Gold et al. v. Metal Sales Manufacturing Corp.

• Decision Date: 19 December 2000
• Docket Number: No. 00-30040,00-30040
• Citation: 236 F.3d 214
• Parties: (5th Cir. 2000) GOLD, WEEMS, BRUSER, SUES & RUNDELL, Plaintiff-Counter Defendant-Appellee v. METAL SALES MANUFACTURING CORP., Defendant-Counter Claimant-Appellant, FRONTIER INSURANCE COMPANY, Movant-Appellant
• Court: U.S. Court of Appeals — Fifth Circuit

Page 214

236 F.3d 214 (5th Cir. 2000)

GOLD, WEEMS, BRUSER, SUES & RUNDELL, Plaintiff-Counter Defendant-Appellee v. METAL SALES MANUFACTURING CORP., Defendant-Counter Claimant-Appellant, FRONTIER INSURANCE COMPANY, Movant-Appellant

No. 00-30040

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

December 19, 2000

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

Before KING, Chief Judge, WIENER, Circuit Judge, and LYNN¹, District Judge.

LYNN, J:

In March 1994, Metal Sales Manufacturing Corporation ("Metal") hired Gold, Weems, Bruser, Sues & Rundell, P.L.C. ("the Gold firm") to represent it in a suit against Acadian Builders (the "Acadian action"). Metal prevailed in the Acadian action and paid the Gold firm approximately half of the Gold firm's claimed legal fees. Metal disputed its liability for the remainder of the bill.

In October 1996, the Gold firm made a formal demand to Metal for payment of the balance in fees owed it, pursuant to La. Rev. Stat. Ann. § 9:2781 (the "Open Account Statute"). After Metal continued to refuse to pay, the Gold firm, representing itself, sued Metal, seeking the remainder of its claimed legal fees (the "open account action"). Metal counterclaimed, alleging malpractice in the Gold firm's defense in the Acadian action. On July 20, 1998, the district court entered summary judgment in favor of the Gold firm, awarding $42,263.73 on the open account plus interest, as well as attorney fees incurred in the open account action, in an amount to be determined at a later date. Upon appeal, this court affirmed.

In August 1998, while the initial appeal was pending, the Gold firm filed in the district court a Suggestion for Attorney Fees, seeking $48,000 in attorney fees for the work of a lawyer employed by the Gold firm, and outside co-counsel. After this court's affirmance, the Gold firm filed a Supplemental Suggestion of Attorney Fees, seeking an additional $32,000 for attorney fees in defending the appeal, and other post-judgment matters. On December 23, 1999, the district court entered a Final Judgment, awarding the Gold firm $80,000, the amount it claimed in attorney fees in the open account claim and the appeal from it. Metal then filed the instant appeal.

In this appeal, Metal first argues that attorney fees cannot be awarded under the Louisiana Open Account Statute to a law firm representing itself and, alternatively, even if fees can be awarded to a firm representing itself, the trial court awarded excessive fees that are unsupported by sufficient documentation and are otherwise improper.²

The district court's resolution of whether an attorney representing himself could collect fees under the open account statute is a conclusion of law we review de novo. See Hayne v. Hardy, 802 F.2d 826, 828 (5th Cir. 1986) (finding the district court's determination that an unpaid fee was an "open account" was a legal conclusion to be reviewed de novo).³

La. Rev. Stat. Ann. § 9:2781 provides, in relevant part:

When any person fails to pay an open account within fifteen days after receipt of written demand therefore correctly setting forth the amount owed, that person shall be liable to the claimant for reasonable attorney fees for the prosecution and collection of such claim when judgment on the claim is rendered in favor of the claimant.

Metal argues that the statutory language of the Louisiana Open Account Statute does not authorize an award of compensation for a firm representing itself in the prosecution of an open account claim. While stating that "no court has addressed the question of whether a firm or lawyer representing itself is entitled to a fee award under the Louisiana Open Account Statute," Metal argues that Louisiana courts have historically declined to allow an award of attorney fees under such circumstances. Statutes that allow for the recovery of attorney fees, Metal argues, contemplate an expenditure of funds that must be recovered. Here, Metal contends, the Gold firm did not pay fees when prosecuting its claim, since it represented itself.

The Gold firm asserts that it is incorrect to characterize this situation as one where a lawyer or law firm represents itself, urging instead that as a corporation it hired one of its employee-attorneys to prosecute its open account claim. The Gold firm further emphasizes that in its July 1998 Judgment, the district court awarded the Gold firm attorney fees, in an amount to be determined at a later date, and that only after the Gold firm filed its Motion for Suggestion of Attorney Fees in August 1998, and Supplemental Suggestion of Attorney Fees, more than a year later, did Metal first argue that the Gold firm was not entitled to such fees.⁴

As Metal points out, the issue of whether an attorney can collect attorney fees for representing himself was squarely before the court in Lambert v. Byron, 650 So. 2d 1201 (La. Ct. App. 1995). The court in Lambert described the facts as follows:

Attorney William H. Lambert was retained to represent defendant Ora James Byron in a personal injury suit. In order that Byron might secure living expenses while he was disabled and without income, Lambert endorsed a promissory note that Byron had executed at MidSouth National Bank (hereinafter MidSouth) and signed as a guarantor of two additional notes to provide funding to Byron. Each of these notes required Byron to pay reasonable attorney's fees in an amount not to exceed 25% should the note be referred to an attorney for collection.

After Lambert was replaced as Byron's counsel by another attorney, Lambert demanded in writing that Byron and his new attorney assume Lambert's obligation to MidSouth, but the demand was not answered. After Byron failed to pay the notes, MidSouth sought payment from Lambert. Upon Lambert's payment, MidSouth endorsed the promissory notes to him without recourse. Lambert subsequently made demands on Byron for payment on all three promissory notes but was unable to collect. At this point, Lambert filed suit in proper person to collect the entire amount of the notes, including reasonable attorney's fees.

After Byron failed to file an answer in the suit, a default judgment was entered in favor of Lambert, granting him judgment on the principal demand but denying the claim for attorney's fees. Lambert appeals the trial court's denial of his demand for attorney's fees.

Id. at 1202. In Lambert, the appellate court affirmed the trial court's decision to deny attorney fees. In so doing, the appellate court stated that "recovery of attorney's fees is not available to one who represents himself because he has incurred no out-of-pocket expenses . . . To allow an attorney filing suit in proper person to recover attorney's fees when he has not actually incurred their expense gives him a monetary advantage unavailable to anyone hiring counsel." Id. at 1203. Although the court recognized that Lambert may have expended his "time, talent, expertise, [ ] travel time and expense, and use of his office personnel," the court nevertheless stressed that there was no payment to another attorney. Id. In reaching its conclusion, the court also turned to the plain language of the promissory notes, which provided that "attorney's fees would be due if their holder referred them to an attorney for collection." Id. Noting that the attorney fee provision contemplated a scenario with two entities, the court in Lambert stated: "For the situation envisioned by the contractual provisions to arise, the notes must be referred to another person: they must be . . . 'refer[red]' . . . 'to an attorney for collection.'" Id.

In fact, however, the Open Account Statute was not at issue in Lambert. In contrast to the court's characterization of the promissory notes in Lambert, the plain language of the Open Account Statute does not clearly contemplate collection of the claimant's attorney fees only when there are two entities, the claimant and his attorney. Another intermediate appellate court in Deutsch, Kerrigan & Stiles v. Fagan, 665 So. 2d 1316 (La. Ct. App. 1995), writ denied, 669 So. 2d 418 (La. 1996) sustained the trial court's award, under the Open Account Statute, of attorney fees to a law firm representing itself. See also Hoskins v. Ziegler, 506 So. 2d 146 (La. Ct. App.), writ denied, 512 So. 2d 460 (La. 1987) (sustaining the trial court's award of attorney fees when an attorney represented himself in the prosecution of an open account claim). While Deutsch and Hoskins did not directly decide that an attorney representing himself on an open account claim can collect attorney fees, both cases lend strong implicit support to the conclusion that such fees are recoverable under Louisiana's Open Account Statute. The conclusion that such fees are recoverable under the statute is rendered even more compelling when, as here, an incorporated law firm represents itself. The district court correctly distinguished Lambert on that basis when it noted that Lambert did not involve "a situation where attorneys' fees were sought by an incorporated law firm that hired one of its own employees to bring the action."

In Kay v. Ehrler, 499 U.S. 432, 437-38 (1991), a case cited by Metal, the United States Supreme Court held that an individual attorney could not recover attorney fees for representing himself in a § 1988 civil rights suit. In so holding, the Supreme Court noted the distinction between individual and entity claimants:

Petitioner argues that because Congress intended organizations to receive an attorney's fee even when they represented themselves, an individual attorney should also be permitted to receive an attorney's fee even when he represents himself. However, an organization is not comparable to a pro se litigant because the organization is always represented by counsel, whether in-house or pro bono, and thus, there is always an attorney-client relationship.

Id. at 436 n.7. In other words, when an organization is...