Michael L. Eckstein v. Steven A. Becnel

• Court: Louisiana Court of Appeal
• Decided: June 3, 2020
• Docket: 2019-CA-0720
• Status: Published

Opinion

MICHAEL L. ECKSTEIN * NO. 2019-CA-0720

VERSUS * COURT OF APPEAL STEVEN A. BECNEL * FOURTH CIRCUIT * STATE OF LOUISIANA *******

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2002-02069 C\W 2002-02253, 2003-06270, DIVISION “L” Honorable Kern A. Reese, Judge ****** JUDGE SANDRA CABRINA JENKINS ****** (Court composed of Judge Edwin A. Lombard, Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins)

LEDET, J., CONCURRING

Henry Minor Pipes, III Patrick J. Lorio PIPES MILES BECKMAN, L.L.C. 1100 Poydras Street, Suite 1800 New Orleans, LA 70163

COUNSEL FOR PLAINTIFF/APPELLEE

Paul E. Bullington Guy E. Wall Jonathan R. Cook Sara M. Lewis WALL, BULLINGTON & COOK, L.L.C. 540 Elmwood Park Boulevard Harahan, LA 70123

Megan C. Kiefer Ignatz Gerard Kiefer, Jr. KIEFER & KIEFER 2310 Metairie Road Metairie, LA 70001

COUNSEL FOR DEFENDANT/APPELLANT

AFFIRMED JUNE 3, 2020 EAL

SCJ

This appeal arises from a judgment awarding attorney’s fees pursuant to a

fee provision of a settlement agreement. Defendants/appellants Steven A. Becnel

and Stratus Systems, Inc. (collectively, “Becnel”) appeal a March 15, 2019

judgment granting a motion to set attorney’s fees, and an April 24 2019 judgment

ordering Becnel to pay $48,818.79 in attorney’s’ fees to plaintiffs/appellees Michael

L. Eckstein; Constance I Partnership, L.L.P.; Eckstein Law Firm, a Professional

Law Corporation; and Stratus Realty, L.L.C. (collectively, “Eckstein”). For the

reasons that follow, we affirm the trial court’s judgments.

FACTUAL AND PROCEDURAL BACKGROUND

In 1992, Michael Eckstein and Steven Becnel formed a company, Stratus

Systems, Inc. (“Stratus”), to sell safety inventions to the United States military.

Beginning in 1997, disputes arose between the parties as to the percentage of

Eckstein’s ownership interest in Stratus, the fees Eckstein claimed he was owed for

legal work, and whether Eckstein had breached any ethical and fiduciary duties to

Stratus. Both parties filed suit. To resolve their disputes, in August 2005, Becnel

1 and Eckstein entered into a Settlement Agreement, a License Agreement, a Product

Transfer Agreement, and a Consent Judgment (collectively, the “Settlement

Agreement”). Section 25 of the Settlement Agreement provided for attorney’s fees

to the prevailing party in the event of a breach of the agreement:

If any party institutes legal action to enforce or interpret the terms and conditions of this Agreement, the prevailing party shall be awarded reasonable attorneys’ fees at all trial and appellate levels, and the expenses and costs incurred by such prevailing party in connection therewith.

In February 2016, Eckstein filed a Motion to Enforce Settlement Agreement

and Consent Judgment (“Motion to Enforce Settlement”). Eckstein alleged that

Becnel had violated the terms of the Settlement Agreement. Eckstein sought, inter

alia, an audit of Becnel’s financial records; an in camera inspection of sales

documents, and an award of attorney’s fees associated with filing the Motion to

Enforce Settlement. Eckstein also filed a Motion for Declaratory relief seeking to

enforce the terms of the Settlement Agreement governing his rights to royalties for

a ten year period. Becnel opposed the motions, and also sought attorney’s fees and

costs as the prevailing party pursuant to Section 25 of the Settlement Agreement.

On September 23, 2016 and May 19, 2017, the trial court held hearings on

Eckstein’s two motions. In a judgment signed on July 20, 2017, the trial court

ruled in favor of Eckstein, ordering an audit of Becnel’s financial records, an in

camera inspection of sales documents, the production of updated deliverables to

Eckstein, and a declaration that royalties owed by Becnel to Eckstein ran through

March 14, 2021. The trial court’s July 20, 2017 judgment did not address the

parties’ requests for attorney’s fees. The trial court stated in the judgment that it

was “final as it disposes of all issues before the Court.”

2 Becnel appealed the trial court’s July 20, 2017 judgment to this Court. One

of Becnel’s assignments of error was that the trial court erred in not awarding

Becnel attorney’s fees, expenses, and costs. Eckstein did not appeal or file an

answer to appeal seeking attorney’s fees. On June 27, 2018, this Court rendered an

opinion affirming the July 20, 2017 judgment in favor of Eckstein. Eckstein v.

Becnel, 17-0868 (La. App. 4 Cir. 6/27/18), 250 So.3d 1046. In the opinion, the

Court denied Becnel’s request for attorney’s fees because Becnel was not the

prevailing party. Id., p. 20, 250 So.3d at 1059. The Court refused to consider an

award of attorney’s fees to Eckstein because, even though he was the prevailing

party, he did not appeal or file an answer to Becnel’s appeal. Id., p. 20, 250 So.3d

at 1059 n.16.

On November 5, 2018, the Supreme Court denied Becnel’s application for

writ of certiorari. Eckstein v. Becnel, 18-1275 (La. 11/5/18), 255 So.3d 1054.

Shortly thereafter, Eckstein made demand upon Becnel for payment of attorney’s

fees as the prevailing party. Becnel refused.

On December 18, 2018, Eckstein filed a Motion to Set Attorney’s Fees

pursuant to Section 25 of the Settlement Agreement. Becnel filed a memorandum

in opposition to Eckstein’s motion, arguing that Eckstein was barred by res

judicata from recovering attorney’s fees, expenses, and costs. On March 1, 2019,

the trial court held a hearing on Eckstein’s Motion to Set Attorney’s Fees. On

March 15, 2019, the trial granted the motion, and ordered the parties to appear for

a reasonableness hearing on the requested fees.

On April 12, 2019, the trial court conducted a reasonableness hearing on the

amount of attorney’s fees to be awarded to Eckstein. On April 24, 2019, the trial

court signed a judgment ordering Becnel to pay Eckstein the sum of $48,818.79,

3 representing fees accumulated through February 25, 2019. The court also reserved

Eckstein’s right to assert a claim for attorney’s fees incurred after that date.

In July 2019, Becnel appealed the trial court’s March 15, 2019 judgment

granting Eckstein’s Motion to Set Attorney’s Fees, as well as its April 24, 2019

judgment awarding Eckstein $48,818.79 in fees.1

DISCUSSION

Standard of Review

“We review factual issues relating to an exception of res judicata on a

manifest error/clearly wrong basis; however, we review legal issues relating to res

judicata under a de novo standard of review.” Countrywide Home Loans Serv., LP

v. Thomas, 12-1304, p. 3 (La. App. 4 Cir. 3/20/13), 113 So.3d 355, 357 (citing

Sutter v. Dane Inv., Inc., 07-1268, p. 3 (La. App. 4 Cir. 6/4/08), 985 So.2d 1263,

1265).

In the sole assignment of error, Becnel contends that the trial court erred as a

matter of law in granting Eckstein’s Motion to Set Attorney’s Fees because that

claim is barred by res judicata.

According to Becnel, it is undisputed that Eckstein sought attorney’s fees

from the trial court in his 2016 Motion to Enforce Settlement Agreement. Becnel

points out that the trial court, in granting the motion, did not rule on Eckstein’s

request for attorney’s fees. Becnel contends that silence in the judgment is deemed

a rejection of the claim. Becnel also notes that in the July 20, 2017 judgment, the

trial court stated “this judgment is final as it disposes of all issues before the

Court.” Thus, Becnel argues, the trial court should have denied Eckstein’s Motion

1 Becnel filed an application for supervisory writ in this Court, seeking reversal of the March 15, 2019 judgment. The Court denied the writ application. Eckstein v. Becnel, 19-0354 (La. App. 4 Cir. July 2, 2019).

4 to Set Attorney’s Fees as barred by res judicata because this Court’s June 27, 2018

judgment rejecting his claim for attorney’s fees became final and definitive after

the Louisiana Supreme Court denied writs.

Eckstein contends that his claim for attorney’s fees is not barred by res

judicata because that issue was never actually litigated under La. R.S. 13:4231(3):

Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent: . . . (3) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to the judgment.

Thus, “[a] final judgment is ‘res judicata only as to those issues presented in

the pleading and conclusively adjudicated by the court.’” Joseph v. Hartford Ins.,

15-1218, p. 4 (La. App. 4 Cir. 4/6/16), 191 So.3d 647, 650 (quoting Ins. Co. of

North Am. v. Louisiana Power & Light, 08-1315, p. 6 (La. App. 4 Cir. 3/4/09), 10

So.3d 264, 268).

According to Eckstein, the parties never actually litigated the issue of

attorney’s fees and costs in connection with Eckstein’s 2016 Motion to Enforce

Settlement Agreement, and the issue of attorney’s fees was not essential to the July

20, 2017 judgment.

To support his assertion that attorney’s fees were not litigated or decided

prior to March 2019, Eckstein refers to the transcript of the March 1, 2019 hearing

on his Motion to Set Attorney’s Fees, in which the trial court stated that, as a

matter of “custom” and “policy”:

[t]his particular court doesn’t award attorney’s fees until it’s determined that the ruling is correct. . . . The Court did not rule on the issue of attorney’s fees [in the July 2017 judgment] because the Court was not of a mind to do that until the matter was resolved. It has now reached the point of resolution, [and] I think that based upon the

5 authority and based upon the agreement, attorney’s fees can be awarded.

Eckstein argues that briefing and arguing the issue of attorney’s fees in

connection with the 2016 Motion to Enforce Settlement and Motion for

Declaratory Relief would have been premature because entitlement to attorney’s

fees could not be determined until there was a final decision on the merits, which

occurred when the Supreme court denied Becnel’s application for writ of certiorari

in November 2018. “If an application for certiorari to the supreme court is timely

filed, a judgment of the court of appeal becomes final and definitive when the

supreme court denies the application for certiorari.” La. C.C.P. art. 2166(E).

We agree with Eckstein that the issue of attorney’s fees was not conclusively

adjudicated, as required for res judicata to apply. Indeed, the issue could not have

been litigated and decided in 2017 because Section 25 of the Settlement

Agreement permits an award of attorney’s fees only to the prevailing party, and

Eckstein was not the prevailing party until November 2018. Thus, any award of

attorney’s fees in the July 2017 judgment would have been premature. See

Megatrend Telecomm., Inc. v. Rees Marine, Inc., 95-1084, p. 4 (La. App. 5 Cir.

4/16/96), 673 So.2d 1098, 1100 (trial court erred in awarding attorney’s fees and

costs prior to the termination of the litigation and determination of which party was

the prevailing party); Freeman v. Freeman, 95-179, p. 6 (La. App. 5 Cir. 7/25/95),

659 So.2d 826, 830 (award of attorney’s fees is premature until court decides who

is prevailing party); Muhammad v. Babin, 17-548, pp. 13-14 (La. App. 5 Cir.

3/13/18), 241 So.3d 1231, 1240 (attorney’s fees are premature until trial court

determines plaintiff’s entitlement by prevailing in suit).

6 The July 2017 judgment is silent on the issue of attorney’s fees. The trial

court explained its reasons for not ruling on the issue. The issue of Eckstein’s

attorney’s fees, therefore, was not “actually litigated and decided.” See

Interdiction of Hunter, 18-0685, p. 2 (La. App. 4 Cir. 12/19/18), -- So.3d --, *4,

writ denied, 19-0208 (La. 4/8/19), 267 So.3d 608. We conclude, therefore, that the

trial court’s award of attorney’s fees to Eckstein in 2019 was not barred by res

judicata.

CONCLUSION

Based on the foregoing, the trial court’s March 15, 2019 judgment granting

Eckstein’s Motion to Set Attorney’s Fees, as well as its April 24, 2019 judgment

awarding Eckstein $48,818.79 in fees, are affirmed.

AFFIRMED