CHIU (WO SIN), ET AL. VS. FREDERICK (CARL D.), ET AL.
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RENDERED: NOVEMBER 6, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-001268-MR
WO SIN CHIU and
KENNETH H. BAKER
v.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JUDITH E. MCDONALD-BURKMAN, JUDGE
ACTION NO. 98-CI-006240
CARL D. FREDERICK and
LAURA WASZ, PERSONAL REPRESENTATIVE
OF THE ESTATE OF RICHARD SHAPERO
APPELLEES
OPINION
AFFIRMING IN PART;
REVERSING IN PART AND REMANDING
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BEFORE: CLAYTON, MOORE AND VANMETER, JUDGES.
CLAYTON, JUDGE: Wo Sin Chiu (“Chiu”) and Kenneth Baker (“Baker”),
collectively the “Appellants,” have appealed from the Jefferson Circuit Court’s
order awarding Carl Frederick (“Frederick”) and the estate of Richard Shapero,
collectively the “Appellees,” post-judgment interest from a December 17, 2002,
judgment. After careful review of the record and the applicable law, we affirm in
part, reverse in part, and remand for further proceedings consistent with this
opinion.
FACTUAL AND PROCEDURAL BACKGROUND
This case involves an attorney’s lien dispute arising from the legal
representation of Chiu. In March 1998, Chiu was involved in a motor vehicle
accident and retained the services of Shapero. The employment agreement signed
by Chiu indicated that Shapero would represent him on a 40 percent contingency
fee basis. Shapero referred Chiu’s case to Frederick, who commenced work on the
case. Thereafter, Chiu retained new legal counsel, as he was unhappy that his case
was being shuffled from attorney to attorney. Frederick was able to persuade Chiu
to resume representation from him a few days later, and during this time, Frederick
received a letter from Allstate Insurance Company, the primary liability carrier,
offering policy limits of $25,000 for Chiu’s bodily injury claim. Still dissatisfied
with the handling of his case, Chiu again discharged Frederick and Shapero and
retained Baker. Chiu eventually received a total settlement of $175,000.
Appellees filed an attorney’s lien against the settlement, and a bench
trial on the enforcement of the lien was held. In its findings of fact, conclusions of
law and judgment entered on December 17, 2002, the trial court found that the
employment agreement was valid and enforceable, that Appellees were not
discharged for cause, and that they were entitled to a fee pursuant to LaBach v.
Hampton, 585 S.W.2d 434 (Ky. App. 1979). Based upon the recovery received by
Chiu, the trial court awarded Appellees 25 percent of the $25,000 payment from
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Allstate and 12.5 percent of the remaining $150,000 settlement for a total fee of
$25,000. The trial court apparently arrived at this number in part based on
Frederick’s admission at the hearing that he and Shapero most likely would have
reduced their contracted-for 40 percent fee to a 25 percent fee.
Appellants appealed this judgment to this Court, and Appellees crossappealed, arguing that they were entitled to their contracted-for fee, less a
reasonable cost for the successor counsel. This Court upheld the trial court’s
factual findings, but found that under LaBach, Appellees were entitled to have
their fee based on the contingent fee contract less the value of Baker’s services as
successor counsel. Therefore, the Court affirmed in part and remanded as to the
amount of the fee awarded in the cross-appeal.
Thereafter, Appellants appealed to the Kentucky Supreme Court,
which granted discretionary review. In a published opinion, the Supreme Court
overruled LaBach and held that when an attorney employed under a contingency
contract is discharged without cause before the 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. As such, the Court of Appeals opinion was reversed and the matter
was remanded to the trial court for proceedings in conformity with the opinion.
After the case was returned to the trial court, the parties declined to
offer additional evidence, as Appellees felt that they had presented sufficient
evidence at the original bench trial for the court to make a determination as to what
they should recover on a quantum meruit basis. The trial court entered a judgment
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re-affirming its original findings of fact and concluding that Appellees were
entitled, based on a quantum meruit theory of recovery, to an attorney’s fee award
of $27,000. Thereafter, the trial court also entered an order that post-judgment
interest would run on the $25,000 portion of the court’s judgment beginning on the
date of the original judgment in December 2002.
Thereafter, the trial court entered another order denying Appellants’
motion to set aside the $27,000 judgment, noting that its findings of fact in the
original order remained undisturbed by both the Court of Appeals and the Supreme
Court. The trial court also noted that it had applied those findings to the factors
under a quantum meruit analysis and had entered judgment in favor of Shapero and
Frederick in the sum of $27,000. This appeal followed.
ANALYSIS
On appeal, if a trial court's findings are supported by substantial
evidence, those findings will be upheld as not being clearly erroneous. OwensCorning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998); Kentucky
Rules of Civil Procedure (CR) 52.01. With regard to the trial court's application of
law to those facts, this Court will engage in a de novo review. Keeney v. Keeney,
223 S.W.3d 843, 848-49 (Ky. App. 2007).
Appellants first argue that the trial court erred in ordering postjudgment interest from the date of the original judgment rather than from the date
of its revised order. Our review of the record and the applicable caselaw, however,
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shows that the trial court correctly ordered post-judgment interest from the date of
the original judgment.
Kentucky Revised Statutes (KRS) 360.040 states that “[a] judgment
shall bear twelve percent (12%) interest compounded annually from its date.” In
Com., Transp. Cabinet, Dept. of Highways v. Esenbock, 200 S.W.3d 489 (Ky. App.
2006), this Court examined KRS 360.040 in a situation similar to this case. In
Esenbock, a plaintiff involved in a car accident filed a claim with the Kentucky
Board of Claims claiming that the Transportation Cabinet was responsible for
insufficient road conditions. The Kentucky Board of Claims entered an order
determining that the Transportation Cabinet was 20 percent at fault, that the
plaintiff was 20 percent at fault, and that the other driver was 60 percent at fault.
In calculating the Transportation Cabinet’s damages owed to the plaintiff, the
Board applied, without regard to the actual damages suffered by the plaintiff, the
Cabinet’s 20 percent comparative fault to the then-existing $100,000 statutorily
prescribed limitation on awards contained in KRS 44.070(5). This calculation
determined the Cabinet’s comparative fault liability to be $20,000. The plaintiff’s
collateral source payments of $11,015.75 were subtracted from the Cabinet’s
comparative fault liability to arrive at a net award of $8,984.25.
The Cabinet appealed the Board’s decision to the circuit court, and on
February 10, 1999, the circuit court entered an order affirming the Board’s
decision, reducing the award to an enforceable judgment. That decision was then
appealed to the Court of Appeals, which concluded that the Board had erroneously
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calculated the award to the plaintiff and that, based upon Truman v. Kentucky Bd.
of Claims, 726 S.W.2d 312 (Ky. App. 1986), the award should be based on 20
percent of the actual damages suffered, less collateral source payments, but not to
exceed $100,000. The Court of Appeals remanded the matter to the Board for a
proper determination of the damage award.
On remand, the Board applied Truman in conformance with the Court
of Appeal’s instructions, which resulted in an amended award to the plaintiff of
$69,297.15. The plaintiff requested an award of post-judgment interest pursuant to
KRS 360.040 and calculated from February 10, 1999, the date of the first
judgment. The Cabinet took the position that post-judgment interest should run
from February 10, 1999, only on the lower amount that was originally affirmed by
the circuit court, and that post-judgment interest on the incremental increase should
run only from the date of the Board’s amended award. The Court, however, found
that once a judgment is entered, and the amount of the judgment is subsequently
increased pursuant to the mandate of an appellate court, the increased judgment
bears interest from the date of the original judgment.
The situation in Esenbock is analogous to this case. Here, the trial
court originally entered an incorrect judgment understating the award to which
Appellees were entitled. The Supreme Court ultimately issued a directive which
had the effect of enlarging the award to the Appellees. Therefore, just as in
Esenbock, interest should run from the date of the original erroneous judgment,
and we affirm the trial court to the extent that it held so.
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Appellants argue that the action of the Supreme Court was to fully
reverse the trial court, thereby “wiping out” the original judgment. In this case, as
in Esenbock and unlike the cases cited by Appellants, the appellate courts still held
that Appellees were entitled to recover. The courts simply reversed the method
used by the trial court to establish how much Appellees were entitled to recover.
As stated in Livingston County. v. Dunn, 300 Ky. 367, 376, 190 S.W.2d 328, 332
(Ky. 1945):
The fact that we have increased the amount found [to] be
owing, obviously does not alter the fact that [the
defendant] was then adjudged to owe the County in a
settlement of his accounts . . . .
Appellants further argue that post-judgment interest can only be
claimed by Appellees when the amount due is “unavailable” to them. Because the
parties had agreed that counsel for Appellees would hold $25,000 in an interestbearing account pending the outcome of the attorney lien proceedings, Appellants
argue that when the trial court entered its judgment on December 17, 2002, the
escrowed funds were “unrestricted,” and that no other party other than Appellees
had any legal claim to the funds. This argument, however, was not presented to
the trial court, and we therefore decline to address the merits. The foundation of
appellate review is based on the principle that the lower court has first had a
chance to deliberate and decide upon the issues. Florman v. MEBCO Ltd.
Partnership, 207 S.W.3d 593 (Ky. App. 2006). As stated by this Court:
The Court of Appeals is one of review and is not to be
approached as a second opportunity to be heard as a trial
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court. An issue not timely raised before the circuit court
cannot be considered as a new argument before this
Court.
Id. at 607(quoting Lawrence v. Risen, 598 S.W.2d 474, 476 (Ky. App. 1980)).
While we agree with the trial court that judgment began to accrue on
the date of the original judgment, we disagree that it should only accrue on the
amount of $25,000. Kentucky jurisprudence dictates that a judgment entered after
remand should place each party in the position it would have been in had the trial
court’s original action been correct. Elpers v. Johnson, 386 S.W.2d 267, 268 (Ky.
1965). Therefore, in order to place the parties in the position they would have been
in had the trial court not erred in the first judgment, Appellees are entitled to
receive from Appellants interest of 12 percent per annum on the entire amount of
$27,000 from December 17, 2002, rather than simply on the amount of the original
judgment of $25,000. This also comports with Esenbock, in which the entire
increased judgment bore interest from the date of the original judgment.
Based on the foregoing, we affirm in part, reverse in part, and remand
for proceedings consistent with this opinion.
ALL CONCUR.
BRIEFS FOR APPELLANTS:
BRIEF FOR APPELLEES:
Kenneth Baker
Louisville, Kentucky
Peter L. Ostermiller
Louisville, Kentucky
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