THOMAS WILLIAM STEPHENS v. TIMOTHY DENISON AND OTHER UNKNOWN DEFENDANTS OTHERWISE KNOWN AS INSURANCE COMPANIES AND AGENTS PROVIDING MALPRACTICE TYPE INSURANCE COVERAGE TO TIMOTHY DENISON
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RENDERED:
December 28, 2001; 2:00 p.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-001817-MR
THOMAS WILLIAM STEPHENS
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JUDITH E. McDONALD-BURKMAN, JUDGE
ACTION NO. 98-CI-006737
v.
TIMOTHY DENISON AND OTHER UNKNOWN
DEFENDANTS OTHERWISE KNOWN AS
INSURANCE COMPANIES AND AGENTS
PROVIDING MALPRACTICE TYPE
INSURANCE COVERAGE TO TIMOTHY
DENISON
APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
BARBER, BUCKINGHAM, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
This is an appeal by Thomas William Stephens
from an order of the Jefferson Circuit Court granting summary
judgment in a legal malpractice lawsuit on the basis that the
cause of action was barred by the one-year statute of limitations
prescribed by KRS1 413.245.
Because the statute of limitations
did not begin to run until the appeal in the underlying criminal
case became final, and the lawsuit was filed within the
1
Kentucky Revised Statutes.
limitations period, we reverse the order granting summary
judgment and remand for a continuation of the lawsuit.
In May 1996, Stephens retained Timothy Denison to
represent him in a Bullitt Circuit Court criminal case in which
Stephens was charged with obtaining a controlled substance by
fraud.
In August 1996, the Commonwealth offered to recommend a
two-year sentence and not to charge Stephens with first-degree
persistent felony offender (PFO I) in exchange for a guilty plea.
Stephens alleges that he was not informed of this offer until
October 1997, by which time it was too late to accept the offer.
On October 30-31, 1997, Stephens was tried and convicted of
obtaining a controlled substance by fraud and PFO I, and on
December 9, 1997, the trial court sentenced him to an enhanced
term of twenty years’ imprisonment.
The Supreme Court affirmed
the conviction in an unpublished opinion rendered on August 26,
1999; the opinion became final on September 16, 1999.
While the Supreme Court appeal was pending, on
December 1, 1998, Stephens filed a legal malpractice case in
Jefferson Circuit Court alleging that Denison had failed to
notify him of the prosecutor’s two-year plea offer and, further,
that Denison ingested and was under the influence of cocaine
during the October 1997 trial.
Because of various procedural
complications, the summons was not issued until May 26, 1999, and
Denison was not served with process until June 2, 1999.
On July
20, 2000, the trial court entered summary judgment in favor of
Denison on the basis that the cause of action was barred by the
statute of limitations.
This appeal followed.
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Stephens contends that the trial court improperly
granted summary judgment to Denison, and that his legal
malpractice claim was not barred by the statute of limitations.
In order to qualify for summary judgment, the movant
must “show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter
of law."
CR 56.03.
On appeal, the standard of review of a
summary judgment is whether the trial court correctly found that
there was no genuine issue as to any material fact and that the
moving party was entitled to judgment as a matter of law.
The
record must be viewed in the light most favorable to the party
opposing the motion for summary judgment and all doubts are to be
resolved in his favor.
Steelvest, Inc. v. Scansteel Service
Center, Inc., Ky., 807 S.W.2d 476, 480 (1991).
To prevail in a legal malpractice action, a plaintiff
is required to prove:
1) that there was an employment
relationship with the defendant/attorney; 2) that the attorney
neglected his duty to exercise the ordinary care of a reasonably
competent attorney acting in the same or similar circumstances;
and (3) that the attorney's negligence was the proximate cause of
damage to the client.
12, 16 (1978).
Daugherty v. Runner, Ky. App., 581 S.W.2d
KRS 413.245 prescribes the statute of limitations
for bringing a legal malpractice case and provides, in relevant
part, that:
a civil action, whether brought in tort or
contract, arising out of any act or omission
in rendering, or failing to render,
professional services for others shall be
brought within one (1) year from the date of
the occurrence or from the date when the
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cause of action was, or reasonably should
have been, discovered by the party injured.
The trial court, consistent with Denison’s argument,
determined that the statute of limitations began to run on
October 31, 1997, based upon Stephens’s admission that he knew no
later than this date that Denison had failed to tell him about
the August 1996 two-year plea offer.
The trial court’s
conclusion, however, is unsupported by the case law interpreting
KRS 413.245.
It appears uncontested that Denison continued to
represent Stephens until he was sentenced in the criminal case.
Pursuant to the continuous representation rule, at the earliest,
the statute of limitations began to run on December 9, 1997. See
Alagia, Day, Trautwein & Smith v. Broadbent, Ky., 882 S.W.2d 121
(1994)(wherein our Supreme Court appears to adopt the continuous
representation rule via strong dicta).
However, because there
was an appeal of the conviction to the Supreme Court, based upon
the principles set forth in Michels v. Sklavos, Ky., 869 S.W.2d
728 (1994) and Hibbard v. Taylor, Ky., 837 S.W.2d 500 (1992), the
statute of limitations did not begin to run until September 16,
1999, the date Stephens’s appeal in the criminal case became
final.
Not until this date did Stephens’s damages become fixed
and nonspeculative, and, pursuant to Michels and Hibbard, the
statute of limitations does not begin to run in a legal
malpractice case until damages have become fixed and
nonspeculative.
In Hibbard, the appellant represented Taylor in an
action to rescind a contract.
At trial, a directed verdict was
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entered against Taylor.
to represent him.
Taylor appealed, and Hibbard continued
After Taylor lost his appeal, he filed a legal
malpractice lawsuit against Hibbard and Hibbard defended on the
basis that the statute of limitations had expired; Taylor
contended that the limitations period did not expire until the
appeal became final.
The Supreme Court stated:
It is evident to us that Taylor discovered
his cause of action when he reasonably should
have - when the result of the appeal became
final and the trial court's judgment became
the unalterable law of the case. Only then
was Taylor put on notice that the principal
damage (the adverse judgment) was real; but
more importantly, only then could he
justifiably claim that the entire damage was
proximately caused by counsel's failure, for
which he might seek a remedy, and not by the
trial court's error, for which he would have
none. The action against Hibbard was filed
within one year after the discovery of the
cause of action, and therefore satisfied KRS
413.245.
Hibbard, 837 S.W.2d at 502.
In Michels, Sklavos was discharged from his employment
and sought redress for wrongful discharge.
Sklavos retained
Michels and Nicholas Carlin, who filed a wrongful discharge suit
in circuit court.
Court.
The employer removed the case to Federal
While the case was pending in Federal Court, Sklavos
discharged Michels and Carlin and obtained Benjamin Lookofsky as
his attorney.
The Federal Court subsequently dismissed the case
for failure to first pursue administrative remedies; however, by
then it was too late to pursue administrative remedies and
Sklavos sued Michels and Carlin.
Again, the Supreme Court
determined that the statute of limitations did not begin to run
until the outcome of the underlying case was known:
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Where, as in the present case, the cause of
action is for "litigation" negligence,
meaning the attorney's negligence in the
preparation and presentation of a litigated
claim resulting in the failure of an
otherwise valid claim, whether the attorney's
negligence has caused injury necessarily must
await the final outcome of the underlying
case. . . .
. . . .
Thus the Court of Appeals properly recognized
in the present case that until the Federal
District Court dismissed the action against
Pennwalt, even if Michels and Carlin were
negligent in failing to first pursue an
administrative remedy in the underlying
claim, whether their nonaction caused damages
was "merely speculative." As their Opinion
states, "the statute of limitations in a
legal malpractice action [of this nature]
shall commence upon the termination of the
proceeding on which the malpractice action is
based."
Where litigation negligence is charged, to
construe KRS 413.245 to require the filing of
a malpractice claim before finality in the
determination of the underlying claim, would
be to construe the statute as a statute of
repose rather than a statute of limitations.
A statute of repose "does not function as a
statute of limitations, but only to cut off
claims which have not accrued within [the
stated] period." Tabler v. Wallace, Ky., 704
S.W.2d 179, 184 (1986). . . .
Michels, 869 S.W.2d at 730.
While the primary malpractice allegation here - failure
to communicate a plea offer - does not fit precisely within the
definition of “litigation negligence” as defined in Michels,
nevertheless, it is inescapable that the same principle applies.2
2
Stephens’s secondary allegation regarding the use of
cocaine during the trial more closely falls within the definition
of “litigation negligence” as that allegation touches upon “the
attorney’s negligence in the preparation and presentation of a
(continued...)
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Among the damages identified by Stephens in his malpractice claim
were damages for mental anguish and suffering; anxiety; emotional
suffering; and “a much longer Prison [sic] sentence than once
offered by the Commonwealth.”
The damages which resulted from
Denison’s alleged failure to inform Stephens could not be
accurately ascertained until the final consequences were known.
In turn, the final consequences could not be known until the
results of the appeal were known.
By way of explanation, for example, one of the issues
raised in the criminal appeal was that Stephens was entitled to a
directed verdict based upon an insufficiency of the evidence.
If
the Supreme Court agreed with Stephens and reversed his
conviction, clearly the damages suffered as a result of Denison’s
alleged failure to communicate the plea offer would be
significantly reduced vis-a-vis if the Supreme Court affirmed the
conviction.
In the former case, Stephens would have been
entitled to his immediate freedom, while in the latter case he
would remain under a twenty-year sentence.
As a result of the
alternative possible outcomes of the criminal appeal, until the
appeal was final, damages were speculative and unfixed, and, as
with Michels and Hibbard, damages could not be litigated until
the outcome of the appeal was known.
See also Broadbent, supra;
Meade County Bank v. Wheatley, Ky., 910 S.W.2d 233 (1995); and
Barker v. Miller, Ky. App., 918 S.W.2d 749 (1996).
2
(...continued)
litigated claim resulting in the failure of an otherwise valid
claim.”
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Denison contends that, for statute of limitations
purposes, this lawsuit was brought on May 26, 1999, when the
summons was issued by the circuit court clerk.
If we accept this
date, inasmuch as the Supreme Court opinion was not final until
September 16, 1999, Stephens’s lawsuit is not barred by the
statute of limitations.
We accordingly reverse the trial court’s
order granting summary judgment.
Finally, we note that the only issue before us is the
statute of limitations matter.
While we decide this issue
adversely to Denison, our decision is not intended to reflect
upon the merits of the allegations in this lawsuit.
For the foregoing reasons, the order of the Jefferson
Circuit Court is reversed and remanded for additional proceedings
consistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Thomas William Stephens,
pro se
LaGrange, Kentucky
Paul S. Gold
Timothy Denison
Louisville, Kentucky
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