MB Industries, LLC v. CNA Insurance Co.

74 So. 3d 1173, 2011 La. LEXIS 2594, 2011 WL 5865487
Supreme Court of Louisiana·Decided October 25, 2011·No. 2011-C-0303, 2011-C-0304·Published·Cited by 63 cases

Opinions

KNOLL, J.

| TThis civil case involves a legal malpractice claim brought by MB Industries, LLC (“MBI”) against attorneys Steven Durio and John Weinstein. Durio and Weinstein represented MBI in an ultimately unsuc[1176]*1176cessful lawsuit against former MBI employees Mark Massey and Sam Lavergne. Rather than appeal the unfavorable judgment, MBI chose to file the instant malpractice action.

There are two issues that need clarification in disposing of this case: first, whether a party’s failure to appeal an underlying judgment waives any right to bring a legal malpractice claim based on that judgment. Second, whether summary judgment was properly granted in light of MBI’s failure to introduce expert testimony to establish the applicable standard of care which would demonstrate the attorneys’ actions fell below that standard.

After our careful study and analysis, we find, in response to the first issue, Louisiana law does not impose a per se rule requiring an appeal before a malpractice action may be filed. However, in answer to the second issue, we find a party alleging legal malpractice must introduce expert testimony to establish the standard of care except in those rare cases involving malpractice so egregious that |2a lay jury could infer the defendant’s actions fell below any reasonable standard of care. In conclusion, as explained in greater detail below, under the particular circumstances of this case we find there are no genuine issues of material fact and plaintiff has failed to establish it will be able to satisfy its evidentiary burden of proof at trial; therefore, defendants are entitled to judgment as a matter of law. Thus, the judgment of the court of appeal is reversed, and the trial court judgment is reinstated.

FACTS AND PROCEDURAL HISTORY

The events leading up to this lawsuit began in 1998 when Mark Massey, a petroleum engineer, began to consider purchasing the assets of Nautica Marine Services, a company which was undergoing bankruptcy. Nautica Marine was in the business of manufacturing, leasing, and selling modular steel buildings, primarily to the petrochemical industry.

Massey asked Fred Gossen, Jr. to help evaluate the potential purchase. Gossen, in turn, brought in Sam Lavergne, an attorney with an engineering background. Massey and Gossen formed Moon Ventures, LLC, with Massey as majority owner, and in September 1998 Moon Ventures purchased the residual assets of Nautica Marine. At Gossen’s urging, the employees of Moon Ventures, including Massey and Lavergne, signed non-compete agreements covering twelve specific parishes in southwestern and southern Louisiana.

Moon Ventures was no more successful than Nautica Marine. Within a year, it too was placed into involuntary bankruptcy. In September 1999, just before Moon Ventures went into bankruptcy, its assets were transferred to MBI, a newly formed company run by Dave Dooley and Fred Gossen.

Shortly thereafter, Sam Lavergne and Mark Massey formed two new businesses, J. Bass, LLC and Hunter Buildings, LLC, both of which directly compete with MBI. On February 14, 2000, MBI, through its attorney John | sWeinstein, filed suit against Lavergne and Massey alleging violation of the non-compete agreements they had signed with Moon Ventures. MBI also claimed Lavergne and Massey misappropriated confidential MBI trade secrets including customer lists, job information, and proprietary engineering data and drawings. The case was soon removed to federal bankruptcy court because of its close connection to the ongoing Moon Ventures bankruptcy proceedings.

On August 1, 2000, Steven Durio enrolled as co-counsel along with Weinstein. On or about March 15, 2001, Fred Gossen [1177]*1177delivered a box containing original documents and exhibits to Durio’s firm. Gos-sen avers he spent weeks compiling and organizing this evidence, which included “all relevant agreements, contracts, documents, legal strategy, and other sensitive, confidential and attorney/client privileged information.”1 One of Durio’s associates turned the box over to opposing counsel as part of plaintiffs document production. Crucially, he neglected to make copies of the documents before turning them over.

On July 9, 2001, Durio withdrew as co-counsel, leaving Weinstein to represent MBI in the proceedings before the bankruptcy court. In early 2002, the defendants filed a motion for summary judgment, which the bankruptcy court denied. On March 27, 2002, the bankruptcy court remanded the case to state court.

Some time before November 2002, MBI asked Durio to reenroll as counsel and take over the case. From this time forward, Weinstein took no active part in the litigation. However, it was several months before Durio filed a formal motion to enroll and Weinstein filed a formal motion to withdraw.2

14On November 20, 2002, Lavergne and Massey filed a motion to set a trial date. The court set a bench trial for May 27, 2003, and issued a pretrial scheduling order setting deadlines for, among other things, propounding discovery and amending pleadings. Weinstein formally withdrew from representation on February 28, 2003, at which time he incorrectly represented to the court that no trial date had been set. On April 3, 2003, Durio filed a motion to continue trial.3 The defendants agreed to postpone the trial date in light of Dave Dooley’s recent heart surgery, but opposed reopening discovery or continuing any of the pretrial deadlines. The trial date was continued to November 10, 2003.

Durio officially enrolled as counsel in July 2003. At the same time, he filed a motion requesting leave to file an amended petition, add additional defendants, and request trial by jury. The court denied the motion as untimely under its pretrial scheduling order and refused to allow MBI to add the additional defendants.

On March 11, 2003, Gossen emailed Du-rio to ask what had happened to the box of documents he had prepared. It was apparently at this time that Durio realized the box was missing, and he made several attempts to find out who had it. In the summer of 2003, Durio and Gossen went to the offices of Frank Neuner, attorney for Massey and Lavergne, where they were able to recover most of the contents of the box. However, some documents were missing, and the rest were out of order and disorganized.

MBI was apparently displeased with the quality of Durio’s representation. Fred Gossen spoke with attorney Milo Nickel, who suggested MBI should consider the possibility of filing a malpractice suit. MBI then contacted attorney Scott Love, who advised that a malpractice claim was [1178]*1178possible if MBI were to lose at trial. |sLove began preparing for a malpractice action, and one of the associates at his firm sat in on the trial to take notes on Durio’s conduct.

Trial was held before the Hon. Thomas Duplantier in November 2003. At the close of trial, the court entered judgment for the defendants. Judge Duplantier found MBI failed to produce any evidence it had any valid trade secrets or that Lavergne or Massey had wrongfully used any of MBI’s proprietary information. With respect to the noncompetition agreement, the court found the only competition took place in East Baton Rouge Parish, which was not one of the twelve parishes listed under the noncompetition agreement. The court found no evidence the defendants competed with MBI in any of those twelve parishes.

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MB Industries, LLC v. CNA Insurance Co., 74 So. 3d 1173, 2011 La. LEXIS 2594, 2011 WL 5865487 (La. 2011).

74 So. 3d 1173 (MB Industries, LLC v. CNA Insurance Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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