Barrasso Usdin Kupperman Freeman & Darver, L.L.C. v. Burch
Docket: Nos. 2014-CA-1020, 2014-CA-1021
Court: Louisiana Court of Appeal; March 18, 2015; Louisiana; State Appellate Court
Plaintiffs George Burch and Bryan Burch appeal a trial court judgment from April 7, 2014, which upheld exceptions of res judicata and peremption filed by defendants Thomas A. Roberts, their former attorney, and Continental Casualty Company. The judgment relates to a prior ruling on April 29, 2013, where the trial court granted a peremption exception from Roberts' law firm, Barrasso Usdin Kupperman, Sarver, L.L.C.
The case stems from the Burches' retention of Barrasso in November 2007 for a lawsuit initiated by their sister regarding asset management of their incapacitated mother. After settling the sister’s suit in September 2008 and concluding representation in March 2009, the Burches faced a claim from Barrasso for outstanding fees of $50,039.27 in July 2011. Subsequently, the Burches countered with a reconventional demand alleging inadequate legal representation, excessive billing, fraud, and breach of fiduciary duty, claiming damages of $1.3 million.
Barrasso responded with an exception of peremption, asserting that the reconventional demand was untimely under Louisiana law. The trial court dismissed the Burches' claims on April 29, 2013, determining that the alleged failures occurred before the settlement date, hence were perempted. The court also denied the Burches' various motions, including for partial summary judgment and to compel responses to admissions, concluding that the claims were based on events preceding the September 24, 2008 settlement. The appeal was ultimately affirmed.
The Reconventional Demand and Third Party Demand filed by the Burches on October 27, 2011, is deemed perempted. They argue against this by claiming fraud, which, under La. R.S. 9:5605(E), would make the peremptive period inapplicable. However, the law clarifies that the "continuous representation rule" does not suspend the peremptive period, as it is based on contra non valentem, which applies only to prescription, not peremption, as established in Reeder v. North, 701 So.2d 1291 (La. 1997). Moreover, even if this rule were applicable, the Burches failed to file their demands within one year after their representation by the Barrasso firm ended in April 2009, despite knowledge of the alleged fraud prior to the Settlement Agreement on September 24, 2008.
Although fraud may extend the three-year peremptive period, it does not exempt the Burches from the one-year requirement, which mandates that any malpractice action based on fraud must be initiated within one year of the fraudulent act or discovery. The Burches' claims of overbilling, presented as deception, occurred before the Settlement Agreement, and they had adequate knowledge of these issues at that time. Consequently, the Exception of Peremption is upheld, leading to the dismissal of the Burches’ claims related to fraud. They retain the right to contest the fees' amount and reasonableness in the original action.
The Burches’ Motion for Partial Summary Judgment regarding the Louisiana Unfair Trade Practices and Consumer Protection Act (LUTPA) and "obvious negligence" is denied, as claims of "obvious negligence" are perempted and the doctrine does not apply in this case. Additionally, the Burches had not previously asserted claims under LUTPA. They sought permission to amend their demands to include LUTPA claims but later indicated an intention to withdraw this motion, leading to its denial as moot.
The Court denied the Burches’ Motion to Compel Amended Responses to Requests for Admissions and also previously denied their Motion for Entry of Partial Final Judgment and their Notice of Intent for Writs related to a prior judgment due to untimeliness, with no appeal lodged by the Burches. On April 7, 2014, the Burches initiated a separate action against Roberts and Continental, citing violations under the Louisiana Unfair Trade Practices and Consumer Protection Act (LUTPA), alleging fraudulent overbilling, misrepresentation of legal efforts, and breach of fiduciary duty, claiming damages exceeding $1,300,000 along with emotional distress. They requested consolidation of this new complaint with existing litigation regarding an open account, which the trial court granted.
Roberts responded with exceptions of res judicata and peremption, arguing that the claims were identical to those previously dismissed due to untimeliness in a reconventional demand against Barrasso. He noted that the trial court had already ruled the Burches' legal malpractice claims were perempted under La. R.S. 9:5605 and that LUTPA also imposes a one-year peremptive period for claims, which the Burches exceeded. A hearing on these exceptions was held on March 14, 2014, where evidence from a prior hearing was stipulated for use. The trial court ultimately maintained Roberts’ exceptions, and the Burches appealed this judgment.
The Burches appeal the April 29, 2013 reconventional judgment, which dismissed their reconventional demand, and the April 7, 2014 judgment that upheld Roberts' exceptions of res judicata and peremption. They argue several errors by the district court: (i) granting the Exception of 9:5605(A) Peremption without considering evidence of fraud under 9:5605(E); (ii) failing to account for evidence of egregious overbilling and relevant case law; (iii) declining to admit fraud evidence leading to Proffers 1-5; (iv) ignoring Attorney General Opinion 12-0083 regarding the Louisiana Unfair Trade Practices and Consumer Protection Act; (v) dismissing their Breach of Contract petition in a consolidated suit involving Continental Casualty Company, which they argue should restart the peremptive period under LUTPA; and (vi) denying their motion to amend responses to Requests for Admission.
The only judgment under review is the April 7, 2014 Roberts judgment. Since the Burches did not timely appeal the reconventional judgment, it became a final judgment, and the court lacks jurisdiction to alter it. Therefore, the court's review will focus on whether the issues in the reconventional judgment support the exceptions of res judicata and peremption in relation to the Burches' claims against Roberts. The definition and application of res judicata under La. R.S. 13:4231 establish that a valid and final judgment is conclusive between the same parties, extinguishing all causes of action arising from the same transaction or occurrence at the time of judgment. It also bars subsequent actions on those causes and is conclusive regarding any issues actually litigated and determined.
To establish that a second action is barred by res judicata, five elements must be satisfied: 1) the judgment must be valid; 2) it must be final; 3) the parties involved must be the same; 4) the causes of action in the second suit must have existed at the time of the final judgment in the first suit; and 5) the causes of action in the second suit must arise from the same transaction or occurrence as the first suit (Chevron USA, Inc. v. State). In the current case, the validity of the reconventional judgment is undisputed. The Burches contest its finality, arguing it did not resolve the entire case; however, the judgment is considered final as it dismissed the Burches’ reconventional demand with prejudice.
The same parties are involved in both actions, with the Burches as petitioners and Roberts representing the same interests in both cases, while Continental is implicated as the insurer. The causes of action in both cases stem from the Burches' relationship with Barrasso and Roberts as their legal counsel, referencing the same alleged misconduct during the same time frame. The present complaint does not introduce any new claims.
Both actions arise from the same transaction, specifically the alleged inadequate and fraudulent legal representation by Barrasso and Roberts, including claims of fraudulent billing, ineffective advocacy, and coercion into an unfavorable settlement. All elements for res judicata are satisfied, precluding the re-litigation of the Burches’ allegations in the second complaint. Therefore, the trial court's decision to grant Roberts’ exception of res judicata is upheld. The court will next examine whether Roberts’ exception of peremption, under La. R.S. 9:5605 and LUTPA, was appropriately granted.
The Burches argue that the trial court improperly granted the exception of peremption under La. R.S. 9:5605(A) without considering their claims of fraud and overbilling, asserting these claims are not legal malpractice and thus not subject to the statute's peremptive limits. However, the trial court had already ruled that these claims were indeed legal malpractice governed by La. R.S. 9:5605 when it granted Barrasso’s exception of peremption in the reconventional judgment. Consequently, the appellate court will not revisit the applicability of La. R.S. 9:5605 or the trial court's decisions on evidentiary matters related to the merits of the fraud and overbilling claims, which do not pertain to the exceptions of res judicata or peremption currently under review.
The governing principles regarding the timeliness of a legal malpractice claim, as outlined in La. R.S. 9:5605, establish that the claim must be filed within one year of the act or discovery of the act, with an absolute three-year limit from the act's occurrence. The trial court noted that the Burches entered a Settlement Agreement on September 24, 2008, which concluded the defense of the underlying action, and acknowledged receiving monthly billing statements from November 2007 to April 2009. All alleged acts occurred before the Settlement Agreement, and the Burches had enough knowledge at that time to be aware of the alleged fraud. Since the Burches did not file suit until October 27, 2011, the trial court upheld the exception of peremption. Findings of fact regarding prescription, when raised by a peremptory exception and supported by evidence, are reviewed under the manifest error-clearly wrong standard.
Both of the Burches’ legal malpractice complaints were filed beyond the one-year peremptive period, leading to the affirmation of the trial court's judgment that granted the exception of peremption. The Burches argued that the trial court improperly dismissed their claim under the Louisiana Unfair Trade Practices Act (LUTPA) and failed to consider Attorney General Opinion 12-0083 regarding LUTPA's applicability to the legal profession. However, their claims were fundamentally based on legal malpractice rather than breach of contract. The court found that regardless of LUTPA's applicability, the Burches did not timely assert their claim, as the peremptive period for LUTPA is also one year from the relevant transaction or act, mirroring the time limitations for legal malpractice actions. Consequently, the Burches waited over a year to file their LUTPA complaint following any deceptive actions. The trial court's decision to grant Roberts' exception of peremption regarding LUTPA was thus upheld. The judgment affirming the exceptions of res judicata and peremption was confirmed, underscoring that peremption periods, as defined by Louisiana law, extinguish rights if not exercised within the specified timeframe and cannot be interrupted or suspended.
In actions against attorneys or law firms in this state, the prescriptive and peremptive periods are governed exclusively by the provisions of the referenced section, regardless of other laws. This section applies to all individuals, including those with disabilities or minors. Notably, the peremptive period does not apply in cases of fraud as defined by Civil Code Article 1953.
The Burches sought to amend their claims under the Louisiana Unfair Trade Practices and Consumer Protection Act (LUTPA), arguing that Barrasso’s severe negligence did not require expert testimony for liability. Their motion for partial summary judgment aimed to establish this negligence, while a motion to compel sought admissions to support their claims.
LUTPA allows individuals who suffer ascertainable losses due to unfair or deceptive practices to seek damages individually, with potential treble damages if the offending party knowingly used such practices after being notified by the attorney general. Courts can also award reasonable attorney fees to the prevailing party, and may impose fees on defendants if the action is found to be groundless or harassing. Claims under LUTPA must be filed within one year of the incident.
In related case law, the Burches referenced Shreveport Credit Recovery v. Modelist, which determined that certain claims could be governed by the general prescriptive period for contractual claims rather than the malpractice statute. The court also dismissed the Burches' argument regarding the denial of their motion to amend responses to Requests for Admissions, stating it was not relevant to the trial court's decisions on res judicata or peremption.
The opinion addressed whether LUTPA protections apply to fraudulent billing by law firms and if clients qualify as consumers under the act, with false billing practices considered "unfair or deceptive acts" in legal services.
