Crosby v. Waits, Emmett, Popp & Teich LLC

KURT CROSBY; THE TARA E. CROSBY TRUST; THE ALLISON CROSBY TRUST; THE TARA E. CROSBY TRUST 2; THE ALLISON CROSBY TRUST 2; THE LAUREN GUIDRY TRUST, THE AARON GUIDRY TRUST; AND BERTUCCI CONTRACTING COMPANY, LLC v. WAITS, EMMETT, POPP & TEICH, L.L.C.; RANDOLPH WAITS; JOHN EMMETT; AND JORDAN TEICH

No. 2021-CA-0054

Court of Appeals of Louisiana, Fourth Circuit

September 22, 2021

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2019-01609 DIVISION "G-11" Honorable Robin M. Giarrusso, Judge

David P. Vicknair Keegan E. Chopin SCOTT VICKNAIR, LLC COUNSEL FOR PLAINTIFFS/APPELLANTS

Gustave A. Fritchie, III Christopher H. Irwin IRWIN FRITCHIE URQUHART & MOORE, LLC COUNSEL FOR DEFENDANTS/APPELLEES

Court composed of Judge Rosemary Ledet, Judge Tiffany Gautier Chase, Judge Dale N. Atkins

Dale N. Atkins, Judge

This is a legal malpractice case. Appellants, Kurt Crosby, the Tara E. Crosby Trust, the Allison Crosby Trust, the Tara E Crosby Trust 2, the Allison Crosby Trust 2, the Lauren Guidry Trust, and the Aaron Guidry Trust (collectively "Crosby Appellants"), appeal the trial court's December 10 2020 judgment, which granted the second exception of no right of action filed by Appellees, Waits, Emmett, Popp &amp Teich, L.L.C., Randolph Waits, John Emmett, and Jordan Teich (collectively "WEPT Appellees"), and dismissed all of Crosby Appellants' claims. For the reasons that follow, we affirm the trial court's judgment.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Underlying Lawsuit - NASDI, LLC v. Bertucci Contracting Company, LLC

In October 2012, NASDI, LLC, sued Bertucci Contracting Company, LLC, (hereinafter "BCC") for damages arising out of a contract dispute concerning the demolition of the Twin Span Bridges over Lake Pontchartrain and the construction of marine mattresses for coastal protection. The lawsuit of NASDI, LLC v. Bertucci Contracting Company, LLC was filed in the Twenty-Fourth Judicial District Court for the Parish of Jefferson with docket number 719-944 (hereinafter "NASDI Lawsuit"). BCC answered and filed, on October 31, 2012, a reconventional demand for its own alleged damages. In the NASDI Lawsuit, Randolph Waits and Jordan Teich, two WEPT Appellees, represented BCC. No Crosby Appellants were parties to the NASDI Lawsuit.

In January 2018, a jury trial commenced in the NASDI Lawsuit. The jury rendered a verdict against BCC. In accordance with the jury verdict, the trial court signed a judgment in favor of NASDI and against BCC for damages totaling $4, 184, 993.00. The trial court subsequently signed another judgment against BCC, which awarded various attorneys' fees and costs to NASDI.

After the adverse judgments, BCC engaged in settlement negotiations with NASDI in an effort to mitigate its losses. However, on February 14, 2019, WEPT Appellees withdrew from representation of BCC in the NASDI Lawsuit when Crosby Appellants and BCC filed a legal malpractice suit against WEPT Appellees.

On March 18, 2019, NASDI, LLC; NASDI Holdings, LLC; and Great Lakes Dredge & Dock Corporation on one side, and BCC, Kurt Crosby, as a member and authorized representative of BCC, and Hartford Insurance Company on the other side, entered a Settlement Agreement and Release (hereinafter "NASDI Settlement"). In the NASDI Settlement, NASDI and BCC agreed to settle the NASDI Lawsuit for five million dollars. Additionally, Kurt Crosby signed an agreement, in which he agreed to guarantee the amount owed by BCC in the NASDI Lawsuit ("Guarantor Agreement").

Initial Transaction - The Seventy-Five Percent Interest in BCC

On January 1, 2015, Crosby Appellants and Vinton Crosby, who is not a party to this suit, purchased Anthony J. Zelenka's and Margaret G. Zelenka's forty percent interest in BCC and a portion of the fifteen percent ownership interests in BCC owned by the Catherine Elizabeth Zelenka ESBT Trust; the Caroline Margaret Zelenka QSST Trust; the Meredith Ann Zelenka Trust; and the Madeline Marie Zelenka ESBT Trust (collectively "Zelenka Trusts"). By these purchases, Crosby Appellants and Vinton Crosby purchased, in total, seventy-five percent of BCC (hereinafter "Seventy-Five Percent Transaction"). After the Seventy-Five Percent Transaction, the Zelenka Trusts retained, in total, twenty-five percent ownership in BCC. As part of the Seventy-Five Percent Transaction, Mr. Zelenka agreed to retain substantially all risks from the then-pending NASDI Lawsuit (minus legal and litigation expenses and subject to a $5.159 million cap), as well as to retain all potential rewards in the form of monies recovered from the NASDI Lawsuit.

In the course of the negotiations leading up to the Seventy-Five Percent Transaction, John Emmett, a WEPT Appellee, reviewed, prepared, and edited documents on behalf of Crosby Appellants and Vinton Crosby that memorialized the Seventy-Five Percent Transaction. Additionally, Mr. Emmett communicated with Kurt Crosby and Farrel Trosclair. In an affidavit, Mr. Emmett identified Mr. Trosclair as "the chief financial officer for . . . various Crosby interests."^[1]

Termination of Mr. Zelenka's Employment with BCC

On January 2, 2015, the day after the Seventy-Five Percent Transaction was completed, Anthony Zelenka and BCC signed an Employment Agreement, which set forth the terms and conditions of Mr. Zelenka's employment with BCC. Additionally, Mr. Zelenka retained his position as manager of BCC. Later that year, on December 10, 2015, Mr. Trosclair contacted Mr. Emmett and inquired under what circumstances Mr. Zelenka could be terminated and what Mr. Zelenka's termination entailed for BCC. In particular, the termination of Mr. Zelenka triggered a buyout option in BCC's operating agreement, whereby the Zelenka Trusts had the right to sell their remaining twenty-five percent interest in BCC. Mr. Emmett responded to Mr. Trosclair's e-mail and provided advice. That same day, BCC terminated Mr. Zelenka.

Final Transaction - The Twenty-Five Percent Interest in BCC

On January 6, 2016, the Tara E. Crosby Trust 2, the Allison Crosby Trust 2, the Lauren Guidry Trust, and the Aaron Guidry Trust, purchased the remaining twenty-five percent ownership interest in BCC from the Zelenka Trusts (hereinafter the "Twenty-Five Percent Transaction"). Mr. Emmett, at Mr. Trosclair's request, reviewed the sale document in January 2016: he recommended to Mr. Trosclair no changes to the document.

Termination of Mr. Zelenka's Employment with BCC - Settlement Agreement, Waiver, and Release

After BCC terminated Mr. Zelenka and after Crosby Appellants and Vinton Crosby collectively became the owners of one hundred percent of BCC, there remained outstanding issues between Mr. Zelenka and BCC concerning Mr. Zelenka's termination and the NASDI Lawsuit. To resolve the outstanding matters, on March 4, 2016, Mr. Zelenka e-mailed Mr. Trosclair and offered three options regarding the risks and rewards of the then-pending NASDI Lawsuit. Mr. Zelenka presented the options as follows: (a) maintain the status quo, under which Mr. Zelenka retained substantially all of the risks and rewards of the NASDI Lawsuit; (b) Mr. Zelenka and BCC split the risks and rewards of the NASDI Lawsuit; or © BCC assumes all risks and rewards of the NASDI Lawsuit. Mr. Trosclair forwarded this e-mail to Mr. Emmett and asked for Mr. Emmett's opinion on the options presented by Mr. Zelenka. Mr. Emmett advised Mr. Trosclair to choose option (b).

On April 6, 2016, Mr. Zelenka and Kurt Crosby as a member of BCC signed a "Settlement Agreement, Waiver and Release" (hereinafter "Settlement Agreement") to resolve issues associated with Mr. Zelenka's termination. One such issue was the NASDI Lawsuit. Within the Settlement Agreement was a section titled "LITIGATION PROCEEDS". This section stated, in pertinent part:

With respect to the [NASDI Lawsuit], should any recovery be made by [BCC], [BCC] will issue a payment to [Mr.] Zelenka equal to one half of the net amount of any recovery made after payment of legal and litigation expenses incurred after January 1, 2015. In addition, [BCC] agrees that [Mr.] Zelenka's indemnity obligation to [BCC] arising out of the [NASDI Lawsuit] is hereby reduced to one half of any amount that [BCC] is or may be ordered to pay as a result of the litigation.

(Hereinafter "Fifty-Fifty Split Agreement"). The Fifty-Fifty Split Agreement altered the prior arrangement confected during the course of the Seventy-Five Percent Transaction, whereby Mr. Zelenka had retained substantially all risks and rewards from the NASDI Lawsuit. When the trial court in the NASDI Lawsuit ultimately cast BCC in judgment on March 7, 2018, BCC and Mr. Zelenka each had responsibility for half of the judgment per the terms of the Fifty-Fifty Split Agreement.

The Kurt Crosby v. Waits, Emmett, Popp & Teich, L.L.C. Lawsuit

On February 12, 2019, Crosby Appellants and BCC, filed this legal malpractice suit against WEPT Appellees and the law firm's malpractice insurer. In the petition, Crosby Appellants alleged that WEPT Appellees negligently represented them in various transactions during their acquisition of BCC. In particular, Crosby Appellants alleged that they accepted Mr. Emmett's advice to accept half of the risks and rewards for the NASDI Lawsuit. Crosby Appellants further alleged that, regarding the NASDI Lawsuit, they suffered from a substantial judgment on liability; a substantial judgment on attorneys' fees and costs; the public embarrassment of a large loss; additional attorneys' fees to mitigate the damages; and any ultimate settlement payment. On February 14, 2019, WEPT Appellees withdrew from representation of BCC in the NASDI Lawsuit because they had become adverse to BCC in the instant malpractice suit.

On March 22, 2019, WEPT Appellees filed a peremptory...