Opinion ID: 2977328
Heading Depth: 4
Heading Rank: 2

Heading: Instructions regarding burden of proof

Text: Pivnick argues that the district court erred in instructing the jury that he “ha[d] the burden to show, by a preponderance of the evidence, that any one aspect of the sale by [FTC] was not commercially reasonable . . . .” According to Pivnick, he would not have had the burden of proving commercial unreasonableness in the underlying case against FTC, and therefore should not have been required to prove the same in the legal malpractice case against WGM. Under Kentucky law, a plaintiff in a legal malpractice case has the burden of proving (1) that there was an employment relationship with the defendant/attorney; (2) that the attorney neglected his duty to exercise the ordinary care of a reasonably competent attorney acting in the same or similar circumstances; and (3) that the attorney’s negligence was the proximate cause of damage to the client. Marrs v. Kelly, 95 S.W.3d 856, 860 (Ky. 2003) (citation and internal quotation marks omitted). The Kentucky Supreme Court noted that a legal malpractice case is essentially a “suit within a suit.” Id. (citation and internal quotation marks omitted). “To prove that the negligence of the attorney caused the plaintiff harm, the plaintiff must show that he/she would have fared better in the underlying claim; that is, but for the attorney’s negligence, the plaintiff would have been more likely successful.” Id. In the present case, WGM admitted that Pivnick had established the first and second elements of his malpractice claim. The crucial question is whether Pivnick was able to show a likelihood of success in the underlying case against FTC. No. 07-4304 Pivnick v. White, Getgey & Meyer Co. et al. Page 9 Pivnick argues that FTC, as the secured creditor in the underlying suit, would have had the burden of proving that the notice it gave and the eventual sale were commercially reasonable. He thus contends that the district court erred in instructing the jury otherwise. In so arguing, Pivnick relies on language from Bank of Josephine v. Conn, 599 S.W.2d 773 (Ky. Ct. App. 1980), and Bailey v. Navistar Financial Corp., 709 S.W.2d 841 (Ky. Ct. App. 1986). Neither of those cases, however, fits the situation here. In both cases, the creditor was the plaintiff bringing suit against the debtor for a deficiency judgment. As plaintiffs, they bore the burden “to prove that the notice was sent in a commercially reasonable manner.” Bailey, 709 S.W.2d at 843. The Bank of Josephine court explicitly limited its holding to the situation in which the creditor was the plaintiff, and declined to reach the question of who would bear the burden of proof if the debtor brought suit to recover damages from the creditor. 599 S.W.2d at 774. The court observed that “[h]ad the [debtor] filed an action against the [creditor] under KRS 355.9-506, it is arguable that the burden of proving commercial reasonableness—or in actuality, commercial unreasonableness—should be borne by the [debtor].” Id. Having said this, the court then expressly declined to reach that question. Id. We are aware of no Kentucky case that squarely addresses the question of which party should bear the burden of proving commercial reasonableness or unreasonableness when the debtor sues the creditor for consequential damages. But courts in other jurisdictions that have addressed this issue have concluded that where a debtor is suing for damages for failure of the creditor to comply with UCC requirements, the debtor bears the burden of proving all elements of the debtor’s case. See, e.g., Adam State Bank v. Navistar Fin. Corp., 426 N.W.2d 525, 527 (Neb. 1988) (“[W]here . . . a party is proceeding against the secured party to recover its loss caused by the secured party’s failure to dispose of collateral in a commercially reasonable manner under the Uniform Commercial Code, the burden of proof as to commercial reasonableness is on the party seeking to recover such a loss.”); First Nat’l Bank & Trust Co. of Enid v. Holston, 559 P.2d 440, 444 (Okla. 1976) (“[W]here the debtor proceeds against the secured party to recover his loss caused by a failure by the secured party to proceed pursuant to the UCC, the debtor carries the burden of proof.”). A treatise on the Kentucky Uniform Commercial Code comes to the same conclusion. See D. Leibson & R. Nowaka, The Uniform Commercial Code of Kentucky 943 No. 07-4304 Pivnick v. White, Getgey & Meyer Co. et al. Page 10 (2d ed. 1992) (“In Kentucky, . . . [i]n a nondeficiency situation where the debtor is seeking damages, the burden should be on it to prove that [the] creditor did not proceed in accordance with the article 9 default provisions.”). Based on the above authorities, we believe that the Kentucky Supreme Court would reach the same result. We therefore hold that the district court properly instructed the jury that Pivnick bore the burden of proving that either the notice or the sale was commercially unreasonable.