The Supreme Court remanded this matter to the circuit court with directions to reinstate a default judgment granted to Bingham Greenebaum Doll, LLP and J. Richard Kiefer (collectively, Bingham) against Meredith Lawrence on its counterclaim to enforce a promissory note made by Lawrence in partial payment of attorney’s fees owed by Lawrence to Bingham, holding that the trial court erred in setting aside the default judgment and that the Court of Appeals erred in affirming that order. Specifically, the Court held that because Bingham’s counterclaim was a compulsory counterclaim to Lawrence’s action against Bingham for professional negligence and because the complaint called into question the validity of the promissory note at issue, Bingham’s counterclaim was justiciable even though it was filed three an a half months prior to the promissory note’s due date. View "Bingham Greenebaum Doll, LLP v. Lawrence" on Justia Law
In this fraud and professional negligence case the Supreme Court reversed the decision of the Court of Appeals that a $80 million punitive damage award was unreasonable and reinstated the trial court’s award, otherwise affirming the appellate court’s judgment, holding that the $80 million award was not grossly excessive and was constitutionally acceptable. Plaintiffs participated in a tax shelter marketed by Defendant, their accounting firm. After the IRS disallowed the tax shelter, Plaintiffs settled with the IRS, paying a total of $20 million for back taxes, interest and penalties and amounts paid to Defendant for fees. Plaintiffs then commenced this action to recoup the $20 million. The trial court found Defendant liable for fraud and gross professional negligence and awarded $20 million in compensatory damages and $80 million in punitive damages. The Court of Appeals affirmed the judgment on liability and compensatory damages but reduced the punitive damage award to equal the compensatory damage award. The Supreme Court (1) affirmed the Court of Appeals’ decision that Defendant was liable for fraudulent conduct and the compensatory damage award; but (2) reversed the remittitur and reinstated the trial court’s punitive damage award, holding that the facts supported an $80 million punitive damage assessment and that an award of that magnitude was constitutionally acceptable. View "Yung v. Grant Thornton, LLP" on Justia Law
The Supreme Court adopted the Exoneration Rule, the majority rule across the nation providing that a criminal defense attorney may not be sued for legal malpractice in a case resulting in the conviction of his or her client unless the client has been exonerated by direct appeal or upon post-conviction relief, and affirmed the trial court’s dismissal of Plaintiffs’ legal malpractice claim against Defendants. The trial court dismissed Plaintiffs’ legal malpractice action against Plaintiff’s defense attorneys. The Court of Appeals affirmed, holding that a criminal defendant who has been convicted at trial and whose conviction has not been overturned on appeal or through other post-conviction proceedings may not bring a legal malpractice action against his defense attorneys for alleged negligence occurring during the representation. The Court of Appeals’ opinion was based on the Exoneration Rule, which the court had previously applied. The Supreme Court granted discretionary review to consider the merits of the rule, adopted the rule, and affirmed, holding that because Plaintiff failed to allege that he had been exonerated of his convictions through post-conviction proceedings, the trial court did not err in dismissing his legal malpractice action without prejudice. View "Lawrence v. Bingham, Greenebaum, Doll, LLP" on Justia Law
The Supreme Court affirmed the holdings of the circuit court and court of appeals determining that public defenders, as employees of the Department of Public Advocacy (DPA), a statutorily-created agency of the Commonwealth, are entitled to assert the defense of qualified immunity within the proper context. After he was discharged from custody, Plaintiff filed a malpractice action against his former attorney, alleging that as a result of Defendants negligent advice regarding parole eligibility, Plaintiff had served longer in prison than he expected when entering his guilty plea. The circuit court granted Defendant’s motion to dismiss, finding that Defendant was entitled to qualified official immunity from suit as an employee of the DPA. The Supreme Court affirmed, holding (1) public defenders performing discretionary tasks in good faith and within the scope of their employment are entitled to assert qualified immunity to any negligence claim; and (2) Defendant was entitled to the defense of qualified immunity under the circumstances of this case. View "Jacobi v. Holbert" on Justia Law
The Supreme Court affirmed in part and reversed in part the judgment of the court of appeals reversing the judgment of the trial court in this action arising from a construction dispute. Two subcontractors - the steel fabricator and the steel erector and installer - on a condominium project brought suit against the project owner, developer, and general contractor after the subcontractors proceeded with extra work outside the scope of the original bid documents but were never paid for either that work or the retainage amount owed under the steel fabricator’s contract with the general contractor. The circuit court entered judgment in favor of Plaintiff for the cost of the extra work and unpaid retainage. The general contractor prevailed on its indemnification cross-claim against the other two defendants and on the negligence cross-claim asserted against it by the other two defendants. The court of appeals reversed. The Supreme Court held that the court of appeals (1) erred by reversing the trial court’s judgment against the owner for unjust enrichment; (2) properly reversed the trial court’s judgment against the general contractor for breach of contract; and (3) properly found that the trial court should have instructed the jury on the owner and developer’s breach of contract claim but erred in finding the negligence instruction deficient. View "Superior Steel, Inc. v. Ascent at Roebling’s Bridge, LLC" on Justia Law
While Brenda Osborne was at home alone, an airplane pilot crashed his airplane into Osborne's home. Osborne subsequently hired Attorney to assist her recovering her losses from the pilot, but when the lawsuit was finally filed, the federal court dismissed the action as barred by limitations. Osborne filed this action against Attorney asserting breach of contract, legal malpractice, and fraud and deceit. A jury found in favor of Osborne, resulting in a judgment against Attorney in excess of $5 million. The court of appeals affirmed the judgment in part but vacated a large portion of the damage award. The Supreme Court reversed, holding (1) the trial court properly tried this case using the suit-within-a-suit method but erred when it failed to instruct the jury on Pilot's negligence, thus resulting in Osborne's failure to establish that Attorney's malpractice proximately caused her loss; (2) emotional-distress plaintiffs must first satisfy the elements of a general negligence claim; and (3) punitive damages are not recoverable against an attorney in a legal malpractice case. View "Osborne v. Keeney" on Justia Law
Roger Elliott, who served as a district court judge for almost twenty-five years and who was a member of the Senior Status Judge Program, was indicted on one count of theft of labor already rendered. Elliott entered an Alford plea to the charge. The circuit court entered an order granting Elliott a pretrial diversion. The judicial conduct commission then issued an order of public reprimand. As a condition of the reprimand, Elliott agreed to resign from the judge program and not seek to re-enter it. As a follow-up to resolve the temporary suspension of his bar license, Elliott and the office of bar counsel agreed to a negotiated sanction. Elliott requested that the Supreme Court enter an order suspending him from the practice of law for two years with one year probated and one year to serve, effective from the date of the order, on conditions that Elliott continue compliance with the terms and provisions of his pretrial diversion contract and that he incur no new disciplinary charges during the probationary period. The Court concluded that the sanctions were appropriate.
Appellant GMAC Mortgage Corporation, through its attorneys Appellants Morgan & Potter, Attorneys, P.S.C. filed a disciplinary complaint against Appellee Noel Botts. Botts had represented GMAC's successor-in-interest in a foreclosure action. The trial commissioner conducted an evidentiary hearing and ultimately determined that the Kentucky Bar Association failed to prove by a preponderance, that Botts committed any of the acts or omissions charged. The Board of Governors accepted the trial commissioner's determination, and charges against Botts were ultimately dismissed. Subsequently Botts filed suit against GMAC and Morgan & Pottinger in circuit court, requesting relief from pecuniary and professional harm he allegedly suffered as a result of the disciplinary complaint. In his suit, Botts alleged wrongful use of civil proceedings, defamation and slander, abuse of process, fraud and outrageous conduct. Appellants filed numerous motions to dismiss based on claims of immunity, all of which were denied. Because Appellants claimed immunity as the basis for their motions, the order is appealable. Because the claim raises an issue of statewide importance, the Supreme Court granted Morgan & Pottinger's motion to transfer. State law holds that any statement made in the institution of, or during the course of an attorney disciplinary proceeding, is privileged so long as it is material, pertinent and relevant to that proceeding. Even if it patently fails or is entered with malice, the Kentucky "judicial statements" privilege is absolute and would still apply. The Court noted that Botts' allegations of wrongful use of civil proceedings, abuse of process, fraud and outrageous conduct are not based singly on Appellants' statements contained in the Bar Association complaint, but also on the act of filing the complaint. Whether the "judicial statements" privilege encompasses the act of filing the complaint is a matter of first impression. The Court decided that any communication or statement made to the Bar Association during the course of a disciplinary hearing or investigation, including the contents of the complaint initiating such proceedings, are absolutely privileged and extend to the act of filing the complaint. The Court remanded the case back to the circuit court for additional fact finding to address the basis of Botts' claims for fraud, defamation and slander.