BEN B. HARDY and DURWARD W. MAYNARD v. FOSTER V. JONES, JR.; KATHERINE JONES; WILLIAM L. LANDERS; ANNE LANDERS; ROBERT L. LANDERS; ILEA MANNERING, EXECUTRIX OF THE ESTATE OF DANIEL RAY MANNERING; UNITED STATES OF AMERICA INTERNAL REVENUE SERVICE; and ATTORNEY GENERAL WASHINGTON, D.C., DEPARMTENT OF JUSTICE, TAX DIVISION
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RENDERED: October 2, 1998; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
No.
1997-CA-001457-MR
BEN B. HARDY and
DURWARD W. MAYNARD
v.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS WINE, JUDGE
ACTION NO. 95-CI-004695
FOSTER V. JONES, JR.;
KATHERINE JONES;
WILLIAM L. LANDERS;
ANNE LANDERS;
ROBERT L. LANDERS;
ILEA MANNERING, EXECUTRIX OF
THE ESTATE OF DANIEL RAY
MANNERING;
UNITED STATES OF AMERICA
INTERNAL REVENUE SERVICE; and
ATTORNEY GENERAL WASHINGTON,
D.C., DEPARMTENT OF JUSTICE,
TAX DIVISION
APPELLEES
OPINION
AFFIRMING
* * * * *
BEFORE:
BUCKINGHAM, GUIDUGLI and HUDDLESTON, Judges.
GUIDUGLI, JUDGE.
Appellants, Ben B. Hardy (Hardy) and
Durward W. Maynard (Maynard) (collectively Appellants) appeal
from an order of the Jefferson Circuit Court entered on February
14, 1997, which held that Hardy's claims against the appellees
were barred by the doctrine of res judicata and Maynard's by the
statute of limitations.
We affirm.
Background Information
Mary Mannering died testate on April 25, 1982, leaving
three sons, William Landers (Bill), Robert Landers (Bob), and
Danny Mannering (Danny).
At the time of her death, Ms. Mannering
owned some real estate along the banks of the Ohio River (the
property).
It appears that over the years Ms. Mannering leased
portions of the property to various individuals who constructed
homes on the leased lots.
Under the terms of Ms. Mannering's
will, the property was to be divided equally between Bill, Bob,
and Danny.
Mary Lucas (Lucas) qualified as the Executrix of Ms.
Mannering's estate on May 14, 1982.
Sometime thereafter, Lucas
sold one of the parcels of the property to Ralph and Violet
Reidling (the Reidlings), who were leasing it.
A dispute arose
between Lucas and Bill, Bob, and Danny when she expressed her
desire to sell the remaining 7.45 acres of the property to the
remaining leaseholders and divide the proceeds.
Lucas filed a declaratory judgment action in the
Jefferson Circuit Court arguing that Ms. Mannering's will
empowered her to sell the property and divide the proceeds
between Bill, Bob, and Danny.
The Reidlings were not made a
party to this action, and the trial court made no order
pertaining to the validity of their deed.
-2-
According to Maynard's deposition, he began
representing Danny and Bill in January 1983.
Maynard testified
that he associated Hardy as co-counsel in May 1983, and that he
had permission to do so from Bill and Danny.
Hardy ever represented Bob.
Neither Maynard nor
Both Maynard and Hardy admitted that
there was no written contract of representation between them and
Bill and Danny.
In an order entered by the Jefferson Circuit Court on
June 20, 1986, Lucas was ordered to convey the property to Bill,
Bob, and Danny.
This Court affirmed the order of the Jefferson
Circuit Court, and also affirmed the lower court's order to send
the case back to the Jefferson District Court for final
settlement of the estate.
S.W.2d 654, 656-657 (1987).
Lucas v. Mannering, Ky. App., 745
Lucas conveyed the property to Bill,
Bob, and Danny by deed dated March 4, 1987.
On March 6, 1997, Appellants filed a "Notice of Action"
against the property in the Jefferson County Clerk's Office.
document stated:
Notice is hereby given that DUWARD W.
MAYNARD and BEN B. HARDY, attorneys
representing defendants and counter-claimants
in Jefferson Circuit Court Action No. 83CI04978, styled Estate of Mary T. Mannering by
Mary C. Lucas, Executrix vs. Danny Ray
Mannering, Robert Lee Landers and William
Landers have established a right to
attorneys' liens involving or affecting the
right, title, interest in, or claim to real
property of DANNY RAY MANNERING, WILLIAM L.
LANDERS and ROBERT LEE LANDERS in and to the
following described property located in
Jefferson County, Kentucky[.]
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The
According to the date stamp, this document was filed at 1:08 p.m.
The deed from Lucas to Bill, Bob, and Danny was filed two minutes
later at 1:10 p.m. on the same day.
On June 10, 1988, Danny and Bill filed an action in the
Jefferson Circuit Court seeking to void the Reidlings' deed.
Maynard testified that his representation of Bill and Danny ended
on November 3, 1989, due to a conflict of interest with the
Reidlings.
Hardy continued his representation of Bill and Danny.
The lower court dismissed the action, holding that the claims
were barred by the doctrine of res judicata and collateral
estoppel on the ground that any question regarding the Reidlings'
deed should have been resolved in Lucas’ declaratory judgment
action.
This Court affirmed the court's order.
Mannering v.
Reidling, 89-CA-833-S, rendered December 15, 1989.
The final settlement of Ms. Mannering's estate was
filed with the Jefferson District Court on July 11, 1988.
Hardy
filed exceptions to the final settlement on behalf of Bill and
Danny.
A hearing on the exceptions was held before Judge Howard
Bowles (Judge Bowles) of the Jefferson District Court on
September 14, 1989.
A review of the hearing transcript shows that Hardy
attempted to argue that either Lucas or the estate should be
ordered to pay Bob and Danny's attorneys' fees.
Judge Bowles
disallowed Bob and Danny's fees as an exception because they were
not listed in the final settlement.
Judge Bowles told Hardy that
he would have to file a separate motion before the trial court
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showing that his representation of Bill and Danny benefitted the
estate.
Hardy then argued that the attorneys' fees paid by the
estate to the attorneys who represented Lucas in the two previous
actions were unreasonable.
In an order entered August 1, 1990, Judge Bowles held
that the attorneys' fees paid by the estate to Lucas' attorneys
were fair and reasonable.
The order did not, however, award any
fees to Hardy and Maynard.
the Jefferson Circuit Court.
Hardy appealed Judge Bowles' order to
In an order entered June 19, 1992,
Judge William Knopf held:
The ruling by Judge Bowles concerning
attorney's fees is well reasoned, and this
Court finds no reason to reverse it. The
Appellants have not conclusively proven that
services rendered by the various attorneys
were not for the estate. Farber's Ex'r v.
Farber, Ky., 148 S.W.2d 732 (1940). However,
the Court finds that [Bob], in addition to
Lucas, caused a delay in the settlement of
the estate. Accordingly, pursuant to KRS
412.070, [Bob] should be responsible for onethird of the Appellant's attorney's fees.
KRS 412.070 allows a court to assess
attorney's fees from an estate, before
distribution of that estate, if the Court
finds that one or more beneficiaries have
prosecuted for the benefit of other
beneficiaries. Although distribution has
already occurred, this Court finds that [Bob]
is responsible for one-third of the
attorney's fees.
The grounds for Judge Knopf's decision to hold Bob responsible
for one-third of Bill and Danny's attorneys' fees is not clear
from the record before us.
While it appears from the record that
Appellants filed motions for attorneys' fees with the probate
court, they apparently did not prevail in obtaining an award of
-5-
attorneys' fees from the probate court.
This was the first time
that a statement of services rendered was sent to Bill and Danny.
On September 15, 1994, Lucas filed a lawsuit against
Bill, Danny and Hardy alleging abuse of civil proceedings.
At
some point in time Bill retained appellee Foster Jones (Jones) to
represent him and, to the best of our knowledge, terminated his
relationship with Hardy.
Hardy alleges that he continued
representing Danny until Danny’s death in May 1995.
To further
complicate matters, Bill and his wife executed a quit-claim deed
on September 19, 1994, transferring an undivided one-sixth
interest in the property to Jones.
As near as we can tell, Bill filed a cross-claim
against Hardy in the suit brought by Lucas.
In his answer to
Bill's cross-claim, Hardy included a counter-claim against Bill
alone for $59,299.95 for legal services, plus various charges for
interest.
Hardy testified as follows regarding the status of his
counter-claim:
Q And isn't it true that you were not
successful in that cross-claim in this case
in obtaining a judgment in that amount
against Mr. Landers?
A The process for that purpose was never
completed in that action.
Q That case is over with isn't it, as far
as the Circuit Court is concerned?
A No, that was still there before the
Circuit Court after the appeal was filed.
Q
My question to you was, Isn't--
-6-
A As a matter of fact, there were
hearings on it after the appeal was filed.
Q Isn't it true that you were not
successful in obtaining a judgment on that
cross-claim for legal fees, against my
client, which are the same legal fees
involved in this action?
A It was never concluded in any form.
The Court, after a hearing, indicated that it
was willing to bring the necessary extra
parties in for the purpose and to hold a
hearing to establish the amount and liability
for the fees if we chose to take the steps to
go through that process, and it has never
been followed up on.
Q You filed a cross-claim in that action
for legal fees, which are the same legal fees
that you're alleging in this action; correct?
A
That's part of them, yes.
Q
Against my client, William Landers?
A
It's part of it, it's not the complete-
Q
$59,000 worth?
-
A That's the part that had already been
billed, it's not the part that has not yet
been billed.
Q But the $59,000 in that action are the
same legal fees that are in this action; is
that correct?
A
That is correct.
Q What is the status of that claim that
was filed in February of '94?
A It is still sitting undetermined and
awaiting with the Court indicating it would
entertain the question and make determination
of the question if and when all necessary
parties were added to the action for the
purpose, which has not been done.
-7-
Q
You have not done that?
A
No, I have not.
Q
Do you intend to do that?
A No, I don't, not with this action for
the purpose.
The Present Appeal
Appellants filed this action against Bill, Bob, and
Danny's estate on August 22, 1995.
The complaint alleged that
Maynard was entitled to $18,867.41 for his representation and
that Hardy was entitled to a total of $59,507.30.
The complaint
also alleged that Bob was responsible for one-third of the amount
owed by Bill and Danny's estate under the terms of Judge Knopf's
order of June 19, 1992.
Hardy and Maynard sought to hold Bill
and Danny's estate jointly and severally liable for the full
amount sought plus interest and further sought to hold Bill
liable for one-third of the judgment.
In addition, Appellants
requested that (1) the trial court find that they have an
attorneys' lien on the property; (2) that the property be sold to
satisfy the lien; and (3) that the proceeds from the sale be used
pay Hardy's back taxes owed to the IRS.
In an order entered
February 14, 1997, the trial court dismissed the case, finding
that Hardy's claims were barred by the doctrine of res judicata
and Maynard's by the statute of limitations.
On appeal, Appellants contend that the trial court
erred in dismissing their claims, and maintain that appellees'
liability for the attorneys' fees is "established by law relating
-8-
to attorney charging liens, by actual knowledge, acquiescence,
continued attorney-client representation and by circuit court
final order."
We disagree.
Dismissal of Maynard's Claim
Appellants contend that the trial court erred in
holding that Maynard's claim was barred by the statute of
limitations.
In support of their argument, Appellants claim that
the trial court misinterpreted Maynard's deposition testimony
that his representation ended on November 3, 1989.
First, we find no misinterpretation of Maynard's
statement.
Second, the five year statute of limitations provided
by Kentucky Revised Statutes 413.120 applies.
Staton, Ky., 220 S.W.2d 855, 858 (1949).
Varney's Ex'r v.
As Maynard's
representation ended on November 3, 1989, and the complaint was
not filed until August 22, 1995, the trial court did not err in
finding Maynard's claim to be untimely.
Dismissal of Hardy's Claim
In Sedley v. City of West Buechel, Ky., 461 S.W.2d 556
(1970), the Court adopted the doctrine of issue preclusion, which
provides that "a person who was not a party to the former action
may assert res judicata against a party to that action, so as to
preclude the re-litigation of an issue determined in the prior
action."
Sedley, 461 S.W.2d at 559.
For issue preclusion to
apply, it must be shown that the party against whom issue
preclusion is sought had a "realistically full and fair
opportunity to present his case."
-9-
Id.
As previously shown, Hardy's counter-claim against Bill
in the action filed by Lucas attempted to recover the same fees
sought in this case.
Hardy admitted in his deposition that the
$59,299.95 sought in the counter-claim was the same amount he was
seeking in this action.
Hardy further stated that the court in
the Lucas action told him that it would not address the issue of
attorneys' fees until all necessary parties were joined, that he
had never taken steps to join the necessary parties, and that he
did not intend to do so.
The Lucas action was decided by a jury
and has since become final.
We agree with the trial court's finding that Hardy had
a full and fair opportunity to argue his claim for attorneys'
fees in the Lucas action.
The fact that the issue of attorneys'
fees was not ultimately ruled upon in the Lucas action does not
preclude application of issue preclusion in this case.
Hardy
raised the issue in the Lucas action and the only reason it was
never ruled upon was because Hardy refused to join the necessary
parties.
As Hardy's own admitted failure to join the necessary
parties in the prior action resulted in the trial court not
ruling on the issue of attorneys’ fees before the judgment
rendered in the underlying case became final, application of
issue preclusion was proper.
Because Hardy's claims are barred by the doctrine of
res judicata, the other arguments presented in Appellants’ brief
are moot.
-10-
The opinion and order of the Jefferson Circuit Court is
affirmed.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES, JONES AND
LANDERS:
Ben B. Hardy
Louisville, KY
Foster V. Jones, Jr.
Louisville, KY
BRIEF FOR APPELLEE, ESTATE OF
DANIEL MANNERING:
Galen L. Clark
Louisville, KY
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