Galloway Jefcoat, LLP v. Keating

138 So. 3d 786, 13 La.App. 3 Cir. 1069, 2014 WL 1614862, 2014 La. App. LEXIS 1097
CourtLouisiana Court of Appeal
DecidedApril 23, 2014
DocketNo. 13-1069
StatusPublished

This text of 138 So. 3d 786 (Galloway Jefcoat, LLP v. Keating) 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
Galloway Jefcoat, LLP v. Keating, 138 So. 3d 786, 13 La.App. 3 Cir. 1069, 2014 WL 1614862, 2014 La. App. LEXIS 1097 (La. Ct. App. 2014).

Opinion

SAUNDERS, Judge.

[ ,This ease involves a dispute over the division of attorney’s fees between a bankruptcy attorney and a firm. The bankruptcy attorney, with a practice established prior to his employment with the firm, was later terminated by the firm for what it deemed improper retention of fees collected by the attorney.

The firm filed suit against the attorney for recovery of the fees and its damages suffered as a result of having to reallocate the time of salaried employees to investigate the activities of the attorney in representing its clients. The attorney reconvened against the firm for fees or for the monthly bonus that he contended entitlement to under his employment agreement.

The trial court’s judgment awarded the firm fees that it deemed were improperly retained by the attorney, but involuntarily dismissed the firm’s claim for damages suffered for reallocation of the time of its salaried employees. Both the attorney and the firm appeal. We amend the trial court’s judgment to reflect the attorney’s entitlement to his percentage of the fees from one particular client as mandated by the employment agreement. We affirm the trial court’s judgment as amended.

FACTS AND PROCEDURAL HISTORY:

This matter arises from the employment of D. Patrick “Rick” Keating (Keating) with Galloway Jefcoat, LLP as an associate bankruptcy attorney from October 1, 2007, through October 10, 2010. The relationship between Keating and Galloway Jefcoat and how Keating was to be paid was governed by an employment agreement.

After terminating Keating, Galloway Jefcoat filed suit against him contending that he improperly converted attorney’s fees. In addition to the return of those fees, Galloway Jefcoat sought damages from Keating for the time its ^salaried employees spent investigating this matter in lieu of performing their typical job duties. Keating did admit to retaining the fees acquired from some of the clients, but asserted that he did so either due to mistake or a belief that those clients were part of his book of business that existed prior to his employment at Galloway Jefcoat.

Prior to the trial pertinent to this appeal, a hearing was conducted by the federal bankruptcy court in Lafayette, Louisiana. The purpose of that hearing was to determine which fees held by the bankruptcy court would be disbursed to either Galloway Jefcoat or Keating. The bankruptcy court divided a portion of the fees based on the date of the confirmation order because it found that neither party provided it with enough evidence to divide the fees using a quantum meruit basis. [789]*789Further, the bankruptcy court asserted that its division should have no weight in the matter before the trial court.

During the pertinent trial, at the close of Galloway Jefcoat’s presentation of evidence, Keating moved for an involuntary dismissal of, inter alia, Galloway Jefcoat’s claims related to the damages sought for the time its salaried employees spent investigating the matter. The trial court granted Keating’s motion.

After hearing the remainder of the case, the trial court took the matter under advisement. Thereafter, it rendered a judgment in favor of Galloway Jefcoat for $58,147.68 on its main demand and in favor of Keating for $5,391.65 on his reconven-tional demand. Keating filed a motion for a new trial. After hearing the motion, the trial court modified its original judgment to increase the award to Keating to $6,295.90. Both parties appealed, alleging the following assignments of error, respectively.

KEATING’S ASSIGNMENTS OF ERROR:

I.
IsThe Trial Court erred in ordering Keating to compensate Galloway Jef-coat, LLP for amounts received from Leonard Gachassin ($500.00) and OIS ($1,925.00). These amounts are accounts receivable by Keating for work which he did before he joined the firm as an employee. Therefore, there was no entitlement or any indication of entitlement of Galloway Jefcoat to these fees.
II.
The Trial Court erred in failing to recognize the interest of Keating in Bankruptcy funds held by the Chapter 13 Trustee, Keith Rodriguez. As of the time of Keating’s termination numerous Chapter 13 bankruptcy cases had been completed. Under Chapter 13 rules, the Chapter 13 trustee continues to collect funds paid by the Chapter 13 debtors included in which are fees due for the debtor’s attorney. Trustee Rodriguez held funds which were ordered by the Bankruptcy Judge to be paid to Keating and to the firm. These funds were ordered by Bankruptcy Judge Summer-hays to be distributed $47,777.50 to Galloway Jefcoat and $22,476.81 to Keating. The division was made by Judge Sum-merhays on a case by case basis. The Trial Court adopted the division made by Judge Summerhays. Judge Sum-merhays clearly ruled that the division was not intended to bind the State Court determination on entitlement of fees from these Chapter 13 matters. Judge Trahan erred in accepting the division of Judge Summerhays as his division without analyzing the issues relating to entitlement as urged by Keating.
III.
In Construction Resources Link (CRL), a Chapter 11 proceeding and a GJ file, the work was completed before termination of DPK. After termination, GJ received fees totaling $7,255.15. The Trial Court erred in refusing to recognize DPK’s entitlement to 75% or $5,441.36 of the CRL fee.
IV.
The Trial Court erred in awarding fees claimed by Keating derived from cases in his book of business to Galloway Jefcoat. The cases in Keating’s book of business were never acquired by Galloway Jefcoat. There was no entitlement legally, ethically or otherwise to those fees when the work was completed and the fees were paid to Keating. Keating contends that he is solely entitled to those fees. Judge Trahan erred in his ruling and judgment ordering Keating to disgorge his book of business fees to Galloway Jefcoat. As an alternative as[790]*790signment of error, if the fees are to be disgorged, then clearly a recalculation should be done because under the terms of employment, even if these fees are determined by the Court to be Galloway Jefcoat fees, Keating would be entitled to 50% of the fees |4under his employment agreement on Chapter 7 and Chapter 13 matters and 75% of the fees derived from Chapter 11 matters.

GALLOWAY JEFCOAT’S ASSIGNMENT OF ERROR:

The trial court erred in granting Involuntary Dismissal of Galloway Jefcoat, LLP’s investigative costs, particularly the time and labor expense incurred by its employees in identifying, documenting and establishing the wrongful acts of its former employee, D. Patrick “Rick” Keating.

KEATING’S ASSIGNMENT OF ERROR NUMBER ONE:

Keating asserts that the trial court erred in ordering him to compensate Galloway Jefcoat for amounts received from Leonard Gachassin and OIS. We disagree.

The applicable standard of review for this assignment of error was not addressed by Keating. He simply argued that the trial court erred because it was his uncon-tradicted testimony that the payments from Gachassin and OIS were to compensate him for work he performed prior to joining Galloway Jefcoat.

The standard of review was addressed by Galloway Jefcoat.

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138 So. 3d 786, 13 La.App. 3 Cir. 1069, 2014 WL 1614862, 2014 La. App. LEXIS 1097, Counsel Stack Legal Research, https://law.counselstack.com/opinion/galloway-jefcoat-llp-v-keating-lactapp-2014.