RENTON PROPERTIES, LLC NO. 20-C-133
VERSUS FIFTH CIRCUIT
213 UPLAND, LLC, MARGARET W. TONTI, COURT OF APPEAL ROBERT J. TONTI, OHIO MANAGEMENT, LLC, CORPORATE REALTY LEASING STATE OF LOUISIANA COMPANY, INC., MARY CARRONE, EMILY KRAMER, CHARLES R. CANNON, III, JODYCORP, LLC, DUFF FRIEND, AND R. LEWIS MCHENRY
ON APPLICATION FOR SUPERVISORY REVIEW FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 775-357, DIVISION "K" HONORABLE ELLEN SHIRER KOVACH, JUDGE PRESIDING
October 05, 2020
SUSAN M. CHEHARDY CHIEF JUDGE
Panel composed of Judges Susan M. Chehardy, Jude G. Gravois, and Stephen J. Windhorst
WRIT GRANTED; JUDGMENT REVERSED; SUMMARY JUDGMENT GRANTED; MOTION TO STRIKE DENIED SMC JGG SJW COUNSEL FOR PLAINTIFF/RESPONDENT, RENTON PROPERTIES, LLC Robert L. Raymond
COUNSEL FOR DEFENDANT/RELATOR, R. LEWIS MCHENRY Richard C. Stanley Eva J. Dossier Endya L. Hash CHEHARDY, C.J.
In this writ application, relator, R. Lewis McHenry (“McHenry”), seeks
review of the trial court’s denial of his motion for summary judgment. Following
de novo review, we grant the writ application, reverse the trial court’s ruling, and
grant summary judgment in favor of relator, McHenry.
Factual and Procedural History
This case arises out of an alleged breach of an agreement by
defendant, 213 Upland, LLC (“Upland”), to sell commercial property
located at 213 Upland Avenue in River Ridge, Louisiana (“the Property”), to
plaintiff, Renton Properties, LLC (“Renton”). On August 10, 2017, Renton
submitted an agreement to purchase the Property for $365,000.00 (“Renton
Agreement”). Renton’s offer stated, “Upon acceptance of this offer,
SELLER and PURCHASER shall be bound by all of its terms and
conditions and PURCHASER becomes obligated to deposit immediately
with Seller’s agent $10,000.00 and failure to do so shall be considered a
breach of this agreement.”
On August 14, 2017, Upland, through Margaret Tonti, counter-offered
for $425,000.00 with a deposit of $20,000.00.1 The counter-offer was
accepted by Renton on Thursday, August 17, 2017. The purchase agreement
required Renton, upon acceptance, to “immediately” tender the deposit with
Upland’s agent.
Meanwhile, on August 15, 2017, a second party, Charles R. Cannon,
III, put in an offer to purchase the Property for $500,000.00 (“Cannon
Agreement”). On August 17, 2017, Upland counter-offered accepting
1 Upland is owned by co-defendant, Margaret W. Tonti, who is also the sole member of the company. Her son, Robert Tonti, is also involved in the company.
20-C-133 1 Cannon’s confidential backup offer, “subject to termination of the Purchase
Agreement with Counter signature of today’s date and presently in effect
between Seller and third party purchaser [Renton].” (Emphasis added).
Cannon executed Upland’s counter offer on Friday, August 18, 2017.
On Monday, August 21, 2017, Renton’s agent attempted to hand-
deliver its $20,000.00 deposit check to the seller’s agent, but the agent
“refused” the check alleging that delivery was “untimely.” Testimony from
the agents revealed that relator, McHenry, counsel for the sellers, Margaret
Tonti and Upland, instructed them not to accept the check from Renton’s
agent.
Also on Monday, McHenry, pursuant to his client’s instructions,
emailed Renton and his agent. In that email, McHenry informed Renton that
its failure to deliver the deposit check on Thursday, August 17, 2017, with
his signed acceptance of Upland’s counter offer meant that the deposit was
not delivered “immediately,” which constituted a breach of the Renton
Agreement. McHenry declared the agreement “null and void and without
any force or effect.”
At that point, Renton’s attorney, Patrick McGoey (“McGoey”), began
discussions with McHenry regarding the alleged nullity and enforceability of
the Renton Agreement. In his affidavit attached to Renton’s opposition to
McHenry’s motion for summary judgment,2 McGoey details discussions he
had with McHenry during the week of August 21, 2017, through August 25,
2017. On Monday, August 21, 2017, McHenry informed McGoey that the
Upton wanted “out of the deal” with Renton and that it no longer intended to
2 Because Patrick McGoey is now a witness in this litigation, he is no longer representing Renton as counsel. While McHenry does not concede that each of the allegations contained in McGoey’s affidavit is true, he relies on the affidavit “so as to construe the facts in the light most favorable to the non-mover”, Renton.
20-C-133 2 proceed with the former deal. McHenry proposed that Renton “come up
with a number” it wanted to walk away from the deal. McGoey related the
offer to Renton, who declined.
On Tuesday, August 22, 2017, McGoey emailed McHenry trying to
get the closing back on track and advised that Renton “prefer[ed] not to
litigate” the matter, but “was prepared to.” McGoey received no response
until the following day.
On Wednesday, August 23, 2017, on behalf of Upland, McHenry
offered an “undisclosed amount to not only Renton but now his real estate
agent for his lost commission on the sale” “to go away.” However, again
Renton declined. On that same day, McHenry then offered a “second
option” to Renton, which was to increase its (already accepted) offer by
$50,000.00 and shorten the due diligence period. Later that day, in a follow-
up conversation between McGoey and McHenry, McGoey advised that
Renton rejected this second option. McGoey then set forth a counter offer
on behalf of Renton with an ultimatum: Renton would not agree to pay an
increased purchase price, but would agree to shorten the due diligence
period, however, if the parties could not come to terms by Friday, August
25, 2017, he would file a lawsuit and a notice of lis pendens.
In the interim, McHenry assisted Upland in facilitating the sale of the
Property to Cannon and JodyCorp, LLC.3 The cash sale of the property to
JodyCorp, LLC for $500,000.00 occurred on Friday, August 25, 2017, and
was recorded that same day at 12:01 p.m.
On Friday, August 25, 2017, at 1:06 p.m., Renton filed a petition
naming 213 Upland, LLC as a defendant, seeking specific performance or,
alternatively, damages, and injunctive relief. On February 6, 2018, Renton
3 JodyCorp, LLC, is a limited liability company that was formed by co-defendant, Charles Cannon.
20-C-133 3 filed its First Amended and Supplemental Verified Petition naming ten more
defendants, including, among others, counsel for Upland, Lewis McHenry,
relator-herein. In its amended petition, Renton alleges, in addition to
specific performance, that defendants breached the Renton Agreement
contract; that defendants were negligent; that defendants committed fraud;
and that defendants participated in unfair trade practices in violation of the
Louisiana Unfair Trade Practices Act (“LUPTA”), La. R.S. 51:1401, et seq.
With respect to McHenry, the amended petition specifically stated that he
was negligent under the Louisiana Rules of Professional Conduct as he had a
duty not to controvert the validity of the Renton Agreement unless there was
a good-faith basis in law to do so; he had a duty to refrain from making false
statements of fact or law to Renton or Renton’s lawyer; he had a duty to
disclose the backup offer; and, he had a duty to avoid assisting his clients in
“defrauding Renton of its right to acquire” the property.
On November 4, 2019, McHenry filed a motion for summary
judgment alleging that Renton cannot prove that McHenry was a party to the
contract that was allegedly breached, that McHenry owed any duty of care to
Renton, or that McHenry made any false misrepresentations. In support of
his motion, McHenry attached the following exhibits: (1) the Renton
Purchase Offer dated August 10, 2017; (2) 213 Upland, LLC’s Counter-
Offer dated August 14, 2017; (3) 213 Upland, LLC’s Counter-Offer signed
by Edward Renton (undated); and (4) the affidavit of Patrick S. McGoey,
former counsel for Renton Properties, LLC.
Renton opposed McHenry’s summary judgment and attached to its
motion the following: (1) the affidavit of Patrick S. McGoey; (2) the Renton
Purchase Offer dated August 10, 2017; (3) 213 Upland, LLC’s Counter-
Offer dated August 14, 2017; (4) 213 Upland, LLC’s Counter-Offer signed
20-C-133 4 by Edward Renton (undated); (5) a letter from McHenry dated August 21,
2017; (6) emails (with attachments) to/from McHenry and Tonti and the real
estate brokers and title company regarding 213 Upland from August 21,
2017 through August 25, 2017; (7) JeffNet listing of Cash Sale filed on
August 25, 2017 in the Conveyance Records at CB 3393, Page 355; (8) an
excerpt of the deposition of Meg Carrone of Corporate Realty, agents for
213 Upland, LLC and the Tontis; (9) an excerpt of the deposition of Emily
Kramer of Corporate Realty, agents for 213 Upland, LLC and the Tontis;
(10) the First Amended and Supplemental Verified Petition with
attachments; (11) an excerpt of the deposition of Charles R. Cannon, III, the
buyer of the Property; and (12) an excerpt of the deposition of Danya Duffy,
title attorney at Acquisition Title.
On January 8, 2020, the trial court heard McHenry’s motion for summary
judgment. In that hearing, McHenry’s counsel noted that McHenry had no duty to
an opposing party or to opposing counsel. Counsel further argued that McHenry’s
actions during the week leading up to the sale of the Property did not amount to
fraud because he did not make any false statements.
In opposition, Renton’s counsel noted, according to McGoey’s affidavit, that
on Wednesday, August 23, 2017, McHenry told McGoey that Upland would still
sell the Property to Renton, if Renton raised its offer by $50,000.00 and allowed a
shorter due diligence period. Renton’s counsel noted that this “second option” had
to be an intentional false statement by McHenry to lull Renton into waiting to file a
notice of lis pendens because the evidence attached to Renton’s opposition to
summary judgment reveals that Upland had already accepted Cannon’s “backup”
purchase offer on August 17, 2017, and by August 23, was actively moving
forward with the sale of the Property to Cannon and JodyCorp, LLC, which
occurred on August 25, 2017.
20-C-133 5 Further, there is evidence that the notarization of the Act of Sale by
McHenry was allegedly improper as evidence suggests that neither he nor the
witnesses were in Covington, Louisiana to witness Margaret Tonti signing the Act
of Sale on behalf of Upland. McHenry and his witnesses (his paralegals) have
been subpoenaed but have not appeared for their depositions.
At the close of the summary judgment hearing, the trial judge denied
McHenry’s motion. In doing so, the trial judge questioned McHenry’s intent in
failing to timely respond to McGoey’s counter offer to shorten the due diligence
period before moving ahead with the sale of the Property to the back-up purchaser.
The trial judge specifically noted:
And I guess it goes back to an issue of intent, at this point. Rather than just saying, I reject the counter offer, they allowed Mr. McGoey to think you’re considering the counter offer, and you’re getting back to me. … what was the intent in doing it that way? *** Because if the property is already spoken for, you don’t act as if the property can still be purchased. … I don’t really know, but it seems to me that there are unanswered questions that preclude summary judgment at this juncture. It’s just not connecting up in a fashion that summary judgment needs to connect up, in my mind. *** Ultimately, and I guess this is where I am, I think there are issues of intent that preclude summary judgment at this juncture.
In short, the trial court reasoned that if Renton could establish the requisite
intent, McHenry’s failure to disclose to opposing counsel that Upland had a backup
offer, and his failure to respond to opposing counsel’s counter offer before Upland
moved forward with the sale of the Property to the backup purchaser, could
“potentially” constitute fraud, which she concluded was a question of fact for the
jury’s determination. Accordingly, the trial court denied McHenry’s motion for
summary judgment. This writ application followed.
20-C-133 6 Issues Presented for Review
The issues presented by relator McHenry for this Court’s review include: (1)
whether an attorney can be liable for breach of a contract to which the attorney is
not a party; (2) whether an attorney can be liable to a client’s adversary for
negligence; and (3) whether an attorney who is engaged in adversarial negotiations
on behalf of his client to resolve a dispute owes any “duty” to the opposing party
and/or its counsel to disclosure information regarding his client’s confidential
business dealings in order to assist that party in formulating its strategy in the
context of the dispute. In the context of the instant case, McHenry moved for
summary judgment on the basis that he could not be held liable to Renton for an
alleged breach of the Renton Agreement as he was not a party to the contract, he
could not be held personally liable to Renton for negligence absent proof of an
intentional tort, and that he owed no legal duty to disclose to opposing counsel that
his client was pursuing a confidential backup offer to purchase the Property or to
respond to Renton’s counter offer.
Law and Discussion
Standard of Review
Appellate review of a trial court’s ruling on a motion for summary judgment
is de novo, with the appellate court using the same criteria that govern the trial
court's determination of whether summary judgment is appropriate—i.e., whether
there is any genuine issue of material fact, and whether the movant is entitled to
judgment as a matter of law. Wright v. Louisiana Power & Light, 06-1181 (La.
3/9/07), 951 So.2d 1058, 1070. A court must grant a motion for summary
judgment “if the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to
material fact, and that mover is entitled to judgment as a matter of law.” La.
C.C.P. art. 966(B).
20-C-133 7 On a motion for summary judgment, the burden of proof remains with the
movant. However, if the moving party will not bear the burden of proof on the
issue at trial and points out there is an absence of factual support for one or more
elements essential to the adverse party's claim, action, or defense, then the non-
moving party must produce factual support sufficient to establish he will be able to
satisfy his evidentiary burden of proof at trial. If the opponent of the motion fails
to do so, there is no genuine issue of material fact and summary judgment will be
granted. La. C.C.P. art. 966(D)(2); Murphy v. Savannah, 18-0991 (La. 5/8/19),
282 So.3d 1034, 1038.
Here, Renton brought claims against its adversary’s attorney, McHenry,
among others, for breach of contract, negligence, fraud, and violations of LUPTA.
We will address each claim separately.
Breach of Contract Claim
In order to succeed on a breach of contract claim, the plaintiff must prove
the existence of the contract, a breach of the obligations therein, and damages.
New Orleans Craft Temple, Inc. v. Grand Lodge of Free Masons of the State of
Louisiana, 13-525 (La. App. 5 Cir. 12/19/13), 131 So.3d 957, 964; Favrot v.
Favrot, 10-986 (La. App. 4 Cir. 2/9/11), 68 So.3d 1099, writ denied, 11-636 (La.
5/6/11), 62 So.3d 127. No action for breach of contract may lie in the absence of
privity of contract between the parties. Rivnor Properties v. Hebert O’Donnell,
Inc., 633 So.2d 735, 742 (La. App. 5th Cir. 1994).
In the instant case, Renton contends that McHenry is liable for breach of the
Renton Agreement. Renton, however, has failed to produce any evidence that
McHenry was a party to that contract, which was solely between Renton and
Upland. Accordingly, because Renton has failed to establish an essential element
of its claim against McHenry for breach of contract, i.e., privity of contract, we
find that the trial court erred in denying McHenry’s motion for summary judgment
20-C-133 8 as to this issue. In the absence of any showing of genuine issues of material fact,
we must render summary judgment in favor of McHenry on the breach of contract
claim.
Negligence Claim
The Louisiana Supreme Court has narrowly defined the circumstances in
which an attorney can be sued by a client’s adversary for alleged tortious actions
that the attorney undertook on behalf of his client. As explained by the Court in
Penalber v. Blount, 550 So.2d 577, 581 (La. 1989):
Louisiana subscribes to the traditional, majority view that an attorney does not owe a legal duty to his client’s adversary when acting in his client’s behalf. (Citations omitted.) A non-client, therefore, generally cannot hold his adversary’s attorney personally liable for either malpractice or negligent breach of a professional obligation. The intent of this rule is not to reduce an attorney’s responsibility for his or her work, but rather to prevent a chilling effect on the adversarial practice of law and to prevent a division of the loyalty owed a client. (Citation omitted). An attorney’s duty is to zealously represent a client. To accomplish this obligation, adversarial counsel must not be hampered by fear of personal liability for negligently injuring his client’s opponent. The attorney’s primary duty is to his client. As such, not even the Rules of Professional Conduct create actionable duties for negligent injury of a client’s adversary or negligent breach of professional obligations which might run in favor of his client’s adversary.
The avowed intent of this rule, that an attorney generally does not owe a
legal duty to his client’s adversary when acting on his client’s behalf, is not to
reduce an attorney’s responsibility for his or her work, but to prevent a chilling
effect on the adversarial practice of law, to prevent a division of the loyalty owed a
client, and to encourage the attorney’s zealous representation of his client. See
Montalvo v. Sondes, 637 So.2d 127, 130 (La. 1994). An attorney’s paramount duty
is, and must be, to his client. Scheffler v. Adams & Reese, LLP, 06-1774 (La.
20-C-133 9 2/22/07), 950 So.2d 641, 651. In fact, our law adheres to the principle that in no
other agency relationship is a greater duty of trust imposed than in that involving
an attorney’s duty to his client. Id. “In no relationship is the maxim that ‘no client
can serve two masters’ more enforced than in the attorney-client relationship.” Id.
citing Plaquemines Parish Commission Council, 502 So.2d 1034, 1040 (La. 1987).
It is undisputed that Upland and Renton were adverse to one another and
that both parties were represented by counsel in negotiations that took place over a
five-day period to resolve the parties’ dispute regarding the enforceability of the
Renton Agreement and Renton’s threatened law suit. As expressly set forth in
Renton’s amended petition, “[a]t all relevant times [during that five-day period],
Lewis McHenry acted as the legal counsel and advisor to 213 Upland, Margaret
Tonti, and Ohio Management in connection with the sale of the Property.”
[Emphasis supplied.] Because Louisiana law does not recognize a cause of action
by a non-client against his adversary’s attorney for malpractice or negligent breach
of a professional obligation, Renton’s claims against McHenry, its adversary’s
counsel, arising out of his alleged negligent conduct or his alleged violations of the
Rule of Professional Conduct while acting on behalf of Upland must be dismissed
as a matter of law.
Although a non-client cannot hold his adversary’s attorney personally liable
for malpractice or negligent breach of a professional obligation, the Supreme Court
in Penalber, supra, determined that an attorney may be held personally liable to a
non-client for his intentional tortious conduct:
Intentionally tortious actions, ostensibly performed for a client’s benefit, will not shroud an attorney with immunity. Consequently, even though an attorney does not generally owe a duty to his client’s adversary, under the broad ambit of La. C.C. art. 2315, an attorney may be held personally accountable for his intentional tortious conduct. …
20-C-133 10 Penalber, 550 So.2d at 582; see also Montalvo v. Sondes, 637 So.2d at 130. In
order for a non-client to prevail in a suit against his adversary’s attorney based on
the commission of an alleged intentional tort, he must prove that the attorney acted
with a specific malice or intent to personally inflict direct harm upon his client’s
adversary. Id. In Montalvo, the Supreme Court recognized that “identifying an
intentional tort in the context of an attorney’s actions may be more difficult than
identifying a traditional intentional tort.” Montalvo, 637 So.2d at 130. For
example, “the mere filing of a lawsuit, even if the suit appears meritless on its face,
is not enough, since the attorney may be simply the instrument through which the
client invokes judicial determination.” Id. (Citations omitted.) Consequently, in
order for Renton to prevail on its action against McHenry for an intentional tort
and defeat summary judgment in the instant case, it had to adduce evidence that it
would be able to carry its burden of proving at trial that, during the negotiations
with Renton’s counsel, McHenry acted on his own behalf, rather than as an
instrument of Upland, with a specific malice or with the intent to personally cause
direct harm to Renton in connection with the sale of the Property.
Based upon our de novo review of the record, we find that Renton failed to
adduce evidence showing that McHenry acted on his own behalf, rather than acting
as an instrument of his client. Further, we find there is no factual basis upon which
to conclude that McHenry was acting with a specific malice toward Renton or with
any specific intent to personally harm Renton. In short, we find there is no
evidence establishing that McHenry personally committed an intentional tort
against Renton. Even if there were deficiencies in the act of sale, such a failure
does not support an inference of specific malice or intent to harm. At most,
McHenry’s actions were negligent. Under the clear language of Penalber and
Montalvo, such negligence is insufficient to hold an attorney liable to a non-client
such as Renton. Consequently, we find the trial court erred in failing to grant
20-C-133 11 McHenry’s motion for summary judgment on the negligence claims, including the
claim for intentional tort.
Renton’s Delictual Fraud Claim
McHenry alleges that the trial court erred by denying his motion for
summary judgment as to Renton’s claims for fraud and claims under LUTPA. We
agree.
Louisiana jurisprudence indicates that in order to recover in an action for
delictual fraud, a plaintiff bears the burden of proving three elements: (1) a
misrepresentation of material fact, (2) made with the intent to deceive, (3) causing
justifiable reliance with resultant injury. Becnel v. Grodner, 07-1041 (La. App. 4
Cir. 4/2/08), 982 So.2d 891, 894. For purposes of the tort of fraud, the intent to
deceive is a specific intent. Chateau Homes by RJM, Inc. v. Aucoin, 11-1118 (La.
App. 5 Cir. 5/31/12), 97 So.3d 398, 404. A cause of action for delictual fraud
requires the existence of a duty. Becnel, 982 So.2d at 894. Additionally, in order
to prevail in an action for fraud due to silence or suppression of the truth, there
must be a duty to speak or disclose information. Id.; Greene v. Gulf Coast Bank,
593 So.2d 630, 632 (La. 1992). Such a duty arises when there is a fiduciary
relationship between the parties. Becnel, 982 So.2d at 894. As previously iterated,
an attorney’s paramount duty is, and must be, to his client. Scheffler, 950 So.2d at
651. This duty should not be diluted by a fiduciary duty owed to some other
person. Id. at 652. Moreover, an attorney has a duty to zealously represent his
client and, in order to do so, he must not be hampered by fear of personal liability
for negligently injuring his client’s opponent. Penalber, 550 So.2d at 581.
In the instant case, Renton alleges that McHenry committed the following
acts of fraud: (1) his letter to Renton, advising that the Renton Agreement was null
and void and without legal effect because Renton failed to “immediately” pay the
deposit upon acceptance of the counter offer, had no basis in law; (2) he instructed
20-C-133 12 Upland’s agents not to accept Renton’s deposit check; (3) he engaged in settlement
negotiations with McGoey wherein he intentionally made false misrepresentations
regarding his client’s willingness to sell the Property to Renton when McHenry
knew that his client had no intention of moving forward with the Renton
Agreement as Upland already had in place an executed backup purchase agreement
with Cannon on which a deposit had been accepted; and (4) he intentionally did
not return McGoey’s phone call or respond to Renton’s counter offer prior the act
of sale of the Property to Cannon in order to lull Renton into waiting to file a
notice of lis penden, thereby precluding Renton from asserting any rights to
acquire the Property. Renton contends, and the trial court agreed, that genuine
issues of material fact precluding summary exist regarding McHenry’s “intent”
with respect to the actions he took in dealing with Renton and Renton’s counsel.
To the contrary, McHenry avers that there are no factual matters in dispute
and that Renton cannot meet its burden of proving the necessary elements to
establish a claim for delictual fraud against McHenry. Specifically, McHenry
argues that Renton has failed to submit evidence showing that he made any false
representations to Renton or its counsel during their negotiations over the five-day
period at issue. From the outset, McHenry advised Renton’s counsel that Renton’s
failure to immediately pay the deposit upon acceptance nullified the Renton
agreement and, on this basis—that the Renton Agreement was null and
unenforceable—he advised his client’s agents not to accept the late deposit. Even
if it is ultimately determined that McHenry’s legal theory regarding the nullity and
enforceability of the Renton Agreement was deficient or wrong, we find that his
pursuing this theory does not rise to the level of a fraudulent act or material
misrepresentation for which he could be held personally accountable to Renton.
We also find that Renton’s contention that McHenry’s alleged fraudulent
misrepresentations and/or omissions during negotiations between opposing counsel
20-C-133 13 constitute fraudulent conduct subjecting McHenry to personal liability to Renton—
i.e., “making the phone call to offer property at a higher price knowing the
property is under contract with another”—is not supported by the law or the
evidence. Renton has failed to point to any specific misrepresentation made by
McHenry to Renton or its counsel during their negotiations to possibly settle
Renton’s threatened litigation. Renton has not shown that McHenry’s offer on
behalf of Upland to sell the Property to Renton at an increased price was false. At
the time the statement was made, Upland retained title to the Property and its
agreement with Cannon was specifically contingent upon the Renton deal falling
through. Therefore, because Renton rejected this offer made by McHenry on
behalf of Upland, there is no way for Renton to prove McHenry’s statement was
false or that Upland would not have sold the Property to Renton had it accepted the
subsequent offer.
Moreover, a fraud claim cannot be premised on the fact that what an
attorney and his client discuss during settlement negotiations is different from what
the same attorney talks about with his opposing counsel during settlement
negotiations. See Castle v. Castle, 13-271 (La. App. 3 Cir. 10/9/13), 123 So.3d
1267, 1272. Moreover, no special fiduciary relationship existed between McHenry
and Renton, or between McHenry and Renton’s counsel, McGoey. In this regard,
under the facts of this case, McHenry owed no duty to Renton or its counsel to
disclose any of the confidential business dealings of his client, Upland, related to
the sale of the Property, including any information relative to the Cannon
Agreement. In fact, had McHenry disclosed such confidential client information to
McGoey, he would have put himself in peril of breaching the fiduciary duty he
owed to his client.
In his final argument, Renton contends that McHenry knew that if the parties
did not come to terms on the Renton Agreement by Friday, August 25, 2017,
20-C-133 14 McGoey was going to file suit and a notice of lis pendens. As a result, Renton
contends that McHenry intentionally did not return McGoey’s phone call in order
to lull McGeoy into believing that Upland was still considering selling the Property
to Renton and so that McHenry could facilitate and expedite the sale of the
Property to Cannon and have the act of sale recorded before McGoey followed
through with Renton’s ultimatum and filed the notice of lis pendens. Renton
argues that McHenry’s omissions resulted in a deprivation of its rights to assert a
claim against the Property and rises to the level of fraud. We disagree.
Though Renton knew from the outset that Upland wanted out of the deal,
and Renton had previously rejected Upland’s two options to form a new deal,
Renton’s counsel unilaterally proposed the ultimatum—if the parties could not
come to terms and move forward with the Renton Agreement by Friday, August
25, 2017, Renton would file suit and a notice of lis pendens. We find that
McHenry, acting on behalf of his client, owed no legal duty to Renton or its
opposing counsel to return McGoey’s phone call and respond to Renton’s
ultimatum of threatened litigation before the Friday deadline, or to refrain from
pursuing other potential sale options for the Property while Renton decided
whether it was going to act upon its threat. We also find that, given the undisputed
adversarial nature of the negotiations, McHenry owed no duty to opposing counsel
to apprise him of the potential consequences of Renton’s unilateral decision to wait
until Friday to file the notice of lis pendens that it had been threatening to file since
Tuesday of that week. Nor did McHenry owe any legal duty to advise McGoey
that his client was moving forward with a sale of the Property to the backup
purchaser, Cannon, as the Rules of Professional Conduct specifically forbid a
lawyer from revealing information relating to the representation of a client.
Rather, McHenry’s sole duty was to his client, Upland. Accordingly, absent a
legal duty owed by McHenry to Renton or its counsel, Renton cannot sustain an
20-C-133 15 action in delictual fraud against McHenry for actions he took on behalf of his
client. See Becnel, 982 So.2d at 894.
Renton’s Claim under the Louisiana Unfair Trade Practices Act
Renton’s remaining claim against McHenry is under LUTPA, La. R.S.
51:1401, et seq. In LUTPA, the legislature declared it to be unlawful to engage in
“unfair methods of competition and unfair or deceptive acts or practices in the
conduct of trade or commerce.” La. R.S. 51:1405. Because of the broad sweep of
this language, “Louisiana courts determine what is a LUTPA violation on a case-
by-case basis.” Quality Environmental Processes, Inc. v. I.P. Petroleum Co.,Inc.,
13-1582 (La. 5/7/14), 144 So.3d 1011, 1025. The Louisiana Supreme Court has
consistently held that in establishing a LUTPA claim, a plaintiff must show that
“the alleged conduct offends established public policy and is immoral, unethical,
oppressive, unscrupulous, or substantially injurious.” Id. (citing Cheramie
Services, Inc. v. Shell Deepwater Prod., 09-1633 (La. 4/23/10), 35 So.3d 1053,
1059. “[T]he range of prohibited practices under LUTPA is extremely narrow,” as
LUTPA prohibits only fraud, misrepresentation, and similar conduct, and not mere
negligence. Quality Environmental Processes, Inc., 144 So.3d at 1025. Moreover,
conduct that offends established public policy and is unethical is not necessarily a
violation under LUTPA. Id. “The goals of LUTPA were not intended to ensure
ethical and fair competition between attorneys” engaged in adversarial
negotiations. See Quality Environmental Processes, Inc., supra.
Here, Renton’s claim against McHenry under LUTPA is based on the same
allegations it asserted in support of its fraud claim. Specifically, Renton avers that
McHenry’s “material misrepresent[ation]” to McGoey that the Property could still
be purchased by Renton while at the same time coordinating the sale of the
Property to Cannon, constituted an “unfair and deceptive trade practice” subjecting
him to personal liability to Renton for the damages it suffered as a result; i.e.,
20-C-133 16 deprivation of its right to acquire the Property. For all of the reasons previously
stated relative to Renton’s fraud claim, its claim against McHenry under LUTPA
likewise fails.
In addition, we note that not only has Renton failed to submit any evidence
of material misrepresentations made by McHenry during his negotiations with
opposing counsel, Renton had failed to present evidence establishing that McHenry
was acting in any manner other than on behalf of his client that would subject him
to personal liability to Renton. Consequently, we find that McHenry’s alleged
actions on behalf of Upland do not fall under the protection of LUTPA’s narrow
goal of protecting against egregious actions of fraudulent, deceitful, and unfair
business practices to promote and foster health and fair business competition.
Rather, McHenry’s alleged actions are more appropriately governed by the
Louisiana Code of Professional Conduct and/or the Louisiana Code of Ethics, and
do not give rise to a cause of action against an attorney by a non-client. See
Thibaut, Thibaut, Garrett and Bacot v. Smith and Loveless, Inc., 576 So.2d 532,
537 (La. App. 1st Cir. 1990), writ denied, 580 So.2d 676 (La. 1991). LUTPA is an
act of the legislature. The legislature cannot enact laws defining or regulating the
practice of law in any respect; the Louisiana Supreme Court has the exclusive and
plenary power to define and regulate all facets of the practice of law, including the
conduct of attorneys, and this law cannot be applied to regulate or define the
practice of law. Id. In short, given the undisputed facts of this case, the law does
not support a claim by Renton against McHenry under LUTPA. Accordingly, we
conclude the trial court erred in failing to grant summary judgment in favor of
McHenry on Renton’s LUTPA claim as a matter of law.
Motion to Strike
Renton filed a motion to strike the supplemental reply brief filed by
McHenry on the basis that this Court’s order assigning the matter for oral argument
20-C-133 17 did not provide for any further briefing by the parties beyond the submission of
their respective supplemental briefs. Therefore, Renton contends that under the
Uniform Rules–Courts of Appeal, Rule 4, McHenry’s supplemental reply brief was
not permitted without first obtaining leave of court. We deny Renton’s motion to
strike.
CONCLUSION
In summary, Renton has presented no evidence showing that a genuine issue
of material fact exist and/or that it will be able to carry its burden of proving at trial
that McHenry can be held personally liable for breach of the Renton Agreement to
which he was not a party; that McHenry can be personally liable to Renton for
malpractice or breach of a professional obligation; that McHenry acted with
specific malice or with an intent to personally cause Renton harm for which he can
be held personally accountable for an intentional tort; that McHenry owed any duty
to Renton or its counsel to disclose information regarding Upland’s confidential
business dealings, or made any affirmative misrepresentations to Renton or its
counsel, during negotiations to resolve the dispute between Renton and Upland
that rise to the level of fraud; or, that McHenry’s alleged actions on behalf of his
client fall under the protection of LUTPA. Accordingly, we grant McHenry’s writ
application, reverse the trial court’s judgment, and render judgment in favor of
relator, McHenry, granting his motion for summary judgment and dismissing all of
Renton’s claims against him, with prejudice. Renton’s motion to strike is denied.
WRIT GRANTED; JUDGMENT REVERSED; SUMMARY JUDGMENT GRANTED; MOTION TO STRIKE DENIED
20-C-133 18 SUSAN M. CHEHARDY CURTIS B. PURSELL
CHIEF JUDGE CLERK OF COURT
MARY E. LEGNON FREDERICKA H. WICKER CHIEF DEPUTY CLERK JUDE G. GRAVOIS MARC E. JOHNSON ROBERT A. CHAISSON SUSAN BUCHHOLZ STEPHEN J. WINDHORST FIRST DEPUTY CLERK HANS J. LILJEBERG JOHN J. MOLAISON, JR. FIFTH CIRCUIT MELISSA C. LEDET JUDGES 101 DERBIGNY STREET (70053) DIRECTOR OF CENTRAL STAFF POST OFFICE BOX 489 GRETNA, LOUISIANA 70054 (504) 376-1400
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