PARRO, J.
Kathi Blanchard appeals a judgment dismissing her claims against Henri M. Saunders and Dominick M. Bianca, the attorneys who represented her ex-husband, Henry Joseph Blanchard, in a maritime personal injury suit. For the following reasons, we vacate in part, reverse in part, render in part, and remand with instructions to transfer a portion of this matter to the Nineteenth Judicial District Court.
In April 2008, Kathi Blanchard (Kathi) asked attorney Benn Hamilton to handle a divorce and community property settlement for her and her estranged husband, Henry Joseph Blanchard (Henry). The couple had worked out and agreed to all the details of their divorce and needed someone to formalize the documents and take their case before the court. The parties eventually obtained a divorce and entered into a voluntary settlement of community property and an agreement as to final spousal support.
The judgment of divorce also included provisions for Henry to pay Kathi final periodic spousal support in the amount of $500 per month, to continue until he settled his maritime personal injury claim and paid her one-third of the settlement; this payment would constitute a final payment of spousal support.
Kathi and Henry also filed a "Compromise, Release and Community Property Settlement," which included the following paragraph:
On or about April 11, 2011, Henry settled his maritime personal injury claim for $500,000. His attorneys, Saunders and Bianca, computed and deducted the fees, expenses, and advances incurred during the pendency of the suit and presented Kathi with a check in the amount of $24,481.24, which purportedly represented her one-third of the net proceeds. They also gave her a client disbursement sheet showing all case expenditures, loans, cash advances, and litigation expenses.
Kathi disagreed with the attorneys' computation of the net proceeds and, on May 26, 2011, filed in The Family Court a petition seeking a declaratory judgment, as well as to enforce the divorce judgment and community property settlement, to object to the calculation of her portion of the settlement proceeds, and to question and contest certain expenses included in the settlement computations. Her petition also claimed past-due spousal support, contempt of court, attorney fees, and court costs from Henry. She named as defendants her ex-husband and his two personal injury lawyers. Her petition asked the court to define and declare her rights under the divorce judgment and compromise, release, and community property settlement rendered and filed in The Family Court. She claimed Saunders and Bianca used an improper method of computing her one-third share of Henry's personal injury settlement, claiming she and Henry had agreed that her portion would be one-third of the gross settlement amount. She also claimed certain deductions were erroneous and/or were advances made to Henry designed to reduce her portion of the settlement. She deposited the check for $24,481.24 in the registry of the court and asked for a rule to show cause against Henry, Saunders, and Bianca.
Henry did not file any responsive pleadings to Kathi's petition. Saunders and Bianca answered the petition and filed a reconventional demand against Kathi for
After a hearing on the exceptions on September 6, 2011, at which evidence was presented and Kathi testified, the court denied the exceptions of improper venue, lack of subject matter jurisdiction, and improper cumulation of actions, and granted the exceptions of lack of personal jurisdiction, improper joinder of parties, no cause of action, and no right of action. The judgment, which was signed September 23, 2011, dismissed with prejudice all claims against Saunders and Bianca and was designated as a final, appealable judgment. Kathi appealed the judgment; Saunders and Bianca answered the appeal, seeking an award of damages, attorney fees, and court costs for frivolous appeal, pursuant to LSA-C.C.P. art. 2164. Because it was clear that Kathi was owed at least the amount deposited in the registry of the court, the trial court ordered that those funds be released to her.
Kathi presents the following issues for review: (1) Is a professional attorney-client relationship always necessary in order to justify a lawsuit against an adversary's lawyer; (2) What are the legal standards for the exceptions of no cause of action and no right of action and how do they differ; and (3) What is the legal function of a petition for declaratory judgment and was it appropriate in this case?
Based on certain provisions concerning declaratory judgments, Kathi argues that she is an interested party with the right to seek a declaration and definition of the judgment in which she compromised her claim for final spousal support by agreeing to accept one-third of Henry's personal injury settlement proceeds. See LSA-C.C.P. arts. 1871 and 1872.
Saunders and Bianca claim that they had no contractual or other agreement with Kathi, and her claims are solely against her ex-husband, whose duty it was to "cause to be made" to Kathi a payment constituting one-third of his settlement proceeds. They further claim that they owe her no duty. Because they felt the stipulated judgment of divorce lacked clarity, Saunders sent a letter to Kathi's attorney, confirming that the "final, one-time payment" of spousal support from Henry's settlement proceeds would be based on his "net recovery, after factoring in attorney's fees and litigation expenses," rather than on his gross recovery. They assert that by signing and returning the letter, a copy of which was admitted into evidence at the hearing, Hamilton agreed that this was his and his client's understanding of the judgment.
Ultimately, their argument is that any cause of action stated in Kathi's petition is against her ex-husband, acknowledging that if she has a cause of action, then she is the person who has the right to bring it against him. However, because they were not parties to the stipulations between Kathi and Henry, her right of action is not against them.
In their answer to the appeal, Saunders and Bianca claim they are entitled to damages for a frivolous appeal, because Kathi and her attorney represented to the court that they believed she was entitled to one-third of the gross settlement proceeds, when the letter signed and returned by Hamilton clearly acknowledged that the agreement was as to one-third of the net proceeds.
A cause of action, when used in the context of the peremptory exception, is defined as the operative facts that give rise to the plaintiff's right to judicially assert the action against the defendant. Everything on Wheels Subaru, Inc. v. Subaru South., Inc., 616 So.2d 1234, 1238 (La. 1993). The function of an exception that raises the objection of no cause of action is to test the legal sufficiency of the petition by determining whether the law affords a remedy on the facts alleged in the petition. Ramey v. DeCaire, 03-1299 (La.3/19/04), 869 So.2d 114, 118. No evidence may be introduced to support or controvert the exception raising the objection of no cause of action. LSA-C.C.P. art. 931. All facts pled in the petition must be accepted as true. Rebardi v. Crewboats, Inc., 04-0641 (La.App. 1st Cir.2/11/05), 906 So.2d 455, 457. However, the jurisprudence recognizes an exception to this rule, which allows the court to consider evidence which is admitted without objection to enlarge the pleadings. Stephenson v. Nations Credit Fin. Services Corp., 98-1688 (La. App. 1st Cir.9/24/99), 754 So.2d 1011, 1021. In reviewing the petition to determine whether a cause of action has been stated, the court must, if possible, interpret it to maintain the cause of action. Any reasonable
An action can only be brought by a person having a real and actual interest that he asserts. LSA-C.C.P. art. 681; Industrial Companies, Inc. v. Durbin, 02-0665 (La.1/28/03), 837 So.2d 1207, 1216. The function of the peremptory exception raising the objection of no right of action is to determine whether the plaintiff belongs to a class of persons to whom the law grants the cause of action asserted in the suit. See LSA-C.C.P. art. 927(A)(6); Industrial Companies, 837 So.2d at 1216. The focus in an exception of no right of action is on whether the particular plaintiff has a right to bring the suit; it assumes that the petition states a valid cause of action for some person and questions whether the plaintiff in the particular case is a member of the class that has a legal interest in the subject matter of the litigation. Benoit v. Allstate Ins. Co., 00-0424 (La.11/28/00), 773 So.2d 702, 708. Evidence is admissible on the trial of an exception of no right of action to support or controvert the objections pleaded, when the grounds for the objections do not appear from the petition. LSA-C.C.P. art. 931. Whether a plaintiff has a right of action is a question of law; therefore, it is reviewed de novo on appeal. Gibbs v. Delatte, 05-0821 (La.App. 1st Cir.12/22/05), 927 So.2d 1131, 1135, writ denied, 06-0198 (La.4/24/06), 926 So.2d 548.
Based on the above, the first step for this court is to examine the petition to determine whether the law extends a remedy to Kathi against Saunders and Bianca under the factual allegations of the petition. In paragraph 5 of the petition, Kathi alleged that the divorce judgment and community property settlement between herself and Henry required him
The issue is whether Kathi has stated a claim against Saunders and Bianca that, based on statutory law or jurisprudential rulings, entitles her to the relief she seeks. Or, as posed in her brief to this court, is a professional attorney-client relationship always necessary in order to justify a lawsuit against an adversary's lawyer? In the case of Penalber v. Blount, 550 So.2d 577, 579 (La.1989), the supreme court addressed a situation in which the Livingston Parish Police Jury had filed an action against an adversary's attorney, alleging that the attorney had knowingly violated statutory and constitutional prohibitions against seizure of public assets by seizing its property after intentionally failing to notify it of the seizure. The court noted that Louisiana subscribes to the traditional, majority view that an attorney does not owe a legal duty to his client's adversary when acting in his client's behalf. Id. A non-client, therefore, generally cannot hold his adversary's attorney personally liable for either malpractice or negligent breach of a professional obligation. Id. at 581. The intent of this rule is not to reduce an attorney's responsibility for his or her work, but rather to prevent a "chilling effect" on the adversarial practice of law and to prevent a division of the loyalty owed to a client. Id. Therefore, if the police jury had alleged facts establishing only a negligent wrongful seizure of police jury assets, the attorney's exception of no cause of action would be sustained. Id. at 582. However, because the police jury's petition asserted that the attorney's action was intentionally tortious and set forth allegations of intentional culpable acts on the part of the attorney, the exception of no cause of action could not be sustained. The court stated, "Intentionally tortious actions, ostensibly performed for a client's benefit, will not shroud an attorney with immunity. Consequently, even though an attorney does not generally owe a duty to his client's adversary, under the broad ambit of LSA-C.C. art. 2315, an attorney may be held personally accountable for his intentional tortious conduct...." Id.
In a later case, Montalvo v. Sondes, 93-2813 (La.5/23/94), 637 So.2d 127, the supreme court reiterated that since an attorney does not owe a legal duty to his client's adversary when acting on the client's behalf, the non-client could not hold the adversary's attorney personally liable for malpractice or negligent breach of a professional obligation, but could bring a cause of action against the attorney based on intentional tort. Id. at 130. However, the supreme court stated that the Penalber requirement of only general intent to bring about a result that would invade the interest of another in a way that the law forbids, was too broad and would have a chilling effect on an attorney's work on behalf of his client. Therefore, in the Montalvo case, the supreme court stated that the facts in the plaintiff's petition had to allege that the attorney defendants intended to cause
In footnote two of the Penalber opinion, the Louisiana Supreme Court clarified that the opinion did not address situations where the non-client is not an adversary, but a third-party beneficiary, citing Capital Bank & Trust Co. v. Core, 343 So.2d 284 (La.App. 1st Cir. 1977), writ denied, 345 So.2d 504 and writ not considered, 345 So.2d 61 (La.1977), and Succession of Killingsworth, 270 So.2d 196 (La.App. 1st Cir.1972), writ granted, 273 So.2d 292 (La.1973), rev'd in part, aff'd in part, 292 So.2d 536 (La.1973). Penalber, 550 So.2d at 578 n. 2. In the Capital Bank case, the bank had advanced funds on the strength of a title opinion rendered to it by an attorney whom the bank did not retain. This court analogized this situation to a "stipulation pour autrui" under Louisiana law, pursuant to which one may bind himself for the benefit of a third party, and found that Capital Bank had alleged a cause of action for fraud against the attorney. Capital Bank, 343 So.2d at 288-89. Succession of Killingsworth involved a suit by legatees under a will that had been declared invalid against the attorneys who had prepared the will. This court held that evidence established that the will had been typed by the officiating notary public's secretary, rather than by the notary/attorney, as was statutorily required. Succession of Killingsworth, 270 So.2d at 203. Therefore, the legatees' claims against the notary/attorney could be maintained under Louisiana Civil Code article 2315. Id. at 205. The supreme court granted writs and reversed, finding that the testimony of subscribing witnesses to the testament was not supported by sufficient independent facts or reasonable inferences. Therefore, although the cause of action asserted by the legatees was not questioned, the will was declared valid. Succession of Killingsworth, 292 So.2d at 556 (on rehearing). In Joyner v. Wear, 27,631 (La.App. 2nd Cir.12/6/95), 665 So.2d 634, 640 n. 1, writ denied, 96-0040 (La.2/28/96), 668 So.2d 370, the court referred to footnote 2 in Penalber, noting that where the non-client was not an adversary, but a third-party beneficiary of the attorney's actions, a negligence cause of action is recognized. See also Davis v. Parker, 58 F.3d 183 (5th Cir.1995). These cases demonstrate that non-client parties, whose interests as third-party beneficiaries of the attorney's actions are negatively affected by his substandard work, can have a negligence cause of action against the attorney. Cf. Congress Square Ltd. P'ship. v. Polk, 2011 WL 837144, *11 n. 6 (E.D.La.3/4/11) (not reported in F.Supp.2d) (stating that the heightened intent requirement articulated in Montalvo logically extends to
Examining the allegations of Kathi's petition in the light of this jurisprudence, we note first that Kathi is not asserting a claim against an adversary's attorneys; she was not an adversary to Henry in his maritime personal injury litigation. Rather, she was a non-client party for whose benefit the split of the settlement proceeds was intended, and claimed that the attorneys negligently and/or intentionally deducted expenses in a manner that damaged her interests. Her petition alleged that Saunders and
Usually, this would be the end of our inquiry as to the exception of no cause of action. However, in this case, because that exception was tried along with other exceptions, including the exception of no right of action, which allows introduction of evidence, we may consider information beyond what was stated in the petition. Specifically, the record includes an August 6, 2008 letter from Saunders to Kathi's attorney, asking Hamilton to confirm their recent conversation in which Hamilton had agreed with Saunders that it was his understanding, as well as his client's, that the "one-third figure would be calculated from Henry's net recovery, after factoring in attorney's fees and litigation expenses incurred in connection with his personal injury claim." Hamilton signed the letter to indicate his agreement, dated his signature August 8, 2008, and returned the signed letter to Saunders. Since an attorney acts as his client's agent, Hamilton's signature served as an expression of Kathi's agreement to this calculation basis. Saunders and Bianca claim that the letter conclusively establishes that their computation was completed in accordance with Kathi and Henry's agreement in the divorce and community property settlement.
The transcript of the hearing also includes Kathi's testimony,
Based on the wording of the confirmation letter between Saunders and Hamilton, the agreement was that Kathi's one-third of the settlement proceeds would be calculated from Henry's net recovery, after factoring in attorney's fees and "litigation expenses." The jurisprudence of this state, beginning with the case of Louisiana State Bar Ass'n. v. Edwins, 329 So.2d 437 (La.1976), has permitted attorneys to advance funds to their clients for minimal, necessary living expenses. See In re Maxwell, 00-3527 (La.3/30/01), 783 So.2d 1244, 1249. However, in Fountain v. Fountain, 93-2176 (La.App. 1st Cir. 10/07/94), 644 So.2d 733, this court examined a list of itemized expenses presented on a law firm's invoice to determine whether they all qualified as "litigation expenses," and found that many of those expenses, including payments of medical expenses, advances, and loans made to the client, were not true expenses of litigation. Id. at 743. Since April 2006, the circumstances and types of expenses that may be paid by an attorney to or on behalf of a client are listed in Rule 1.8 of the Rules of Professional Conduct,
Rule 1.8(e)(5) refers to the three types of financial assistance provided by a lawyer to a client as "court costs, expenses of litigation, or for necessitous circumstances." Clearly, although loans and advances may be made by an attorney to a client for subsistence and in necessitous circumstances, such loans and advances are never to be considered "litigation expenses." Even if the letter agreement between Saunders and Hamilton were interpreted as limiting Kathi's recovery, it did not eliminate her cause of action for a declaration that certain deductions made by Henry's attorneys from her portion of the settlement were not "litigation expenses" and were not in accord with the divorce judgment or the confirmation letter.
With respect to Kathi's right of action, having concluded that her petition states a valid cause of action, we conclude that she is the only person who has a legal interest in the settlement proceeds that are the subject of this litigation. Therefore, she has a right of action against Saunders and Bianca.
Louisiana Revised Statutes 13:1401 sets out the jurisdiction of The Family Court of East Baton Rouge. With reference to the matter before us, it states:
The declaratory judgment articles of the Louisiana Code of Civil Procedure grant courts of record within their respective jurisdictions the authority to declare rights, status, and other legal relations, whether or not further relief is or could be claimed. LSA-C.C.P. art. 1871. The purpose of these articles is to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations, and they are to be liberally construed and administered. LSA-C.C.P. art. 1881. A person is entitled to relief by declaratory judgment when his rights are uncertain or disputed in an immediate and genuine situation, and the declaratory judgment will remove the uncertainty or terminate the dispute. Williams v. City of Baton Rouge, 02-0339 (La.App. 1st Cir.2/14/03), 848 So.2d 9, 13; Spicer v. Spicer, 10-1577 (La.App. 1st Cir.3/25/11), 62 So.3d 798, 800.
Kathi's petition was entitled: "Petition for Declaratory Judgment; To Enforce Divorce Judgment and Community Property Settlement; to Object to Calculation of Settlement; To Question and Contest Certain Expenses; and For Past-Due Spousal Support, Contempt, Attorney Fees and Court Costs." She requested, in paragraph 8, that The Family Court define and declare her rights under the divorce judgment and compromise, release, and community property settlement rendered or filed in that court. Her former husband was named as a defendant. The Family Court in this case correctly concluded that it had subject matter jurisdiction over this matter, which involves an interpretation of a judgment and community property settlement between the spouses.
However, having found that Kathi had not stated a cause of action against Saunders and Bianca, the court sustained their exceptions raising the objection of improper joinder and lack of personal jurisdiction over Saunders and Bianca, neither of whom were involved in any way in the divorce or community property actions between Kathi and Henry. Kathi contends that this ruling was erroneous, basing her argument on the procedural rules governing actions for declaratory judgment, which state that all persons who have or claim any interest that would be affected by the declaration must be made parties, and no declaration may prejudice the rights of persons not parties to the proceeding. See LSA-C.C.P. arts. 1880 and 641; Blanchard v. Naquin, 428 So.2d 926, 928 (La.App. 1st Cir.), writ denied, 433 So.2d 162 (La.1983). Moreover, further relief based on a declaratory judgment or decree may be granted whenever necessary. LSA-C.C.P. art. 1878.
In this case, if The Family Court were to declare that Saunders and Bianca did not compute Kathi's portion of the settlement proceeds in accord with the court's judgment, it could then require them to re-compute the amounts payable to her and to Henry, since Kathi has requested this additional relief in her petition. Such a computation could negatively affect the attorneys' ability to recover, from Henry's portion of the settlement proceeds, the full amounts they paid to him as advances and loans. Under this rationale, it would appear that The Family Court would have personal jurisdiction over Saunders and Bianca and that their joinder was mandatory.
Id. at 550-51 (Emphasis added).
Jurisdiction over the subject matter of a controversy is "the legal power and authority of a court to hear and determine a particular class of actions or proceedings, based upon the object of the demand, the amount in dispute, or the value of the right asserted." LSA-C.C.P. art. 2; Amin v. Bakhaty, 01-1967 (La. 10/16/01), 798 So.2d 75, 80. The jurisdiction of a court over the subject matter of an action or proceeding cannot be conferred by consent of the parties. A judgment rendered by a court that has no jurisdiction over the subject matter of the action or proceeding is void. LSA-C.C.P. art. 3; see also Bordelon v. Dehnert, 99-2625 (La.App. 1st Cir.9/22/00), 770 So.2d 433, 435, writ denied, 00-2923 (La.3/19/01), 787 So.2d 995. It is the duty of a court to examine subject matter jurisdiction sua sponte, even when the issue is not raised by the litigants. McGehee v. City/Parish of East Baton Rouge, 00-1058 (La.App. 1st Cir.9/12/01), 809 So.2d 258, 260.
As previously noted, The Family Court correctly stated that it had subject matter jurisdiction over this matter, which, after the court's dismissal of all claims against Saunders and Bianca, was nothing more than an action between former spouses seeking the enforcement of a judicial or contractual settlement of claims. However, this court has concluded that Kathi
Since we have concluded that Kathi's appeal had merit, we find no basis for an award of damages, attorney fees, and court costs for frivolous appeal, which were requested in the answer to appeal filed by Saunders and Bianca.
For the above reasons, we reverse the portion of the September 23, 2011 judgment that sustained the exceptions raising the objections of no cause of action and no right of action, as well as that portion of the judgment denying the exception raising the objection of improper cumulation of actions. We vacate the portion of the judgment that granted the exceptions raising the objections of lack of personal jurisdiction and improper joinder of parties. We render judgment, decreeing that The Family Court is hereby divested of subject matter jurisdiction over the claims against Henry, Saunders, and Bianca regarding computation of the settlement proceeds, and remand this matter to The Family Court with orders to transfer that portion of this case to the Nineteenth Judicial District Court for further proceedings in accordance with this judgment.
WELCH, J., concurs.
Article 1872 states: