A recent case out of Louisiana’s Fourth Circuit, Meyers v City of New Orleans, 2005-1142 (La.App. 4 Cir. 5/17/06) 932 So.2d 719, writ den., 2006-1530 (La. 9/29/06) — So.2d —-, 2006 WL 2820822, found that a “settled” lawsuit had abandoned before the settlement was completed, leaving the plaintiff with no case to settle.
Louisiana civil procedure generally provides that a lawsuit is “abandoned” if no party takes a step in the prosecution or defense of the case for a period of three years. Louisiana Code of Civil Procedure article 561 and Clark v. State Farm Mut. Auto. Ins. Co., 2000-3010, p. 5-6 (La. 5/15/01); 785 So.2d 779, 784 (La.,2001). Acts in the prosecution or defense of the case sufficient to interrupt abandonment typically require some positive action by a party reflected in the Court’s records and directed toward defending or prosecuting the case on the merits. The abandonment is self-effectuating, meaning that it occurs without any need for action by the Court or a party, but a party is entitled to an Order recognizing the abandonment and dismissing the case.
In Meyer, plaintiff sued the City of New Orleans for personal injuries to her daughter, allegedly caused when the girl fell in an uncovered manhole while attempting to board a bus. Just prior to trial, the parties reached a verbal agreement settling the case, and the court’s minutes for the day of the scheduled trial reflected that the case had settled. The settlement, however, was never finalized by a written settlement agreement signed by the parties or by a recitation of the settlement in open court. Accordingly, the settlement funds were never paid and no judgment was ever submitted to the Court. After three years, the City moved for and was granted an order dismissing the case as abandoned, under Louisiana Code of Civil Procedure article 561.
The court acknowledged that the parties had negotiated a settlement, but found that since they never confirmed the settlement in a binding settlement agreement (written and signed by the parties or recited in open court – Louisiana Civil Code article 3071) or effectuated the settlement by the anticipated payment of money, the case had abandoned and had to be dismissed.
The Fourth Circuit explained that Article 561 imposes three requirements on a plaintiff to avoid abandonment:
(1) the plaintiff must take some “step,” which is defined as any formal action before the court intended to hasten the suit toward judgment, in the prosecution of the lawsuit;
(2) the step must be taken in the proceeding, and with the exception of formal discovery, must appear in the record of the suit; and
(3) the step must be taken within the legislatively prescribed time period of the last step taken by either party.
Meyers at 712, citing Olavarrieta v. St. Pierre, 2004-1556, p. 4 (La.App. 4 Cir. 5/11/05), 902 So.2d 566, 569, writ denied, 2005-1557 (La.12/16/05), 917 So.2d 1118 [citing Clark v. State Farm Mut. Auto. Ins. Co., 2000-3010, pp. 5-6 (La.5/15/01), 785 So.2d 779, 784].
Relying on Lizama v. Williams, 99-1040 (La. App 5 Cir. 3/22/00), 759 So.2d 865, the Fourth Circuit found that a non-binding settlement or ongoing settlement negotiations “. . . [do] not relieve the parties of their duty to protect the court record by taking timely steps on the record to avoid abandonment.” Meyer, at 722. The Court further explained:
[W]e . . . find that a verbal settlement agreement does not relieve the parties of their responsibility to protect the record by filing a written confirmation of settlement within at least three years of the last ‘step’ in the case to avoid abandonment. The fact that the plaintiff’s counsel was relying upon his opposing counsel to prepare a judgment did not prevent plaintiff’s counsel from filing some pleading to force the opposing party to honor the settlement agreement before the passage of three years.
Meyer, at 722.
Plaintiff applied to the Louisiana Supreme Court for review, but the writ application was denied on September 29, 2006. See Meyers ex rel. Meyers v. City of New Orleans, 2006-1530 (La. 9/29/06) — So.2d —, 2006 WL 2820822 (La.).
How could something like this happen? It doesn’t take long to come up with a few scenarios where a “settled” case might be allowed to languish. What if a plaintiff and his lawyer had a falling out over some provision in the negotiated settlement, or over the amount of the attorney’s fee and the plaintiff fired the lawyer? It is not likely that a lawyer’s lien filed in the record for his or her fee would interrupt abandonment. But is that lawyer responsible for allowing the case to abandon if he or she has not formally withdrawn?
Or, what if the lawyer had problems of his own and had to withdraw from practice? It might not be easy for a plaintiff to find a new lawyer to wrap things up, especially if a lien has been filed.
The ultimate lesson of Meyers may be that a plaintiff who doesn’t tie up the loose ends of a “settled” case may end up with no case to settle. The lesson to a lawyer may be that if your client’s or former client’s case is going to abandon, be sure that it doesn’t happen on your watch.