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The Law Office of John D. Sileo, LLC v. Kruse

Court of Appeals of Louisiana, Fifth Circuit

February 21, 2018

THE LAW OFFICE OF JOHN D. SILEO, LLC
v.
DEBORAH KRUSE, MARK KRUSE, AND THE LAW OFFICES OF ALLAN BERGER & ASSOCIATES, PLC

         ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 765-855, DIVISION "G" HONORABLE E. ADRIAN ADAMS, JUDGE PRESIDING

          COUNSEL FOR PLAINTIFF/APPELLANT, THE LAW OFFICE OF JOHN D. SILEO, LLC, John D. Sileo, Casey W. Moll.

          COUNSEL FOR DEFENDANT/APPELLEE, DEBORAH KRUSE, MARK KRUSE, AND THE LAW OFFICES OF ALLAN BERGER & ASSOCIATES, PLC Edward P. Gothard.

          Panel composed of Judges Jude G. Gravois, Stephen J. Windhorst, and Marion F. Edwards, Judge Pro Tempore.

          MARION F. EDWARDS, JUDGE PRO TEMPORE JUDGE.

         This is an appeal from a judgment of the district court sustaining defendants' peremptory exceptions of no right of action, res judicata, and prescription, and defendants' declinatory exception of lack of subject matter jurisdiction, and dismissing all of plaintiff's claims against defendants, with prejudice. The suit originated out of a claim by plaintiff, The Law Office of John D. Sileo, LLC ("Sileo"), against its former clients, defendants, Deborah and Mark Kruse (the "Kruses"), to recover attorney fees and expenses pursuant to a contingency fee contract, and a claim for conversion against defendant, The Law Offices of Allan Berger & Associates, PLC ("Berger"), for its alleged wrongful appropriation of those attorney fees and expenses. For the following reasons assigned, we affirm the district court's grant of defendants' exception of no right of action and, consequently, pretermit review of the remaining exceptions on the grounds that they are moot.

         FACTS AND PROCEDURAL HISTORY

         On June 6, 2012, Sileo filed a complaint on behalf of the Kruses in the United States District Court, Eastern District of Louisiana, for damages related to Deborah's use of transvaginal mesh/American Medical Systems/Endo Corporation Sparc. The Kruses' suit was thereafter transferred on June 25, 2012 from federal district court in Louisiana into multi-district litigation pending in the United States District Court, Southern District of West Virginia (hereinafter "Mesh MDL").[1]

         On September 23, 2012, three months after filing the initial complaint on behalf of the Kruses in federal district court, Sileo entered into a contingency fee contract with Deborah Kruse regarding its representation of the Kruses' pending suit in the Mesh MDL litigation.[2] The contract called for Sileo to receive forty percent of the total amount collected in the event settlement was achieved without the necessity of filing suit (even though suit had already been filed at the time the contingency fee contract was confected), or fifty percent of "whatever amount [was] collected" in the event an appeal. The contract also provided the following:

RIGHT TO DISCHARGE ATTORNEY: I understand that I have the right to discharge my attorney. If I do so, my Attorney is nevertheless entitled to the fees, expenses, loans and interest thereon, upon any settlement or judgment obtained on my claim, as set forth in this contract in accordance with law.

         According to Sileo, during the two-and-a-half years after suit on behalf of the Kruses was filed, a substantial amount of legal work was performed and expenses pertaining to the Mesh MDL litigation were incurred by Sileo. By written correspondence dated February 9, 2015, the Kruses terminated Sileo's representation. Two weeks later, on February 24, 2015, the Kruses filed a motion to substitute defendant, Berger, as counsel of record for the Kruses in lieu of Sileo in the Mesh MDL litigation.

         During the five months following his discharge, the record reflects that Sileo took no formal or informal action to protect its interest to attorney fees and costs incurred by the firm during its representation of the Kruses. Sileo did not file its contingency fee contract pursuant to La. R.S. 37:218, [3] nor did it file a petition of intervention in to the federal court action. Moreover, the record is devoid of evidence that Sileo ever attempted to notify Berger in writing or otherwise to advise of its contingency fee contract and/or its intent to pursue its rights thereunder.

         Because it had not yet withdrawn as counsel of record for the Kruses (though four-and-a-half months had lapsed since its discharge), Sileo received notice from the federal district court on June 30, 2015 via the federal court's electronic notification system advising that a settlement of the Kruses' claims in the Mesh MDL litigation had been reached, and that the court had issued an "inactive docket order" retiring the Kruses' case from the court's active docket.[4]The order provided that the court would "reinstate the case to the active docket" upon a showing of good cause for such reinstatement.[5]

         On July 7, 2015, five months after having been discharged by the Kruses, Sileo filed a motion to withdraw as their counsel of record in the Mesh MDL litigation. Notably, on that same day, though it had received notice that the Kruses' suit had previously been settled and moved to the federal court's inactive docket, Sileo attempted to file a petition of intervention in the inactive suit seeking to enforce the contingency fee contract it entered into with Deborah Kruse and to recover attorney fees and the out-of-pocket expenses Sileo incurred during its representation of the Kruses prior to its discharge.[6] Attached as an exhibit to Sileo's petition was a copy of the contingency fee contract. Though it did not include a motion for leave to file its petition of intervention, Sileo submitted a proposed order with its petition that would grant Sileo leave of court to file the petition into the record.

         There is no indication in the record of the instant appeal, however, evidencing that the proposed order submitted by Sileo was ever signed or that the federal district court otherwise issued an order permitting Sileo's petition of intervention. In federal court, an intervention may only be filed with leave of court pursuant to a "timely motion." See Fed. R. Civ. Proc. 24. Accordingly, because Sileo did not obtain the required permission or authority to intervene, Sileo's petition of intervention was never actually filed. In short, the effect of Sileo's unsuccessful attempt to file its petition of intervention to recover attorney fees and costs was that the intervention was never actually "filed" and the claims asserted therein were never actually made or "pending."

         On July 10, 2015, three days after its unsuccessful attempt to file the untimely petition of intervention, Sileo filed a motion to reinstate the Kruses' case to the active docket "so that the issues presented in [Sileo's] petition of intervention" could be litigated and resolved. On August 6, 2015, the federal district court entered an order denying Sileo's motion to reactivate the case. Implicit in the trial court's denial was its determination that Sileo's motion failed to establish the requisite showing of "good cause."

         Notably, following the federal court's denial of Sileo's motion, Sileo took no remedial action. It did not file a motion for reconsideration or rehearing. It did not file a motion for new trial, a writ application or appeal, or any other request for review in the federal court action. Moreover, Sileo also failed to take any further action relative to the court's failure to sign the order granting leave to file its petition of intervention.

         On September 9, 2015, seven months after it had been discharged, and aware that the Kruses' case had been settled three months prior and that its attempt to file a petition of intervention and/or reopen the case was unsuccessful, Sileo filed and recorded its ...


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