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Dodson & Hooks, APLC v. The Louisiana Community Development Capital Fund, Inc.

Court of Appeals of Louisiana, First Circuit

December 18, 2019

DODSON & HOOKS, APLC
v.
THE LOUISIANA COMMUNITY DEVELOPMENT CAPITAL FUND, INC. "CAPFUND" THE LOUISIANA COMMUNITY DEVELOPMENT CAPITAL FUND, INC. (CAPFUND)
v.
DODSON & HOOKS, APLC

          On Appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Docket Nos. C642674, Sec. 27 c/w C652673, Sec. 23 Honorable Todd Hernandez, Judge Presiding

          Alan W. Stewart James H. Gibson Michael O. Adley Lafayette, Louisiana Kenneth Henry Hooks Baton Rouge, Louisiana Counsel for Defendant-in- Reconvention/ Appellee Dodson & Hooks, APLC

          Ernest L. Johnson Arthur R. Thomas Baton Rouge, Louisiana Counsel for Plaintiff/Appellant Louisiana Community Development Capital Fund, Inc.

          Christopher M. Vitenas Henry Price Mounger, III Baton Rouge, Louisiana and Brian Ballay New Orleans, Louisiana Counsel for Intervenor CB& I Government Solutions, Inc.

          BEFORE; McCLENDON, WELCH, AND HOLDRIDGE, JJ.

          McCLENDON, J.

         In this suit for damages, the plaintiff challenges the judgment of the trial court that granted the defendant's peremptory exception raising the objection of no cause of action and dismissed the plaintiff's principal demand with prejudice. For the reasons that follow, we affirm.

         FACTUAL AND PROCEDURAL BACKGROUND

         On January 7, 2015, Dodson, Hooks, & Frederick, APLC (Dodson & Hooks) and Louisiana Community Development Capital Fund, Inc. (Capfund) entered into an attorney-client contract. Pursuant to the contract, the parties agreed that Dodson & Hooks would represent Capfund in Capfund's lawsuit to recover payments due under a contract with CB&I Government Solutions, Inc. (CB&I). The contract also provided that, in consideration for services rendered, Capfund agreed to pay Dodson & Hooks "[f]orty (40%) percent of all amounts which may be recovered ... pursuant to arbitration and/or litigation," in addition to reimbursement for all costs related to the litigation. The attorney-client contract also provided that Capfund granted a special privilege to Dodson & Hooks for their professional fees "on all money and property recovered and/or obtained" for Capfund. The contract further provided that neither Dodson & Hooks nor Capfund could settle any claim commenced pursuant to the contract without the consent of the other.

         The Arbitration Proceedings

         On February 9, 2015, Dodson & Hooks filed an arbitration proceeding with the American Arbitration Association on behalf of Capfund against CB&I for the payment of outstanding invoices in the amount of $280, 000.00. Shortly prior to the arbitration hearing, on September 18, 2015, CB&I paid Capfund directly the amount of $207, 934.91 for the payment of invoices. Thereafter, Dodson & Hooks requested payment of its costs and fees from Capfund. Capfund failed to pay Dodson & Hooks, claiming that no attorney fees were due to Dodson & Hooks from the payment from CB&I to Capfund. Because of Capfund's refusal to pay, Dodson & Hooks withdrew from its representation of Capfund.[1] Also, Dodson & Hooks sent a letter to the American Arbitration Association, dated November 5, 2015, requesting that a copy of its attorney/client contract with Capfund be filed into the record of the arbitration proceedings to assert its attorney fee lien.[2]

         On November 17, 2015, after Dodson & Hooks's withdrawal from its representation of Capfund, CB&I made an offer of settlement to Capfund in the amount of $10, 000.00 in exchange for a full release from Capfund and Dodson & Hooks. Dodson & Hooks refused to release any claims it had against Capfund for attorney fees and costs. Capfund and CB&I were unable to reach a settlement of CB&I's claims, which proceeded to arbitration. CB&I succeeded on its claim and was awarded $83, 156.82 against Capfund.

         Thereafter, Dodson & Hooks filed a separate arbitration claim for attorney fees and costs against Capfund, asserting that the $207, 934.91 payment by CB&I to Capfund constituted payment on the demand asserted against CB&I in the first arbitration proceeding for unpaid and outstanding invoices. Dodson & Hooks further represented that on payment of the $207, 934.91 amount to Capfund, it sent a settlement statement to Capfund with the calculation of fees and costs owed, in the amount of $98, 705.24, and requested payment of same. Dodson & Hooks alleged that Capfund refused to pay any of the costs and fees owed. Accordingly, Dodson & Hooks asserted its security interest for $98, 705.24 of the funds paid by CB&I to Capfund.

         In response to the second arbitration proceeding, Capfund filed a counterclaim for damages against Dodson & Hooks asserting that Dodson & Hooks wrongfully failed to consent to CB&I's settlement offer in the first arbitration proceeding. Ultimately, the arbitrator dismissed Capfund's counterclaim, finding that the agreement between Dodson & Hooks and Capfund clearly required that "both client and law firm consent to any settlement" with CB&I and that Dodson & Hooks could not be "held at fault" for declining to agree to a settlement reached by CB&I and Capfund.

         The District Court Proceedings

         On September 30, 2015, Dodson & Hooks filed a Petition to Enforce Contract, for Damages and for Writ of Sequestration against Capfund in the 19th Judicial District Court, seeking the $98, 705.24 amount for fees and expenses. On November 4, 2016, Capfund filed its own Petition for Damages against Dodson & Hooks for the "wrongful and unlawful filing of a lien by the defendant in an arbitration proceeding in which defendant was not a party." Capfund attached nine exhibits to its petition, including a copy of the attorney-client contract.[3] On motion of Capfund, the cases were consolidated on May 22, 2017.

         In response to Capfund's lawsuit, Dodson & Hooks filed a peremptory exception raising the objection of no cause of action.[4] The trial court granted the exception of no cause of action, but allowed Capfund to amend its petition to state a valid cause of action against Dodson & Hooks. In sustaining the exception, the trial court held:

[T]he law fails to provide a cause of action or remedy against [Dodson & Hooks] as asserted in the petition for damages filed by [Capfund]. [Capfund's] petition asserts that [its] cause of action arises out of [Dodson & Hooks'] unlawful and/or wrongful filing of a lien in the arbitration proceeding and that this conduct prevented a favorable settlement. The law specifically authorized [Dodson & Hooks] to pursue ...

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