Case Name: Valerie C. RAGAS v. George J. RAGAS, Sr.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1997-03-19
Citations: 690 So. 2d 1112
Docket Number: No. 96-CA-0979
Parties: Valerie C. RAGAS v. George J. RAGAS, Sr.
Judges: Before BYRNES, ARMSTRONG and JONES, JJ.
Reporter: Southern Reporter, Second Series
Volume: 690
Pages: 1112–1118

Head Matter:
Valerie C. RAGAS v. George J. RAGAS, Sr.
No. 96-CA-0979.
Court of Appeal of Louisiana, Fourth Circuit.
March 19, 1997.
Rehearing Denied April 15, 1997.
Roger I. Dallam, Greenberg & Dallam, Gretna, for Plaintiff/Appellant.
Daniel W. Nodurft, Nicholas S. Morphis, Sean D. Alfortish, Christopher J. Williamson, Nicholas S. Morphis & Associates, APLC, New Orleans, for Defendant/Appellee.
Before BYRNES, ARMSTRONG and JONES, JJ.

Opinion:
11JONES, Judge.
Appellant Valerie Ragas appeals the judgment of the trial court which granted appel-lee George Ragas' motion to distribute funds. After reviewing the record and applicable law, we affirm as amended.
Pursuant to an order of the 24th Judicial District Court of Jefferson Parish in Case No. 403-481, George Ragas is obligated to pay child support to his former wife, Valerie Ragas, for the maintenance and support of their four minor children. George Ragas has never paid any of the court ordered child support and the children currently receive financial assistance from a governmental welfare program, Ad to Families with Dependent Children (AFDC).
Since May 14, 1991, Valerie Ragas has obtained four executory judgments on past due child support against George Ragas. These judgments were made executory in Orleans Parish on June 8, 1995, in accordance with the procedure set forth in the Louisiana Code of Civil Procedure.
Additionally, on June 8, 1995, Valerie Ragas acquired a writ of fieri facias to seize the interest of George Ragas in two lawsuits:
a) George Ragas, et al. vs. Tennessee Gas Pipeline, et al., Civil Action No. 94-2932 of the United States District Court for the Eastern District of Louisiana, and
b) George Ragas, et al. vs. Do D Xuan, No. 94-13102 of the Civil District Court for the Parish of Orleans.
In January, 1996, counsel for George Ragas and MGA Insurance Company entered into a settlement agreement in the Xuan case for the sum of $94,000.00, which was placed into the court registry. Thereafter, George Ragas' counsel filed a motion to distribute funds contending that the attorney fees, expenses and related cost incurred in the Xuan case exceed the sum deposited into the court registry and prime the rights of Valerie Ragas to said funds. The claim made by George Ragas and his counsel consisted of three components:
a) Attorney's fee of 40 % $37,600.00
b) Costs advanced by counsel (25 items) $28,296.75
c) Costs guaranteed by counsel (9 items) $40,325.93
The total cost of these three components is $106,222.68 or $12,222.68 in excess of the settlement funds.
On February 23, 1996, Valerie Ragas filed an opposition to the motion to distribute funds wherein she opposed several of the costs advanced ($17,155.28) and all of the costs guaranteed ($40,325.93). She contended that there remained more than sufficient funds in the court registry after payment of the unopposed costs ($48,741.47) to cover her claim of $39,596.82.
On February 28, 1996, the trial court conducted an informal contradictory hearing on George Ragas' motion to distribute funds. The court awarded the entire $94,000.00 to George Ragas finding that the attorney's fee and all advances and guarantees by counsel exceed the sum deposited in the court registry. This appeal followed.
J¿DISCUSSION
Valerie Ragas first challenges the determination by the trial court that the expenses guaranteed by George Ragas' counsel are within the ambit of the attorney privilege established by Louisiana Revised Statute 9:5001.
LSA-R.S. 9:5001(A) provides that "[a] special privilege is hereby granted to attorneys at law for the amount of their professional fees on all judgments obtained by them, and on the property recovered thereby, either as plaintiff or defendant, to take rank as a first privilege thereon." LSA-R.S. 9:5001(A); Pullen v. Ziegler, 595 So.2d 1267, 1267 (La.App. 4th Cir.1992). Historically, the court was burdened with the task of determining what constituted an attorney's "professional fees" for the purposes of LSA-R.S. 9:5001 because this phrase was undefined by the statute. In 1989, however, this burden was lifted when "the legislature clarified the phrase 'professional fees' as it [currently] appear[s] in La. R.S. 9:5001 to include the agreed upon fee, whether fixed or contingent, and any and all other amounts advanced by the attorney to or on behalf of the client as permitted by the Rules of Professional Conduct of the Louisiana State Bar Association." Pullen, 595 So.2d at 1268; LSA-R.S. 9:5001(B). The Rules of Professional Conduct of the Louisiana State Bar Association relating to the professional fees of an attorney are found in Rule 1.8(e):
"A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that: (1) A lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter, and (2) A lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client." Rules of Professional Conduct of the Louisiana State Bar Association, Rule 1.8(e); Dupuis v. Faulk, 609 So.2d 1190, 1192 (La.App. 3rd Cir.1992). Thus, the attorney privilege applies to attorney fees and expenses relating to litigation, including court costs.
Valerie Ragas asserts that expenses guaranteed are not covered by the attorney privilege because "guarantees" are not specifically addressed by either LSA-R.S. 9:5001 or Rule 1.8(e). She cites LSA-C.C. Art. 3185 to support this argument. "Privilege can be claimed only for those debts to which it is expressly granted-" LSA-C.C. Art. 3185; Southern Savings Assoc'n v. Langford Land Co., 372 So.2d 713, 714 (La.App. 4th Cir.1979). "Privileges are stricti juris and must be strictly construed." Southern Savings, 372 So.2d at 714. Nevertheless, we are compelled to find that the attorney privilege applies to expenses related to litigation, advanced or guaranteed, when strictly construed. Pullen, 595 So.2d at 1268-1270; Dupuis, 609 So.2d at 1192.
In Pullen, an attorney initiated a con-cursus proceeding to determine whether his law firm or a judgment creditor of the attor-néy's client had priority over proceeds of a tort judgment awarded to his client. The attorney argued that the total sum of the attorneys' fees, expenses incurred, and expenses guaranteed in regard to his client's law suit exceeded the total amount deposited in the registry of the court and that these costs primed any claim held by the judgment creditor.
"We find that Morris Bart has a privilege on the proceeds of the judgment . This is consistent with the manner in which the statute has been applied heretofore. R.S. 9:5001 grants to attorneys a privilege of first rank for their fees on judgments obtained by them and on property recovered thereby. In Roberts v. Hanover Ins. Co., 338 So.2d 158 (La.App. 2d Cir.1976) the court discussed the history of La.R.S. 9:5001. Act 124 of 1906 amended the attorney fee privilege provisions to subject not only the judgment but any property recovered thereunder to the privilege. The court held that attorneys are not 'ordinary creditors' nor must they record their privilege."
Pullen, 595 So.2d at 1270. The relevant inquiry in an attorney privilege determination is whether the expense reasonably relates to the litigation. We find no significant difference between an attorney's advance or his guarantee of a litigation expense. In both instances, the attorney is standing in the shoes of his client and therefore, is entitled to assert the attorney privilege created by LSA-R.S. 9:5001. Accordingly, we hold that the expenses guaranteed by George Ragas' counsel prime any claim held by Valerie Ragas because these costs were related to litigation pursued on George Ragas' behalf. We do not hold today, however, that all guarantees made by an attorney are privileged.
Valerie Ragas next contends that not every sum actually expended by an attorney is subject to the attorney privilege. This contention is supported by case law. "We do not believe the legislature in granting the privilege vested lawyers with the sole authority to categorize as expenses all funds they desire to spend and charge to a client's account. An attorney asserting the privilege has an evidentiary responsibility to establish the nature and association of the charged expenditure with the pending litigation." Bixenman v. Radlauer, 647 So.2d 565, 567 (La.App. 3rd Cir.1994).
Valerie Ragas specifically challenges the determination by the trial court that 10 of the items which the appellee enumerates as costs advanced are privileged. The contested costs advanced include costs for fuel, office supplies, parking, internal office administration, car repairs, car rental, car purchase, wrecker service, and witness transportation. After reviewing the record, we find that four of these items, given their nature, are not entitled to privilege.
Costs incurred by an attorney that are incidental to the administration of a case are not privileged expenses. We believe that the three items listed in this case |6as "file set up costs . $150", "gas . $31", and "office depot . $86.81" reflect such incidental expenses and thus, are not entitled to privilege.
We further determine that the item listed as "assignment of proceeds . $6,500.00" fails to qualify as a privileged expense. This item refers to a 1986 BMW automobile which George Ragas purchased from his attorney on credit. LSA-R.S. 9:5001 contemplates "amounts advanced by the attorney . on behalf of the client" to a third party, for example an expert witness, not to the lawyer himself acting in a personal capacity. Thus, we agree with Valerie Ragas' contention that a lawyer who sells his own car ought not be allowed to claim said sale as an assignment of proceeds of the client's claim and thereby, be entitled to also claim it as an privileged advance.
Additionally, evidence (check vouchers, receipts, ledger sheets, contracts, and etc.) was introduced at the contradictory hearing which established the nature and association of all other costs advanced with the Xuan case. Therefore, with the exception of the costs listed as file set up, gas, office supplies, and assignment of proceeds, we hold that the costs advanced were properly classified as privileged by the trial court.
Moreover, we find no merit in Valerie Ragas' contention that several of the transportation expenses advanced (payments to Auto-works, Inc., Don Bohn Ford, and Agency Rent A Car) for George Ragas are not entitled to privilege. In Louisiana State Bar Assoc'n v. Edwins, 329 So.2d 437, 444-445 (La.1976), the court held that the attorney's payment of three car notes and costs for tires, on behalf of his client, qualified as living expenses and as such were proper advances. 17Likewise, George Ragas' transportation expenses were proper and are thus, privileged.
Accordingly, the judgment of the trial court is amended to delete the items listed as "file set up costs . $150", "gas . $31", "office depot . $86.81", and "assignment of proceeds . $6,500.00" as these items are not entitled to privilege. The judgment of the trial court is affirmed in all other aspects.
AFFIRMED AS AMENDED.
BYRNES, J., concurs with reasons.