Davis v. Parker

• Decision Date: 17 July 1995
• Docket Number: No. 94-40514,94-40514
• Citation: 58 F.3d 183
• Parties: William C. DAVIS, Plaintiff-Appellant, v. Ernest L. PARKER, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 183

58 F.3d 183

William C. DAVIS, Plaintiff-Appellant, v. Ernest L. PARKER, Defendant-Appellee.

No. 94-40514.

United States Court of Appeals, Fifth Circuit.

July 17, 1995.

Robert E. Arceneaux, Barham & Arceneaux, New Orleans, LA, Warren D. Rush, Rush & Rush, Lafayette, LA, for appellant.

Walter C. Thompson, Jr., Charles M. Pisano, Barkley & Thompson, New Orleans, LA, Bob F. Wright, Domengeaux & Wright, P.L.C., Lafayette, LA, for appellee.

Appeals from the United States District Court for the Western District of Louisiana.

Before REYNALDO G. GARZA, GARWOOD and DAVIS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

This diversity case arises out of a dispute between William C. Davis and his former attorney and business partner Ernest L. Parker, over the ownership of twenty-five percent of the stock of Campbell Wells Corporation and a related partnership, CAMPCO-1985 (collectively, "Campbell Wells"). The district court granted Parker's motion for summary judgment and dismissed all of Davis' claims against Parker on the grounds that they were prescribed by Louisiana Revised Statute 9:5605, which governs the prescriptive period for legal malpractice actions. For the reasons explained below, we vacate and remand.

I.

Ernest L. Parker, a practicing attorney in Lafayette, Louisiana, began representing William C. Davis, a Lafayette businessman, in 1976. The two later became friends. In 1984, Parker learned from fellow attorney Logan Nichols that Campbell Wells Corporation, a company that operated an oil field waste disposal facility, was for sale. Parker talked to Davis, Nichols and another client, Richard Barnett, about the possibility that they acquire the company. The four men purchased the company in September 1985, splitting their ownership interests equally. They also agreed to be equal partners in CAMPCO-1985, a partnership formed to acquire the immovable property on which the waste disposal facility was located. The acquisitions were funded by a million dollar loan from Guaranty Bank & Trust Company of Lafayette (the "Bank") and by promissory notes in the amount of $1,052,000, payable to the sellers. An additional $500,000 was borrowed from the Bank to cover start-up costs. Each man signed personal guaranties to the Bank and the sellers to secure the loans.

Despite Campbell Wells' success, Davis began to have financial problems in some of his other business ventures and by early 1986 was on the brink of bankruptcy. Parker represented Davis in the attempted work-out of his financial problems with his creditors. Parker also advised Davis as his friend and business partner. Parker warned Davis that his creditors might seize Davis' interest in Campbell Wells and suggested that Davis transfer his interest to Parker. Davis alleges that Parker agreed to hold the Campbell Wells stock "in trust" until Davis resolved his financial problems; Parker committed to return the stock to Davis upon request. In contrast, Parker contends that Davis transferred his interest to Parker outright in exchange for Parker's assumption of the debt Davis incurred in the Campbell Wells acquisition. On February 3, 1986, by a written Act of Cash Sale and Assumption, Davis transferred his twenty-five percent ownership interest in Campbell Wells to Parker. Under the instrument, which Parker prepared, Parker assumed Davis' debt and agreed to pay Davis $1000 for Davis' interest. Davis contends that Parker never gave Davis a copy of the document nor advised him to consult another attorney before signing it.

Davis eventually worked out his financial problems and avoided bankruptcy. Campbell Wells continued to thrive, and in June 1990, Parker and Nichols agreed to merge Campbell Wells with Sanifill, Inc. ("Sanifill"). Pursuant to the merger agreement, they surrendered all of the Campbell Wells stock in exchange for Sanifill stock. ¹

Davis asserts that he first became concerned about Parker's control over the transferred shares in 1988. He mentioned his agreement with Parker to an attorney working on unrelated matters, who advised him to discuss his Campbell Wells' interest with Parker. Shortly thereafter, Davis raised the subject during a meeting with Parker in Lafayette. Davis alleges that Parker was at first evasive but ultimately assured Davis not to worry because they both would make a lot of money on the Sanifill deal. Parker, on the other hand, contends that he denied the existence of a retransfer agreement during this meeting. Davis then consulted another attorney, Mr. Robert Jackson, about the alleged retransfer agreement with Parker and asked Jackson to discuss it with Parker. Jackson told Davis that when he asked Parker about the agreement, Parker denied its existence. On September 14, 1990, Parker visited Davis and his wife at their home in Austin. Davis again brought up the agreement, and a heated argument ensued. Three weeks later, Davis engaged his present counsel, Mr. Warren Rush.

Davis filed this suit more than a year later on November 21, 1991. ² In his complaint, as amended on January 17, 1992, Davis seeks damages or, in the alternative, a judgment declaring him the owner of a quarter of the Sanifill stock received in the merger with Campbell Wells. The complaint also seeks an accounting and a rescission of the 1986 agreement.

Following a preliminary round of motions, Parker moved for summary judgment on the ground that Davis' claims were time-barred under Louisiana Revised Statute 9:5605, the statute of limitations for legal malpractice actions. The district court granted Parker's motion and dismissed Davis' suit with prejudice. Davis now appeals the dismissal of his action predicated on the following theories: breach of contract, rescission, detrimental reliance and nullity.

II.

We review a grant of summary judgment de novo, using the same standards that guided the district court. Cherokee Pump & Equip., Inc. v. Aurora Pump, 38 F.3d 246, 249 (5th Cir.1994). Summary judgment is proper if the court determines that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

The district court determined that section 5605, which became effective on September 7, 1990, should be applied retroactively to Davis' suit and when applied in this manner, Davis' suit was time barred. Section 5605, entitled "Actions for legal malpractice," provides, in relevant part:

A. No action for damages against any attorney at law ..., whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide legal services shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect is discovered or should have been discovered; however, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect.

La.Rev.Stat.Ann. Sec. 9:5605(A). On September 21, 1992, the statute was amended to add the following:

B. The provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged act, omission, or neglect occurred. However, with respect to any alleged act, omission, or neglect occurring prior to September 7, 1990, actions must, in all events, be filed in a court of competent jurisdiction and proper venue on or before September 7, 1993, without regard to the date of discovery of the alleged act, omission, or neglect....

Id. Sec. 9:5605(B).

The district court noted that Davis' claims were timely under Louisiana law as it existed when Davis' causes of action arose, but determined that section 5605 applied retroactively to bar Davis' claims. ³ In this appeal Davis contends the district court erred in determining, first, that section 5605 applies generally to all of Davis' claims and, second, that section 5605 should be applied retroactively to bar Davis' causes of action, all of which arose before the effective date of the statute.

III.

A.

We consider first Davis' preliminary argument that section 5605 does not apply to any of his causes of action preserved on appeal. As mentioned above, the statute applies to actions "for damages against any attorney at law duly admitted to practice in this state, ... whether based upon tort, breach of contract, or otherwise, arising out of an engagement to provide legal services." La.Rev.Stat.Ann. Sec. 9:5605(A). As to the breach of contract, rescission for failure of consideration, and detrimental reliance claims, Davis argues that they are unrelated to Parker's capacity as an attorney and thus do not "arise out of an engagement to provide legal services." As to the nullity claim, Davis argues that although it is dependent on Parker's capacity as an attorney, it is not an action for damages and thus does not fall within the scope of section 5605. The district court rejected these arguments, concluding that section 5605 applies to "all actions against an attorney for his actions in any capacity."

Parker contends that the clear language of section 5605 supports the district court's interpretation. He argues that the language in section 5605(A) covering all actions "whether based upon tort, or breach of contract, or otherwise" reflects this intent. He also points to paragraph (C), which provides: "Notwithstanding any other law to the contrary, in all actions brought in this state against any attorney at law duly admitted to practice in this state ..., the prescriptive and peremptive period shall be governed exclusively by this Section." La.Rev.Stat.Ann. Sec. 9:5605(C).

But the Louisiana Supreme Court's decision in Branch v. Willis-Knighton Medical Ctr., 636 So.2d 211, 214 (La.1994), requires a more narrow interpretation of the statute's scope. In Branch, the Court addressed a nearly identical question with...