learned that the filing deadline had been missed, and that Mr. Repaske had admitted to Mr. Dauterive that he had made a mistake. She was never told that the claim was forever barred in bankruptcy. She testified that Mr. Repaske did not seek to terminate the attorney-client relationship with her, did not advise her to seek independent counsel, nor did he inform her that there was a period of limitation for the legal malpractice claim.

Mr. Repaske's testimony is significant especially since the trial judge found his recollection more complete. He claimed that when the November 9, 1998 document was signed, he told his client that his malpractice insurance would compensate for the mistake and that Mr. Dauterive was free to make a claim. He also encouraged his client to "talk to someone else" and explained that if an objection was filed against the new proof of claim, there would be no chance for recovery.

On January 18, 1999, an objection was lodged against the proof of claim. When Mr. Repaske contacted Mr. Dauterive with news of the objection, he specifically recalled telling his client that there was no longer any possibility of recovery—that "that was the end." He explained that a claim could be made against the malpractice insurance carrier and that "you need to talk to someone else."

Mr. Dauterive testified that by January 1999, Mr. Repaske had admitted his mistake and had mentioned the malpractice insurance carrier. He testified that on the date the objection was filed, he was told by the law firm to wait for the bankruptcy court decision on the objection. Only then would he know the success of the late-filed proof of claim. Contrarily, Mr. Repaske testified that he would not have told his client to do nothing, and that by telling them that he had malpractice insurance, he was not discouraging them from pursuing a malpractice claim. Mr. Repaske agreed that he never discussed the period of limitation for legal malpractice, nor did he take any action to interrupt it.

By January 18, 1999, Mr. Repaske considered the attorney-client relationship to have ceased and testified that after such date, he no longer had any contact with Mr. Dauterive or his business. Though there is no document reflecting the relationship's alleged termination, Mr. Repaske no longer participated in the bankruptcy proceeding. Mr. Dauterive agreed with Mr. Repaske that at some point after January 18, 1999, Mr. Repaske no longer took his calls; however, Mr. Dauterive testified that he still felt represented by the firm. Mr. Repaske testified that he spoke with Ms. Badeaux via telephone sometime after January 1999 and suggested she draft a demand letter to Landry & Watkins.

Testimony revealed that during the course of these events, Mr. Edward Landry, another partner in the firm, continued to represent Mr. Dauterive and his company in other matters. Mr. Landry was not responsible for the submission of the proof of claim and Mr. Dauterive admits that he never discussed the Grant matter with Mr. Landry until 1999. From 1999 to 2000, there were several occasions when Mr. Dauterive made inquiries to Mr. Landry about the status of the malpractice matter. Each time, Mr. Landry relayed information obtained from the attorney representing Landry & Watkins and the malpractice insurance carrier.

Mr. Dauterive never gave Mr. Landry any specific authority to negotiate a settlement with the insurance carrier. Mr. Landry testified that he was not familiar enough with the situation to know that the period of limitation for the malpractice claim would be at issue. He did not seek to formally terminate the attorney-client relationship,...