Opinion
CIVIL ACTION NO. 03-2907 SECTION "L" (3)
April 16, 2004
ORDER REASONS
Before the Court is the plaintiff's Motion for Partial Summary Judgment. For the following reasons the motion is hereby DENIED, and the plaintiff's suit is DISMISSED.
I. BACKGROUND
This case arises out of two prior lawsuits filed in this court: Dimitrios Drillias versus M/V AMERICAN CHEMIST, et al., Civil Action 96-1748, and Sunrise Shipping, Ltd. versus M/V AMERICAN CHEMIST, et al., Civil Action 96-2849. In these prior cases, the Plaintiff Drillias brought an action against his employer under the Jones Act and general maritime law for injuries allegedly suffered while working as a member of the crew of the M/V AMERICAN CHEMIST.
According to the Defendants, the Plaintiff was represented by their law firm, Caskey Burley, L.L.C. (CB), in the above actions intermittently from 1996 to May 1, 1999. In May of 1999, Caskey left CB and took the Drillias case with him. On June 19, 1999, Drillias signed a representation agreement with Caskey in Caskey's own name: the agreement makes no mention of CB.
The plaintiff's case was settled by consent judgment in the Eastern District of Louisiana in early June of 1999. On June 10, 1999, Caskey received $241,011.70 from the Clerk of Court; this amount represented $225,000 in principal and $17,790.78 in accrued interest, less a $1,779.08 administration fee. Nine days later, on June 19, 1999, Caskey met with Drillias in Greece to disburse the settlement funds. Caskey disbursed $108,682.20 to Drillias, and gave him a "Disbursement Sheet" documenting the expenses and fees withheld by Caskey, including attorneys' fees. At the time Caskey made the disbursement to the Plaintiff, he also informed the Plaintiff that an additional recovery of $9,607.02 would be paid if interest was properly payable on the settlement. Additionally, the Plaintiff asked Caskey to negotiate a lesser fee for another one of the plaintiff's attorneys and later disputed another amount withheld from the disbursement.
During the pendency of the plaintiff's lawsuit, the Defendants and CB were undergoing financial difficulties. To address those concerns, in 1998, Caskey personally filed for Chapter 7 bankruptcy. Furthermore, on November 4, 1999, CB petitioned for state court supervised liquidation of the law firm.
Defendant Caskey maintains that the entire disbursement of the plaintiff's settlement was under the supervision of a United States Bankruptcy Trustee in In Re: Caskey, Case Number 98-12739, United States Bankruptcy Court, Middle District of Louisiana. As such, the Trustee was required to approve all the disbursements to the Plaintiff. Caskey alleges that before Trustee approval was obtained for the last disbursement to the Plaintiff, the Louisiana state court proceedings regarding the liquidation of CB intervened in Caskey's United States Bankruptcy proceedings, and Caskey was enjoined from disbursing any further funds to the Plaintiff pending court or liquidator approval.
A judgment of dissolution of CB was entered on December 23, 1999. Caskey states that he was ordered to turn over any residual funds inuring to the benefit of the Plaintiff to the state court liquidator. Caskey further claims that the dissolution order, approved by the Bankruptcy Trustee, relieved him of any further responsibilities relative to plaintiff's case. Accordingly, Caskey states that he turned over $12,000, representing all funds inuring to the benefit of the Plaintiff, to the court appointed liquidator on February 2, 2000. Thus, Caskey maintains that he is no longer in possession of the funds and has no further obligation to the Plaintiff.
On February 25, 2000, the Plaintiff filed a complaint against Caskey with the Louisiana State Bar Association, Office of Disciplinary Counsel, demanding an accounting and the residual money from the settlement. Apparently, this complaint was dismissed after a finding that Caskey had not violated any professional duty owed to the Plaintiff. Thereafter, on or about April 1, 2000, the Plaintiff retained new counsel to contact Caskey and demand payment of the residual funds from the settlement. At that time and currently, Caskey maintains that all of the funds were turned over to the liquidator.
The Plaintiff filed the present suit, over four years from the date of the settlement, in Civil District Court for the Parish of Orleans in October of 2003, and the case was removed to this Court on October 17, 2003. In his complaint, the Plaintiff asks the Court to find that the Defendants breached their fiduciary duty and to order an accounting, including justification of all costs and expenses deducted and withheld from the total settlement proceeds.
The Plaintiff now moves this Court for partial summary judgment on his breach of fiduciary duty claim. Drillias seeks an accounting from the Defendants, and an award of $25,272.13, representing the total of the three amounts withheld in June 1999 during Caskey's disbursement to the Plaintiff. The Defendants filed separate responses to the plaintiff's motion. Caskey argues that the action should be dismissed on the basis of prescription and on the merits. He maintains that he has satisfied his obligations to the Plaintiff. Burley claims that he is not a proper Defendant because the Plaintiff was represented by Caskey. He further claims that he did not possess funds in which the Plaintiff had an interest.
Because the Court finds that the plaintiff's claims have prescribed, the Court need not address the other issues raised by counsel in their respective briefs.
II. LAW AND ANALYSIS
A. Legal Standard
Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995). "[A] dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. To oppose a motion for summary judgment, the non-movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contrary facts." Id. The Court does not, "in the absence of proof, assume that the nonmoving party could or would prove the necessary facts." Id. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita, 475 U.S. at 588. Finally, "the mere existence of some factual dispute will not defeat a motion for summary judgment; Rule 56 requires that the fact dispute be genuine and material." Willis, 61 F.3d at 315. If the evidence leads to only one reasonable conclusion, summary judgment is proper. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
B. Prescription
Defendants maintain that the action should be dismissed because plaintiff's claim has prescribed. Louisiana provides for a one-year prescriptive period for legal malpractice actions. La. Rev. Stat. § 9:5605(A) (1992). This period runs from the date of the act, omission, or neglect giving rise to the client's injury, or from the date on which the client knew or should have known of the malpractice. Id. There is no "continuous representation" theory under this statute, so the date of the act of malpractice, and not the last date of representation, is the relevant date for prescriptive purposes. Reeder v. North, 701 So.2d 1291, 1298-99 (La. 1997).
For purposes of discovery under the one-year prescriptive period, prescription begins to run when a client knew or should have known of facts that would have enabled him to state a cause of action for malpractice, even if the client has a limited ability to comprehend and evaluate those facts. Turnbull v. Thensted, 757 So.2d 145, 150 (La.App. 4 Cir. 2000). A client is considered to have discovered potential malpractice once he hires an attorney to represent him in a malpractice action. Id. The actual date of discovery is prior to hiring, however, because a client has formed an awareness of potential malpractice prior to that date. Id.
Louisiana also places an absolute limit on legal malpractice claims through a three-year peremptive period that runs from the date of the act, omission or neglect giving rise to the claim. La. Rev. Stat. § 9:5605(A) (1992).
However, the statute provides for an exception to the three-year peremptive period in cases of fraud. Even in cases of fraud, though, the one-year prescriptive period applies. La. Rev. Stat. § 9:5605(E) (1992); Broussard v. Toce, 746 So.2d 659 (La.App. 3 Cir. 1999). Thus, a client who discovers an attorney's fraud may bring his action more than three years from the date of the fraudulent act, so long as the action is brought within one year from the date the client discovered the fraud.
Fraud is a misrepresentation or suppression of the truth made with the intent to gain an unjust advantage or to cause another loss or inconvenience. La. Civ. Code art. 1953 (1984). To prove fraud, a plaintiff must show that the defendant had an intent to defraud; a showing of negligence is not enough. Cortes v. Lynch, 846 So.2d 945, 950 (La.App. 1 Cir. 2003). In addition, fraud must be pleaded with particularity. La. Code Civ. Proc. art. 856 (1984).
In his complaint, Drillias alleges fraud and intentional misrepresentation on the part of the Defendants. Thus, the three-year peremptive period does not apply in this case. Nonetheless, the action is still subject to the one-year prescriptive period from the date the Plaintiff knew or should have known of the alleged fraudulent acts. In this case, the Plaintiff filed a complaint with the disciplinary board on February 25, 2000, asserting precisely the same allegations as the instant matter. By April 1, 2000, Drillias had hired a lawyer who made an in-person demand for restitution from the Defendants. Even taking the most favorable date to the Plaintiff, April 1, 2000, as the start date for the running of prescription, the present action for malpractice based on fraud or otherwise has long since prescribed.
The Court notes that in July 2003, the Louisiana Legislature amended the prescription rules for attorney malpractice actions. La. Rev. Stat. § 9:5605.1 (2004). The statute provides that if the malpractice claim deals with theft or misappropriation of a client's funds, and if the client files a complaint with the state disciplinary board, prescription of the client's malpractice action is interrupted during the disciplinary proceedings. Id.
The Louisiana Civil Code provides that "[p]rocedural and interpretative laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary." La. Civ. Code art. 6 (1999). The legislature was silent regarding the retroactivity of the new statute. As described by the Louisiana Supreme Court, procedural laws are "those which prescribe a method for enforcing a substantive right and relate to the form of the proceeding or the operation of the laws[.]" Sawicki v. K/S STAVANGER PRINCE 802 So.2d 598, 603 (La. 2002) (finding a statute regarding the enforceability of forum selection clauses should be retroactively applied).
Section 9:5605.I appears to provide for "a method of enforcing a substantive right" by establishing a new prescriptive rule for certain malpractice actions; thus, it is possible that the statute could apply retroactively. Id. However, this Court need not decide the issue. The enactment of a new prescriptive statute cannot revive a cause of action that has already prescribed. Hall v. Hall, 516 So.2d 119, 120 (La. 1987); Bishop v. Simonton, 615 So.2d 8, 11 (La.App. 2 Cir. 1993) (applying the rule in a medical malpractice case). By the time that the statute was passed in 2003, Drillias' claim against Caskey and Burley had prescribed. The new statute cannot revive Drillias' claim against Caskey and Burley.
Burley urges a further ground for dismissal of the plaintiff's claims against him. Burley argues that he never personally provided representation to Drillias, and that, after May 1, 1999, during the events of this case, Caskey represented Drillias as a sole practitioner. On May 1, 1999, Caskey withdrew from CB. Thereafter, Caskey had an hourly fee agreement with CB for his work on the case. On June 19, 1999, during disbursement of the settlement, the Plaintiff signed a new representation agreement with Caskey as a solo practitioner.
Other than the alleged failure to account for the settlement proceeds, Drillias has not alleged any direct acts by Burley that constitute malpractice in this case. Drillias seems to argue that Burley is indirectly liable as a former partner of Caskey during part of the representation of Drillias. The Louisiana Supreme Court has not spoken on the issue of whether a law partner practicing in an LLC is liable for the malpractice of his partners. The Court need not address that issue here, however, because the Court finds that the Plaintiff was represented solely by Caskey during the period of time relevant to the case. The alleged fraudulent or improper acts occurred during the disbursement of the settlement. By that time, Caskey was no longer with CB, but was practicing as a solo practitioner. Moreover, Caskey took the Drillias case with him when he withdrew from the firm, thereby entitling him to any potential fees as well as exposing him to any potential risk. Thus, though the Court has already found that the Plaintiff's claims have in any event prescribed, the Court makes a separate finding that the Plaintiff cannot properly assert a cause of action against Burley.
III. CONCLUSION
For the foregoing reasons, the plaintiff's Motion for Partial Summary Judgment is hereby DENIED. Furthermore, the Court finds that the plaintiff's action is PRESCRIBED and should be and hereby is DISMISSED.