Dynamic Environmental Services, LLC v. Kyle Marioneaux, Kara Kantrow, Marioneaux Kantrow, LLC and Continental Casualty Company

JLY/
STATE OF LOUISIANA

COURT OF APPEAL
w c sew FIRST CIRCUIT

2020 CA 1172

DYNAMIC ENVIRONMENTAL SERVICES, LLC

VERSUS

KYLE MARIONEAUX, KARA KANTRO W, MARIONEAUX
KANTROW, LLC AND CONTINENTAL CASUALTY COMPANY

JUDGMENT RENDERED: APR 1 6 mi

Appealed from the
Nineteenth Judicial District Court
In and for the Parish of East Baton Rouge • State of Louisiana
Docket Number C655719 • Division 22

The Honorable Timothy E. Kelley, Judge Presiding

Jacques F. Bezou COUNSEL FOR APPELLANT
Jacques F. Bezou, Jr. PLAINTIFF— Dynamic
Erica A. Hyla Environment Services, LLC
Matthew L. Devereaux
Sam J. Collett, III
Covington, Louisiana

Connell L. Archey COUNSEL FOR APPELLEES
Keith J. Fernandez DEFENDANTS— Kyle
Baton Rouge, Louisiana Marionneaux, Kara Kantrow,
Marionneaux Kantrow, LLC, and

Continental Casualty Company

BEFORE: WHIPPLE, C.J., WELCH, AND CHUTZ, JJ.

WELCH, J.

In this action for damages based on legal malpractice, the plaintiff, Dynamic

Environmental Services, LLC (" Dynamic"), appeals a summary judgment granted

in favor of the defendants, Kyle C. Marionneaux; Kara B. Kantrow; Marionneaux

Kantrow, LLC; and their insurer, Continental Casualty Company ( collectively

Marionneaux Kantrow"), which dismissed all of Dynamic' s claims against

Marionneaux Kantrow. For reasons that follow, we affirm in part, reverse in part,

and remand.

FACTUAL AND PROCEDURAL HISTORY

On May 15, 2000, the Louisiana Public Service Commission (" LPSC")

issued Common Carrier Certificate Number 5662- F ( Corrected) (" Certificate

5662") to Steve Kent Trucking, Inc. (" SK Trucking"), which allowed for the

transportation of certain waste for disposal, subject to specific enumerated

restrictions. SK Trucking was owned by Steve Kent, Sr. ( 50%) and his wife,

Trudy Kent ( 50%). The following year, Dynamic, a transportation company

providing emergency spill cleanup, environmental services, rental equipment, and

transportation services to the petrochemical, refinery, marine, municipal and

oilfield industries, across south Louisiana, was formed. Dynamic was owned by

Damon Wood ( 331/3%), Brent Upton ( 331/3%), and Steve Kent, Sr. and Trudy Kent

jointly, 331/3%). From 2005 until 2016, Dynamic transported regulated waste

using Certificate 5662.

Damon Wood and Brent Upton became aware that the Kents and SK

Trucking were having financial difficulties. Therefore, on December 23, 2013,

Damon Wood and Brent Upton purchased Steve and Trudy Kent' s interest in

Dynamic. On that same date, as part of the transaction and for consideration,

Dynamic and SK Trucking entered into a Licensing Agreement, which provided

Dynamic the non- exclusive right to use Certificate 5662. Dynamic' s right to use

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Certificate 5662 was to be in perpetuity and could not be " assigned, transferred,

pledged,
or hypothecated in any way ..." The Licensing Agreement further

provided that "[ a] ny attempt to assign or transfer contrary to the terms of the

agreement [ would] be null and void." The Licensing Agreement was not filed with

the LPSC.

Prior to December 23, 2013 ( the date the Licensing Agreement was executed

by SK Trucking and Dynamic), Dynamic retained Marionneaux Kantrow to assist

Dynamic in filing an application with the LPSC for its own common carrier

certificate.
An application was filed by Marionneaux Kantrow on behalf of

Dynamic in January 2014, which was docketed as LPSC docket number T- 33092.

At the time, Marionneaux Kantrow was unaware of the Licensing Agreement

between Dynamic and SK Trucking for Certificate 5662 and was not involved in

the drafting or execution of the Licensing Agreement in any way. On July 23,

2014, the deposition of Dynamic' s dispatcher, Scott Feske, was taken in the LPSC

docket number T-33092 proceedings; Kara Kantrow attended this deposition.

Dynamic contends that during this deposition, Kara Kantrow became aware that

Dynamic was transporting waste utilizing Certificate 5662.

On April 13, 2015, Dynamic and SK Trucking entered into a First

Amendment to the Licensing Agreement permitting SK Trucking to assign its

rights, interests, and benefits in and to the Licensing Agreement to Regions Bank,

a lien -holder over the assets of SK Trucking. Less than one month later, on May 8,

2015, Dynamic and SK Trucking entered into a Second Amendment to the

Licensing Agreement, wherein the First Amendment was revoked, repealed, and

removed.
SK Trucking again agreed not to assign the Licensing Agreement, to

require any future holder of Certificate 5662 to be burdened with SK Trucking' s

obligations to Dynamic under the Licensing Agreement and Second Amendment,

and not to permit any additional licenses of Certificate 5662 to any other third

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party after May 7, 2015. In connection with the Second Amendment and as

additional consideration, Dynamic paid Regions Bank the sum of $600, 000. 00 on

behalf of SK Trucking.

Prior to that time, in 2012, Steve Kent, Sr. formed Kent & Smith Holdings,

LLC with Gerard Smith. After the execution of the Licensing Agreement and the

Second Amendment thereto between Dynamic and SK Trucking, on May 4, 2015,

Steve Kent, Sr. sold his membership interest in Kent & Smith Holdings to Gerard

Smith; thus, Gerard Smith became the sole member of Kent & Smith Holdings. In

June 2015, SK Trucking was placed into formal liquidation by its creditor, Regions

Bank. Kent & Smith Holdings, LLC retained Marionneaux Kantrow to negotiate

and draft an Asset Purchase Agreement on behalf of Kent & Smith Holdings

providing that Kent & Smith Holdings would acquire from SK Trucking all of SK

Trucking' s right, title, and interest in Certificate 5662. Kara Kantrow negotiated

the Asset Purchase Agreement on behalf of Kent & Smith Holdings, with attorney

John Dale Powers representing SK Trucking. At the time, Marionneaux Kantrow

was still representing Dynamic in LPSC docket number T- 33092 relative to

Dynamic' s application for its own common carrier certificate.

The Asset Purchase Agreement drafted by Marionneaux Kantrow was

executed on July 24, 2015, by SK Trucking and Kent & Smith Holdings. The

Asset Purchase Agreement specifically stated that the assets were being purchased

free and clear of any and all encumbrances of any kind." The Asset Purchase

Agreement did not mention the Licensing Agreement between Dynamic and SK

Trucking or the Second Amendment thereto, or that SK Trucking had agreed not to

transfer Certificate 5662 unless it was burdened with SK Trucking' s obligations to

Dynamic under the Licensing Agreement and the Second Amendment. This was

purportedly due to Marionneaux Kantrow not knowing about the Licensing

Agreement or Second Amendment between SK Trucking and Kent & Smith

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Holdings relative to Certificate 5662.

On July 28, 2015, Kyle Marionneaux received an email from John Dale

Powers, which contained copies of the Licensing Agreement, the First

Amendment, and an unsigned copy of the Second Amendment. In the email, John

Dale Powers specifically asked Kyle Marionneaux, " Do these documents, in order

to protect Dynamic ..., need to be reflected?" On that same date, July 28, 2015,

Marionneaux Kantrow filed a Joint Application on behalf of both SK Trucking and

Kent & Smith Holdings with the LPSC seeking approval of the transfer of

Certificate 5662 from SK Trucking to Kent & Smith Holdings. The Joint

Application was assigned LPSC docket number T- 33737, and on July 31, 2015, it

was published in the LPSC Official Bulletin No. 1094. After various proceedings

and a hearing, on September 25, 2015, the LPSC issued an order in LPSC docket

number T-33737 approving the transfer of Certificate 5662 from SK Trucking to

Kent & Smith Holdings.

On August 11, 2015, between the date the Joint Application was filed with

the LPSC and the date of the hearing in LPSC docket number T-33737, John Dale

Powers sent a letter to Kyle Marionneaux, noting that "[ i] n reviewing the Petition

Joint Application)] which you [( Kyle Marionneaux)] filed with the [ LPSC]

regarding the transfer of the [ SK Trucking] permit [( Certificate 5662)], would you

Kyle Marionneaux)] need to mention that [ SK Trucking] would also retain the

right to use the permit [( Certificate 5662)] and that there is an existing right, [ in]

perpetuity, for Dynamic ... to use the permit [( Certificate 5662)]?" On August 17,

2015, Kyle Marionneaux responded to John Dale Powers that he did not " believe

that the LPSC [ would] allow that information to be included in the LPSC

Certificate and, thus, seeking approval of those rights in the Change of Control

docket would seem improper." Kyle Marionneaux further stated that "[ o] peration

under the authority of another carrier is accomplished at the LPSC through lease

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agreements entered into by the parties and kept on file with the LPSC." Kyle

Marionneaux attached to the response orders of the LPSC providing for leasing

rules of common carriers, including an order discussing how the " farming out" of

certificates was prohibited. In closing, Kyle Marionneaux stated that the " best

manner to facilitate the operation by [ SK Trucking] and Dynamic through Kent &

Smith [ Holdings] would be through an independent contractor arrangement which

complies with the attached leasing rules." Kyle Marionneaux did not inform his

client, Dynamic, of his opinion in this regard, and Dynamic was not aware that

Marionneaux Kantrow was representing Kent & Smith Holdings or SK Trucking in

a proceeding before the LPSC involving Certificate 5662 in which Dynamic held

an interest. Further, Dynamic did not receive notice of and was not listed as a

known party with an interest in any of the proceedings in LPSC docket number T-

33737 regarding Certificate 5662. Further, at the September 2015 hearing before

the LPSC, no testimony or other evidence was presented disclosing Dynamic' s

interest in Certificate 5662 pursuant to the Licensing Agreement or the Second

Amendment.

On October 7, 2015, Gerard Smith advised Damon Wood that Kent & Smith

Holdings owned Certificate 5662. In October 2015, Damon Wood encountered

Kyle Marionneaux and Kara Kantrow at a restaurant in Baton Rouge and inquired

about getting the Dynamic leases done; Damon Wood was told that he needed to

confer with Gerard Smith about the leases and operating under Certificate 5662.

In March 2016, Kent & Smith Holdings filed a complaint with the LPSC

alleging that Dynamic was using Certificate 5662 without authority. In connection

therewith, LPSC issued Dynamic a set of Data Requests, which Marionneaux

Kantrow forwarded to Dynamic. Upon receipt of the Data Requests, a telephone

conversation took place between Brent Upton or Damon Wood and Kyle

Marionneaux. Kyle Marionneaux advised him that Marionneaux Kantrow could

not handle the Data Requests and finalizing the leases between Dynamic and Kent

Smith Holdings because of a conflict of interest. Thereafter, Dynamic

terminated its relationship with Marionneaux Kantrow, and Marionneaux Kantrow

withdrew as counsel of record in the LPSC docket number T-33092 proceedings

involving Dynamic' s application for its own common carrier certificate.

In September 2016, Dynamic filed a complaint with the LPSC against SK

Trucking and Kent & Smith Holdings alleging that because of the Licensing

Agreement and the Second Amendment thereto, there was an encumbrance on

Certificate 5662 in favor of Dynamic that was not recognized in LPSC docket

number T-33737 and seeking, among other things to rescind the order in LPSC

docket number T-33737 approving the transfer of Certificate 5662 from SK

Trucking to Kent & Smith Holdings. This complaint was docketed as LPSC

docket number T- 34241. After various proceedings in that matter, including the

denial of a motion for partial summary judgment filed by Kent & Smith Holdings,

Dynamic' s claims were eventually dismissed on the basis of prescription.

On March 2, 2017, Dynamic commenced this proceeding seeking damages

against Marionneaux Kantrow based on legal malpractice. Therein, Dynamic

asserted that Marionneaux Kantrow was liable to them because: Marionneaux

Kantrow knew or should have known of the existence of the Licensing Agreement,

and the Second Amendment thereto, between Dynamic and SK Trucking regarding

Certificate 5662 prior to filing the Joint Application on behalf of Kent & Smith

Holdings and SK Trucking and/ or prior to finalizing the Joint Application at the

hearing on September 25, 2015; Marionneaux Kantrow' s representation of Kent &

Smith Holdings and SK Trucking in the Joint Application proceedings in LPSC

docket number T- 33737 was a conflict of interest because those proceedings were

adverse to the interests of Dynamic in Certificate 5662; Marionneaux Kantrow' s

failure to recognize and resolve the conflict of interest between Dynamic, SK

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Trucking, and Kent & Smith Holdings constituted a breach of duties of

competence, diligence, and honesty that they owed to Dynamic, as well as a breach

of the fiduciary duties owed to each of their clients. Dynamic further claimed that

as a result of Marionneaux Kantrow' s actions ( or inactions) Dynamic suffered and

continues to suffer economic losses, including but not limited to lost revenues,

increased cost of business, and legal fees associated with seeking to rescind the

transfer of Certificate 5662.

Thereafter, Dynamic filed a motion for partial summary judgment on the

issue of Marionneaux Kantrow' s liability. Marionneaux Kantrow responded by

filing its own motion for summary judgment seeking the dismissal of all of

Dynamic' s claims against them, arguing that the undisputed material facts show

that Dynamic could not recover from Marionneaux Kantrow as a matter of law

because: the Licensing Agreement providing for Dynamic' s right to use SK

Trucking' s Certificate 5662 in perpetuity was " illegal" under the LPSC' s rules, i.e.,

Kyle Marionneaux' s opinion that the Licensing Agreement was improper was

correct as a matter of law; Marionneaux Kantrow, upon learning of the Licensing

Agreement after the Asset Purchase Agreement had been executed, was prohibited

from disclosing that information to Dynamic under Rule 1. 8( b) of the Rules of

Professional Conduct; and Dynamic was barred from recovering from the

defendants based upon its own unclean hands in entering into an illegal agreement

that was against public policy.

After a hearing on the motions for summary judgment, the trial court signed

a judgment on August 7, 2020, in favor of Marionneaux Kantrow and against

Dynamic, which denied the motion for partial summary judgment filed by

Dynamic, granted the motion for summary judgment filed by Marionneaux

Kantrow, and dismissed all of Dynamic' s claims against Marionneaux Kantrow

with prejudice. From this judgment, Dynamic has appealed, challenging the trial

8

court' s judgment insofar as it granted Marionneaux Kantrow' s motion for

summary judgment and dismissed Dynamic' s claims against Marionneaux

Kantrow.'

LAW AND DISCUSSION

Summary Judgment Law

A motion for summary judgment is a procedural device used to avoid a full-

scale trial when there is no genuine issue of material fact. Georgia- Pacific

1St
Consumer Operations, LLC v. City of Baton Rouge, 2017- 1553 ( La. App.

Cir. 7/ 18/ 18), 255 So. 3d 16, 21, writ denied, 2018- 1397 ( La. 12/ 3/ 18), 257 So. 3d

194. After an opportunity for adequate discovery, a motion for summary judgment

shall be granted if the motion, memorandum, and supporting documents show that

there is no genuine issue as to material fact and that the mover is entitled to

judgment as a matter of law. La. C. C. P. art. 966( A)(3).

On a motion for summary judgment, the burden of proof is on the party

filing the motion. La. C. C. P. art. 966( D)( 1). If the mover will not bear the burden

of proof at trial on the issue that is before the court on the motion for summary

judgment, the mover need only point out to the court, through its supporting

documents, the absence of factual support for one or more elements essential to the

adverse party' s claim, action, or defense. La. C. C. P. art. 966( D)( 1). See also La.

C. C. P. art. 966, Comments -2015, Comment ( j). Once the motion for summary

judgment has been properly supported by the moving party, i.e., the mover has

established the material facts through its supporting documents and the mover has

made a prima facie showing that the motion should be granted, the burden then

shifts to the non-moving party to produce factual support, through the use of

supporting documents in opposition to the motion, of the existence of a genuine

On appeal, Dynamic has not challenged the judgment insofar as it denied Dynamic' s motion
for partial summary judgment.

M

issue of material fact or that the mover is not entitled to judgment as a matter of

law. La. C. C. P. art. 966( D)( 1). If the non-moving party fails to produce factual

support in its opposition sufficient to establish this burden, the motion should be

granted. See Babin v. Winn-Dixie Louisiana, Inc., 2000- 0078 ( La. 6/ 30/ 00), 764

So. 2d 37, 40.

Appellate courts review evidence de novo using the same criteria that govern

the trial court' s determination of whether summary judgment is appropriate. Thus,

appellate courts ask the same questions: whether there is any genuine issue of

material fact and whether the mover is entitled to judgment as a matter of law.

Georgia- Pacific Consumer Operations, LLC, 255 So. 3d at 22. In ruling on a

motion for summary judgment, the court' s role is not to evaluate the weight of the

evidence or to make a credibility determination, but instead to determine whether

or not there is a genuine issue of material fact. Hines v. Garrett, 2004- 0806 ( La.

6/ 25/ 04), 876 So.2d 764, 765 ( per curiam); Penn v. CarePoint Partners of

Louisiana, L.L.C., 2014- 1621 ( La. App. 1' Cir. 7/ 30/ 15), 181 So. 3d 26, 30.

A " genuine" issue is a triable issue, which means an issue on which

reasonable persons could disagree. If on the state of the evidence, reasonable

persons could reach only one conclusion, there is no need for a trial on that issue.

Kasem v. State Farm Fire & Cas. Co., 2016- 0217 ( La. App. 1St Cir. 2/ 10/ 17),

212 So. 3d 6, 13. A fact is " material" when its existence or nonexistence may be

essential to plaintiff' s cause of action under the applicable theory of recovery.

Collins v. Franciscan Missionaries of Our Lady Health System, Inc., 2019-

0577 ( La. App. 1St Cir. 2/ 21/ 20), 298 So. 3d 191, 195, writ denied, 2020- 0480 ( La.

6/ 22/ 20), 297 So. 3d 773. Simply put, a " material" fact is one that would matter at

a trial on the merits. Any doubt as to a dispute regarding a material issue of fact

must be resolved against granting the motion and in favor of a trial on the merits.

10

Collins, 298 So. 3d at 195. Whether a particular fact in dispute is material can be

seen only in light of the substantive law applicable to the case. Id.

Legal Malpractice

A legal malpractice plaintiff must prove three different elements to

successfully bring a legal malpractice action: ( 1) the existence of an attorney- client

relationship; ( 2) negligent representation by the attorney or professional

impropriety in the attorney' s relationship with the client; and ( 3) loss caused by

that negligence or misconduct. Teague v. St. Paul Fire and Marine Ins. Co.,

2007- 1384 ( La. 2/ 1/ 08), 974 So. 2d 1266, 1272; Costello v. Hardy, 2003- 1146 ( La.

1/ 21/ 04), 864 So. 2d 129, 138; Leonard v. Reeves, 2011- 1009 ( La. App. 1St Cir.

1/ 12/ 12), 82 So. 3d 1250, 1257. Failure to prove any one of these elements is fatal

to the plaintiff' s claim. See Costello, 864 So. 2d at 138 n. 7.

Proof of the violation of an ethical rule by an attorney, standing alone, does

not constitute actionable legal malpractice per se or proof of factual causation.

Leonard, 82 So. 3d at 1257. See also Teague v. St. Paul Fire and Marine Ins.

Co., 2006- 1266 ( La. App. 1St Cir. 4/ 7/ 09), 10 So. 3d 806, 825, writ denied, 2009-

1030 ( La. 6/ 7/ 09), 10 So. 3d 722. However, the Rules of Professional Conduct may

be relevant in defining the legal standard of care, which may vary depending upon

the particular circumstances of the relationship. Id.

The Rules of Professional Conduct are set forth in Article 16 of the Articles

of Incorporation of the Louisiana State Bar Association. Rule 1. 6( a) provides, in

pertinent part that "[ a] lawyer shall not reveal information relating to the

representation of a client unless the client gives informed consent, [ or] the

disclosure is impliedly authorized in order to carry out the representation ...."

Additionally, Rule 1. 7 provides:

a) Except as provided in paragraph ( b), a lawyer shall not represent a
client if the representation involves a concurrent conflict of interest. A
concurrent conflict of interest exists if.

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1) the representation of one client will be directly adverse to
another client; or

2) there is a significant risk that the representation of one or

more clients will be materially limited by the lawyer' s responsibilities
to another client, a former client or a third person or by a personal
interest of the lawyer.

b) Notwithstanding the existence of a concurrent conflict of interest
under paragraph ( a), a lawyer may represent a client if -

1)1) the lawyer reasonably believes that the lawyer will be able
to provide competent and diligent representation to each affected
client;

2) the representation is not prohibited by law;

3) the representation does not involve the assertion of a claim

by one client against another client represented by the lawyer in the
same litigation or other proceeding before a tribunal; and

4) each affected client gives informed consent, confirmed in

writing.

Lastly, Rule 1. 8( b) provides that "[ a] lawyer shall not use information relating to

representation of a client to the disadvantage of the client unless the client gives

informed consent, except as permitted or required by these Rules."

Discussion

Herein, there is no disputed issue of fact that an attorney- client relationship

existed between Dynamic and Marionneaux Kantrow. Therefore, in order for

Dynamic to succeed in this malpractice action against Marionneaux Kantrow,

Dynamic has the burden of proving that there was a professional impropriety by

Marionneaux Kantrow in its relationship with Dynamic or that Marionneaux

Kantrow negligently represented Dynamic, and that Dynamic sustained or suffered

a loss due to Marionneaux Kantrow' s negligence or misconduct. In Marionneaux

Kantrow' s motion for summary judgment, it contends that: there is an absence of

factual support for Dynamic' s claim that it suffered a loss because the Licensing

Agreement between SK Trucking and Dynamic providing for Dynamic' s right to

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use Certificate 5662 was an " illegal" agreement under the LPSC' s rules;

Marionneaux Kantrow, upon learning of the Licensing Agreement after the Asset

Purchase Agreement had been executed, was prohibited from disclosing any

information to Dynamic pursuant to Rule 1. 8( b) of the Rules of Professional

Conduct; and Dynamic was barred from recovering from Marionneaux Kantrow

based upon its own unclean hands in entering into an illegal agreement that was

against public policy. In support of its motion for summary judgment,

Marionneaux Kantrow relied on: the affidavit of Kyle Marionneaux, with various

exhibits attached thereto; the affidavit of Kara Kantrow, with various exhibits

attached thereto; a decision of the LPSC in docket number T-34241 ( the complaint

of Dynamic against SK Trucking and Kent & Smith Holdings); 2 an affidavit of

Brent Upton; and copies of various rules and regulations governing the leasing of

motor vehicles by authorized carriers, including Order 9901 ( Amended) of the

LPSC.'

The affidavits of Kyle Marionneaux and Kara Kantrow establish much of the

undisputed factual background of this case, set forth hereinabove, which was also

set forth in Dynamic' s petition. The affidavits of Kyle Marionneaux and Kara

2 Louisiana Code of Civil Procedure article 966( A)(4) provides that "[ t]he only documents that
may be filed in support of or in opposition to the motion [ for summary judgment] are pleadings,
memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written
stipulations, and Additionally, La. C. C.P. art. 966( D)( 2) sets forth that the trial
admissions."

court " may consider only those documents filed in support of or in opposition to the motion for
summary judgment and shall consider any documents to which no objection is made." ( Emphasis
added.) Louisiana Code of Civil Procedure article 966( D)( 2) further states that "[ a] ny objection
to a document shall be raised in a timely filed opposition or reply memorandum."

We note that Dynamic objected to this document pursuant to La. C. C. P. art. 966( D)( 2);
however, the record does not reveal the trial court' s ruling on the objection. Therefore, we deem
the trial court' s silence as a denial or rejection of Dynamic' s objection. See M.J. Farms Ltd. v.
Exxon Mobil Corp., 2007- 2371 ( La. 711108), 998 So. 2d 16, 26. Dynamic has not challenged
this ruling on appeal. We also note that Dynamic, in its opposition to Marionneaux Kantrow' s
motion for summary judgment, relied on a decision rendered in the same LPSC proceeding
LPSC docket number T- 34241). Furthermore, the trial court was authorized to take judicial
notice of any rules or decisions of the LPSC pursuant to La. C. E. art. 202( B)( e).

3 Dynamic did not object to these documents pursuant to La. C. C. P. art. 966( D)( 2); therefore,
the trial court was required to consider the documents in ruling on the motion for summary
judgment. See also footnote 1.

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Kantrow establish that prior to December 23, 2013, Dynamic retained

Marionneaux Kantrow to assist Dynamic in the filing of an application with the

LPSC to obtain a common carrier certificate to allow Dynamic to haul LPSC

regulated waste within the State of Louisiana, and that in January 2014,

Marionneaux Kantrow filed an application for certification on behalf of Dynamic,

which was assigned LPSC docket number T- 33092. Their affidavits further

establish that prior to July 24, 2015, Kent & Smith Holdings retained Marionneaux

Kantrow to draft and negotiate an Asset Purchase Agreement on behalf of Kent &

Smith Holdings by which Kent & Smith Holdings would acquire from SK

Trucking all of its right, title, and interest in Certificate 5662. Thereafter, Kent &

Smith Holdings and SK Trucking retained Marionneaux Kantrow to file a Joint

Application on behalf of both Kent & Smith Holdings and SK Trucking with the

LPSC seeking approval of the transfer of Certificate 5662 from SK Trucking to

Kent & Smith Holdings, and that on July 28, 2015, Marionneaux Kantrow filed the

Joint Application, which was assigned LPSC docket number T- 33737.

Pertinent to the issues raised in Marionneaux Kantrow' s motion for

summary judgment, the affidavit of Kyle Marionneaux sets forth that Dynamic

never informed him of the Licensing Agreement between Dynamic and SK

Trucking and that the July 28, 2015 email to him from John Dale Powers was the

first time that he became aware of the Licensing Agreement, the First Amendment,

and the Second Amendment between Dynamic and SK Trucking. Kyle

Marionneaux stated that since he was not aware of the Licensing Agreement, he

neither drafted nor provided advice to Dynamic regarding the Licensing

Agreement when Dynamic entered into the Licensing Agreement, the First

Amendment, and the Second Amendment thereto. Kyle Marionneaux further

stated that the Licensing Agreement between Dynamic and SK Trucking was not

filed with the LPSC prior to 2016 and that the LPSC did not approve Dynamic

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operating under Certificate 5662 pursuant to the Licensing Agreement. Kyle

Marionneaux further stated that his opinion was and continues to be that the

Licensing Agreement between Dynamic and SK Trucking was an illegal " farming

out" of Certificate 5662 from SK Trucking to Dynamic, which the LPSC rules and

regulations prohibit; that the LPSC would not have enforced or recognized the

Licensing Agreement between Dynamic and SK Trucking; and that it would have

been improper to seek approval of the Licensing Agreement in the Joint

Application for change of control of Certificate 5662 filed by SK Trucking and

Kent & Smith Holdings.

According to the affidavit of Kara Kantrow, on November 19, 2013, in

response to an inquiry by Damon Wood, she forwarded him a copy of the LPSC' s

leasing rules. She stated that on February 19, 2014, in preparation for the hearing

in LPSC docket number T- 33092 ( Dynamic' s application for its own common

carrier license), she sent an email to Damon Wood requesting various documents,

including "[ c] urrent lease agreements between Dynamic and another company for

services in Louisiana." She further stated that in response to this inquiry, Dynamic

did not inform her that it had entered into the Licensing Agreement with SK

Trucking. Kara Kantrow acknowledged that on July 24, 2014, she attended the

deposition of Scott Feske in LPSC docket number T- 33092, but stated that Scott

Feske testified " to [ her] surprise" that Dynamic hauled regulated waste through a

lease with SK Trucking that was on file with the LPSC. Kara Kantrow stated that

after Scott Feske' s deposition, she sent an email to Damon Wood asking him about

the lease between Dynamic and SK Trucking, advising him that a staff attorney at

the LPSC had said that a lease between Dynamic and SK Trucking was never filed,

and inquiring as to whether Dynamic had any record of the lease being filed. Kara

Kantrow also stated that, thereafter, she received an email from a LPSC staff

attorney providing a list of the active leases on file with the LPSC pertaining to SK

15

Trucking; she then received a subsequent email from the same LPSC staff attorney

stating that Dynamic did not have an LPSC number and was operating without

authority. Kara Kantrow set forth that as of July 24, 2014, she had no knowledge

that Dynamic had entered into the Licensing Agreement with SK Trucking.

Kara Kantrow also stated that on January 9, 2015, she sent an email to

Damon Wood in response to an inquiry from him regarding a contract carrier

permit.
In the email, she specifically told Damon Wood that any contracts had to

be on file with the LPSC and that " a carrier [ would be] prohibited from ` farming

out' its certificate or using one of its contracts with a brokerage company." Kara

Kantrow further stated that as of January 9, 2015, she had no knowledge that

Dynamic had entered into the Licensing Agreement with SK Trucking.

Kara Kantrow stated that she was unaware and was never informed by

anyone of the existence of the Licensing Agreement prior to reading the July 28,

2015 email from John Dale Powers to Kyle Marionneaux, as she had not been

provided with or made aware of those agreements before that date. Since Kara

Kantrow was not aware of the Licensing Agreement, she did not draft nor provide

advice to Dynamic regarding the Licensing Agreement when Dynamic entered into

the Licensing Agreement, the First Amendment, and the Second Amendment to

same. She stated that the Licensing Agreement between Dynamic and SK

Trucking was not filed or recorded with the LPSC, and the LPSC did not approve

Dynamic operating under Certificate 5662 pursuant to the Licensing Agreement.

Lastly, Kara Kantrow stated that her opinion was, and continues to be that the

Licensing Agreement between Dynamic and SK Trucking was an illegal farming

out of Certificate 5662 from SK Trucking to Dynamic that the LPSC rules and

regulations prohibit; that the LPSC would not have enforced or recognized

Licensing Agreement between Dynamic and SK Trucking; and that it would have

been improper to seek approval of the Licensing Agreement in the Joint

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Application for change of control of Certificate 5662 filed by SK Trucking and
Kent & Smith Holdings.

The affidavit of Brent Upton established that he understood that Dynamic

was prohibited from transporting non -hazardous oilfield waste, non -hazardous

industrial solid waste, and hazardous waste unless Dynamic was granted a LPSC

common carrier certificate or contract carrier permit or Dynamic leased its trucks

to a LPSC- authorized carrier pursuant to a lease agreement in compliance with

LPSC leasing rules. He further stated that as of that date, April 18, 2016, he

understood that the December 2013 Leasing Agreement, and the Amendments

thereto, between Dynamic and SK Trucking had to be approved by the LPSC prior

to Dynamic being authorized to transport waste under Certificate 5662, then held

by SK Trucking.

As to the LPSC decision in LPSC docket number T-34241 ( complaint of

Dynamic against SK Trucking and Kent & Smith Holdings), which is dated

December 6, 2018, the LPSC determined that Dynamic' s claims against SK

Trucking and Kent & Smith Holdings were prescribed, because the complaint was

not filed within one year of September 15, 2015, the date of the hearing on the

Joint Application. The LPSC also determined that while Dynamic was certainly

affected by the decision in LSPC docket number T-33737, since the LPSC never

approved the Licensing Agreement, Dynamic did not have rights in Certificate

5662 such that it needed to be joined as a necessary party for just adjudication, as

provided by La. C. C. P. art. 641. The LPSC also determined that contra non

valentum did not apply to interrupt prescription on Dynamic' s claims against SK

Trucking and Kent & Smith Holdings. In making this determination, the LPSC

found as follows:

Further, it should be noted that knowledge of an attorney is imputable
to his client. Marionneaux Kantrow had knowledge of the Licensing
Agreement and the Second Amendment to the Licensing Agreement

17

on July 28, 2015 and had knowledge of [LPSC docket number] T-
33737 on July 28, 201[ 5'] the date the Joint Application was filed. At
that time, Marionneaux Kantrow was also the counsel of record for
Dynamic] at the [ LPSC]. Consequently, the knowledge Marionneaux
Kantrow had of the [ Licensing] Agreement[ and Second Amendment
thereto] and [ LPSC docket number] T- 33737 is imputed to
Dynamic.] Even if there was improper representation or misconduct
by an attorney, the courts have held that it does not provide a legally
recognized basis for granting an action in nullity or denying an
exception of prescription.

Emphasis added. Footnotes omitted.)

Lastly, with regard to the various rules and regulations governing the leasing

of motor vehicles by authorized carriers, specifically Order 9901 ( Amended) of the

LPSC, provides, in pertinent part, that "[ t]he practice of `farming out' or leasing of

a certificate or permit by an authorized carrier to an unauthorized person or carrier

under the guise of a motor vehicular lease is expressly forbidden and prohibited."

Order 9901 ( Amended) further provides that all leases " shall be in writing,

properly executed in quadruplicate" and that one copy " must be immediately filed

with the [ LPSC]."

In opposition to Marionneaux Kantrow' s motion for summary judgment,

Dynamic contends that there are material issues of fact as to Marionneaux

Kantrow' s conflict of interest, its negligence, and resultant malpractice, and further

as to Dynamic' s significant losses as a result of Marionneaux Kantrow' s

malpractice. In support of its opposition to Marionneaux Kantrow' s motion for

summary judgment, Dynamic relied on a decision from an administrative hearing

in LPSC docket number T- 34241 ( the complaint of Dynamic against SK Trucking

and Kent & Smith Holdings); an affidavit from its expert, Basile Uddo; and an

affidavit from Damon Wood.

4 The LPSC ruling action stated " July 28, 2018"; however, this was an obvious typographical
error because the LPSC had already noted in its decision that the filing date of the Joint
Application was July 28, 2015.

18

The opinion in LPSC docket number T- 34241, which was dated October 13,

2017, was from an administrative hearing before an administrative law judge

ALJ") on a motion for partial summary judgment filed by Kent & Smith

Holdings. Kent & Smith Holdings sought a partial summary judgment seeking to

have the LPSC deny Dynamic' s request to declare that Certificate 5662 was

encumbered by the Licensing Agreement and Second Amendment and that SK

Trucking was prohibited from assigning and/ or transferring either, including the

right to use in perpetuity Certificate 5662 to any party, including Kent & Smith

Holdings. As Marionneaux Kantrow argues in this case, Kent & Smith Holdings

argued in those proceedings that the Licensing Agreement and the Second

Amendment was a " farming out" of Certificate 5662, which was in violation of

LPSC rules and orders; thus, Kent & Smith Holdings claimed that Licensing

Agreement and the Second Amendment were absolutely null contracts that did not

create any encumbrances on Certificate 5662. Kent and Smith Holdings also

argued that the Licensing Agreement and the Second Amendment were not leases;

therefore, the LPSC orders, rules and regulations pertaining to leases did not apply.

In denying the motion for partial summary judgment, the ALJ was not

persuaded by Kent & Smith Holdings' arguments. The ALJ noted that La. R.S.

45: 166( B) 5 permitted the lease of a certificate and that Order 9901 ( Amended) only

prohibited leases that are confected under the guise of a motor vehicular lease. The

ALJ found that Kent & Smith Holdings had not shown that the Licensing

Agreement and Second Amendment were confected under the guise of a motor

s Louisiana Revised Statutes 45: 166( B) provides:
No certificate or permit shall be sold, leased or transferred, nor shall such
certificate or permit be used by any other than the person, firm or corporation to
whom it was originally granted, unless and until it be shown by a clear
preponderance and to the satisfaction of the commission that the owner thereof

shall have for a period of six consecutive months, immediately prior to the lease
transfer or use thereof by one other than the owner, substantially operated all
rights under said certificate or permit; or that the failure to so operate was due to
bankruptcy, receivership, or other legal proceedings, or to other causes beyond his
or its control.

IM

vehicle lease. Moreover, the ALJ determined that there was " insufficient evidence

in the record from which a determination can be reached as to the legal nature and

effect of the [ Licensing Agreement and Second Amendment.]" Thus, the ALJ

concluded that there were " remaining genuine issues of material fact as to the legal

nature and effects of the [ Licensing Agreement and Second Amendment;]" thus,

the motion for summary judgment in that matter was denied.

According to the affidavit of Basile Uddo, he has significant expertise in the

rules of professional conduct, lawyer ethics, and the standard of care for lawyers.

Basile Uddo opined that Marionneaux Kantrow had an attorney- client relationship

with Dynamic from late 2013, which included matters that would become not only

elated to, but adverse to SK Trucking and Kent & Smith Holdings. He believed

that Marionneaux Kantrow learned that Dynamic was using Certificate 5662 in

July 2014; nonetheless, approximately a year later, Marionneaux Kantrow was

retained by Kent & Smith Holdings to negotiate and draft the Asset Purchase

Agreement to acquire from SK Trucking all of SK Trucking' s assets, including

Certificate 5662, and thereafter, to file a Joint Application to transfer Certificate

5662 from SK Trucking to Kent & Smith Holdings. Basile Uddo opined that,

since Marionneaux Kantrow was still
representing Dynamic in Dynamic' s

application for its own common carrier certificate, there was a clear concurrent

conflict of interest between Dynamic and Kent & Smith Holdings, and that

Marionneaux Kantrow failed to adhere to the standard of care and the Rules of

Professional Conduct in dealing with this conflict of interest. He also opined that

the substandard conduct by Marionneaux Kantrow was exacerbated by the fact that

Marionneaux Kantrow was specifically made aware of Dynamic' s interest in

Certificate 5662 in connection with the Joint Application, including the Licensing

Agreement and amendments thereto, but took no action to properly disclose the

concurrent conflict and to seek informed consent from both clients prior to

20

proceeding in the Joint Application matter, even though the conflict was likely not
waivable. Basile Uddo further opined that Marionneaux Kantrow' s representation

of Kent & Smith Holdings in the Joint Application was directly adverse to

Dynamic' s interests and contrary to the applicable standard of care and the Rules

of Professional Conduct. Basile Uddo stated that Marionneaux Kantrow' s opinion

that the Licensing Agreement was an unenforceable " farming out" of Certificate

5662, which was not communicated at all to Dynamic, did not resolve the conflict

of interest. Basile Uddo further stated that Marionneaux Kantrow had an even

greater duty to provide such information to Dynamic as part of an informed

consent disclosure, since Marionneaux Kantrow was taking a position that was not

only directly adverse to Dynamic, but it was also a position with very serious

consequences. In that regard, Basile Uddo opined that Marionneaux Kantrow

acted contrary to the applicable standard of care and the Rules of Professional

Conduct.

Basile Uddo believed that the fact that the LPSC denied Kent & Smith

Holdings' motion for partial summary judgment on the " farming out" legal issue

in LPSC docket number T- 34241) compounded Marionneaux Kantrow' s breach in

not disclosing to and discussing with Dynamic their conflict, because Dynamic

was entitled to Marionneaux Kantrow' s vigorous and loyal representation,

including advancing favorable legal positions and resisting unfavorable legal

positions, unless such action would be frivolous. In other words, Dynamic was

entitled to have its counsel resist the argument that the Licensing Agreement and

Second Amendment were not enforceable, which was clearly not a frivolous

position given the ALJ' s ruling on the motion for partial summary judgment.

Accordingly, Basile Uddo opined that Marionneaux Kantrow acted contrary to the

applicable standard of care and the Rules of Professional Conduct. Lastly, Basile

Uddo stated that Marionneaux Kantrow continued to represent Dynamic and Kent

21

Smith Holdings even after assisting Kent & Smith Holdings in getting

Certificate 5662 transferred without protecting Dynamic, which was an additional

concurrent conflict that was contrary to the applicable standard of care and the

Rules of Professional Conduct.

According to the affidavit of Damon Wood, individually and as managing

member of Dynamic, Dynamic formed an attorney- client relationship with

Marionneaux Kantrow in late 2013 regarding matters related to SK Trucking and

Kent & Smith Holdings. Damon Wood stated that as managing member of

Dynamic, he personally reviewed invoices for legal fees from Marionneaux

Kantrow and tendered payments for same to Marionneaux Kantrow on behalf of

Dynamic. Damon Wood also stated that on March 14, 2016, Dynamic was

informed— for the very first time— that Marionneaux Kantrow had been involved

with the transfer of Certificate 5662 from SK Trucking to Kent & Smith Holdings.

Mr. Wood attested that between December 2013 and March 2016, Dynamic paid

Marionneaux Kantrow substantial fees for legal representation related to

Certificate 5662, and that during that time period, Marionneaux Kantrow never

informed Dynamic they were also representing Kent & Smith Holdings and had

been billing Dynamic for work while they were concurrently working on behalf of

Kent & Smith Holding and against Dynamic relating to Certificate 5662. Damon

Wood further stated that had Dynamic been made aware of Marionneaux

Kantrow' s conflict of interest, Dynamic would have terminated Marionneaux

Kantrow' s representation with regard to Certificate 5662 based on the clear

conflict of interest and would not have paid legal fees to Marionneaux Kantrow for

work done relating to Certificate 5662.

Based on our de novo review of the record, we find there are genuine issues

of material fact that preclude summary judgment in this matter. More specifically,

we find the documents offered in support of and in opposition to Marionneaux

22

Kantrow' s motion for summary judgment establish that there are genuine issues of

material fact as to whether there was professional impropriety in Marionneaux

Kantrow' s relationship with Dynamic and whether Dynamic sustained a loss as a

result of Marionneaux Kantrow' s alleged misconduct. The documents establish

that Marionneaux Kantrow was first retained by Dynamic and that it was

subsequently retained by Kent & Smith Holdings, and then SK Trucking. As of

the end of 2013, Dynamic claimed to have obtained an interest in Certificate 5662

from SK Trucking by virtue of the Licensing Agreement and Second Amendment,

whereas Kent & Smith Holdings claimed to have obtained full ownership

unencumbered) of Certificate 5662 from SK Trucking. Thus, there is an issue of

fact as to whether there existed a concurrent conflict of interest for Marionneaux

Kantrow because its subsequent representation of Kent & Smith Holdings ( and SK

Trucking) was adverse to its other client, Dynamic.

While the documents establish that Marionneaux Kantrow did not have

actual knowledge of Dynamic' s interest in Certificate 5662 or the Licensing

Agreement and Second Amendment at the time it was retained to represent Kent &

Smith Holdings, the documents establish that there are issues of fact as to when

Marionneaux Kantrow knew or should have known of Dynamic' s alleged interest

in Certificate 5662. Nevertheless, the documents undisputedly establish that

Marionneaux Kantrow obtained actual knowledge of Dynamic' s claim to an

interest in Certificate 5662 and of the Licensing Agreement, the First Amendment,

and the Second Amendment when John Dale Powers sent an email to Kyle

Marionneaux on July 28, 2015, the same date that the Joint Application to transfer

Certificate 5662 from SK Trucking to Kent & Smith Holdings was filed by

Marionneaux Kantrow. Notwithstanding this actual knowledge, the documents

further establish that Marionneaux Kantrow continued to represent Kent & Smith

Holdings and SK Trucking in that proceeding before the LPSC and that it did not

23

notify Dynamic of said representation. While Marionneaux Kantrow was of the

opinion that Dynamic' s interest in Certificate 5662 did not need to be reflected or

included in the transfer or even its opinion that Dynamic' s interest was

unenforceable because it was an illegal " farming out" of Certificate 5662,

Marionneaux Kantrow never communicated such to its client, Dynamic. Although

Marionneaux Kantrow also contends that it was precluded from disclosing such

information to Dynamic under Rule 1. 8( b) of the Rules of Professional Conduct, it

was nonetheless required to disclose the existence of the concurrent conflict of

interest. Thus, we find genuine issues of material fact as to whether there was

professional impropriety in Marionneaux Kantrow' s relationship with Dynamic.

As to whether Dynamic sustained a loss or losses from the alleged

misconduct of Marionneaux Kantrow, the documents offered establish that with

regard to such losses Dynamic has incurred and paid legal fees and other expenses,

particularly with regard to Certificate 5662. We recognize that Marionneaux

Kantrow continues to maintain its opinion that Dynamic sustained no loss and that

it had " unclean hands" because the Licensing Agreement and Second Amendment

thereto was an illegal " farming out" of Certificate 5662 because it is prohibited by

the LPSC rules and orders, i.e., Order 9901 ( Amended). However, there has been

no determination by the LPSC that the Licensing Agreement and Second

Amendment thereto was an illegal " farming out" of Certificate 5662. Like the ALJ

in LPSC docket number T- 34241, we find the documents offered on the motion for

summary judgment are insufficient to make a determination as to the legal nature

and effect of the Licensing Agreement and Second Amendment. As previously set

forth, Order 9901 ( Amended), provides that " the practice of ` farming out' or

leasing of a certificate or permit by an authorized carrier to an unauthorized person

or carrier under the guise of a motor vehicular lease is expressly forbidden and

prohibited." Thus, Order 9901 ( Amended) prohibits leases when they are

Z!

confected under the guise of a motor vehicular lease. Louisiana Revised Statutes

45: 166( B) states that no certificate or permit shall be leased, nor used by any other

person than to whom it was originally granted, " unless and until it be shown by a

clear preponderance and to the satisfaction of the [ LPSC] that the owner"

substantially operated under the certificate or permit for six consecutive months

immediately prior to the lease transfer. Thus, La. R.S. 45: 166( B) permits the lease

of a certificate, upon application to the LPSC and a showing that the certificate was

used prior to the lease transfer.

As the ALJ noted in denying Kent & Smith Holdings' motion for partial

summary judgment in LPSC docket number T- 34241, the prohibition in Order

9901 ( Amended) indicates that the requirements of 45: 166( B) cannot be avoided

through the use of a motor vehicle lease and these provisions work together to

ensure that carriers do not avoid seeking the LPSC' s approval for the lease of a

certificate by confecting a lease under the guise of a motor vehicle lease. Since La.

R.S. 45: 166( B) permits the lease of a certificate under certain conditions and Order

9901 ( Amended) only prohibits leases that are confected under the guise of a motor

vehicular lease, the documents offered fail to show that the Licensing Agreement

and Second Amendment were confected under the guise of a motor vehicle lease

and do not exclude the possibility of Dynamic' s interest in Certificate 5662 falling

under the provisions of La. R.S. 45: 166( B). While the documents establish that the

Licensing Agreement and the Second Amendment were not filed with or approved

by the LPSC until Dynamic complained to the LPSC about the transfer of

Certificate 5662 from SK Trucking to Kent & Smith Holdings, the LPSC' s

subsequent decision in LSPC docket number T-34241 ( on the issue of prescription)

suggests the possibility that if Dynamic' s claims therein had not been prescribed,

Dynamic might have had an interest in Certificate 5662 had those agreements been

approved by the LPSC, i.e., LPSC " approval would have been needed prior to

25

Dynamic] being granted the interest in the certificate that it claims to have...."

Thus, we find genuine issues of material fact as to whether Dynamic sustained a

loss due to Marionneaux Kantrow' s alleged misconduct.

Because we find there are genuine issues of material fact exist herein,

Marionneaux Kantrow was not entitled to summary judgment or to the dismissal of

Dynamic' s claims against it. Therefore, the trial court' s decision to grant

Marionneaux Kantrow' s motion for summary judgment and to dismiss Dynamic' s

claims against Marionneaux Kantrow must be reversed.

CONCLUSION

For all of the above and foregoing reasons, that portion of the August 7,

2020 judgment of the trial court granting the motion for summary judgment filed

by the defendants, Kyle Marionneaux, Kara Kantrow, Marionneaux Kantrow, LLC

and Continental Casualty Company, and dismissing the claims of the plaintiff,

Dynamic Environmental Services, against the defendants is reversed. The

judgment is affirmed in all other respects and this matter is remanded for further

proceedings. All costs of this appeal are assessed to the defendants, Kyle

Marionneaux, Kara Kantrow, Marionneaux Kantrow, LLC and Continental

Casualty Company.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

26