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Trailer Outlet v. Dutel

Court of Appeal of Louisiana, First Circuit
Jun 11, 2010
39 So. 3d 852 (La. Ct. App. 2010)

Opinion

No. 2009 CA 2139.

June 11, 2010.

APPEALED FROM THE TWENTY-SECOND JUDICIAL DISTRICT COURT IN AND FOR THE PARISH OF ST. TAMMANY STATE OF LOUISIANA SUIT NUMBER 2006-11350 HONORABLE WILLIAM J. CRAIN, PRESIDING.

Lisa Brener, New Orleans, LA, Counsel for Plaintiffs/Appellants Esther Layerle and Robert R. Layerle.

Harry Rosenberg, Christopher K. Ralston, Stephanie Villagomez, New Orleans, LA, Counsel for Defendants/Appellants William J. Dutel and Dutel and Tranchina, LLC.

BEFORE: CARTER, C.J., GUIDRY, AND PETTIGREW, JJ.


In this legal malpractice action, Esther Layerle and Robert Layerle appeal from a trial court judgment sustaining William J. Dutel and Dutel Tranchina, LLC's peremptory exceptions raising the objections of prescription, peremption, and no cause of action and dismissing their claims with prejudice. For the reasons that follow, we vacate the trial court's judgment and remand.

FACTS AND PROCEDURAL HISTORY

In 2001, Esther and Robert Layerle hired William J. Dutel and Dutel Tranchina, LLC to represent them in the acquisition of Investment Management Services, Inc. (IMS), a business engaged in the sale and repair of trailers and related activities. On September 19, 2001, The Trailer Outlet, Inc. (Trailer Outlet), a corporation owned by Esther and Robert Layerle, purchased movable assets and related intangible property from IMS. On that same date, Remtac Investments, LLC (Remtac), a limited liability company also owned at the time of the sale by Esther and Robert Layerle, purchased the real estate and improvements on which IMS operated from Hampton Life Insurance Limited (Hampton). Remtac paid Hampton $125,000.00 at the time of sale and executed a promissory note secured by a mortgage on the real estate in favor of Hampton for the remaining $925,000.00 of the purchase price. The act of sale for the movable and intangible property from IMS to the Trailer Outlet stated that the consideration for that sale was contained in the payment and promissory note described in the act of sale between Remtac and Hampton.

Thereafter, on January 9, 2003, Remtac executed a dation en paiement in favor of Hampton, whereby Remtac transferred to Hampton the real estate that secured the $925,000.00 promissory note. On February 27, 2003, IMS filed a lawsuit against the Trailer Outlet, seeking rescission of the sale of its business and requesting a preliminary injunction, enjoining the Trailer Outlet from transferring or disposing of any of the assets of the business pending resolution of the lawsuit. IMS later added Esther and Robert Layerle as defendants.

William J. Dutel represented the Layerles and the Trailer Outlet in all of the above transactions and in the suit brought against them by IMS, and he continued to represent them until April or May 2005. On March 30, 2006, the Layerles and the Trailer Outlet filed a petition for damages, naming William J. Dutel and Dutel Tranchina, LLC, the law firm employing Dutel, as defendants and asserting various acts of malpractice. Particularly, the plaintiff's asserted that the defendants were negligent in their review, participation in, and approval of the September 2001 sale documents, by permitting plaintiff's to execute the dation en paiement without requiring that the document provide for their indemnification by Hampton in the event IMS brought suit against them, and in failing to understand the risk that IMS might be determined to be a third party beneficiary of the consideration set forth in the agreement between Hampton and Remtac and to provide plaintiff's with appropriate protection.

Thereafter, Dutel and Dutel Tranchina, LLC filed peremptory exceptions raising the objections of prescription, peremption, and no cause of action. Following a hearing, the trial court signed a judgment on July 16, 2009, sustaining the exceptions and dismissing the plaintiffs' claims with prejudice. Esther and Robert Layerle now appeal from this judgment.

According to the parties, the Trailer Outlet is in bankruptcy, and it is not a party to this appeal.

DISCUSSION

The time limitation for filing a legal malpractice action is set forth in La.R.S. 9:5605, which provides, in pertinent part:

A. No action for damages against any attorney at law duly admitted to practice in this state, any partnership of such attorneys at law, or any professional corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of law, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide legal services shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered; however, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect.

B. The provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged act, omission, or neglect occurred. . . . The one-year and three-year periods of limitation provided in Subsection A of this Section are peremptive periods within the meaning of Civil Code Article 3458 and, in accordance with Civil Code Article 3461, may not be renounced, interrupted, or suspended.

* * *

E. The peremptive period provided in Subsection A of this Section shall not apply in cases of fraud, as defined in Civil Code Artilce 1953. [Emphasis added.]

The burden of proving peremption is typically on the party pleading it. However, when the action is perempted on the face of the petition, the burden shifts to the plaintiff to show the claim has not perempted. See Dauterive Contractors, Inc. v. Landry and Watkins, 01-1112, pp. 15-16 (La. App. 3rd Cir. 3/13/02), 811 So. 2d 1242, 1253.

The Layerles filed their petition for damages against defendants on March 30, 2006. In their petition, they asserted that Dutel represented them with respect to the September 19, 2001 purchases of movable and immovable property from IMS and Hampton and the January 9, 2003 execution of a dation en paiement in favor of Hampton. The Layerles further asserted that as a result of Dutel's negligence in his review, participation, and approval of the September 19, 2001 sale documents, and his negligence in permitting them to execute the dation en paiement without requiring the document to provide for indemnification by Hampton in the event IMS brought a claim or suit against the Layerles, IMS filed suit against the Layereles on February 27, 2003, exposing them to personal liability. Accordingly, because the Layerles filed their action for malpractice in March 2006, over four years following the execution of the sale documents and over three years following the execution of the dation en paiement, their action is perempted on its face and the burden shifted to them to show that their claim is not perempted.

In opposing the defendants' exceptions, the Layerles acknowledged that their claim for malpractice was not filed within three years of the date of the alleged negligent acts. However, they asserted that the peremptive periods in La.R.S. 9:5605(A) do not apply because Dutel's deliberate suppression of the truth regarding the execution of the dation en paiement and assurances made to plaintiff's that they would prevail in the IMS litigation in order to obtain the unjust advantage of preventing the Layerles from knowing, or timely knowing, that they had a claim against him, fall within the fraud exception contained in La.R.S. 9:5605(E).

As stated previously, La.R.S. 9:5605(E) provides that the peremptive periods of La.R.S. 9:5605(A) shall not apply in cases of fraud, as defined in Civil Code Article 1953. Louisiana Civil Code article 1953 defines fraud as "a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other . . . and may result from silence or inaction."

This court has previously determined that the fraud exception applies to both the one-year and three-year peremptive periods. See Coffey v. Block, 99-1221, p. 8 (La. App. 1st Cir. 6/23/00), 762 So. 2d 1181, 1187, writ denied, 00-2226 (La. 10/27/00), 772 So. 2d 651; see also Klein v. American Life Casualty Company, 01-2336, p. 6 n. 4 (La. App. 1st Cir. 6/27/03), 858 So. 2d 527, 531 n. 4, writs denied, 03-2073 and 03-2101 (La. 11/7/03), 857 So. 2d 497 and 499 (noting that the fraud exception in La.R.S. 9:5606(C) applies to both the one-year and three-year peremptive periods).

Some circuits have held that the fraud exception only applies in cases where the fraudulent act itself constitutes the malpractice. See Brumfield v. McElwee, 07-0548, p. 7 (La. App. 4th Cir. 1/16/08), 976 So. 2d 234, 240; Smith v. Slattery, 38,693, pp. 8-9 (La. App. 2nd Cir. 6/23/04), 877 So. 2d 244, 249, writ denied, 04-1860 (La. 10/29/04), 885 So. 2d 592; Atkinson v. LeBlanc, 03-365, p. 8 (La. App. 5th Cir. 10/15/03), 860 So. 2d 60, 65. This court, however, has previously found that allegations of misrepresentation or suppression of the truth occurring subsequent to the acts of malpractice are sufficient to raise the issue of fraud within the meaning of La.R.S. 9:5605(E). See Coffey v. Block, 99-1221, p. 8 (La. App. 1st Cir. 6/23/00), 762 So. 2d 1181, 1186-1187, writ denied, 00-2226 (La. 10/27/00), 772 So. 2d 651.

Additionally, in Borel v. Young, 07-0419, p. 13 (La. 11/27/07), 989 So. 2d 42, 60 (on rehearing), the Louisiana Supreme Court, in examining the three-year period in La.R.S. 9:5628 for filing actions under the Louisiana Medical Malpractice Act, recognized La.R.S. 9:5605 and reasoned that when the legislature chose to establish a peremptive period for negligence actions against professionals, it specifically stated its intent and specially exempted claims for fraud. The court went on to reason that presumably, by exempting claims for fraud, the legislature intended to restore the third category of contra non valentem so as to prevent a potential defendant from benefitting from the effects of peremption by intentionally concealing his or her wrongdoing. Borel, 07-0419 at p. 13 n. 3, 989 So. 2d at 60 n. 3.

As such, in accordance with this court's previous ruling in Coffey, and keeping in mind that peremptive statutes are to be strictly construed against peremption and in favor of maintaining the claim, Albach v. Kennedy, 00-0636, p. 9 (La. App. 1st Cir. 8/6/01), 801 So. 2d 476, 482, writ denied, 01-2499 (La. 10/12/01), 799 So. 2d 1138, we find that the Layerles' allegations regarding Dutel's suppression of the truth in order to prevent them from knowing, or timely knowing, that they had a claim against him are sufficient to raise the fraud exception contained in La.R.S. 9:5605(E). Therefore, we find the trial court erred in failing to consider the Layerles' allegations of fraud as a defense to the defendants' exceptions. However, because the Layerles were not permitted to present evidence in support of their allegations of fraud at the trial of the exception, nor were they given an opportunity to amend their petition to formally plead fraud, we must remand this matter to the trial court with instructions to permit amendment of the pleadings and to conduct a full evidentiary hearing on the allegations of fraud. See La.C.C.P. art. 934; Coffey, 99-1221 at pp. 9-10, 762 So. 2d at 1187-1188.

CONCLUSION

For the foregoing reasons, we vacate the judgment of the trial court sustaining defendants' exceptions raising the objections of prescription, peremption, and no cause of action and remand this matter to the trial court for further proceedings consistent with this opinion. All costs of this appeal are assessed equally to William J. Dutel and Dutel Tranchina, LLC.

VACATED AND REMANDED WITH INSTRUCTIONS.

CARTER, C.J., CONCURS AND ASSIGNS REASONS.

I reluctantly agree with the result reached by the majority opinion, but I have serious misgivings about the effects of this interpretation of LSA-R.S. 9:5605.

It is respectfully submitted that the results reached by the Second, Fourth, and Fifth Circuit cases referred to in the majority opinion are the better interpretation of LSA-R.S. 9:5605. I am of the opinion that the fraud exception should only apply where the fraudulent act itself constitutes the malpractice and such was clearly not the case herein, where the alleged suppression of the truth occurred subsequent to the supposed malpractice. However, this Circuit is bound by the decision in Coffey v. Block, 99-1221 (La. App. 1 Cir. 6/23/00), 762 So.2d 1181, 1187, writ denied, 00-2226 (La. 10/27/00), 772 So.2d 651, until overruled by an en banc decision of this court.

An excellent discussion contrasting cases where the fraudulent act comprised the malpractice with cases involving fraud that occurred in acts after the legal malpractice occurred can be found in Brumfield v. McElwee, 07-0548 (La. App. 4 Cir. 1/16/08), 976 So.2d 234, 239-243.

Finally, I believe the Coffey case and this majority opinion open the door to all kinds of unpleaded, unsubstantiated fraud allegations. I recognize, however, that the law takes a liberal approach toward allowing amended pleadings to raise the possibility that a claim is not perempted. See Reeder v. North, 97-0239 (La. 10/21/97), 701 So.2d 1291, 1299; Klein v. American Life Cas. Co., 01-2336 (La. App. 1 Cir. 6/27/03), 858 So.2d 527, 531, writs denied, 03-2073 and 03-2101 (La. 11/7/03), 857 So.2d 497, 499. For this reason, I respectfully concur.


Summaries of

Trailer Outlet v. Dutel

Court of Appeal of Louisiana, First Circuit
Jun 11, 2010
39 So. 3d 852 (La. Ct. App. 2010)
Case details for

Trailer Outlet v. Dutel

Case Details

Full title:THE TRAILER OUTLET, INC., ESTHER LAYERLE, AND ROBERT R. LAYERLE v. WILLIAM…

Court:Court of Appeal of Louisiana, First Circuit

Date published: Jun 11, 2010

Citations

39 So. 3d 852 (La. Ct. App. 2010)

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