source: Caselaw Access Project

author: GAIDRY, J.

license: Public Domain

text:
    Michael SIMS v. BFI WASTE SERVICES, L.L.C.
    No. 2006 CA 1319.
    Court of Appeal of Louisiana, First Circuit.
    May 16, 2007.

      Peter T. Dudley, Baton Rouge, Counsel for Plaintiff/Appellant Michael Sims.
    Trenton J. Oubre, Matthew Bonham, Baton Rouge, Counsel for Defendant/Ap-pellee BFI Waste Services, L.L.C.
    Before: KUHN, GAIDRY, and WELCH, JJ.
   GAIDRY, J.

LA workers’ compensation claimant appeals a judgment denying his motion seeking indemnity under a compromise agreement and statutory penalties. For the following reasons, we reverse the judgment in part and affirm it in part.

FACTUAL BACKGROUND AND PRIOR PROCEEDINGS

The claimant-appellant, Michael Sims, was a driver employed by the defendant, BFI Waste Services, L.L.C. (BFI). He filed a disputed claim for compensation with the Louisiana Office of Workers’ Compensation Administration on September 11, 2003, alleging he sustained a work-related injury on June 12, 2003.

Throughout the course of the subsequent proceedings, the causal relationship of Mr. Sims’s medical condition to any work-related accident was vigorously contested. BFI denied liability for any benefits or medical expenses, basing its position primarily on the fact that Mr. Sims had earlier made a claim for disability benefits with UNUM Provident Insurance Company (UNUM), attesting that his medical condition was degenerative in nature and his resulting disability was unrelated to a workplace injury. The claim with UNUM was approved, and Mr. Sims began receiving disability benefits on July 9, 2003, prior to the filing of the disputed claim for compensation. Medical expenses related to treatment of his condition had been paid through a group health care plan with CIGNA Healthcare, also purportedly based upon Mr. Sims’s representations that his condition was not due to a workplace injury. Mr. Sims also applied for and was awarded Social Security disability benefits, which commenced on December 1, 2003.

The trial of the claim was eventually set for January 5, 2005, but the parties agreed to settle the dispute as the result of a mediation held on LJanuary 7, 2005. The compromise was later embodied in a written agreement entitled “Receipt and Release,” executed by Mr. Sims on February 17, 2005. In addition to providing for the release of all claims by Mr. Sims in exchange for the payment of $25,000.00, the compromise agreement also provided for reciprocal indemnity obligations owed by both parties. BFI’s indemnity obligation, the central issue of this appeal, was expressed as follows:

As a further condition and in further consideration of the settlement reached herein, BFI agrees to indemnify and hold harmless Michael Sims, from any specific claims asserted by CIGNA Healthcare and/or UNUM Provident Insurance Company solely for reim bursement of paid medical expenses and/or disability insurance benefits received by Michael Sims up to the date this matter was settled in principle at the mediation of this matter on January 7, 2005. (Emphasis supplied.)

On February 22, 2005, a UNUM representative wrote to Mr. Sims, advising him that as he had received Social Security disability benefits during a period in which he also received full long-term disability benefits from UNUM, he had been overpaid $7,138.01, and UNUM was entitled to reimbursement in that amount. On March 9, 2005, Mr. Sims’s attorney sent a letter by facsimile telecopier and mail to BFI’s attorney, enclosing a copy of UNUM’s letter and advising BFI that Mr. Sims would seek defense and indemnity of UNUM’s claim from BFI.

On March 16, 2005, the parties submitted a joint petition seeking approval of their compromise agreement by the workers’ compensation judge (WCJ). No issue was raised in the petition concerning UNUM’s reimbursement claim. Finding that a bona fide dispute existed and that compromise was fair and equitable, the WCJ rendered judgment on March 17, 2005, approving the compromise according to the terms of the “Receipt and Release,” and dismissing the claim with prejudice.

|4On January 20, 2006, Mr. Sims filed a Motion to Enforce Settlement Agreement and to Assess Penalties, based upon BFI’s refusal to indemnify him for UNUM’s claim for reimbursement. The motion was heard on February 17, 2006, and the WCJ ruled in favor of BFI, denying the motion and dismissing Mr. Sims’s claim for indemnity and penalties asserted therein. The WCJ’s judgment was signed on February 23, 2006. Mr. Sims then instituted this appeal.

ASSIGNMENTS OF ERROR

We summarize Mr. Sims’s two assignments of error as follows:

(1) The WCJ committed legal error in ruling that BFI’s indemnity obligation in the compromise agreement did not apply to UNUM’s reimbursement claim for overpayment of disability benefits based upon Mr. Sims’s concurrent receipt of Social Security disability benefits.

(2) The WCJ erred in failing to award Mr. Sims statutory penalties and attorney fees under La. R.S. 23:1201(G).

ANALYSIS

The general rules which govern the interpretation of other contracts apply in construing contracts of compromise and indemnity. See Brown v. Drillers, Inc., 93-1019 (La.1/14/94), 630 So.2d 741, 748, and Dean v. Griffin Crane & Steel, Inc., 05-1226, p. 7 (La.App. 1st Cir.5/5/06), 935 So.2d 186, 191, writ denied, 06-1334 (La.9/22/06), 937 So.2d. 387. Thus, the following general codal principles guide our interpretation of the contract, including its indemnity provisions.

Interpretation of a contract is the determination of the common intent of the parties. La. C.C. art.2045. This is an objective inquiry; thus, “a party’s declaration of will becomes an integral part of his will.” La. C.C. art.2045, Revision Comments— 1984, (b). When the words of a contract are |sclear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. La. C.C. art.2046. The words of a contract must be given their generally prevailing meaning. La. C.C. art.2047. Words susceptible of different meanings must be interpreted as having the meaning that best conforms to the object of the contract. La. C.C. art.2048. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. C.C. art.2050.

In Moak v. American Auto. Ins. Co., 242 La. 160, 134 So.2d 911 (La.1961), the Louisiana supreme court held that when a dispute arises as to the scope of a compromise agreement, extrinsic evidence can be considered to determine exactly what differences the parties intended to settle. This rule is a special exception to the general rule of La. C.C. art.2046, based upon a supplementary rule of construction in La. C.C. art. 3073 stating that compromises “do not extend to differences which the parties never intended to include in them.” Brown, 93-1019, 630 So.2d at 748-49. Under Moak and its progeny, the parties to a release or compromise are permitted to raise a factual issue as to whether unequivocal language in the instrument was intended to be unequivocal. Brown, 93-1019, 630 So.2d at 749. Thus, in the case of a compromise agreement, the intent which its words express in light of the surrounding circumstances at the time of execution of the agreement is controlling. Brown, 93-1019, 630 So.2d at 748. However, the jurisprudential rule of Moak has since been tempered by the qualification that there must be some substantiating evidence of mistaken intent as to the nature of the rights being released or the aspects of the claim being released. Brown, 93-1019, 630 So.2d at 749.

I nAs the mover or plaintiff-in-rule, Mr. Sims had the initial burden of establishing his entitlement to reimbursement, and he established that prima facie case based upon the terms of the compromise agreement alone. See Drapcho v. Drapcho, 05-0003, p. 10 (La.App. 1st Cir.2/10/06), 928 So.2d 559, 565, writ denied, 06-0580 (La.5/5/06), 927 So.2d 324. But as the party asserting the benefit of the release as excluding the claim for reimbursement, BFI bore the burden of proof on the validity and scope of the release. Id.

Other provisions in the compromise agreement refer to potential claims by UNUM. In addition to the provision describing BFI’s indemnity obligation to Mr. Sims, the “Receipt and Release” provided that Mr. Sims owed certain contingent indemnity obligations to BFI:

Except for the specific claims of CIG-NA Healthcare and UNUM Provident Insurance Company as previously outlined herein, Michael Sims does hereby agree to indemnify, hold harmless and defend (solely at his cost including court costs and attorneys’ fees) BFI ... from and against any and all claims or demands ... which may be hereafter asserted by any firm or person ..., corporation and/or entity against BFI ... in connection with any alleged injuries or claims arising out of Michael Sims’s injuries ... which allegedly occurred on or about June 12, 2003, or at any time during his employment with BFI ...
Michael Sims acknowledges that it is his obligation to pay, from the lump sum set forth above, any outstanding and/or future medical bills. Michael Sims further agrees to satisfy, in full, any and all liens and/or privileges and/or subro-gation demands asserted by any third party and Michael Sims hereby assumes all obligations and/or responsibilities for the payment of same, except the specific potential claims of CIGNA and UNUM as outlined above. (Emphasis supplied.)

It might be argued that the language of the second paragraph quoted above serves to further define or narrow BFI’s indemnity obligation to only those potential claims for which UNUM could assert a lien or privilege, or for which it could assert a demand based upon subrogation. To the extent that this conceivably injects some ambiguity into the scope of the indemnity | obligation, such ambiguity is easily resolved by examination of the terms of UNUM’s policy, which was introduced as extrinsic evidence by both parties at the hearing. The terms of that policy are obviously relevant to an understanding of the scope of BFI’s indemnity obligation relating to any potential claim by UNUM.

The policy issued by UNUM provided both short-term and long-term disability benefits under an employer-funded disability plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq. ERISA preempts state statutes related to self-funded employee benefit plans, including state subrogation and reimbursement laws. In re Tutorship of Roy, 31,383, p. 2 (La.App. 2nd Cir.1/20/99), 726 So.2d 1048, 1050. ERISA sets forth no principles of interpretation of its own nor does it regulate the substantive content of employee benefit plans. Therefore, a court should look to the terms of the plan and other manifestations of the parties’ intent regarding reimbursement and subrogation rights. Tutorship of Roy, 31,383 at p. 3, 726 So.2d at 1050.

The relevant language of UNUM’s policy simply provides that “UNUM has the right to recover any overpayments due to ... [an employee’s] receipt of deductible sources of income,” that the employee “must reimburse [UNUM] in full,” and that UNUM “will determine the method by which repayment is to be made.” (Emphasis supplied.) “Deductible sources of income” that UNUM was entitled to offset against its long-term disability payments included, among others, workers’ compensation benefits and Social Security disability payments. There is no provision providing for conventional subrogation of UNUM to the employee’s rights against the employer or any third-party obligor, and as | sLouisiana substantive law does not apply, no legal subrogation under the Civil Code would exist.

At the hearing, BFI argued that its indemnity agreement was negotiated in the course of the mediation, based upon a concern by Mr. Sims’s counsel that UNUM would seek reimbursement for disability payments made without reduction for workers’ compensation received, and that Mr. Sims’s receipt of Social Security disability benefits, another “deductible source of income,” was never discussed during the negotiations. BFI renews that argument in this appeal.

BFI’s argument that the Social Security disability payments received by Mr. Sims were not at issue in the compromise is belied by the following language contained in the “Receipt and Release”:

Michael Sims represents that he is currently receiving Social Security Disability Income. Michael Sims further represents that he has received Social Security Disability Income for a period less than 21 months and that he does not have a reasonable expectation of becoming a Medicare beneficiary within 30 months of this settlement and that the total amount of this compromise settlement, including indemnity, medicals and attorneys’ fees is less than $250,000. (Emphasis supplied.)

The foregoing language expressly evidences BFI’s knowledge of the receipt of Social Security disability payments, and implicitly acknowledges BFI’s awareness that its potential indemnity obligation formed part of the “amount” of the settlement. We also observe that the UNUM policy, including its reimbursement clause, forms part of the documentary evidence offered by BFI at the hearing, and BFI unquestionably was familiar with its terms, as it funded the disability plan as employer. While BFI’s argument is reasonable and makes sense given the nature of the claim compromised, no direct evidence or testimony regarding that supposed intent was offered at the hearing on Mr. Sims’s motion. Argument of counsel, no matter how |flartful, is not evidence. Houston v. Chargois, 98-1979, p. 3 (La.App. 4th Cir.2/24/99), 732 So.2d 71, 73. There is simply no direct evidence supporting BFI’s alternate interpretation of the phrase “any specific claims asserted by ... UNUM ... solely for reimbursement of paid ... disability insurance benefits received by Michael Sims.”

Louisiana Civil Code article 2057 sets forth a rule which provides further guidance in the present fact situation:

In case of doubt that cannot be otherwise resolved, a contract must be interpreted against the obligee and in favor of the obligor of a particular obligation.
Yet, if the doubt arises from lack of a necessary explanation that one party should have given, or from negligence or fault of one party, the contract must be interpreted in a manner favorable to the other party whether obligee or obligor. (Emphasis supplied.)

If BFI had actually intended to limit its indemnity obligation to claims for reimbursement of overpayments based upon Mr. Sims’s receipt of workers’ compensation benefits only, it easily could have supplied that necessary explanation in the compromise agreement. It did not. Nor did it seek to amend the compromise agreement to clarify that point or to bring the issue before the WCJ before seeking his approval according to its written terms. Given that BFI had notice of the claim for reimbursement prior to obtaining such approval, we view the latter omission as particularly significant. Accordingly, the indemnity agreement must be interpreted as written, against BFI, an interpretation that otherwise accords with the plain meaning of the provision and is still consistent with the factual context of the compromise.

In opposition to Mr. Sims’s motion, BFI also argued that his claim for indemnity under the compromise agreement was premature, citing Suire v. Lafayette City-Parish Consol. Gov’t, 04-1459 (La.4/12/05), 907 So.2d 37. |10In Suire, the Louisiana supreme court observed that an indemnitor is not liable under an indemnity agreement until the indemnitee actually makes payment or sustains loss, and that a claim for defense under an indemnity agreement is premature until the party entitled to indemnity has sustained some compensable loss. Suire, 04-1459 at p. 17, 907 So.2d at 51.

At the hearing, Mr. Sims introduced a letter from UNUM to his client dated November 30, 2005, advising him that it would be applying his full monthly long-term disability payments to the overpayment amount until the full amount claimed was recovered. Thus, at the time the motion was heard on February 17, 2006, Mr. Sims established a prima facie case that his benefits since November 30, 2005 were being withheld and set off by UNUM against the overpayment. There being no evidence to the contrary, his claim for indemnity could no longer be considered premature on the grounds that no loss had been sustained.

Additionally, we note that BFI did not assert the dilatory exception of prematurity in response to Mr. Sims’s claim, although it did raise the issue by memorandum. Even if such could somehow be considered the equivalent of an exception, the dilatory exception must be tried and decided in advance of the trial on the merits of a claim. See La. C.C.P. art. 929. If not tried in advance of the trial on the merits, any objection asserted in a dilatory exception is waived or abandoned. See Dombrowski v. New Orleans Saints, 05-0762, p. 5 (La.App. 1st Cir.8/2/06), 943 So.2d 403, 407, and La. Power & Light Co. v. City of Houma, 229 So.2d 202, 204 (La.App. 1st Cir.), writ denied, 254 La. 1165, 229 So.2d 350 (La.1969). Thus, BFI’s argument as to prematurity lacks merit on both substantive and procedural grounds.

In summary, we agree with Mr. Sims that the WCJ erred in denying his claim for indemnity against BFI. Accordingly, he is entitled to Inindemnification from BFI for UNUM’s claim for reimbursement of the overpayment of disability benefits through January 7, 2005, in the amount of $7,138.01. But as Mr. Sims failed to offer any evidence at the hearing regarding any costs or expenses incurred in the defense of UNUM’s claim for reimbursement, he is not entitled to judgment for any such costs of defense.

Statutory Penalties and Attorney Fees

A consent judgment of compromise may constitute a “final, non-appeal-able judgment” for purposes of imposition of statutory penalties and attorney fees under La. R.S. 23:1201(G). Trahan v. Coca Cola Bottling Co. United, Inc., 04-0100, pp. 16-19 (La.3/2/05), 894 So.2d 1096, 1107-09. Awards of penalties and attorney fees in workers’ compensation cases are essentially penal in nature, and are imposed to deter indifference and undesirable conduct by employers and their insurers toward injured workers. Trahan 04-0100 at p. 17, 894 So.2d at 1108. As a penal statute, La. R.S. 23:1201(G) must be strictly construed. Cooper v. St. Tammany Parish Sch. Bd., 02-2433, pp. 9-10 (La. App. 1st Cir.11/7/03), 862 So.2d 1001, 1009, unit denied, 04-0434 (La.4/23/04), 870 So.2d 300.

Louisiana Revised Statutes 23:1201 provides that penalties and attorney fees shall be assessed unless the claim is reasonably controverted or such nonpayment results from conditions over which the employer had no control. Brown v. Texas-LA Cartage, Inc., 98-1063, p. 8 (La.12/1/98), 721 So.2d 885, 890. In order to reasonably controvert a claim, the defendant must have some valid reason or evidence for refusing to pay, or must have based his decision on a nonfrivolous legal-dispute. See Brown, 98-1063 at p. 9, 721 So.2d at 890.

112A1 though embodied by reference in a consent judgment, the terms of the “Receipt and Release” are not expressed with the clarity and precision generally required of a judgment. Given the nature of the compromised claim, the factual context of the compromise, and the contingent nature of the indemnity provision at the time the agreement was signed, BFI’s interpretation of the scope of its indemnity obligation was certainly plausible, and its interpretation constituted a valid basis to reasonably controvert the claim for indemnity. Imposition of penalties under these facts would not further the statutory scheme, and is not warranted under these facts. Thus, the WCJ was correct in denying Mr. Sims’s claim for penalties, and we affirm that portion of the WCJ’s judgment.

DECREE

The judgment of the Office of Workers’ Compensation Administration, District 5, is reversed in part to hold the defendant-appellee, BFI Waste Services, L.L.C., liable for indemnity to the claimant-appellant, Michael Sims, for the sum of $7,138.01, together with legal interest thereon from the initial date of loss until paid, and is otherwise affirmed. All costs of this appeal are assessed to the defendant-appellee.

REVERSED IN PART AND AFFIRMED IN PART.

KUHN, J., concurs.


author: CARTER, C.J.

text:
    Jaroed SLOCUM, ex ux. v. Elmer LITCHFIELD, Sheriff of East Baton Rouge Parish.
    No. 2007 CW 0006.
    Court of Appeal of Louisiana, First Circuit.
    June 8, 2007.
    John Stewart Tharp, Cyrus J. Greco, William Kaufman, Baton Rouge, Counsel for Defendant/Relator, Elmer B. Litch-field, Sheriff of East Baton Rouge Parish.
    Timothy J. Martinez, Baton Rouge, Counsel for Plaintiffs/Respondents, Jaroed Slocum and Laura Slocum.
    Before: CARTER, C.J., WHIPPLE and McDonald, jj.
   CARTER, C.J.

| ¡.This court granted a writ of certiorari to determine the sufficiency of service of process of this delictual action against Elmer Litchfield as the Sheriff of East Baton Rouge Parish.

FACTS AND PROCEDURAL HISTORY

Jaroed Slocum, formerly a deputy employed with the East Baton Rouge Parish Sheriffs Department, instituted a negligence action in April 2006. Slocum alleges he sustained injuries in the performance of his official duties when attacked by an inmate. “Elmer Litchfield, in his capacity as the Sheriff of the Parish of East Baton Rouge” was named as the sole defendant. The petition contained a request that service on the defendant be held. In June 2006, personal service was perfected upon “EBR Parish Sheriffs Office through its agent for service: Elmer B. Litchfield.”

In response to Slocum’s petition, Sheriff Litchfield filed a declinatory exception raising the objection of insufficiency of service of process and a motion for involuntary dismissal. Sheriff Litchfield also filed a dilatory exception raising the objection of lack of procedural capacity and a peremptory exception raising the objection of no cause of action. Following the trial court’s denial of his exceptions and motion, Sheriff Litchfield sought the supervisory review of this court. On March 7, 2007, this court granted a writ of certiorari.

DISCUSSION

The sole issue briefed for this court’s consideration is whether personal service of the citation and petition upon the “EBR Parish Sheriffs Office through its agent for service: Elmer B. Litchfield,” (emphasis supplied) constitutes timely and effective service on the sole defendant to this suit, Sheriff Litchfield.

| .^Litchfield, as the elected sheriff, is the constitutionally designated chief law enforcement officer of the Parish, and the sheriff, not the sheriff’s department, was properly named as the defendant in this litigation. The law of Louisiana affords no legal status to a parish sheriff’s department; a sheriff’s department is not a legal entity capable of being sued. Valentine v. Bonneville Ins. Co., 96-1382 (La.3/17/97), 691 So.2d 665, 668.

As noted in Slocum’s petition, Sheriff Litchfield is a “political subdivision” within the meaning of LSA-R.S. 13:5102 B(l). As a political subdivision, service must be accomplished in accordance with LSA-R.S. 13:5107 D(l), which requires that service be requested within ninety days of the commencement of the action. “If service is not requested by the party filing the action within that period, the action shall be dismissed without prejudice, after contradictory motion as provided in Code of Civil Procedure Article 1672(C), as to the state, state agency, or political subdivision, or any officer or employee thereof, who has not been served.” LSA-R.S. 13:5107 D(2).

According to the citation and service return, an East Baton Rouge Parish Deputy Sheriff effected personal service upon Sheriff Litchfield; however, the citation refers to Sheriff Litchfield as an agent for the East Baton Rouge Parish Sheriffs Office, rather than as the named defendant. Sheriff Litchfield maintains that this error in the citation amounts to ineffective service; therefore, plaintiffs suit against him should be dismissed without prejudice in accordance with LSA-R.S. 13:5107 D(2).

In Thomas v. Louisiana Dept, of Public Safety and Corrections, 02-0897 (La.App. 1 Cir. 3/28/03), 848 So.2d 635, writ denied, 03-2397 (La.11/21/03), 860 So.2d 552, the plaintiff filed suit against the State of Louisiana through the Department of |4PubIic Safety and Corrections (DPSC) and Dixon Correctional Institute. In Thomas, as in the instant case, the correct defendant was named in the suit. But in Thomas, service initially was requested upon the Secretary of State, an incorrect agent for service. Approximately eighteen months after the suit was filed, service was perfected on the correct agent, Richard Stalder, the Secretary of DPSC. In response to the defendants’ motion to dismiss, plaintiff argued that LSA-R.S. 13:5107 merely required that service be requested within ninety days of filing the initial pleading, not that service be perfected, emphasizing that he timely requested service on the proper party, albeit on the wrong agent for service of process. This court rejected plaintiffs argument and held that a request for service of process satisfies the ninety-day requirement of LSA-R.S. 13:5107 D when it names the proper party or agent for service of process. Thomas, 848 So.2d at 638-640.

But the present matter is factually distinguishable from Thomas and'requires a different result. In Thomas, service was made upon the incorrect agent, an agent totally unrelated to the litigation. Thomas, 848 So.2d at 636-637. Conversely, in this instance, although the citation referred to Sheriff Litchfield as “agent” for the East Baton Rouge Parish Sheriffs Department, Sheriff Litchfield was personally served with the citation and the petition; service was perfected upon the sole named defendant. The technical misnomer of Sheriff Litchfield as “agent” in the citation does not vitiate the actual service of process upon Sheriff Litchfield as the sole named defendant.

Based on the foregoing, we find no error in the trial court’s ruling denying the decli-natory exception raising the objection of insufficiency of service of process and the motion for involuntary dismissal filed on behalf of Sheriff Litchfield.

AFFIRMED.

      . "Personal service is made when a proper officer tenders the citation or other process to the person to be served.” LSA-C.C.P. art. 1232.

      . Sheriff Litchfield did not brief the trial court’s ruling denying his "Exception of Lack of Procedural Capacity and No Cause of Action.” Legal issues not briefed are considered abandoned. Uniform Rules-Courts of Appeal, Rule 2-12.4.

      . Sheriff Litchfield filed in district court a motion to supplement the record with: (1) a June 16, 2006, letter from plaintiff's counsel to the clerk of court requesting service of the petition; and (2) the citation and return of the East Baton Rouge Parish Sheriff’s Office filed June 27, 2006. The district court granted the motion. The clerk’s office supplemented the record with the citation return; however, the June 16, 2006, letter requesting service was sent under separate cover with a notation that the “letter was not filed.” Because the letter to the clerk of court was never filed into the record or into evidence at the trial court level, it cannot be considered. An appellate court cannot review evidence that is not in the record and cannot receive new evidence. Guedry v. Fromenthal, 633 So.2d 287, 289 (La.App. 1 Cir. 1993). The minutes from the December 4, 2006, hearing reflect that Sheriff Litchfield offered "the entire suit record” into evidence, but "the record” already is a part of the proceedings, and it is not necessary for an attorney to specifically state that it is offered into evidence. See Discover Bank v. Peters, 38,366 (La.App. 2 Cir. 4/14/04), 870 So.2d 602, 606.


author: DOWNING, J.

text:
    Debra McKEE, Individually and as Natural Tutrix of Her Minor Child, Breanna Denise Ellis v. WAL-MART STORES, INC. and Amy Guidry Gleason.
    No. 2006 CA 1672.
    Court of Appeal of Louisiana, First Circuit.
    June 8, 2007.
    Rehearing Denied July 9, 2007.

      Donald W. Price, Baton Rouge, Allen J. Myles, Plaquemine, Counsel for Plaintiffs/Appellants Debra McKee, etc.
    F. Scott Kaiser, Gregory T. Stevens, Baton Rouge, Counsel for Defendants/Ap-pellees Wal-Mart Stores, Inc. and Amy G. Gleason.
    Before: PETTIGREW, DOWNING and HUGHES, JJ.
   DOWNING, J.

| gDebra McKee appeals a summary judgment granted in favor of Wal-Mart dismissing her claim for damages allegedly arising from a Wal-Mart pharmacist’s failure to counsel regarding medicine prescribed for her daughter. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

Ms. McKee took her child to see her pediatrician on November 10, 2003 due to sinus, allergy and related complaints. Initially, the pediatrician told Ms. McKee that he would give her daughter an antibiotic called Omnicef. He counseled Ms. McKee on the proper administration of Omnicef and gave her an instruction sheet concerning this drug. However, apparently when he realized he did not have samples, he wrote a prescription for another antibiotic called Septra DS. He did not advise Ms. McKee of the change.

Ms. McKee took the prescription to the Wal-Mart store in Zachary, Louisiana, where the pharmacist filled the prescription as written. Wal-Mart has stipulated in brief, for purposes of the motions at issue only, that it did have a duty to counsel regarding the prescription, that it breached the duty by failing to properly counsel, that had the Wal-Mart pharmacist counseled, the pharmacist would have called the pediatrician to see what he intended to prescribe, that they dispensed generic Septra DS to the child, and that the child suffered certain damages. (R. p. 603)

| aAfter a hearing on Wal-Mart’s motion for summary judgment, the trial court entered judgment in its favor, finding that no genuine issues of fact existed and that Ms. McKee had failed to prove Wal-Mart was negligent. Ms. McKee filed a motion for new trial, which the trial court denied after a hearing.

Ms. McKee now appeals, asserting three assignments of error, as follows:

1.The trial court erred in finding that there were no genuine issues of material fact and that the defendants were entitled to judgment as a matter of law on the issue of the defendants’ negligence.
2. The trial court erred in finding that there were no genuine issues of material fact and that the defendants were entitled to judgment as a matter of law on the issue of causation.
3. The trial court erred in denying the motion for new trial due to its failure to find that its ruling on the motion for summary judgment was contradictory to the law and the evidence.

DISCUSSION

Standard of Review

In determining whether summary judgment is appropriate, appellate courts conduct a de novo review of the evidence, employing the same criteria that govern the trial court’s determination of whether summary judgment is appropriate. Osborne v. JAG Const Services, Inc., 04-0437, p. 4 (La.App. 1 Cir. 2/16/05), 906 So.2d 601, 603, writ denied, 05-0739 (La.5/6/05), 901 So.2d 1101. Summary judgment is appropriate only if the pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966 B.

If the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant’s |4burden 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 that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact. La. C.C.P. art. 966 C(2).

Analysis

Here, Ms. McKee claims that Wal-Mart is liable for negligence in that it failed to counsel her pursuant to a statutory duty, which resulted in damages to her daughter. Generally, proof of liability for negligence includes five elements:

(1) proof that the defendant had a duty to conform his conduct to a specific standard (the duty element);
(2) proof that the defendant’s conduct failed to conform to the appropriate standard (the breach element);
(3) proof that the defendant’s substandard conduct was a cause-in-fact of the plaintiffs injuries (the cause-in-fact element);
(4) proof that the defendant’s substandard conduct was a legal cause of the plaintiffs injuries (the scope of liability or scope of protection element); and
(5) proof of actual damages (the damages element).

See Detraz v. Lee, 05-1263, p. 8 (La.1/17/07), 950 So.2d 557, 562. Wal-Mart has stipulated to the first, second, and fifth element for the purposes of these motions. Accordingly, we limit our review of the trial court's judgment to the third and fourth elements: whether there exist questions of fact regarding whether Wal-Mart’s substandard conduct was a cause-in-fact 15of Ms. McKee’s daughter’s injuries and whether the substandard conduct was a legal cause of her injuries. And because of our disposition of the fourth, legal cause, element, we pretermit discussion of the cause-in-fact element.

LEGAL CAUSATION

In Perkins v. Entergy Corp., 98-2081, p. 31 (La.App. 1 Cir. 12/28/99), 756 So.2d 388, 410, this court explained that a determination of “cause” in a legal causation analysis demands inquiry into “whether a legal standard of care exists and requires delving into policies for and against extending the asserted legal standard of care to protect the particular plaintiff against the particular harm. (Citations omitted.)” The determination of legal cause is a purely legal question. Id. “The ease of association of the injury with the rule of conduct that is urged, however, is the proper inquiry.” Id. “[Ljegal cause can be evaluated on the basis of foreseeability and ease of association.” Id. “[T]he extent of protection owed a particular plaintiff is determined on a case-to-case basis to avoid making a defendant an insurer of all persons against all harms.” Id.

1. Pertinent legal standard

The duty Wal-Mart allegedly breached is the duty of its pharmacist to counsel Ms. McKee regarding a prescription it dispensed for her daughter. The parameters of this duty are set forth in La. Admin. Code 46:LIII:1115. A copy is attached to this opinion as Appendix A.

lfi2. Foreseeability

No evidence in the record filed in connection with the motion for summary judgment suggests that it was dangerous or improper for Wal-Mart to dispense Septra DS to Ms. McKee’s child. At worst, Ms. McKee’s medical expert states that such prescription was “not a prudent choice.” Other evidence asserted that the prescription for generic Septra DS was appropriate, though perhaps not the first choice for treatment. And no evidence suggests that the side effects suffered from the prescription are common or expected. Rather, the only evidence presented in this regard is that the child’s reaction was extremely rare. And she had taken the medication before.

While complications are foreseeable from taking any medication, it does not seem to be reasonably foreseeable that the rare harm suffered here would result from the failure to counsel a patient, which resulted in the dispensation of an apparently appropriate antibiotic. This is particularly so where Wal-Mart’s regulated duty was to inform the patient of “common severe side or adverse effects or interactions and therapeutic contraindications that may be encountered, including their avoidance, and the action required if they occur.” (Emphasis added.) La. Admin. Code 46:LIII:1115D(4).

3. Ease of Association

Nor do we find it easy to associate Wal-Mart’s failure to counsel Ms. McKee with the development of a rare side effect from an allegedly incorrect, nevertheless appropriate, antibiotic. By its own terms, the duty imposed does not require that a patient be counseled regarding rare or remotely possible side effects. Id.

|74. Public Policy

The stated purpose of a pharmacist’s duty to counsel is “to improve therapeutic outcomes by maximizing proper use of prescription medications and devices.” Ms. McKee only argues that had she been counseled, she would have been alerted, and the pharmacist would have called the doctor, who would have realized his mistake and corrected the prescription to prescribe Omnicef. While we recognize that a jury could believe this scenario, it does not appear to us that the purposes underlying the regulated duty for pharmacy counseling encompass this factual scenario in which Ms. McKee would have been alerted to a possible error.

5. Legal Cause

Accordingly, under the undisputed facts of this case, based on foreseeability, ease of association, and consideration of public policy, we conclude that Ms. McKee has failed to show that she can establish an essential element of her case — legal causation. Therefore, the trial court did not err in finding that Wal-Mart was not negligent. Further it did not err in finding that there were no disputed issues of material fact to preclude entry of summary judgment.

Ms. McKee’s first and second assignments of error are without merit.

DENIAL OF NEW TRIAL

We pretermit consideration of the third assignment of error addressing the denial of Ms. McKee’s motion for new trial. Following Carpenter v. Hannan, 01-0467, p. 4 (La.App. 1 Cir. 3/28/02), 818 So.2d 226, 228, citing Morrison v. Dillard Department Stores, Inc., 99-2060, p. 2 (La.App. 1 Cir. 9/22/00), 769 So.2d 742, 744, the established rule in this circuit is that the denial of a motion for new trial is an interlocutory and non-appealable judgment. The Louisiana Supreme Court, however, has instructed us to consider an appeal of the denial of a motion for new trial as an appeal of the judgment on the merits, when it is clear from appellant’s brief that the appeal was intended to be on the merits. Carpenter, 01-0467 at p. 4, 818 So.2d at 228-229. Thus, we are to review the judgment on the merits and not the judgment denying a new trial, which we have done.

DECREE

For the foregoing reasons, we affirm the judgment of the trial court granting summary judgment in favor of Wal-Mart and against Ms. McKee, dismissing her claims with prejudice. Costs of this appeal are assessed against Ms. Debra McKee.

AFFIRMED.

PETTIGREW, J., concurs in the result.

HUGHES, J., concurs.

APPENDIX A

J^46 LA ADC Pt LIII, § 1115

La. Admin Code. tit. 46, pt. LIII, § 1115

LAC 46:LIII.1115

This document has been amended. Use UPDATE. See SCOPE for more information.

LOUISIANA ADMINISTRATIVE CODE TITLE 46. PROFESSIONAL AND OCCUPATIONAL STANDARDS PART LIII. PHARMACISTS CHAPTER 11. PHARMACIES

Current through November 1, 2001

§ 1115. Patient Counseling

A. Patient Counseling — the effective communication by the pharmacist of information, as defined in this regulation, to the patient or caregiver, in order to improve therapeutic outcomes by maximizing proper use of prescription medications and devices.

B. Sign. The use of a sign to alert patients that patient counseling services are available may be appropriate for informing patients of this service, but does not satisfy the requirements for counseling, since many patients may not be able to read or understand the sign.

C. Waiver. No pharmacist or pharmacy may solicit or encourage blanket waivers for patient counseling; however, nothing in this regulation shall prohibit the patient or caregiver from refusing counseling on each prescription.

D. Minimum Requirements. At a minimum, the pharmacist should be convinced that the patient or caregiver, as a result of counseling, is informed of the following:

1. the name and description of the medication;
2. the dosage form, dosage, route of administration, and duration of drug therapy;
3. special directions and precautions for preparation, administration, and use by the patient;
4. common severe side or adverse effects or interactions and therapeutic contraindications that may be encountered, including their avoidance, and the action required if they occur;
5. techniques for self-monitoring drug therapy;
6. proper storage;
7. prescription refill information; and
8. action to be taken in the event of a missed dose.

E. The pharmacist may supplement oral information with written information but may not use written information alone to fulfill the counseling requirement.

F. Patient Information

1.In order to effectively counsel patients, the pharmacist shall be responsible to ensure that a reasonable effort is made to obtain, record, and maintain the following patient information, if significant, but not limited to:

a. name, address, telephone number;
b. date of birth (age), gender;
c. medical history;
i. disease state(s);
ii. allergies/drug reactions;
iii.current list of medications and devices.
2. This information may be recorded in the patient’s manual or electronic profile, or in any other system of records and may be considered by the pharmacist in the exercise of his professional judgment concerning both the offer to counsel and content of counseling.
3. The absence of any record of a failure to accept the pharmacist’s offer to counsel shall be presumed to signify that such offer was accepted and that such counseling was provided.

G.Communication to the Patient

1. A pharmacist should counsel the patient or cqregiver “face-to-face,” when possible or appropriate. If it is not possible or appropriate to counsel the patient or caregiver “face-to-face”, then a [^pharmacist should counsel the patient or caregiver by using alternative methods. The pharmacist must exercise his professional judgment in the selection of an alternative method.
2. Patient counseling, as described in this regulation, should also be provided for outpatient and discharge patients of hospitals and institutions where applicable.
3. Patient counseling, as described herein, shall not be required for inpatients of a hospital or institution where a nurse or other licensed health care professional is authorized to administer the medication(s); and
4. The pharmacist shall maintain appropriate patient-oriented reference materials for use by the patient upon request.

AUTHORITY NOTE: Promulgated in accordance with R.S. 37:1178.

HISTORICAL NOTE: Promulgated by the Department of Health and Hospitals,

Board of Pharmacy, LR 23:1311 (October 1997).

      . Ms. McKee filed the original petition and this appeal individually and on behalf of her minor child, Breanna Denise Ellis.

      . The defendants/appellees include Wal-Mart Stores, Inc., Wal-Mart Associates, Inc., Wal-Mart Louisiana, L.L.C., and Amy Guidry Gleason, the specific pharmacist against whom allegations are made.

      . We do not evaluate whether these stipulations are properly supported by evidence, but we do accept them for purposes of our review here. We note that the child apparently developed Stevens-Johnson Syndrome, which progressed to toxic epidermal necrolysis, subsequent to taking Septra DS.

      . The regulation recites that it was promulgated pursuant to former La. R.S. 37:1178. The subject matter of this statute now appears in La. R.S. 37:1182. See Disposition Table preceding La. R.S. 37:1161.

      . Ms. McKee cites La. Admin. Code 46:LIII:517 as the proper regulation. However, while this regulation was promulgated in October 2003, it did not become effective until January 1, 2004, nearly two months after the Septra DS was dispensed. The regulations are similar.

      . Louisiana Admin. Code 46:LIII:517A, effective January 1, 2004, states more simply that the purpose of patient counseling is “to ensure proper use of drugs and devices.” See also La. R.S. 37:1164(31).

      . We observe that the trial court was technically incorrect. The supreme court explains the distinction between "negligence” and "liability in a negligence case” in its opinion in Detraz. It explains: " ‘Negligence’ has been defined by this Court as follows: ‘conduct which falls below the standard of care established by law for the protection of others against an unreasonable risk of harm.' " De-traz, 05-1263 at p. 8, 950 So.2d at 562. Liability for negligence is determined as outlined above. Id.

      . By 2005 La. Acts No. 205, effective January 1, 2006, La. C.C.P. art.2083 was amended to remove the longstanding provision that interlocutory judgments that "may cause irreparable harm” are appealable. An interlocutory judgment is now appealable only when expressly provided by law. Accordingly, the denial of a new trial is not generally appeal-able.


text:
    Michael A. TEAGUE, M.D. v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, St. Paul Insurance Company, Seale, Smith, Zuber and Barnette, Donald Zuber, Catherine Nobile, Catherine Lauffer, and ABC Insurance Agency.
    No. 2006 CA 1266.
    Court of Appeal of Louisiana, First Circuit.
    June 8, 2007.
    Writ Granted Oct. 5, 2007.
    John L. Hammons, Shreveport, Counsel for Plaintiff/Appellee Michael A. Teague, M.D.

      Stephen R. Wilson, Baton Rouge, Counsel for Defendants/Appellants Seale, Smith, Zuber and Barnette, Donald Zuber, and Catherine Nobile.
    Before: KUHN, GAIDRY, and WELCH, JJ.
   GAIDRY, J.

LA physician, sued for medical malpractice, in turn sued his defense attorneys for legal malpractice in effecting the settlement of the malpractice case against him without his consent. The defense attorneys appeal a judgment against them, and also except to the physician’s cause of action on the grounds of peremption. For the following reasons, we sustain the exception, reverse the judgment, and dismiss the action.

FACTS AND PROCEDURAL HISTORY

The Medical Malpractice Action

The appellee, Michael A. Teague, M.D., was sued in 1997 by a former patient for medical malpractice after a medical review panel had unanimously concluded that no breach of professional standards occurred in the course of treatment. Dr. Teague’s malpractice insurer, St. Paul Insurance Company (St. Paul), assigned the defense of the suit to the law firm of Seale, Smith, Zuber & Barnette, L.L.P., one of the appellants. Donald Zuber, one of the firm’s partners and another appellant, answered the suit on behalf of Dr. Teague, denying liability and requesting trial by jury. Mr. Zuber subsequently delegated the handling of the litigation to an associate, Catherine Nobile, also an appellant.

On April 19, 1999, the trial court issued a case management schedule order, setting a three-day jury trial beginning on January 25, 2000. The order also fixed a deadline of August 1, 1999 for the filing of a jury bond by the defendants. It is undisputed that Ms. Nobile failed to file the required jury bond by the deadline established in the order, thus resulting in the loss of the right to a jury as the trier of fact.

The St. Paul policy did not contain a “consent to settle” clause, which would have required the insurer to obtain Dr. Teague’s consent to any |3proposed compromise of a malpractice claim covered by the policy. Instead, the policy described St. Paul’s duties and rights in that regard as follows:

We’ll defend any suit brought against you for damages covered under this agreement. We’ll do this even if the suit is groundless or fraudulent. We have the right to investigate, negotiate and settle any suit or claim if we think that’s appropriate.

On Friday, October 29, 1999, the parties’ attorneys participated in the mediation of the case. It is undisputed that Dr. Teague was never previously informed that the mediation would take place. As the result of the mediation, a settlement agreement was reached that day, whereby St. Paul agreed to pay the plaintiff $50,000.00 to compromise her claim against Dr. Teague. That afternoon, Ms. Nobile telephoned Dr. Teague’s office and left a message for him, advising that the case had been settled. Dr. Teague returned Ms. Nobile’s call that same afternoon and confirmed that the case had been settled as the result of the mediation.

On Monday, November 1, 1999, Dr. Teague telephoned Mr. Zuber, discussed the settlement, and expressed his dissatisfaction with the fact that the case was settled rather than tried.

The formal settlement release was executed by the plaintiff on November 5,1999, and her lawsuit was subsequently dismissed.

The Legal Malpractice Action

Dr. Teague instituted the present litigation against Mr. Zuber, Ms. Nobile, and Seale, Smith, Zuber & Barnette, L.L.P. (the defendants) on November 3, 2000. In his petition, Dr. Teague alleged that an attorney-client relationship existed between him and the defendants in the prior medical malpractice action, that the defendants failed to properly investigate and defend that action, that they failed to keep him informed of significant | developments affecting his interests, that they negligently forfeited his right to trial by jury, and that they engaged in a conspiracy to conceal their professional neglect by effecting the settlement of the medical malpractice claim. Dr. Teague further alleged that “[a]s a direct consequence of the settlement,” St. Paul reported the settlement to the National Practitioner Data Bank. Finally, he claimed that as the direct result of the defendants’ negligence and breach of professional duties, he sustained damages consisting of “injury to business reputation, unwarranted expense associated with obtaining malpractice insurance at a higher premium, loss of income, past and future, embarrassment, humiliation, and mental anguish.” While admitting certain facts alleged in the petition, such as the failure to post the jury bond, the defendants denied any liability.

Dr. Teague subsequently amended his petition to allege that the defendants violated Rule 1.4 of the Louisiana State Bar Association Rules of Professional Conduct “by failing to keep [him] advised of all pertinent developments in his case and by intentionally concealing from him the fact that they had waived his constitutional right to trial by jury through their negligence in failing to post the required jury bond in a timely manner.”

Dr. Teague and the defendants filed cross-motions for summary judgment on the issue of liability. The motions were heard on the same day, and the trial court denied both motions by judgment signed on April 9, 2003.

|fiThe case was subsequently tried before a jury on October 17-19, 2005. The jury found the defendants liable to Dr. Teague, assessing 70% fault to Ms. Nobile and 30% fault to Mr. Zuber, and awarded him $138,500.00 in damages. The trial court’s judgment incorporating the jury’s verdict was signed on November 29, 2005. On December 6, 2005, the defendants filed a posttrial peremptory exception of peremption and prescription, arguing that based upon the evidence at trial, including Dr. Teague’s own testimony, his cause of action was perempted prior to the date he filed suit. The defendants also filed a motion for judgment notwithstanding the verdict on various alternative grounds. The exception and motion were both denied in separate judgments signed on March 10, 2006.

The defendants thereafter instituted this suspensive appeal, and on August 21, 2006 they filed a peremptory exception of per-emption in this court, reasserting that defense.

ASSIGNMENTS OF ERROR AND ISSUES PRESENTED

Although our ultimate resolution of this matter obviates review and analysis of all of the issues raised, we set out all of the defendants’ assignments of error for the sake of completeness:

1. The trial court erred in allowing judgment to be rendered on evidence which is insufficient as a matter of law.
2. The [trial court] erred in failing to grant JNOY, thus allowing the judgment based on legally insufficient evidence to stand.
3. The trial court erred in finding that the claims of plaintiff were not per-empted pursuant to Louisiana Revised [Statutes] 9:5605.
| ñ4. The trial court below erred in finding plaintiffs evidence sufficient to support an award of general damages, even if such damages are legally recoverable.
5. If any award of damages is legally sustainable, the jury award of $138,500.00 is grossly excessive.
6. The trial court erred in refusing to place St. Paul Insurance Company on the verdict form [for purposes of assessing liability],
7. The trial court erred in failing to charge the jury: ■
a) that under Louisiana law, a party in a civil matter is not entitled to a jury trial if it is stipulated that damages do not exceed $50,000.00;
b) that settlements are favored in Louisiana law;
c) that without a consent to settle clause, St. Paul Insurance Company had absolute authority to settle the [medical malpractice] case.
8. The trial court erred in finding liability as against Donald Zuber.

The defendants frame the issues raised in this action as follows:

1. Can an insured under a professional malpractice insurance policy with no “consent to settle” clause claim and recover damages from his defense attorneys if the suit against him is settled without his knowledge or consent?
2. Can a plaintiff in a legal malpractice case who sues for special damages but does not prove them, nevertheless be awarded general damages?
3. Can a plaintiff in a legal malpractice suit who does not sustain economic damages recover general damages when the general damages are not severe, debilitating, and foreseeable such as would be required in an ancillary [sic ] personal injury claim where no physical injury was sustained?
4. Is specific knowledge of settlement of his lawsuit without consent, which settlement forms the basis for later claims of malpractice, sufficient to excite inquiry, place such party on notice, and begin the running of peremption pursuant to [La. R.S.] 9:5605?
5. Can an attorney be held liable in legal malpractice if he is no longer involved in the case and has no input into or | ./knowledge of a settlement (which forms the basis of plaintiffs complaint) merely because such attorney had not filed a motion to withdraw as counsel or specifically notified the client of the transfer of the case to another attorney within the same firm?

DISCUSSION

This case is illustrative of the pitfalls inherent in the “eternal triangle” created by the tripartite relationship of insurer, insured, and insurance defense counsel. Despite the absence of a “consent to settle” clause in his favor in the St. Paul policy, Dr. Teague contends that the professional responsibilities and ethical duties imposed upon the defendants by virtue of their representation of him support the existence of an independent cause of action against them and the trial court’s judgment. This important substantive issue raised by Dr. Teague’s action has been addressed by the courts of other jurisdictions, with conflicting results. The issue appears to be res nova in this state. While we acknowledge the importance of the substantive legal and ethical issues presented, it is unnecessary and inappropriate for us to reach those issues, for the simple reason that this matter must be resolved on the procedural basis of per-emption.

Peremption of legal malpractice claims is governed by La. R.S. 9:5605, which provides, in pertinent part:

A.No action for damages against any attorney at law duly admitted to practice in this state, any partnership of such attorneys at law, or any professional corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of law, whether based upon tort, or breach of contract, or otherwise, 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, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect.
B. The provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged act, omission, or neglect occurred .... The one-year and three-year periods of limitation provided in Subsection A of this Section are peremptive periods within the meaning of Civil Code Article 3458 and, in accordance with Civil Code Article 3461, may not be renounced, interrupted, or suspended.
C. Notwithstanding any other law to the contrary, in all actions brought in this state against any attorney at law duly admitted to practice in this state, any partnership of such attorneys at law, or any professional law corporation, company, organization, association, enterprise, or other commercial business or professional combination authorized by the laws of this state to engage in the practice of law, the prescriptive and per-emptive period shall be governed exclusively by this Section.
E. The peremptive period provided in Subsection A of this Section shall not apply in cases of fraud, as defined in Civil Code Article 1953.

In a legal malpractice case, prescription (or peremption) commences to run when a claimant knew or should have known of the existence of facts that would have enabled him to state a cause of action for legal malpractice. Paternostro v. LaRocca, 01-0333, p. 5 (La.App. 1st Cir.3/28/02), 813 So.2d 630, 634. A prescriptive period will begin to run even if the injured party does not have actual knowledge of facts that would entitle him to bring a suit as long as there is constructive knowledge of same. Campo v. Correa, 01-2707, p. 12 (La.6/21/02), 828 So.2d 502, 510. (Emphasis supplied.) The latter principle applies to the peremption of legal malpractice claims. See Atlas Iron and Metal Co. v. Ashy, 05-458, p. 5 (La.App. 3rd Cir.1/4/06), 918 So.2d 1205, 1210, writ not considered, 06-0296 (La.4/28/06), 927 So.2d 276.

|t)The standard for determining whether a claimant has constructive knowledge of facts sufficient to commence the running of peremption is that of a reasonable person. Carroll v. Wolfe, 98-1910, p. 6 (La.App. 1st Cir.9/24/99), 754 So.2d 1038, 1041. Thus, a plaintiff who had knowledge of facts that would place a reasonable person on notice that malpractice may have been committed shall be held to have been subject to the commencement of prescription by virtue of such knowledge even though he asserts a limited ability to comprehend and evaluate the facts. Id. The focus is on the appropriateness of the claimant’s actions or inac-tions. Id.

In Patemostro, the plaintiff sued his former attorney for legal malpractice, claiming, among other things, that the attorney presented a substandard evidentia-ry case to a medical review panel and failed to request a jury trial in the subsequent lawsuit. The evidence included correspondence from the plaintiff to the Patients’ Compensation Fund and the United States Attorney’s office, asserting various complaints against his attorney related to the handling of the medical review panel procedure. The correspondence was dated over a year prior to the date the legal malpractice suit was filed. We affirmed the trial court’s dismissal of the case as perempted. Patemostro, 01-0333 at pp. 5-6, 813 So.2d at 635.

In the Atlas Iron case, the plaintiff sued its former attorney for his failure to properly investigate its insurance coverage and to join its liability insurers as co-defendants in a suit against it, thereby depriving it of the benefit of coverage. The evidence showed that the plaintiffs president had experience with prior claims against his company covered by insurance, and that he testified that he felt the defendant attorney did nothing to prepare for trial and nothing or very little at trial. The witness also admitted that he discovered on the first day of trial that the company’s insurers were not | ininvolved. The trial resulted in a judgment against the plaintiff the following day. The Third Circuit Court of Appeal held that the “peremption clock” began running on the day of judgment, and that the legal malpractice suit, filed over two years later, was perempted. Atlas Iron, 05-458 at pp. 10-11, 918 So.2d at 1213.

In Paragraph 35 of his petition, Dr. Teague alleged:

The first notice plaintiff Teague received that settlement was being considered was when his office manager received a phone message from defendant Nobile notifying him that the case had been concluded by way of payment to the plaintiffs. Upon being so informed, plaintiff Teague called defendants Zuber and Nobile and expressed his dismay and dissatisfaction that the case had been settled without his knowledge or consent and vociferously objected to the fact that payment had been made to settle this specious case. (Emphasis supplied.)

The evidence indisputably places the date of receipt of Dr. Teague’s “first notice” of the settlement, the telephone message, on October 29, 1999. That same date, Dr. Teague spoke on the telephone with Ms. Nobile and confirmed the content of the message. It is also undisputed that Dr. Teague was informed at that time that the trial would not have taken place before a jury.

In his trial testimony, Dr. Teague recounted his “shock” at first learning of the settlement and his surprise at learning from Ms. Nobile, who had never met with him concerning the medical malpractice case, that she had been handling his defense. He also described himself as being “confused” after first receiving the telephone message concerning the settlement. Dr. Teague testified that when he spoke with Mr. Zuber the following Monday, November 1, 1999, Mr. Zuber, whom he assumed had been handling the case, advised him that he had not been involved in the mediation. Although Dr. Teague had previously been involved in other cases involving Mr. Zuber, he emphasized that he had not been placed in such a Imposition before in 25 years of medical practice and had never had a case brought against him settled nor an adverse judgment. He explained, “I had never had a case at that point even go to trial much less be settled, so I certainly wanted to protect my reputation and my integrity, and so that was very important to me to make sure that my record was still clear.” He admitted under cross-examination, however, that by the time he spoke with Mr. Zuber, he was already aware that the settlement would be reported to the National Practitioner Data Bank, and that he was already “very upset” and “concerned” about the effect of the “settlement” upon his professional reputation.

Upon receiving notice that the supposedly “specious” suit against him had been settled at mediation, Dr. Teague certainly had notice “enough to excite attention and put [him] on guard and call for inquiry.” See Campo, 01-2707 at p. 12, 828 So.2d at 510-11. And such notice was “tantamount to knowledge or notice of everything to which a reasonable inquiry may lead,” including any predicate events or prior acts which supposedly prompted the settlement. See Campo, 01-2707 at p. 12, 828 So.2d at 511. Thus, the fact that Dr. Teague was unaware at the time he was informed of the settlement of the defendants’ earlier failure to file the jury bond does not serve to stop the “peremption clock,” or to reset it upon his acquiring that information.

Based upon the foregoing, the conclusion is inescapable that the peremptive period of Dr. Teague’s cause of action, meritorious or not, commenced on October 29, 1999. This action, indisputably filed over a year after that date, is perempted. We accordingly sustain the peremptory exception of peremption of the defendants-appellants, reverse the trial court’s judgment in favor of the plaintiff-appellee, Michael A. Teague, M.D., and against the defendants-appellants, and dismiss Dr. Teague’s cause |12of action with prejudice and at his costs. All costs of this appeal are assessed to the plaintiff-appellee.

EXCEPTION SUSTAINED; REVERSED AND RENDERED.

      . St. Paul and its claims adjuster, Catherine Laufer, were also named as defendants, but were subsequently dismissed from the suit.

      . See 45 C.F.R. §§ 60.1-60.14. The National Practitioner Data Bank for Adverse Information on Physicians and Other Health Care Practitioners was established by the U.S. Department of Health and Human Services under the authority of the Health Care Quality Improvement Act of 1986, 42 U.S.C. §§ 11101, et seq. The purpose of the National Practitioner Data Bank is “to collect and release certain information relating to the professional competence and conduct of physicians, dentists and other health care practitioners.” 45 C.F.R. § 60.1. Any insurance company which makes a payment under a policy "for the benefit of a physician, dentist or other health care practitioner in settlement of or in satisfaction in whole or in part of a claim or a judgment” for malpractice must report certain information regarding the claim and payment to the National Practitioner Data Bank. 45 C.F.R. § 60.7. However, any settlement payment "shall not be construed as creating a presumption that medical malpractice has occurred.” 45 C.F.R. § 60.7(d).

      .The jury verdict form did not provide for categorization of the damages, but provided only one blank to be completed with the monetary amount of all damages.

      . Cf. Rogers v. Robson, Masters, Ryan, Bru-mund & Belom, 74 Ill.App.3d 467, 30 Ill.Dec. 320, 392 N.E.2d 1365 (1979), affirmed, 81 I11.2d 201, 40 Ill.Dec. 816, 407 N.E.2d 47 (1980), and Mitchum v. Hudgens, 533 So.2d 194 (Ala. 1988). See also Lieberman v. Employers Insurance of Wausau, 84 N.J. 325, 419 A.2d 417 (1980).


author: DOWNING, J. PETTIGREW, J., HUGHES, J., McCLENDON, J.,

text:
    AMERICAN MEDICAL ENTERPRISES, INC. v. AUDUBON INSURANCE COMPANY.
    No. 2005 CA 2006.
    Court of Appeal of Louisiana, First Circuit.
    June 8, 2007.

      Alfred B. Shapiro, Baton Rouge, Counsel for Plaintiff/Appellant American Medical Enterprises, Inc.
    John W. Waters, Jr., David E. Walle, Robin C. O’Bannon, New Orleans, Counsel for Defendant/Appellee Audubon Insurance Company.
    Before: CARTER, C.J., PETTIGREW, DOWNING, McCLENDON and HUGHES, JJ.
   DOWNING, J.

| ^American Medical Enterprises, Inc. (American Medical) appeals a summary judgment in favor of Audubon Insurance Company (Audubon), a property insurer, that recognized Audubon as the holder of mortgage notes on insured real estate owned by American Medical. This judgment further held American Medical, a corporate officer, and an alleged co-conspirator hable for the amount Audubon paid to the mortgagee, together with the costs it incurred in investigating the fraudulent claim. We reverse the summary judgment.

Summary judgment is properly granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B). On a motion for summary judgment, the burden of proof is on the mover unless the mover will not bear the burden of proof at trial. See La. C.C.P. art. 966(C)(2).

American Medical’s president and owner of at least one-half of its stock was convicted in federal court of arson for causing a hotel own'ed by American Medical to be burned down. The initial issue raised by American Medical questions whether the criminal conviction of one of the chief operating officers of a corporation serves to bar civil litigation by the corporation resulting from the same basic facts that underlie the officer’s criminal conviction. American Medical argues that the conviction of its chief operating officer for arson does not establish an uncontested |sissue of material fact establishing liability on behalf of American Medical for insurance fraud. We agree.

Whether or not American Medical can be charged with the acts of its officer such that its corporate veil is pierced or that it can be considered the alter ego of its officer, criminal convictions are not admissible in Louisiana as conclusive proof of liability in a civil case. “Ordinarily, evidence is not admissible in a civil tort action to prove either that a party was charged with, ..., or convicted of, ..., a criminal offense arising out of the same accident.” Davis v. Bankston, 192 So.2d 614, 617 (La.App. 3 Cir.1966), citing Bertoli v. Flabiano, 116 So.2d 76, 79 (La.App. 1 Cir.1959) and Reidr-Elliott Motors v. Lee, 94 So.2d 160, 161-62 (La.App. 1 Cir.1957). It should be noted that these cases followed the then current common law jurisprudence. Here, since the corporate officer’s conviction is inadmissible to prove liability, and the other evidence offered in support of the motion for summary judgment does not independently or conclusively establish the officer’s fault, no basis exists to grant summary judgment in favor of Audubon in that it has failed to show that it is entitled to judgment as a matter of law. See La. C.C.P. art. 966 B.

In Breeland v. Security Ins. Co. of New Haven, Conn., 421 F.2d 918, 921 (5th Cir. 1969), the federal Fifth Circuit observed that a prior criminal conviction is not conclusive of fault in a civil suit under Louisiana principles of res judicata. It noted, however, that the conviction could possibly be asserted under the common law doctrine of judicial estoppel, which it asserts is followed in Louisiana. It then noted that there is no Louisiana case squarely on point. Breeland observed that the |4trend in common law favored judicial estoppel in this regard. Id., p. 922. Since the common law basis for admissibility of criminal convictions in civil cases is trending in favor of admissibility, perhaps Louisiana should re-examine its interpretation of the common law doctrine. But this is a matter for the supreme court to review., We must follow the existing First Circuit jurisprudence. See First Circuit Court of Appeal Internal Rules — Rule 2.1(d)(1).

DECREE

For the foregoing reasons, we reverse the grant of summary judgment rendered by the trial court. Costs of this appeal are assessed to Audubon Insurance Company.

REVERSED.

PETTIGREW, J., dissents,- and assigns reasons.

HUGHES, J., concurs with reasons.

McClendon, J., concurs and assigns reasons.

PETTIGREW, J.,

dissenting.

hOn January 23, 2002, a petition, erroneously captioned as a “Petition for Damages,” was filed on behalf of American Medical Enterprises, Inc. (“American Medical”) in the 19th Judicial District Court in and for the Parish of East Baton Rouge, State of Louisiana. The sole defendant named therein was Audubon Insurance Company (“Audubon”). The petition demanded payment pursuant to a contract of insurance issued by Audubon that extended coverage to a building owned by American Medical (identified in subsequent pleadings as the Rusty Pelican Motel) located at 3240 Louisiana Highway 1, Grand Isle, Louisiana. The Audubon policy # CPF003823809 provided coverage to American Medical for the period January 28, 2000 to January 28, 2001. On the night of January 23, 2001, the motel owned by American Medical was damaged by fire resulting in a loss of approximately $262,000.00. American Medical alleged that despite amicable demand and submission of a proof of loss, Audubon arbitrarily and capriciously denied payment of its claim. Consequently, American Medical further set forth a demand for penalties pursuant to La. R.S. 22:658 together with attorney fees and costs.

Prior to this, on December 13, 2001, Elizabeth B. Smith, the president, director, registered agent, and principal officer of American Medical, along with Josh Booty, an employee or agent of American Medical, had been indicted in the United States District Court for the Eastern District of Louisiana on various acts of witness tampering, | ¡¡conspiracy, arson, and fraud. Later, on June 5, 2002, Mr. Booty entered a plea of guilty to conspiracy to commit arson, and to arson of the Rusty Pelican Motel.

Audubon responded by filing an answer to the civil action in state court, and later on June 14, 2002, an “Amended Answer, Counter Claim and Third Party Demand” wherein it alleged that the fire in question was arson and had been deliberately set by Mr. Booty who acted at the direction, and with the knowledge and consent, of Ms. Smith. It was also alleged that both Ms. Smith and Mr. Booty acted on behalf of American Medical for the fraudulent purpose of obtaining the proceeds of the Audubon insurance policy. Audubon further alleged that following the fire, Ms. Smith, again acting for and on behalf of American Medical, fraudulently concealed and falsely swore about the involvement of herself and Mr. Booty in setting the fire, and their actions afterwards. Audubon contended that the actions of Ms. Smith and Mr. Booty violated the terms and conditions of its policy and served as a complete defense to any claim put forth by American Medical. In the alternative, Audubon asserted that American Medical had refused and failed to cooperate by producing financial records requested by Audubon thereby voiding coverage pursuant to the policy. In the event of a judgment in favor of American Medical, Audubon put forth a demand for a credit of $137,215.99, which sum represented the amount paid by Audubon to the mortgagee named in the insurance policy.

On that same date, a jury in federal court found Ms. Smith guilty on all seven counts of the indictment on charges of conspiracy to commit arson of the Rusty Pelican, arson of the Rusty Pelican, and willfully scheming to defraud Audubon by damaging the Rusty Pelican for the purpose of obtaining the proceeds of the Audubon insurance policy.

On July 13, 2002, Audubon filed a motion for summary judgment seeking a dismissal with prejudice of the claims made against it by American Medical and recognition of the indebtedness owed to Audubon by virtue of its payment of the American Medical mortgage, assignment of rights, and the recovery of the costs incurred by Audubon in investigating American Medical’s fraudulent claim. Audubon claimed that American | ¡¡Medical, Ms. Smith, and/or Mr. Booty were liable to it, jointly, severally and in solido, for the sum of $146,558.64 together with legal interest and costs.

Ms. Smith’s convictions were later affirmed by the United States Court of Appeal for the Fifth Circuit on December 17, 2003. Ultimately, the United States Supreme Court denied Ms. Smith’s application for a writ of certiorari on March 22, 2004. Ms. Smith’s convictions are now final.

On January 25, 2005, Ms. Smith filed on behalf of American Medical, a motion for summary judgment against Mr. Booty seeking payment of $273,000.00, plus judicial interest and costs as a result of his actions herein.

On March 10, 2005, Ms. Smith moved for entry of a preliminary default against Mr. Booty based upon his prior admission that he set fire to the Rusty Pelican Motel, and Ms. Smith’s claim that the evidence in the record established the nonexistence of a conspiratorial agreement between her and Mr. Booty to set fire to the motel. Accordingly, Ms. Smith prayed for entry of a default judgment against Mr. Booty. A default judgment was accordingly entered on March 14, 2005.

Following a hearing on July 18, 2005, the 19th Judicial District Court sustained Audubon’s Motion for Summary Judgment and (1) dismissed American Medical’s claims against Audubon; (2) recognized Audubon’s rights under notes and mortgage paid by Audubon; (3) granted judgment against American Medical, Ms. Smith, and Mr. Booty and (4) designated said judgment as final and appealable. A judgment to this effect was signed by the trial court on July 20, 2005. From this judgment, American Medical has appealed. The judgment is now final with respect to Ms. Smith and Mr. Booty.

In connection with its appeal in this matter, American Medical sets forth the following issues for consideration by this court:

1. Does the criminal conviction of one of the chief operating officers of a corporation act as a bar to civil litigation by the corporation arising from the same basic facts which underlie the criminal conviction?
2. Is there a genuine issue of material fact relating to American Medical’s vicarious liability for the alleged criminal acts of Elizabeth Smith?

14 This matter comes to us through a grant of summary judgment. A motion for summary judgment is a procedural device used to avoid a full-scale trial when there is no genuine issue of material fact. Johnson v. Evan Hall Sugar Coop., Inc., 2001-2956, p. 3 (La.App. 1 Cir. 12/30/02), 836 So.2d 484, 486. Summary judgment is properly granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that mover is entitled to judgment as a matter of law. La.Code Civ. P. art. 966(B). Summary judgment is favored and is designed to secure the just, speedy, and inexpensive determination of every action. La.Code Civ. P. art. 966(A)(2); Thomas v. Fina Oil and Chemical Co., 2002-0338, pp. 4-5 (La.App. 1 Cir. 2/14/03), 845 So.2d 498, 501-502.

On a motion for summary judgment, the burden of proof is on the mover. If, however, the mover will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the mover’s burden on the motion does not require that all essential elements of the adverse party’s claim, action, or defense be negated. Thereafter, the adverse party must produce factual evidence sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial. If the adverse party fails to meet this burden, there is no genuine issue of material fact, and the mover is entitled to summary judgment. La.Code Civ. P. art. 966(C)(2); Robles v. ExxonMobile, 2002-0854, p. 4 (La.App. 1 Cir. 3/28/08), 844 So.2d 339, 341.

Summary judgments are reviewed on appeal de novo. An appellate court thus asks the same questions as does the trial court in determining whether summary judgment is appropriate: whether there is any genuine issue of material fact, and whether the mover is entitled to judgment as a matter of law. Ernest v. Petroleum Service Corp., 2002-2482, p. 3 (La.App. 1 Cir. 11/19/03), 868 So.2d 96, 97, writ denied, 2003-3439 (La.2/20/04), 866 So.2d 830. Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to this case. Walker v. Phi Beta Sigma \ ¿Fraternity (Rho Chapter), 96-2345, p. 6 (La.App. 1 Cir. 12/29/97), 706 So.2d 525, 528.

The initial issue raised by American Medical questions whether the criminal conviction of one of the chief operating officers of a corporation serves to bar civil litigation by the corporation resulting from the same basic facts that underlie the criminal conviction.

In support of this issue, American Medical argues that despite Ms. Smith’s criminal conviction on charges related to the arson of the Rusty Pelican, she has steadfastly maintained her innocence, and there has never been any suggestion that her husband and fellow American Medical shareholder, Spencer Smith, was anything other than an innocent third party. Further arguing that application of the doctrine of collateral or judicial estoppel is not recognized in Louisiana, American Medical contends that “relitigation” of the arson issue is not precluded in this civil case. Audubon Insurance urges the application of collateral estoppel or the application of La. R.S. 13:4231, which codifies the doctrine of res judicata and issue preclusion in Louisiana.

Res judicata is an issue and claim preclusion device found in both federal law and state law. The purpose of both federal and state law on res judicata is essentially the same — to promote judicial efficiency and final resolution of disputes by preventing needless relitigation. Terre-bonne Fuel & Lube, Inc. v. Placid Refining Co., 95-0654, 95-0671, pp. 11-12 (La. 1/16/96), 666 So.2d 624, 631. A judgment determining the merits of a case, in whole or in part, is a final judgment. La.Code Civ. P. art. 1841. The preclusive effect of a judgment attaches once a final judgment has been signed by the trial court and bars any action filed thereafter unless the judgment is reversed on appeal. La. R.S. 13:4231, comment (d).

The doctrine of res judicata has been codified in La. R.S. 13:4231 and provides as follows:

Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
| (i(l) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.
(2) If the judgment is in favor of the defendant, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and the judgment bars a subsequent action on those causes of action.
CS) A judgment in favor of either the plaintiff or the defendant is conclusive, in any subsequent action between them, with respect to any issue actually litigated and determined if its determination was essential to that judgment.

Louisiana Revised Statute 13:4231 embraces the broad usage of the phrase res judicata to include both claim preclusion (res judicata) and issue preclusion (collateral estoppel). Mandalay Oil & Gas, L.L.C., 2001-0993, p. 9 (LaApp. 1 Cir. 8/4/04), 880 So.2d 129, 135, writ denied, 2004-2426 (La.1/28/05), 893 So.2d 72. Under claim preclusion, the res judicata effect of a final judgment on the merits precludes the parties from relitigating matters that were or could have been raised in that action. Under issue preclusion or collateral estoppel, however, once a court decides an issue of fact or law necessary to its judgment, that decision precludes relitigation of the same issue in a different cause of action between the same parties. Thus, res judicata used in the broad sense has two different aspects: (1) foreclosure of relitigating matters that have never been litigated, but should have been advanced in the earlier suit; and (2) foreclosure of relitigating matters that have been previously litigated and decided. Five N Company, L.L.C. v. Stewart, 2002-0181, p. 15 (LaApp. 1 Cir. 7/2/03), 850 So.2d 51, 61.

Prior to the amendments to Louisiana res judicata law effective in 1991, Louisiana law on res judicata was substantially narrower than federal law. Terrebonne Fuel, 95-0654 at pp. 11-12, 666 So.2d at 631. The original Louisiana doctrine of res judicata was based on a presumption of correctness rather than an extinguishment of the cause of action. Leon v. Moore, 98-1792, p. 4 (LaApp. 1 Cir. 4/1/99), 731 So.2d 502, 504, writ denied, 99-1294 (La.7/2/99), 747 So.2d 20. A decided case precluded a second suit only if it involved (1) the same parties, (2) the same cause of action, and (3) the same object |7of demand as the prior suit. Leon, 98-1792 at p. 4, 731 So.2d at 504 (citing Arbour, The Louisiana Concept of Res Judicata, 34 La.L.Rev. 763,764 (1974)).

Pursuant to La. R.S. 13:4231, as amended in 1990, effective January 1, 1991, res judicata bars relitigation of a subject matter arising from the same transaction or occurrence as a previous suit. Thus, the chief inquiry is whether the second action asserts a cause of action that arises out of the transaction or occurrence that was the subject matter of the first action. Mandalay Oil & Gas, L.L.C. v. Energy Development Corp., 2001-0993 at 9, 880 So.2d at 135. The doctrine of res judicata is not discretionary and mandates the effect to be given to final judgments. Leon v. Moore, 98-1792 at p. 5, 731 So.2d at 505.

As we have previously stated, American Medical, in the instant appeal, contends that because the doctrine of collateral es-toppel is not recognized in Louisiana and the requirements of the doctrine of res judicata are not met, the trial court’s decision granting Audubon’s motion for summary judgment should be reversed.

In response, Audubon argues that Ms. Smith’s prior criminal conviction on arson-related charges bars a subsequent civil suit by the corporation, which she served as president, to recover proceeds from its property insurer. Audubon asserts that to allow Ms. Smith’s criminal conviction to be relitigated in a civil suit seeking to recover insurance proceeds constitutes an impermissible collateral attack upon a prior conviction.

Concluding that the issue of Ms. Smith’s guilt did not have to be relitigated in the instant civil proceeding, the trial court opined:

I don’t find that there’s any issue of fact concerning whether Ms. Smith conspired to commit arson. And there were a number of cases cited on both sides, and I’m looking at the Supreme Court recently in In Re: Bankston, and that was dealing with an attorney discipline proceeding, and I’m going to quote the language from the Supreme Court. It said in an attorney disciplinary proceeding based on the lawyer’s criminal conviction, the issue of his guilt may not be relitigated because the lawyer’s conviction, whether based on adjudication case or guilty plea, is tantamount to a finding of his guilt beyond a reasonable doubt. The clear and convincing standard of proof that applies to disciplinary proceedings has already been satisfied. Thus, due process does not require a second opportunity for the lawyer to refute criminal charges. A criminal conviction, based on either an adjudication or a plea of guilty, is considered to be conclusive proof that the attorney committed the essential elements of the offense. As I indicated, although this is not an attorney discipline case, the burden Audubon would Rhave on its claim against — on its affirmative defense is by a preponderance of the evidence, much less a standard than that which is applied, beyond all reasonable doubt, in a criminal conviction. I think the same reason, the same logic that the Supreme Court applied in In Re: Bankston applies to the issue whether or not Ms. Smith’s guilt needs to be relitigated in this case. Likewise, I don’t find any issue of material fact exists regarding whether or not American Medical Enterprises [“AME”] should be liable for the act of arson committed by its president and majority stockholder. I think after reviewing the record in this case and the documents and exhibits attached to Audubon’s motion for summary judgment, AME is clearly vicariously liable for the actions of Ms. Smith. So for those reasons, the Court is going to grant the motion for summary judgment on behalf of Audubon.

Upon consideration of the oral reasons provided by the trial court in this matter, I am mindful that the Attorney Disciplinary Board is a statewide agency vested with broad investigatory and adjudicative powers that is charged to administer the lawyer discipline and disability system. La. S.Ct. Rule XIX, Section 2. I question however whether the stringent evidentiary safeguards applicable to civil court proceedings are present in attorney disciplinary proceedings. For this reason, I would decline to apply In Re: Bankston to the facts of this case.

Ordinarily, evidence is not admissible in a civil tort action to prove either that a party was charged with, or convicted of, a criminal offense arising out of the same accident. However, the usual rule is that, in the absence of a prohibitory statute, a plea of guilty in a criminal case is considered an admission against interest and is competent evidence in a civil action involving the same subject matter. Davis v. Bankston, 192 So.2d, 614, 617 (La.App. 3 Cir.1966). Although a guilty plea is admissible as relevant evidence to show fault and may be given some weight, it is not conclusive. Sutherland v. Board of Commissioners, 459 So.2d 1282, 1284 n. 3 (La. App. 1 Cir.1984). The amount of weight to be given to such plea must be determined by other evidence offered, including the reason for the plea. Jackson v. St. Pierre, 336 So.2d 261, 264 (La.App. 1 Cir.1976).

Although Ms. Smith’s prior criminal conviction is entitled to great weight and is relevant evidence to show fault on her part, it is not necessarily conclusive. I decline to say that said prior conviction is determinative of Ms. Smith’s guilt with respect to the instant civil proceeding. I also note that American Medical, the insured in the instant case, |awas not a party to the earlier criminal proceeding that resulted in Ms. Smith’s conviction. In this motion for summary judgment and at a trial of the merits, Audubon bears the burden of proof. Pursuant to La.Code Civ. P. arts. 966 and 967, Audubon must show by virtue of the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits in support of its motion for summary judgment, that there is no genuine issue as to material fact and that Audubon is entitled to judgment as a matter of law.

In addition to the convictions of Ms. Smith, Audubon put forth into evidence various other exhibits in support of its motion for summary judgment. Following a thorough review of these exhibits, we conclude that Audubon carried its initial burden and produced sufficient evidence to demonstrate that there existed no genuine issue as to material fact with respect to whether Ms. Smith participated in the arson of the Rusty Pelican Motel. Pursuant to La.Code Civ. P. art. 967 B, the burden then shifted to American Medical to produce factual evidence sufficient to establish that it would be able to satisfy its eviden-tiary burden of proof at trial, thereby creating a material issue of fact. It was incumbent upon American Medical to produce evidence that Ms. Smith did not participate in the arson, rather than merely rely on a denial of the allegations against her. After a thorough review of the record and the evidence submitted on behalf of American Medical, we are forced to conclude that the evidence put forth by American Medical did not rise to a level so as to raise material issues of fact regarding Ms. Smith’s involvement in the arson of the Rusty Pelican Motel.

The second issue presented by American Medical questions whether there exists a genuine issue of material fact relating to American Medical’s vicarious liability for the alleged criminal acts of Ms. Smith. American Medical contends that Audubon has not established that Ms. Smith’s alleged role in connection with the burning of the Rusty Pelican Motel would have been in any way related to her official duties as an officer of American Medical. American Medical further contends that no evidence was presented to demonstrate that the acts allegedly committed by Ms. Smith were motivated by a desire, at least in part, to serve the interests of American Medical.

110In support of its motion for summary judgment, Audubon argues that although Ms. Smith and her husband were the sole officers and only shareholders of American Medical, it was Ms. Smith, not her husband, who dominated the corporation. In its brief to this court, Audubon argues that Ms. Smith was, and remains, president of American Medical as well as its agent for service of process. Ms. Smith signed applications for occupational licenses both before and after the fire. Following the fire, Ms. Smith mailed or caused to be mailed a claim for insurance benefits on behalf of American Medical as a result of the fire.

In pleadings before this court Audubon cites earlier admissions made by Ms. Smith in connection with an Examination under Oath conducted by Audubon pursuant to the terms and conditions of its policy. In connection with her examination under oath, Ms. Smith stated the following with respect to her corporate responsibilities:

I do the paperwork. I pay the bills. I do the cleaning. I do the painting. I do the repairs if they need it. I call for someone to repair if I can’t do it. I’ve cut the grass. I’ve weed-eated when the guy didn’t show up. Just your typical things. I order things like new sheets. Just the everyday upkeep of a motel that you would have to do.

Audubon asserts that Ms. Smith’s criminal convictions conclusively establish that Ms. Smith masterminded and orchestrated the destruction of the Rusty Pelican in an attempt to defraud Audubon. As Ms. Smith was not a named insured under the Audubon policy, she could not recover from Audubon directly, but would apparently be the person to receive the insurance proceeds on behalf of American Medical.

Audubon takes the position that recovery by American Medical would be tantamount to allowing Ms. Smith to benefit from the crimes that she committed on behalf of American Medical. As the remaining shareholder of American Medical, Audubon claims that Mr. Smith, after having allowed his wife to dominate the corporation and manage its assets, cannot now disavow her actions in order to recover the proceeds of the Audubon policy.

Accordingly, the burden to defeat Audubon’s motion for summary judgment was successfully shifted to American Medical. In order to defeat the motion for summary judgment filed on behalf of Audubon, American Medical was required to produce factual InSupport sufficient to establish that it would be able to satisfy its eviden-tiary burden of proof at trial; i.e., that as a corporation, American Medical was a juridical person with a corporate identity separate and distinct from that of its president and majority shareholder. This American Medical failed to do. American Medical’s opposition to Audubon’s motion for summary judgment was nothing more than a general denial of the fact that Ms. Smith was a party to the arson, rather than distinguishing the charges against her personally from liability on the part of the corporation that she served.

I am of the opinion the trial court was correct in its conclusion that there existed no genuine issue of material fact as to whether American Medical was vicariously liable for the actions of its president, Ms. Smith.

For the above and foregoing reasons, it is my humble opinion that the trial court’s grant of summary judgment in favor of defendant, Audubon Insurance Company, should be affirmed.

HUGHES, J.,

concurring.

|,I respectfully concur. There is no evidence at this point that the corporation, or Mr. Smith, a shareholder of the corporation, were involved in the criminal activity for which the criminal convictions were obtained.

McCLENDON, J.,

concurs, and assigns reasons.

| ,With regard to the admissibility of a criminal conviction in a related civil proceeding to prove liability for civil acts, I believe the correct approach is to recognize the conviction as admissible evidence, but not conclusive evidence, to be weighed in connection with all other evidence educed in the civil action. See Reid-Elliott Motors v. Lee, 94 So.2d 160 (La.App. 1 Cir.1957). To the extent that the majority does not adopt this position, I disagree. However, I agree with the result reached by the majority, finding that there are genuine issues of material fact which preclude the granting of a summary judgment.

      . American Medical is a corporation acquired by Elizabeth Boyette Smith and her husband Spencer Smith in 1998 from Robert Rosiere. On May 29, 1998, Mr. Rosiere purportedly transferred 1,000 shares solely to Ms. Smith. In a notarized statement dated June 3, 1998, Mr. Rosiere indicated that he transferred all the outstanding stock in American Medical to Elizabeth and Spencer Smith. Ms. Smith either owns all of the 1,000 shares of American Medical stock, or an undivided interest in all of said shares. This is just one of several significant facts that is unresolved for purposes of this motion.

      . We note that under La. C.E. art. 609, evidence of convictions is admissible in some circumstances to attack a witness's credibility. Even so, it is well settled that trial judges cannot make credibility determinations on motions for summary judgment. See Independent Fire Insurance Co. v. Sunbeam Corp., 99-2181, 00-2257 (La.2/29/00), 755 So.2d 226. Further, in the absence of a prohibitory statute, a plea of guilty in a criminal case is considered an admission against interest that is competent, but not conclusive, evidence in a civil action involving the same subject matter. Davis v. Bankston, 192 So.2d at 617. There was no guilty plea in the matter before us.

      . In McCollough v. Dauzat, 98-1293 (La.App. 3 Cir. 3/3/99), 736 So.2d 914, 915, the Third Circuit ruled that “federal law must be applied in determining whether a federal court judgment has res judicata effect." Whether or not this assertion is correct, it appears that a conflict now exists between the First and Third Circuits.

      . American Medical is a corporation acquired by Elizabeth Boyette Smith and her husband Spencer Smith in 1998 from Robert Rosiere. On May 29, 1998, Mr. Rosiere purportedly transferred 1,000 shares solely to Ms. Smith. In a notarized statement dated June 3, 1998, Mr. Rosiere indicated that he transferred all the outstanding stock in American Medical to Elizabeth and Spencer Smith. Ms. Smith either owns all of the 1,000 shares of American Medical stock, or an undivided interest in all of said shares.

      . U.S. v. Elizabeth Boyette Smith, No. 01-CR-348-1-N (E. Dist. of La. 6/14/2002).

      . U.S. v. Elizabeth Boyette Smith, 354 F.3d 390 (5th Cir.2003).