Davidson, Meaux, Sonnier, McElligott & Swift v. Brodhead

613 So. 2d 1038, 1993 La. App. LEXIS 381, 1993 WL 25530
CourtLouisiana Court of Appeal
DecidedFebruary 3, 1993
DocketNo. 92-6
StatusPublished
Cited by1 cases

This text of 613 So. 2d 1038 (Davidson, Meaux, Sonnier, McElligott & Swift v. Brodhead) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Davidson, Meaux, Sonnier, McElligott & Swift v. Brodhead, 613 So. 2d 1038, 1993 La. App. LEXIS 381, 1993 WL 25530 (La. Ct. App. 1993).

Opinion

COOKS, Judge.

This case arose from a contract dispute over the payment of contingency fees for legal services. The parties are the law firm of Davidson, Meaux, Sonnier, McElli-gott and Swift (hereinafter Davidson), who filed this action against the Domiciliary and Ancillary Receivers from California and Texas, respectively, representing the now defunct Mission National Insurance Company.

ISSUE

The sole issue presented is whether the trial judge erred in granting a Motion for Summary Judgment in favor of Davidson. We conclude entry of Summary Judgment in this case was clearly erroneous considering the nature of the defenses and claims specially raised by the Receivers in Answer, Reconventional Demand, and Opposing Affidavit.

FACTS AND PROCEDURAL HISTORY

The dispute originates from an oil rig accident which occurred in 1983, fatally injuring two workers. As alleged in pleadings, the accident was caused by a defective spinning chain sold by Gearench, Inc. In effect were two (2) policies covering the liabilities of Gearench: One issued by Travelers Insurance Company for Three Hundred Thousand and No/100 Dollars ($300,-000.00), as primary insurer; and the other by Mission National Insurance Company for Ten Million Dollars ($10,000,000.00), as excess insurer.

According to the record, it is customary in the insurance industry for the primary [1040]*1040carrier to undertake full responsibility in defending the insured and to subsequently demand from the excess carrier only its “pro rata” share of the defense cost. Keeping with this practice, Travelers retained Davidson to defend Gearench in several wrongful death suits filed by the families of the deceased workers. Davidson answered the suits on behalf of Gearench and filed cross-claims for full indemnity against Columbus-McKinnon, the manufacturer of the defective chain. Prior to trial Gearench agreed to pay Two Million Dollars ($2,000,000.00) in damages to all plaintiffs in the pending suits, expressly reserving its indemnity rights against Columbus-McKinnon. Travelers paid Three Hundred Thousand and No/100 Dollars ($300,-000.00), in partial settlement satisfaction, constituting the full face value of the primary policy. Mission paid the balance of the settlement, tendering One Million Seven Hundred Thousand and No/100 Dollars ($1,700,000.00) as excess carrier.

Next, Gearench actively pursued the cross-claim already filed against Columbus-McKinnon, seeking full indemnity of the Two Million Dollars ($2,000,000.00) paid to the victims’ families. Travelers, as primary insurer, continued the initial contractual arrangement with Davidson agreeing to pay an hourly rate for legal service, plus expenses, incurred in connection with Gear-ench’s indemnity litigation. The U.S. District Court awarded Gearench judgment against Columbus-McKinnon for the total amount of settlement, which included the subrogated portions paid by Travelers and Mission, plus interest. Columbus-McKinnon lodged an appeal seeking to set aside the judgment.

While the appeal was pending, Mission entered receiverships in California, its place of domicile, and in Texas, where it maintained substantial business connections. A Domiciliary Receiver in California and an Ancillary Receiver in Texas were appointed to conduct the business operations and other affairs of Mission.

Ostensibly exercising valid authority, the Texas Receiver contacted and subsequently employed Davidson to protect Mission’s interest in the Gearench Indemnity action against Columbus-McKinnon. The Receiver agreed to pay Davidson a twenty-five percent (25%) contingency fee on the total recovery. As evident from our discussion below, we are not called at this juncture to resolve any conflict regarding the actual “authority” of the Texas Receiver to execute a valid contingency contract with Davidson.

Six (6) weeks after Davidson acknowledged acceptance of the employment contract, the U.S. Fifth Circuit Court of Appeal remanded the indemnity action to the District Court for written findings addressing the “reasonableness of the amount” paid by Gearench in settlement. Molett v. Penrod Drilling Co., 826 F.2d 1419 (5th Cir.1987). Following instructions, the District Court issued findings of fact and reinstated the judgment awarding full indemnity to Gearench. Columbus-McKinnon filed a second appeal. The U.S. Fifth Circuit Court of Appeal vacated the judgment and remanded the case for determination of the District Court’s “subject matter” jurisdicr tion over the controversy. Molett v. Penrod Drilling Co., 872 F.2d 1221 (5th Cir., 1989). Concluding it had jurisdiction in the case, the District Court again issued judgment in favor of Gearench. Following Columbus-McKinnon’s third appeal, the Appellate Court affirmed the judgment recognizing Gearench’s entitlement to full indemnity of the Two Million Dollars ($2,000,-000.00) settlement, plus accrued interest. Columbus-McKinnon eventually paid the judgment in full with interest.

Davidson sent a letter to the Texas Receiver expressing intent to issue a disbursement draft from the judgment proceeds to the Receivers for Mission’s share, less Five Hundred Forty Three Thousand Three Hundred Eighty Two and No/100 Dollars ($543,382.00) in attorneys fees. We note, Travelers paid Davidson Sixty One Thousand Nine Hundred Seventy Six and 10/100 Dollars ($61,976.10) -for hourly fees charged during Geareneh’s indemnity litigation, which included a claim for Mission’s portion. In turn, Travelers billed Mission the customary pro rata share of Fifty Thousand Eight Hundred Twenty and

[1041]*104140/100 Dollars ($50,820.40) for Davidson’s services.

Learning of the proposed disbursement, the California Receiver promptly objected to the fee payment citing that: (1) The Texas Receiver lacked authority to execute the contingency contract; (2) the contract was void for “error and mistake” because the Texas Receiver was not aware of the hourly fee agreement between Davidson and Travelers which allegedly retained the firm to pursue full indemnity from Columbus-McKinnon, including Mission’s portion; and (3) the contingency fee amount was “excessive and unreasonable.”

Davidson filed a “Petition for Concursus and/or Declaratory Judgment” naming both the Texas and California Receivers as defendants and seeking judicial recognition of its alleged ownership rights to the disputed fees. The Receivers responded by filling “Answer and Reconventional Demand” urging the contract was void; or alternatively the resulting fees were unreasonable and excessive in violation of Rule 1.5(a) of the Rules of Professional Conduct of the Louisiana State Bar Association.

The Receivers forwarded to Davidson several discovery pleadings designed, in part, to elicit information regarding the disclosures made by Davidson to the Texas Receiver prior to execution of the contract and the actual time spent by Davidson in separate pursuit of Mission’s subrogated claim. Davidson failed to answer interrogatories propounded or produce documents requested within the legal delays allowed, forcing the Receivers to file a Motion to Compel Discovery. Before the motion was assigned for hearing, Davidson filed and fixed for hearing a Motion for Summary Judgment.

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Bluebook (online)
613 So. 2d 1038, 1993 La. App. LEXIS 381, 1993 WL 25530, Counsel Stack Legal Research, https://law.counselstack.com/opinion/davidson-meaux-sonnier-mcelligott-swift-v-brodhead-lactapp-1993.