Reconventional Demand

What is the name of your state (only U.S. law)? Louisiana

I was contracted to performed work at a business. The agreed amount was $3,500.

During the couse of this work, the owner made claims that I had damaged his office. They filed a claim against my insurance company.

The insurance company retained an attorney to defend against this claim. An agreement was reached and the claim was settled. The owner was then paid $11K by the insurance company.

Note that I NEVER spoke to the attorney handling this matter for the insurance company. In fact I NEVER knew a settlement had even been reached untill I called asking what the status was. (The settlement clearly excluded my lien)

Shortly after the work was completed, I filed a labor and materials lien on the property in the amount of $3,500

When I filed to enforce my lien, my case was dismissed because the attorney had NOT filed a Reconventional Demand for the $3,500 owed to me for the work performed.

Question: What can I do about it? Any recomendations?

Please understand that the business owner DID NOT make a claim against your insurance company. Nor did it sue your insurance company! The business owner’s claim for damages was against you personally, not the insurance company.

The business owner was not in privity to your liability insurance contract, which is an indemnity agreement, and therefore could make no claim against that coverage.

The fact that your effort to foreclose a mechanic’s lien was denied on the grounds you mention (failure to plead a reconventional demand for the $3500) clearly indicates that the settlement was reached after a lawsuit was filed making your counterclaim compulsory. *

Although your insurance company was contractually bound to provide you an attorney to defend the business owner’s claim of loss as it was obviously covered under your insurance protection, it was under no obligation to provide you legal representation to assert your claim in reconvention.

Now I will grant you that the attorney should have advised you of the limits of its representation, (especially if the attorney was made aware of your mechanic’s lien) but nevertheless it was your ultimate responsibility.

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[*]Louisiana Code of Civil Procedure ( CCP 1061) - Actions pleaded in reconventional demand; compulsory

SECTION 2. RECONVENTION
Art. 1061. Actions pleaded in reconventional demand; compulsory

* * * *
B. The defendant in the principal action, except in an action for divorce under Civil Code Article 102 or 103 or in an action under Civil Code Article 186, shall assert in a reconventional demand all causes of action that he may have against the plaintiff that arise out of the transaction or occurrence that is the subject matter of the principal action.”

I hear you.

You are correct in everything you wrote with one major exception, the attorney hired by the insurance company NEVER ONCE CONTACTED me about the case or lien. (He was aware of the lien)

In fact I found out the case had been settled 3 months after the agreement was reached when I called the insurance company to obtain a status. How can that be my fault or responsibility? I never agreed to or signed anything.

To make matters worse, the attorney I hired to handle this one day in court to enforce the lien, charged me $3,750! and still loss. WTF!

Suggestions? Thoughts? Do I have a recourse against the attorney?

I think you have recourse against the attorney that ripped you off for the tune of $3750! Were he/she not aware of the business owner’s lawsuit and that your demand in reconvention was compulsory and could not be asserted collaterally?

Also it seems most unusual that a formal response to the business owner’s lawsuit could have been filed much less settled and the case dismissed absent any knowledge or participation on your part.

You might address these issues to both the Louisiana Bar Association and the Louisiana Department of Insurance.

Once again thanks for the comments. I agree.

Yes, the $3,750 attorney was WELL aware of all of the events that had transpired. Also a copy of the settlement agreement was included in the file.

I would now agree that he did know, or a minimum, should have know that a Reconventional Demand (RD) was required and that I was SOL. In an $500 e-mail he made a small reference to the RD, but pretty much downplayed / dismissed it and continued on. Here is what he wrote in the e-mail (in total) concerning the RD:

However, I wanted you to be aware of the potential res judicata problem with any suit you may file against XYZ, specifically regarding the lack of a prior reconventional demand, as noted in XYZ’s memo in the ABC Justice of the Peace Court filings.

It was clear to me from the beginning the defendant was going to "stand" on the RD argument. Thus this attorney should have focused in on it as well.

Technical Question:

I understand what the statue says. If the case was NEVER heard in open court and a judge NEVER issued a judgement, but an agreement was reached unilateraly outside of court, does the RD requirement still apply to my lien?

The mere word "Shocked" would not do justice as to how I felt when I opened the bill. My wife and I each were expecting $1,500-$2K, not $3,750!

I do plan to file a complaint with the La Insurance Commission. Also contemplating LABA against each of the attorneys. Once again, any advice?

Bump it up

Bump it up again

clemenda said:

. . . I do plan to file a complaint with the La Insurance Commission. Also contemplating LABA against each of the attorneys. Once again, any advice?

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Yes! Stop planning and act.

By taking your money to pursue a claim against the business owner knowing that your claim was barred the attorney committed not only an outrageous breach of professional ethics, but also a criminal act in obtaining money by false pretenses.

And he is not going to get away with it by claiming that he explained the legal pitfalls with a lot of legalese gibberish. Not unless you permit it.

Good luck

One final comment, clemenda.

Your attorney exhibited not a small degree of professional incompetence when in wrote:

I wanted you to be aware of the potential res judicata problem with any suit you may file against XYZ

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Literally the Latin term “res judicata” means that the thing (the res) has been once and for all time decided (adjudicated).

Thus by definition the principal clear doesn’t apply here! It can’t apply.

Your “thing” was never decided because your claim for services performed wasn’t presented to the court in the principal action. There was no ruling as to its merits.

It is not barred because it has already been ruled against you. It is now barred because it was not pleaded when it should have been.

And whether he understood the principal or not, why would he use the modifier “potential”? That’s as much as his saying that he thinks, he speculates, or there is a possibility. Double dumb! Where did you find this pickpocket anyway?

I’ll make a fair wager that he didn’t send that email off until after you coughed up the $3750 and he spent it. Also I would be much surprised if the LABA doesn't require him to refund the entire amount. But if they don’t, then file a lawsuit against the sap.