Opinion ID: 10313
Heading Depth: 3
Heading Rank: 2

Heading: The Mutual Release

Text: 54 In the course of closing the deal with Hanover, C & B released COI and its officers and directors from liability relating to the transactions involved in this lawsuit. The district court found that the release was valid, dismissed COI and Humphrey, and awarded them attorney's fees. While we agree with the district court's ruling on the validity of the release, we find the court's award of attorney's fees to be erroneous. 55 C & B contends that the release is invalid because it was procured by fraud and the fear of economic injury and violates public policy. It also contends that the release does not cover Humphrey personally. C & B's assertions are conclusory and have no supporting authority. 56 First, assuming that the release was procured through fraud, C & B cannot show that it reasonably relied on any representations. C & B admits that it already knew that McDonald owned a 50 percent interest in COI; thus, it was on notice that McDonald had engaged in double-dealing and may have diverted corporate opportunities. Second, C & B cites no authority for the proposition that fear of economic injury voids a release. Instead, it relies on La.Civ.Code art. 3079, which states that a contract may be rescinded in case of mistake, fraud, or threat of violence. Third, C & B's argument that the release does not cover Humphrey is specious: as the district court found, the plain language of the release includes officers, directors, and shareholders of COI. Finally, while contracts that violate public policy can be void in limited instances, C & B once again fails to cite any authority for the proposition that those procured by fraud fall within such an exception; in fact, such a finding would render article 3079's prohibition superfluous. 57 C & B is correct, however, with regard to the award of attorney's fees. In Louisiana, attorney's fees are not recoverable unless specifically included in the contract itself or where a fair reading of the agreement suggests such costs were contemplated to be covered. Perry v. Chevron U.S.A., Inc., 887 F.2d 624, 629 (5th Cir.1989); see also Spiers v. Seal, 426 So.2d 631, 636 (La.Ct.App.1982), writ denied, 432 So.2d 269 (1983), and writ denied, 432 So.2d 270 (1983), and writ denied, 433 So.2d 150 (1983). There is no such condition in the agreement in the case sub judice. 58 Humphrey, COI, and CCC argue that attorneys' fees which are incurred as a result of the wrongful act of another are a recoverable item of damages. They rely on Ramp v. St. Paul Fire and Marine Ins. Co., 263 La. 774, 269 So.2d 239 (1972), and Jenkins v. St. Paul Fire and Marine Ins. Co., 393 So.2d 851 (La.Ct.App.1981), aff'd, 422 So.2d 1109 (La.1982). These cases are distinguishable, however. Both involved attorney malpractice claims and allowed recovery for the cost of hiring new attorneys to do what the original, negligent attorneys had failed to do. Ramp and Jenkins only allowed the plaintiff to recover the costs of hiring attorneys to pursue a separate action. In contrast, the appellees seek the cost of having attorneys litigate the claim before the court. 59 The holding of Ramp is applicable here. Plaintiff is entitled to recover the loss he has sustained by reason of having to pay attorney fees to indirectly pursue his claim against the railroad, which the defendants had obligated themselves to do without charge except on a contingent basis. The award of this item of loss or damage does not amount to an award of attorney fees incurred in order to pursue the malpractice action as such, but is to compensate for the additional cost, i.e., attorneys fees, incurred by plaintiff in order to have the railroad's liability to him judicially determined. 60 Jenkins, 393 So.2d at 859. 61 The appellees also contend that the district court was entitled to award attorney's fees under its inherent supervisory powers, citing Chambers v. NASCO, Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991). The inherent supervisory power in Chambers, however, stemmed from the court's need to protect the integrity of the judicial process from unethical litigants. Nothing in Chambers suggests that power allows a court to punish behavior such as C & B's: a breach of contract that does not undermine the integrity of the judicial process. For these reasons we reverse the award of attorney's fees.