Rentals v. Kean Miller, L. L.P.
| Decision Date | 20 February 2019 |
| Docket Number | 2017 CA 1768 |
| Parties | LOUISIANA MACHINERY RENTALS, L.L.C. AND LOUISIANA MACHINERY COMPANY, L.L.C. v. KEAN MILLER, L.L.P., LINDA S. AKCHIN, CHRISTOPHER J. DICHARRY, PAMELA R. MASCARI AND ABC INSURANCE COMPANY |
| Court | Court of Appeal of Louisiana — District of US |
NOT DESIGNATED FOR PUBLICATION
ON APPEAL FROM THE NINETEENTH JUDICIAL DISTRICT COURT
NUMBER C616658, SECTION 23, PARISH OF EAST BATON ROUGE
STATE OF LOUISIANA
Jacques F. Bezou, Sr.
Stacy R. Palowsky
Covington, Louisiana
Counsel for Plaintiffs-Appellants
Louisiana Machinery Rentals, L.L.C.
Christopher J. Dicharry and Pamela R.
Disposition: REVERSED AND REMANDED.
In this legal malpractice action, plaintiffs-appellants, Louisiana Machinery Rentals, LLC and Louisiana Machinery Company, LLC (collectively, "LMC"), appeal a district court judgment that granted a motion for judgment on the pleadings and dismissed plaintiffs' claims with prejudice. For the following reasons, we reverse and remand.
The factual background from which this action arises was set forth by the Louisiana Supreme Court in Catahoula Parish School Board v. Louisiana Machinery Rentals, LLC, 12-2504 (La. 10/15/13), 124 So.3d 1065, 1066, as follows:
Louisiana Machinery Company, L.L.C. and Louisiana Machinery Rentals, L.L.C. (collectively "the Companies"), Louisiana's exclusive Caterpillar franchise dealers, sold, leased, and/or repaired Caterpillar equipment and machinery in parishes throughout Louisiana. Following a multi-parish audit, the taxing authorities from numerous parishes began tax collection proceedings against the Companies, alleging they incorrectly failed to charge and collect sales and use taxes from their customers on their taxable sales, leases, and/or repairs for certain tax periods, and that the Companies were liable for these taxes, penalties, and interest under the provisions of the Uniform Local Sales Tax Code [La. R.S. 47:337.1 et seq.] ("ULSTC"). [Footnote omitted.]
During September and October of 2010, tax collectors in eleven parishes instituted twenty-two suits against LMC to collect sales and use taxes, penalties, interest, and audit fees. LMC retained the law firm of Kean Miller, LLP to defend it in the multi-parish litigation.1 Approximately a year later, on October 31, 2011, LMC terminated Kean Miller, having become dissatisfied with its services. LMC then retained the law firm of Jones, Walker, Waechter, Poitevent, Carrere & Denegre (Jones Walker) to represent it in the tax litigation.
According to the allegations of LMC's amended petition, upon review of the pleadings previously filed in the litigation, Jones Walker discovered that Kean Miller "had failed to assert an exception of no cause of action and an affirmative defense based on that fact that the final assessment notices issued by all but one of the tax collectors failed to meet the strict requirements of La. R.S. 47:337.51(A)." (Footnote omitted.) Jones Walker subsequently attempted to challenge the validity of the notices in the various proceedings pending against LMC. The attempts met with varying success.2
In addition to arguing that the defense of defective notice was raised untimely,3 the tax collectors responded to the challenges by arguing that the notice required for "taxpayers" under La. R.S. 47:337.51(A) was different than the notice required for "dealers," such as LMC, under Section (B) of the statute.4 At the timein question, Section (A) provided that a "taxpayer" must be advised, among other things, that he had sixty days from the date of notice of an assessment to request a hearing with the collector. In contrast, Section (B) provided that a "dealer" aggrieved by "any findings or assessment" had thirty days from receipt of the notice of assessment or findings to file a protest with the collector and request a hearing. The tax collectors asserted LMC was properly given notice of the hearing requirements specifically set forth for dealers in Section (B), i.e., that LMC had thirty days to protest the assessment or request a hearing.
Ultimately, on October 15, 2013, the Louisiana Supreme Court held in Catahoula Parish School Board, 124 So.3d at 1075-76, that the notices issued to LMC, which failed to advise LMC it had sixty days to request a hearing, were defective for failing to comply with the mandatory notice requirements of La. R.S. 47:337.5(A). The Catahoula Court held that Section (A) applied to all taxpayers, including dealers such as LMC. Catahoula Parish School Board, 124 So.3d at 1075. The court further held that valid notice under Section (A) was an essential element of the tax collectors' claims, since these claims were premised on the tax collectors' assertions that the assessments were final. The court stated that Section (B) provided "a separate protest procedure available to dealers who are aggrieved by any finding of a collector, not solely an assessment." Catahoula Parish School Board, 124 So.3d at 1075-76. In an opinion issued the same date, the Supreme Court reached the same result in Washington Parish Sheriff's Office v. LouisianaMachinery Company, supra. Subsequently, on January 17, 2014, the Supreme Court granted writs and remanded six additional cases involving LMC to various courts of appeal for reconsideration in light of the opinions in Catahoula and Washington.5 Upon remand, the assessment notices in each of those cases were found to be defective, and the cases were remanded to the trial courts for further proceedings.6
Meanwhile, after Jones Walker advised LMC that Kean Miller had failed to challenge the validity of the tax collectors' notices, LMC filed the instant suit for legal malpractice against Kean Miller on October 30, 2012. Linda S. Akchin, Christopher J. Dicharry, and Pamela R. Mascari, the Kean Miller partners who handled the tax litigation for LMC, were also named as defendants (all defendants are collectively referred to as "Kean Miller"). In an amended petition, LMC alleged that Kean Miller failed to meet the standard of care for attorneys handling sales and use tax litigation in the State of Louisiana. Specifically, LMC alleged that Kean Miller failed to challenge the validity of the assessment notices that failed to comply with Section (A) by either filing an exception of no cause of action or an affirmative defense to the tax collectors' claims. As a result, LMC alleged that it sustained financial damages consisting of attorney fees paid to Kean Miller, additionalattorney fees paid in an effort to remedy Kean Miller's omissions, and payments it made to the Jefferson Davis Parish tax collector after all avenues of appeal were exhausted.
In response, Kean Miller filed a peremptory exception raising the objection of no cause of action or, alternatively, a motion for summary judgment. The basis of Kean Miller's exception and alternative motion for summary judgment was its contention that, as demonstrated by the conflicting appellate decisions involving LMC, the standard of care was not established as a matter of law at the time that Kean Miller represented LMC. Pointing out that a claim for legal malpractice cannot be based on rulings rendered subsequent to the alleged malpractice, Kean Miller asserted that the law was unsettled prior to the Supreme Court's decisions in Catahoula and Washington. The district court overruled Kean Miller's exception of no cause of action and denied its motion for summary judgment.
Kean Miller then filed an answer to LMC's amended petition and a motion for judgment on the pleadings. In support of its motion, Kean Miller argued that the allegations of LMC's petitions failed "as a matter of law to establish [that] Kean Miller breached the standard of care," which is an essential element of a legal malpractice claim, "because the standard of care was not known or established prior to Catahoula." Following a hearing, the district court granted Kean Miller's motion for judgment on the pleadings and signed a judgment on September 25, 2017, dismissing this matter with prejudice.
LMC has now appealed. In a single assignment of error, LMC contends the district court erred in concluding Kean Miller did not have a duty in the underlying tax litigation to raise the issue that the tax collectors' notices were defective.
Legal Malpractice:
To establish a claim for legal malpractice, a plaintiff must prove: 1) the existence of an attorney-client relationship; 2) negligent representation by the attorney; and 3) loss caused by that negligence. MB Industries, LLC v. CNA Insurance Company, 11-0303 (La. 10/25/11), 74 So.3d 1173, 1184; Teague v. St. Paul Fire & Marine Insurance Company, 07-1384 (La. 2/1/08), 974 So.2d 1266, 1272. An attorney is not required to exercise perfect judgment in every instance. Ramp v. St. Paul Fire and Marine Insurance Company, 263 La. 774, 269 So.2d 239, 244 (1972); Crescent City Property Redevelopment Association, LLC v. Hardy, 11-1292 (La. App. 4th Cir. 4/18/12), 89 So.3d 1270, 1274-75, writ denied, 12-1429 (La. 10/8/12), 98 So.3d 859. The plaintiff must prove the defendant failed to "exercise at least that degree of care, skill, and diligence which is exercised by prudent practicing attorneys in his locality." MB Industries, LLC, 74 So.3d at 1184, quoting, Ramp, 269 So.2d at 244. The Louisiana Supreme Court has held that expert testimony must be introduced in legal malpractice cases to establish the applicable standard of care, except in those rare cases where the malpractice is so egregious that a lay jury could infer the defendant's actions fell below any reasonable standard of care. MB Industries, LLC, 74 So.3d at 1185.
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