Neely v. Hollywood Marine, Inc.

• Decision Date: 12 September 1988
• Docket Number: No. 88-C-0618,88-C-0618
• Citation: 530 So.2d 1116
• Parties: Randy NEELY v. HOLLYWOOD MARINE, INC. and Tenneco Oil Company. 530 So.2d 1116, 1989 A.M.C. 1042
• Court: Louisiana Supreme Court

Page 1116

530 So.2d 1116

Randy NEELY v.HOLLYWOOD MARINE, INC. and Tenneco Oil Company.

No. 88-C-0618.

530 So.2d 1116, 1989 A.M.C. 1042

Supreme Court of Louisiana.

Sept. 12, 1988.

Concurring Opinion Sept. 19, 1988.

Rehearing Denied Oct. 20, 1988.

Lawrence D. Wiedemann, W. Lloyd Bowers, Wiedemann & Fransen, New Orleans, for applicant.

Robert S. Reich, Rufus C. Harris, III, L.R. DeBuys, IV, Terriberry, Carroll & Yancey, John E. Galloway, Deborah B. Ginsburg, Galloway, Johnson, Tompkins & Burr, New Orleans, for respondents.

DIXON, Chief Justice.

In this casethe plaintiff, Randy Neely, a seaman, discharged the attorneys representing him in a maritime personal injury suit against the defendants, Hollywood Marine, Inc. and Tenneco Oil Company.Plaintiff then entered into a settlement with the defendants.Plaintiff's attorneys, the law firm of Wiedemann & Fransen, filed a petition in intervention in the seaman's suit seeking enforcement of its contingent fee contract with plaintiff and reimbursement for medical expenses and other costs incurred in the prosecution of the suit.The contingency fee contract was simultaneously filed with the clerk of court and served in conformity with R.S. 37:218.The attorneys later filed a supplemental petition of intervention alleging the nullity of the settlement agreement.

The trial court first dismissed the suit with prejudice and later granted defendants' motion for summary judgment dismissing the petition of intervention and held the compromise agreement between plaintiff and defendants"was satisfactory and enforceable in plaintiff's best interests and not overreaching."The court of appeal affirmed.Neely v. Hollywood Marine, Inc., 518 So.2d 1151(La.App. 4th Cir.1987).We reverse.

On May 8, 1985plaintiff, a twenty-two year old deckhand, sustained head and facial injuries in an accident on board a vessel owned by Hollywood Marine, Inc.Plaintiff has undergone surgical procedures for neuropsychological damage, scarring and a hearing deficiency as a result of this injury.On May 13, 1985plaintiff entered into a contingency fee contract for representation with intervenors, Wiedemann & Fransen.The contingency fee contract contained a provision specifying that the client "agrees not to settle or compromise the suit, claim or proceeding personally with defendant, and not to employ any other counsel" in the matter.On June 13, 1985the plaintiff's lawyers filed a Jones Act and general maritime suit against defendants in the Civil District Court of Orleans Parish seeking damages on behalf of the plaintiff for the injuries he sustained as a deckhand in Hollywood Marine's employ.Suit was filed under the Judiciary Act of 1789,28 U.S.C., Sec. 133(the "saving to Suitors' Clause").

On November 19, 1985plaintiff mailed an undated letter to the intervenors discharging them.¹ This letter was typed by an employee of Hollywood Marine in Houston, Texas while plaintiff was in Houston to discuss the possibility of a settlement with the defendants.At the time of these settlement discussions, defendants knew that plaintiff was under the care of several doctors because of his injury and was facing further surgery.The intervenors received the letter discharging them on November 21, 1985.These negotiations with plaintiff leading to the release were carried on in Houston by Mr. Thomas Vacek, vice president in charge of claims for Hollywood Marine, and his assistant, Kem Coen.

Plaintiff returned to Houston the next day, November 22, and entered into a release and compromise in which defendants agreed to pay him $50,000 and to pay the future medical expenses for two further surgeries, provided the surgeries were done within one year from the date of the contract.In consideration for this settlement, plaintiff agreed to discharge the defendants from any and all liability arising from the maritime accident.Plaintiff was unrepresented in the negotiation of this settlement agreement.A sworn statement by plaintiff was taken in Houston at the Hollywood Marine offices before Mr. Ronald White, the Texas attorney for Hollywood Marine.The statement was recorded by a shorthand reporter, with Mr. Vacek of Hollywood Marine present.At that time plaintiff was asked to sign a joint motion for dismissal with prejudice.Plaintiff signed this motion and accompanying order without representation.

On November 25, 1985 Wiedemann & Fransen filed a petition of intervention seeking reimbursement of medical expenses and costs paid on behalf of plaintiff as well as an enforcement of its contingent fee contract, or, in the alternative, intervenors sought legal fees of $200,000 on the basis of quantum meruit.On December 5, 1985defendants answered the intervention with a general denial.

On joint motion of plaintiff and defendants, the trial court on December 12, 1985 ordered dismissal with prejudice of plaintiff's suit.This dismissal was based on the compromise and release agreement between plaintiff and defendants.The motion was the one which plaintiff signed while in Houston; he was unrepresented and signed the motion himself.The motion to dismiss was filed in New Orleans by defendants' Louisiana attorney, Rufus Harris of Terriberry, Carroll and Yancey.Intervenors were not notified of the dismissal.

On February 26, 1986defendants filed a motion for summary judgment asking that the intervention be dismissed and arguing that the contingency fee contract was not filed timely since it was filed after the settlement agreement had already been completed.

On March 5, 1986intervenors filed an amended petition for intervention alleging the nullity of the settlement agreement because plaintiff was unrepresented and also alleging that the amount paid by defendants is grossly inadequate for the injuries sustained.Intervenors also alleged that the dismissal and final judgment of plaintiff's suit was null and void under R.S. 37:218 because they were entered subsequent to the filing and service of intervenors' petition and recordation of the contingency fee contract.

A hearing on the rule to show cause and motion for summary judgment was held on October 3, 1986.Based on the briefs and documents in the record, the trial court granted defendants' motion for summary judgment and dismissed the petition of intervention on October 28, 1986, finding that the contingency fee contract was not timely filed.The trial court then held that the compromise agreement was "satisfactory and enforceable in plaintiff's best interests, and not overreaching."

The court of appeal affirmed finding intervenors, once discharged, had no standing to urge the invalidity of the settlement agreement.

A review of the jurisprudence dealing with R.S. 37:218 convinces us that the prior interpretation of this statute is not dispositive under the particular facts of this case.R.S. 37:218 reads as follows:

"By written contract signed by his client, an attorney at law may acquire as his fee an interest in the subject matter of a suit, proposed suit, or claim in the assertion, prosecution or defense of which he is employed, whether the claim or suit be for money or for property.In such contract, it may be stipulated that neither the attorney nor the client may, without the written consent of the other, settle, compromise, release, discontinue or otherwise dispose of the suit or claim.Either party to the contract may, at any time, file and record it with the clerk of court in the parish in which the suit is pending or is to be brought or with the clerk of court in the parish of the client's domicile.After such filing, any settlement, compromise, discontinuance, or other disposition made of the suit or claim by either the attorney or the client, without the written consent of the other, is null and void and the suit or claim shall be proceeded with as if no such settlement, compromise, discontinuance, or other disposition had been made."

In Saucier v. Hayes Dairy Products, Inc., 373 So.2d 102(La.1979), on rehearing, this court dealt with a case in which an attorney was dismissed without cause where a contingent fee contract existed between the attorney and his client.The attorney intervened in the personal injury suit claiming one-third of any recovery by the client.There the court stressed that R.S. 37:218 is to be interpreted in light of other legal principles governing the conduct of attorneys in their relationships with their clients.A primary consideration in this regard is the court's duty to assert the authority given it by the Constitution to regulate the practice of law, which stems from the grant of original exclusive jurisdiction of disciplinary proceedings against a member of the bar.La. Const., Art. V, Sec. 5(B);seeLouisiana State Bar Association v. Edwins, 329 So.2d 437(La.1976).This court's authority resulted in the adoption and promulgation of the Articles of Incorporation of the Louisiana State Bar Association, which in turn came to incorporate the Code of Professional Responsibility.The Code of Professional Responsibility regulates attorneys' practices and has been recognized as having the force and effect of substantive law.Legislative acts which tend to impede or frustrate this court's judicial authority in regulating the practice of law are without effect.

Under the disciplinary rules this court recognized the client's absolute right to discharge his attorney despite the existence of a contingency fee contract.The court also found that the disciplinary rules prohibit the acquisition of an absolute ownership interest in the client's claim prior to his performance of all or substantially all the legal services.The language of the statute giving the attorney "an interest in the subject matter of a suit" was interpreted by this court to be "no more than a privilege granted to aid the attorney's collection of a fully earned fee out of the fund which the satisfaction of the client's claim yields....