RICHARD BOHLINGER; MARY BECKER; and ESTATE OF WALTER BOHLINGER v. O'HARA, RUBERG, TAYLOR, SLOAN & SERGENT; SUE CASSIDY; DONALD J. RUBERG; and PAUL MARKGRAF and O'HARA, RUBERG, TAYLOR, SLOAN & SERGENT; SUE CASSIDY; and DONALD J. RUBERG v. RICHARD BOHLINGER; MARY BECKER; and ESTATE OF WALTER BOHLINGER
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RENDERED:
OCTOBER 29, 2004; 10:00 a.m.
ORDERED NOT PUBLISHED BY THE KENTUCKY SUPREME COURT:
AUGUST 17, 2005 (2004-SC-1041-D)
Commonwealth Of Kentucky
Court of Appeals
NO. 2003-CA-001670-MR
RICHARD BOHLINGER; MARY BECKER;
and ESTATE OF WALTER BOHLINGER
v.
APPELLANTS
APPEAL FROM KENTON CIRCUIT COURT
HONORABLE PATRICIA M. SUMME, JUDGE
ACTION NO. 00-CI-02623
O'HARA, RUBERG, TAYLOR, SLOAN &
SERGENT; SUE CASSIDY; DONALD J.
RUBERG; and PAUL MARKGRAF
AND
NO. 2003-CA-001736-MR
O'HARA, RUBERG, TAYLOR, SLOAN &
SERGENT; SUE CASSIDY; and DONALD J.
RUBERG
v.
APPELLEES
CROSS-APPELLANTS
CROSS-APPEAL FROM KENTON CIRCUIT COURT
HONORABLE PATRICIA M. SUMME, JUDGE
ACTION NO. 00-CI-02623
RICHARD BOHLINGER; MARY BECKER;
and ESTATE OF WALTER BOHLINGER
OPINION
AFFIRMING
** ** ** ** **
CROSS-APPELLEES
BEFORE:
JOHNSON, TAYLOR, AND VANMETER, JUDGES.
VANMETER, JUDGE:
This case involves two causes of action
against separate sets of attorneys for malpractice.
While the
claims against the attorneys are distinct, each arises out of
the 1996 sale by Gertrude Bohlinger, with the assistance of her
son Robert Marshall (Marshall), of $200,000 worth of Procter &
Gamble stock owned by her husband, Walter Bohlinger.
The Kenton
Circuit Court entered summary judgment in favor of the defendant
attorneys.
We affirm.
In 1985, Walter Bohlinger and Gertrude Marshall
married.
Both were elderly and widowed, with children from
their respective prior marriages.
Prior to their marriage,
Walter and Gertrude signed a prenuptial agreement in which each
waived any claim to the other’s estate at death.
Attorney Paul
Markgraf, who had represented Marshall previously, prepared the
prenuptial agreement.
And on the date Walter and Gertrude
married, each signed a will drafted by Markgraf which left their
respective estates to their respective children.
By all accounts, this marriage was happy and Walter
and Gertrude were devoted to each other.
By late 1991, however,
Walter was showing signs of both Parkinson’s and Alzheimer’s
diseases.
On January 8, 1992, Walter signed a power of
attorney, prepared by Markgraf, designating Gertrude as his
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attorney-in-fact.
bills.
As attorney-in-fact, Gertrude paid Walter’s
By 1996, however, Gertrude was experiencing her own
health problems and she turned to Marshall for assistance.
In
the process, Gertrude and Marshall sold approximately 1,500
shares of Walter’s Procter & Gamble stock which had an
approximate value of $210,000.
While some of the proceeds were
used to pay capital gains taxes and medical and living expenses
for both Walter and Gertrude, approximately $160,000 was placed
in a bank account in the joint names of Gertrude and Marshall.
By June 1997, through Markgraf, Marshall contacted
Walter’s children, Richard Bohlinger and Mary Becker, to request
that they assume guardianship of Walter due to Gertrude’s
failing health.
In a June 1997 letter addressed to Becker, with
a copy to Bohlinger, Markgraf informed Becker and Bohlinger that
he had prepared the prenuptial agreement, wills and powers of
attorney.
Markgraf gave Becker and Bohlinger copies of those
documents when they were appointed Walter’s guardians by the
Kenton District Court in September 1997.
In investigating their father’s stock holdings and
sales, Becker and Bohlinger discovered the Procter & Gamble
stock sales made by Gertrude and Marshall.
Walter died in
December 1997 and Bohlinger was appointed executor of his will.
In April 1998, after the siblings did not receive satisfactory
answers regarding the proceeds of the stock sales, they
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individually and as executor sued both Gertrude and Marshall,
seeking an accounting for their actions under the power of
attorney.
Becker and Bohlinger’s attorneys were appellees
Donald Ruberg and Suzanne Cassidy with the firm of O’Hara,
Ruberg, Taylor, Sloan & Sergent.1
Gertrude and Marshall
counterclaimed for amounts expended in taking care of Walter,
and for Gertrude’s necessary expenses under KRS 404.040.
Gertrude died in May 1998. On July 28, 1998, defense
counsel’s motion to substitute her estate with respect to her
counterclaim was granted, although a copy of the court’s order
does not appear in the record on appeal.
One year later, on
July 20, 1999, defense counsel filed a motion to dismiss the
claims against Gertrude’s estate since a motion to revive the
action had not been filed within a year as required by KRS
395.278.
Meanwhile, Becker and Bohlinger were apparently
becoming unhappy with their representation by the O’Hara law
firm, and at some point prior to August 17, 1999, Bohlinger
communicated this fact to Ruberg.
On August 17, Cassidy sent a
letter to Becker and Bohlinger advising them of the motion to
dismiss, and stating “[i]t is my understanding through Don that
you had decided to retain new counsel to represent you.
You
should notify him or her of this Motion as soon as possible.”
1
Ruberg, Cassidy and their firm will be collectively referred to as the
“O’Hara law firm.”
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Although the motion to dismiss was docketed for a hearing in
August, Cassidy obtained a continuance of the motion and secured
an order permitting the O’Hara law firm to withdraw as counsel
for Becker and Bohlinger.
The trial court’s notes on the motion
to dismiss indicate that the motion was passed from August 1999
to September 1999, and that attorney David Nelson was
substituted as new counsel in the action.
Becker and Bohlinger secured counsel other than
Nelson, and the unopposed motion to dismiss was granted in
October 1999.
The order of dismissal was not appealed.
Ultimately, Becker and Bohlinger settled their claims against
Marshall in June 2000, with each side essentially dropping its
claims against the other.
No money exchanged hands as a result
of this settlement.
Becker and Bohlinger filed these actions against
Markgraf and the O’Hara law firm on December 22, 2000.
Their
allegation against Markgraf was that he failed to properly
advise Walter that Gertrude could use the power of attorney to
sell assets and make gifts, thereby frustrating Walter’s estate
plan.
Their allegation against the O’Hara law firm was that it
failed to timely revive the original action against Gertrude’s
estate, such that they lost their claim against her estate and
thereby also lost their ability to prosecute effectively their
claim against Marshall in that action.
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The trial court granted
summary judgment in favor of Markgraf, ruling that the claim was
barred by the statute of limitations.
The court also ruled in
favor of the O’Hara law firm, holding that based on admissions
by Becker and Bohlinger, no evidence existed that Gertrude or
her estate committed any wrongdoing.
The court found that
Becker and Bohlinger would not have prevailed, even if the
O’Hara law firm had not committed malpractice.2
Cause of Action Against Markgraf
Becker and Bohlinger’s claim against Markgraf is that
he failed to advise Walter that the power of attorney in favor
of Gertrude was so broadly written as to enable Gertrude to
frustrate Walter’s estate plan, i.e., leaving his estate to his
children.
Even assuming this claim to be true, the question we
must address is at what point the statute of limitations began
to run.
KRS 413.245 explicitly states:
[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 cause of action was, or
reasonably should have been, discovered by the
party injured. Time shall not commence against a
party under legal disability until removal of the
disability.
2
The trial court discussed revival and whether revival was necessary. The
court seems to have stated that had it been aware of the case law concerning
revival, it would have permitted additional time to file a revival motion or
would have overruled the motion to dismiss. However, the court deemed the
issue moot due to its view of lack of causation.
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Markgraf persuasively argues that by the time of their
September 1997 appointment as guardians for Walter, Becker and
Bohlinger were aware of Walter’s will, the prenuptial agreement,
and the power of attorney, as well as the fact that Markgraf had
prepared each document.
They were also aware at this time that
they had considered Walter incompetent by the time he signed the
power of attorney in January 1992.
And, after their
investigation of Walter’s stock holdings, they knew by December
1997 that a large quantity of Procter & Gamble stock had been
sold and that Marshall would not be forthcoming with any more
information.
Becker and Bohlinger argue that they did not know of
Markgraf’s failure to properly advise Walter until Markgraf’s
deposition was taken on February 16, 2000.
However, a cause of
action for professional malpractice begins to run on the date
the cause of action was, or reasonably should have been,
discovered.
Bohlinger, in his deposition, testified that prior
to August 17, 1999, attorney Larry Holbrook advised him the
power of attorney and prenuptial agreement should be
investigated as to their legality.
Becker and Bohlinger
therefore knew, or should have known, of the cause of action
against Markgraf no later than August 1999.
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As this action was
not filed until December 22, 2000, it was barred under the one
year statute of limitations.
Cause of Action Against the O’Hara Law Firm
To state a cause of action against an attorney for
malpractice, a client must prove 1) an employment relationship
with the defendant/attorney; 2) the attorney failed to exercise
ordinary care; and 3) the attorney’s negligence was a
substantial factor in causing damages to the client.
Stephens
v. Denison, Ky. App., 64 S.W.3d 297, 298-99 (2001); Daugherty v.
Runner, Ky. App., 581 S.W.2d 12, 16 (1978).
Becker and
Bohlinger’s sole claim against the firm is that the O’Hara firm
failed to file a revival of the claim against Gertrude’s estate
within a year of her death, as required by KRS 395.278.
As a
malpractice claim involves a case within a case, Becker and
Bohlinger must show that a revival of the claim was necessary.
While true that the trial court dismissed the claims
against Gertrude’s estate for failure to file a revival, the
O’Hara law firm’s employment was also terminated before the firm
had an opportunity to respond to the motion.
In fact, no one
responded to the motion to dismiss, and it essentially was
granted by default.
The salient facts are, however, that
Gertrude’s estate had previously filed its motion to revive its
counterclaim against Becker, Bohlinger, and Walter’s estate, and
that motion had been granted.
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KRS 395.278 provides that “[a]n application to revive
an action in the name of the representative or successor of a
plaintiff, or against the representative or successor of a
defendant, shall be made within one (1) year after the death of
a deceased party.”
Also, CR 25.01(1) states:
If a party dies during the pendency of an action
and the claim is not thereby extinguished, the
court, within the period allowed by law, may
order substitution of the proper parties. . . .
The motion for substitution may be made by the
successors or representatives of the deceased
party or by any party . . . .”
The purpose of revival is “to bring before the court
parties in interest who are not already before the court.”
Perry v. Covington Savings Bank & Trust Co., 195 Ky. 40, 50, 241
S.W. 850, 855 (1922) (quoting Larrabee v. Larrabee, Ky., 71 S.W.
645, 647 (1903)).
The effect of revival is that the personal
representative of the deceased is substituted as the real party
in interest.
72 (1989).
See Snyder v. Snyder, Ky. App., 769 S.W.2d 70,
And, “[t]he substituted party, as a general rule,
takes up the litigation with all of its benefits and with all of
its burdens just where the predecessor dropped it.”
Citizens
Bank & Trust Co. v. McEuen, 281 Ky. 113, 117, 134 S.W.2d 1012,
1014 (1939).
In this case, Gertrude’s estate filed a motion to
revive her claim, and that motion was granted.
estate was before the court.
Clearly, her
It would therefore seem somewhat
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illogical to advance an argument that her estate was before the
court for her claim but not for any other purpose.
Having
subjected Gertrude’s estate to the jurisdiction of the court for
purposes of her counterclaim, the estate was before the court
for all related purposes, including defending against Becker and
Bohlinger’s claim.
No additional revival on the part of Becker
and Bohlinger was necessary.
The O’Hara law firm was in the process of researching
and responding to the motion to dismiss at the point Becker and
Bohlinger terminated the firm’s employment.
The O’Hara law firm
advised Becker and Bohlinger, as well as the attorney the firm
assumed would be continuing the representation, of the pending
motion.
The failure to follow through in opposing the motion
therefore is not attributable to the O’Hara law firm.
The judgment of the Kenton Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS/CROSS
APPELLEES:
Eric C. Deters
Ft. Mitchell, Kentucky
BRIEF FOR APPELLEES/CROSSAPPELLANTS O’HARA, RUBERG,
TAYLOR, SLOAN & SARGENT; SUE
CASSIDY; AND DONALD J. RUBERG:
Thomas C. Smith
Steven C. Martin
Covington, Kentucky
BRIEF FOR APPELLEE PAUL
MARKGRAF:
Raymond G. Smith
Louisville, Kentucky
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