Zatzkis v. Zatzkis

632 So. 2d 302, 1993 WL 521178
Louisiana Court of Appeal·Decided December 16, 1993·No. 93-CA-0447·Published·Cited by 10 cases

Opinion

632 So.2d 302 (1993)

Sherril Herman, Wife of Ralph ZATZKIS
v.
Ralph ZATZKIS.

No. 93-CA-0447.

Court of Appeal of Louisiana, Fourth Circuit.

December 16, 1993.
Rehearing Denied March 17, 1994.

*303 Lanny R. Zatzkis, Karen D. McCarthy, Deborah M. Sulzer, Zatzkis & Associates, New Orleans, for appellant.

Walter C. Thompson, Jr., Barkley & Thompson, New Orleans, and Avram C. Herman, Arthur A. Steiner, Metairie, and Warren A. Goldstein, New Orleans, for appellee.

Before BARRY, BYRNES and LOBRANO, JJ.

BYRNES, Judge.

This is one of six related appeals (four of which were consolidated) in a divorce case in which issues of child support and alimony have been the subject of painfully protracted and bitter litigation.

In this appeal Ralph Zatzkis appealed the judgments of the trial court rendered on November 9, 1992 and December 23, 1992. However, the judgments cannot be understood without reference to another judgment dated July 14, 1992 which is the subject of appeal No. 92-CA-2637.

The issue which overshadows all others is the award in the November 9, 1992 judgment of $8,700 in attorney's fees to Sherril Herman Zatzkis for which Ralph Zatzkis and his attorneys Lanny Zatzkis and Karen McCarthy were "jointly, severally and solidarily cast in judgment" for "falsely back-dating Exhibit 10."

"Exhibit 10" was an engagement letter addressed to Ralph Zatzkis by his attorney and brother, Lanny Zatzkis, stating that Lanny's firm would charge $150.00 per hour but "because of our computer accounting limitations, your bills will indicate fees of $75.00 per hour ...". The letter was signed by both Lanny and Ralph. It was dated April 25, 1990 but was not produced until the hearing on May 29, 1992, in spite of prior discovery requests covering Ralph's debts and attorney's fees.

*304 At that time Sherril's attorney, Mr. Goldstein, protested vehemently that the letter should not be accepted into evidence as it had never been produced in response to previous discovery requests. It was only several days later when Mr. Goldstein went back through his files and discovered from previous correspondence that the letterhead on which Exhibit 10 was written was not in existence on April 25, 1990 that he realized that the letter might represent an attempt to perpetrate a fraud upon Sherril and upon the Court. Under the circumstances Ralph and Lanny could not deny the letter was backdated.

Elementary standards of candor would have required that Ralph and/or his attorneys admit that Exhibit 10 was backdated when Mr. Goldstein first objected to its admissibility. The transcript of the May 29, 1992 hearing reflects that Mr. Goldstein was agitated and animated in making his objections. In spite of the furor surrounding the introduction of Exhibit 10, Ralph and his attorneys failed to acknowledge that it was backdated. Exhibit 10 became a focal point and subject for argument. It was not just one exhibit among many that could arguably have been lost in the shuffle. There was no justification for the failure to disclose that the letter was backdated. But it was only when the backdating could no longer be denied that Ralph and his attorneys commenced the series of excuses that continue on this appeal. Far from persuading this court or the trial court that there was a legitimate reason for backdating the letter, the excuses have the opposite effect of reinforcing the bad faith surrounding the issue.

The record contains a transcript of a status conference before Judge Okla Jones on June 3, 1992 in which Mr. Goldstein first hints that there are questions of misrepresentation in connection with Exhibit 10. This was the second opportunity afforded to Ralph to explain why Exhibit 10 was backdated. Instead Ralph's attorney recited technical procedural objections to Mr. Goldstein's efforts to raise the issue. The failure to be candid with Sherril and the court a second time reinforces the deliberate bad faith.

Ralph and his attorneys contend that the letter represents only a written memorialization of what had always been the oral fee arrangement between Ralph and his brother Lanny. They acknowledge that it, perhaps, should have included the additional words "effective date", but that the court should not attach significance to this omission. They argue that the court should not ascribe bad faith and fraud to the failure to disclose the fact that the letter was backdated.

Ralph and his attorneys have presented an unconvincing series of excuses that both the trial court and this court find unpersuasive:

1. Mr. Goldstein didn't ask if the letter were backdated when it was produced in court.

The date on the letter was a material issue and we find that there was an affirmative duty to disclose whether asked or not.

2. Ralph and his attorneys should not have the burden of trying Sherril's case for her.
This is another variation of the previous argument.
3. This was the only way that the Zatzkis' computer could handle the billing of a pay one-half now and one-half later arrangement.

We agree with the trial court's finding that "this rationalization is dubious on several counts ..." In addition to the incongruities in Lanny Zatzkis' testimony referred to by the lower court in Reasons for Judgment dated November 9, 1992, this court does not believe any more than did the trial court that the Zatzkis firm's billing system could not have billed Ralph the full $150.00 per hour billing if that had been the true agreement, but have then accepted partial payments on account. As payment in full of all bills by all clients would be rare, no one would design computer software that could accept only payment in full.

It is obvious that the trial judge carefully considered all of the evidence and arguments of the Zatzkises and Ms. McCarthy in this case, but nonetheless "... determine[d] that Mr. Zatzkis and his attorney willfully failed to disclose the back-dating of Defendant's *305 Exhibit 10 to the court and opposing counsel..."

The trial court further found that "... [Zatzkis] and his counsels' actions were deceitful, fraudulent, and purposely motivated to gain an unfair advantage in this litigation...".

The parties argued extensively about the standard of review we should apply to such findings of the trial court. We have examined the record using both the manifest error standard and de novo review and find no error in the findings of fact of the trial court regarding the actions and motives of Ralph and his attorneys surrounding Exhibit 10.

The trial court characterized the explanations used to explain the lack of candor surrounding Exhibit 10 as "rationalizations." The record supports this finding.

In reasons for judgment dated July 14, 1992 the trial court stated:

Here it is uncontroverted that Mr. Zatzkis and his counsel were put on notice as to their alleged bad faith actions. However, no request for or testimony was offered at the hearing in support of specific sanctions—other than exclusion of the exhibit—and attorney's fees now raised. Thus, it cannot be truly said that Ralph Zatzkis and his counsel were fully aware of what sanctions were under consideration and the nature of those sanctions. Davis v. Veslan Enterprises, 765 F.2d 494, 500 and n. 12 (5th Cir.1985).

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Zatzkis v. Zatzkis, 632 So. 2d 302, 1993 WL 521178 (La. Ct. App. 1993).

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