Hendrick v. ABC Ins. Co.

787 So. 2d 283, 2001 WL 508377
CourtSupreme Court of Louisiana
DecidedMay 15, 2001
Docket2000-CC-2403 and 2000-CC-2349
StatusPublished
Cited by25 cases

This text of 787 So. 2d 283 (Hendrick v. ABC Ins. Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hendrick v. ABC Ins. Co., 787 So. 2d 283, 2001 WL 508377 (La. 2001).

Opinion

787 So.2d 283 (2001)

Rodney HENDRICK
v.
ABC INSURANCE COMPANY, DEF Insurance Company, XYZ Insurance Company, et al.

Nos. 2000-CC-2403 and 2000-CC-2349.

Supreme Court of Louisiana.

May 15, 2001.
Rehearing Denied June 29, 2001.

*284 James A. Brown, Jana L. Grauberger, John M. Wilson, Liskow & Lewis, New Orleans, Counsel for Applicant (No. 00-CC-2349).

James C. Percy, Baton Rouge, Robert R. Percy, III, Timothy E. Pujol, Charles H. Braud, Jr., Richard P. Ieyoub, Baton Rouge, Counsel for Respondent (No 00-CC-2349).

James C. Percy, Baton Rouge, Robert R. Percy, III, Timothy E. Pujol, Baton Rouge, Counsel for Applicant (No. 00-CC-2403).

James A. Brown, Jana L. Grauberger, John M. Wilson, Liskow & Lewis, New Orleans, Charles H. Braud, Jr., Richard P. Ieyoub, Baton Rouge, Counsel for Respondent (No. 00-CC-2403).

KNOLL, Justice.

Before this Court is a legal malpractice claim filed by Rodney Hendrick ("Hendrick") against Stone, Pigman, Walther, Wittmann & Hutchinson, John M. Landis, Randall A. Smith, William E. Brown, and Attorneys' Liability Assurance Society, Inc. (collectively "Stone Pigman"). Based on the record before us and the law, we find that Hendrick's claim against Stone Pigman prescribed under the law in effect before the enactment of LA.REV.STAT. ANN. § 9:5605.[1]

*285 FACTS AND PROCEDURAL HISTORY

Hendrick worked for Herb Polk ("Polk"), Hendrick's father-in-law, at Polk's car dealership in Baton Rouge and became involved in a business deal with Polk in South Carolina. Polk, James Fink ("Fink"), Francis Collins ("Collins") and Hendrick formed a corporation named PFC, Inc. d/b/a Stingray Boat Company ("Stingray"). Polk, Fink, and Collins each had a 30% interest and Hendrick had a 10% interest in Stingray when it was formed. The ownership interests changed when additional shares of Stingray were issued at a 1981 shareholders' meeting. Polk's interest increased to 59%, Fink and Hendrick retained their percentage interest at 30% and 10% respectively. Collins' interest, however, was reduced to 1% after the new shares were issued.

Hendrick and Judith Polk were divorced in April 1983. Soon thereafter, Hendrick was replaced on the board of directors of Stingray. Collins filed suit against Hendrick, Polk and Fink in South Carolina and in the Middle District of Louisiana and alleged irregularities and improprieties at the 1981 shareholders' meeting when Collins' interest in Stingray was diluted. See Collins v. PFC, Inc., No. 83-16-570 (S.C. Ct. Com. Pleas, Darlington 1983); Collins v. Polk, 115 F.R.D. 326 (M.D.La.1987). In November 1983, apparently due to the inability of Hendrick and Judith to resolve community property issues in their divorce, Hendrick filed a voluntary petition for bankruptcy under Chapter 11 of the United States Bankruptcy Code in Bankruptcy Court for the Middle District of Louisiana.

*286 Donald Starns ("Starns") was appointed the trustee to manage the debtor's estate. In the bankruptcy proceedings, both Starns and Hendrick were represented by counsel. David Rubin ("Rubin") represented Starns, and William Steffes ("Steffes") represented Hendrick. In the course of the bankruptcy proceedings, Starns filed an application with the bankruptcy court seeking authority to sell Hendrick's stock in Stingray.[2]

The bankruptcy judge conducted an adversarial hearing before deciding whether to approve the proposed sale. Hendrick filed an objection to the sale on the day of the hearing, alleging that the offered price of $150,000 was less than two-thirds the fair market value of the stock and the $150,000 offer was far less than the price paid for Polk's and Collins' stock. Starns, his attorney Rubin, Steffes, Fink, and an attorney for Judith Polk were all present at the hearing. Rubin expressed concerns whether the proposed offer reflected the value for the shares that other shareholders had received, but maintained that the stock sale should be approved. The bankruptcy judge approved the sale. The Bankruptcy Court's order authorized the sale of the Stingray stock "free and clear of all liens, claims, and encumbrances, including any and all alleged co-owner's rights or right of first refusal of Judith Polk Hendrick." This signed order contrasts with a minute entry of February 13, 1985, in which the court directed the trustee to continue to investigate the stock transaction and "bring an action to recover claims on behalf of the estate if any is found to exist." Neither Rubin nor Steffes appealed the order. Neither Rubin nor Steffes filed a motion for clarification to correct the discrepancy between the order and the minute entry. The bankruptcy estate not only received money for the sale, but also was dismissed from all liability associated with the Stingray stock, namely the Collins lawsuit.[3] After the hearing, Hendrick's stock was delivered to Fink with the name of the purchaser left blank.

The day after the hearing on the sale, February 14, 1985, Starns filed a supplemental application for authority to employ special counsel to investigate the circumstances surrounding the offer received by the trustee for the purchase of the Stingray stock. Pursuant to a court order, Starns, as trustee for the debtor's estate, hired Stone Pigman as special counsel on April 19, 1985. Stone Pigman was charged with investigating the circumstances related to the sale of Hendrick's Stingray stock and the "institution of any necessary litigation" regarding the matter.

Investigation by Stone Pigman revealed alleged fraud perpetrated by the purchasers of the Stingray stock. Stone Pigman subsequently filed suit on February 12, 1986, and asserted fraud claims under the Racketeer Influenced and Corrupt Organizations Act, the Securities Exchange Act, and state law claims (collectively the "RICO suit"). Stone Pigman not only signed the complaint as attorney for *287 Starns, the trustee, but also as Hendrick's attorney. Defendants in the RICO suit raised defenses of res judicata and collateral estoppel based on Hendrick's failure to appeal the February 13, 1985, order that authorized the sale of the stock. The federal district court hearing the RICO suit advised the parties of its ruling dismissing the RICO suit on December 2, 1988, and issued its written judgment on January 24, 1989. See Starns v. Avent, 96 B.R. 620 (M.D.La.1989), aff'd sub nom. Hendrick v. Avent, 891 F.2d 583 (5th Cir.), cert denied, 498 U.S. 819, 111 S.Ct. 64, 112 L.Ed.2d 39 (1990). The dismissal of the RICO suit on res judicata and collateral estoppel grounds raised questions as to whether counsel involved in the sale of the stock should have appealed or sought clarification of the February 13, 1985 order and whether Stone Pigman should have filed a Rule 60(b) motion[4] under the Federal Rules of Civil Procedure to insure that the order reserved rights to assert the claims set forth in the RICO suit.

The record shows that Hendrick was intimately involved in the RICO suit and that Stone Pigman kept Hendrick abreast of the posture of the case. Steffes, Hendrick's bankruptcy attorney, was aware *288 that Hendrick attended meetings with Stone Pigman attorneys, was informed of the RICO suit proceedings, and received a copy of the complaint that set forth the RICO claims.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Francois v. Anslum
W.D. Louisiana, 2021
VSE Corporation v. Koretzky
E.D. Louisiana, 2019
Titus v. Wilson
216 So. 3d 928 (Louisiana Court of Appeal, 2015)
Williams v. Library
111 So. 3d 356 (Louisiana Court of Appeal, 2012)
Jenkins v. Starns
85 So. 3d 612 (Supreme Court of Louisiana, 2012)
Doe v. Roe
20 A.3d 787 (Court of Appeals of Maryland, 2011)
Marin v. Exxon Mobil Corp.
48 So. 3d 234 (Supreme Court of Louisiana, 2010)
Guillot v. Daimlerchrysler Corp.
50 So. 3d 173 (Louisiana Court of Appeal, 2010)
Taylor v. Babin
13 So. 3d 633 (Louisiana Court of Appeal, 2009)
Teague v. St. Paul Fire and Marine Ins. Co.
974 So. 2d 1266 (Supreme Court of Louisiana, 2008)
Johnson v. Orleans Parish School Bd.
975 So. 2d 698 (Louisiana Court of Appeal, 2008)
Daigle v. McCarthy
238 F. App'x 1 (Fifth Circuit, 2007)
Greenblatt v. Payne
929 So. 2d 193 (Louisiana Court of Appeal, 2006)
Soreide v. Vantrex Communications, Inc.
902 So. 2d 872 (District Court of Appeal of Florida, 2005)
Spencer v. Sommer
91 F. App'x 48 (Tenth Circuit, 2004)
Brown v. Avoyelles Parish School Bd.
861 So. 2d 773 (Louisiana Court of Appeal, 2003)
Mary L. Brown v. Avoyelles Parish School Board
Louisiana Court of Appeal, 2003
Terrebonne Parish School Board v. Mobil Oil Corp.
310 F.3d 870 (Fifth Circuit, 2002)
Reed v. St. Charles General Hosp.
815 So. 2d 319 (Louisiana Court of Appeal, 2002)

Cite This Page — Counsel Stack

Bluebook (online)
787 So. 2d 283, 2001 WL 508377, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hendrick-v-abc-ins-co-la-2001.