JOYCE F. KIRK v. BERNARD G. WATTS
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MODIFIED:
AUGUST 24, 2001; 2:00 p.m.
TO BE PUBLISHED
NOVEMBER 9, 2001; 10:00 a.m.
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-000820-MR
JOYCE F. KIRK
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE LISABETH ABRAMSON, JUDGE
ACTION NO. 99-CI-001847
BERNARD G. WATTS
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
COMBS, GUIDUGLI AND MILLER, JUDGES.
GUIDUGLI, JUDGE.
Joyce F. Kirk (Kirk) appeals from an opinion
and order of the Jefferson Circuit Court entered March 9, 2000,
which granted summary judgment in favor of Bernard G. Watts
(Watts).
We reverse and remand.
As Kirk is appealing from entry of summary judgment in
favor of Watts, we must review her appeal under the standard set
forth in Steelvest, Inc. v. Scansteel Service Center, Inc., Ky.,
807 S.W.2d 476 (1991).
Under that standard, the purpose of
summary judgment is to terminate litigation when it appears to be
impossible for the party opposing the motion to produce evidence
at trial which would warrant judgment in her favor.
807 S.W.2d at 480.
Steelvest,
We are to view the record in a light most
favorable to Kirk as she is the party opposing entry of summary
judgment.
Id.
Summary judgment is not to be granted lightly,
and, in fact, is not to be granted at all unless the “right to
judgment is shown with such clarity that there is no room left
for controversy.”
Id. at 482.
Kirk, who has a tenth grade education, was employed by
The Carbide/Graphite Group (Carbide) from April 1977 to November
11, 1994.
During the course of her employment with Carbide, Kirk
was subjected to acts of sexual harassment by her co-workers.
According to medical records, these acts included:
Many “accidental” touchings of her breasts,
one male removed his penis from his pants and
shook it at her, there were constant requests
to bed her, men would urinate out side [sic]
in front of her. There were remarks about
the size of her breasts, was physically
chased all over a barge by a man demanding a
kiss, when people who did not work there the
men who worked there offered them her sexual
favors, slander about her being promiscuous.
She often told them she did not like these
things and they told her “your [sic] in a
man’s world, if you don’t like it there is
Bell’s lane, hit it” [sic]
These are instances but not the total
happenings.
On her last day of work, Kirk suffered a breakdown on the job and
was transported to Charter Hospital.
According to a psychiatric
evaluation dated February 20, 1995, Dr. Thomas Cassidy diagnosed
single episode major depression and post-traumatic stress
disorder stemming from the sexual harassment.
further indicated:
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Dr. Cassidy
Considering the length of the sexual
harassment, so many years, certainly recovery
for this woman is going to be problematic at
this point. It is doubtful that she can ever
return to the similar kind of work because of
the severe impact of the humiliation that she
has experienced.
Kirk and her husband contacted several attorneys about
the possibility of pursuing a sexual harassment claim against
Carbide.
One of these attorneys was Ed Airhart.
During her
meeting with Airhart, which occurred approximately one month
after her breakdown, another person named William Johnson
(Johnson) was present.
At the time of the meeting, Kirk did not
know that Johnson had been disbarred from the practice of law in
1983.
Kentucky Bar Association v. Johnson, Ky., 660 S.W.2d 671
(1983).
Apparently Johnson did freelance investigations and
legal research for attorneys in the Louisville area.
Airhart,
like other attorneys she had contacted, ultimately declined to
undertake representation.
Approximately one week after Kirk’s meeting with
Airhart, Johnson called her at home and asked her to meet with
him.
Kirk ultimately met with Johnson and several other
individuals at a local hotel.
According to Kirk, they discussed
her case and Johnson assured her that her case against Carbide
was a good one.
Johnson later called Kirk at home and told her
he had a good attorney he wanted her to meet with.
Kirk met with this attorney, whose name she does not
recall.
He told her she had a good case and they discussed the
possibility of entering into an attorney/client relationship.
Kirk testified that she believes she signed a contract of
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representation with this attorney.
After their initial meeting
he never contacted her again or returned her phone calls.
When
Kirk called Johnson to ask why her phone calls were not being
returned, he told her not to worry about anything and that he
would take care of the contract with the attorney.
Johnson then
arranged a meeting between Kirk and Watts at Watts’ office.
Kirk and her husband first met with Watts in April
1995.
Johnson was present at this meeting.
According to Kirk,
they discussed her sexual harassment claim against Carbide but
did not discuss the Kirks’ financial situation.
As a result of
this meeting a complaint was drafted and Kirk signed it on April
10, 1995.
Despite signing the complaint in April 1995, Kirk did
not sign a contract for representation by Watts until May 1995.
According to Kirk, at the time she first met with Watts
she was emotionally upset and still seeing a counselor.
She was
also on psychotropic medication and believes that her ability to
remember and comprehend was affected by the medication.
It was
her understanding that the complaint was to be filed shortly
after she signed it.
Between April and June 1995 the Kirks’ financial
situation continued to worsen.
In June 1995, the Kirks
approached Watts for advice on bankruptcy.
Watts gave them a
bankruptcy questionnaire to fill out and return.
Kirk’s husband
completed the questionnaire and Watts used it to complete the
bankruptcy petition.
Kirk admitted that neither the bankruptcy questionnaire
or petition reflected the sexual harassment claim against
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Carbide.
Everyone agrees that Watts advised the Kirks not to
include the claim against Carbide on the petition.
According to
Kirk, they asked Watts whether it should be listed on the
petition and Watts told them not to because (1) the two matters
were entirely unrelated; (2) they would still have time to file
the claim against Carbide after the bankruptcy was concluded; (3)
if the claim was filed after discharge of the bankruptcy the
trustee would not get any money from it; and (4) this would keep
the claim against Carbide from being “tied up” in the bankruptcy
court and the trustee would not get his “hands in the pie.”
Based on Watts’ advice, the Kirks did not list the claim against
Carbide on the petition.
Upon completion of the petition, which was signed by
the Kirks on June 26, 1995, Watts filed a Chapter 7 bankruptcy on
their behalf.
Kirk testified that she vaguely remembers
discussing the differences between a Chapter 7 and a Chapter 13
bankruptcy with Watts, but stated that she would have never filed
a Chapter 7 bankruptcy if someone would have told her at that
time that they qualified for a Chapter 13.
Although Kirk
admitted that she testified at the bankruptcy hearing that she
understood the difference between a Chapter 7 and a Chapter 13
bankruptcy, she stated that her response was based on the
information she had at that time.
She also admitted that the
trustee told them to consult with their attorney if they did not
understand the consequences of bankruptcy.
According to Kirk,
Watts had coached them not to mention the claim against Carbide.
The Kirks’ bankruptcy was discharged on September 28, 1995.
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Following discharge of the bankruptcy, Watts filed the
complaint against Carbide on October 12, 1995, in the Jefferson
Circuit Court.
Carbide removed the case to the Federal District
Court and the discovery process was initiated.
While performing
a background check on Kirk, counsel for Carbide discovered the
bankruptcy.
On June 18, 1996, Carbide filed a motion for summary
judgment on the grounds that (1) the failure to list the claim on
the bankruptcy petition was a judicial admission that the claim
did not exist; and (2) that Kirk did not have standing to
litigate the claim because it was an asset of the bankruptcy
estate and as such could only be pursued by the bankruptcy
trustee.
Watts responded to the summary judgment motion by
filing a motion to reopen with the Bankruptcy Court on August 9,
1996.
Watts made a formal response to the summary judgment
motion on August 26, 1996, in which he referenced the motion to
reopen and included an intervening complaint on behalf of
bankruptcy trustee John Wilson (Wilson) which he alleged was
“being filed simultaneous herewith by [Wilson].”
Although Watts
had discussed the matter with Wilson, he did not have Wilson’s
permission to file the intervening complaint nor had he been
retained by the bankruptcy court to represent Wilson.
By this time, Kirk was understandably uncomfortable
with the thought of allowing Watts to continue to represent her.
She formally advised Watts that she was terminating her
attorney/client relationship with him by letter dated August 26,
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1996.
Kirk was referred to Thomas Clay (Clay), who accepted her
case and also brought in another attorney, James Bolus (Bolus),
to assist in representing her.
A hearing on the motion to reopen was held before the
Bankruptcy Court on October 21, 1996, during which time the
Bankruptcy Judge heard testimony from the Kirks, Johnson, and
Watts.
At the conclusion of the hearing, the Bankruptcy Judge
granted the motion to reopen, stating:
It’s the feeling of the Court, based on [the
testimony of the Kirks], Mr. Johnson and Mr.
Watts, that the omission of the claim that
has been reduced to a lawsuit filed in the
Jefferson Circuit Court and is now pending in
the Federal District Court, that this was an
omission that was made based on your reliance
on the advice of Mr. Watts.
And it serves no further purpose to, at least
at this juncture, point in time, to further
describe or characterize the conduct of Mr.
Watts except that the Court finds that at the
very least he should have . . . been prudent
enough to file this motion to re-open the
case at the time that the lawsuit was filed.
And that he did not do. He did it
subsequently when he realized that Mr. Wilson
needed to be an intervening plaintiff in the
case to have proper standing.
. . . .
I want to make it clear on this record that
as a result of this finding, Mr. and Mrs.
Kirk, that Mr. Wilson will be a person who
will participate in how the lawsuit proceeds.
. . . .
So your attorneys, Mr. Bolus and Mr. Clay,
will be working with Mr. Wilson.
A transcript of the hearing was subsequently forwarded
to the U.S. Attorney’s office and Watts’ conduct in regard to his
handling of the bankruptcy claim was investigated by a federal
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grand jury.
Following a hearing, the grand jury decided not to
indict Watts.
The Federal District Court entered a formal order on
January 21, 1997, which denied Carbide’s motion for summary
judgment and stated its intent to allow the bankruptcy trustee to
maintain the action on behalf of the bankruptcy estate.
At some
point in time after the October 1996 hearing, Wilson resigned as
bankruptcy trustee and was replaced by Stephen Reisz (Reisz).
On February 20, 1997, the bankruptcy court entered an
order authorizing the trustee:
to employ [Bolus and Clay] as attorneys, to
represent him and the estate’s interest in
matters concerning the claim against Carbide
with the fee to be 40% of any recovery
subject however to further review and orders
of this Court.
Reisz, in his capacity as bankruptcy trustee, was substituted as
the plaintiff in the action against Carbide by order of the
Federal District Court dated April 15, 1997.
Following the Federal District Court’s order of
February 1997, Bolus kept Kirk informed of the progress of the
case through a series of letters.
On July 1, 1997, Bolus wrote
to Kirk to advise her “that pursuant to the instruction of the
bankruptcy trustee we have demanded $500,000 for settlement of
this case.
The response of the Defendant’s counsel was that they
had considered settling this matter in the low tens of thousands
of dollars[.]”
On July 24, 1998, a mediation conference was held
before a federal magistrate on the claim against Carbide.
Kirk,
Bolus, Reisz, and counsel for Carbide attended this meeting.
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Kirk was not represented by counsel at the meeting.
It does not
appear that she consulted with an attorney at any time prior to
the meeting.
Kirk testified that everyone was talking about
money and that she did not understand what was going on.
Kirk
turned down settlement offers of $5,000 and $10,000 at the
meeting.
Kirk further stated that the Magistrate explained the
consequences of settling with her, and further testified that he
told her that she:
didn’t have a say into it because at any time
the trustee could say “Hey, we’ve got our
money and that’s all we’re worried about,”
and then I would be left out without
anything.
Faced with this information, Kirk decided to accept $15,000 to
settle her claim against Carbide.
Kirk testified that she stated
“Yes, I’ll just go ahead and take it, I just want to get this
over with.”
Kirk also stated that although no one coerced her
into settling, she felt like she had to because Reisz could “take
the money at any time and just forget it.”
Kirk’s testimony was
supported by an affidavit signed by Reisz, which stated:
[A]t the mediation on July 24, 1998, I agreed
to a settlement of the Bankruptcy Estate’s
sexual harassment claim for $52,000, with
$15,000 to be paid to Joyce Kirk.
[H]ad Joyce Kirk objected to this settlement
I would have recommended to the Bankruptcy
Court that she get nothing and based upon my
training and experience I believe she would
have received nothing.
Following the mediation conference, Bolus wrote to Kirk
on July 29, 1998, to go over the specifics of the proposed
settlement.
In the letter, Bolus stated:
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I am writing at this time to assist in your
obtaining counsel for advice as to your
options at time in view of the settlement
proposal which is on the table. Also, we
would like to remove any confusion as to the
potential of us serving two “masters” in this
case. As we discussed at length . . . we
represent the bankruptcy trustee . . . on the
pending sexual harassment case as to which
you are no longer a party.
As to the settlement offer on the table, I
would like to confirm that [Carbide] has
offered $52,500 for settlement of this case.
Mr. Reisz . . . has agreed to let $15,000.00
go your way free of attorneys fees and
expenses and the remaining $37,500.00 will go
to the bankruptcy estate from which we will
take our 40% attorney fee and expenses, and
where Mr. Reisz will take his trustee fee.
I would also like to give you the name of
Joseph Elder, II . . . . He is an excellent
bankruptcy lawyer and civil litigator and
should be able to advise you as to your
options in this case. For instance, he can
address the chance you would have of
converting the subject Chapter 7 bankruptcy
to a Chapter 13 bankruptcy where you would
have more control of the asset which consists
of the pending sexual harassment case. In
addition, he can advise you as to the wisdom
of whether or not you should take the
$15,000.00[.]
Kirk, Elder, Clay, and Bolus met on August 24, 1998.
There is nothing in the record which documents what transpired at
this meeting.1
On September 17, 1998, Bolus forwarded a copy of
the proposed settlement agreement to Kirk based on his
understanding that she was not planning to object to the
settlement and intended to accept the $15,000 settlement offer.
1
The only thing in the record at all pertaining to Elder is
a letter dated February 15, 1999, from Elder to Bolus which
appears to be an expert opinion on Watts’ representation of Kirk.
-10-
Bolus also suggested that she consult with Elder again if she had
any misgivings about the settlement.
Kirk signed the settlement agreement on September 18,
1998.
Under its terms, Carbide was to pay Reisz $52,500 and
Reisz was to pay Kirk $15,000.
The agreement further stated:
[N]othing in this agreement shall in any way
release, explicitly or implicitly, Bernard
Watts, former attorney of Joyce Kirk and Bill
Kirk, for any claims or causes of action or
lawsuits that the Kirks may have against
Bernard Watts by virtue of his representation
of them. Further, Reisz specifically assigns
any claims that the bankruptcy estate may
have now or have had in the past against
Bernard Watts to the Kirks for prosecution as
they deem fit.
The settlement agreement was approved by the Bankruptcy Court on
October 9, 1998.
On October 6, 1998, and December 2, 1998, Watts advised
counsel for Carbide and Bolus that he was claiming an attorney’s
lien on Kirk’s recovery under the settlement agreement pursuant
to KRS 376.460.
As Kirk had already been paid $10,000, it
appears that Watts asserted a lien in the amount of $5,000.
The
filing of this lien delayed the payment of the remaining $5,000
to Kirk and resulted in yet another hearing before the Bankruptcy
Court on March 15, 1999.
At the hearing, the Bankruptcy Judge
was highly critical of Watts’ representation of Kirk.
At the
conclusion of the hearing, the Judge denied Watts’ lien, ordered
payment of the remaining $5,000 to Kirk, and ordered payment of
attorneys fees to Bolus and Clay in the amount of $15,124.88.
According to Kirk, Watts’ filing of the lien was the
last straw.
She once again retained Clay and Bolus to represent
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her and filed a malpractice claim against Watts with the trial
court on March 31, 1999.
Watts sought summary judgment on Kirk’s
claim, arguing that Kirk was precluded from recovering anything
from him because of her settlement with Carbide.
In an opinion
and order entered March 9, 2000, the trial court granted Watts’
motion, finding that although “Watts’ professional conduct in the
course of his representation of Kirk certainly merits the
criticism leveled at him and can be assumed to constitute legal
malpractice for purposes of the pending motion,” any recovery
Kirk could possible obtain from Watts was precluded by Mitchell
v. Transamerica Insurance Company, Ky.App., 551 S.W.2d 586
(1977).
This appeal followed.
Kirk argues that the trial court erred in construing
Mitchell to hold that Watts was entitled to summary judgment.
Having reviewed the record and Mitchell, we believe that Kirk is
correct.
In Mitchell, the plaintiffs were injured in a collision
with a tractor-trailer.
They retained the defendant, an
attorney, to file suit against the driver and owner of the
tractor-trailer.
Inexplicably, the defendant failed to file the
lawsuit before Kentucky’s one year statute of limitations expired
and then kept this fact from the plaintiffs for several months.
When the defendant’s conduct came to light, the plaintiffs hired
another attorney who was able to maintain the action in the
Federal District Court of Southern Indiana.
plaintiffs settled the case for $60,000.
-12-
Prior to trial, the
The plaintiffs then brought a malpractice suit against
the defendant and were awarded over $100,000 following a jury
trial.
However, this Court reversed, stating:
At the outset, we can properly observe
that Carr was guilty of malpractice and this
was conceded by all concerned.
. . . .
Having said all of this, however, this court
cannot see where the Mitchells proved their
damages. The Delaware Supreme Court stated
the problem here thusly:
We may assume malpractice on the
part of the defendants but every
malpractice action does not carry
with it a right to monetary
judgment. It is the law that a
malpractice action against an
attorney cannot be established in
the absence of a showing that his
wrongful conduct has deprived his
client of something to which he
would otherwise have been entitled.
Thompson v. D’Angelo, 320 A.2d 729
(Del.Super. 1974).
The Mitchells argue that they could
have received more damages if the
case had been tried in Kentucky.
However, the evidence, in our
opinion, on this point is a matter
of conjecture and speculation. It
may have been a different case if
the Mitchells had tried their case
in Indiana and had come away with
patently inadequate damages. The
fact is that they settled their
case for $60,000.00. There is no
way of knowing what a jury across
the Ohio river [sic] from
Louisville, Kentucky would have
done if it had actually tried this
case.
It seems to us that the Mitchells’
argument as to damages is an
exercise in the pyramiding of an
inference upon an inference.
Trying to predict what a jury might
-13-
do at any given time or place is
hazardous and is one of the
vagaries of life.
Moreover, it was not the function
of the trial court to punish Carr.
His misconduct will be judged in
another forum. [Citation omitted.]
The Mitchells had their case before
a forum of competent jurisdiction
and received a substantial
settlement. No one can determine
with any accuracy whether or not
they should have tried their case
before the Indiana jury. They
might have recovered more or less
than the settlement figure. We are
certain, however, that the damages
assessed in the case before us were
based upon uncertainties and
speculation requiring that the
verdict and judgment be set aside
and that a judgment be entered
dismissing the complaint against
Carr in conformity with his motion
for judgment N.O.V.
Mitchell, 551 S.W.2d at 587-588.
We agree that under Mitchell the plaintiff must show
that his attorney’s wrongful conduct has caused him to lose
something to which he would have otherwise been entitled to in
order to maintain a malpractice action.
In Mitchell, the
plaintiffs lost nothing as a result of the defendant’s
malpractice because they were able to maintain an action in
federal court in their own names in which they could assert their
own interests.
That is not what has occurred in this case.
It is clear from the facts in this case that Kirk had a
viable claim for sexual harassment against Carbide and that she
lost the opportunity to maintain this case in her own name and
prosecute her own interests as a result of Watts’ advice not to
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list the claim on the bankruptcy petition.
From that point on,
the claim belonged to Reisz in his status as bankruptcy trustee
and as such Reisz owed a duty to the bankruptcy creditors to do
what was in their best interest in handling the claim.
As has
been established, Reisz could have decided not to maintain the
action at all or leave Kirk with nothing in the event she decided
against accepting the $15,000.
The fact that Kirk received
something from Carbide as a result of Reisz’s settlement makes no
difference as it was Watts’ conduct that painted her into that
corner to begin with.
The opinion and order of the Jefferson Circuit Court is
reversed and this matter is remanded with instructions to
reinstate Kirk’s complaint against Watts and proceed accordingly.
COMBS, JUDGE, CONCURS.
MILLER, JUDGE, DISSENTS.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Thomas E. Clay
Louisville, KY
R. Douglas Burchett
Louisville, KY
James M. Bolus, Jr.
Louisville, KY
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