Reynolds, Nelson, Theriot & Stahl v. Chatelain

428 So. 2d 829, 1983 La. App. LEXIS 7622
CourtLouisiana Court of Appeal
DecidedJanuary 10, 1983
Docket5-333
StatusPublished
Cited by8 cases

This text of 428 So. 2d 829 (Reynolds, Nelson, Theriot & Stahl v. Chatelain) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Reynolds, Nelson, Theriot & Stahl v. Chatelain, 428 So. 2d 829, 1983 La. App. LEXIS 7622 (La. Ct. App. 1983).

Opinion

428 So.2d 829 (1983)

REYNOLDS, NELSON, THERIOT & STAHL
v.
Farrell CHATELAIN.

No. 5-333.

Court of Appeal of Louisiana, Fifth Circuit.

January 10, 1983.
Rehearing Denied April 18, 1983.

*830 Leonard L. Levenson, Levenson & Bonin, New Orleans, for Farrell Chatelain, defendant-appellant.

Donald E. Theriot, Nelson & Theriot, New Orleans, for Reynolds, Nelson, Theriot & Stahl.

Before BOUTALL, KLIEBERT and DUFRESNE, JJ.

BOUTALL, Judge.

This appeal arises from a lawsuit filed against a real estate developer to collect a fee for legal services rendered in connection with a conversion of an apartment project into condominiums. From a judgment in favor of plaintiff law firm of Reynolds, Nelson, Theriot and Stahl, the defendant, Farrell Chatelain has appealed.

Farrell Chatelain was in the process of building a large apartment complex in May, 1979, when he decided that the units would be more marketable as condominiums and consulted Donald E. Theriot, a partner of the plaintiff law firm. On May 7, Theriot sent a three-page letter to Chatelain outlining the legal services to be provided. The first paragraph reads as follows:

"In accordance with our meeting of May 4, 1979, this office under my direction will commence preparation of all documents necessary to convert your present rental properties located on Cleary Avenue, Jefferson Parish, Louisiana, into a condominium development. These documents will include, among other things, a Condominium Declaration, Articles of Incorporation of the Condominium Association, Bylaws of the Condominium Association, Rules and Regulations of the Condominium Association and all offering disclosure material required by the present Louisiana Condominium Act or any amendments thereto."

On the third page Theriot states the fee agreement:

"As we discussed, our fee for the preparation of all Condominium Documentation plus offering materials will run to approximately $3,000. It is agreeable to our firm that this fee be paid $1,000 at such time as the final Condominium Documents are prepared, with the remaining balance payable ratably over the next 6 months."

The documents were completed and delivered and a bill rendered June 26, 1979. Chatelain paid $1,500.00 on account August 22 and the balance later in the year.

Sometime during the summer of 1979, Chatelain called Theriot with a problem in closing the sales of individual units. Chatelain's interim lender, The First National Bank of Commerce in Jefferson Parish, held a three-year construction loan of $1,200,000 that was secured by a mortgage on the apartment property. The bank refused to subordinate its construction loan to the Condominium Declaration and to release the individual units for which Chatelain had purchasers, because the loan was in default and was being reviewed for foreclosure; further, there were other liens and judgments against the property. Chatelain asked Theriot to see the bank officers and attempt to work out the problems with the loan.

Theriot performed services during the summer and fall to meet the bank's requirements for releasing the units, namely closing a new mortgage which was to be insured by Lawyers Title Insurance Company, and amendment of the original condominium documents to comply with the new Louisiana Condominium Act, Acts 1979, No. 682, Section 1, which was enacted in July, to become effective September 7, 1979. The closings took place in November, and the loan at the bank was eventually paid in full from the proceeds. On January 4, 1980, Theriot had his firm bill Chatelain as follows:

"For professional services rendered in connection with workout of loan with National Bank of Commerce in Jefferson Parish, and conversion of property into condominium, including numerous conferences with clients, officers of National Bank of Commerce in Jefferson Parish, Surveys, Inc., Security Homestead Association, Jess Nelson at Lawyer's Title Insurance *831 Company, Joseph Drolla and other attorneys; advice as to necessary inclusion in condominium Building Plans and condominium survey, attendance at closing at Lawyer's Title Insurance Company, legal research re: Subordination of Mortgage Agreement, and various other title problems relative to the Louisiana Condominium Act, correspondence with the foregoing parties; and conferences with attorneys for various homesteads. 111.4 hours."

Including $15.50 in costs, the amount due was $7,813.50 representing an hourly rate of $70.00. When Chatelain had not paid the bill by February 15, 1980, Theriot sent a second bill, revised upward to $11,155.00, calculated at a rate of $100.00 per hour, to be paid in full by February 18. As the bill remained unpaid, Theriot filed suit on February 22, seeking $11,155.00, legal interest from date of judicial demand, attorney's fees of $300.00 and costs. Chatelain's answer alleged extinguishment of the debt by the payment of $3,000.00.

Trial was heard by a judge on September 3, 1981. The court awarded the plaintiff $7,813.50, the amount of the first bill, with legal interest from February 22, 1980, the date of filing the petition, and costs but no attorney's fees.

The issues before the court are: first, whether the services for which Chatelain was billed on January 4,1980 were included in the letter agreement of May 7, 1979; second, if not, whether there was an oral agreement that Chatelain would pay Theriot an hourly fee for representing him in obtaining the bank's release of mortgage and subordination; and third, whether the trial judge's award of $7,813.50 was proper and if so whether interest should run from date of demand or from date of judgment.

Regarding the services to be included in the fee of $3,000, Theriot testified that he agreed only to do the initial documentation to create a condominium on Chatelain's property, nothing more, and certainly no complicated negotiations on a mortgage loan. The defendant's counsel asserts in his brief that his only reason for conversion was to save his real estate project as the loan was in jeopardy. Further, that "... he would not have agreed to pay any fee for the preparation of condominium documents unless there would be an agreement with the bank to accept the condominium conversion as prepared by the plaintiff." He admits, however, that there was a misunderstanding ab initio and accepts Theriot's testimony that he was unaware that the loan was in default or that the property was encumbered by judgments and liens until after Chatelain asked him to contact the bank. Chatelain himself admitted telling Theriot that the bank was treating him "fairly and everything was running along fine." He vigorously denied that the loan was ever in default and said that he and Theriot did not ever discuss a default as there was none. Nevertheless, he testified that he interpreted the paragraph in Theriot's letter regarding fees, quoted above, to mean that if there were problems with the bank, Theriot would handle them as part of the $3,000 fee. As will be discussed later, Theriot insists that he told Chatelain when the problem arose that services in connection with the loan were outside the original agreement and would be billed by the hour. We conclude that it reasonably follows that if the client did not inform the attorney of his motive for converting the property to condominiums, i.e., to prevent foreclosure, he had no basis for believing that the fee included negotiations regarding the loan.

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Cite This Page — Counsel Stack

Bluebook (online)
428 So. 2d 829, 1983 La. App. LEXIS 7622, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reynolds-nelson-theriot-stahl-v-chatelain-lactapp-1983.