REVIEW FROM COURT OF APPEALS NO. 2013-CA-002074-MR HARDIN
CIRCUIT COURT NO. 13-CI-00166 .
COUNSEL FOR APPELLANT: Peter Lucas Ostermiller.
COUNSEL FOR APPELLEE: Charles E. Theiler II Ashby Angell.
law firm Hughes & Coleman was hired by Travis Underwood
after he was injured in a car crash. Underwood eventually
became dissatisfied with the firm and fired them. Shortly
after discharging Hughes & Coleman and hiring another
attorney, Underwood agreed to a final settlement of his
claims. This appeal asks whether Hughes & Coleman is
entitled to be compensated for their services rendered before
being fired. Our precedent entitles a discharged lawyer to
receive, on a quantum meruit basis, a portion of a
contingency fee on a former client's recovery-so long as
the termination was not "for cause." Because Hughes
8s Coleman's firing was not for cause under this rule,
the firm is entitled to quantum meruit compensation.
October 1, 2012, Travis Underwood was injured when a
commercial truck crashed into the vehicle he was driving. His
injuries required hospitalization and other medical
treatment, and forced him to miss about five weeks of work.
The truck driver was apparently (at least
mostly) at fault.
October 9, Underwood received a so-called Personal Injury
Protection (PIP), or no-fault,  payment of $200 from his insurer,
Progressive, to replace one week's lost wages in the
amount prescribed by KRS 304.39-130. On October 18,
Progressive disbursed another $990.06 of Underwood's PIP
benefits to pay two medical bills.
October 23, Underwood hired the law firm Hughes 8b Coleman to
represent him in his motor-vehicle personal-injury matter.
Their agreement provided for Hughes & Coleman to be paid
on a contingency-fee basis and included, among other terms,
that the firm would "assist the client in submitting
medical bills for payment to any responsible insurance
carrier or agency." Attorney Judy Brown handled most of
the pre-litigation work in the case, while another attorney,
Brent Travelsted,  primarily worked the case once it entered
active litigation in January 2013. The firm's non-lawyer
personnel also provided substantial assistance under the
attorneys' supervision and direction. The firm
maintained, as the trial court put it, "a highly
meticulous database ... [that] documented] every event (e.g.
letter, telephone call, settlement offer)" related to
its representation of Underwood.
days after Underwood retained its services, Hughes 8b Coleman
mailed Progressive a letter advising the insurer of
Underwood's PIP claim and requesting, under KRS
304.39-241, that it reserve all no-fault benefits to
"pay bills or lost wages only as directed by Hughes 6b
Coleman." Through further communications with
Progressive, the firm learned that Underwood had a total of
$20, 000 in PIP coverage-$10, 000 in basic reparation
benefits (BRB) plus $10, 000 in added reparation benefits
(ARB). See KRS 304.39-020(1), (2); KRS 304.39-140. The firm
also learned that Underwood had not provided to Progressive
any physician statements or wage-verification documents
required to verify his entitlement to further lost-wage
payments. See KRS 304.39-280. Despite repeated
requests from Hughes & Coleman, Underwood never provided
November 6, Hughes 6b Coleman mailed Progressive another
letter, this time asking it to release Underwood's
remaining no-fault benefits of $18, 809.94 by check payable
to Underwood and the firm. To support the. request and show
that Underwood's covered losses would easily exceed that
amount, Hughes 8b Coleman attached a bill totaling $71,
812.40 from Underwood's stay at the University of
Louisville Hospital. The firm received the check on November
30. That same day, they mailed Underwood a "Power of
Attorney" document, which he signed a couple days later.
This limited power of attorney authorized Hughes &
Coleman "to endorse [Underwood's] name to a
settlement draft for the purpose of depositing [the
outstanding PIP] funds in [the firm's] escrow account
pending final distribution."
December 7, despite Underwood's not providing any
verifying documentation, Hughes 85 Coleman issued him a check
for $973 from the escrowed funds for lost wages. This was
calculated by applying the $200~per-week statutory rate to
the four weeks and three days that he had not worked or been
already compensated for. Later, Hughes & Coleman cut another
check from the escrowed funds for $3, 492.88-a negotiated
full-satisfaction of the University of Louisville Hospital
bill. See KRS 304.39-245. This left $14, 344.06
remaining in the escrow account.
January 2013, Hughes & Coleman decided that the claim
needed to enter litigation, and Travelsted took over primary
control of the case. On January 23, Underwood authorized
Travelsted's filing suit on his behalf. Travelsted then
began negotiating a settlement with the tortfeasor's
insurer, and by February, their back and forth had culminated
in the insurer offering $145, 000, which Underwood rejected.
Hughes 85 Coleman's case-management notes show that
Travelsted had valued the case at $200, 000 or more and
recommended against settling for less than that amount.
Underwood's (and his mother's) relationship with his
counsel deteriorated. On March 13, Underwood fired Hughes
& Coleman. In her email discharging the firm and
requesting the case file and remaining escrow balance, his
One of the reasons that we are letting you go is, the escrow
money could have been given to Travis when he heeded the
money but we were not told that, we were told that you all
had to take it and put it in escrow. We have found out that