Lawrence v. Bingham, Greenebaum, Doll, L.L.P.

567 S.W.3d 133

Meredith L. LAWRENCE, and Meredith L. Lawrence, P.S.C., Appellants

v.BINGHAM, GREENEBAUM, DOLL, L.L.P.; J. Richard Kiefer; Taliferro Carran and Keys, P.L.L.C.; and Robert Carran, Appellees

2017-SC-000531-DG

Supreme Court of Kentucky.

DECEMBER 13, 2018

Rehearing Denied March 14, 2019

COUNSEL FOR APPELLANTS MEREDITH L. LAWRENCE, P.S.C. AND MEREDITH L. LAWRENCE: Brandy Lawrence, Meredith L. Lawrence, Warsaw.

COUNSEL FOR APPELLEES BINGHAM, GREENEBAUM, DOLL, L.L.P., AND J. RICHARD KIEFER: Beverly Ruth Storm, Covington, Arnzen, Storm & Turner, P.S.C.

COUNSEL FOR APPELLEES TALI FERRO CARRAN AND KEYS, PLLC, AND ROBERT CARRAN: Jeffrey C. Mando, Covington, Adams, Stepner, Woltermann & Dusing, PLLC.

OPINION OF THE COURT BY JUSTICE VENTERS

Appellants Meredith L. Lawrence and Meredith L. Lawrence, P.S.C., (Lawrence) appeal from a decision of the Court of Appeals which held that a criminal defendant who has been convicted at trial and whose conviction has not been overturned on appeal or through other post-conviction proceedings may not maintain a legal malpractice action against his criminal defense attorneys for alleged negligence occurring during the criminal defense representation. The Appellees, Lawrence’s defense attorneys, are Bingham, Greenebaum, Doll, L.L.P.; J. Richard Kiefer; Robert Carran; and Taliferro, Carran, & Keys, P.L.L.C.¹

The Court of Appeals' opinion is based upon a doctrine known as the "Exoneration Rule" which has been previously applied by our Court of Appeals but has never been addressed or adopted by this Court. We granted discretionary review to consider the merits of the rule.

The Exoneration Rule provides that a criminal defense attorney may not be sued for legal malpractice in a case resulting in the conviction of his or her client unless the client has been exonerated by direct appeal or upon post-conviction relief. The rationale for the rule is that the sole cause of the conviction is the criminal conduct of the client rather than the poor performance of the defense counsel. Thus, absent subsequent exoneration, the convicted defendant cannot establish that his attorney was the cause of his conviction. The Exoneration Rule, with slight variations discussed below, is the majority rule across the nation.

For the reasons stated below, we follow the lead of the Court of Appeals and most of our sister-state jurisdictions in adopting the Exoneration Rule. Upon application of this rule to Lawrence’s legal malpractice claim, we affirm the trial court’s dismissal of his claims against Appellees. Upon that conclusion, we recognize Lawrence’s remaining claims on appeal as moot or otherwise without merit.

I. FACTUAL AND PROCEDURAL BACKGROUND

Lawrence was formerly an attorney and a member of the Kentucky Bar Association. In 2012, he was found guilty in federal district court of violating 26 U.S.C. § 7206(1), a felony offense involving false and fraudulent tax returns which Lawrence allegedly filed between 2004 and 2006. He was sentenced to twenty-seven months in prison and ordered to pay $128,253 in restitution to the United States Treasury.²

Lawrence’s conviction was affirmed on direct appeal. See U.S. v. Lawrence, 557 Fed. Appx. 520 (6th Cir. 2014).³ Lawrence unsuccessfully sought a new trial pursuant to Federal Rule of Criminal Procedure 33.⁴ U.S. v. Lawrence, 2015 WL 428087 (E.D. Ky. 2015). He later filed a petition for habeas corpus, seeking post-conviction relief in federal district court pursuant to 28 U.S.C. § 2255.⁵ His petition was denied, and the district court denied a certificate of appealability to the United States Sixth Circuit Court of Appeals. U.S. v. Lawrence, 2016 WL 3212161 (E.D. Ky. 2016) ; U.S. v. Lawrence, 2016 WL 4803934 (E.D. Ky. 2016). He petitioned the Sixth Circuit for a certificate of appealability, which was denied by Order entered April 4, 2017. See Lawrence v. U.S., Case No. 16-5870 (6th Cir. April 4, 2017). Lawrence has now exhausted all conventional post-conviction direct and collateral attacks against his conviction.

In October 2015, while the federal litigation was still pending, Lawrence filed a civil action in the Gallatin Circuit Court against the attorneys and law firms that defended him in his federal court trial. His sole cause of action was that his attorneys had committed professional negligence in their defense of his criminal charges.⁶ The Complaint was entitled, "CAUSE OF ACTION PROFESSIONAL NEGLIGENCE." The complaint alleges that "the representation provided by the defendants jointly and individually were [sic] laced with 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 violating the constitutional rights of the defendants." More specifically, the complaint alleged that Lawrence’s attorneys were negligent by failing to comply with a scheduling order relating to the disclosure of expert witness testimony; by failing to object to certain testimony presented at trial; and by failing to move for a bill of particulars. This negligence, according to Lawrence’s complaint, caused the "utter failure" of his trial defense and "subjected Mr. Lawrence to ineffective assistance of counsel."

Consistent with the results obtained in his post-conviction litigation, Lawrence’s complaint does not allege that he has been exonerated or that his conviction has been otherwise overturned. Instead, his complaint demonstrates that he remains under conviction for the crimes.

Based upon the Exoneration Doctrine, the trial court granted Appellees' motion to dismiss Lawrence’s complaint pursuant to CR 12.02(f), for failure to state a claim upon which relief can be granted. The trial court also denied Lawrence’s subsequent motions under CR 59 and 60 to alter, amend, or vacate the dismissal. The Court of Appeals affirmed the trial court’s dismissal.

Lawrence identifies thirteen arguments for relief in the "Arguments" section of his brief, some of which overlap. They include: (1) that Lawrence is actually and factually innocent of the federal crimes charged; (2) that the Appellees are collaterally estopped from asserting the Exoneration Rule because their conduct was intentional and egregious; (3) that the Exoneration Rule should not be applied where defense counsel willfully/intentionally breaches his fiduciary duties owed to his client; (4) the Appellees should not be able to rely upon the collateral estoppel effect of the federal habeas corpus proceeding finding no ineffective assistance of counsel because the Appellees failed to properly plead it in this case; (5) the Exoneration Doctrine and its reliance on the ineffective assistance of counsel standard is not applicable to his claims concerning fee disputes, intentional post-trial betrayal, violations of Supreme Court Rules, fraud, and concealment; (6) his legal malpractice claims should be allowed to proceed under the language of KRS 411.165, and that KRS 411.165 preempts the Exoneration Rule; and (7) the 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.

II. STANDARD OF REVIEW

A motion to dismiss for failure to state a claim upon which relief may be granted under CR 12.02(f)"admits as true the material facts of the complaint." Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010). Therefore, a motion under the rule should not be granted "unless it appears the pleading party would not be entitled to relief under any set of facts which could be proved...." Id. In assessing the motion, "the pleadings should be liberally construed in the light most favorable to the plaintiff, all allegations being taken as true." Id.

This standard of review eliminates any need by the trial court to make findings of fact because all the facts asserted in the complaint must be taken as true. The question is purely a matter of law. Stated another way, the court must ask if the facts alleged in the complaint can be proven, would the plaintiff be entitled to relief? Id. Since the matter is purely a question of law, a reviewing court owes no deference to a trial court’s determination. Accordingly, we review the issue de novo.

III. ANALYSIS

KRS 411.165, titled "liability of attorney for professional negligence," establishes a statutory basis for malpractice suits against attorneys:

(1) If any attorney employed to attend to professional business neglects to attend to the business, after being paid anything for his services, or attends to the business negligently, he shall be liable to the client for all damages and costs sustained by reason thereof.

(2) If any attorney employed to attend to any professional business receives his fee and does not attend to the business, he may be sued and made to refund the fee.

In this instance we directly address for the first time the issue of whether a criminal defendant who was convicted of a crime and whose conviction has not been overturned on appeal or otherwise set aside by way of post-conviction proceedings, may maintain a legal malpractice action against his trial attorney for negligence in the presentation of the criminal defense. The Court of Appeals has addressed the issue a number of times applying the Exoneration Rule. See Ray v. Stone, 952 S.W.2d 220 (Ky. App. 1997) (the client must establish his innocence before he can demonstrate that his attorney’s actions were the proximate cause of his conviction and resulting damages); Stephens v. Denison, 150 S.W.3d 80 (Ky. App. 2004) (exoneration is a pre-requisite for maintaining client’s legal malpractice action against his defense counsel); and the unpublished cases of Violett v. Milliken, 2006-CA-000303-MR, 2006 WL 3372523 (Ky. App. 2006) ("a criminal client suing counsel for legal negligence must first...