Waste Management of Louisiana, LLC v. Penn-America Ins. Co.

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

12-1033

WASTE MANAGEMENT OF
LOUISIANA, LLC

VERSUS

PENN-AMERICA INSURANCE
COMPANY, ALBERT D. GIRAUD,
J. MICHAEL NASH, GINGER K.
DEFOREST, AND ABC INSURANCE
COMPANY

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, DOCKET NO. 2006-002452
HONORABLE RONALD F. WARE, DISTRICT JUDGE

**********

JAMES T. GENOVESE
JUDGE

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Court composed of Elizabeth A. Pickett, James T. Genovese, and Shannon
J. Gremillion, Judges.

AFFIRMED.

John W. deGravelles
J. Neale deGravelles
deGravelles, Palmintier, Holthaus & Fruge, LLP
618 Main Street
Baton Rouge, Louisiana 70801
(225) 344-3735
COUNSEL FOR PLAINTIFF/APPELLANT:
Waste Management of Louisiana, LLC

Emmett C. Sole
William B. Monk
Paul P. Marks
Stockwell, Sievert, Viccellio, Clements & Shaddock, L.L.P.
Post Office Box 2900
Lake Charles, Louisiana 70602-2900
(337) 436-9491
COUNSEL FOR DEFENDANTS/APPELLEES:
Albert D. Giraud, J. Michael Nash,
and Ginger K. DeForest

GENOVESE, Judge.

Plaintiff, Waste Management of Louisiana, LLC (Waste Management),

appeals the trial court‘s grant of summary judgment in favor of Defendants,

Albert D. Giraud, J. Michael Nash, and Ginger K. DeForest (hereinafter referred to

collectively as Defendant Attorneys). For the following reasons, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This matter involves a legal malpractice lawsuit filed by Waste Management

against Defendant Attorneys on the basis that Defendant Attorneys‘ representation

of Waste Management during the appeal process in a personal injury lawsuit

allegedly presented conflicts of interest for which Defendant Attorneys should

have withdrawn from their representation of Waste Management. The facts of the

lawsuit for which Defendant Attorneys represented Waste Management were set

forth in a previous opinion of this court as follows:

Waste Management of Louisiana, LLC entered into a contract
with the City of Lake Charles to remove debris associated with a
January 1997 ice storm. Because Waste Management did not have the
necessary employees and equipment, it engaged Delta Exports, Inc. to
perform the required work. Delta Exports then engaged Jack Gibson
d/b/a J & P Logging to undertake the clean-up.

The accident at issue occurred on February 7, 1997, as the
process was underway. Johnny Leroy Cobb, the plaintiff, alleges that
he was traveling to a business appointment via Louie Street and saw a
crew removing debris on the street. He denies seeing barricades or
flagmen deterring his passage on the road. Mr. Cobb alleges that the
accident occurred when he tried to pass the work crew‘s front-end
loader. He contends that the loader, driven by James Wright of J & P
Logging, backed into his car. . . .

....

Mr. Cobb filed suit, naming as defendants the City of Lake
Charles, Waste Management, Delta Exports, Jack Gibson d/b/a J & P
Logging, and the driver of the front-end loader, James Wright. Delta
Exports‘ insurer, Penn-America Insurance Company was also named
as a defendant. Summary judgments were originally entered in favor
of the City of Lake Charles, Waste Management, and Delta Exports,
but were reversed on appeal to this court. See Cobb v. Delta Exports,

Inc., 03-33 (La.App. 3 Cir. 6/4/03), 847 So.2d 739, writs denied,
03-1906 (La.10/31/03), 857 So.2d 483, 03-1936 (La.10/31/03), 857
So.2d 485.

After the matter proceeded to trial, a jury found that
Mr. Wright, Delta Exports, and Waste Management were at fault in
causing the accident. The plaintiff, Jack Gibson d/b/a J & P Logging,
and the City of Lake Charles were found not to be at fault.
Mr. Wright was also found to be the borrowed employee of Delta
Exports. The jury apportioned 25% of the fault to Mr. Wright, 25% to
Delta Exports, and 50% to Waste Management.

The jury awarded [damages totaling $2,267,483.71].

Cobb v. Delta Exports, Inc., 05-509, pp. 1-2 (La.App. 3 Cir. 12/30/05), 918 So.2d

1080, 1083-84, writ denied, 06-225 (La. 4/24/06), 926 So.2d 551.

The lawsuit which forms the basis for the present appeal was filed on

May 25, 2006. Waste Management filed a Petition for Damages, and in the

Alternative Only, Action to Nullify Final Judgment, against Defendant Attorneys

and their insurer. Waste Management alleged that during the appeal process of the

underlying litigation, Cobb v. Delta Exports, Inc., Docket Number 97-3701,

Division D, 14th Judicial District Court, Parish of Calcasieu, Defendant Attorneys

were faced with clear conflicts of interest for which they should have withdrawn

from their representation of Waste Management, yet did not. Waste Management

contends that it was wrongfully required to pay its portion of a judgment with

interest of over $1,800,000.00 due to Defendant Attorneys‘ malpractice.

On December 27, 2006, Defendant Attorneys filed an Exception of

Peremption which was granted by the trial court on October 23, 2007. As a result,

all of Waste Managements‘ claims against Defendant Attorneys stemming from

alleged acts that occurred prior to May 26, 2005 were dismissed with prejudice.

Defendant Attorneys filed a motion for summary judgment on November 14,

2008, asserting that the evidence supported their position that they did not breach

their duty to Waste Management. After a hearing on May 8, 2009, the trial court

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denied Defendant Attorneys‘ motion for summary judgment, citing insufficient

discovery. A concomitant judgment was signed by the trial court on May 19,

2009.

On May 6, 2011, Defendant Attorneys filed a second motion for summary

judgment. Unlike their previous motion, Defendant Attorneys asserted that the

doctrine of equitable estoppel precluded Waste Management‘s claims. Defendant

Attorneys‘ motion for summary judgment was heard and granted by trial court on

March 2, 2012. On March 30, 2012, the trial court signed a judgment granting

Defendant Attorneys‘ motion for summary judgment declaring ―all remaining

claims of [Waste Management] versus [Defendant Attorneys] covered by the

[motion for summary judgment], that is, all such claims arising from events

occurring on or after May 25, 2005, are dismissed with prejudice.‖ It is from this

judgment that Waste Management appeals.

ASSIGNMENT OF ERROR

On appeal, Waste Management asserts the following:

The trial court erred in granting the [D]efendant [A]ttorneys‘ [m]otion
for [s]ummary [judgment] on the basis of the equitable estoppel
doctrine when, under the facts presented, this doctrine does not apply
because it is undisputed that[:]

A. Waste Management made no false or misleading representation
of fact; and

B. The [D]efendant [A]ttorneys never changed their position in
reliance on any conduct or representations of Waste
Management.

LAW AND DISCUSSION

In order to establish a claim for legal malpractice, a plaintiff must prove that

(1) there was an attorney-client relationship; (2) the attorney was negligent in his

representation of the plaintiff; and (3) the plaintiff sustained a loss as a result of the

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attorney‘s negligence. Costello v. Hardy, 03-1146 (La. 1/21/04), 864 So.2d 129;

Morgan v. Simon, 00-1556 (La.App. 3 Cir. 2/28/01), 780 So.2d 626.

As this matter comes to us on an appeal of the grant of a summary judgment,

we note that summary judgments are reviewed de novo using the same criteria that

govern the trial court‘s consideration of whether summary judgment is appropriate.

La.Code Civ.P. art. 966(B). A de novo review is the proper standard of review in a

summary judgment case where there are contested issues of fact. Guillot

v. Guillot, 12-109 (La.App. 3 Cir. 6/6/12), 92 So.3d 1212. However, ―[i]n a case

where there are no contested issues of fact[] and the only issue is the application of

the law to the undisputed facts, . . . the proper standard of review is whether or not

there has been legal error.‖ Tyson v. King, 09-963, p. 2 (La.App. 3 Cir. 2/3/10),

29 So.3d 719, 720 (quoting Bailey v. City of Lafayette, 05-29, p. 2 (La.App. 3

Cir. 6/1/05), 904 So.2d 922, 923, writs denied, 05-1689, 05-1690, 05-1691, and

05-1692 (La.1/9/06), 918 So.2d 1054, 1055, and the cases cited therein). In the

case at bar, there are no contested facts. The issue before this court is the

application of the law to the undisputed facts; therefore, our review is to determine

whether the trial court committed legal error when it ruled that the doctrine of

equitable estoppel applies and precludes Waste Management‘s claims against

Defendant Attorneys.

This court, in Roberson v. Lafayette Oilman’s Sporting Clays Shoot, Inc.,

02-1275, 02-369, pp. 4-5 (La.App. 3 Cir. 4/30/03), 845 So.2d 1267, 1270, writ

denied, 03-1531 (La. 9/26/03), 854 So.2d 370, stated:

Equitable estoppel or ‗estoppel in pais‘ can be defined as
the effect of the voluntary conduct of a party whereby he
is barred from asserting rights against another party
justifiably relying on such conduct and who has changed
his position to his detriment as a result of such reliance.
Thus, there are three elements of estoppel: (1) a
representation by conduct or word; (2) justifiable

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reliance; and (3) a change in position to one‘s detriment
because of the reliance.

Elliott v. Catahoula Parish Police Jury, 02-09, p. 1 (La.App. 3 Cir.
5/8/02); 816 So.2d 996, 997 (quoting Wilkinson v. Wilkinson, 323
So.2d 120, 125 (La.1975)).

In Morris v. Friedman, 94-2808, p. 9 (La.11/27/95); 663 So.2d
19, 25, the supreme court further elaborated on this issue: ―[A] party
having the means readily and conveniently available to determine the
true facts, but who fails to do so, cannot claim estoppel. Further,
estoppels are not favored in our law, and properly apply only as to
representations of fact. . . . Finally, ‗[e]quitable considerations and
estoppel cannot be permitted to prevail when in conflict with the
positive written law.‘‖

Waste Management contends that at least two of the essential elements

required for the doctrine of equitable estoppel to apply—false or misleading

representations and a change in position in reliance upon said false or misleading

representations—were absent in this case; therefore, it was error for the trial court

to grant Defendant Attorneys‘ motion for summary judgment and dismiss its

claims based upon equitable estoppel. Relying heavily upon our supreme court‘s

holding in MB Industries, LLC v. CNA Insurance Co., 11-303, 11-304

(La. 10/25/11), 74 So.3d 1173, Waste Management argues that ―[w]hen the test

and factors set out in MB Industries are applied to the facts of this case, it is clear

that the trial court made a patently erroneous decision in applying equitable

estoppel.‖

In MB Industries, 74 So.3d 1173, the defendants urged that the doctrine of

equitable estoppel precluded the plaintiffs‘ claims on the basis that the plaintiffs

effectively waived their right to sue defendants for legal malpractice when the

plaintiffs failed to perfect an appeal in the underlying litigation. Our supreme

court rejected defendants‘ arguments stating:

A claim of waiver by failure to appeal is thus not ―equitable
estoppel‖ as the doctrine has been defined by this Court. Strictly
speaking, equitable estoppel applies only where a party has made false

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or misleading representations of fact and the other party justifiably
relied on the representation. State v. Mitchell, 337 So.2d 1186, 1188
(La.1976). We must narrowly construe this argument, as ―estoppel is
not favored in our law,‖ Id., and estoppel is a ―doctrine of last resort.‖
Howard Trucking Co., Inc. v. Stassi, 485 So.2d 915, 918 (La.1986).
Because [plaintiff‘s] decision not to pursue an appeal was not a
representation of fact which [defendants] justifiably relied upon to
their detriment, equitable estoppel does not apply.

The issue is more properly framed as a failure to mitigate
damages . . . .

Id. at 1180-81.

Specifically, Waste Management asserts that Defendant Attorneys failed to

prove that ―Waste Management made affirmative ‗false or misleading

representations of fact‘‖ and that ―Waste Management caused [Defendant

Attorneys] to rely on this to their detriment and change their position.‖

Defendant Attorneys argue that Waste Management‘s reliance upon

MB Industries, 74 So.3d 1173, is misplaced. We agree. Waste Management fails

to recognize the clear distinction between the facts herein and those in

MB Industries. Waste Management made certain representations to Defendant

Attorneys. Defendant Attorneys relied upon and changed their position based

upon said representations. Waste Management argues, however, that because the

representations upon which Defendant Attorneys relied were not ―false or

misleading representations,‖ estoppel does not apply. We disagree.

Since being named a defendant in the supplemental and amending petition

filed on January 23, 1998, in the underlying litigation, Waste Management‘s

defense was handled by counsel representing Penn-America Insurance Company

(Penn-America). Penn-America was the insurer of Delta Exports, Inc., the

subcontractor whom Waste Management hired to perform the debris removal. In

September 2001, Defendant Attorneys substituted themselves as counsel of record,

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and their involvement in this litigation and representation of Waste Management

began.

Waste Management admittedly retained separate, independent counsel in

April 2004, when it hired the law firm of Taylor, Wellons, Politz & Duhé (the

Taylor Firm). However, the Taylor Firm never officially enrolled as counsel of

record in representation of Waste Management in the underlying litigation. After

the April 2004 jury trial in the underlying litigation, the trial court held that Waste

Management was not an insured under the Penn-America insurance policy.

On June 7, 2004, Michael Mentz, an attorney hired by Penn-America to

represent only its interests, sent written correspondence advising Waste

Management that Penn-America was taking the position that Waste Management

was not an insured under its policy. Mr. Mentz‘s letter advised Waste

Management that should the Taylor Firm consent, Defendant Attorneys would

withdraw from their representation of Waste Management. The letter stated: ―In

light of Penn-America‘s position relative to Waste Management‘s status under its

policy, if Waste Management is not comfortable with [Defendant Attorneys]

continued representation . . . Penn-America will pay [the Taylor Firm‘s] attorney[]

fees and costs to undertake the defense of Waste Management solely in that

litigation.‖ Waste Management elected not to officially enroll the Taylor Firm as

its counsel.

At a post-trial hearing, also in June 2004, Defendant Attorney, Albert D.

Giraud, argued the holding of Steptore v. Masco Construction Co., Inc., 93-2064

(La. 8/18/94), 643 So.2d 1213, in an effort to obtain a favorable judgment of

coverage for Waste Management under Penn-America‘s policy. In Steptore, 643

So.2d 1213, our supreme court held that an insurer which accepts coverage and

does not timely assert coverage defenses is deemed to have waived those defenses,

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even if valid. However, despite Mr. Giraud‘s urging of Steptore, the trial court

allocated all of the available insurance coverage provided by Penn-America to

Delta and none to Waste Management.

In November 2004, Mr. Giraud also sent written correspondence by

electronic mail to the Taylor Firm extending much of the same offer as was

previously made by Mr. Mentz the preceding June. Mr. Giraud even attached to

the e-mail a motion for the Taylor Firm to substitute as counsel of record for Waste

Management. Again, Waste Management did not elect to officially enroll the

Taylor Firm as its counsel.

Waste Management alleges that Defendant Attorneys‘ representation of its

interests during the appeal of the underlying litigation‘s jury verdict was marred by

Defendant Attorneys‘ conflicts of interest by continuing to also represent

Penn-America. Waste Management contends that because Defendant Attorneys

did not continue to cite and argue the holding of Steptore in the writ applications

both to this court and to the Louisiana Supreme Court, Defendant Attorneys

breached their duty to competently represent Waste Management‘s interests.

Defendant Attorneys counter by arguing that the Taylor Firm was provided

copies of its appellate pleadings, and the only feedback it ever received was

grammatical and stylistic suggestions. The Taylor Firm did not seek to have

Defendant Attorneys urge the holding in Steptore in its writ applications.

Defendant Attorneys assert, however, that it was argued, though unsuccessfully,

that the trial court erred in ruling that Waste Management was not insured under

Penn-America‘s policy.

In the instant matter, the trial court, in ruling on Defendant Attorneys‘

motion for summary judgment, stated:

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To say that Waste Management hired an attorney, an independent
attorney, for them to kind of keep an eye on what was happening to
protect their interests; and these attorneys or that firm, [were] actively
involved in the preparation of these writ applications to the Third
Circuit and to the Louisiana Supreme Court, made suggestions, never
made the direct suggestions or the specific suggestions that . . .
Steptore be argued. They just can‘t have it both ways.

I do believe that equitable estoppel applies[] in this case,
because it‘s not fair. It‘s just not fair to kind of invite them in to do
certain things and go along with them, and even say the brief looks
okay to me. And now complain, you blew it, when they were given a
chance to respond[] on behalf of Waste Management; and to advise
Waste Management, which obviously, they did and have done; and
probably continue to do. . . .

. . . [I]t just seems unfair for [the Taylor Firm], as an agent
representative attorney for Waste Management, to be actively, not
passively, involved in preparing the Post-verdict pleadings, and the
appellate - - being involved in the appellate process, and then come
back; and Waste Management gets the opportunity to hold those, who
[the Taylor Firm] consulted with and collaborated with, responsible.
You just can‘t have it both ways.

. . . I find that Waste Management is estopped from asserting
any claims against the attorneys in this instance. I find in favor of the
[Defendant Attorneys] in this case; and I‘m going to grant the Motion
for Summary Judgment.

The first element of estoppel—a representation by conduct or word—was

satisfied by Waste Management‘s conduct. Despite benefit of its own separate

legal counsel (the Taylor Firm), Waste Management declined Defendant Attorneys

offers to withdraw. Defendant Attorneys relied upon Waste Management‘s

acquiescence, inferring that Waste Management did not believe a conflict of

interest existed to necessitate Defendant Attorneys‘ withdrawal.

The second element of estoppel—justifiable reliance—is present. Defendant

Attorneys sent a motion to Waste Management for the Taylor Firm to substitute as

counsel of record for Waste Management. Still, Waste Management took no

action and did not file said motion. Defendant Attorneys reasonably assumed and

relied upon the fact that Waste Management did not wish for Defendant Attorneys

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to withdraw. We find that Waste Management‘s acquiescence constituted a

misleading representation, contrary to Waste Management‘s position that there

were no ―false or misleading representations of fact‖ upon which Defendant

Attorneys justifiably relied and to which equitable estoppel applies.

MB Industries, 74 So.3d at 1180.

The third and final element of estoppel—a change in position to one‘s

detriment because of the reliance—is likewise present. Defendant Attorneys

reasonably inferred that Waste Management was satisfied with its legal

representation and did not consider the existence of a possible conflict of interest

as necessitating its withdrawal; therefore, Defendant Attorneys changed their

position from withdrawing as counsel of record to remaining as counsel of record.

Defendant Attorneys even voluntarily kept Waste Management‘s separate,

independent counsel, the Taylor Firm, apprised of the efforts of their

representation. As stated by the trial court, Waste Management ―can‘t have it both

ways.‖

In brief, counsel for Waste Management repeatedly claims that Defendant

Attorneys had a ―non-waivable conflict of interest.‖ Whether or not Defendant

Attorneys had a non-waivable conflict of interest is an ethical issue governed by

the Rules of Professional Conduct regulating the actions of members of the

Louisiana State Bar Association and not a matter before this court. Furthermore,

the issue of a non-waivable conflict of interest was not specified as an error and is

not properly before the court for consideration. See Uniform Rules—Courts of

Appeal, Rule 1–3; Charles v. Landry, 09-1161 (La.App. 3 Cir. 3/10/10), 32 So.3d

1164.

Considering the facts and applicable law set forth above, we find that the

record supports the finding of the trial court, and we find no legal error in the trial

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court‘s judgment. Defendant Attorneys clearly relied on the conduct, or in this

case, the silence and acquiescence of Waste Management, to infer that it did not

object to Defendant Attorneys‘ representation. To hold otherwise would be to

render an unfair and unjust result. The trial court was legally correct in applying

the law of equitable estoppel to the facts of this case.

DECREE

For the foregoing reasons, the judgment of the trial court granting summary

judgment in favor of Defendants/Appellees, Albert D. Giraud, J. Michael Nash,

and Ginger K. DeForest, is affirmed. Costs of this appeal are assessed against

Plaintiff/Appellant, Waste Management of Louisiana, LLC.

AFFIRMED.

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