[Copyrighted Material Omitted]
ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIFTH CIRCUIT, PARISH OF JEFFERSON.
Frank W. Lagarde, Jr., For Applicant.
Andrew Tillman Lilly, LILLY PLLC, For Respondent.
[2014-2483 La. 1] JOHNSON, Chief Justice
In this legal malpractice case, defendant, Michelle Myer-Bennett, filed a peremptory exception of peremption asserting plaintiff, Tracy Ray Lomont, filed her malpractice claim beyond the three-year peremptive period set forth in La. R.S. 9:5605. Ms. Lomont opposed the exception, arguing the peremptive period should not apply because Ms. Myer-Bennett engaged in fraudulent behavior which prevents application of the peremptive period pursuant to La. R.S. 9:5605(E). The district court sustained the exception of peremption and the court of appeal affirmed. We granted Ms. Lomont's writ application to determine the correctness of the lower courts' rulings.
FACTS AND PROCEDURAL HISTORY
Ms. Myer-Bennett was hired by Ms. Lomont to represent her in a divorce and related domestic matters, which included partitioning the community property. Ms. Lomont and her ex-husband, John Lomont, agreed to a partial partition of the community property whereby Ms. Lomont was provided full ownership of the family home in Jefferson Parish, and Mr. Lomont was provided full ownership of his business. Ms. Myer-Bennett drafted a written agreement to this effect entitled " Partial Partition of Community Property Agreement between Tracy Lomont and John [2014-2483 La. 2] Lomont." The agreement was executed by the parties on September 8, 2008, but Ms. Myer-Bennett failed to record it in the mortgage and conveyance records in Jefferson Parish.
On February 4, 2009, Citibank obtained a default judgment against John Lomont in the amount of $26,052.17 on a delinquent account. On February 20, 2009, Citibank recorded the judgment in the mortgage records in Jefferson Parish as a lien against the home.
In September 2010, Ms. Lomont attempted to refinance the mortgage on the home and learned from the bank that the settlement agreement, giving her full ownership of the home, was never recorded in the mortgage and conveyance records. Ms. Lomont contacted Ms. Myer-Bennett to advise her of the problem. According to Ms. Myer-Bennett, because it was her standard practice to record such documents, she initially believed Ms. Lomont was given inaccurate information by the bank. However, upon investigation, Ms. Myer-Bennett discovered that she had not recorded the agreement. Ms. Myer-Bennett recorded the agreement the next day, September 30, 2010.
In December 2010, Ms. Lomont was notified that her application to refinance the loan was denied because of Citibank's lien on the property. Ms. Lomont again contacted
Ms. Myer-Bennett. Prior to this time, neither Ms. Lomont nor Ms. Myer-Bennett was aware of the Citibank lien. According to Ms. Myer-Bennett, once she became aware of the Citibank lien she discussed with Ms. Lomont the fact she had committed malpractice and gave Ms. Lomont several options to proceed, including hiring another lawyer to sue her for malpractice or allowing Ms. Myer-Bennett to file suit against John Lomont and/or Citibank to have the lien removed. Ms. Myer-Bennett asserts Ms. Lomont chose not to pursue a malpractice action, but wanted defendant to fix the problem. Ms. Lomont denied Ms. Myer-Bennett ever notified her she had [2014-2483 La. 3] committed malpractice. Similarly, Ms. Lomont denied being advised she could obtain other counsel and sue Ms. Myer-Bennett for malpractice. Ms. Lomont asserts Ms. Myer-Bennett never mentioned malpractice in December 2010, but simply advised she would have the Citibank lien removed from the property by filing lawsuits against John Lomont and Citibank. Ms. Lomont further asserts she was asked to come to Ms. Myer-Bennett's office to sign the pleadings against Citibank and John Lomont, which she did on June 20, 2011. Ms. Myer-Bennett also enlisted her help in an effort to serve John Lomont with the lawsuit. Ms. Lomont alleges she repeatedly called Ms. Myer-Bennett to inquire about the status of the lawsuits and was assured the lawsuits were actively being pursued and the lien would be removed in due course.
Ms. Myer-Bennett admits no lawsuits were ever filed against John Lomont and/or Citibank. Ms. Myer-Bennett admits a draft lawsuit was prepared, which was reviewed by Ms. Lomont, but she denies Ms. Lomont signed the lawsuit or verification because it was not complete. Ms. Myer-Bennett could not produce a copy of the drafted lawsuit in response to a subpoena duces tecum from Ms. Lomont, nor did she submit a copy of the lawsuit into evidence. Ms. Myer-Bennett testified she did not file the lawsuit because she discovered in March 2012 she had an unwaivable conflict of interest and could no longer represent Ms. Lomont in an effort to have the lien removed. Ms. Myer-Bennett met with Ms. Lomont and advised her of the conflict and memorialized this conversation in an April 12, 2012, letter to Ms. Lomont stating:
As we discussed, on or about December 2010, you and John executed a Partition Agreement wherein he assumed any liabilities associated with his business. Unfortunately, however, I did not file the Partition Agreement with the Mortgage Office, and it needed to be filed with the Mortgage Office in order for it to have an effect on third parties (i.e., people other than you and John).
As a result of my failure to file the Partition Agreement with the Mortgage Office, a credit card company was able to obtain a lien against [2014-2483 La. 4] your property. I would love to represent you in an effort to get the lien removed, but I have an unwaivable conflict of interest that prohibits me from doing so. Therefore, I urge you to obtain independent counsel to assist you in that regard. (Emphasis added).
Ms. Myer-Bennett provided Ms. Lomont with a list of suggested attorneys who could assist her with having the lien removed. Ms. Lomont subsequently met with one of the suggested attorneys, Debra Kesler, on June 28, 2012, who advised her the sole cause of action available was a malpractice suit against Ms. Myer-Bennett. Ms. Lomont testified she was " shocked" to learn of the malpractice because she had been led to believe the lien could be successfully removed by filing a lawsuit.
Ms. Lomont filed this malpractice action against Ms. Myer-Bennett on July 12, 2012, alleging her attorney committed legal malpractice by failing to record the community property settlement which gave her full ownership of the home, thus allowing a third-party creditor to file a lien against her home for her ex-husband's debt. Ms. Myer-Bennett filed an exception of peremption asserting more than three years had passed since the date of the alleged act, omission, or neglect upon which Ms. Lomont's claims were based and, thus, Ms. Lomont's claims were perempted under La. R.S. 9:5605. Ms. Lomont filed a supplemental and amending petition alleging defendant acted fraudulently in misrepresenting and/or suppressing the truth regarding the malpractice she committed. Ms. Lomont further alleged because of defendant's fraudulent acts, her claim fell under the exception set forth in La. R.S. 9:5605(E) and was not perempted. In a second supplemental and amending petition, Ms. Lomont detailed the alleged specific fraudulent acts.
An evidentiary hearing was held on Ms. Myer-Bennett's exception of peremption. The parties submitted evidence and the district court heard testimony [2014-2483 La. 5] from Ms. Myer-Bennett and Ms. Lomont. Following the hearing, the district court sustained the exception. Relying on a recent Fifth Circuit case, Garner v. Lizana, 13-427 (La App. 5 Cir. 12/30/13), 131 So.3d 1105, writ denied, 14-0208 (La. 4/4/14), 135 So.3d 1183, the court first held post-malpractice acts could be considered in determining whether the fraud exception in La. R.S. 9:5605(E) should be applied. However, the court specifically found Ms. Myer-Bennett's actions after the discovery of her malpractice did not amount to fraud. Based on the evidence, the district court found defendant was " honestly trying to fix a mistake that she had caused" and, thus, did not have the requisite intent to commit fraud.
On appeal, Ms. Lomont contended the allegations of fraud in her petition should be accepted as true and were sufficient to prevent application of the three-year peremptive period in La. R.S. 9:5605(A). Ms. Lomont also argued the district court erred in failing to find defendant's conduct constituted fraud. The court of appeal affirmed. Because evidence was presented at the hearing on the exception of peremption, the court of appeal held the presumption that the allegations in Ms. Lomont's petition were true did not apply. The court further found no manifest error in the district court's ruling. The court explained:
Defendant testified that she admitted her mistake in failing to file the partition agreement to Ms. Lomont in December 2010. Defendant further stated that she offered to help Ms. Lomont in getting the lien removed and everything she did was in an effort to " fix the problem" she had created. When findings are based on determinations regarding the credibility of witnesses, great deference is given to the trier of fact because only the fact finder is cognizant of the variations in demeanor and tone of voice that bears so heavily on the
listener's understanding and belief in what is said. While some of Defendant's representations to Ms. Lomont regarding the method by which the lien could have been removed may have been grossly negligent, we cannot say the trial court was manifestly erroneous in finding Defendant's conduct was not [2014-2483 La. 6] fraudulent.
Ms. Lomont filed a writ application with this Court which we granted.
The time limits to file a legal malpractice action are 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. However, with respect to any alleged act, omission, or neglect occurring prior to September 7, 1990, actions must, in all events, be filed in a court of competent jurisdiction and proper venue on or before September 7, 1993, without regard to the date of discovery of the alleged act, omission, or neglect. 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 Article 1953.
(Emphasis added). In this case there is no dispute the act of malpractice was Ms. Myer-Bennett's failure to record the settlement agreement in the public records prior [2014-2483 La. 7] to February 20, 2009, the date the Citibank lien was recorded against Ms. Lomont's property. Thus, under the clear wording of La. R.S. 9:5605(A) and (B), Ms. Lomont's suit, filed on July 12, 2012, more than three years after the act of malpractice, would be perempted. Here, however, Ms. Lomont has asserted the peremptive period is not applicable based on the fraud exception set forth in La. R.S. 9:5605(E).
The objection of peremption is raised by the peremptory exception. La. C.C.P. art. 927(A)(2). " Peremption has been likened to prescription; namely, it is prescription that is not subject to interruption or suspension." Rando v. Anco Insulations, Inc., 08-1163 (La. 5/22/09), 16 So.3d 1065, 1082.
Thus, the rules governing the burden of proof as to prescription also apply to peremption. Id. Ordinarily, the exceptor bears the burden of proof at the trial of the peremptory exception. Id. But, if prescription is evident on the face of the pleadings, the burden shifts to the plaintiff to show the action has not prescribed. Id. Ms. Lomont's First Supplemental and Amended Petition for Damages for Legal Malpractice affirmatively alleges her petition for damages was not time-barred under La. R.S. 9:5605(A) because defendant committed fraud and thus the action falls under the fraud exception of La. R.S. 9:5605(E). Additionally, Ms. Lomont filed a Second Amended and Supplemental Petition for Damages for Legal Malpractice which affirmatively set forth detailed factual allegations of fraud and asserted that defendant's fraudulent actions rendered the peremptive period in La. R.S. 9:5605(A) inapplicable. Based on these allegations, it appears plaintiff made a prima facie showing that her claims were timely filed, leaving the burden of proving peremption with the defendant.
At a hearing on a peremptory exception of prescription pleaded prior to trial, evidence may be introduced to support or controvert the exception. La. C.C.P. art. 931. In the absence of evidence, an exception of peremption must be decided upon the facts alleged in the petition with all of the allegations accepted as true. [2014-2483 La. 8] Cichirillo v. Avondale Industries, Inc., 04-2894 (La. 11/29/05), 917 So.2d 424, 428. However, when evidence is introduced, the court is not bound to accept plaintiff's allegations as true. See Denoux v. Vessel Management Services, Inc., 07-2143 (La. 5/21/08), 983 So.2d 84, 88; Younger v. Marshall Industries, Inc., 618 So.2d 866, 871 (La. 1993); Ansardi v. Louisiana Citizens Property Ins., 11-1717 (La.App. 4 Cir. 3/1/13), 111 So.3d 460, 472, writ denied, 13-0697 (La. 5/17/13), 118 So.3d 380. If evidence is introduced at the hearing on the peremptory exception of peremption, the district court's findings of fact are reviewed under the manifest error-clearly wrong standard of review. Rando, 16 So.3d at 1082. If those findings are reasonable in light of the record reviewed in its entirety, an appellate court cannot reverse even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Id.
To satisfy her burden of proving Ms. Lomont's claim is perempted, Ms. Myer-Bennett was required to prove La. R.S. 9:5605(E) is not applicable. We begin our analysis mindful that " peremptive statutes are strictly construed against peremption and in favor of the claim. Of the possible constructions, the one that maintains enforcement of the claim or ...