“ILL PRACTICES”/LEGAL ETHICS”– Louisiana’s procedural laws provide a mechanism to enter a “default judgment” against a party who chooses to ignore or refuses to respond to a suit, but a recent decision from the Third Circuit strongly indicates that this procedure is not properly suited for use against a party who believes they are under no pending obligation to answer a suit. It also demonstrates that an attorney’s filing of an improper pleading can prove costly to the attorney.
In Buster’s Frozen Custard v. Lancaster Manufacturing, 2015-947 (La. App. 3 Cir. 4/27/16), ______ So. 3d ______, 2016 WL 1660494, a defense attorney followed customary practices and called the plaintiff attorney to request an extension of time to file responsive pleadings. During the call, plaintiff’s counsel agreed to the extension and expressed interest in settlement. He then sent an email advising that a firm settlement demand would be provided once better estimates were obtained concerning the costs to remove the disputed equipment. Estimates were then forwarded a few days later along with a firm settlement demand, after which the attorneys engaged in settlement negotiations by phone and email.
In one of the emails from plaintiff’s counsel, he expressed his desire to settle “without having to waste time in court proceedings.” That same day he took a preliminary default against the defendant. At the default confirmation hearing a month later, plaintiff’s counsel certified that there was no appearance by the defendant whether by answer to the suit, “enrollment of counsel, or otherwise.” The Court rendered a default judgment which the attorney recorded in the mortgage records.
While the parties ultimately settled the underlying dispute, the defendant proceeded with a petition to annul the default judgment due to the plaintiff attorney’s “ill practices” as provided by La. C.C.P. Art. 2004. The Trial Court granted the annulment in view of the “ill practices,” and further ordered the attorney to personally pay the defendant over $28,000 in attorney fees pursuant to La. C.C.P. Art. 863, which provides that an attorney’s signature to a pleading constitutes certification that the “pleading is not being presented for any improper purpose.” The Court found that the motion for preliminary default was certified for the improper purpose of obtaining a judgment against a party without notifying the party of the action, and the confirmation obtained without divulging to the judge ongoing negotiations and an informal extension of time for the defendant to answer. The Court of Appeal affirmed.