La. State Bar Ass'n v. Carr and Associates

• Decision Date: 08 May 2009
• Docket Number: No. 2008 CA 2114.,2008 CA 2114.
• Citation: 15 So.3d 158
• Parties: LOUISIANA STATE BAR ASSOCIATION v. CARR AND ASSOCIATES, INC. and Earl T. Carr, Jr.
• Court: Court of Appeal of Louisiana — District of US

15 So.3d 158

LOUISIANA STATE BAR ASSOCIATION v. CARR AND ASSOCIATES, INC. and Earl T. Carr, Jr.

No. 2008 CA 2114.

Court of Appeal of Louisiana, First Circuit.

May 8, 2009.

Rehearing Denied June 15, 2009.

Charles M. Hughes, Jr., Gary L. Hanes, Mandeville, LA, Henry T. Dart Covington, LA, for Plaintiff-Appellee, Louisiana State Bar Association.

Jean-Paul Layrisson, Steven O. Scandurro, New Orleans, LA, for Defendants-Appellants, Carr and Associates, Inc. and Earl T. Carr, Jr.

Before CARTER, C.J., WHIPPLE and DOWNING, JJ.

CARTER, C.J.

This case involves the trial court's grant of permanent injunctive relief in favor of the Louisiana State Bar Association (the LSBA) and against a public insurance adjuster, Earl T. Carr, Jr., and his public adjusting business, Carr and Associates, Inc. (hereafter collectively referred to as "Carr"). The injunctive relief is based on the trial court's finding that Carr was engaged in the unauthorized practice of law, which is strictly prohibited by Louisiana law. For the following reasons, we affirm the trial court's judgment.

FACTS AND PROCEDURAL BACKGROUND

The LSBA initiated this lawsuit on September 5, 2006, after receiving several complaints regarding Carr's public insurance adjusting activities. Carr's business involves contracting with individuals in a representative capacity in order to negotiate a settlement of the individual's first-party property insurance claims with insurance companies. No employee of Carr is a licensed attorney in Louisiana or elsewhere. Carr's fee for its public adjusting service is contingent upon and calculated by a percentage of the amount recovered for each claim. Based upon the complaints, the LSBA became convinced that Carr was engaged in the unauthorized practice of law because Carr: (1) advised and counseled its clients regarding the terms of their insurance policy coverage and their respective rights; (2) had direct contact and negotiated with its clients' insurers regarding aspects of the clients' insurance coverage, the monetary value of its clients' claims, and settlement of its clients' claims; (3) improperly used a contingency fee/percentage-based contract for its public adjusting services; and (4) instructed its clients' insurers to send checks directly to Carr and made payable to Carr along with Carr's clients. The LSBA believed that all of these activities were in direct violation of prohibitory language in the Louisiana Public Adjuster Act (the LPAA),¹ LSA-R.S. 22:1691, et seq. (formerly cited as LSA-R.S. 22:1210.91, et seq.), and constituted the unauthorized practice of law in violation of LSA-R.S 37:212-213. Therefore, the LSBA sought a preliminary and permanent injunction restraining, enjoining, and prohibiting Carr from the outlined activities, as well as a declaratory judgment outlining what activities were prohibited by law.

In response to the LSBA's petition, Carr filed an answer and peremptory exceptions raising the objections of no right of action and no cause of action. Carr argued that the LSBA lacked standing to regulate the activities of a non-lawyer and could not bring a civil suit to enforce a criminal statute. The trial court heard argument on the exceptions at the same time that it received evidence on the preliminary injunction. The evidence submitted to the trial court at a three-day hearing included: (1) copies of Carr's various contingency fee and percentage-based compensation contracts that required payment from insurance companies to Carr and the insured client whom Carr represented; (2) copies of an advertising brochure, notice of representation, and power of attorney, all indicating that Carr advised and assisted in the conclusion of insurance losses/claims and represented the interests of insured clients in mediation and negotiation in order to settle insurance claims; (3) testimony from Carr and several of Carr's clients regarding the fee arrangement and the advice given by Carr; (4) testimony regarding complaints filed with the LSBA; (5) a surveillance tape of a private investigator and a representative of Carr where Carr is presented as an advocate in the insured client's negotiating process with its insurers; and (6) expert testimony from a professor of law regarding the practice of law and the unauthorized practice of law.

On October 23, 2006, the trial court rejected Carr's peremptory exceptions raising the objections of no right of action and no cause of action, finding that the LSBA had standing to bring the action for injunctive relief. The trial court also granted a preliminary injunction against Carr, finding that the LSBA had established by a "preponderance of the evidence" that Carr had engaged in the unauthorized practice of law and enjoining Carr from specific prohibited activities. No appeal was taken from the preliminary injunction.² A few days later on October 31, 2006, the LSBA moved for a permanent injunction prohibiting Carr from engaging in the unauthorized practice of law and from utilizing unauthorized contingent/percentage-based fee contracts. The LSBA relied on all of the testimony and exhibits that had been introduced into the record at the preliminary injunction hearing. Carr responded by re-urging the peremptory exceptions raising the objections of no right of action and no cause of action, again challenging the LSBA's standing to bring the action for injunctive relief. The trial court denied Carr's peremptory exceptions for the same reasons it overruled them before the preliminary injunction proceeding.

Trial on the merits of the permanent injunction was held on February 21, 2008. At the trial, the parties filed stipulations and submitted the entire record to date, including all of the evidence previously adduced at the hearing on the preliminary injunction. The trial court took the matter under advisement, and on March 25, 2008, rendered judgment in favor of the LSBA, issuing a permanent injunction without bond against Carr. The permanent injunction prohibited Carr from: (1) entering into fee agreements with clients that provide for payments to Carr that are contingent upon and calculated as a percentage of the amount paid on the clients' insurance claims; (2) advising or counseling clients in a manner that constitutes the unauthorized practice of law, including giving advice on the terms of insurance policies, rights, limitations, coverage, liabilities, establishing and/or enforcing legal remedies, or law; (3) having any direct contact with its clients' insurers to settle its clients' claims against the insurers by negotiating with the insurers regarding legal aspects of its clients' insurance policies and claims, acting on behalf of its clients to prevent a wrong or establish a right, and negotiating with its clients' insurers over the monetary value of its clients' claims; and (4) instructing insurance companies to send checks directly to Carr and made payable to Carr along with Carr's clients.³

Carr moved for a new trial, but that motion was denied. Carr then appealed to this court from the trial court's final judgment issuing the permanent injunction.⁴ Carr raises the following assignments of error (some of which have been combined):

1. The trial court committed legal error in denying Carr's peremptory exceptions raising the objections of no right of action and no cause of action.

2. The trial court was manifestly erroneous in ruling against Mr. Carr individually as there was a lack of evidence in the record supporting any personal liability against Mr. Carr.

3. The trial court was manifestly erroneous and committed legal error in allowing expert testimony on matters related to "the field of law."

4. The trial court's decision was manifestly erroneous on the merits because it was based on entrapment evidence that was largely manufactured from a "sting operation."

LAW AND ANALYSIS

Peremptory Exceptions

Carr argues that the trial court legally erred when it twice overruled Carr's peremptory exceptions raising the objections of no right of action and no cause of action. Initially, we note that a peremptory exception may be urged at any time. LSA-C.C.P. art. 928. And a party may re-urge a peremptory exception after it has been denied. Landry v. Blaise, Inc., 02-0822 (La.App. 4 Cir. 10/23/02), 829 So.2d 661, 664. The overruling of a peremptory exception is merely an interlocutory order, and the court has the right, at any stage of the proceeding at which the objection was made, to set aside that decree and to sustain the exception, upon finding that it erred in overruling it. R.G. Claitor's Realty v. Juban, 391 So.2d 394, 396 (La.1980). Therefore, Carr is entitled to seek review of any adverse or prejudicial interlocutory rulings in this unrestricted appeal that was taken from the final judgment, in addition to a review of the final judgment that granted the permanent injunction. See Wooley v. AmCare Health Plans of Louisiana, Inc., 05-2025 (La.App. 1 Cir. 10/25/06), 944 So.2d 668, 674; Rao v Rao, 05-0059 (La.App. 1 Cir. 11/4/05), 927 So.2d 356, 360, writ denied, 05-2453 (La.3/24/06), 925 So.2d 1232.

No Right of Action

Carr strenuously urges that the LSBA has no standing or right to bring this action seeking injunctive and declaratory relief against non-lawyers. Carr maintains that there is no right of action for injunctive relief under the LPAA or the statutes defining the practice of law or the unauthorized practice of law. The LSBA counters that it initiated this lawsuit pursuant to its charge to protect the public from non-lawyers engaging in the unauthorized practice of law, contending that it has standing to bring such actions to regulate the practice of law, including the unauthorized practice of law, pursuant to Article III, Sections 1 and 2 of its Articles of Incorporation.⁵ The LSBA also argues that the Louisiana Supreme Court has been granted the express, exclusive, and plenary constitutional authority and power to define and regulate all...