Industrial Companies, Inc. v. Durbin

837 So. 2d 1207, 2003 WL 183272
CourtSupreme Court of Louisiana
DecidedJanuary 28, 2003
Docket2002-C-0665
StatusPublished
Cited by217 cases

This text of 837 So. 2d 1207 (Industrial Companies, Inc. v. Durbin) 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
Industrial Companies, Inc. v. Durbin, 837 So. 2d 1207, 2003 WL 183272 (La. 2003).

Opinion

837 So.2d 1207 (2003)

INDUSTRIAL COMPANIES, INC.
v.
James E. DURBIN, Berkley R. Durbin, Durbin & Durbin, L.L.C., and All South Title, Inc.

No. 2002-C-0665.

Supreme Court of Louisiana.

January 28, 2003.

*1210 Samuel B. Rhorer, Counsel for Applicant.

Michael L. Cave, Counsel for Respondent.

CALOGERO, Chief Justice.

We granted writs of certiorari in this case in order to review two claims asserted by the defendants, Louisiana attorneys and a corporation they apparently own or control. First, the defendants claim that the appellate court decision improperly allows the plaintiff, a non-attorney who earlier was their client, to seek a portion of the defendants' attorney fees. The plaintiff responds by making a strong assertion that the monies it seeks are not attorney fees, as the defendants claim, but money flowing from the proceeds of promissory notes and collateral mortgage notes to which plaintiff is entitled as holder in due course of the notes. The record evidence, however, is inconclusive concerning the nature of the disputed funds. In fact, the defendants have failed to present any record evidence to support their claim that the disputed funds are attorney fees. Although we question the reasons stated by the court of appeal, we will nonetheless affirm the court of appeal decision, which, favorably to the plaintiff, reversed the district court's dismissal of the plaintiff's case on peremptory exceptions of no cause of action and no right of action. Our reasons therefor follow.

Second, the defendants challenge the appellate court's resolution of the difficult problems presented by this case by commanding the joinder of third parties to the action, the defendants in the foreclosure proceeding, who, according to the court of appeal, actually paid the disputed funds. The defendants in the foreclosure proceeding, however, have not made any claims concerning the funds in this litigation. Because we are not convinced on the face of the present record that it is essential that the third parties be brought into the case, we will reverse the court of appeal's decision to order joinder of the defendants in the foreclosure action.

FACTS AND PROCEDURAL HISTORY

The following facts are set forth in the petition of plaintiff, Industrial Companies, Inc. ("Industrial"). Industrial asserts that it was the holder in due course of "two certain promissory notes" and "three certain collateral mortgage notes" executed by Albert and Lillian Connell. When the Connells' indebtedness became overdue, Industrial retained the legal services of defendants, James E. Durbin and Berkley R. Durbin, practicing law as defendant Durbin, Durbin & Durbin, L.L.C., (hereinafter referred to collectively as "Durbin"), to foreclose on the indebtedness. Industrial claims that Durbin agreed to perform legal services related to the foreclosure for a fee not to exceed $2,000. Durbin filed a petition for executory process on Industrial's behalf, which resulted in the seizure of the property. Industrial claims that it paid Durbin $1,650 in connection with the agreement for Durbin to perform the foreclosure for not more than $2,000.

Before a sheriff's sale could take place, a third party purchased the property for the sum of $335,169.[1] Industrial alleged *1211 that checks totaling that amount were issued by the Connells, and that Industrial endorsed the checks over to Durbin, who deposited the funds into an account belonging to defendant, All South Title, Inc., a company controlled by or somehow affiliated with the Durbins. Thereafter, according to Industrial's petition, the defendants paid Industrial $255,793.49, which Industrial admits was the amount of principal and interest due on the indebtedness. Industrial alleged that the defendants retained approximately $40,000, claiming that amount was attorney fees.[2]

On January 1, 2000, Industrial filed a "Petition for Unjust Enrichment and Return of Monies Due," against Durbin and All South. Industrial alleged that the defendants were indebted to it for "all sums retained by defendants ... in excess of $1,650." Because Durbin had agreed to represent Industrial in the foreclosure proceedings for a total legal fee not to exceed $2,000, Industrial alleged that the defendants were unjustly enriched when they retained approximately $40,000 from the funds paid by the purchaser. As holder in due course of collateral mortgage notes and promissory notes executed by the previous owners of the property, Industrial alleged it was entitled to all sums owed under the instruments.

The defendants responded by filing exceptions of no cause of action and no right of action. In support of its exception of no cause of action, the defendants argued that the funds they retained from the foreclosure proceeding were "by their very nature attorney fees" that could not belong to Industrial, a non-attorney. In support of its exception of no right of action, the defendants asserted that the only party that could bring an action to recover the monies was the party that actually paid the alleged attorney fees, the Connells.

At the hearing on the defendants' exceptions, counsel for the defendants stated that the only issue before the district court was whether Mr. Durbin, an attorney, can share attorney fees with a non-attorney, Industrial. The district court sustained the exceptions of no cause of action and no right of action and dismissed Industrial's suit with prejudice at Industrial's cost. Although the district judge did not issue reasons for judgment, the transcript of the hearing reveals that the judge focused primarily on the admission of Industrial's attorney that Industrial received all the money it was owed under the promissory notes and collateral mortgage agreements, including accrued interest.

The court of appeal reversed the judgment of the district court. The appellate *1212 court agreed with the district court's finding that Industrial, which had received the full amount due and owing on the promissory notes, "ordinarily would not be the appropriate party to bring an action contesting an amount paid out of sums received by the Connells from a third party purchaser." Industrial Companies, Inc. v. Durbin, 2000-2170, p. 3 (La.App. 1 Cir. 12/28/01), 806 So.2d 106, 109. However, the court then found that Industrial had a real and actual interest in the suit because the "existence of the dual payment of attorney fees related to collection by Durbin on the same promissory notes changes the procedural specter of Industrial's right to present a claim for overpayment of attorney fees." Id. at 4, 806 So.2d at 109. Thus, the court reversed the district court judgment that had granted the defendants' exception of no right of action.

After finding that Industrial has a right of action, the appellate court cited the compulsory joinder articles, La.Code of Civ. Proc. arts. 641 and 645, and found that "the instant action cannot proceed, and complete relief cannot be accorded, without the joinder of the Connells." Id., citing La.Code of Civ. Proc. art. 641(1). The appellate court then remanded the case to the district court for joinder of the Connells. Id.

Finally, the court of appeal found that Industrial "presents a claim for which the law affords a remedy" because it is entitled to "inquire into the reasonableness of attorney fees," even if the fees are stipulated in a contract. Id. at 5, 806 So.2d at 110. Accordingly, the appellate court reversed the district court judgment granting the defendants' exception of no cause of action.[3]

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Cite This Page — Counsel Stack

Bluebook (online)
837 So. 2d 1207, 2003 WL 183272, Counsel Stack Legal Research, https://law.counselstack.com/opinion/industrial-companies-inc-v-durbin-la-2003.