Lestelle & Lestelle, a Professional Law Corporation v. Campo Music Shopping Center Condominium Association and Gulf Coast Claim Recovery, Inc.

CORRECTED

LESTELLE & LESTELLE, A * NO. 2021-C-0077
PROFESSIONAL LAW
CORPORATION *
COURT OF APPEAL
VERSUS *
FOURTH CIRCUIT
CAMPO MUSIC SHOPPING *
CENTER CONDOMINIUM STATE OF LOUISIANA
ASSOCIATION AND GULF *******
COAST CLAIM RECOVERY,
INC.

APPLICATION FOR WRITS DIRECTED TO
CIVIL DISTRICT COURT, ORLEANS PARISH
NO. 2009-12577, DIVISION “A”
Honorable Ellen M. Hazeur, Judge
******
Judge Dale N. Atkins
******
(Court composed of Judge Edwin A. Lombard, Judge Tiffany G. Chase, Judge
Dale N. Atkins)

Mark A. Moeller
Moeller Law Firm, LLC
1000 Veterans Memorial Blvd., Suite 206
Metairie, LA 70005

COUNSEL FOR RELATOR

Nicholas S. Lindner
631 Saint Charles Avenue
New Orleans, LA 70130

Terrence Jude Lestelle
LESTELLE & LESTELLE, APLC
3421 North Causeway Blvd., Suite 602
Metairie, LA 70002-3726

COUNSEL FOR RESPONDENTS

WRIT GRANTED; JUDGMENT REVERSED AND RENDERED
MARCH 23, 2021

DNA
EAL
TGC This is a concursus proceeding. Relator, Gulf Coast Claim Recovery, Inc.,

seeks review of the trial court’s December 12, 2020 judgment granting an

exception of no right of action filed by Respondent, Campo Music Shopping

Center Condominium Association. For the reasons that follow, we grant Relator’s

writ application, reverse the trial court’s judgment granting Respondent’s

exception of no right of action, and render judgment denying the exception of no

right of action.

FACTUAL AND PROCEDURAL HISTORY

Respondent sustained damages to its property due to Hurricane Katrina.

Accordingly, Respondent filed a claim with its insurer, Evanston Insurance

Company (“Evanston”). After determining that the amounts received from

Evanston were insufficient to repair the damages, Respondent contracted with Stan

Pore d/b/a Gulf Coast Claim Recovery (“GCCR”), to advise and assist Respondent

in the course of Respondent’s claim with Evanston. Respondent’s contract with

GCCR provided for a contingency fee based on the amount of additional recovery,

if any, from Evanston. The contract also specified that GCCR could assign its

rights under the contract to a successor corporation and any other entity at the sole

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discretion of GCCR. Relator claims that GCCR assigned its rights under the

contract to Relator.

Eventually, Respondent hired Lestelle & Lestelle, a Professional Law

Corporation (“Lestelle”) to file a lawsuit on its behalf against Evanston. After

Lestelle filed a petition for damages, the parties settled the claim for $455,000.00.

On December 2, 2009, Lestelle filed a petition for concursus proceeding, claiming

that Relator and Respondent were each asserting entitlement to $91,000.00 of the

settlement proceedings.

Relator filed an answer to the petition for concursus on May 15, 2012,

asserting that Mr. Pore and GCCR assigned the contract to Relator. Thus,

according to Relator, it was entitled to the settlement proceeds via the assignment.

Countering, Respondent filed an answer, exceptions, a cross-claim, and a

reconventional demand on June 22, 2012, asserting several defenses to Relator’s

claim to the concursus amount. Respondent attached evidence that Mr. Pore fled

the United States and is currently a fugitive sought by the U.S. Marshal Service in

support of its defenses.

Relator filed exceptions, defenses, and answer to reconventional demand and

a cross-claim on July 20, 2012, generally denying the allegations asserted by

Respondent. On September 11, 2019, Respondent filed an exception of no right of

action. Respondent claimed that Relator lacked proof of the assignment of the

contract from Mr. Pore and GCCR to Relator. Thus, Respondent concluded,

Relator had no right of action.

On December 12, 2020, after Relator filed an opposition to the exception of

no cause of action, the trial court rendered judgment, granting the exception of no

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right of action. From this judgment, Relator filed the instant application for

supervisory writ.

DISCUSSION

As an initial matter, this Court notes that the factors enunciated in Herlitz

Const. Co., Inc. v. Hotel Inv’rs of New Iberia, Inc., 396 So.2d 878 (La. 1981)

dictate that this Court exercise its supervisory jurisdiction here. In Herlitz, the

Supreme Court stated:

When the overruling of the exception is arguably incorrect, when a
reversal will terminate the litigation, and when there is no dispute of
fact to be resolved, judicial efficiency and fundamental fairness to the
litigants dictates that the merits of the application for supervisory
writs should be decided in an attempt to avoid the waste of time and
expense of a possibly useless trial on the merits. See Mangin v. Auter,
360 So.2d 577 (La. App. 4 Cir. 1978).

As discussed more fully below, we find that the trial court’s ruling on the

exception of no right of action is arguably incorrect and that there is no dispute of

fact to be resolved in reviewing the exception of no right of action. Further,

judicial efficiency and fundamental fairness to the litigants dictate that this Court

decide the merits of the writ application. Accordingly, this Court exercises its

supervisory jurisdiction pursuant to Herlitz.

Exception of No Right of Action

The exception of no right of action, “or no interest in the plaintiff to institute

the suit” is brought by peremptory exception. La. C.C.P. art. 927(A)(6). “The

function of an exception of no right of action is to determine whether the plaintiff

belongs to the class of persons to whom the law grants the cause of action asserted

in the suit.” Hood v. Cotter, 2008-0215, p. 17 (La. 12/2/08), 5 So.3d 819, 829.

“The exception of no right of action questions whether the particular plaintiff has

standing to bring the lawsuit, ‘but it assumes that the petition states a valid cause of

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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.’” Downtown Dev. Dist. of City of New Orleans v. City of New Orleans,

2018-0726, p. 6 (La. App. 4 Cir. 5/8/19), 272 So.3d 917, 924 (quoting Howard v.

Administrators of Tulane Educ. Fund, 2007-2224, p. 17 (La. 7/1/08), 986 So.2d 47,

60).

The parties may introduce evidence to support or controvert the exception of

no right of action. La. C.C.P. art. 931. Notably, on an exception of no right of

action, “[t]he exceptor bears the burden of proof, and the no right of action

exception assumes that the petition states a valid cause of action.” Hosp.

Consultants, LLC v. Angeron, 2009-1738, p. 6 (La. App. 4 Cir. 6/9/10), 41 So.3d

1236, 1240.

“The exception of no right of action presents a question of law;

thus,…appellate review of that exception is de novo and involves determining

whether the trial court was legally correct in sustaining such exception.” N. Clark,

L.L.C. v. Chisesi, 2016-0599, p. 6 (La. App. 4 Cir. 12/7/16), 206 So.3d 1013, 1017

(internal citation omitted).

Exceptions in Concursus Proceedings

Relator contends that the trial court erred in granting Respondent’s

exception of no right of action because the law does not permit the filing of an

exception in a concursus proceeding, such as this one. Respondent counters that,

because Relator did not raise this issue at the trial court, we cannot consider it here.

Respondent cites this Court’s opinion in Graubarth v. French Mkt. Corp., 2007-

0416, p. 5 (La. App. 4 Cir. 10/24/07), 970 So.2d 660, 664, wherein this Court

indicated that “[a]ppellate courts generally find it inappropriate to consider an issue

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raised for the first time on appeal that was not plead, urged, or addressed in the

court below.” This argument is without merit as this matter is not before the Court

on appeal. Thus, we consider Relator’s argument that an exception of no right of

action cannot be filed in a concursus proceeding.

A concursus proceeding is defined as a proceeding “in which two or more

persons having competing or conflicting claims to money . . . are impleaded and

required to assert their respective claims contradictorily against all other parties to

the proceeding.” McClean v. Majestic Mortuary Servs., Inc., 2011-1166, p. 7 (La.

App. 5 Cir. 5/22/12), 96 So.3d 571, 576. Thus, “a concursus proceeding is a special

type of proceeding, in which the plaintiff’s liability is limited to the amount of

funds deposited in the registry of the court…[and] [t]he issues are limited to

various defendants proving their rights to a specific sum of money.” Id., 2011-

1166, p. 8, 96 So.3d at 576.

Importantly, La. C.C.P. art. 4656 provides:

Each defendant in a concursus proceeding is considered as being both
a plaintiff and a defendant with respect to all other parties. No
exceptions or responsive pleadings may be filed to the answer of a
defendant, and every fact alleged therein is considered as denied or
avoided by effect of law as to all other parties. If a defendant fails to
answer, issue need not be joined by default.

Respondent makes two arguments that the trial court properly granted its

exception of no right of action. First, Respondent claims that La. C.C.P. art. 4656

does not prohibit the exception it filed against the Relator. Second, Respondent

claims that it filed the exception against Relator in Relator’s position as a plaintiff,

not a defendant. Respondent notes that concursus proceedings are meant to be

adjudicated quickly; thus, Respondent maintains that its peremptory exception of

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no right of action, unlike a dilatory or declinatory exception, allows the process to

be streamlined and not result in unnecessary delay.

Respondent’s argument is disingenuous. The concursus petition was filed in

this matter in 2009. After discovery, Respondent filed a motion for summary

judgment arguing that Relator was not entitled to the proceeds. In the exception,

however, Respondent argued instead that Relator lacked a right to the proceeds.

Thus, Respondent’s own filings have resulted in delay.

Further, while the defendant in a concursus is considered both a plaintiff and

a defendant, there is nothing to support the argument that the exception was filed in

response to Relator’s position as a plaintiff. As was done in this case, parties

named as defendants in concursus proceedings file answers to the petition in the

concursus proceeding. At a hearing on the merits, each “defendant” would then

argue entitlement to the proceeds. Therefore, each defendant is also considered a

plaintiff in relation to the other defendants in the proceeding.

This transforms the answer of each defendant into its own petition or

incidental action to which a party could properly file an exception. La. C.C.P. art.

4656 specifies, however, that no exception may be filed to the answer of a

defendant. Comment (C) to La. C.C.P. art. 4656 notes that “[n]othing in the above

article prevents a defendant from excepting to the plaintiff's petition, to raise the

objections of lack of jurisdiction, improper venue, no right to implead the

defendants, and so forth.” Accordingly, La. C.C.P. art. 4656 limits the filing of

exceptions in this instance, only allowing them to be filed in response to the

petition to institute the concursus proceeding. Here, Respondent filed an answer to

the petition to institute the concursus proceeding, asserting defenses to Relator’s

entitlement to the settlement proceeds. Thereafter, Respondent filed an exception

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of no right of action to Relator’s answer wherein Relator asserted its entitlement to

the proceeds. Thus, Respondent’s argument that it filed the exception of no right of

action in response to Relator’s status as a plaintiff is not supported by La. C.C.P.

art. 4656 or by the record. Instead, Respondent’s exception of no right of action to

Relator’s answer is prohibited by the plain wording of La. C.C.P. art. 4656.

Accordingly, we find that the trial court erred in granting Respondent’s exception

of no right of action. We reverse the trial court’s judgment and render judgment

denying the exception of no right of action.

DECREE

For the foregoing reasons, we grant Relator’s writ application and reverse

the trial court’s judgment granting Respondent’s exception of no right of action.

We render judgment denying Respondent’s exception of no right of action.

WRIT GRANTED; JUDGMENT REVERSED AND RENDERED

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