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Wootan & Saunders, A Professional Corp. v. Diaz

Court of Appeals of Louisiana, Fourth Circuit

March 28, 2018

WOOTAN & SAUNDERS, A PROFESSIONAL CORPORATION
v.
GLENN E. DIAZ

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2001-05098, DIVISION "G-11" Honorable Robin M. Giarrusso, Judge

          Paul J. Hebert Benjamin D. Jones OTTINGER HEBERT, LLC Charles R. Sonnier THE SONNIER FIRM COUNSEL FOR PLAINTIFF/APPELLEE

          Joseph R. Ward, Jr. WARD & CONDREY, LLC COUNSEL FOR DEFENDANT/APPELLANT

          Court composed of Judge Edwin A. Lombard, Judge Paula A. Brown, Judge Dennis R. Bagneris, Pro Tempore

          Edwin A. Lombard, Judge.

         The Appellant, attorney Glenn Diaz, seeks review of the June 13, 2017 judgment of the district court enforcing a fee-splitting agreement between himself and the Appellee, Wootan & Saunders, A Professional Corporation ("WS"), and awarding WS $1, 181, 250 plus all costs and legal interest from the date of judicial demand. Finding no error, we affirm the judgment of the district court.

         Facts and Procedural History

         This is a breach of contract case arising from an attorney fee-splitting agreement between the parties in the wrongful death and survival action of Kenneth P. Gowland, D.D.S. ("Dr. Gowland"). Dr. Gowland was a client of WS when he was tragically killed in an automobile collision in May 1992, in St. Bernard Parish at the floodgate near the Plaquemines Parish border.

         Dr. Gowland's widow, Connie Gowland ("Mrs. Gowland"), retained WS to open a succession on her husband and to handle an uninsured motorist claim against Dr. Gowland's insurer, State Farm Insurance Company, on behalf of herself and her children (collectively "the Gowland family"). Moreover, from 1992-1993, WS investigated Dr. Gowland's accident by: examining the accident scene; submitting public records requests to the Louisiana Department of Transportation and Development ("DOTD"); videotaping the accident scene; researching applicable laws; conducting strategy meetings with Mrs. Gowland; attempting to identify potentially responsible parties; and developing a theory of the wrongful death case.

         During the same time period, WS also performed defense work for various Louisiana states agencies and departments, including the Louisiana Department of Public Safety and Corrections, for which it received payments from the Louisiana Office of Risk Management ("the ORM"), which is an office that handles tort claims brought against state agencies. See La. Rev. Stat. 39:1535.

         WS was primarily a defense firm that did not handle personal injury and/or road hazard claims, so it vetted various personal injury lawyers to handle the wrongful death and survival claim ("the Gowland Litigation") on behalf of the Gowland family. After meeting with WS attorneys-Guy Wootan and John Saunders-on April 26, 1993, Mr. Diaz was selected to handle the Gowland Litigation. On April 28, 1993, a meeting was held with the parties and Mrs. Gowland at which she and Mr. Diaz signed a "Contingent Fee Contract and Assignment of Interest" and Mr. Diaz signed the fee-splitting agreement ("Fee Agreement") with WS.[1]

         The Fee Agreement provided that WS was to receive its portion of the fee in consideration of the work it had already performed and also for continuing to maintain contact with the Gowland family.[2] The Fee Agreement stated in pertinent part:

Consistent with our discussions, I [Mr. Wootan] have reviewed Article XVI (Rules of Professional Conduct, Louisiana State Bar Association), Rule 1.5, and it appears that your offer to divide part of your contingency fee with the Gowland family with our law firm [WS] is appropriate considering the extensive time devoted by us to date (including our extensive investigation efforts, numerous client conferences, meetings with attorneys for some defendants and extensive file documentation) and our willingness to assist you by maintaining a continuous line of communications with Mrs. Gowland and her family hereinafter. Based on our legal services and contributions to date in addition to future assistance, you have specifically offered to divide the following part of your Gowland contingent fee interest or agreement with our firm on the following, proportionate basis:
One-fourth or 25% to our law firm [WS] from your 35% interest in any gross amount received or recovered by [Mr.] Diaz via settlement, compromise, judgment or appeal.
We have advised Mrs. Gowland of your offer to share part of your contingency fee with our firm and she has no objection thereto.
Finally, it is our understanding that you will keep us informed of all developments and copy us with all correspondence, memoranda and pleadings. We will work with and/or maintain direct contact with the Gowland family and thereby assist you in the prosecution of this claim(s) without our firm being directly involved or named in the pleadings.

         After the Fee Agreement was signed, WS tendered its files relating to the Gowland Litigation to Mr. Diaz. It is undisputed that WS did not inform Mr. Diaz that it was doing defense work for various state agencies prior to entering into the Fee Agreement. Additionally, by June 1994, WS dissolved, and Messrs. Wootan and Saunders began working at Chaffe McCall, LLP.[3]

         The Gowland Litigation eventually went to trial in 1998, resulting in a judgment in the Gowland family's favor against the DOTD. Post-trial, Mr. Diaz expressed his desire to renegotiate the Fee Agreement with WS, but to no avail. The Gowland Litigation subsequently settled for $13, 500, 000.

         Mr. Diaz issued the settlement proceeds to Mrs. Gowland, withholding monies for cost reimbursement and the attorney's fee. He refused, however, to tender any portion of the contingency fee to WS based upon his ethical concerns about the validity of the Fee Agreement. He maintained that he learned from opposing counsel Daniel Vidrine, who was then an assistant attorney general for the State of Louisiana, that WS had a conflict of interest with the DOTD because WS had represented other agencies of the State of Louisiana. He further asserted that WS failed to perform its obligations under the contract. Having resolved that WS was not entitled to any share of the contingency fee, Mr. Diaz retained and spent the disputed funds. Ultimately, in March 2001, WS filed suit against Mr. Diaz seeking to enforce the Fee Agreement and asserting that Mr. Diaz had breached the same.

         During the course of the two-day trial, the district court heard testimony from Mr. Diaz, John Saunders, and WS's ethics expert, Leslie Schiff, Esq. The district court further considered the deposition testimony of Mr. Diaz's witness, Mr. Vidrine. After taking the matter under advisement, the district court issued a judgment on June 13, 2017, awarding WS $1, 181, 250, plus costs and all legal interest from date of demand.

         Mr. Diaz timely filed the instant appeal from the judgment. He raises four assignments of error:

(1) The district court erred in finding that the Fee Agreement was valid and enforceable in view of the concurrent conflict of interest WS had in representing any party in a tort claim against the State of Louisiana;
(2) The district court erred in granting judgment in favor of WS and against Diaz for 25% of the contingency fee earned by Mr. Diaz in litigation in which WS provided no legal work nor assumed any responsibility;
(3) The district court erred in not finding the Fee Agreement void and unenforceable because of fraud in the inducement; and
(4) The district court erred in accepting and relying upon Mr. Schiff's testimony as to his interpretation of the law to be ...

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