AMER. BANK AND TRUST CO. OF COUSHATTA v. Boggs and Thompson
821 So. 2d 585 (2002)
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Rule of Law:
An attorney's letter to a creditor confirming that a client's debt will be satisfied from the proceeds of separate litigation does not create personal liability for the attorney, as the attorney is acting as a disclosed agent and such a letter does not constitute an express suretyship agreement or a binding contract if the creditor rejects its terms.
Facts:
- Thomas and Denise Washburn were indebted to American Bank and Trust Company of Coushatta (AB & T) for approximately $45,000.
- After the Washburns defaulted, AB & T initiated foreclosure proceedings against them.
- The Washburns' attorney, A. Michael Boggs, sent a letter dated November 21, 1997, to AB & T on their behalf.
- The letter stated Boggs' representation of the Washburns in separate litigation and confirmed that if any funds were obtained, AB & T would be satisfied regarding the Washburns' loans.
- After receiving the letter, an AB & T representative met with the Washburns, informing them the bank would proceed to judgment on the foreclosure but would not execute it if the Washburns made interim payments.
- The Washburns initially made interim payments but stopped in mid-1998.
- Subsequently, the Washburns' separate litigation settled, and they received proceeds but did not pay their debt to AB & T.
Procedural Posture:
- American Bank and Trust Company of Coushatta sued A. Michael Boggs and his law corporation in the Twenty-Sixth Judicial District Court, Bossier Parish (the trial court) for breach of contract.
- Boggs filed a Motion for Summary Judgment.
- The trial court granted summary judgment in favor of Boggs, dismissing the bank's lawsuit.
- American Bank and Trust Company of Coushatta, as appellant, appealed the trial court's decision to the Court of Appeal of Louisiana, Second Circuit.
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Issue:
Does an attorney's letter to a creditor, which states that any funds obtained from a client's separate litigation will be used to satisfy the client's outstanding loans, create a personal contractual or suretyship obligation for the attorney to pay the debt?
Opinions:
Majority - Kostelka, J.
No. The attorney's letter does not create a personal obligation for the attorney to pay the client's debt. The court rejected AB & T's claim under three distinct legal theories. First, under the law of mandate (agency), Boggs was not personally liable because he was acting as a mandatary for a disclosed principal, the Washburns. Boggs expressly stated his representation in the letter, and AB & T had prior knowledge of the attorney-client relationship, meaning he did not bind himself personally. Second, the letter did not create a suretyship agreement because such contracts must be express and in writing and cannot be presumed by inference; Boggs' letter contained no express language indicating his personal intent to be bound for the Washburns' debt. Third, under general contract law, no contract was formed between Boggs and AB & T. Even if the letter were considered an offer, AB & T did not accept it; instead, it made a counteroffer directly to the Washburns (to proceed with foreclosure but delay execution in exchange for payments), which formed a new and separate agreement between AB & T and the Washburns, negating any potential offer from Boggs.
Analysis:
This decision reinforces the principle that an attorney acting as a disclosed agent for a client is shielded from personal liability for the client's obligations. It clarifies that ambiguous language in a communication, such as confirming a debt will be 'satisfied,' does not meet the high 'express and in writing' standard required to create a suretyship. The ruling also underscores basic contract principles, demonstrating how a party's counteroffer to the principal (the client) effectively rejects any perceived offer from the agent (the attorney), thereby preventing the formation of a contract with the agent. This precedent protects attorneys from inadvertently becoming personal guarantors of their clients' debts through routine professional correspondence.
