Reeder v. North

• Decision Date: 21 October 1997
• Citation: 701 So.2d 1291
• Parties: 97-0239 La
• Court: Louisiana Supreme Court

Page 1291

701 So.2d 1291

97-0239 La. 10/21/97

O. William REEDER, M.D. v. Bruce A. NORTH and Molony, North & Kewley.

No. 97-C-0239.

Supreme Court of Louisiana.

Oct. 21, 1997.

Dissenting Opinion of

Justice Johnson Dec. 9, 1997.

David L. Colvin, Gretna, Stanhop Bayne-Jones Denegre, New Orleans, for Applicant.

Arthur A. Lemann, IV, Jefferson, Daniel A. Rees, New Orleans, for Respondent.

William E. Wright, Jr., Nancy J. Marshall, Jonathan M. Pierce, New Orleans, for Coregis Insurance Group, Amicus Curiae.

[97-0239 La. 2] VICTORY, Justice.

We granted this writ to determine whether the court of appeal was correct in holding that La. R.S. 9:5605 did not perempt plaintiff's legal malpractice suit even though plaintiff filed suit more than three years after the date of the alleged negligent act. After reviewing the record and the applicable law, we hold that the strict wording of La. R.S. 9:5605 provides that plaintiff's legal malpractice suit is perempted; however, we remand the case to the trial court to allow plaintiff to amend and supplement his petition.

FACTS AND PROCEDURAL HISTORY

On July 10, 1989, Bruce A. North ("North"), as attorney for William Reeder, Jr. ("Reeder"), filed a complaint in the United States District Court of the Eastern District of Louisiana against the Succession of Michael B. Palmer, Lynn Paul Martin, and the Bank of LaPlace. The complaint alleged various violations of federal and state securities laws resulting from a fraudulent check kiting and Ponzi scheme allegedly perpetrated by Martin and facilitated by Palmer and the Bank of LaPlace resulting in damages to Reeder. The district court dismissed the complaint with prejudice in favor of the defendants. Reeder v. Succession of Palmer, 736 F.Supp. 128 (E.D.La.1990). The United States Court of Appeals for the Fifth Circuit affirmed the dismissal on September 27, 1990. Reeder v. Palmer, 917 F.2d 560 (5th Cir.1990). In May of 1990, North filed a petition in state court on behalf of Reeder against the same defendants based on the same course of conduct alleging negligence, negligent misrepresentation, breach of fiduciary duty, breach of contract, and violations of the Louisiana Blue Sky Law. [97-0239 La. 3] On April 26, 1991, the trial court sustained defendants' exceptions of no cause of action and res judicata and dismissed the case. On September 16, 1992, the Louisiana Court of Appeal for the Fifth Circuit affirmed in part and reversed in part, holding that res judicata barred further claims based on state securities law, but did not bar further claims against Palmer that were not included in the federal complaint. Reeder v. Succession of Palmer, 604 So.2d 1070 (La.App. 5th Cir.1992). This Court reversed that ruling on September 3, 1993, holding that because the federal court had pendant jurisdiction over all of Reeder's state law claims against Palmer, the federal judgment precluded the omitted state law claims. Reeder v. Succession of Palmer, 623 So.2d 1268 (La.1993). Rehearing was denied on October 7, 1993. The U.S. Supreme Court denied certiorari on February 28, 1994. Reeder v. Succession of Palmer, 510 U.S. 1165, 114 S.Ct. 1191, 127 L.Ed.2d 541 (1994). North continued to represent Reeder throughout these proceedings.

On September 15, 1994, Reeder filed the present legal malpractice suit against North and his law firm, alleging the following:

XIV.

Because North failed to raise all of Petitioner's claims in the original federal complaint, Petitioner is now barred from recovering under any theory the damages he sustained as a result of his investments in the fraudulent check kiting and Ponzi scheme.

XVI.

Petitioner also avers that the res judicata bar on his subsequent state claims was caused solely by the negligence of North and Malony, North & Kewley in not properly raising all of the claims arising out of the same transaction or occurrence in the federal complaint.

North filed an exception claiming that Reeder's malpractice action was perempted under La.R.S. 9:5605. In his opposition memorandum, Reeder claimed [97-0239 La. 4] that La. R.S. 9:5605 was unconstitutional. The trial court granted North's exception and dismissed Reeder's suit. On November 3, 1995, Reeder appealed to the Louisiana Court of Appeal for the Fifth Circuit. On April 22, 1996, Reeder filed a motion to stay the appeal and to remand the case back to the trial court in order to specifically plead that the application of La. R.S. 9:5605 would be unconstitutional as applied. Without acting on the motion, the court of appeal reversed the judgment of the trial court and remanded the case for a trial on the merits. Reeder v. North, 96-165 (La.App. 5th Cir. 11/14/96), 683 So.2d 912.

North filed a writ application in this Court alleging two assignments of error: (1) that the appellate court ignored the express provisions of La. R.S. 9:5605 that the peremptive period cannot be renounced, interrupted, or suspended by applying a rule of suspension; and (2) that the appellate court erroneously held that the three-year peremptive period commences only when a cause of action has accrued, rather than on the date of the act, omission or neglect. We granted North's writ to consider these assignments of error. Reeder v. North, 97-0239 (La.3/27/97), 692 So.2d 377.

DISCUSSION

On July 10, 1989, when North filed the initial suit in federal court wherein he allegedly negligently failed to include all causes of action, the prescriptive period for legal malpractice claims was governed by La. C.C. art. 3492, which provides that delictual actions are subject to a liberative prescription of one year commencing to run from the day injury or damage is sustained. Braud v. New England Ins. Co., 576 So.2d 466, 468 (La.1991). The time limits to file legal malpractice actions are [97-0239 La. 5] now contained in La. R.S. 9:5605, enacted in 1990 and amended in 1992, which provides in part:

A. No action for damages against any attorney at law duly admitted to practice in this state, any partnership of such attorneys at law, or any professional corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of 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, or within one year from the date that 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.

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. The one-year and three-year periods of limitation provided in Subsection A of this Section are peremptive periods within the meaning of Civil Code Article 3458 and, in accordance with Civil Code Article 3461, may not be renounced, interrupted, or suspended.

C. 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, any partnership of such attorneys at law, or any professional law corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of law, the prescriptive and peremptive period shall be governed exclusively by this Section.

The court of appeal found, in spite of the clear wording of this statute, that "[i]n determining when the claim against an attorney comes into existence, and hence when prescription or peremption begins to run, we must determine when the facts ripened into a viable cause of action sufficient to support a lawsuit." 683 So.2d at [97-0239 La. 6] 915. The court of appeal held that "[w]hile the attorney-client relationship is in existence and the attorney is actively attempting to remedy the alleged malpractice until the judgment giving rise to the malpractice claim becomes definitive, a legal malpractice claim does not ripen into a cause of action." Id. at 916. The court found that this did not occur until the U.S. Supreme Court denied certiorari on February 28, 1994. Thus, the court of appeal found that Reeder's malpractice suit was timely filed on September 15, 1994.

We cannot agree with the court of appeal's reasoning. The Legislature was particularly clear in wording La. R.S. 9:5605 so as to leave no doubt as to its intent. "When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature." La. C.C. art. 9. As directed by this Civil Code article, we must apply the statute as written.

La. R.S. 9:5605A expressly provides that all legal malpractice actions must be brought "within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered;...." The Legislature put a three-year limit on these actions by further stating that "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...