Two Wrongs Don’t Make a Right: Fraudulent Concealment of Legal Malpractice in Louisiana

By Casey Auttonberry

No one enjoys being sued. But for lawyers, being sued for malpractice does not just mean potential monetary damages; it is also likely to damage the lawyer’s reputation. Fortunately, the Louisiana Legislature has attempted to give lawyers at least a little peace of mind. Louisiana Revised Statutes section 9:5605 has been described as “A Louisiana Lawyer’s Best Friend.”1 This is largely because the time periods set forth by the statute protect the lawyer if the client does not act quickly:

A. No action for damages against any attorney at law duly admitted to practice in this state . . . 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.2

Section 9:5605(B) makes the one-year and three-year limitation periods peremptive.3 Peremption is similar to prescription, but in practice it can be a very different creature. Unlike prescription, peremption cannot be “renounced, interrupted, or suspended.”4 Also, when a prescriptive period runs, the cause of action is merely barred; when a peremptive period runs, the cause of action is destroyed entirely.5 Considering these characteristics of peremption, it is easy to see why section 9:5605 is regarded as a friend to attorneys.

The legislature did not make the statute completely lawyer-friendly, though. Section 9:5605(E) creates an exception to the peremptive periods for “cases of fraud.”6 The public policy behind discouraging lawyers, who are fiduciaries, from committing fraud is unquestionably sound. What is questionable is the interpretation and application of the fraud exception. Specifically, does subsection E apply when a lawyer fraudulently conceals malpractice from a client, and, if not, what other types of relief may a client get in this situation?

The Louisiana Supreme Court has not ruled on this specific issue. The Second, Fourth, and Fifth Louisiana Circuit Courts of Appeal have ruled that this exception applies when the fraud is committed as part of the underlying malpractice claim, but the fraud exception is not applicable when the attorney has subsequently concealed malpractice.7 The First Circuit has gone in the other direction and applied this exception to cases in which a lawyer subsequently concealed the malpractice from the client, thus allowing the former client to bring his or her claim even though it would normally be barred by peremption.8 The Third Circuit has not ruled definitively on the issue, but the court has hinted that it may be inclined to allow section 9:5605 to apply in cases of fraudulent concealment.9

The consequence of the Second, Fourth, and Fifth Louisiana Circuit Courts of Appeals’ interpretation is that if an attorney conceals the malpractice for three years, the client’s malpractice cause of action is extinguished. Additionally, it seems as though there is no way—and will be no way—for the client to bring his or her malpractice claim if the three-year limitations period has run. This is due to the way in which Louisiana’s highest court has approached peremption in legal malpractice actions. The Louisiana Supreme Court has strictly adhered to the notion that peremption cannot be renounced, interrupted, or suspended. For example, supplemental and amending petitions that add new plaintiffs cannot relate back after the peremptive period has run.10 Additionally, the continuous representation rule, which is a rule that suspends a limitations period based on the doctrine of contra non valentem, cannot suspend the peremptive period in section 9:5605.11 These results, though perhaps harsh, are legally correct since peremption cannot be renounced, interrupted, or suspended. Therefore, it is unlikely that any jurisprudentially created fraudulent concealment exception would pass muster, since only “statutorily created exceptions” to the peremptive periods in section 9:5605 will be recognized.12

This brings us back to section 9:5605(E), the only statutorily created exception.13 The subsection states, “The peremptive period provided in Subsection A of this Section shall not apply in cases of fraud, as defined in Civil Code article 1953.”14 Louisiana Civil Code article 1953 says, “Fraud is a misrepresentation or a suppression of the truth made with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud may also result from silence or inaction.”15 A lawyer clearly misrepresents or suppresses the truth when he or she does not inform a client that he or she has committed malpractice. Silence or inaction about the malpractice has the same effect. Whether the suppression is negligent or intentional is irrelevant—a Louisiana lawyer has an ethical duty to keep his or her client informed about the status of the client’s legal matter.16 The lawyer is in a superior position to know of the malpractice, and by not having a suit for damages brought against him or her, the lawyer is gaining an unjust advantage. Therefore, the plain language of section 9:5605(E) can, and should, accommodate an interpretation that excepts the three-year peremptive period when legal malpractice is fraudulently concealed.

Public policy also supports including fraudulent concealment as an exception under section 9:5605(E). By allowing no recourse against a lawyer when the lawyer has fraudulently concealed malpractice, the limited interpretation by the Second, Fourth, and Fifth Circuit Courts of Appeal essentially encourages lawyers to abandon their fiduciary relationship with clients and conceal the malpractice. Of course, the client could bring disciplinary action against the attorney, but this does not guarantee that the client will have any recourse against the lawyer.17 Furthermore, the existence of an alternate disciplinary action does not justify an interpretation of section 9:5605(E) that violates public policy by encouraging lawyers to act contrary to the best interest of their clients.

Additionally, the Second, Fourth, and Fifth Circuit Courts’ reasoning, while technically correct, is arguably incomplete. All three circuit courts rely on
the proposition that the prior cases have applied the fraud exception when the fraudulent act constitutes the malpractice.18 In Brumfield v. McElwee,19 the Fourth Circuit cites Smith v. Slattery,20 a Second Circuit case, and Atkinson v. LeBlanc,21 a Fifth Circuit case, in support of its assertion that the fraudulent act itself should comprise the malpractice to fall under the fraud exception. Both Smith v. Slattery22 and Atkinson v. LeBlanc23 cite Shreveport Credit Recovery, Inc. v. Modelist24 in support of their interpretation of 9:5605(E). In Shreveport Credit Recovery, the plaintiff alleged that its former attorney fraudulently assigned a promissory note in order to defeat plaintiff’s claims on the note.25 The Second Circuit concluded that the plaintiff properly alleged fraud, and, therefore, the claim was not subject to the peremptive periods of section 9:5605.26

The court in Shreveport Credit Recovery applied the fraud exception when the underlying malpractice constituted fraud, so clearly the courts are not wrong when they say the fraud exception has been applied when the fraudulent act constitutes the malpractice. The exception should apply in those cases. But that does not mean that the scope of the exception should be limited to only those cases. The plain language of the statute can accommodate fraudulent concealment, and public policy supports that interpretation. Since only statutorily created exceptions to peremption will be recognized, the equitable solution is that Louisiana courts should include cases of fraudulent concealment within the scope of section 9:5605(E).

1 Jennifer Thornton, Comment, Louisiana Revised Statute Section 9:5605: A Louisiana Lawyer’s Best Friend, 74 Tul. L. Rev. 659 (1999).

2 La. Rev. Stat. Ann. § 9:5605(A) (2013).

3 Id. § 9:5605(B). In 2008, the Legislature made other statutory changes that impact legal malpractice actions; specifically, Louisiana Code of Civil Procedure article 927 was amended to include the Peremptory Exception of Peremption “on which evidence may be introduced in accordance with Article 931.” 2008 La. Sess. Law Serv. Act 824 (H.B. 548) (West).

4 La. Civ. Code art. 3461 (2012).

5 See Naghi v. Brener, 17 So. 3d 919, 926 (La. 2009) (“Peremption differs from prescriptive in two respects: (1) the expiration of the peremptive time period destroys the cause of action itself; and (2) nothing may interfere with the running of a peremptive time period.”).

6 § 9:5605(E).

7 Smith v. Slattery, 877 So. 2d 244, 249 (La. App. Ct. 2d 2004), writ denied, 885 So. 2d 592 (La. 2004) (applying the fraud exception only when the “fraudulent act itself that constituted the malpractice, and not for fraud in the actions taken after the legal malpractice has occurred”); Atkinson v. LeBlanc, 860 So. 2d 60, 65 (La. App. Ct. 5th 2003) (“The jurisprudence applying this article in cases of legal malpractice apply it in cases where it was the fraudulent act itself that constituted the malpractice, not as herein alleged, fraud in the actions taken after the legal malpractice has occurred.”); Brumfield v. McElwee, 976 So. 2d 234, 240 (La. App. Ct. 4th 2008) (citing Smith and Atkinson and determining that the fraud exception in section 9:5605(E) is only applicable when the underlying act of malpractice constitutes fraud).

8 Coffey v. Block, 762 So. 2d 1181, 1187 (La. App. Ct. 1st 2000), writ denied, 772 So. 2d 651 (La. 2000) (determining that the plaintiff’s pleadings, which alleged that the lawyer’s misrepresentations about the status of the case subsequent to the malpractice were “made with the intention by defendant to obtain an unjust advantage over petitioner and to cause her loss of her cause of action against petitioner [sic] for his malpractice” fell under the fraud exception to the peremptive periods of section 9:5605); Trailer Outlet, Inc. v. Dutel, 2010 WL 2342753 (La. App. Ct. 1st 2010) (acknowledging that other Louisiana circuits have limited the scope of § 9:5605(E) to situations in which the fraudulent act was part of the malpractice, but in the Louisiana First Circuit Court of Appeals, “allegations of misrepresentation or suppression of the truth occurring subsequent to the acts of malpractice are sufficient to raise the issue of fraud within the meaning of La. R.S. 9:5605(E)”).

9 In Robin v. Allstate Insurance Co., the plaintiffs believed that their former attorney had informed another law firm via letter that an appeal had been filed. 844 So. 2d 41, 49 (La. App. Ct. 3d 2003), writ denied, 855 So. 2d 763 (La. 2003). Later, the plaintiffs began to believe the letter had been manufactured to gain an unjust advantage in the malpractice action, and they argued this fell under the section 9:5605(E) fraud exception. Id. The court never directly reached the fraud issue on that matter. Instead, it said that the lawyer’s actions “may be fraudulent,” but it was irrelevant since the plaintiffs already had sufficient facts to file a malpractice action against the attorney. Id.

10 Naghi, 17 So. 3d at 926. The same principle applies when a plaintiff attempts to amend its petition to add a new defendant after the peremptive period has run. Stewart v. Cont’l Cas. Co., Inc., 79 So. 3d 1047, 1053 (La. App. Ct. 1st 2011), writ denied, 82 So. 3d 285 (La. 2012).

11 Reeder v. North, 701 So. 2d 1291, 1297–99 (La. 1997) (holding that “the three-year peremptive period of La. R.S. 9:5606 . . . cannot be suspended by the ‘continuous representation rule’”); Jenkins v. Starns, 85 So. 3d 612, 628 (La. 2012) (holding that “the continuous representation rule also does not apply to the one-year peremptive period in La. R.S. 9:5605”).

12 Allen v. Carollo, 674 So. 2d 283, 289 (La. App. Ct. 1st 1996).

13 Coffey v. Block, 762 So. 2d 1181, 1186 (La. App. Ct. 1st 2000), writ denied, 772 So. 2d 651 (La. 2000).

14 La. Rev. Stat. Ann. § 9:5605(E) (2013).

15 La. Civ. Code art. 1953 (2012).

16 La. Rules of Prof’l Conduct R. 1.4(a)(3).

17 Id.

18 See supra note 8 and accompanying text.

19 976 So. 2d 234, 240 (La. App. Ct. 4th 2008).

20 877 So. 2d 244 (La. App. Ct. 2d 2004).

21 860 So. 2d 60 (La. App. Ct. 5th 2003).

22 877 So. 2d 244, 249 (La. App. Ct. 2d 2004).

23 860 So. 2d 60, 65 (La. App. Ct. 5th 2003).

24 760 So. 2d 681 (La. App. Ct. 2d 2000).

25 Id. at 685.

26 Id.