Opinion
2013 CA 2017 2013 CA 2018
07-09-2015
J. PATRICK, INC., MACHINE, PUMP AND FABRICATION v. RICKY PATRICK RICKY J. PATRICK v. JAMES H. DUPONT, MELISA A. PATRICK AND DALE A. PATRICK
John B. Brumfield Baton Rouge, Louisiana Attorney for Plaintiff/Appellee J. Patrick, Inc., Machine, Pump and Fabrication, Melisa A. Patrick and Dale A. Patrick F. Barry Marionneaux F. Charles Marionneaux Plaquemine, Louisiana Attorneys for Defendant/Appellants Ricky J. Patrick, Individually and as a shareholder on behalf of and asserting rights of J. Patrick Inc., Machine, Pump and Fabrication Connell Archey Keith Fernandez Baton Rouge, Louisiana Attorneys for Defendant/Appellant James H. Dupont
NOT DESIGNATED FOR PUBLICATION
APPEALED FROM THE EIGHTEENTH JUDICIAL DISTRICT COURT IN AND FOR THE PARISH OF WEST BATON ROUGE STATE OF LOUISIANA
DOCKET NUMBERS 39,416 AND 70,483, DIVISION "C"
HONORABLE ALVIN BATISTE, JUDGE John B. Brumfield
Baton Rouge, Louisiana
Attorney for Plaintiff/Appellee
J. Patrick, Inc., Machine, Pump and
Fabrication, Melisa A. Patrick and
Dale A. Patrick
F. Barry Marionneaux
F. Charles Marionneaux
Plaquemine, Louisiana
Attorneys for Defendant/Appellants
Ricky J. Patrick, Individually and as a
shareholder on behalf of and asserting
rights of J. Patrick Inc., Machine,
Pump and Fabrication
Connell Archey
Keith Fernandez
Baton Rouge, Louisiana
Attorneys for Defendant/Appellant
James H. Dupont
BEFORE: McDONALD, CRAIN, AND HOLDRIDGE, JJ. McDONALD, J.
In this appeal, Ricky Patrick challenges a judgment granting an exception of prescription. James H. Dupont filed an answer to the appeal, asserting that the trial court erred in denying an exception of no cause of action in a separate, consolidated suit. Mr. Dupont also filed a motion asking that an attorney/expert witness be disqualified. For the following reasons, we affirm the judgment granting the exception of prescription, dismiss the answer to the appeal, and dismiss the motion to disqualify the attorney/expert witness.
FACTS AND PROCEDURAL HISTORY
This case involves protracted litigation among several parties originating from as far back as the year 2000. The complex factual and procedural history will not be recited in full here. Briefly, however, before 2000, Bayou Fabricators Machine and Pump, Inc. (Bayou Fabricators) was apparently owned by James Patrick, his brother, Glenn J. Patrick, and Samuel Carville. After James Patrick's death in February 2000, his interest in the company devolved to his children, Ricky Patrick and Melisa Patrick. As part of a settlement agreement intended to resolve a dispute regarding ownership, Ricky Patrick and Melisa Patrick bought out Glenn J. Patrick's interest and Samuel Carville's interest in Bayou Fabricators, which at the time had been renamed J. Patrick, Inc., Machine Pump & Fabrication (hereafter the Company), for approximately $1 million. Patrick v. Dupont, 2014-0812 (La. App. 1 Cir. 3/11/15), 2015 WL 1129092, writ denied, 2015-0715 (La. 6/1/15), ___ So.3d ___, 2015 WL 3795873, and writ denied, 2015-0722 (La. 6/1/15), ___ So.3d ___, 2015 WL 3867741 (unpublished).
Three related cases were recently handed down by this court: Patrick v. Dupont, 2014-0810 (La. App. 1 Cir. 3/11/15), 2015 WL 1128669, writ denied, 2015-0750 (La. 6/1/15), ___ So.3d ___, 2015 WL 3823382 (unpublished); Patrick v. Dupont, 2014-0811 (La. App. 1 Cir. 3/11/15), 2015 WL 1128932, writ denied, 2015-0715 (La. 6/1/15), ___ So.3d ___, 2015 WL 1128932 (unpublished); and Patrick v. Dupont, 2014-0812 (La. App. 1 Cir. 3/11/15), 2015 WL 1129092, writ denied, 2015-0715 (La. 6/1/15), ___ So.3d ___, 2015 WL 3795873, and writ denied, 2015-0722 (La. 6/1/15), ___ So.3d ___, 2015 WL 3867741 (unpublished).
In 2002, the Company issued fifteen shares of stock in the Company to Mr. Dupont as compensation for legal work. The litigation over ownership of the Company was settled in 2003. Glenn J. Patrick and Samuel Carville continued to run a competing business known as Bayou Fabricators & Machine Works, Inc. Attorneys Barry Marionneaux and Charles Marionneaux represented Glenn J. Patrick and Samuel Carville in the litigation, while James H. Dupont (the uncle of Ricky Patrick's then wife, Elisabeth H. Patrick) represented the Company and Ricky Patrick.
On August 26, 2010, the Company terminated Ricky Patrick from his position as company president, due to alleged drug abuse. Ricky Patrick was rehired by the Company on September 23, 2010, with conditions. However, Ricky Patrick was again terminated by the Company on February 3, 2011, due to his refusal to submit to drug testing. On June 14, 2011, the Company filed suit against Ricky Patrick for allegedly converting more than $700,000.00 in company checks and for taking company property (the Check Suit). Ricky Patrick denied the allegations and filed a third-party claim against Mr. Dupont and Melisa Patrick, asserting that they were solidary obligors in the conversion claim.
On June 24, 2011, and by amended petition on August 24, 2011, Ricky Patrick filed suit against the Company, Melisa Patrick, Dale Patrick, and Mr. Dupont, seeking to nullify the acquiring of the 15 shares of stock by Mr. Dupont, asserting that issuing shares in exchange for legal services violated Rule 1.8 of the Rules of Professional Conduct, and asserting that Mr. Dupont committed fraud and misrepresented material facts in his efforts to obtain the stock (the Stock Suit). Ricky Patrick prayed that a writ of quo warranto be issued to compel Melisa Patrick, Dale Patrick, and Mr. Dupont to show by what authority they held office as directors of the Company. Further, Ricky Patrick asked for damages and attorney fees. Thereafter, the Check Suit, #70,483, which had been filed in Division "B" of the Eighteenth Judicial District Court, was consolidated with the Stock Suit, #39,416, in Division "C" of the Eighteenth Judicial District Court.
Dale Patrick became a stockholder in the Company after Mr. Dupont sold one of his shares of stock to him.
Attorney Elizabeth A. Engolio originally represented Ricky Patrick in the consolidated litigation. At Ricky Patrick's request, Glenn J. Patrick agreed to pay legal fees on Ricky Patrick's behalf pursuant to a loan agreement made on March 8, 2011. Also at Ricky Patrick's request, around July of 2011, Glenn J. Patrick asked the Marionneauxs to represent Ricky Patrick in the consolidated litigation. Glenn J. Patrick continued to pay Ricky Patrick's legal fees. On August 29, 2011, Ricky Patrick and Glenn J. Patrick signed a contract obligating Ricky Patrick to reimburse Glenn J. Patrick for the legal fees advanced.
Melisa Patrick, Dale Patrick, and Mr. Dupont filed a motion to disqualify the Marionneauxs as Ricky Patrick's attorneys due to the Marionneauxs' representation of Glenn J. Patrick in the 2000-2003 litigation against the Company and Ricky Patrick. After a hearing, the trial court denied the motion. The Company, Melisa Patrick, Dale Patrick, and Mr. Dupont sought supervisory writs to this court, which were denied. J. Patrick, Inc., Machine, Pump and Fabrication v. Patrick, 2013-1402 (La. App. 1 Cir. 10/27/14).
Mr. Dupont filed exceptions raising the objections of prescription, peremption, no cause of action, and non-joinder of a party (Elisabeth H. Patrick) needed for just adjudication of the Stock Suit. The Company, Melisa Patrick, and Dale Patrick later adopted and incorporated Mr. Dupont's exceptions of prescription, peremption, and no cause of action.
A hearing was held on the exception of prescription in the Stock Suit and the exception of no cause of action in the Check Suit on March 27, 2013. The parties stipulated that the issuance of stock in the Company to Mr. Dupont had occurred more than five but fewer than ten years earlier. Thereafter, the trial court granted Mr. Dupont's exception of prescription in the Stock Suit, concluding in its oral reasons for judgment that the violation of Rule 1.8 of the Rules of Professional Conduct alleged herein would constitute a relative nullity and had to be brought within the five-year prescriptive period for a relative nullity as opposed to the ten-year prescriptive period for an absolute nullity. The trial court denied Mr. Dupont's exception of no cause of action as to the third party demand by Ricky Patrick against Mr. Dupont in the Check Suit. On April 23, 2013 the trial court signed a judgment sustaining Mr. Dupont's exception of prescription, dismissing all claims against Mr. Dupont in the Stock Suit, certifying that it was a partial final judgment pursuant to La. C.C.P. art. 1915, and further, denying the exception of no cause of action filed by Mr. Dupont in the Check Suit. Ricky Patrick appealed the judgment sustaining Mr. Dupont's exception of prescription in the Stock Suit.
Mr. Dupont filed an answer to the appeal, asserting that the judgment incorrectly denied his exception of no cause of action in the Check Suit, and asking that all claims of Ricky Patrick against him be dismissed.
MOTION TO DISQUALIFY MR. CIOLINO
On January 8, 2014, Mr. Dupont filed a motion with this court to disqualify attorney of record and expert witness Dane S. Ciolino. Mr. Dupont asserted that when he received Ricky Patrick's original appellate brief on December 30, 2013, Mr. Ciolino was identified as one of the attorneys for Ricky Patrick. He noted that at no prior time was it mentioned that Mr. Ciolino was acting as counsel for Ricky Patrick. The facts set forth in the motion state that the Marionneauxs had retained Mr. Ciolino as an expert witness in the matter involving the motion to disqualify the Marionneauxs. Mr. Ciolino rendered an opinion as to whether the Marionneauxs should be disqualified and he was deposed on February 18, 2013. Mr. Dupont maintained that Mr. Ciolino also stated during the deposition that he was retained to render an opinion on the issue of whether the transfer of stock to Mr. Dupont violated any professional rules - the legal issue in the appeal. At the May 22, 2013 hearing on the motion to disqualify the Marionneauxs, Mr. Ciolino testified that the Marionneauxs should not be disqualified. On August 5, 2013, the trial court ruled that Ricky Patrick made a voluntary and informed decision in his choice of counsel and denied the motion to disqualify the Marionneauxs. Mr. Dupont sought supervisory writs to this court, which were denied on October 27, 2014. J. Patrick, Inc., Machine, Pump and Fabrication v. Patrick c/w Ricky J. Patrick v. J. Patrick Inc., Machine, Pump & Fabrication, 2014-1402 (La. App. 1 Cir. 10/27/14).
The motion to disqualify attorney of record and expert witness Mr. Ciolino was referred to this panel. Mr. Dupont's motion seeks to have Mr. Ciolino disqualified as an expert witness in this matter and strike his testimony. However, there is no expert witness testimony by Mr. Ciolino in the record in this appeal, thus there is nothing to strike in the appellate record and no reason to disqualify Mr. Ciolino as an expert witness on an issue that is not part of this appeal. Thus, the motion to disqualify Mr. Ciolino as an expert witness and strike his testimony is denied.
Because we find no expert testimony by Mr. Ciolino in the record in this appeal, we pretermit the issue of whether Mr. Dupont has standing to file the motion to disqualify Mr. Ciolino as Ricky Patrick's attorney based upon a conflict of interest.
ASSIGNMENTS OF ERROR IN THE APPEAL
In his appeal, Ricky Patrick makes the following assignments of error:
1. The district court erred in holding that the Louisiana Rules of Professional Conduct are not "laws enacted for the protection of the public interest" governed by the Civil Code's absolute-nullity provisions.
2. The district court erred in holding that a juridical act done in violation of Rule 1.8(a) and Rule 1.8(j) is subject to ratification by the client and governed by the Civil Code's relative-nullity provisions.
3. The district court erred in holding that the prescriptive period
applicable to an action to annul a noncontractual juridical act is governed by the Civil Code's provisions relating to actions on "a relatively null contract."
THE APPEAL
The issue for review in Ricky Patrick's appeal is whether an action to set aside an act by a lawyer allegedly in violation of Rule 1.8(a) of the Rules of Professional Conduct is a relative nullity that must be brought within five years pursuant to La. C.C. art. 2032. The parties stipulated at trial that the issuance of stock to Mr. Dupont had occurred more than five but fewer than ten years earlier, and the trial court found that the issuance the of stock was not an absolute nullity, but at most a relative nullity, and thus was prescribed. The trial court's ruling that an act of a lawyer that allegedly violates Rule 1.8(a) of the Rules of Professional Conduct is at most a relative nullity is a legal determination. In a case involving no dispute regarding material facts--only the determination of a legal issue--a reviewing court must apply the de novo standard of review, under which the trial court's legal conclusions are entitled to no deference. Cawley v. National Fire & Marine Ins. Co., 2010-2095 (La. App. 1 Cir. 5/6/11) 65 So.3d 235, 237.
A contract is absolutely null when it violates a rule of public order, as when the object of a contract is illicit or immoral. A contract that is absolutely null may not be confirmed. Absolute nullity may be invoked by any person or may be declared by the court on its own initiative. La. C.C. art. 2030. A contract is relatively null when it violates a rule intended for the protection of private parties, as when a party lacked capacity or did not give free consent at the time the contract was made. A contract that is only relatively null may be confirmed. Relative nullity may only be invoked by those persons for whose interest the ground for nullity was established, and may not be declared by the court on its own initiative. La. C.C. art. 2031.
The Rules of Professional Conduct, Rule 1.8 provides in pertinent part:
(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client in the transaction.
The Louisiana Rules of Professional Conduct (formerly the Code of Professional Responsibility) have the force and effect of substantive law. In re Succession of Parham, 98-1660 (La. App. 1 Cir. 9/24/99), 755 So.2d 265, 270, writ denied, 99-3016 (La. 12/17/99), 755 So.2d 240. We look to the jurisprudence interpreting similar transactions alleged to be in violation of the Rules of Professional Conduct, and find that the cases have determined that the transactions were relative nullities. In Succession of Crowe v. Henry, 602 So.2d 243 (La. App. 2 Cir. 1992), a succession, through its administratrix, brought an action against its former attorney to annul a sale of real estate to the attorney. The court held that "[a] transaction between an attorney and a client is closely scrutinized and may be annulled even though the same transaction with a non-client without overreaching may be found unobjectionable." Succession of Crowe, 602 So.2d 246-47. In Vidrine v. Abshire, 558 So.2d 288 (La. App. 3 Cir. 1990), attorneys attempted to enforce a mortgage against a client who was also a "runner" for the attorneys. The court noted that the rule of law is that all dealings between attorneys and clients will be closely scrutinized by the courts, and transactions between them are often declared to be voidable which would be deemed unobjectionable between other persons. Vidrine, 558 So.2d at 293.
In Marshall v. Wells, 381 So.2d 551 (La. App. 2 Cir. 1980) an attorney had his client execute deeds conveying a one-third interest in a succession to the attorney as his fee. The client later sought to annul and rescind the contingency fee contract and deeds given to the attorney conveying real estate pursuant to the contract. The client alleged that the fee was unreasonable, excessive, contracted in bad faith, unethical, and in violation of the Code of Professional Responsibility. The court found that the "contract and deeds, although perhaps voidable under the allegations of the petition, are not absolutely null and imprescriptible." Marshall, 381 So.2d at 552-53.
Rule 1.8(a)(1) provides that a lawyer shall not enter into a business transaction with a client unless the terms are fair and reasonable. If the transaction is fair and reasonable, it would not be a nullity. If it is not fair and reasonable, it would be a nullity. Thus, we find that a transaction between an attorney and a client that allegedly violates Rule 1.8(a) cannot be an absolute nullity, as under some circumstances it would be null, and under other circumstances it would not be null. Therefore, after a de novo review, we affirm the trial court judgment finding that a five-year prescriptive period applied to the corporate stock transfer to Mr. Dupont and finding that the suit to set aside the corporate stock transfer was prescribed.
ANSWER TO THE APPEAL
Ricky Patrick filed an appeal from the judgment granting the exception of prescription in the Stock Suit. Mr. Dupont filed an answer to the appeal, in which he is appealing the judgment denying his exception of no cause of action in the Check Suit. We must determine whether we have jurisdiction to consider Mr. Dupont's answer to the appeal since the answer challenges the interlocutory, nonappealable ruling denying the exception of no cause of action.
While the cases were consolidated, the Check Suit is a separate claim in a separate petition from the Stock Suit. The consolidation of actions is a procedural convenience designed to avoid multiplicity of actions and does not cause a case to lose its status as a procedural entity. See La. C.C.P. art. 1561; Ricks v. Kentwood Oil Co., Inc., 09-0677 (La. App. 1 Cir. 2/23/10), 38 So.3d 363, 366; In re Miller, 95-1051 (La. App. 1 Cir. 12/15/95), 665 So.2d 774, 776, writ denied, 96-0166 (La. 2/9/96), 667 So.2d 541. While a final judgment is appealable, an interlocutory judgment is appealable only when expressly provided by law. La. C.C.P. art. 2083. Under La. C.C. art. 2133 an answer to an appeal is in the character of a cross appeal in which the appellee takes advantage of an appeal entered and perfected by an appellant, in the hope of procuring an alteration or amendment of the judgment rendered in a manner beneficial to the appellee. Francois v. Ybarzabal, 483 So.2d 602, 606 (La. 1986). The only judgment that Mr. Dupont can pray for alteration or amendment to in his answer to the appeal is the judgment granting the exception of prescription, which was already rendered in his favor.
Mr. Dupont's remedy was to take writs from the judgment denying his exception of no cause of action in the Check Suit. See La. C.C.P. art. 2083. We have no jurisdiction over an appeal from an interlocutory judgment, thus the answer to the appeal is dismissed.
The judgment was rendered on April 23, 2013. Mr. Dupont's answer to the appeal was filed on December 5, 2013, well past the 30-day limit for filing a writ application, thus we will not exercise our supervisory discretion to convert Mr. Dupont's answer to the appeal to an application for supervisory writs. See Buxton v. Buxton, 2010-2182 (La. App. 1 Cir. 3/28/12), 2012 WL 1070012, *2 (unpublished). See Uniform Rules-Courts of Appeal, Rule 4-3. --------
CONCLUSION
For the foregoing reasons, the motion to disqualify Mr. Ciolino is denied, the trial court judgment granting the exception of prescription is affirmed, and the answer to the appeal is dismissed. Costs of this appeal are assessed one-half against Ricky Patrick and one-half against James H. Dupont.
MOTION DENIED; JUDGMENT GRANTING EXCEPTION OF PRESCRIPTION AFFIRMED; ANSWER TO APPEAL DISMISSED.