The Trailer Outlet, Inc., Esther Layerle and Robert R. Layerle VS William J. Dutel and Dutel & Tranchina, L.L.C.
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NOT DESIGNATED FOR PUBLICATION STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT NUMBER 2009 CA 2139 THE TRAILER OUTLET INC ESTHER LAYERLE AND ROBERT R LAYERLE VERSUS WILLIAM J DUTEL AND DUTEL TRANCHINA LLC Judgment Rendered June 11 2010 f v Appealed from the Twenty second Judicial District Court In and for the Parish of St Tammany State of Louisiana Suit number 200611350 Honorable William J Crain Presiding Lisa Brener New Orleans LA Harry Rosenberg Christopher K Ralston Stephanie Villagomez New Orleans LA Counsel for PlaintiffsAppellants Esther Layerle and Robert R Layerle Counsel for Defendants Appellants William J Dutel and Dutel and Tranchina LLC BEFORE CARTER C GUIDRY AND PETTIGREW JJ J GUIDRY J In this legal malpractice action Esther Layerle and Robert Layerle appeal from a trial court judgment sustaining William J Dutel and Dutel Tranchina s LLC 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 sjudgment 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 at the time of sale and executed a promissory note secured 00 000 by a mortgage on the real estate in favor of Hampton for the remaining 00 000 925 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 promissory note 00 000 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 2 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 plaintiffs asserted that the defendants were negligent in their review participation in and approval of the September 2001 sale documents by permitting plaintiffs 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 plaintiffs 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 DISCUSSION The time limitation for filing a legal malpractice action is set forth in La S 5605 R 9 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 According to the parties the Trailer Outlet is in bankruptcy and it is not a party to this appeal 3 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 and three year 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 02 13 3811 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 12 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 S 5605 R 9 do not apply because Dutel deliberate suppression of the truth A s regarding the execution of the dation en paiement and assurances made to plaintiffs 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 9 S 5605 E As stated previously La R 9 provides that the peremptive S 5605 E periods of La R 9shall not apply in cases of fraud as defined in Civil S 5605 A 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 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 1 976 So 2d 234 240 Smith v Slattery 08 16 693 38 pp 8 9 La App 2nd Cir 6 877 So 2d 244 249 writ denied 04 04 23 z This court has previously determined that the fraud exception applies to both the oneyear and threeyear peremptive periods See Coffey v Block 991221 p 8 La App 1st Cir 6 00 23 762 So 2d 1181 1187 writ denied 00 2226 La 10 772 So 2d 651 see also Klein v 00 27 American Life Casualty Company 01 2336 p 6 n La App 1st Cir 6 858 So 2d 4 03 27 527 531 n writs denied 032073 and 03 2101 La 11 857 So 2d 497 and 499 noting 4 03 7 that the fraud exception in La R 9 S 5606 Capplies to both the oneyear and three year peremptive periods E 1860 La 10 885 So 2d 592 Atkinson v LeBlanc 03 365 p 8 La App 04 29 5th Cir 10 860 So 2d 60 65 This court however has previously found 03 15 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 9 See Coffey v Block 991221 p 8 La App S 5605 E3 1st Cir 6 762 So 2d 00 23 1181 11861187 writ denied 002226 La 00 27 10 772 So 2d 651 As such in accordance with this court previous ruling in Coffey and s 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 8 801 So 2d 476 482 writ denied 01 La 01 6 2499 01 12 10 799 So 2d 1138 we find that the Layerles allegations regarding s Dutel 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 9 Therefore we find the trial court erred S 5605 E 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 3 Additionally in Borel v Young 07 0419 p 13 La 11 989 So 2d 42 60 on 07 27 rehearing the Louisiana Supreme Court in examining the three year period in La R 9 S 5628 for filing actions under the Louisiana Medical Malpractice Act recognized La R 9 and S 5605 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 070419 at p 13 n 989 So 2d at 60 n 3 3 J allegations of fraud See La C art 934 Coffey 99 1221 at pp 9 10 762 So P 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 assessed equally to William J Dutel and Dutel All costs of this appeal are Tranchina LLC VACATED AND REMANDED WITH INSTRUCTIONS 7 THE TRAILER OUTLET INC ESTHER LAYERLE AND STATE OF LOUISIANA ROBERT R LAYERLE FIRST CIRCUIT VERSUS WILLIAM J DUTEL AND DUTEL TRANCHINA LLC NO 2009CA2139 CARTER C CONCURS AND ASSIGNS REASONS J CARTER C Concurring J I reluctantly agree with the result reached by the majority opinion but I have serious misgivings about the effects of this interpretation of LSAR S 5605 9 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 LSAR 9 I am of the opinion that the fraud S 5605 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 6762 So 1181 1187 writ denied 002226 La 00 23 2d 00 27 10 772 So 651 until overruled by an en bane decision of this 2d 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 1 976 08 16 2d So 234 239243 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 10 701 So 1291 1299 Klein v 97 21 2d American Life Cas Co 01 2336 La App 1 Cir 6 858 So 03 27 2d 527 531 writs denied 03 2073 and 032101 La 11 857 So 497 03 7 2d 499 For this reason I respectfully concur 2
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