Cut-N-Shoot, L.L.C. v. Bingham Greenebaum Doll, L. L.P.

CUT-N-SHOOT, L.L.C.; MEREDITH L. LAWRENCE, P.S.C.;AND MEREDITH L. LAWRENCE APPELLANTS v. BINGHAM GREENEBAUM DOLL, L.L.P.; BGD HOLDINGS, L.L.C.; BINGHAM MCHALE, L.L.P.;AND JAMES RICHARD KIEFER APPELLEES

NO. 2019-CA-1735-MR

Commonwealth of Kentucky Court of Appeals

JUNE 11, 2021

NOT TO BE PUBLISHED

APPEAL FROM GALLATIN CIRCUIT COURT

HONORABLE JAMES R. SCHRAND, II, JUDGE

ACTION NO. 19-CI-00083

OPINION

AFFIRMING

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BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND JONES, JUDGES.

JONES, JUDGE: This appeal arises from a series of related litigation before the Kenton and Gallatin Circuit Courts. In 2012, Appellees James Richard Kiefer and his law firm, Bingham Greenbaum Doll, L.L.P. (hereinafter collectively referred to as "Bingham"), represented Appellant Meredith L. Lawrence in a federal criminal case. Lawrence was convicted in 2012 and subsequently sued Bingham for legal malpractice related to his representation. In 2014, Bingham sued Lawrence in a separate action to foreclose on a mortgage that secured the promissory note for Lawrence's unpaid legal fees, and Lawrence asserted a counterclaim for legal malpractice. In 2015, Lawrence sued Bingham for legal malpractice and asserted a variety of related ancillary claims. In 2019, Lawrence and his business entities, Cut-N-Shoot, L.L.C., and Meredith L. Lawrence, P.S.C. (hereinafter referred to collectively as "Lawrence"), again brought claims against Bingham sounding in legal malpractice. The Gallatin Circuit Court dismissed Lawrence's claims in this lawsuit under CR¹ 12.02(f) and imposed CR 11 sanctions on Lawrence for duplicitous litigation. Following a careful review of the record and relevant case law, we AFFIRM the Gallatin Circuit Court's judgment.

I. STATEMENT OF THE CASE

This is the fourth case in which Lawrence² has sued Bingham for professional/legal malpractice in connection with Bingham's legal representation of Lawrence in a federal criminal case. Lawrence first retained Bingham in 2008 to represent him in federal court on tax evasion charges. Lawrence soon fellbehind on his legal fee payments, and the parties renegotiated their fee agreement, resulting in Lawrence's executing a promissory note for the unpaid legal fees. In 2012, Lawrence was indicted and convicted in federal court for willfully filing false tax returns for 2004, 2005, and 2006 in violation of 26 U.S.C.³ § 7206(1). Lawrence was sentenced to twenty-seven months in prison and ordered to pay restitution to the United States Treasury. By 2017, Lawrence had exhausted all conventional post-conviction direct and collateral attacks against his conviction, including a 28 U.S.C. § 2255 petition to vacate, set aside, or correct sentence.

In 2013, Lawrence sued Bingham for professional/legal malpractice in Kenton Circuit Action No. 13-CI-01620. Bingham counterclaimed for the enforcement of the promissory note Lawrence had executed in partial payment of his attorney fees. The circuit court granted Bingham summary judgment pursuant to the Exoneration Rule because Lawrence had not been exonerated of his criminal conviction. The circuit court also granted Bingham a default judgment against Lawrence on the promissory note. Subsequently, a new trial judge took the bench and set aside the default judgment, and Lawrence appealed the summary judgment. Ultimately, the Kentucky Supreme Court ordered the circuit court "to reinstate the default judgment in favor of Bingham and to enter the award, including interest and costs, accordingly." Bingham Greenebaum Doll, LLP v. Lawrence (LawrenceI), 567 S.W.3d 127, 131 (Ky. 2018). Lawrence has since appealed the Kenton Circuit Court's refusal to address certain post-judgment motions. That appeal, No. 2019-CA-1125, is presently pending before our Court.

In 2014, Bingham filed Gallatin Circuit Action No. 14-CI-00055 against Lawrence to foreclose on the mortgage which secured Lawrence's promissory note.⁴ Even though the federal litigation was still pending⁵ and Lawrence had not been exonerated of his criminal conviction, Lawrence counterclaimed for malpractice. The circuit court granted summary judgment in Bingham's favor and dismissed Lawrence's counterclaim pursuant to the Exoneration Rule. Record (R.) at 238-49. The property subject to the aforementioned mortgage was sold, and the sale was confirmed by the circuit court on May 30, 2018.

Lawrence appealed. Upon transfer to the Kentucky Supreme Court, the Supreme Court held that Lawrence's allegation that Bingham has engaged in the unauthorized practice of law is meritless. Lawrence III, 599 S.W.3d at 824.The Kentucky Supreme Court rejected Lawrence's argument that he was fraudulently induced into hiring Kiefer by a misrepresentation that Kiefer was licensed to practice in Kentucky. Id. at 824-25. Our Supreme Court also held that because the federal court had denied his ineffective-assistance-of-counsel claim, Lawrence was precluded from claiming that Bingham's legal representation was deficient. Id. at 824-25. Lawrence's attack on the amount of attorneys' fees owed was likewise barred by claim preclusion. Id. at 825. However, the Kentucky Supreme Court did reverse and remand the Gallatin Circuit Court's summary judgement on one issue: whether Bingham had properly accepted a security interest in the real property Lawrence had offered to secure his unpaid legal fee. Id. at 828-29.

Consequently, on August 21, 2020, the Gallatin Circuit Court set aside the deed of foreclosure, finding that Bingham had taken a possessory interest in Lawrence's property for more than the agreed upon fee and Lawrence had not been given a reasonable time to consult with independent counsel. Both Bingham and Lawrence have filed appeals in this case that are currently pending before our Court.⁶

In October 2015, Lawrence filed Action No. 15-CI-00113 in Gallatin Circuit Court against Bingham with a sole cause of action - professional negligence in Bingham's defense of his criminal charges. Lawrence II,⁷ 567 S.W.3d at 136. Lawrence filed this third legal malpractice claim against Bingham with a litany of ancillary claims: "professional negligence, gross negligence, breach of fiduciary duty, breach of contract both express and implied, breach of professional failure to observe the rules and order of the court and were intentionally reckless and wanton with the representation of the defendants, including but not limited to the [sic] violating the constitutional rights of the defendants." Id. Lawrence also alleged, as he does in the present case, that Bingham "willfully/intentionally breached fiduciary duties," "the Exoneration Doctrine is not applicable to his claims regarding fee disputes, intentional betrayal, violations of the Supreme Court Rules, fraud, and concealment," "his legal malpractice claims should be allowed to proceed under the language of KRS 411.165," and "the [Exoneration Doctrine] is inapplicable in cases of professional negligence where the attorney fee is unreasonable, or when the attorney fails to provide his case file to his former client." Id. at 137. Our Supreme Court determined that the case was properly dismissed in favor of Bingham, finding thatall of the causes of action asserted by Lawrence "stem[med] from the same professional negligence claim, a claim that . . . fails due to the lack of exoneration." Id. at 141. There are no appeals currently pending in that case.

On June 14, 2019, just six months after our Supreme Court's decision in Lawrence II and two months before our Supreme Court rendered Lawrence III, Lawrence filed the Complaint in this case, Gallatin Circuit Action No. 19-CI-00083. According to Lawrence, he filed this latest complaint to recover attorneys' fees paid to Bingham, set aside orders and judgments in other cases allowing Bingham's attorney fees, obtain damages for breach of the attorney-client contract, and set aside the foreclosure and sale of Lawrence's business property in Gallatin Circuit Action No. 14-CI-00055. In doing so, Lawrence asserted claims against Bingham for legal/professional malpractice, negligence, breach of contract, fraudulent concealment, fraud by omission, fraud by misrepresentation, deceit, unjust enrichment, violations of the Fair Debt Collection Practices Act (FDCPA), slander of title, conversion, and intentional infliction of emotional distress.

On July 5, 2019, Bingham moved to dismiss Lawrence's claims because Lawrence had not pled that he had been exonerated, rendering his claims once again premature under the Exoneration Rule. Lawrence argued that the parties' legal employment relationship was invalidated by Bingham's allegedly unauthorized practice of the law, rendering the Exoneration Rule inapplicable. Inreply, Bingham directed the circuit court to take judicial notice of the federal court's October 17, 2011 order admitting Kiefer pro hac vice in USA v. Lawrence, 2:11-cr-00052-DCR-EBA, Lawrence's criminal case.⁸

On July 25, 2019, Lawrence moved for an "equitable accounting" and the creation of a "constructive trust" for the disputed attorneys' fees and foreclosed properties. On August 9, 2019, Bingham responded to that motion, arguing that Lawrence's claims were still barred by the Exoneration Rule and merely an attempt to reargue issues already decided in Gallatin Circuit Action No. 14-CI-00055.

In August 2019, the trial court dismissed Lawrence's claims. The court rejected Lawrence's argument that Bingham had engaged in the unauthorized practice of law and dismissed all of Lawrence's claims as stemming from his claims for legal malpractice.

The Plaintiffs [argue] that Kentucky procedural due process requires denial of the CR 12.02(f) because the motion present relies on "matters outside the pleadings," thus it should be treated as a Motion for Summary Judgment and all parties should be given the opportunity to conduct discovery. They further argue that Kentucky's exoneration rule is inapplicable because this is not a professional malpractice case because Defendant LLP

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