354 So.3d 854
La. Ct. App.2023Background
- Ashton was injured in a 2017 auto accident and retained Hood under a written contingency contract (25% fee; Hood advanced costs). Hood sent notice of representation to Liberty in January 2018.
- Liberty issued a $25,000 settlement check on December 3, 2018 payable to "Hood and Ashton" (not negotiated by Ashton) and later reissued another joint check in August 2019; both remained unsigned.
- Hood recorded the contingency contract in Caddo Parish on October 4, 2019 and withdrew as counsel the same month after Ashton refused to sign earlier checks; Liberty reissued a $25,000 check payable to Ashton alone on October 29, 2019, which Ashton negotiated.
- Hood sued Liberty to enforce a statutory attorney-fee privilege under La. R.S. 37:218, seeking his fee and advances; trial court granted Liberty summary judgment and denied Hood’s motion.
- The appellate court reversed: it held Hood had perfected a privilege when he recorded the contract before Liberty disbursed funds to Ashton and concluded Liberty had notice of Hood’s claim (e.g., earlier checks naming Hood). Hood was awarded summary judgment against Liberty and the matter remanded.
Issues
| Issue | Hood's Argument | Liberty's Argument | Held |
|---|---|---|---|
| Whether La. R.S. 37:218 requires recordation before settlement or only before disbursement to be effective against third parties | Recordation is required only before disbursement of settlement proceeds; Hood recorded Oct. 4, 2019 before Liberty paid Ashton on Oct. 29, 2019 | Contract must be recorded at the time of settlement (Dec. 3, 2018) to bind third parties; no recorded contract then | Court held recording prior to disbursement suffices to perfect the attorney’s privilege against Liberty; reversed trial court and granted Hood summary judgment |
| Whether Liberty had sufficient notice of Hood’s fee claim independent of recordation | Liberty had notice (Hood was named on earlier settlement checks) and should have investigated before reissuing funds to Ashton | Liberty had no actual notice of a recorded contract and reissued at Ashton’s request; it did not receive the contract before reissuance | Court found Liberty had adequate notice (inclusion on prior checks) and should have inquired further, supporting Hood’s claim |
| Whether failure to timely record/notify forfeits rights against settling third parties or successor counsel | Recording before disbursement and prior notice preserved Hood’s rights against Liberty | Relied on authorities saying discharged attorneys may forfeit claims if they don’t timely record/notify prior to settlement | Court distinguished cases cited by Liberty (e.g., Sileo) and held Hood did not forfeit his right as to Liberty because he recorded before disbursement and there was notice |
Key Cases Cited
- Scott v. Kemper Ins. Co., 377 So. 2d 66 (La. 1979) (interprets R.S. 37:218 and holds recordation is required for obligor to be charged with withholding settlement funds until the attorney’s fee is determined)
- Calk v. Highland, 376 So. 2d 495 (La. 1979) (privilege can attach to settlement proceeds in disputes with client’s creditors even without recordation)
- Neely v. Hollywood Marine, Inc., 530 So. 2d 1116 (La. 1988) (post-settlement recordation and intervention do not automatically foreclose inquiry into whether settlement was adequate; court scrutinized release process)
- Law Office of John D. Sileo, LLC v. Kruse, 239 So. 3d 1057 (La. App. 5 Cir. 2018) (discusses forfeiture where discharged attorney fails to record or otherwise notify before settlement)
- Reis v. Fenasci & Smith, 635 So. 2d 1319 (La. App. 4 Cir. 1994) (successor counsel’s acknowledgment or prior notice can preserve a discharged attorney’s claim against successor counsel)