BONAR (BARBARA D.), ET AL. VS. WAITE, SCHNEIDER, BAYLESS & CHESLEY CO., L.P.A. , ET AL.
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RENDERED: OCTOBER 16, 2009; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-001374-MR
BARBARA D. BONAR AND
B. DAHLENBURG BONAR, P.S.C.
v.
APPELLANTS
APPEAL FROM BOONE CIRCUIT COURT
HONORABLE ROBERT W. MCGINNIS, SPECIAL JUDGE
ACTION NO. 06-CI-02202
WAITE, SCHNEIDER, BAYLESS
& CHESLEY CO., L.P.A.; STANLEY M.
CHESLEY; AND ROBERT A.
STEINBERG
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: DIXON AND NICKELL, JUDGES; KNOPF,1 SENIOR JUDGE.
DIXON, JUDGE: This action involves an attorney fee dispute between
1
Senior Judge William L. Knopf sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
Appellants, Barbara D. Bonar and her law firm, B. Dahlenburg Bonar, P.S.C.
(“Bonar”), and Appellees, Stanley M. Chesley, his law firm, Waite, Schneider,
Bayless & Chesley Co., L.P.A., and associate, Robert A. Steinberg (collectively
(“WSBC”), arising out of a settlement of an underlying class action lawsuit filed in
the Boone Circuit Court against the Roman Catholic Diocese of Covington, Doe v.
Roman Catholic Diocese of Covington, Civil Action No. 03-CI-00181. Following
a three-day bench trial, the trial court ruled that Bonar was not entitled to any
attorney’s fees from the class action.
At the outset, we note that the litigation herein has been contentious at
best, and the parties vehemently disagree as to virtually every aspect of this matter,
from the facts to the applicable law. However, it appears clear that in August
2002, Steinberg and attorney Michael O’Hara began investigating a class action
child sexual abuse case against the Diocese. Sometime in December 2002 or
January 2003, Bonar and Steinberg discussed the fact that she had two clients who
had also been abused by the same priest. As a result, Bonar was invited to join
as a class co-counsel. The record contains several letters between Bonar and
Steinberg in early 2003 discussing a potential fee arrangement. However, the
parties never entered into a formal written fee contract.
The class action complaint was filed in the Boone Circuit Court2 on
February 4, 2003, with Bonar listed among class counsel and her clients as class
2
At the time the Complaint was filed, Judge Bamburger was presiding. However, he resigned
from the bench in December 2003 and Senior Judge John Potter was assigned to the case. In
September 2006, the case was assigned to a second special judge, Robert W. McGinnis,
following the completion of Judge Potter’s senior judge service.
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representatives. A petition for class certification was subsequently filed in July
2003. Among the many disputes that are alleged in the briefs, an issue arose when
class counsel filed a memorandum in September 2003, alleging that the Diocese
was continuing to place “sexual predators” in positions involving contact with
children. Bonar thereafter contacted Steinberg and requested that her name be
removed from the memorandum because it was creating conflict with her
associates and peers in the Diocese. Bonar also filed documents with the trial court
denying any participation in the drafting, review or filing of the memorandum.
Apparently during this same time period and unbeknownst to other
class counsel, Bonar began negotiations with the Diocese’s counsel, Carrie Huff,
for individual settlements for the two representatives she initially brought to the
class action. The record contains an affidavit by Huff, wherein she stated that
Bonar negotiated and settled the two individual claims outside the class action
while she was acting as class counsel. Huff further stated that Bonar ultimately
negotiated individual settlements with the Diocese for 25 victims who were
referred by the Diocese and who met the definition of a class member.
On October 1, 2003, Doe was certified as a class action. On October
10, 2003, Bonar emailed Huff that WSBC had not been informed of the individual
settlement negotiations between herself and the Diocese. Further, the record
contains another email from Bonar to Huff dated October 17, 2003, wherein she
admitted telling clients that they were better off settling individually than joining
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the class. Unquestionably, in October 2003, Bonar was acting as class counsel yet
engaging in negotiations that were detrimental to the class.
On January 9, 2004, Bonar filed a motion to withdraw. Her
accompanying affidavit stated that “recent changes in the composition of the class
members have created a conflict of interest for Affiant, prohibiting Affiant from
continuing as class counsel.” On the same date she filed a notice of attorney’s fee
lien pursuant to KRS 376.460 and Labach v. Hampton, 585 S.W.2d 434 (Ky. App.
1979).3
Mediation proceedings in Doe began in June 2004, culminating in a
tentative settlement in May 2005. After reviewing the proposed settlement, the
trial court ordered that class members be given notice of its terms and scheduled a
fairness hearing for January 9, 2006. Prior to the January hearing, Bonar filed a
notice with the court that she would be asserting a claim for attorney’s fees and
expenses during that hearing.
Following the fairness hearing, the trial court entered an order on
January 31, 2006, approving a settlement whereby the class would have
approximately $80 to $85 million dollars available to it, part available immediately
and the remainder available at a future date to be established. The trial court also
scheduled a hearing to determine attorney’s fees and ordered class counsel to file a
motion for an award of attorney’s fees and detailed memorandum in support
thereof.
3
Subsequently overruled by Baker v. Shapero, 203 S.W.3d 697 (Ky. 2006).
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Consistent with the trial court’s order, class counsel4 filed their motion
seeking an award of 30% of the settlement funds, as well as reimbursement for outof-pocket expenses of $1,068,350.42. On February 9, 2006, Bonar also filed a
separate fee petition requesting attorney’s fees in the amount of 15% of the total
underlying settlement as compensation for the “initiation, prosecution and ultimate
settlement of the claims against the . . . Diocese.” Bonar’s petition also alleged for
the first time that she was forced to withdraw from the class action by WSBC.
On February 23, 2006, class counsel moved to strike Bonar’s fee
petition. At a March 14, 2006, hearing, the trial court ruled that in the interest of
trying to resolve the fee dispute “intramurally,” Bonar’s fee petition and all other
related motions would be remanded to mediation without prejudice. Thereafter,
two separate attempts to mediate the dispute failed. In May 2006, the trial court
entered an order setting the attorney’s fees in the underlying case at 22% of the
settlement funds plus claimed costs.
In August 2006, Bonar filed a supplemental pleading in opposition to
WSBC’s motion to strike her fee petition. In an attached affidavit, Bonar asserted,
again for the first time, that she and Chesley had entered into an oral agreement
whereby WSBC would conduct “all of the legal work,” but that Bonar and WSBC
would be “equal partners” and split all of the settlement fees. Bonar claimed that
when she later attempted to get the fee arrangement in writing, she was contacted
4
The motion related solely to the services provided by the law firms of Waite, Schneider,
Bayless & Chesley Co., LPA; O’Hara, Ruberg, Taylor, Sloan & Sergent; and Oldfather &
Morris.
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by Steinberg who then began to “negotiate down” her fee share in a series of letters
in early 2003. Bonar asserted, as she did at trial, that since Chesley himself never
renegotiated their fee arrangement, the equal partnership remained valid.
In September 2006, class counsel filed a motion for summary
judgment arguing that Bonar was not legally entitled to any fees because she: (1)
had not submitted any records reflecting her hourly work on the class action; (2)
had a conflict of interest; (3) violated the Kentucky Rules of Professional Conduct;
and (4) breached her fiduciary duties to the class members. During an October 4,
2006, hearing, the trial court noted that the issues relating to the attorney’s lien and
fee petition filed by Bonar were separate and distinct from other issues in the Doe
case, and suggested that they be handled in a separate case to “streamline” the
process. The parties agreed to create a new case styled Barbara D. Bonar v. Class
Counsel.
During the ensuing months, the parties bitterly argued over every
issue of the fee dispute case. Eventually, a three-day bench trial was conducted in
May 2007. The trial court entered its Findings of Fact, Conclusions of Law,
Opinion and Judgment on June 1, 2007, finding that: (1) Bonar’s withdrawal from
the class action was voluntary as a result of a conflict and not due to any actions by
class counsel; (2) Bonar’s numerous ethical violations would have constituted
removal had she not voluntarily withdrawn; (3) Bonar’s allegation of an oral
agreement with Chesley whereby she would receive 50% of all awarded attorney’s
fees was not credible; (4) any written fee arrangement was negated when she
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withdrew from the case; (5) and that she violated her fiduciary duties to the class
by negotiating individual settlements while serving as class counsel. Further, the
court noted:
Even if Ms. Bonar had not voluntarily withdrawn and
had not acted against the interests of the class, she would
have been entitled to no fees. Had the Court found that
she had been forced to withdraw, Plaintiff’s total fees,
measured by quantum meruit, would have amounted to
$540,290.000 (assuming that the hours provided on her
timesheet were all attributable to the class). Further, had
Ms. Bonar remained in the case, she would have been
entitled to approximately $1 million under the written
percentage agreement with Defendant. During the trial,
however, Ms. Bonar submitted fee information to the
Court demonstrating that she had received $1,326,383.00
in the settlement of the individual claims of prospective
class members, more than she would have received under
either of the above calculations. When this amount is set
off against the claimed fees, nothing is owed to her; the
amount she has already received is compensation for
work done prior to joining the class and for bringing in
two clients as class representatives.
Bonar thereafter appealed to this Court.
On appeal, Bonar challenges not only the trial court’s final order and
judgment, but also numerous pretrial rulings. Specifically, Bonar argues that the
trial court erred by: (1) denying her motion for partial summary judgment; (2)
dismissing her claims against Chesley and Steinberg in their individual capacities;
(3) improperly limiting discovery; (4) prohibiting impeachment testimony; (5)
excluding expert testimony; (6) failing to afford her a fair and impartial trial; (7)
making inconsistent rulings; (8) determining that Baker v. Shapero was dispositive;
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and (9) finding that she committed numerous ethical violations. We shall address
each argument in turn, providing additional facts as necessary.
Denial of Motion for Partial Summary Judgment
Bonar first argues that the trial court erred in denying her November
3, 2006, motion for partial summary judgment, wherein she argued that WSBC had
conceded during a prior hearing that there was, in fact, a written fee agreement
between the parties. As such, Bonar claimed there was no dispute of material fact
that she was entitled to at least the amounts provided for in the written agreement,
leaving only the issue of what additional value she was owed.
“The general rule under CR 56.03 is that a denial of a motion for
summary judgment is, first, not appealable because of its interlocutory nature and,
second, is not reviewable on appeal from a final judgment where the question is
whether there exists a genuine issue of material fact.” Transportation Cabinet v.
Leneave, 751 S.W.2d 36, 37 (Ky. App. 1988) (citing Bell v. Harmon, 284 S.W.2d
812 (Ky. 1955)). The denial of a motion for summary judgment “can in no sense
prejudice the substantive rights of the party making the motion since he still has
the right to establish the merits of his motion upon the trial of the cause.” Ford
Motor Credit Company v. Hall, 879 S.W.2d 487, 489 (Ky. App. 1994) (citing Bell,
284 S.W.2d at 814). Accordingly, Bonar could not
have been prejudiced by the
denial
of her motion because she was provided the right to establish the merits of her
position during the trial.
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Dismissal of Claims Against Chesley and Steinberg
As previously noted, during the October 4, 2006, hearing, the trial
court and parties agreed to create a separate case through which Bonar could assert
her fee claims while the Doe case continued through the process of validating the
class member claims. At that time, the parties agreed the new case would be styled
Bonar v. Class Counsel. In response to the trial court’s directive, Bonar filed a
Complaint on October 30, 2006. However, the named defendants included not
only WSBC, but also Chesley and Steinberg, both individually and in their roles as
class counsel.
During a subsequent pretrial conference, the trial court questioned
Bonar’s intent to pursue individual claims against Chesley and Steinberg, noting
that was not the parties’ agreement when the new case was created. The court
commented:
This is about an attorney’s lien and what cut of an
attorney’s fee she gets with the original case. It was not
meant to establish a new cause of action and it does not
do that. So when you are sitting here telling me that you
are trying to make individual claims against these
attorneys, you’ve set up new claims that did not exist in
the original case. . . . You all have to come to an
agreement on this, because this is an unorthodox way of
handling this case. . . . Now the whole purpose of this
was to streamline it to get you all to get this out of your
way so that we can concentrate, or I can concentrate, on
this case at hand. If you are not willing to agree and you
are trying to build a record here, I’ll throw this right back
into the middle of this case the way it was, and we’ll take
the next two years to fight through this mess. So either
you agree to it or you don’t. If you’re not going to agree
to it, then we’ll go right back to square one, and I’ll
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dismiss this case on my own, and we’re right back into
the middle of the 13-14 volume case.
Bonar claimed that her reason for the inclusion of individual defendants was so
that “Chesley . . . [would] answer interrogatories and be before the Court.” The
trial court responded that because Chesley was a member of WSBC, he was clearly
before the court. Further, WSBC stipulated that Chesley was acting on behalf of
the law firm and had absolute authority to bind the firm. As such, the trial court
clarified that “class counsel” would be defined as WSBC.
The parties thereafter entered into an agreed pretrial order specifying
that WSBC was the proper defendant. Further, on April 18, 2007, Bonar filed an
amended complaint naming WSBC as the sole defendant. The case proceeded to
trial without further amendment.
We find no merit in Bonar’s claim that she was “forced . . . to enter an
agreed order dismissing Chesley . . . in exchange for a clear stipulation that such
dismissal would ensure the simplicity of awarding Appellant’s their deserved
attorney’s fees.” As the trial court noted, it was not until Bonar filed the October
2006, complaint that she asserted any individual claims against Chesley or
Steinberg. Such was clearly in contravention of what the parties agreed to when
the new case was established. Nor do we perceive how Bonar was prejudiced
since WSBC stipulated that it was responsible for any and all of Chesley’s actions
in the case. Furthermore, we must agree with Appellees that this issue was waived
upon the signing of the agreed pretrial order and the filing of the amended
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complaint naming WSCB as the sole defendant. See Browning v. Cornn, 240
S.W.3d 671 (Ky. App. 2007).
Discovery Rulings
Bonar next argues that the trial court improperly limited her access to
discovery. Specifically, Bonar sought information as to other class actions in
which WSBC was class counsel, as well as its practices regarding fee splitting and
opting out class members. Bonar further sought copies of all of WSBC’s fee
agreements with other class co-counsel in the instant underlying case. Bonar
maintains that all requested information was discoverable under CR 26.02(1) and
was directly relevant to her claims and defenses. We disagree.
We have reviewed all of the hearings during which discovery issues
were addressed by the trial court, and would note that the trial court herein went to
great lengths to simplify and clarify its rulings. Repeatedly, the court emphasized
that the sole issues in the case were whether Bonar was entitled to a fee and, if so,
the amount of such fee. As such, the court ruled that information as to WSBC’s
other class actions or its fee agreements with other co-counsel in this case had
absolutely no bearing on the issues herein. Thus, discovery was limited to
evidence relating to: (1) whether Bonar and WSBC had, in fact, entered into some
type of fee arrangement; (2) what “value” Bonar had brought to the class action
while she was co-counsel, namely the number of clients she referred that were
signed as class members; and (3) the amount of time Bonar spent directly working
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on the case while she was co-counsel. As the trial court commented on numerous
occasions, because Bonar did not remain in the case until its settlement, neither
other co-counsel’s contributions nor their fee arrangement had any correlation to
Bonar’s fee entitlement.
We review a trial court's decision to admit or to exclude evidence for
abuse of discretion. Goodyear Tire and Rubber Co. v. Thompson, 11 S.W.3d 575,
577 (Ky. 2000). A trial court abuses its discretion when its decision is arbitrary,
unreasonable, unfair, or unsupported by sound legal principles. Id. at 581. See
also Commonwealth v. English, 993 S.W.2d 941 (Ky. 1999).
The purpose of our discovery rules is to simplify and clarify the issues
in the case; eliminate or significantly reduce the element of surprise; achieve a
balanced search for the truth; and encourage the settlement of cases. Clephas v.
Garlock, Inc., 168 S.W.3d 389, 393 (Ky. App. 2004) (citing LaFleur v. Shoney’s,
Inc., 83 S.W.3d 474 (Ky. 2002)). We are of the opinion that the trial court
properly limited discovery to that evidence essential to a resolution of the issues.
Accordingly, it did not abuse its discretion in denying Bonar’s discovery requests.
Exclusion of Impeachment Testimony
Prior to trial, Bonar served subpoenas on two attorneys, Jacqueline
Sawyers and Albert F. Grasch, who had allegedly entered into fee agreements with
WSBC. Neither attorney was included as class co-counsel since each had
represented an individual class member who had received an award in 2006, after
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Bonar’s withdrawal. Initially, the trial court granted both Sawyers’ and Grasch’s5
motions for protective orders. However, at a May 3, 2007, pretrial hearing, the
trial court agreed that Sawyers’ testimony could be relevant if it contradicted
Chesley’s prior sworn testimony. Thus, the trial court ruled that if Bonar
successfully established a foundation through Chesley at trial, Sawyers’ testimony
might be admissible.
Bonar attempted to call Sawyers as a rebuttal witness on the last day
of trial. The trial court prohibited the testimony because it was not offered to rebut
anything in WSBC’s case but rather to impeach Bonar’s own witness, Chesley, on
a collateral matter. The trial court in ruling that whether Chesley had a fee
agreement with Sawyers was irrelevant to whether he had a fee agreement with
Bonar commented, “I have allowed [Chesley’s] testimony on the issue of
credibility, it is a collateral issue, [these facts] occurred after Bonar’s withdrawal
and had no relevance to her withdrawal.”
A trial court has broad discretion in controlling the examination of
witnesses and its decisions will not be disturbed absent an abuse of that discretion.
Stopher v. Commonwealth, 57 S.W.3d 787 (Ky. 2001), cert. denied, 535 U.S. 1059
(2002). Further, absent surprise, a party cannot inquire as to collateral matters it
raises on cross-examination and then introduce otherwise inadmissible evidence in
rebuttal under the guise of impeachment. Bratcher v. Commonwealth, 151 S.W.3d
332 (Ky. 2004).
5
The trial court eventually ruled that Bonar could take Grasch’s deposition and such was
admitted into evidence at trial.
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We would note that at no point in her brief does Bonar actually
explain either the nature or importance of Sawyers’ testimony. Nonetheless, we
agree with the trial court that other counsel’s fee arrangements had absolutely no
relevance to whether Bonar was entitled to a fee and, if so, how much.
Exclusion of Expert Testimony
Bonar retained Honorable Michael O. McDonald, a retired judge, as
an expert to testify concerning: (1) her legal entitlement to fees; (2) the
reasonableness of her fees; (3) the reasonableness of her withdrawal from the class
action; (4) and the legal effect of withdrawal on her entitlement to fees. Although
WSBC had taken Judge McDonald’s deposition and had not filed a pretrial motion
to exclude his testimony, it made an oral motion at trial to preclude such on the
grounds that under KRE 702, Judge McDonald’s testimony would not assist the
court. The trial court, noting that it assumed the parties’ experts would testify as to
ethical issues, ruled that such testimony would not be helpful and required both
parties to submit their experts’ testimony by avowal.
“Preliminary questions concerning the qualification of a person to be a
witness . . . or the admissibility of evidence shall be determined by the court[.]”
KRE 104(a). Further KRE 702 provides:
If scientific, technical, or other specialized knowledge
will assist the trier of fact to understand the evidence or
to determine a fact in issue, a witness qualified as an
expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an opinion
or otherwise[.]
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Bonar’s reliance on Daubert v. Merrell Dow Pharmaceuticals, Inc.,
509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), is misplaced as Judge
McDonald’s testimony did not involve complex scientific or technical evidence,
but rather legal principals. In fact, the trial court specifically found that Judge
McDonald’s opinions were not appropriate in a bench trial since the court did not
need guidance on the ultimate issues to be decided from a former judge who did
not have the benefit of testimony from both parties. We agree that Bonar failed to
show that Judge McDonald possessed any specialized knowledge that would assist
the trial court in resolving the issues at hand. Therefore, no error occurred.
Fair and Impartial Trial
As a result of the trial court’s rulings regarding discovery and witness
testimony, Bonar complains that she was not afforded a fair and impartial trial.
She further asserts that the trial court pre-decided the issues herein and actually
assisted WSBC in collecting evidence to support its position.
At trial, the court remained focused on the two issues: whether Bonar
was entitled to a fee and, if so, how much. Indeed, the court disregarded and did
not allow evidence of collateral issues that Bonar continued to attempt to introduce
into the proceedings. Repeatedly, the court emphasized that neither WSBC’s fee
arrangements with other attorneys or the amount of work performed by other
counsel was relevant to a determination of Bonar’s entitlement, if any.
Nevertheless, Bonar continuously sought the introduction of evidence pertaining to
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inadmissible and irrelevant collateral issues, rather than evidence quantifying the
amount of work she had performed while acting as class counsel.
Bonar also claims that she was denied a fair trial due to outside
influences. Specifically, the Kentucky Bar Association had requested all records in
the case once it was resolved. In response, the trial court commented that he would
have referred the case to the KBA regardless of the request because he believed
there were numerous ethical problems. Bonar contends that because the trial
court’s comments were subsequently reported in the press, she suffered prejudice
because it intimated that she was under a disciplinary investigation.
Had this case proceeded to a jury trial Bonar may have had a credible
argument. However, because this was a bench trial, it would be nonsensical to
conclude that the trial court was improperly influenced by its own comments.
Thus, we find no error.
Inconsistency of Trial Court’s Orders
We also find no merit in Bonar’s claims that the trial court somehow
erred by entering orders that disagreed or were inconsistent with earlier rulings.
Indeed, when Judge McGinnis took over the underlying Doe case, he commented
on the record that he would give deference to Judge Potter’s prior orders in the
case. However, once the new fee dispute case was created, Judge McGinnis was
fully entitled to enter rulings as were appropriate to the case.
Bonar asserts in her brief, without citation to the record, that Judge
Potter ruled she was entitled to a percentage of the settlement fees, thus binding
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Judge McGinnis to that ruling and leaving only the issue of how much she was
owed. First, we find this issue to be unpreserved as it was not raised in Bonar’s
prehearing statement on appeal. CR 76.03(8). Second, and more importantly,
without citation to the record, we are unable to locate in the proceedings below
where Judge Potter made such a ruling. Certainly, contrary to Bonar’s claim,
Judge Potter certainly did not enter an order on the record that could be construed
as the “law of the case.”
Application of Baker v. Shapero
In its final judgment and order, the trial court ruled:
The controlling case is the Kentucky Supreme
Court decision in Baker v. Shapero, 203 S.W.3d 697 (Ky.
2006). This case stands for three basic principles in a
situation in which a lawyer has a contingent fee
agreement:
1. A lawyer can withdraw from a contingency fee case at
any time on her own accord. If she does, she forfeits her
fee.
2. If a lawyer is discharged for cause, she cannot receive
a fee.
3. If a lawyer is discharged without cause, she is entitled
to a fee, but not to the contingent fee set forth in her
contract. Instead, the lawyer is entitled to a fee measured
by quantum meruit. Baker, 203 S.W.3d at 699-700.
The purpose of the third principle is to ensure that
there is fairness to the lawyer who has already provided
some services to the client. If, in this situation, the
lawyer is discharged without cause, then she is entitled to
be compensated for those services at a reasonable hourly
rate.
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Applying those principles to this case, the Court
hereby finds that Ms. Bonar voluntarily withdrew due to
her conflict of interest, and therefore is not entitled to any
fee.
In Baker v. Shapero, the Kentucky Supreme Court addressed the
proper measure for the allowance of a fee to an attorney employed under a
contingent contract who is discharged without cause before the completion of the
contract. The Court noted:
Since [LaBach v. Hampton, 585 S.W.2d 434 (Ky.
App. 1979)], it has been noted that Kentucky's policy of
allowing attorneys who are discharged without cause to
claim entitlement to a contingency fee on a former
client's final recovery, even though they never completed
the contracted work, is an extreme minority position.
Most jurisdictions only allow these discharged attorneys
to claim fees on a quantum meruit basis. See Lester
Brickman, Setting the Fee when the Client Discharges a
Contingent Fee Attorney, 41 Emory L.J. 367, 373 n. 37
(Spring 1992) (citing the vast majority of jurisdictions
which apply true quantum meruit recovery for attorneys
who are discharged without cause); Limitation to
Quantum Meruit Recovery, Where Attorney Employed
under Contingent-Fee Contract is Discharged without
Cause, 56 A.L.R. 5th 1, § 3(a) (1998) (same).
A closer examination of LaBach, supra, reveals
that the predecessor cases cited in that opinion do not
support the reasoning therein. For example, LaBach
cited our 1901 case of Henry v. Vance, supra, as
authority for its decision. In Henry v. Vance, however,
the Court specifically held that discharged attorneys
“should [generally] be relegated to an action to recover
[on] quantum meruit.” Id. at 276. This rule, the Court
determined, is consistent with the client's unqualified
right “to discharge his attorney at any time, with or
without cause, even in a case where a contingent fee has
been agreed upon. . . .” Id. The reasoning and holding in
Henry v. Vance was reaffirmed on at least two occasions
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prior to the Court of Appeals' opinion in LaBach. See
Hubbard v. Goffinett, 253 Ky. 779, 70 S.W.2d 671, 672
(1934) (“It is sufficient to say that under the law of this
state a client may at any time discharge his attorney, and
substitute another in his place, but if he has performed
services under the contract, he is entitled to recover
compensation to the extent of the services performed,
based on quantum meruit, and not on the terms of the
contract.”); Gilbert v. Walbeck, 339 S.W.2d 450, 451
(Ky.1960) (“Since a client may at any time discharge his
attorney even if a contract exists, unless the attorney's
services are completely performed thereunder an
allowance of compensation is based upon quantum
meruit.”). . . .
In accordance with the vast majority of other
jurisdictions that have addressed this issue, we hold that
when an attorney employed under a contingency fee
contract is discharged without cause before completion of
the contract, he or she is entitled to fee recovery on a
quantum meruit basis only, and not on the terms of the
contract.
Baker, 203 S.W.3d at 699.
The trial court herein opined that although Baker was not squarely on
point, the rationale applied therein would be equally applicable when an attorney
voluntarily withdraws from a case. As such, because the trial court concluded that
Bonar voluntarily withdrew from the case due to a conflict of interest, the
appropriate method of determining what compensation she was owed was based on
quantum meruit.
Nevertheless, Bonar continues to argue to this Court, as she did
below, that she had a binding fee agreement with WSBC that was unaffected by
her withdrawal from the case. However, Bonar’s argument leads to an absurd
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result because it would necessarily require the enforcement of a fee agreement
even when an attorney voluntarily withdraws in the initial stages of the case. As
the trial court observed, only those attorneys who remain in the class action until
its completion are entitled to a percentage of the fees. Those who voluntarily
withdraw or are discharged without cause are only entitled to compensation for the
hourly work performed in furtherance of the case. Such rationale is consistent with
the holding in Baker.
Furthermore, we find Bonar’s reliance upon Melvin v. Preston, 2002CA-000419 (August 8, 2003), an unpublished decision by a panel of this Court,
unpersuasive as the issues therein concerned whether the attorneys’ fee splitting
arrangement violated (SCR) 3.130(1.5)(e) and whether the client’s lack of
knowledge of the arrangement voided the contract. Moreover, unlike the attorneys
in Melvin, Bonar did not remain in the case until its completion. Clearly, Melvin
has no application to the instant case.
Ethical Violations
Bonar claims that the trial court’s conclusion that she committed
ethical violations during her involvement in the Doe case was not based upon any
law and underscores what she believes was the prejudice she suffered as a result of
limited discovery and inconsistent rulings. We disagree.
In ruling on Bonar’s conduct while acting as class counsel, the trial
court determined that she violated SCR 3.130(1.3), (1.7), (1.9), and (1.16). The
trial court explained in its final opinion and judgment:
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Exacting fiduciary duties are imposed upon the attorney
acting as class counsel. Throughout the Doe litigation,
Ms. Bonar either failed or refused to understand or
recognize that, when an attorney acts as class counsel,
her duty is to the class, to the exclusion of individual
clients. The attorney is obligated to inform any
individual clients that, once they become class
representatives, they are obligated to remain in the case;
that the case is likely to take a long time; and that, if they
choose to opt out, she may no longer represent them.
The acts of settling individual cases, or advising putative
members to utilize the opt-out mechanism, are
detrimental to the class and cannot ethically be carried
out while the attorney is class counsel. Furthermore, an
attorney who has withdrawn as class counsel cannot then
represent individual clients who have opted out,
particularly where there is a limited fund available for
settlement, without causing further detriment to her
former client. Finally, it is clearly damaging to the class
to engage in negative publicity which would tend to drive
away current or potential class members.
In light of these principles, the Court finds that Ms.
Bonar committed numerous and egregious ethical
violations. Her agreement with class counsel, which
purportedly allowed her to keep her own clients and
settle their cases, became a fiduciary breach as soon as
the class action was certified. In addition, Ms. Bonar’s
emails to the Diocese’s attorney, Carrie Huff . . .
provided evidence, in her own words, of her various
conflicts: her continued settlement negotiations with the
Diocese for three weeks between when the class
certification was announced (i.e., the class was no longer
speculative) and the certification order was entered; her
failure to inform her individual clients of the amount of
time required for a class action; her reference to her own
ties to the Diocese; and her reference to contacts with the
media, in which she portrayed the class in a negative
light.
Throughout this process, Ms. Bonar was
essentially serving three masters: her original two clients,
the class, and the church. Her actions demonstrate a
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pattern of subordinating the interests of the class to those
of her individual clients, and to her own interests in
obtaining substantial attorney’s fees. For example, she
negotiated individual settlements for clients while
serving as class counsel; engaged in negative publicity
about the class (which may have resulted in the
withdrawal of innumerable class members), and, after
withdrawing as class counsel, caused further detriment to
the class by continuing to settle individual claims on a
contingency basis. Furthermore, Ms. Bonar has
acknowledged her own ties to the Diocese, a conflict
stemming from her original involvement in the case,
which became apparent when she refused to participate
in a brief filed by class counsel.
We are of the opinion that the trial court’s findings with respect to ethical
violations were, in fact, based on substantial evidence in the record.
Finally, we would observe that throughout her brief, Bonar posits that
the trial court was clearly prejudiced against her. Our review of the record, and in
particular the video proceedings, convinces us that the trial court was justifiably
exasperated with both parties. Not a hearing was conducted wherein the parties
could agree on even the smallest detail of the case. What began as an attempt to
separate and “streamline” a fee dispute between attorneys from an underlying
complex matter became in itself a complex and bitter battle. We are of the opinion
that the trial court herein was faced with an unpleasant task and handled the matter
with the utmost patience and skill.
The final opinion and judgment of the Boone Circuit Court is
affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANTS:
BRIEF FOR APPELLEES:
William C. Rambicure
Christopher D. Miller
Christopher B. Rambicure
Lexington, Kentucky
C. Alex Rose
James M. Gary
Louisville, Kentucky
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