Priola Construction Corporation v. Cameron Parish Police Jury

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

19-282

PRIOLA CONSTRUCTION CORPORATION

VERSUS

CAMERON PARISH POLICE JURY, ET AL.

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APPEAL FROM THE
THIRTY-EIGHTH JUDICIAL DISTRICT COURT
PARISH OF CAMERON, NO. 10-19950
HONORABLE PENELOPE Q. RICHARD, DISTRICT JUDGE

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VAN H. KYZAR
JUDGE

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Court composed of John D. Saunders, Elizabeth A. Pickett, and Van H. Kyzar,
Judges.

AFFIRMED ON OTHER GROUNDS.

Hunter W. Lundy
Daniel A. Kramer
Lundy, Lundy, Soileau & South, L.L.P.
P. O. Box 3010
Lake Charles, LA 70602
(337) 439-0707
COUNSEL FOR PLAINTIFF/APPELLANT:
Priola Construction Corporation

David J. Krebs
Richard Baudouin
Cassandra Hewlings
Krebs, Farley & Dry
400 Poydras Street, Suite 2500
New Orleans, LA 70130
(504) 299-3571
COUNSEL FOR DEFENDANT/APPELLEE:
Travelers Casualty & Surety Company of America

Joseph P. Guichet
Jay Farmer
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard
601 Poydras Street, Suite 2775
New Orleans, LA 70130
(504) 568-1990
COUNSEL FOR DEFENDANT/APPELLEE:
Travelers Casualty & Surety Company of America

Jennifer A. Jones
District Attorney
W. Thomas Barrett, III
Assistant District Attorney
Thirty-Eighth Judicial District
P. O. Box 280
Cameron, LA 70631
(337) 775-5713
COUNSEL FOR DEFENDANT/APPELLEE:
Cameron Parish Police Jury

KYZAR, Judge.

The plaintiff, Priola Construction Corporation, appeals from a trial court

judgment granting partial summary judgment in favor of the defendant, Travelers

Casualty and Surety Company of America, dismissing its claims for a declaratory

judgment recognizing a privilege in favor of its counsel for attorney fees from

funds disbursed in a concursus proceeding instituted in another suit. For the

reasons set forth herein, we affirm on other grounds.

FACTS AND PROCEDURAL HISTORY

The contractor, Priola Construction Corporation (Priola), entered into a

Public Works Contract with the Cameron Parish Police Jury (CPPJ) on June 3,

2011, for the construction of the Cameron Parish Sheriff‟s Office and Correctional

Facility (the Project), for the sum of $11,150,000.00. Because this was a Public

Works Contract in excess of $25,000.00, Priola was required to obtain a bond for

fifty percent of the contract price. La.R.S. 38:2241(A)(2). Thus, Priola contracted

with Travelers Casualty and Surety Company of America (Travelers) for a surety

bond to guarantee its performance and completion of the Project and to guarantee

payment of any claims by subcontractors, suppliers, etc.

On May 9, 2017, Priola filed suit against CPPJ and Travelers alleging breach

of contract and damages from delays allegedly caused by CPPJ, its architect, and

Travelers. We restrict our discussion of the record to Priola‟s claims against

Travelers as only those claims are the subject matter of this appeal. As to

Travelers, Priola alleged that when it began experiencing the alleged delays, it

informed Travelers of its intent to complete the Project even if it experienced

losses. Priola asserted that after receiving this information, Travelers interfered in

its contract with CPPJ when it sent a representative to the Project, who informed

CPPJ and the subcontractors that Travelers would be taking over the Project

because Priola was going or had gone bankrupt.

As a result of these actions, Priola claimed that Travelers breached its

insurance, bonding, and surety contract, as well as its indemnity contract, and was

liable to it for damages, including delay damages and the costs it incurred in

bonding off Public Works Act claims by subcontractors and suppliers involved in

the Project. Priola further asserted that it incurred attorney fees related to its

claims against CPPJ and Travelers and in defending itself from the claims of the

subcontractors and suppliers.

Priola further asserted that funds were being held in escrow by its counsel as

a result of a concursus hearing in Cameron Parish Police Jury v. Priola

Construction Corp., Number 10-19649. In that matter, CPPJ had placed the

remaining $563,609.13 due on the Project into the registry of the court and

instituted a concursus hearing, impleading Priola, Travelers, and fourteen

subcontractors and suppliers to “require[] them to assert their respective claims

contradictorily against all other parties[.]” At the conclusion of the concursus

proceeding, the trial court released CPPJ from all personal liability as to the La.R.S.

38:2242 claimants, except as to Priola, and ordered the clerk of court to cancel any

outstanding claims filed in the mortgage records relative to the Project. It further

ordered the clerk of court to transfer the funds held in the registry of the court to

Priola, through its counsel, “subject to the stipulation that such funds be held in

trust by Lundy, Lundy, Soileau & South, L.L.P. and used first to pay any

undisputed amounts of claims brought by subcontractors of Priola Construction

Corporation[.]” A judgment was rendered by the trial court on September 21, 2016.

In the instant petition, Priola alleged that $197,569.30 remained in escrow

after the satisfaction of all undisputed claims related to the Project, and it claimed

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that its counsel had a privilege over these funds pursuant to La.R.S. 9:5001,

superior to all other privileges or liens, for the payment of their fees. Priola alleged

that Travelers contested its right to $77,756.90 of the $197,569.30 due to its

subrogation rights arising from payments it (Travelers) made to subcontractors and

suppliers in satisfaction of their Public Works Act claims against Priola. Thus,

Travelers contended that Priola could not use the escrow funds to partially pay its

attorney fees incurred in relation to this matter. For these reasons, Priola sought a

declaratory judgment declaring its right to disburse funds from the escrow account

to pay its attorney fees and that the privilege granted by La.R.S. 9:5001 to its

counsel was superior to Travelers‟ subrogation rights.

After Travelers filed an answer and reconventional demands against Priola

and third-party demands against Nickey Priola, Jr. and Carmen A. Priola, Priola‟s

president and secretary, Priola and Travelers filed a joint motion to place the

contested $77,756.90 into the registry of the court. Thereafter, Travelers moved

for partial summary judgment, requesting the trial court to dismiss, with prejudice,

Priola‟s request for declaratory judgment relative to its counsel‟s attorney fee

privilege over these funds.

Following a hearing, the trial court granted partial summary judgment in

favor of Travelers, dismissing Priola‟s claim for declaratory relief “regarding

whether its attorneys enjoy a privilege to the funds held in the Registry of the

Court that is superior to Travelers‟ alleged subrogation and assignment rights to

the funds.” In its oral ruling, the trial court stated:

I‟m persuaded by Travelers‟ argument. I don‟t believe that the
judgment of August 29, 2016, was a judgment contemplated under the
attorney liens statute. And I‟m going to grant their motion for partial
summary judgment.

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A written judgment was rendered by the trial court on January 2, 2019. It is from

this judgment that Priola perfected this appeal.

On appeal, Priola asserts one assignment of error:

The trial court erred as a matter of law by granting the motion
for partial summary judgment, when it held that the judgment from
the Concursus Proceeding is not the type of judgment giving rise to an
attorney fee lien under Louisiana Revised Statute § 9:5001.

However, pursuant to La.Code Civ.P. art. 927(B), we notice sua sponte that

the pleadings in Priola‟s petition fail to disclose that it has a right or interest to

institute the claim relative to the privilege afforded its counsel under La.R.S.

9:5001. Accordingly, we need not address its assignment of error.

OPINION

The law relating to the peremptory exception of no right of action was

recently laid out by the supreme court in State ex rel. Caldwell v. Molina

Healthcare, Inc., 18-1768, pp. 5-7 (La. 5/8/19), _ So.3d _, _ (alteration in original):

Generally, a legal action can be brought only by a person
having a real and actual interest in doing so. See La. C.C.P. art. 681.
“When the facts alleged in the petition provide a remedy under the
law to someone, but the plaintiff who seeks the relief is not the person
in whose favor the law extends the remedy, the proper objection is no
right of action, or want of interest in the plaintiff to institute the suit.”
Howard v. Administrators of Tulane Educ. Fund, 07-2224, p. 16
(La. 7/1/08), 986 So.2d 47, 59 (citing FRANK L. MARAIST &
HARRY T. LEMMON, LOUISIANA CIVIL LAW TREATISE:
CIVIL PROCEDURE1 § 6.7, 121 (1999)). Such an objection is
presented as a peremptory exception of no right of action raised by the
defendant or noticed by the court on its own motion, in either the trial
or appellate court. See La. C.C.P. arts. 927 and 2163. “The function
of the peremptory exception is to have the plaintiff‟s action declared
legally nonexistent, or barred by effect of law, and hence this
exception tends to dismiss or defeat the action.” La. C.C.P. art. 923.

“The burden of showing that the plaintiff has stated no cause of
action is upon the exceptor.” City of New Orleans v. Bd. of
Directors of Louisiana State Museum, 98-1170, p. 9 (La. 3/2/99),

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The other issues in this matter, which include breach of contract, tort, and indemnity
claims, were not resolved by the time this judgment was granted, and trial on the merits as to
these remaining issues has not been set.
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739 So.2d 748, 755. “On the trial of the peremptory exception [of no
right of action] pleaded at or prior to the trial of the case, evidence
may be introduced to support or controvert any of the objections
pleaded, when the grounds thereof do not appear from the petition.”
La. C.C.P. art. 931. In instances when “evidence [has been]
introduced at the hearing” on a peremptory exception, “the trial
court‟s findings of fact . . . are subject to the manifest error-clearly
wrong standard of review.” London Towne Condominium
Homeowner’s Ass’n v. London Towne Co., 06-401, p. 4 (La.
10/17/06), 939 So.2d 1227, 1231.

In other respects, “[t]he determination of whether a plaintiff has
a legal right to bring an action raises a question of law, which requires
de novo review.” Rebel Distributors Corp., Inc. v. LUBA Workers’
Comp., 13-0749, p. 10 (La. 10/15/13), 144 So.3d 825, 833 (citing,
inter alia, Holly & Smith Architects, Inc. v. St. Helena Congregate
Facility, Inc., 06-0582, p. 9 (La. 11/29/06), 943 So.2d 1037, 1045.
“An appellate court considering an exception of no right of action
should focus on whether the particular plaintiff has a right to bring the
suit and is a member of the class of persons that has a legal interest in
the subject matter of the litigation, assuming the petition states a valid
cause of action for some person.” Rebel Distributors, 13-0749 at 10,
144 So.3d at 833. If doubt exists about the appropriateness of an
objection of no right of action, it is to be resolved in favor of the
plaintiff. Rebel Distributors, 13-0749 at 10, 144 So.3d at 833.

Assuming that Priola‟s petition states a valid cause of action for some person,

we must determine whether it is a member of the class of persons that has a legal

interest in the subject matter of the attorney fee privilege found in La.R.S. 9:5001

and, thus, has a right to assert this claim.

The legislature has enacted two statutes to assist attorneys in collecting fees

from their clients. Louisiana Revised Statutes 9:5001 grants a special privilege to

attorneys “for the amount of their professional fees on all judgments obtained by

them, and on the property recovered thereby . . . to take rank as a first privilege

thereon superior to all other privileges and security interests under Chapter 9 of the

Louisiana Commercial Laws.” Louisiana Revised Statutes 37:218, allows an

attorney to acquire an interest in his client‟s suit, which as a special privilege,

“take[s] rank as a first privilege thereon, superior to all other privileges and

security interests under Chapter 9 of the Louisiana Commercial Laws,” as under

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La.R.S. 9:5001. If a written contract evidencing this interest is executed between

the attorney and the client and filed in the parish records where the suit is pending,

neither the attorney nor the client can settle the suit without the other‟s written

consent. A settlement reached absent this written consent is rendered null and void.

La.R.S. 37:218(A). Because La.R.S. 9:5001 and La.R.S. 37:218 deal with the

same subject matter, jurisprudence has held that they are to be read in pari materia.

Palmer & Palmer v. Stire, 195 So.2d 706 (La.App. 1 Cir. 1967), writ refused, 250

La. 645, 197 So.2d 899 (1967).

The legislative history of La.R.S. 9:5001 and La.R.S. 37:218 was discussed

in detail by the supreme court in Calk v. Highland Construction & Manufacturing,

376 So.2d 495, 497-99 (La.1979) (second alteration in original):

The state of the law in this area, relating to the protection
afforded a lawyer for the collection of his fees, can be better
appreciated by a brief review of the historical developments
surrounding the applicable statutes.

Sections 128 and 2897 of the Revised Statutes of 1870 were
identical, and read as follows:

“From and after the passage of this act, in addition
to the privileges enumerated in Title Twenty-first of the
Civil Code of this State, a special privilege is hereby
granted in favor of attorneys at law for the amount of
their professional fees on all judgments obtained by them,
to take rank as a first privilege thereon.”

In the case of Luneau v. Edwards, 39 La.Ann. 876, 6 So. 24
(1887), this court held that section 128 of the 1870 Revised Statutes
gave attorneys a privilege on the judgments of their clients, but not on
any property recovered in execution of such judgments.

This Court affirmed Luneau, just one year later, in Weil et al. v.
Levi et al., 40 La.Ann. 135, 3 So. 559 (1888) stating:

“The statute in terms confers „a special privilege * * * in
favor of attorneys at law on * * * all judgments obtained
by them.‟ Privileges are stricti juris, and cannot be
extended by inference to other objects than those
mentioned in the statute granting them. Guided by this
familiar rule of interpretation, our conclusion is that the

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opponent‟s demand is unfounded, and should have been
rejected. In our opinion this statute was not intended by
the legislature to confer upon an attorney at law a lien or
privilege upon his client‟s property, real or personal, for
professional services rendered in the maintenance of his
possession or ownership thereof.”

Both of these cases dealt with the issue of whether an attorney had a
privilege on the proceeds he recovered by judgment in his client‟s
lawsuit, and both held that he did not.

In the case of Smith v. V., S. & P. Railroad Co., 112 La. 985, 36
So. 826 (1904), the client‟s case did not reach judgment. The attorney
filed suit for the client, but before judgment, the suit was settled. The
attorney was claiming to have a privilege on the proceeds of the
settlement. This Court held, “The case here, as to lien vel non, was
not within the terms of the statute, as no judgment had yet been
obtained. Rev.St. § 128.”

All three of the foregoing cases influenced the Legislature in
the enactment of Act No. 124 of 1906, which reads as follows:

“AN ACT (# 124)

To amend and re-enact Section 2897 of the Revised
Statutes of 1870.

Be it enacted by the General Assembly of the State
of Louisiana, That, Section 2897 of the Revised Statutes
of 1870 be amended and re-enacted so as to read as
follows:—

In addition to the privileges enumerated in title
twenty-first of the Civil Code of Louisiana, a special
privilege is hereby granted to attorneys-at-law for the
amount of their professional fees on all judgments
obtained by them, and on the property recovered by said
judgment, either as plaintiff or defendant, to take rank as
a first privilege thereon.

Provided, that, by written contract signed by the
client, attorneys-at-law may acquire as their fee in such
matter an interest in the subject matter of the suit,
proposed suit or claim, in the prosecution or defense of
which they are employed, whether such suit or claim be
for money or for property, real, personal or of any
description whatever. And in such contract of
employment, it shall be lawful to stipulate that neither the
attorney nor the client shall have the right, without the
written consent of the other, to settle, compromise,
release, discontinue or otherwise dispose of such suit or

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claim. Either party to said contract shall have the right at
any time to file same with the clerk of the District Court
where the suit is pending or is to be brought, and to have
a copy made and served on the opposing party and due
return made as in case of petitions in ordinary suits; from
and after the date of such service, any settlement,
compromise, discontinuance or other disposition made of
such suit or claim by either the attorney or the client
without the written consent of the other, shall be null and
void, and such suit or claim shall be continued and
proceeded with as if no such settlement or discontinuance
had been made.” (Emphasis provided[.])

The last clause of the first paragraph of the act was added as a
result of the Luneau and the Weil cases. Those cases rendered Section
2897 (and Section 128) virtually ineffective since they held that the
attorney‟s privilege did not extend to the proceeds recovered from the
judgment but rather to the judgment alone. The clause emphasized
above was added to breathe life back into Section 2897.

Even with the addition of the above clause, the attorney would
still have been left unprotected if he settled the case rather than
bringing it to judgment, as was held in Smith. To remedy this
situation, the Legislature added the second paragraph of Act 124 of
1906. This addition was intended, seemingly at least, to give an
attorney comparable protection pre-judgment to that afforded him
post-judgment.

In an excellent opinion by Judge Leche, in Davis v. O’Neal,
160 So. 463 (Orl.La.App.1935), the Court of Appeal, after tracing the
historical background of Act 124 of 1906, stated:

“It is our opinion, as stated above, that the two
paragraphs of the act relate to different situations, and
that each was intended to provide a remedy in the
particular circumstances contemplated by it, namely, that
paragraph 1 was intended to confer a special privilege to
take rank as a first privilege, not only on the judgment
obtained, but on the property recovered by said judgment,
and was enacted in view of the decisions in Luneau v.
Edwards and Mechanics’ & Traders’ Insurance Co. v.
Levi et al, [40 La.Ann. 135, 3 So. 559] supra. It is our
further opinion that paragraph 2 of Act No. 124 of 1906
was intended to protect an attorney in the event of a
compromise, settlement, or other disposition of the case
Before a judgment was obtained and was designed by the
Legislature to remedy the situation obtaining in the case
of Smith v. V., S. & P. Railroad Co., supra.”

We believe that it was the intent of the Legislature, in amending
and adding to § 2897 of the Revised Statutes of 1870, to provide

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attorneys with a privilege on the proceeds recovered by judgment and
to give them a corresponding remedy where their case is settled rather
than brought to judgment.

In 1950, when our statutes were revised, Act 124 of 1906 was
split into two separate statutes, R.S. 9:5001, containing the first
paragraph of the Act, and R.S. 37:218, containing the second
paragraph. With only some minor amendments, this is the state of the
law today.

In Calk, the supreme court held that an attorney was not entitled to assert the

La.R.S. 9:5001 privilege over proceeds he obtained for his client through

settlement. However, in considering La.R.S. 37:218, it held:

[F]rom looking at the historical development of R.S. 37:218 and R.S.
9:5001, it is clear that the Legislature added the provisions of the
present R.S. 37:218 to assist the attorney in collecting his fee when he
settles a case in the same way he is assisted by R.S. 9:5001, when he
brings the suit to judgment.

Calk, 376 So.2d at 499.

Using well recognized rules of statutory construction, “statutes in derogation

of common rights, such as those creating liens and privileges, are to be strictly

construed and are not to be extended by implication or through considerations of

equity.” State ex rel. Maitrejean v. Demarest, 229 La. 300, 303-04, 85 So.2d 522,

523-24 (1956). “When a law is clear and unambiguous and its application does not

lead to absurd consequences, the law shall be applied as written and no further

interpretation may be made in search of the intent of the legislature.” La.Civ.Code.

art. 9. The interpretation of any statute begins with the language of the statute

itself. M.J. Farms, Ltd. v. Exxon Mobil Corp., 07-2371 (La. 7/1/08), 998 So.2d 16.

Louisiana Revised Statutes 9:5001(A) (emphasis added) provides that the

privilege “is hereby granted to attorneys at law for the amount of their

professional fees[.]” Louisiana Revised Statutes 37:218(A) (emphasis added)

provides that “an attorney at law” may, in place of a fee, acquire an interest in his

client‟s suit. Thus, it is clear from the legislative history and the clear language of

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these statutes that the right of privilege granted over the proceeds of a judgment or

settlement belongs to the attorney who obtained the proceeds in favor of his client.

Indeed, the supreme court, in Calk, specifically stated that “for the attorney to

succeed” in asserting the privilege, “he must assert his claim by intervention or

other legal proceedings prior to disbursement of the proceeds to a third party.” Id.

(emphasis added).

In the instant case, counsel for Priola has neither intervened nor filed any

legal proceeding asserting its attorney fee privilege over the funds distributed to

Priola in the September 21, 2016 concursus judgment. As this right belongs solely

to Priola‟s counsel, Priola has no right of action to assert the privilege.

Accordingly, we sustain the peremptory exception of no right of action raised on

our own motion, finding that Priola has failed to state a right of action to assert the

La.R.S. 9:5001 attorney fee privilege. We further find that because it will be

unable to remove these grounds through amendment of its petition, that portion of

Priola‟s petition requesting declaratory judgment on the issue of the La.R.S.

9:5001 attorney fee privilege is dismissed with prejudice. La.Code Civ.P. art. 934.

DISPOSITION

Based on the foregoing reasons, we maintain the peremptory exception of no

right of action, raised sua sponte, because the pleadings in Priola Construction

Corporation‟s petition fails to disclose that it has a right or interest to assert the

attorney fee privilege afforded under La.R.S. 9:5001. Accordingly, we dismiss,

with prejudice, that portion of its petition seeking a declaratory judgment on the

issue of the attorney fee privilege granted by La.R.S. 9:5001. Thus, the judgment

of the trial court is affirmed for the reasons stated. The costs of this appeal are

assessed to Priola Construction Corporation.

AFFIRMED ON OTHER GROUNDS.

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