COA 2010 Minutes: March 5, 2010 (Nos. 231-259)

COA 2010 Minutes: March 5, 2010 (Nos. 231-259) (link corrected 3/13/10)

  • 29 decisions
  • 2 Published
  • 15 orders dismissing appeal

Published Decisions with digest and link to full text decision at AOC:

233 Legal Negligence
1 The notice of appeal incorrectly listed Steven H. Keeney as appellant instead of cross-appellee.

CLAYTON, JUDGE: Steven H. Keeney (“Keeney”) appeals from both the August 30, 2007 judgment, in an action for legal malpractice which was entered by the Jefferson Circuit Court in favor of Brenda C. Osborne (“Osborne”), and also the October 10, 2007 opinion and order denying Keeney’s various posttrial motions. The judgment was based on a jury verdict against Keeney that awarded Osborne compensatory and punitive damages of more than $5.1 million. The claim for negligent representation arose out of an October 22, 2002 incident in which a small airplane crashed into Osborne’s home. Osborne retained Keeney to represent her in an action against the airplane pilot; however, the underlying action was dismissed on statute-of-limitations grounds.  Following the entry of the judgment, Carolina Casualty Insurance Company and Monitor Liability Mangers, Inc. (hereinafter “Carolina”), which were Keeney’s professional liability insurer and policy administrator, appealed both the judgment and also the October 10 order which granted Osborne leave to file a second amended complaint against them.
For the following reasons, we affirm in part, vacate in part, and remand. ***

The jury awarded Osborne approximately $5,000,000 in damages. The damages awarded to Osborne were as follows:

$ 54,924.04 Property damage from the airplane crash Mental
500,000.00 Mental pain and suffering; physical pain and suffering
750,000.00  Mental pain and suffering
53,025.39 Legal fees paid to Keeney
250,000.00 Emotional distress caused by Keeney
$ 3,500,000.00 Punitive damages against Keeney

On August 30, 2007, judgment was entered for Osborne. Following the verdict against him on September 10, 2007, Keeney filed various posttrial motions, which included judgment not withstanding the verdict under Kentucky Rules of Civil Procedure (CR) 50.02; to alter, amend, or vacate the judgment, or for a new trial under CR 59.05; and, for relief from the judgment under CR 60.02. On September 18, 2007, the nineteenth day after entry of the judgment, Osborne objected to Keeney's motions and also filed a motion to amend her complaint to add Carolina as a defendant, and to add claims against Carolina under Kentucky Revised Statutes (KRS) 304.12-230, the Unfair Claims Settlement Practices Act; KRS 367.170; and Kentucky common law for bad faith conduct in refusing to settle the case. The proposed amended complaint also incorporated by reference all of the allegations made in the original complaint.
Then, Keeney filed additional motions and objections to the motion for leave to amend the complaint. Keeney argued that the amended complaint adding additional parties and claims would delay his appeal while Osborne argued her bad faith claims against third parties. On October 10, 2007, the court granted Osborne leave to file the second amended complaint and denied Keeney's various motions.

On October 19, 2007, Keeney filed a notice of appeal and named Carolina as an appellee. Carolina filed a notice of cross-appeal on October 29, 2007. Then, on December 8, 2007, Osborne filed a motion to dismiss Carolina’s appeal on the grounds that Carolina is not a proper party to this appeal because it was not a party at the trial. Furthermore, Osborne argued that Carolina could not appeal the trial court’s order permitting Osborne to file her postjudgment amended complaint because the order was interlocutory. Subsequently, on December 20, 2007, Carolina filed a response to Osborne’s motion to dismiss and set forth its legal basis for participating in Keeney’s appeal, and claimed that Carolina should be allowed to appeal to protect its interests in the outcome of the appeal.
On March 18, 2008, we entered an order on Osborne’s motion to dismiss Carolina’s cross-appeal and on appellees’/cross-appellants’ (Carolina’s) motions in the alternative for leave to intervene and for leave to file a reply to Osborne’s response and response to the motions. After we considered the motions, we ordered that the motion for leave to file a reply be granted. And, we denied the motions to dismiss the cross-appeal and to intervene in the direct appeal. We will now address the issues in this appeal.

1. Elements of legal malpractice.

The facts, here, are that an airplane landed on Osborne’s home causing damages. Following this event, she hired Keeney to represent her in an action against the airplane pilot. Subsequently, he missed the statute of limitations in filing the action and the case was dismissed. Hence, in the present case, Osborne was completely precluded from bringing any suit or recovering any damages from Quesenberry. Furthermore, evidence was introduced that Keeney not only failed to file the airplane case within the one-year statute of limitations but also that he received reminders from third parties that the statute of limitations was approaching. And, once Osborne’s airplane case was dismissed, Keeney failed to inform her that the case had been dismissed and costs awarded against her. Even more significant, Osborne did not learn of the case’s dismissal until after such time she would have been able to move for reconsideration or file an appeal.

Thus, in the airplane case, evidence was presented that Osborne had a viable claim against Quesenberry and that she lost the opportunity to maintain this case in her own name and prosecute her own interests. While it is true that Osborne must demonstrate that, but for Keeney’s negligence, she would have prevailed in the underlying case, we believe she presented adequate evidence to establish the liability of the airplane pilot, particularly in light of the circumstances of a legal malpractice action and its “case within a case” structure. We would be remiss not to mention that Keeney’s own actions following the dismissal of the airplane case created issues in establishing the pilot’s negligence, most obviously when he allowed the insurance company in the original case to discard the airplane wreckage. This factor alone precluded Osborne’s ability to have the wreckage inspected.

Therefore, we find that Osborne raised a viable claim of legal negligence against Keeney and that Osborne introduced evidence of the airplane pilot’s action, allowing the jury to find both that Keeney breached his duty to exercise reasonable care and skill in his legal representation of Osborne and that Osborne, but for his negligence, would have prevailed in the airplane case. We will not substitute our opinion regarding Keeney or Quesenberry’s negligence for that of the jury. See Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382, 385 (Ky. 1985).

2. Damages

* * *  under Kentucky jurisprudence, in order to recover for emotional distress Osborne must have suffered some type of physical impact in the airplane crash in order to recover damages for emotional suffering. As she herself testified, nothing touched her and she was not physically injured. Thus, since nothing touched her, she cannot recover. Hetrick v. Willis, 439 S.W.2d 942, 943 (Ky. 1969). Similarly, she cannot, as a matter of law, recover for emotional distress, mental anguish, or any psychological stress. Morgan, 163 S.W.2d at 22.
Regardless of Osborne’s strenuous suggestion that Kentucky has adhered to the “no impact” principle while other jurisdictions in negligence cases have rejected the physical impact
or injury requirement, it remains Kentucky law. The trial court should not have allowed the jury to consider Osborne’s claim for suffering, whether mental or physical, without any impact from the plane. Thus, we hold that emotional distress and physical suffering damages in this case conflict with the impact rule as it currently stands and vacate the $500,000 damage award for these damages.

Airplane case – “punitive damages”
The question presented in this case is whether a plaintiff in a legal malpractice case may recover punitive damages allegedly lost in the underlying suit as a result of attorney malpractice. 

Here, the jury decided the negligence of the pilot based on several factors, including information from Keeney’s initial representation of Osborne; the airplane crash itself; and the testimony of two attorneys – Sullivan, who represented Quesenberry in the original action, and Hixon, an attorney and aviation expert witness.    In actions founded on negligence, the causal connection between the defendant's negligence and the plaintiff's injury must be established by a preponderance of the evidence. 65A C.J.S. Negligence § 812 (2009). We believe that the jury’s findings in this case were not erroneous. But, notwithstanding that negligence was established, Osborne must prove by clear and convincing evidence that Quesenberry acted in such a manner as to warrant an award of punitive damages. We find that no clear and convincing evidence was proffered by Osborne regarding the necessary elements for an award of punitive damages against the airplane pilot, and vacate the award of lost punitive damages in the amount of $750,000.

Legal malpractice case – Osborne’s emotional distress damages

As discussed above, Kentucky courts apply the “impact rule” in determining whether a plaintiff may recover for negligent infliction of emotional distress. To recover damages in such an action, the plaintiff must suffer a physical impact or injury. * * *  Clearly, this case does not support the proposition that Osborne can receive damages for emotional distress based on Keeney’s fraud, nor does she cite any other support for such a proposition. Consequently, under Kentucky jurisprudence, Osborne may not recover $250,000 for emotional distress and this portion of the jury award is vacated.

Legal malpractice case – punitive damages 
 Keeney disputed much of Osborne’s testimony, but the trier of fact heard the evidence and ascertained that Keeney’s behavior reached the level required for an award of punitive damages. We, again, will not substitute our opinion for that of the jury.

Osborne’s damages exceeded her pretrial itemization
Keeney argues that Kentucky law limits Osborne’s monetary damage recovery to the damages specified by her in pretrial discovery. * * * CR 8.01(2) restricts a plaintiff’s recovery to the amount of damages provided during discovery or any court-permitted supplementation if no prejudice results to the defendant. Here, the last amount of damages specified by Osborne was in her trial memorandum and she asked for $1 million in punitive damages for Keeney’s legal malpractice. Thus, we hold that punitive damages herein are limited to $1 million rather than the $3.5 million punitive damages awarded.

Next, we will address the issues presented by Carolina. First, a brief synopsis of the facts will be given. Carolina issued Keeney’s legal malpractice insurance policy. Under the provisions of the policy, the company and its administrator hired and paid independent counsel for Keeney’s defense. As previously mentioned the policy contains a $1 million limit of liability and allows for payment for Keeney’s defense at trial. The policy also provides that Keeney’s coverage is reduced by the amount of attorney fees and costs incurred by his defense counsel.

1. Osborne’s Motion to Amend the Complaint

First, we must consider the legal viability of Osborne’s motion to
amend her complaint nineteen days following the entry of the judgment.
Then, we are required to ascertain whether Carolina’s motion to
intervene on appeal is valid.

The longstanding rule in Kentucky is that a party may not move,
pursuant to CR 15.01, to amend or supplement a complaint after a
judgment becomes final under CR 58 without first moving to alter,
amend, or vacate the final judgment under CR 59.05  Consequently, the
CR 15 amendment and the order granting permission to file an amended
complaint are invalid without an order of postjudgment relief vacating
the original judgment.  The timeline regarding this issue allows only
one conclusion – the trial court lacked jurisdiction to rule on
Osborne’s motion when it granted the motion to amend the complaint. We
review questions as to the circuit court’s jurisdiction de novo.
Kentucky Employers Mut. Ins. v. Coleman, 236 S.W.3d 9, 13 (Ky. 2007).
Therefore, the order is invalid. We vacate the order permitting the
amendment of Osborne’s complaint after the entry of the August 30, 2007

2. Carolina’s motion to intervene in the direct appeal
By granting Carolina’s motion to dismiss the trial court’s grant allowing Osborne to amend her complaint nineteen days after the entry of the judgment, Carolina’s motion to intervene directly in the appeal is rendered moot.

After considering the arguments of the parties, we affirm in part and vacate in part the Jefferson Circuit Court August 30, 2007 judgment, and October 10, 2007 opinion and order. First, we hold that Osborne raised a viable claim of legal negligence against Keeney. Second, we determine that, with regard to damages, the jury had sufficient evidence to establish damages for personal property plus evidentiary support for the award for punitive damages in the malpractice case. But, we do not reach the issue of lost punitive damages in the airplane case because clear and convincing evidence was not provided to demonstrate the requisite actions on the pilot’s part warranting punitive damages. With regard to the damages for emotional distress for both the underlying case and the case itself, we find that Kentucky law does not allow an award of these damages without physical impact and, thus, vacate the award for those damages. We uphold the jury award of $53,025.39 in legal fees and costs to Keeney based on sufficient evidence on the record for the jury to believe Keeney’s conduct was fraudulent. Likewise, Keeney’s argument that his fraud damages must be vacated because Osborne did not suffer any damages is erroneous. Finally, regarding the itemization of damages pretrial, we believe, based on the requisites of CR 8.01(2), that Osborne is limited to punitive damages in the amount of $1 million against Keeney, based on her last itemization of such damages in her trial memorandum.
Additionally, we find that the trial court did not have jurisdiction to allow Osborne to amend her complaint nineteen days following the entry of the judgment and, thus, this order must be vacated. The vacation of the order allowing her to amend her complaint renders moot any reason for Carolina to intervene directly in the appeal.
In summary, for the foregoing reasons we affirm in part, vacate in part, and remand to the Jefferson Circuit Court for further action in accordance with this opinion.

STUMBO, JUDGE, DISSENTING. I agree with the majority’s well written and scholarly opinion with one exception. I cannot agree with the conclusion that there was insufficient evidence of gross negligence on the part of the pilot. In addition to starting the engine by squirting aviation gasoline into the air intake, the pilot ignored the fact that his engine had suffered pump failure three times previously, investigation revealed a foreign object in the pump, the pump’s previous repairs had been made with improper parts, and the repairs were undocumented in violation of regulation. The pilot was the owner of the plane and responsible for its being airworthy. Clearly, there was sufficient evidence to support the award of punitive damages.

Sheryl G. Snyder
Douglas C. Ballantine

Lee E. Sitlinger

234 Criminal Law

KELLER, JUDGE: Edward Jefferson Mitchell and Edward Joseph Mitchell (the Appellants)1 appeal from an Opinion and Order of the Jefferson Circuit Court denying their motions for post-conviction relief pursuant to Kentucky Rules of Criminal Procedure (RCr) 11.42, following an evidentiary hearing. For the reasons stated below, we reverse and remand.

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