Davidson v. Broadhead

649 So. 2d 479, 94 La.App. 3 Cir. 97, 1994 La. App. LEXIS 2977, 1994 WL 597363
Louisiana Court of Appeal·Decided November 2, 1994·No. No. 94-97·Published·Cited by 2 cases

Opinions

JiDOUCET, Judge.

This appeal concerns a fee dispute arising out of an attempt by a distributor to recover from a manufacturer damages paid pursuant to a personal injury suit.

In 1983, two men were killed in an oil rig accident caused by a defective chain. The families of the two men filed wrongful death suits naming as defendant Gearench, Inc. (Gearench), the seller of the chain. Gear-ench filed a cross-claim against Columbus-McKinnon (Columbus), the manufacturer of the chain. Gearench was defended by its primary insurer, Travelers Insurance Company (Travelers). Travelers hired the law firm of Davidson, Meaux, Sonnier, McElligott & Swift (Davidson) to represent its insured. Davidson regularly represented Travelers in such matters, always at an hourly fee plus expenses. After completion of trial, but before a verdict was announced, Gearench settled with the plaintiff for $2,000,000. Gear-ench retained its right to pursue its cross-claim against Columbus. Travelers paid its policy limits of $300,000. Mission National Insurance Company (Mission), as Gearench’s excess insurer, paid $1,700,000.

^Gearench pursued its claim against Columbus. Davidson continued to represent Gearench at an hourly fee plus expenses. The U.S. District Court rendered judgment against Columbus in the full amount of the settlement plus interest. Columbus appealed the judgment.

[481] On February 24,1987, the California State Insurance Commissioner obtained an order appointing a receiver for Mission. An ancillary receiver was appointed in Texas. The California receiver sent the Gearench file to the Texas receiver. The Texas receiver, by letter dated July 28, 1987, contacted Davidson. He asked the fee Davidson would charge to represent them in the Gearench matter, and suggested a 25% contingency fee. Davidson replied indicating that a 25% contingency fee would be appropriate. Further correspondence confirms the Texas receiver’s agreement to the fee arrangement.

By that time the matter had been remanded to the U.S. District Court by the U.S. Fifth Circuit Court of Appeal. Columbus had asked the Fifth Circuit for a rehearing. More than three years passed before the judgment was affirmed and became final. This end was achieved only after two more appeals, two more remands, an attempt by Columbus to obtain a writ of certiorari to the U.S. Supreme Court and other proceedings, all in the federal court system. These extremely complex proceedings required extensive and time consuming research in connection with a multiplicity of briefs and memo-randa.

Davidson charged Travelers $176,000 for its defense of the case. $61,976.10 of that amount was attributable to the cross-claim against Columbus. Davidson notified the Texas receiver that it would distribute Mission’s portion of the proceeds of the judgment to the Texas and California receivers, minus $543,382.43, representing the 25% contingency fee agreed upon. The California receiver objected to the fee.

Davidson began a eoneursus proceeding and deposited the disputed fee in the registry of the court. Davidson further sued for a judgment declaring it to be the owner of the funds. After a trial on the merits, the trial court rendered judgment in favor of Davidson. The Texas and California receivers appeal.

\^VALIDITY OF THE FEE AGREEMENT

The California and Texas receivers argue that the trial judge erred in failing to find the fee agreement invalid. They contend that the agreement was entered in error and that the Texas receiver had no authority to enter the agreement.

La.C.C. art. 1949 provides that:

“Error vitiates consent only when it concerns a cause without which the obligation would not have been incurred and that cause was known or should have been known to the other party.”

The trial judge has much discretion in deciding whether such error has occurred. Findings of fact on this subject, where adequately supported by the record, should not be disturbed in the absence of manifest error. Canter v. Koehring Co., 283 So.2d 716 (La.1973). Where there are two permissible views of the evidence, the trial court’s choice between them can virtually never be manifestly erroneous or clearly wrong. Rosell v. ESCO, 549 So.2d 840 (La.1989). After reviewing the record in this matter we conclude that the record adequately supports the trial judge’s conclusion that no error occurred.

Mark Ross of the Texas receiver’s office testified that he did not know that Travelers was primary and Mission was excess. He said that Davidson did not tell him that they were trying to recover the whole amount paid by both insurers. However, he admitted having the entire file before him and failing to review it in its entirety before retaining Davidson. He testified that the Texas receiver did not have sufficient liquidity to hire counsel on an hourly basis. The correspondence between Davidson and the Texas receiver makes it clear that Texas was aware that Davidson was already fully involved in the litigation and appeal process. Given the information before the Texas receiver, we cannot conclude that he was in error as to Mission’s situation in the case or as to that of Davidson in the representation of the parties.

Even assuming the Texas receiver made an error, he had the burden of proving both an error as to motive and that Davidson was aware of the motive.

“A contract may be invalidated for unilateral error as to a fact which was a principal cause for making the contract [482] where the other party knew or should have known that it was the principal cause. Shreveport Great Empire Broadcasting, Inc. [v. Chicoine, 528 So.2d 633 (La.App. 2 Cir.1988) ]; Cochran Ford, Inc. v. Copeland, 499 So.2d 509 (La.App. 2d Cir.1986). In order for the defense of error to prevail, the party claiming it must prove a motive for the obligation, error as to the motive, and that the other party knew or should have known of the motive. Shreveport Great Empire Broadcasting, Inc., supra; Ouachita Equipment Rental Company v. Tommy Trainer, 408 So.2d 930 (La.App. 2d Cir.1981).” (emphasis added)

Twin City Pontiac, Inc. v. Pickett, 588 So.2d 1125, 1128 (La.App. 2 Cir.1991). See also Bordelon v. Kopicki, 524 So.2d 847 (La.App. 3 Cir.1988). Our review of the record, reveals no evidence that would suggest that Davidson was aware of the receivers’ motive for entering the contract or of the supposed error. Therefore, we cannot say that the trial judge erred in failing to find error such as to vitiate consent to the contract.

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Davidson v. Broadhead, 649 So. 2d 479, 94 La.App. 3 Cir. 97, 1994 La. App. LEXIS 2977, 1994 WL 597363 (La. Ct. App. 1994).

649 So. 2d 479 (Davidson v. Broadhead) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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