Robin Murphy v. MKS Plastics, L.L.C. ( 2020 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
NO. 2019 CA 1485
ROBIN MURPHY
VERSUS
MKS PLASTICS, L.L. C.
SEP 212020
Judgment Rendered:
On Appeal from the
21 st Judicial District Court
In and for the Parish of Tangipahoa
State of Louisiana
Trial Court No. 2016- 0002533
Honorable Jeffrey S. Johnson, Judge Presiding
Dale R. Baringer Attorneys for Plaintiff A
- ppellant,
Benjamin J. B. Klein Robin Murphy
William H. Caldwell
Baton Rouge, LA
Bradley A. Stevens Attorney for Defendants -Appellees,
Amite, LA MKS Plastics, David Smith, and
Robert Killebrew
Gus A. Fritchie, III Attorney for Defendant -Appellee,
New Orleans, LA Ron S. Macaluso
BEFORE: HIGGINBOTHAM, PENZATO, AND LAMER, JJ.
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HIGGINBOTHAM, J.
This appeal concerns a legal malpractice claim contained within a suit
petitioning for a declaratory judgment seeking recognition of an ownership interest
in a Louisiana limited liability company. The legal malpractice claim was dismissed
on a partial summary judgment.
BACKGROUND
After his expulsion from employment with MKS Plastics, L.L.C. ( the L.L. C.)
in February 2016, Robin Murphy filed a petition for declaratory judgment on
September 21, 2016. In his petition, Mr. Murphy sought recognition of his one- third
ownership interest in the L.L.C., and he sought to void the June 10, 2015 conversion
of MKS Plastics, Inc. ( the Corporation) to the L.L.C. The L.L.C. is in the business
of manufacturing plastic buckets in Tangipahoa Parish. The L.L.C. was the only
named defendant in Mr. Murphy' s original petition. However, on February 1, 2017,
Mr. Murphy amended his petition to add extra defendants: David Smith, Robert
Killebrew, and Ron S. Macaluso. Allegedly, Mr. Smith and Mr. Killebrew were
equal shareholders with Mr. Murphy in the Corporation and subsequently, Mr.
Murphy alleged they all had equal membership interests in the L.L.C.
Mr. Macaluso is the attorney who was engaged by Mr. Smith to convert the
Corporation to the L.L.C. and to prepare an operating agreement for the L.L.C.
Although Mr. Murphy was under the impression that his L.L.C. membership interest
was equal to Mr. Smith and Mr. Killebrew, he learned in July 2015 that Mr. Smith
did not include him or Mr. Killebrew as members in the L.L.C.' s business. Instead,
when the conversion took place a month earlier, the Secretary of State documents
reflect that Mr. Smith was listed as the sole member of the L.L.C., leaving Mr.
Murphy and Mr. Killebrew as employees. According to everyone involved except
Mr. Murphy, only Mr. Smith had a controlling interest initially since he was the
person who was financing the business. As a result, Mr. Murphy asserted legal
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malpractice and damage claims against Mr. Macaluso and sought damages from the
L.L.C., Mr. Smith, and Mr. Killebrew.
Mr. Macaluso filed a motion for summary judgment on February 6, 2019,
arguing that he cannot be liable for legal malpractice, because he was never an
attorney for Mr. Murphy. Mr. Macaluso maintained that he had previously
represented Mr. Smith, who contacted him to request assistance in legally converting
the Corporation to the L.L.C. for tax purposes. Mr. Smith advised Mr. Macaluso
that he was the sole shareholder of the Corporation and would continue to be the sole
owner and member of the L.L.C. Mr. Smith also requested that Mr. Macaluso
become the " company attorney" for the L.L.C.
In support of his motion for summary judgment, Mr. Macaluso introduced
affidavits of Mr. Smith, Mr. Killebrew, and himself attesting that Mr. Smith was the
sole member and owner of the L.L. C. In all three affidavits, the affiants
acknowledged that Mr. Macaluso was the attorney for the L.L.C. Mr. Smith stated
that Mr. Murphy and Mr. Killebrew did not own proprietary interests in the L.L.C.
Additionally, Mr. Macaluso introduced excerpts from the deposition testimony of
Mr. Murphy, confirming that Mr. Murphy knew and understood that Mr. Macaluso
was hired as the company lawyer, and that Mr. Macaluso was to prepare the
operating agreement for the L.L.C. Mr. Murphy also testified that Mr. Macaluso
never told him that he was representing their individual interests.
On April 10, 2019, Mr. Murphy filed a second amended and supplemental
petition, claiming that Mr. Macaluso acted as counsel for the L.L.C., and that Mr.
Smith, Mr. Murphy, and Mr. Killebrew were all third -party beneficiaries of the
engagement agreement between the L.L.C. and Mr. Macaluso. Mr. Murphy alleged
that Mr. Macaluso had a duty to the shareholders of the Corporation to ensure the
shareholdings were properly converted to the L.L.C. membership interests.
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Mr. Murphy filed an opposition to Mr. Macaluso' s motion for summary
judgment on April 22, 2019. He introduced excerpts of his deposition testimony and
Mr. Macaluso' s deposition testimony. Mr. Murphy explained that it was always
understood that he, Mr. Smith, and Mr. Killebrew were to be equal partners in the
L.L.C., with Mr. Smith financing the company. He testified that he drew a salary
and Mr. Smith signed the checks most of the time. He also stated that Mr. Smith
told him and Mr. Killebrew that Mr. Smith was hiring Mr. Macaluso to be the
L.L.C.' s lawyer. He further testified that Mr. Macaluso never said that he was not
their individual lawyer. Mr. Macaluso' s deposition testimony revealed that Mr.
Smith had asked Mr. Macaluso to conduct the conversion of the Corporation to the
L.L.C. and to represent the L.L.C.
Before the hearing on the motion for summary judgment, Mr. Macaluso filed
a motion to strike Mr. Murphy' s second amended petition, which Mr. Murphy
opposed.
After the hearing on the motion for summary judgment and the motion to
strike, the trial court ruled in favor of Mr. Macaluso finding that no attorney- client
relationship existed between Mr. Macaluso and Mr. Murphy, and that it was
unreasonable for Mr. Murphy to believe that Mr. Macaluso was his personal attorney
in addition to representing the L.L.C. The trial court also found that the legal
malpractice claim was actually perempted, so there was no need to decide the merits
of Mr. Murphy' s third -party beneficiary claim. On July 26, 2019, the trial court
signed a final judgment, dismissing Mr. Murphy' s legal malpractice claims against
Mr. Macaluso.
Mr. Murphy appeals, raising five assignments of error: ( 1) the trial court erred
in granting summary judgment without reasonable discovery; ( 2) the trial court erred
in granting Mr. Macaluso' s motion to strike Mr. Murphy' s second amended petition;
3)
the trial court erred in granting summary judgment without considering Mr.
Macaluso' s violation of the Rules of Professional Conduct; ( 4) the trial court erred
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in granting summary judgment when there are genuine issues of material fact as to
Mr. Murphy' s subjective belief that he had an attorney- client relationship with Mr.
Macaluso; and ( 5) the trial court erred in granting summary judgment when there
are genuine issues of material fact as to Mr. Murphy' s status as a third -party
beneficiary of the legal services provided by Mr. Macaluso to the L.L.C.
SUMMARY JUDGMENT
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 for all or part of the relief prayed for by
a litigant. See La. Code Civ. P. art. 966( A)(3). A summary judgment is reviewed
on appeal de novo, with the appellate court using the same criteria that govern the
trial court' s determination of whether summary judgment is appropriate — whether
there is any genuine issue of material fact, and whether the movant is entitled to
judgment as a matter of law. Beer Industry League of Louisiana v. City of New
Orleans, 2018- 0280 ( La. 6/ 27/ 18), 251 So. 3d 380, 386.
The burden of proof rests with the mover. La. Code Civ. P. art. 966( D)( 1).
When the mover will bear the burden of proof at trial, the mover has the burden of
making a primafacie showing that no genuine issue of material fact remains. Only
when the mover makes this showing does the burden shift to the opposing party to
present evidence demonstrating a material factual issue remains. See Action
Oilfield Services, Inc. v. Energy Management Co., 2018- 1146 ( La. App. 1st Cir.
4/ 17/ 19), 276 So. 3d 538, 541- 542. If, however, the mover does not resolve all
material issues of fact, the burden never shifts to the opposing party. In that
situation, the opposing party has nothing to prove in response to the motion for
summary judgment, and summary judgment should be denied. John River
Cartage, Inc. v. Louisiana Generating, LLC, 2020- 0162 ( La. App. I st Cir.
3/ 4/ 20), So. 3d 2020 WL 1061354, * 5. Summary judgment cannot be
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defeated by mere argument of counsel, no matter how artful. See Hawkins v.
Fowler, 2011- 1495 ( La. App. 1st Cir. 5/ 2/ 12), 92 So. 3d 544, 547, writ denied, 2012-
1449 ( La. 10/ 8/ 12), 98 So. 3d 860.
If the mover will not bear the burden of proof at trial on the issue raised in the
motion, the mover' s burden on the motion does not require him to negate all essential
elements of the adverse party' s claim, action, or defense, but rather to point out to
the court the absence of factual support for one or more elements essential to the
adverse party' s claim, action or defense. Thereafter, the burden is on the adverse
party to produce factual support sufficient to establish the existence of a genuine
issue of material fact or that the mover is not entitled to judgment as a matter of law.
La. Code Civ. P. art. 966( D)( 1). Because it is the applicable substantive law that
determines materiality, whether a particular fact in dispute is material can only be
seen in light of the substantive law applicable to the case. Pumphrey v. Harris,
2012- 0405 ( La. App. 1st Cir. 11/ 2/ 12), 111 So. 3d 86, 89.
LAW AND ANALYSIS
To establish a claim for legal malpractice, a plaintiff must prove: ( 1) the
existence of an attorney- client relationship; ( 2) negligent representation by the
attorney; and (3) loss caused by that negligence. Costello v. Hardy, 2003- 1146 ( La.
1/ 21/ 04), 864 So. 2d 129, 138. The plaintiff bears the burden of proof of each of
these elements. Failure to prove any one of these elements is fatal to the claim. See
Id. at 138 n. 7. In this appeal, the primary issue is whether there was an attorney-
client relationship between Mr. Macaluso and Mr. Murphy.
Mr. Murphy initially argues that the trial court did not allow for adequate
discovery before granting summary judgment in favor of Mr. Macaluso, because
discovery was ongoing and not yet complete. This argument lacks merit. There is
no absolute right to delay action on a motion for summary judgment until discovery
is complete; rather, the requirement is only that the parties have a fair opportunity to
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carry out discovery and to present their claim. Unless a party shows a probable
injustice, a suit should not be delayed pending discovery when it appears at an early
stage that there is no genuine issue of fact. Primeaux v. Best Western Plus Houma
Inn, 2018- 0841 ( La. App. 1st Cir. 2/ 28/ 19), 274 So. 3d 20, 32. The trial court has
broad discretion when regulating pre- trial discovery, which discretion will not be
disturbed on appeal absent a clear showing of abuse. It is not an abuse of the trial
court' s wide discretion in discovery matters to grant a motion for summary judgment
before discovery has been completed. Id. The trial court considered Mr. Murphy' s
argument regarding inadequate discovery, but found that discovery was sufficient
for this particular motion for summary judgment that involved only one issue —
whether Mr. Macaluso was Mr. Murphy' s personal attorney. Considering the facts
and procedural posture of this case, we find that consideration of Mr. Macaluso' s
motion for summary judgment was not premature.
In his affidavit introduced in support of his motion for summary judgment,
Mr. Macaluso stated that he was hired by Mr. Smith as the attorney for the L.L.C. in
early June 2015. Mr. Smith requested that Mr. Macaluso prepare documents for the
conversion of the Corporation to the L.L.C. Mr. Macaluso reviewed the Articles of
Incorporation for the Corporation and confirmed that Mr. Smith was the
incorporator, director, and sole shareholder. The conversion was certified by the
Secretary of State on June 10, 2015. Mr. Macaluso met with Mr. Smith, Mr.
Killebrew, and Mr. Murphy on July 8, 2015. Mr. Macaluso never represented that
he was any individual' s personal attorney. Following the meeting, Mr. Macaluso
provided a retainer agreement regarding his services as attorney for the L.L.C. Mr.
Macaluso drafted an operating agreement for the L.L.C. in August 2015, but he later
learned from Mr. Smith that the operating agreement was never executed.
Mr. Macaluso also introduced excerpts of his deposition testimony, which
mirrored the information attested to in his affidavit. Additionally in support of his
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motion for summary judgment, Mr. Macaluso introduced the conversion documents
signed solely by Mr. Smith, the affidavits of Mr. Killebrew and Mr. Smith indicating
that Mr. Smith was to control the L.L.C. with Mr. Murphy and Mr. Killebrew serving
as employees without proprietary interests. Mr. Murphy also submitted excerpts of
Mr. Murphy' s deposition testimony where Mr. Murphy confirmed that he
understood Mr. Macaluso was hired as the " company lawyer."
In opposition to the motion for summary judgment, Mr. Murphy introduced
excerpts of his deposition and that of Mr. Macaluso. Much of Mr. Murphy' s
deposition testimony centered on his understanding of his agreement with Mr. Smith
and Mr. Killebrew that they were all equal partners in the L.L.C.' s business. Mr.
Murphy stated that he did not know who was handling the conversion of the L.L.C.,
nor did he realize that he and Mr. Killebrew had been left off of the conversion
papers until after the conversion took place. Mr. Murphy stated that he never
discussed the conversion of the business to an L.L.C. with Mr. Macaluso. Mr. Smith
told Mr. Murphy and Mr. Killebrew that the L.L.C. had hired Mr. Macaluso as the
company' s lawyer. Mr. Murphy testified that he thought Mr. Macaluso' s retainer as
the company lawyer meant that he was a client. The deposition testimony of Mr.
Macaluso did not reveal any representation of Mr. Macaluso other than as the lawyer
for the L.L.C.
The trial court found that the undisputed facts revealed that Mr. Macaluso was
engaged to be legal counsel for the L.L.C., that Mr. Macaluso' s obligation was to
protect the interests of the L.L.C., and that obligation did not extend to Mr. Murphy.
The trial court also found that it was unreasonable for Mr. Murphy to believe that he
had a personal attorney- client relationship with Mr. Macaluso. Mr. Murphy
presented no evidence other than his personal belief that Mr. Macaluso represented
him.
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Even though the question of whether an attorney- client relationship exists
turns largely on one' s subjective belief that it does, a person' s subjective belief that
an attorney represents him must be reasonable under the circumstances. Williams
v. Roberts, 2006- 169 ( La. App. 3rd Cir. 5/ 31/ 06), 931 So. 2d 1217, 1220- 1221, writ
denied, 2006- 1780 ( La. 11/ 9/ 06), 941 So. 2d 41. The requirement that the belief be
reasonable is an objective standard. A person' s subjective belief cannot establish an
attorney-client relationship unless the attorney reasonably induced that belief. For
this reason, an attorney-client relationship cannot exist in the absence of some initial
communication between the attorney and the client. Feingerts v. D' Anna, 2017-
0321 ( La. App. 4th Cir. 1/ 10/ 18), 237 So. 3d 21, 28.
The evidence submitted in support of and in opposition to summary judgment
reveals that no communication between Mr. Macaluso and Mr. Murphy ever
occurred regarding the conversion of the Corporation to the L.L.C. Mr. Murphy
always understood that Mr. Macaluso was the L.L.C.' s " company attorney." Thus,
we agree with the trial court that there was no attorney- client relationship between
Mr. Macaluso and Mr. Murphy. Because no such relationship existed, Mr. Murphy
could not have asserted a legal malpractice claim against Mr. Macaluso. Therefore,
summary judgment in favor of Mr. Macaluso on Mr. Murphy' s malpractice claim
was appropriate,.
As for the third -party beneficiary claim, the trial court found that the claim
was perempted under La. R.S. 9: 5605,' because it was not brought within one year
of the date that the alleged neglect by Mr. Macaluso was discovered ( in July 2015)
1 Louisiana Revised Statutes 9: 5605( A) provides, in pertinent part:
No action for damages against any attorney ... arising out of an engagement to provide
legal services shall be brought unless filed in a court of competent jurisdiction and proper venue
within one year from the date of the alleged act, omission, or neglect, or within one year from the
date that the alleged act, omission, or neglect is discovered or should have been discovered;
however, ... in all events such actions shall be filed at the latest within three years from the date
of the alleged act, omission, or neglect. [ Emphasis added.]
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or within three years from the date that the alleged neglect occurred ( in June 2015).
Louisiana jurisprudence has long recognized that the one and three year periods in
La. R.S. 9: 5605 are expressly peremptive, rather than prescriptive. See Naghi v.
Brener, 2008- 2527 ( La. 6/ 26/ 09), 17 So. 3d 919, 922. Because Mr. Murphy did not
assert his third -party beneficiary claim until almost four years after the date of the
alleged negligent action of Mr. Macaluso in converting the Corporation to an L.L.C.
without recognizing Mr. Murphy' s alleged proprietary interest in the L.L.C., we find
that the trial court correctly determined that Mr. Murphy' s legal malpractice claims
are time- barred. Peremption destroys the cause of action itself, and there is nothing
to which Mr. Murphy' s amended pleading asserting a third -party beneficiary legal
malpractice claim can relate back. Id. at 925- 926.
Given our outlined reasons for upholding the trial court' s July 26, 2019
judgment, we pretermit a full discussion of Mr. Murphy' s remaining assignments of
error concerning his second amended petition and consideration of whether Mr.
Macaluso may have violated a Rule of Professional Conduct by not clarifying any
potential conflict arising out of his representation of the L.L.C., but not its members
and/ or employees.2 We point out, however, that 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 v. Reeves, 2011- 1009 ( La. App. 1 st
Cir. 1/ 12/ 12), 82 So. 3d 1250, 1257. Additionally, the existence of an attorney- client
relationship is a prerequisite for proving a violation of professional conduct rules.
See In re Austin, 2006- 0630 ( La. 11/ 29/ 06), 943 So. 2d 341, 348. Mr. Murphy has
failed to demonstrate that he can prove an attorney-client relationship existed. We
further note that the claims asserted by Mr. Murphy against the L.L.C., Mr. Smith,
2 The law considers an L.L.C. and its members as being wholly separate persons. See Wilson v.
Two SD, LLC, 2015- 0959 ( La. App. 1st Cir. 12/ 23/ 15), 186 So. 3d 103, 114.
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and Mr. Killebrew are not before us in this appeal and thus, we express no opinion
as to those claims.
CONCLUSION
Based on our de novo review of the record, summary judgment in favor of Mr.
Macaluso and against Mr. Murphy was appropriate in this case. The July 26, 2019
judgment dismissing Robin Murphy' s claims against Ron S. Macaluso is affirmed.
All costs of this appeal are assessed to Robin Murphy.
AFFIRMED.
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STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
NO. 2019 CA 1485
ROBIN MURPHY
VERSUS
MKS PLASTICS, L.L.C.
J., affirming in part and dissenting in part.
I agree in part and dissent in part. I agree with the majority that there was no
attorney- client relationship between Mr. Macaluso and Mr. Murphy and that because
no relationship existed, Mr. Murphy could not have asserted a legal malpractice
claim against Mr. Macaluso. I also agree with the majority that summary judgment
in favor of Mr. Macaluso in connection with Mr. Murphy' s legal malpractice claim
was appropriate.
However, I disagree with the majority in affirming the trial court' s application
of the peremptive period provided by La. R.S. 9: 5605 to Mr. Murphy' s alternative
third -party beneficiary claim contained in the Second Amended, Supplemental and
Restated Petition for Declaratory Relief and Damages and granting the Motion to
Strike on that basis.
Limitation periods for legal malpractice actions do not apply to a non -client' s
action against an attorney, as the action does not arise out of "engagement to provide
legal services" to a non -client. La. R. S. 9: 5605; See Broussard v. F.A. Richard &
Assocs., Inc., 98- 1167 ( La. App. 3rd Cir. 3/ 17/ 99), 732 So. 2d 578, 582- 85, writ
denied, 99- 1048 ( La. 6/ 4/ 99), 744 So. 2d 625 ( finding there must be an attorney-
client relationship for La. R.S. 9: 5605 to apply). In order for La. R.S. 9: 5605 to
apply, there must be an attorney- client relationship. Smith v. Zibilich, 2012- 1123
La. App. lst Cir. 2/ 15/ 13), 2013 WL 595825, at * 3 ( unpublished) ( citing Broussard,
732 So. 2d at 585).
Therefore, I would reverse that portion of the judgment granting the Motion
to Strike. I would also reverse the portion of the judgment granting the motion for
summary judgment in its entirety dismissing all claims asserted by Mr. Murphy with
prejudice. I would grant the motion for summary judgment on a partial basis
dismissing only Mr. Murphy' s legal malpractice claim.
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