Summary
awarding costs for deposition transcripts
Summary of this case from Omega Hosp., LLC v. Cmty. Ins. Co.Opinion
Civil Action No. 99-3286, Section "D" (2)
September 13, 2002
ORDER AND REASONS
Plaintiff, Larry Nicholson, instituted this action to recover for alleged personal injuries arising out of an accident that allegedly occurred on August 18, 1999. He brought claims under the Jones Act and the general maritime law, and a Louisiana tort law claim under the courts supplemental jurisdiction.
After Nicholson agreed to settle his lawsuit against defendants, defendants deposited the settlement proceeds into the registry of the court. Plaintiff invoked an interpleader as to the settlement funds and was permitted to withdraw his agreed upon portion of the funds. The remaining claimants to the funds, and the only parties left in this action, include Nicholson's current attorney, John Munoz, for his attorney's fees and costs; plaintiff's former attorneys, Darleen Jacobs and the law firm of Stern Miller, who intervened in the action for their fees and costs; and three consumer credit companies, made defendants in interpleader, who allegedly loaned money to plaintiff in connection with this litigation.
I. FACTUAL AND PROCEDURAL BACKGROUND
Nicholson initially hired Jeffrey M. Stern and the law firm of Stern, Morgan Miller of Houston, Texas to represent him in connection with his personal injury claim. Plaintiff entered into a contingency fee contract with Stern, Morgan Miller, which provided for a 40% contingency fee in the event of a settlement before trial. Record Doc. No. 100, Darleen Jacobs's Memorandum in Support of Her Claim for Attorney's Fees and Costs, Exh. C. Stern referred the matter to Jacobs, who filed the instant suit as plaintiff's counsel. Stern never enrolled as counsel pro hac vice.
Although Nicholson entered into the contingency fee contract with the firm of "Stern, Morgan Miller," the petition in intervention names the firm as "Stern Miller."
Plaintiff apparently never signed a contract with Jacobs, but none of the parties dispute her entitlement to attorney's fees or costs on that basis.
Nicholson later discharged both Stern and Jacobs, and retained Russell Solomon to represent him. Solomon referred the case to Munoz. Plaintiff entered into a contingency fee contract with Solomon and the law firm of Garner Munoz. This contract also provided for a 40% contingency fee in the event of settlement before trial. Munoz enrolled as counsel of record for plaintiff. Jacobs and the law firm of Stern Miller received leave to intervene and filed their petition of intervention to recover their attorney's fees and costs. Record Doc. Nos. 37, 38.
During the pendency of this litigation, Nicholson's attorneys advanced various expenses to him or on his behalf. Solomon financed plaintiff's living expenses and costs allegedly related to the case through Oceanside, Inc. d/b/a Magnolia Credit, Inc. ("Oceanside"); Consumer Capital, Inc. ("Consumer Capital"); and Eagle Finance, Inc. ("Eagle") (sometimes collectively referred to as the "consumer credit companies").
Nicholson and the defendants agreed to settle his claims for $55,000, and the case was dismissed with the exception of the intervention. Record Doc. No. 89. Nicholson and Jacobs, individually and on behalf of Stern, Morgan Miller, entered into a joint stipulation that "counsel for plaintiff and Intervenor will split any and all attorney's fees in this matter on an equal (50/50) basis;" the $55,000 in settlement funds would be placed in the registry of the court; Nicholson would accept $5,000 as his share of the settlement; counsel for plaintiff would immediately file an interpleader against the consumer credit companies who also made claims to the funds; and the parties would submit the interpleader to the court for a determination of how the remaining $50,000 in the court's registry should be disbursed, including the amount of attorney's fees due to plaintiff's attorneys and the payment of all costs and asserted liens. Record Doc. No. 90.
Nicholson filed his complaint in interpleader against Oceanside, Consumer Capital and Eagle. Record Doc. No. 93. He received leave to withdraw $5,000 from the court's registry. Record Doc. No. 95. This matter was then referred to the undersigned Magistrate Judge for all further proceedings and entry of judgment in accordance with 28 U.S.C. § 636(c) upon the written consent of all parties. Record Doc. No. 99.
I then conducted a telephone status conference with counsel for plaintiff, intervenors and defendants in interpleader. Counsel stipulated that no live evidentiary hearing was necessary and that the remaining claims could be decided upon the submission of written memoranda and evidence. I entered a discovery and briefing schedule, and set a date for a hearing. Record Doc. No. 98.
Each of the claimants submitted an initial memorandum with attached exhibits to support their claims. Record Doc. Nos. 100, 101, 102, 103, 104. The consumer credit companies and plaintiff each filed reply memoranda. Record Doc. Nos. 105, 106, 107. Consumer Capital received leave to file a supplemental memorandum. Record Doc. No. 109. Nicholson filed his original affidavit in substitution for the unsigned copy that had been attached to his reply memorandum. Record Doc. No. 110. A hearing was conducted as scheduled. Counsel for all parties stated at the hearing that they had no additional evidence to submit.
In support of her claimed costs, Jacobs originally submitted a handwritten list of expenses totaling $1,038.14, with no affidavit, explanation or backup documentation. Stern submitted backup documentation only, without any affidavit or explanation. These submissions were "inadequate under any evidentiary standard." Record Doc. No. 112. Thus, I ordered Jacobs and Stern, Morgan Miller to submit affidavits and/or other evidence to establish the nature and association of the charged expenditures with the pending litigation. Id. They complied by filing an unopposed motion to file a supplemental memorandum in support of their intervention, which included affidavits by both Jacobs and Stern and additional supporting exhibits. Record Doc. Nos. 113, 114.
Having considered the complaint, as amended; the complaint in interpleader; the record; the written and oral submissions of the parties; the documentary evidence; and the applicable law, and for the following reasons, IT IS ORDERED that the funds in the registry of the court will be awarded and distributed as follows.
II. ANALYSIS
A. Louisiana Law Governs the Remaining Claims
Nicholson brought this action under the Jones Act, general maritime law and Louisiana tort law. The parties contend that Louisiana law governs the apportionment of the interpleaded funds, including a determination of the appropriate amount of attorney's fees and costs in this case.
The remaining claims before the court are entirely contract-based. The interventions of plaintiffs' attorneys are based on their contingency fee contracts, and the claims of the consumer credit companies are based on contracts and promissory notes executed by Nicholson in Louisiana. The promissory notes state that they will be governed by Louisiana law see Record Doc. No. 101, unnumbered exhibits attached to Oceanside and Eagle's memorandum in support of intervention; Record Doc. No. 104, Consumer Capital's Exh. 3. Some of Nicholson's obligations were allegedly perfected under Article 9 of the Louisiana Commercial Code. Id., Consumer Capital's Exh. 4. Thus, the court agrees that Louisiana law governs the remaining claims.
Nicholson's contract with Solomon and Munoz specifically refers to Louisiana law. Record Doc. No. 103, Plaintiff's Memorandum Regarding Proposed Distribution of Funds in the Registry of the Court, Plaintiff's Exh. A. Although plaintiffs contract with Stern states that it shall be construed under the laws of the state in which it was executed, the court has no evidence concerning where it was executed. Nicholson lived in Alabama at the time, as stated on the contract. No party contends that either Texas or Alabama law governs the court's interpretation of the contract or its decision concerning distribution of the funds in the registry of the court.
B. Attorney's Fees
The attorneys who have represented plaintiff in this case claim a priority for their fees and costs over the claims of the consumer credit companies. All parties concede in their memoranda that plaintiff's attorneys are entitled to a first-ranked privilege under Louisiana law for their reasonable attorney's fees, but they dispute the reasonableness of all of the fees and costs claimed.
Attorneys, including attorneys who have been discharged without cause, who have entered into a contingency fee contract with their client are entitled to a first-ranking privilege for their reasonable attorney's fees against any settlement proceeds received by the client. La. Rev. Stat. § 37:218(A); Franis v. Hotard, 798 So.2d 982, 985 (La.App. 1st Cir. 2001) (citing Saucier v. Haves Dairy Prods., Inc., 373 So.2d 102, 117 (La. 1978)).
Section 37:218(A) provides, in relevant part:
By written contract signed by his client, an attorney at law may acquire as his fee an interest in the subject matter of a suit, proposed suit, or claim in the assertion, prosecution, or defense of which he is employed, whether the claim or suit be for money or for property. Such interest shall be a special privilege to take rank as a first privilege thereon, superior to all other privileges and security interests under Chapter 9 of the Louisiana Commercial laws. In such contract, it may be stipulated that neither the attorney nor the client may, without the written consent of the other, settle, compromise, release, discontinue, or otherwise dispose of the suit or claim.
La. Rev. Stat. § 37:218(A) (emphasis added).
Furthermore, "the privilege/interest afforded an attorney with a contingency fee contract, even though unrecorded, attaches to settlement proceeds in preference to the claim of a seizing creditor, provided [the privilege] is legally asserted prior to disbursement." Scott v. Kemper Ins. Co., 377 So.2d 66, 68 n. 2 (La. 1979) (citing Calk v. Highland Constr., 376 So.2d 495 (La. 1979), superseded by statute on other grounds as stated in Francis, 798 So.2d at 985).
An attorney who is discharged without cause "may enforce the privilege accorded him by R.S. 37:218 and recover whatever fee he has earned which is not clearly excessive, up to the contractual maximum" agreed to in his contingency fee contract. Saucier, 373 So.2d at 117. When two or more attorneys are involved, each of whom had a contingency fee contract with the plaintiff,
only one contingency fee should be paid by the client, the amount of the fee to be determined according to the highest ethical contingency percentage to which the client contractually agreed in any of the contingency fee contracts which he executed. Further, that fee should in turn be allocated between or among the various attorneys involved in handling the claim in question, such fee apportionment to be on the basis of factors which are set forth in the Code of Professional Responsibility.Id. at 118.
In all cases, an attorney's right to "a recovery is subject to the court's authority to review excessive or unearned fees. Calculation of any fee due under the contingency fee contract should reference the guidelines and concerns expressed in Saucier" and in the Louisiana Rules of Professional Conduct. Francis, 798 So.2d at 986. This court has adopted the Louisiana Rules of Professional Conduct to govern the conduct of attorneys appearing before it. Local Rule 83.2.4E.
Under Louisiana law, a "reasonable attorney's fee is determined by the facts of an individual case." Richardson v. Parish of Jefferson, 727 So.2d 705, 707 (La.App. 5th Cir. 1999) (citation omitted). "The fundamental measure of attorney's fees is reasonableness, considering the factors set forth by Rules of Professional Conduct R. 1.5." Mayeur v. Campbell, 666 So.2d 366, 370 (La.App. 1st Cir. 1995).
Thus, the factors to be taken into consideration in determining the reasonableness of attorney's fees include: (1) the ultimate result obtained; (2) the responsibility incurred; (3) the importance of the litigation; (4) the amount of money involved; (5) the extent and character of the work performed; (6) the legal knowledge, attainment and skill of the attorneys; (7) the number of appearances involved; (8) the intricacies of the facts involved; (9) the diligence and skill of counsel; and (10) the court's own knowledge. Richardson, 727 So.2d at 707 (citing Rivet v. State Dep't of Transp. Dev., 680 So.2d 1154, 1161 (La. 1996)). In determining an award, the court should consider the entire record, including discovery, pretrial motions, the legal issues involved and the length of trial. Id.
These factors are derived from Rule 1.5(a) of the Rules of Professional Conduct, which provides:
(a) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:
(1) The time and labor required, the novelty and difficulty of the question involved, and the skill requisite to perform the legal service properly;
(2) The likelihood, if apparent to the client, that the acceptance of a particular employment will preclude other employment by the lawyer;
(3) The fee customarily charged in the locality for similar legal services;
(4) The amount involved and the results obtained;
(5) The time limitations imposed by the client or by the circumstances;
(6) The nature and length of the professional relationship with the client;
(7) The experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) Whether the fee is fixed or contingent.
Id. at 708 (citations omitted).
The claimants in the instant case do not dispute these principles. Nicholson entered into a contingency fee agreement with Stern Miller and another with Solomon and Garner Munoz, both of which provided for a 40% fee upon settlement before trial. Plaintiff's Exh. A; Jacobs's Exh. C. The court finds that a 40% contingency fee is ethical and reasonable on the facts of this case and that Nicholson's attorneys are entitled to recover a single, 40% fee out of the settlement funds.O'Rourke v. Cairns, 683 So.2d 697, 704 (La. 1996); Saucier, 373 So.2d at 117; Gordon v. Levet, 643 So.2d 371, 374 (La.App. 5th Cir. 1994). Furthermore, none of the parties dispute that Jacobs was discharged without cause or that the stipulated 50/50 allocation of the fees between intervenors Stern Miller and Jacobs, on the one hand, and Munoz on the other is appropriate.
Accordingly, 40% of the total settlement amount of $55,000, or $22,000, is awarded jointly to intervenors, Jacobs and Stern Miller, and to plaintiff's attorney, Munoz, as their reasonable attorney's fees, to be divided equally among them according to their joint stipulation. These attorney's fees have a first-ranking privilege and must be paid first out of the funds in the registry of the court, without interest.
C. Legal Standards for Ranking and Awarding Costs
After deducting the $5,000 settlement paid to Nicholson and the $22,000 in first-ranked, reasonable attorney's fees to be paid to plaintiff's attorneys, $28,000 remains in the registry of the court. Plaintiff's attorneys contend that, under Louisiana law, their expenses are entitled to the same privilege as their attorney's fees and should be paid in preference to the claims of the interpleaded consumer credit companies. The total costs claimed by plaintiffs' attorneys exceed $28,000. The other parties dispute whether these costs are entitled to a first-ranked privilege and whether, even if some costs are entitled to a privilege, all of the claimed costs were necessary and reasonable.
The Louisiana statute that creates a privilege for attorney's fees against a settlement provides that an attorney's "fee" includes "amounts advanced by the attorney to or on behalf of the client, as permitted by the Rules of Professional Conduct of the Louisiana State Bar Association." La. Rev. Stat. § 37:218(B); accord Francis, 798 So.2d at 985; Dupuis v. Faulk, 609 So.2d 1190, 1193 (La.App. 3d Cir. 1992). These amounts may include medical and living expenses advanced to the plaintiff, as well as direct litigation expenses. Id. Thus, "amounts advanced" for costs and expenses are included within the first-ranked privilege for "fees," provided that the amounts are reasonable, as required by Rules 1.5(a) (quoted above) and 1.8(e) of the Rules of Professional Conduct.
Rule 1.8(e) provides, with regard to the advances made to a client:
(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:
(1) A lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and
(2) A lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.
La. R. Prof. Conduct 1.8(e).
Louisiana courts have held that the Louisiana Legislature, in granting this privilege for court costs and expenses of litigation, did not vest attorneys "with sole authority to categorize as expenses all funds they desire to spend and charge to a client's account. An attorney asserting the privilege has an evidentiary responsibility to establish the nature and association of the charged expenditure with the pending litigation."Bixenman v. Radlauer, 647 So.2d 565, 567 (La.App. 3d Cir. 1994) (emphasis added); accord Ragas v. Ragas, 690 So.2d 1112, 1115 (La.App. 4th Cir.),vacated on other grounds, 701 So.2d 140 (La. 1997); see also Ragas, 701 So.2d at 140 (remanding for evidentiary hearing to determine which advances qualified as "court costs" and "expenses of litigation");Dupuis, 609 So.2d at 1193 (plaintiff's testimony established necessity of advances for living and medical expenses). "The relevant inquiry in an attorney privilege determination is whether the expense reasonably relates to the litigation." Ragas, 690 So.2d at 1115.
These cases interpreted La. Rev. Stat. § 9:5001, which gives attorneys a first-ranked privilege for their "professional fees" against judgments they obtain for their clients, just as La. Rev. Stat. § 37:218 does for settlements. Section 9:5001 defines "professional fees" similarly to "fee" in Section 37:218, i.e., as "the agreed upon fee, whether fixed or contingent, and any and all other amounts advanced by the attorney to or on behalf of the client, as permitted by the Rules of Professional Conduct of the Louisiana State Bar Association." La. Rev. Stat. § 9:5001(B). Thus, cases that interpret Section 9:5001 provide relevant authority for the nearly identical concepts in Section 37:218.Scott, 377 So.2d at 70.
Plaintiff's reply memorandum questions whether Stern, who apparently is not licensed to practice law in Louisiana and who did not enroll in this case pro hac vice, should be deemed a "non-lawyer" and therefore not entitled to any statutory privilege for his costs. Although Nicholson concedes that Stern should be reimbursed for his valid costs, he argues that Stern cannot take advantage of the Section 37:218(B) privilege, which is granted only to lawyers. See La. Rev. Stat. § 37:213 (prohibiting the practice of law by persons not admitted to the Louisiana state bar); Crocker v. Levy, 615 So.2d 918, 921 (La.App. 1st Cir. 1993) (contract by non-lawyer to render legal services is absolutely null and unenforceable).
This court's Local Rules allow attorneys who are not admitted to practice in Louisiana but who are in good standing with the bar of any other United States court or the highest court of another state to move for permission to appear and participate as co-counsel in a case with an attorney admitted to the bar of this court. The applicant for such admission must provide evidence of his good standing in another court and must disclose any disciplinary proceedings or criminal charges that have been instituted against him. Local Rule 83.2.6E. Once admitted pro hac vice, the visiting attorney must be familiar with this court's Local Rules and with the substance of all documents filed in the case, and he subjects himself to the discipline of the court for willful noncompliance with its rules. Id. R. 83.2.8, 83.2.8.1E.
Stern states in his affidavit that he "was attorney of record" for plaintiff until August 2000. Record Doc. No. 114, Intervenors' Exh. B. This is not accurate. He did not avail himself of this court's procedure for admission and he never enrolled as attorney of record. He neither participated in this civil action as attorney of record nor submitted himself to this court's jurisdiction for oversight of his conduct. Neither his affidavit nor any other evidence in the record indicates that he is licensed to practice in any state. However, according to the Texas State Bar Association's website, Stern is licensed to practice in Texas and has no prior disciplinary actions against him. Despite his failure to enroll as counsel of record, the court is cognizant that a litigant is free to choose his own attorney and that he may have "a number of excellent reasons to select a nonlocal lawyer." Frazier v. Heebe, 482 U.S. 641, 650 n. 12 (1987).
Seehttp//www.texasbar.com/members/onlinetools/members.asp?BarCard = 19175660.
Nicholson has not cited any law, and my own research has located none, that would prevent Stern, a licensed Texas attorney who associated with Louisiana lawyer Jacobs, from taking advantage of the statutory privilege on costs granted to attorneys. Therefore, I find that Nicholson's attorneys, Munoz (and his firm), Jacobs and Stern (and his firm), each have a first-ranking privilege, but only for those costs and expenses that are proven to be both reasonable and related to this litigation.
D. Munoz's Claim for Costs
Munoz has submitted his sworn affidavit containing an itemized list of the amounts he expended on Nicholson's behalf in connection with this litigation, along with copies of the invoices, receipts and/or checks issued for these costs. Plaintiff's Exh. B. He seeks a total of $1,265.29 in costs for photocopies, deposition transcripts, delivery charges, late fees, parking charges and an advance for bus fare for Nicholson to travel to New Orleans for a settlement conference. I have carefully reviewed this evidence and find that the claimed costs are reasonable and were reasonably expended in connection with this litigation, with the following exceptions.
Late fees charged by court reporters for Munoz' s late payment of their invoices are his responsibility and are not reasonably related to the litigation. Accordingly, late fees of $19.71 paid to Esquire Deposition Services and $20 paid to Bay Area Reporting will be deducted from the amount claimed by Munoz. Parking charges are overhead, not litigation expenses. The court disallows the $4 parking charge. Although 20 cents per page for copies made by a law firm is well in excess of the amounts charged by readily accessible, commercial copying businesses, that charge was made by defendant's counsel in providing copies to plaintiff's counsel, and was not under Munoz's control. Therefore, Munoz will not be penalized.
After taking these deductions from his claimed costs, the court finds that Munoz is entitled to a first-ranked privilege on his reasonable, proven litigation costs and expenses of $1,221.58 ($1,265.29 less $19.71, $20 and $4).
E. Intervenors' Claims for Costs
1. Jacobs's Costs
Jacobs has submitted her sworn affidavit containing an itemized list of the amounts she expended on Nicholson's behalf in connection with this litigation, along with copies of the invoices, receipts and/or checks issued for these costs. Record Doc. No. 114, Intervenors' Exh. A in globo. She seeks $1,038.14 for the costs of photocopies, deposition transcripts, a deposition videotape and an advance of $70 to Nicholson to enable him to travel from Mobile, Alabama, where he lived, to New Orleans for his deposition. I have carefully reviewed this evidence and find that all of the costs are reasonable and were reasonably expended in connection with this litigation.Accordingly, the court finds that Jacobs is entitled to a first-ranked privilege on her reasonable, proven litigation costs and expenses of $1,038.14.
2. Stern's Costs
In his original submission, Stern claimed a total of $31,680.61 in costs and expenses incurred on Nicholson's behalf. Record Doc. No. 100, Intervenors' Exh. E in globo. After the court ordered him to supplement this inadequately supported submission, Stern submitted his sworn affidavit and additional backup documentation for the costs he claims. Record Doc. No. 114, Intervenors' Exh. B in globo (consisting of the affidavit of Jeffrey M. Stern, from which the quotations in the following paragraph are taken, and his backup documentation, attached to Intervenors' Exh. B in globo as Stern's Exhibits A through K). He now seeks a total of $47,148.11, which is $15,467.50 more than he originally claimed. The difference arises primarily from medical expenses that were not documented in his original submission.
Stern's costs, as summarized in his affidavit, consist of medical expenses totaling $16,785.15, Stern's Exhs. A, B, C, D, H, and I; investigative expenses totaling $634.92, Stern's Exh. E; transportation expenses of $849.35 for Nicholson to be transported by limousines while in Houston for "medical exam and treatment and litigation travel expenses," Stern's Exh. F; Federal Express delivery charges totaling $209.11, Stern's Exh. G; travel expenses (airfare, lodging and advances for travel expenses) totaling $3,565.58 for Nicholson to fly from New Orleans to Houston and "overnight lodging when ordered by the doctor," supported by Stern's Exh. J; advances/loans totaling $25,104 made to Nicholson that were "necessary for meals, rent, transportation and other living expenses during the pendency of the litigation," supported by Stern's Exh. K. Some of the advances or loans to Nicholson were accomplished by checks made payable to Brothers Jewelry, an authorized Western Union agent, which, for a percentage of the funds, transmitted the money from Stern in Houston to Nicholson in Alabama. Record Doc. No. 114, Intervenors' Exh. B in globo, Stern affidavit.
I have carefully reviewed Stern's affidavit and backup documentation. The sums of expenses calculated from that documentation do not always match the amounts claimed in Stern's affidavit in a particular category. Thus, I have calculated that the documented expenses in Stern's Exhibit F total $725, not $849.35 as stated in his affidavit; in Exhibit J, the documented expenses total $3,256, not $3,565.58; and in Exhibit K, the documented expenses total $25,544, not $25,104. Accordingly, the grand total of documented expenses that Stern seeks is $47,154.18.
The reservation confirmations from the Gallery Inn and Days Inn have no dollar amounts on them and there are no receipts or checks showing payment, so I included no amount for lodging in my calculations. In addition, Exhibit J includes two sets of duplicate airline ticket receipts, one set of duplicates for April 26, 2000 and one set for July 3, 2000. I have included only one of each of those tickets in my calculations. The remainder of Exhibit J consists of checks payable to Brothers Jewelry, apparently for travel expenses transmitted to Nicholson. Finally, one duplicate copy of check #19088 to Brothers is not included in my calculations.
I did not include in my calculation the duplicate of check number 18289 in this exhibit.
In Dupuis, the Louisiana Third Circuit Court of Appeal held that an attorney's advance of medical and living expenses to a plaintiff is part of the statutorily allowed "fee" for privilege purposes. However, guided by the Louisiana Supreme Court's decision in Louisiana State Bar Ass'n v. Edwins, the Third Circuit stated that "while we recognize the extension of the privilege, we must limit the circumstances under which the privilege for such advances attaches." Dupuis, 609 So.2d at 1193 (citing Louisiana State Bar Ass'n v. Edwins, 329 So.2d 437 (La. 1976)). Thus, the court awarded such costs only upon testimonial proof of "the [plaintiff's] dire circumstances requiring advancement of medical expenses and living expenses." Id.
In Edwins, the Louisiana Supreme Court was "unwilling to hold that the spirit or the intent of the [then-applicable] disciplinary rule is violated by the advance or guarantee by a lawyer to a client (who has already retained him) of minimal living expenses, of minor sums necessary to prevent foreclosures, or of necessary medical treatment."Edwins, 329 So.2d at 445 (emphasis added). The Supreme Court recently reaffirmed that the principles of its opinion in Edwins, which was decided under the former professional Disciplinary Rules, have survived the enactment of the Rules of Professional Conduct. Chittenden v. State Farm Mut. Auto. Ins. Co., 788 So.2d 1140, 1145-46, 1149 (La. 2001).
Clearly, Edwins set the policy in the State for attorney/client relationships where money was advanced by the attorney prior to the resolution of the litigation, which generally has been followed by the legal practitioners. The opinion set the limits on this privilege, including the following guidelines: (1) the advances cannot be promised as an inducement to obtain professional employment, nor made until after the relationship has commenced; (2) the advances were reasonably necessary under the facts; (3) the client remained liable for repayment of all funds, whatever the outcome of the litigation; and (4) the attorney did not encourage public knowledge of this practice as an inducement to secure the representation of others.Id. at 1145 (emphasis added).
Although the language of Rule of Professional Conduct 1.8(e) does not incorporate "the gloss" that the Edwins Court placed on the former Disciplinary Rule, the Supreme Court acknowledged in Chittenden that "the current practice of law in our State follows the Edwins policy of allowing an attorney to advance funds under the constraints enunciated inEdwins." Id. at 1146. The Court characterized "the custom within the legal profession which has developed as a result of the Edwins decision," and noted that custom can acquire the force of law. Id. at 1152 (citing La Civ. Code art. 3).
Under Edwins and its progeny, Stern is permitted to advance only minimal living expenses, minor sums necessary to prevent foreclosures (or similar circumstances) and the expenses of necessary medical treatment. I find that many of Stern's costs are not adequately documented, are excessive and were not reasonably expended in connection with this litigation.
First, as to the medical expenses claimed in Stern's Exhibits A, B, C, D, H and I, with the exception of Exhibit H, there is no evidence that Stern actually paid the majority of them. In Exhibits A, B, C and D, Stern has submitted copies of "letters of protection" that he wrote to each medical provider in which he stated that his firm
will protect payment for services rendered to our client for injuries sustained in the above referenced accident out of the proceeds of the recovery, if any. after attorney's fees and expenses, made on behalf of the patient. The protection of payment from settlement proceeds requires [that you keep the law firm notified about treatment. Please keep in touch with my office] so we may expeditiously collect medical records and bill[s] for settlement.
Stern's Exhs. A, B, C, D (emphasis added). There is no evidence that Stern has actually paid any of these medical bills. Indeed, the billing records of Mobile Physical Therapy Services included in Exhibit A indicate that all but $19.25 of the $1,501.78 billed has already been paid by plaintiff's insurance company. Moreover, there is no evidence that he has committed himself to pay the bills in full, regardless of the amount received in settlement of Nicholson's claims. The "letters of protection" do not appear to make such a commitment.
In addition, Exhibit I consists simply of a copy of a check for $60 made payable to "Gulf Coast Ortho," without any documentation that this was in payment of a necessary medical expense on Nicholson's behalf. The court cannot allow this undocumented claim.
Furthermore, Stern has submitted no evidence either that any of the claimed expenses were medically necessary or that it was medically necessary for Nicholson to obtain treatment in Houston rather than in Mobile, where he lived, or in New Orleans, which is within driving distance of Mobile. I find that Nicholson's numerous trips from Mobile to Houston for medical treatment and the treatments themselves were excessive. Accordingly, I will deduct $1,482.53 ($1,501.78 less $19.25) to reflect the insurance company payments for the medical costs claimed in Exhibit A, and I will deduct the undocumented $60 medical expense in Exhibit I. of the remaining medical costs claimed ($16,785.15 less $1,482.53 less $60 = $15,242.62), I will allow Stern to recover only 1/2, or $7,621.31, and only 1/2 of the claimed airline transportation costs of $2,269 in Exhibit J, or $1,134.50.
In his affidavit, Nicholson recalled traveling to Houston only three times to meet with Stern and/or to receive medical treatment. Record Doc. Nos. 107, 110. However, plaintiff's affidavit was filed before Stern filed additional evidence. Nicholson's recollection appears to have been faulty. I have carefully examined and correlated the evidence of medical expenses, airfare, lodging dates and limousine expenses, and I find that plaintiff made numerous trips to Houston. Stern's evidence includes 11 plane tickets from New Orleans to Houston issued to plaintiff between September 29, 1999 and August 4, 2000. There are also records of 9 instances of limousine transportation between the airport and various locations, including Stern's office and medical providers' offices, between February 2 and June 15, 2000.
Stern has provided no evidence to justify having plaintiff chauffeured around Houston in a limousine, although obviously some transportation was necessary, to the extent that it was necessary for plaintiff to be in Houston at all. Therefore, I will allow Stern to recover 1/2 of the claimed $725 in limousine transportation expenses, or $362.50.
Stern has submitted an invoice for a private investigator's fee and expenses totaling $634.92. Stern's Exhibit E. Plaintiff, in his affidavit attached to his reply memorandum, states that he did not authorize any investigation. Record Doc. Nos. 107, 110. Stern provides no evidence concerning the necessity, purpose or reasonableness of this investigation. Therefore, I find that the investigation was not reasonably related to the litigation, and none of its costs will be allowed.
Stern has not shown the need for Federal Express delivery charges. I will not allow any of the claimed charges of $209.11 for Federal Express delivery.
Other than medical expenses, the bulk of the expenses at issue in Stern's submissions consists of $25,544 in advances and loans he made to plaintiff for allegedly necessary "meals, rent, transportation and other living expenses," Record Doc. No. 114, Intervenors' Exh. B in globo, Stern affidavit, as documented in Stern's Exhibit K. There are also several checks totaling $987 made payable to Brothers Jewelry (the Western Union agent) as advances to Nicholson in Stern's Exhibit J. These additional checks bring the total amount advanced to $26,531.
No party in this case argues that Stern's advances and loans to Nicholson violate the first, third and fourth Edwins principles. The only dispute is over the reasonableness of the amounts advanced. Stern characterizes the advances in his affidavit as necessary for plaintiff's meals, rent, transportation and other living expenses. Nicholson concedes in his own affidavit that he received checks totaling at least $20,800 from Stern "for payment of living expenses for affiant and his family," but he was unable to verify the authenticity of two checks allegedly made payable to him because he did not have copies, and he had no knowledge of any checks issued to Brothers Jewelry. Record Doc. Nos. 107, 110. However, since Stern filed his additional evidence, he has plausibly explained why checks were made payable to Brothers Jewelry and has included copies of all the checks he personally wrote to plaintiff.
Stern has submitted no proof that plaintiff was in "dire circumstances" that required the advancement of substantial, as opposed to minimal, living expenses. Dupuis, 609 So.2d at 1193. Stern made advances of $26,531 over ten months from September 1, 1999 through August 4, 2000. According to the pretrial order, plaintiff intended to prove at trial that he had earned average gross wages of $37,692 annually, for the four years preceding his alleged injury. Record Doc. No. 86, pretrial order at p. 6. Stern thus advanced 70% of plaintiff's average annual gross wages in 10 months.
I find that these substantial amounts are unsupported by the evidence and do not comport with the Edwins and Dupuis principles. See Edwins, 329 So.2d at 448 (denying recovery of some advances when, "unlike the advances made to [plaintiff] . . . for necessary living and medical expenses, no justification is shown for" additional advances); Dupuis, 609 So.2d at 1193 ("The testimony of Mr. Dupuis clearly illustrates the dire circumstances requiring advancement of medical expenses and living expenses."). Therefore, I will reduce the claimed advances from $26,531 to $20,800, the amount that plaintiff admits having received as living expenses and an amount equal to approximately 55% of plaintiff's alleged gross annual wages before the alleged accident.
Accordingly, the court finds that Stern is entitled to a first-ranked privilege on his reasonable, proven litigation costs and expenses of $29,918.32.
This amount is calculated by allowing the following amounts: $9.63 for Exhibit A; $1,400 for Exhibit B; $2,415 for Exhibit C; $3,586.19 for Exhibit D; $362.50 for Exhibit F; $210.50 for Exhibit H; $1,134.50 for Exhibit J; and $20,800 for Exhibit K. No amounts were allowed for Exhibits E, G and I.
F. Proration of Privileged Costs
Each of plaintiff's three attorneys is entitled to a first-ranking privilege on his or her reasonable and necessary costs. Thus, Munoz is entitled to a first-ranked privilege on his reasonable, proven litigation costs and expenses of $1,221.58; Jacobs is entitled to a first-ranked privilege on her reasonable, proven litigation costs and expenses of $1,038.14; and Stern is entitled to a first-ranked privilege on his reasonable, proven litigation costs and expenses of $29,918.32.
Plaintiff's three attorneys expended a total of $32,178.04 in reasonable expenses. Obviously, this exceeds the $28,000 remaining in the registry of the court after deducting the $5,000 settlement paid to Nicholson and the $22,000 in first-ranked, reasonable attorney's fees to be paid to plaintiff's attorneys. The court will prorate the remaining funds to reimburse the attorneys for as much of their costs as possible.
As percentages of the total reasonable expenses, Stern expended 92.9774%, Jacobs expended 3.2262% and Munoz expended 3.7963%. Accordingly, Stern is entitled to recover 92.9774% of the remaining $28,000, or $26,033.68; Jacobs is entitled to recover 3.2262% of $28,000, or $903.35; and Munoz is entitled to recover 3.7963% of $28,000, or $1,062.97.
III. CLAIMS BY CONSUMER CREDIT COMPANIES
Because the attorney's fees and costs due to plaintiff's attorneys receive a first-ranked privilege over the claims of the consumer credit companies and because the attorneys' fees and costs have exhausted the funds in the registry of the court, no funds remain to pay any claims by the consumer credit companies. Therefore, it is unnecessary to address the validity, if any, of the claims of the consumer credit companies to the interpleaded funds, and their claims are dismissed without prejudice.
CONCLUSION
For the foregoing reasons, IT IS ORDERED that 40% of the total settlement amount of $55,000, or $22,000, is awarded jointly to intervenors, Jacobs and Stern Miller, and to plaintiff, for his current attorney, Munoz, as their reasonable attorney's fees, to be divided equally among them according to their joint stipulation. These attorney's fees have a first-ranking privilege and must be paid first out of the funds in the registry of the court, without interest.
IT IS FURTHER ORDERED that Stern is entitled to recover $26,033.68, Jacobs is entitled to recover $903.35 and plaintiff, for his current attorney, Munoz, is entitled to recover $1,062.97 in costs. These costs have a first-ranking privilege, behind only the attorney's fees noted above, and must be paid out of the funds remaining in the registry of the court, without interest, after the attorney's fees are paid.
IT IS FURTHER ORDERED that the claims of the consumer credit companies are dismissed without prejudice because no funds are available in this interpleader to pay them.