Court Opinion

ID: 7797510
Source: CourtListenerOpinion
Date Created: 2022-08-03 18:00:28.855696+00
Date Added: 2024-06-11T16:28:38.120083
License: Public Domain

Case: 22-30027      Document: 00516417672         Page: 1    Date Filed: 08/03/2022

              United States Court of Appeals
                   for the Fifth Circuit
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                         August 3, 2022
                                   No. 22-30027                          Lyle W. Cayce
                                                                              Clerk

   United Specialty Insurance Company,

                                                            Plaintiff—Appellant,

                                       versus

   Olivia Y. Truong; Richard E. King; Melchiode Marks
   King, L.L.C.; ABC Insurance Company; Jamie A. Futral,

                                                          Defendants—Appellees.

                  Appeal from the United States District Court
                     for the Eastern District of Louisiana
                            USDC No. 2:21-CV-480

   Before Stewart, Elrod, and Graves, Circuit Judges.
   Per Curiam:*
          Plaintiff-Appellant United Specialty Insurance Company (“United”)
   appeals the district court’s denial of its motion for reconsideration after the
   district court dismissed its legal malpractice claim under Rule 12(b)(6). See
   Fed. R. Civ. P. 12(b)(6). We AFFIRM.

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 22-30027        Document: 00516417672             Page: 2      Date Filed: 08/03/2022

                                        No. 22-30027

                   I.     Facts & Procedural History
           The facts of this case stem from an underlying suit in which United,
   through its managing general agent, QEO Insurance Group, retained as
   counsel Defendants-Appellees Olivia Y. Truong, Richard E. King,
   Melchiode Marks King, LLC, and Jamie Futral (collectively, “Truong”). In
   the underlying matter, the plaintiff Diane Jackson was involved in a motor
   vehicle accident where she was rear-ended by a truck operated by Napoleon
   White (“White”) during the course and scope of his employment with Vic 3
   Enterprises, LLC (“Vic 3”). United provided automobile liability insurance
   coverage to Vic 3 and White. United, Vic 3, and White (collectively, “the
   state court Defendants”) were codefendants in the underlying matter.
                                  a. The underlying suit
           On August 15, 2019, the state court Defendants filed a Stipulation of
   Liability, which provided that “White was the sole cause of the Incident and
   liability is not contested” so “this case can proceed to a trial on damages.”
   Later that month, a jury trial concluded with a verdict in favor of Jackson and
   against United’s insured in the amount of $1,632,192.24 plus interest thereon
   and court costs. Truong then filed a motion for judgment notwithstanding
   the verdict or alternatively for a new trial on behalf of United, which was
   ultimately denied on November 15, 2019. On December 19, 2019, Truong
   filed a notice and motion for suspensive appeal, 1 but did not furnish security
   in the form of a surety bond until January 16, 2020—twenty-eight days after

           1
             Under Louisiana law, a suspensive appeal is “an appeal that suspends the effect
   or the execution of an appealable order or judgment.” LA. CODE CIV. PROC. ANN. art.
   2123.

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   the deadline provided by Louisiana Civil Code article 2123. 2 The surety bond
   was in the amount of $1,800,000 and bound only United, despite its
   codefendants having also been found liable.
          In January 2020, Jackson filed a motion to dismiss the suspensive
   appeal, which the trial court granted on March 5, 2020 because the surety
   bond was not timely posted. Then in April 2020, Truong filed a notice of
   intent to apply for a supervisory writ regarding the motion to dismiss, which
   the Louisiana Fifth Circuit Court of Appeal denied due to the untimely
   security furnishing. The appellate court also affirmed the trial court’s
   dismissal of the suspensive appeal and converted it to a devolutive appeal, for
   which security is not required. This conversion enabled Jackson to
   immediately execute the August 2019 judgment.
          Nearly two months later, United’s insurance representative contacted
   Truong regarding the supervisory writ application, and Truong responded,
   “It completely slipped my mind to forward the writ denial, which is attached
   for your file (sorry!).” United alleged that it was unable to challenge the writ
   denial with the Louisiana Supreme Court because of Truong’s delayed notice
   of the writ denial and failure to advise accordingly.
          In September 2020, Truong received a demand letter from Jackson’s
   counsel demanding payment from United in the amount of $1,903,986.37. In
   November 2020, Jackson filed two petitions for garnishment, requesting a
   writ of fieri facias to seize and possess all property rights of United and its

          2
              Louisiana Code of Civil Procedure Article 2123 provides:

          Except as otherwise provided by law, an appeal that suspends the effect or
          the execution of an appealable order or judgment may be taken, and the
          security therefor furnished, only within thirty days of any of the following:
                                               ...
          (2) The date of the mailing of notice of the court’s refusal to grant a timely
          application for a new trial or judgment notwithstanding the verdict, as
          provided under Article 1914. Id.

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   insured, White. Consequently, in November 2020, Jackson seized three
   dump trucks belonging to United’s insured and co-defendant, Vic 3,
   effectively putting the company out of business. United paid the full value of
   the judgment to secure the return of Vic 3’s trucks.
                                   b. Procedural history
           On March 8, 2021, United filed this action asserting a legal
   malpractice claim against Truong. The complaint alleged that Truong
   approved the judgment casting United for an amount in excess of its policy
   limit of $1,000,000. On May 31, 2021, Truong filed a motion to dismiss for,
   inter alia, failure to state a claim under Rule 12(b)(6). 3 The district court
   granted Truong’s motion on Rule 12(b)(6) grounds. Specifically, the district
   court determined that United adequately alleged the duty and breach
   elements of its legal malpractice claim, but that it failed to establish the cause-
   in-fact and legal cause elements. United then moved for reconsideration. The
   district court denied its motion and this appeal followed.
                         II.     Standard of Review
           This court reviews a district court’s dismissal for failure to state a
   claim de novo, “accepting all well-pleaded facts as true and viewing those
   facts in the light most favorable to the plaintiffs.” Littell v. Hous. Indep. Sch.
   Dist., 894 F.3d 616, 622 (5th Cir. 2018). To survive a motion to dismiss, a
   plaintiff must plead “enough facts to state a claim to relief that is plausible
   on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim
   has facial plausibility when the plaintiff pleads factual content that allows the
   court to draw the reasonable inference that the defendant is liable for the
   misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

           3
              Truong also moved to dismiss under Rules 12(b)(1), 12(b)(7), and 12(e). The
   district court denied the motion as to Rules 12(b)(1) and (7) and concluded that the Rule
   12(e) motion was moot.

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                                    No. 22-30027

                            III.    Discussion
          Under Louisiana law, “[t]o establish a claim for legal malpractice, a
   plaintiff must prove: 1) the existence of an attorney-client relationship; 2)
   negligent representation by the attorney; and 3) loss caused by that
   negligence.” Ewing v. Westport Ins. Corp., 2020-00339 (La. 11/19/20), 315 So.
   3d 175, 180, reh’g denied, 2020-00339 (La. 2/9/21), 310 So. 3d 175. Because
   “[a] legal malpractice claim in Louisiana is a negligence claim . . . derive[d]
   from La. C.C. arts. 2315 and 2316,” id. at 182, a plaintiff must prove five
   elements: duty, breach, cause-in-fact, legal cause or scope of duty, and
   damages, Pinsonneault v. Merchants & Farmers Bank & Tr. Co., 2001-2217 (La.
   4/3/02), 816 So. 2d 270, 276.
          As to the first two elements, the district court identified Truong’s
   failure to timely post the surety bond as a breach of Truong’s duty to act with
   reasonable promptness and diligence in their representation. It further
   concluded that Truong’s failure to timely inform United of the appellate
   court’s denial of the supervisory writ was a breach of the duty to render
   competent representation, which encompasses the duty to reasonably inform
   one’s client. Having considered Truong’s arguments to the contrary, we
   leave these conclusions undisturbed.
          Regarding cause-in-fact, the district court acknowledged that if
   Truong had timely posted the surety bond required to file a suspensive
   appeal, Jackson would not have been able to immediately execute the
   judgment. It reasoned, however, that posting the surety bond would not have
   necessarily precluded United from eventually having to pay the judgment on
   behalf of its insured. This is because the parties to the underlying suit
   stipulated prior to trial that White was the “sole cause of the Incident,” and
   United was found solidarily and jointly liable in the judgment. The district
   court pointed out that as White’s insurer, “United agreed to indemnify
   [White] for the resultant damages, at least up to the policy limit, regardless

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   of [Truong’s] negligence.” It further determined that even if the bond had
   been timely posted, United would have been liable for the full amount of the
   judgment if affirmed on appeal. As to the legal cause element, the district
   court reasoned that because the suspensive appeal was converted into a
   devolutive appeal that could potentially result in a reversal, Truong still
   sustained United’s right to challenge the underlying judgment, meaning
   United failed to plead the legal cause element of its claim.
           United argues that the district court erred in holding that it failed to
   allege that Truong’s alleged malpractice caused United’s damages. It asserts
   that the district court’s analysis overlooked its critical allegation that Truong
   approved a judgment that made United liable for the entire amount of the
   jury award even though this amount exceeded the policy limit. 4 It further
   contends that even without that critical allegation, it still adequately alleged
   that Truong’s negligence caused its damages because, by posting a bond that
   exceeded United’s policy limits, Truong effectively rewrote United’s policy
   to extend its liability limit. Said another way, even if Truong had not
   approved the excess judgment, their posting of the $1,800,000 bond had the
   same effect. Finally, United avers that Truong’s failure to timely post the
   bond for the suspensive appeal resulted in United’s having to pay the excess

           4
              At the outset, we reject United’s argument that the district court never addressed
   its allegation that Truong’s approving the excess judgment caused it to suffer liability for
   an amount that exceeded its policy limits. United made this allegation in its complaint and
   repeated it in its opposition to Truong’s motion to dismiss and in its motion for
   reconsideration. Because United advanced this argument in the “Breach of Duty” section
   of its opposition, the district court addressed it in the “Breach of Duty” section of its order
   on Truong’s motion to dismiss. Specifically, the district court noted that “United alleges
   that defendants’ failure to review the underlying judgment casting United in excess of its
   policy limits breached defendants’ duty to act as prudent attorneys.” The district court
   declined to analyze this argument, however, because it concluded that United had
   adequately alleged a breach on other grounds.

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                                     No. 22-30027

   judgment more than a year earlier than it would have been required to pay
   had the suspensive appeal been perfected. Thus, United lost interest and
   earnings on approximately $1.9 million over the course of thirteen months.
   We address these arguments in turn.
                                  a. Cause-in-fact
          “An attorney is liable to his client for the damages caused by the
   attorney’s negligence in handling the client’s business, providing that the
   client proves by a preponderance of the evidence that such negligence is the
   proximate cause of the loss claimed.” Holland v. Hornyak, 07-394 (La. App.
   5 Cir. 11/27/07), 971 So. 2d 1227, 1231, writ denied, 2008-0333 (La. 4/25/08),
   978 So. 2d 366. “The proper method of determining whether an attorney’s
   malpractice is a cause in fact of damage to his client is whether the
   performance of that act would have prevented the damage.” Id. “If the
   alleged loss would have resulted irrespective of any alleged negligence, that
   alleged negligence is not actionable as a substantial factor or a cause in fact.”
   Colonial Freight Sys. Inc. v. Adams & Reese LLP, No. CIV.A. 11-1755, 2012 WL
   1570103, at *2 (E.D. La. May 3, 2012), aff'd, 524 F. App’x 142 (5th Cir. 2013).
          Here, as Truong convincingly explains, the trial in the underlying suit
   followed the parties’ stipulating to United’s joint and solidary liability with
   its codefendants. Thus, the underlying judgment was caused by that
   stipulation and the jury’s calculation of damages, not by Truong’s actions.
   Because United’s alleged loss would have resulted regardless of any alleged
   negligence by Truong, we hold that the district court did not err in
   concluding that United failed to establish the cause-in fact element of its legal
   malpractice claim. See Colonial Freight Sys. Inc., 2012 WL 1570103, at *2.
                                   b. Legal cause
          “As in any tort claim, the plaintiff in a malpractice claim must
   establish that the attorney’s breach was not only the factual cause but also
   the legal cause of any injury.” Leonard v. Reeves, 2011-1009 (La. App. 1 Cir.

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   1/12/12), 82 So. 3d 1250, 1263. “The proper inquiry [is] how easily the risk
   of injury to plaintiff can be associated with the duty sought to be enforced.”
   Simmons v. CTL Distrib., 03-1301 (La. App. 5 Cir. 2/23/04), 868 So. 2d 918,
   925. Here, the short answer is not easily.
          In this case, the risk of the injury to United is more closely associated
   with the state court Defendants’ waiver of their right to contest liability so
   that the case could proceed to a trial on damages. Moreover, as the district
   court observed, because the suspensive appeal was converted into a
   devolutive appeal, Truong sustained United’s right to challenge the
   judgment and potentially attain a reversal. See Baton Rouge Bank & Tr. Co. v.
   Coleman, 582 So. 2d 191, 192 (La. 1991) (“[W]hen an appellant fails to file a
   suspensive appeal from a final judgment timely, the judgment does not
   thereby acquire the authority of the thing adjudged, and the court of appeal
   does have jurisdiction to reverse, revise or modify the judgment (as long as
   the appeal was filed within the time limit for appealing devolutively).”).
          Accordingly, we hold that the district court properly granted
   Truong’s motion to dismiss under Rule 12(b)(6).
                            IV.     Conclusion
          For the foregoing reasons, the district court’s judgment is
   AFFIRMED.

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