Court Opinion

ID: 9948939
Source: CourtListenerOpinion
Date Created: 2024-03-08 15:15:04.482488+00
Date Added: 2024-06-11T14:26:22.074646
License: Public Domain

RENDERED: MARCH 1, 2024; 10:00 A.M.
                        NOT TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals
                              NO. 2023-CA-0211-MR

OWEN NATION AND CAROL
NATION                                                                APPELLANTS

                 APPEAL FROM JEFFERSON CIRCUIT COURT
v.                HONORABLE ANNIE O’CONNELL, JUDGE
                         ACTION NO. 18-CI-006007

JOHN A.G. PADDOCK                                                        APPELLEE

                                     OPINION
                                    AFFIRMING

                                   ** ** ** ** **

BEFORE: THOMPSON, CHIEF JUDGE; EASTON AND GOODWINE,
JUDGES.

EASTON, JUDGE: The Appellants (the “Nations”) ask us to reverse the summary

judgment granted to their former attorney, the Appellee (“Paddock”). Because the

circuit court correctly concluded that the applicable one-year statute of limitations

barred the Nations’ claims, we affirm.
                   FACTUAL AND PROCEDURAL BACKGROUND

                 Paddock was an attorney for the Nations for over thirty years. Issues

arose about his services between 2010 and 2015. The Nations believed Paddock

had not handled various matters properly. There was a claim about insurance

proceeds paid with respect to a property the Nations were buying. When another

property was sold, Paddock retained a large sum, supposedly without explanation.

There was another case involving title to a property, which Paddock had settled,

supposedly without approval by the Nations. The Nations had also paid a fee of

$5,000 to Paddock for filing a patent on a gaming invention, but the Nations never

saw Paddock do anything on this, and they hired another attorney to complete the

work.

                 On July 31, 2015, new counsel (who still represents the Nations in this

matter) sent a letter to Paddock terminating his services and requesting return of

client files. The Nations filed a bar compliant on November 13, 2015. Part of the

purpose of the bar complaint was to obtain the Nations’ files. The bar complaint

would eventually be summarily dismissed without any findings on January 8,

2018.

                 As the bar complaint proceeded, the Nations filed a circuit court case1

for replevin. Replevin is an ancient common law action to obtain an order from a

1
    Jefferson Circuit Court Civil Action No. 16-CI-005528.

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court for the return of personal property. Replevin included the ability to seek

damages for any wrongful detention of the property. See Halcomb v. Phipps, 240

S.W. 363 (Ky. 1922). This common law action has been largely displaced by

codification of the right to obtain possession. See, e.g., KRS2 425.011 et seq.

(statutes governing writs of possession).

                The replevin case was filed on November 7, 2016. While these

overlapping matters proceeded, documents were provided by Paddock. A hearing

on a motion to dismiss the replevin action took place on June 8, 2017. Before that

hearing, on May 22, 2017, the Nations’ counsel received the documents sought,

and he acknowledged reviewing them on June 7, 2017, the day before the hearing.

The circuit court dismissed the replevin action by Order3 entered on June 20, 2017.

The Nations did not appeal that dismissal.

                This present case was not filed until October 15, 2018, more than one

year and almost four months later. The Complaint mirrors the allegations of

2
    Kentucky Revised Statutes.
3
  The circuit court concluded that it did not have subject matter jurisdiction of the replevin claim
because the simultaneous bar complaint proceeding addressed Paddock’s retention of the same
documents. The circuit court had subject matter jurisdiction over the replevin claim. A cited
case does not suggest otherwise. In Rose v. Winters, Yonkers & Rousselle, P.S.C., 391 S.W.3d
871 (Ky. 2012), the Kentucky Supreme Court simply held that a violation of an ethical rule by
itself cannot be the basis for a civil suit against an attorney, although such a violation may serve
as evidence in such a civil suit. This does not mean the circuit court could not order an attorney
to return property of a client, which does not require a proven violation of an ethical rule. Of
course, the circuit court certainly could have chosen to defer to the bar proceedings as a matter of
comity or for judicial economy before acting simultaneously. The reason for the dismissal of the
replevin action is not germane to this case, although the timing of the dismissal may be relevant.

                                                -3-
wrongdoing in the 2015 bar complaint as can be seen from comparison of the prior

bar complaint and Paragraphs 13-25 of the Complaint. This includes explanation

of the damages sustained (with amounts) because of Paddock’s alleged actions.

The circuit court entered summary judgment because the one-year statute of

limitations barred the Compliant. This appeal follows.

                            STANDARD OF REVIEW

              “The standard of review on appeal of a summary judgment is whether

the circuit judge correctly found that there were no issues as to any material fact

and that the moving party was entitled to a judgment as a matter of law.” Pearson

ex rel. Trent v. Nat’l Feeding Systems, Inc., 90 S.W.3d 46, 49 (Ky. 2002).

Summary judgment is only proper when “it would be impossible for the

respondent to produce evidence at the trial warranting a judgment in his favor.”

Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991).

In ruling on a motion for summary judgment, the court is required to construe the

record “in a light most favorable to the party opposing the motion . . . and all

doubts are to be resolved in his favor.” Id.

             As summary judgment involves only legal questions if there are no

genuine issues of material fact, an appellate court does not defer to the trial court’s

decision and will review the legal issue de novo. Lewis v. B & R Corp., 56 S.W.3d

432, 436 (Ky. App. 2001). In this case, there were no disputed questions of fact as

                                          -4-
to when certain events occurred, and these undisputed facts must be applied to the

legal question of the application of a statute of limitations.

                                          ANALYSIS

               The sole issue for this appeal is the application of the statute of

limitations.4 KRS 413.245 states in relevant part:

               Notwithstanding any other prescribed limitation of
               actions which might otherwise appear applicable, . . . a
               civil action, whether brought in tort or contract, arising
               out of any act or omission in rendering, or failing to
               render, professional services for others shall be brought
               within one (1) year from the date of the occurrence or
               from the date when the cause of action was, or
               reasonably should have been, discovered by the party
               injured.

We first see that, regardless of what the action against the attorney is called, this

one-year limitation period applies. For example, a claim that the attorney acted

fraudulently is within the one-year limitation period, not the five-year period for

4
  We decline to address at length the alternate argument advanced by Paddock of res judicata as
it is not necessary to affirm the circuit court. The bar complaint proceedings addressed violation
of ethical rules. The bar association could not adjudicate damages to be recovered by clients for
malpractice, which does not require violation of a specific ethical rule. In this case, the bar
association summarily dismissed the bar complaint without substantial explanation and made no
findings.

Res judicata is not as broad as Paddock suggests. See Kentucky Bar Association v. Greene, 386
S.W.3d 717 (Ky. 2012) (prior court judgment awarding attorney’s fee did not prevent
consideration of ethical violation for the fee charged). The more potentially meritorious
argument for res judicata was the failure to assert the malpractice claims in the replevin action,
although the replevin action could be considered a limited and specific action not intended to
address malpractice claims. See Yeoman v. Commonwealth, Health Policy Bd., 983 S.W.2d 459,
465 (Ky. 1998) (a previous suit may be deemed to have adjudicated every matter which could
have been brought in support of the cause of action).

                                               -5-
fraud. Abel v. Austin, 411 S.W.3d 728, 737-39 (Ky. 2013). See also Seiller

Waterman, LLC v. RLB Properties, Ltd., 610 S.W.3d 188, 202-05 (Ky. 2020).

             To ameliorate any harshness of the one-year limitation, the statute

provides two measurements for this period. It may be measured one year from the

occurrence or one year from the reasonable discovery of a cause of action against

the attorney. Occurrence and cause of action are synonymous. Under either

measurement, there is no question that the complained of acts by Paddock and the

Nations’ knowledge of damages flowing from those acts occurred well before a

year prior to the commencement of this suit.

             To reach this conclusion, we must determine when the Nations had a

cause of action to assert. The Nations argue they could not have earlier asserted

their claims because the amounts of their damages were not certain. Part of their

argument relies on Michels v. Sklavos, 869 S.W.2d 728 (Ky. 1994).

             The holding in Michels does not apply in this case. The court in

Michels recognized the rule for claims of malpractice by an attorney involving

litigation not yet completed – a claim which requires proving “a case within [a]

case.” Id. at 729. If the case is ongoing and thus the client may yet win, then any

claim of damages because of the malpractice of that case by the attorney is

speculative. No cause of action exists until the case is final. Id. at 731. This

specific rule was reaffirmed in a much more procedurally convoluted case also

                                         -6-
cited by the Nations: Doe v. Golden and Walters, PLLC, 173 S.W.3d 260 (Ky.

2005).

                 The transactions the Nations complain about here had been

completed by the time they filed the bar complaint in 2015. There was no

completion of a court case to await. Because Michels does not apply, the fact that

the bar complaint was not dismissed until January of 2018 is immaterial. As we

have previously explained, a bar complaint is to determine ethical violations. It is

not a civil action. The bar complaint could not have resolved any civil claims the

Nations had against Paddock.

                To have a cause of action requires only injuries resulting from a

wrongful act. Michels, supra, at 732. A cause of action accrues when the claimant

has an “irrevocable [and] non-speculative injury.” Id. at 730 (citation omitted). As

we will see, this does not mean the Nations had to know the precise amounts of

damages they could prove before their cause of action existed and the statute of

limitations period began to run.

                In lawsuits, injuries are measured in damages which may be awarded.

But damages are often unliquidated and must be proven as to amount. CR5 8.01(2)

prohibits the listing of specific amounts for unliquidated damages in a complaint.

The Nations complied with this rule in Paragraph 27 of their Complaint.

5
    Kentucky Rules of Civil Procedure.

                                           -7-
             Paddock relies upon Saalwaechter v. Carroll, 525 S.W.3d 100 (Ky.

App. 2017). Recognizing the rule in Michels about “irrevocable [and] non-

speculative injury[,]” this Court in Saalwaechter explained that such an injury has

occurred when a claimant can be certain that damages will flow from the attorney’s

acts. This is not a quantitative requirement. For a cause of action to ripen, the

damages do not have to translate into a specific dollar amount. Id. at 106. The

Kentucky Supreme Court has recently clarified and upheld the law on this subject

consistent with Saalwaechter. Wolfe v. Kimmel, 681 S.W.3d 7, 26 (Ky. 2023).

             The Nations insist that the circuit court should have applied equitable

principles to toll the statute of limitations. Paddock contends that this argument

was not preserved as it was not specifically presented to the circuit court. We have

repeatedly cautioned that litigants are not permitted to make arguments for the first

time to an appellate court. We do not allow appellants “to feed one can of worms

to the trial judge and another to the appellate court.” Kasey v. Beshear, 626

S.W.3d 204, 210 (Ky. App. 2021) (citations omitted).

             Considering the general equitable argument advanced, we note the

Nations reliance on Adams v. Ison, 249 S.W.2d 791 (Ky. 1952), and its progeny.

Indeed, a wrongdoer may take actions and make statements which may compel

consideration of equity in the tolling of a statute of limitations. But this is not such

a case.

                                          -8-
             “Equity follows the law.” Adamson v. Adamson, 635 S.W.3d 72, 81

n.8 (Ky. 2021). When a legal rule clearly governs the rights of the parties, equity

will not alter the application of that rule. The discovery option under KRS 413.245

allows for those situations where an attorney has prevented the client from

discovering the harm done.

             The Nations knew of Paddock’s actions and the damages flowing

from it by the time they filed the bar complaint in 2015. At the latest, the Nations

knew of the wrongful acts by Paddock and that damages were certain to flow from

those acts when the replevin case was dismissed after the production of the

requested documents. That occurred in June 2017. The filing of the second circuit

court suit happened well over a year later.

                                  CONCLUSION

             The applicable statute of limitations barred the claims which are the

subject of the Complaint in this case. The Jefferson Circuit Court properly granted

summary judgment and is AFFIRMED.

             ALL CONCUR.

                                         -9-
BRIEF FOR APPELLANTS:      BRIEF FOR APPELLEE:

C. Gilmore Dutton, III     Donald L. Cox
Shelbyville, Kentucky      William H. Mooney
                           Louisville, Kentucky

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