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Bingham Greenebaum Doll, LLP v. Lawrence

Supreme Court of Kentucky

December 13, 2018



          COUNSEL FOR APPELLANT: Beverly Ruth Storm, Frank Kern Tremper, Arnzen, Storm & Turner, P.S.C.

          COUNSEL FOR APPELLEE: Meredith L. Lawrence.



         Under Kentucky law, an action seeking enforcement of a promissory note that is payable on a certain date in the future is generally not justiciable nor ripe for determination. In this case, the issue we must resolve is whether the Kenton Circuit Court erred in setting aside a default judgment previously granted to Bingham Greenbaum Doll, LLP and J. Richard Kiefer (collectively "Bingham") against Meredith Lawrence on its counterclaim to enforce a promissory note made by Lawrence in partial payment of attorney's fees owed by Lawrence to Bingham. Because Bingham's counterclaim was a compulsory counterclaim to Lawrence's action against Bingham for professional negligence and because Lawrence's complaint necessarily called into question the validity of the promissory note, Bingham's counterclaim seeking enforcement of the promissory note was justiciable notwithstanding that it was filed approximately 3V2 months prior to the promissory note's due date. We therefore hold that the trial court erred in setting aside the default judgment and that the Court of Appeals similarly erred in affirming that Order. Thus, this matter is remanded to the Kenton Circuit Court with directions to reinstate the default judgment in favor of Bingham.

         I. Background.

         In 2008, Lawrence retained Bingham to defend him against federal tax evasion charges. As Lawrence's 2012 trial date approached, he fell behind in his payments for legal fees owed, causing the parties to renegotiate their fee agreement. To secure the unpaid fee, in June 2012, Lawrence executed a promissory note evidencing his obligation to pay an amount not exceeding $650, 000, with the note bearing a maturity date of December 31, 2013.

         In July 2012, Lawrence was convicted and sentenced in federal court.[1]Thereafter, Lawrence decided he was dissatisfied with his counsel's representation and in August 2013 brought this action for professional negligence against Kiefer; Bingham; Robert Carran; and Taliaferro, Carran & Keys, PLLC.[2] In response, Bingham filed an answer, denying negligence, and a counterclaim, alleging Lawrence's indebtedness pursuant to the terms of the note. When Lawrence did not answer or otherwise respond to the counterclaim, Bingham moved for default judgment.

         In September 2014, after the note's date of maturity had passed, the trial court entered an order resolving all outstanding motions and dismissing Lawrence's lawsuit without prejudice. The court granted default judgment to Bingham on its counterclaim and awarded judgment against Lawrence in the amount of $472, 504.86, with interest and costs. The court also granted the motions of Carran and the Taliaferro firm for summary judgment and dismissed Lawrence's professional negligence claim as premature, since he had yet to obtain post-conviction relief from his criminal conviction as required under the so-called exoneration rule. See, e.g., Stephens v. Denison, 150 S.W.3d 80, 83-84 (Ky. App. 2004) (holding that criminal defendant may not maintain a cause of action against counsel for legal malpractice absent exoneration from his conviction and sentence through postconviction relief).[3]

         Thereafter, Lawrence filed a plethora of post-judgment motions, including a motion for CR 60.02 relief to have the default judgment set aside as void on the basis that the note had not yet matured when Bingham filed its counterclaim. In January 2016, the Kenton Circuit Court (under a new presiding judge) granted Lawrence's CR 60.02 motion, finding that since the note had not yet matured when Bingham filed its counterclaim, no justiciable claim existed. Without a justiciable claim, the trial court held that it never had subject matter jurisdiction to rule on the counterclaim, thus rendering the default judgment void.

         On appeal, the Court of Appeals affirmed, concluding that while the trial court had general jurisdiction over claims such as those set forth in Bingham's counterclaim, the particular counterclaim at issue was not ripe when filed, and therefore not justiciable, because Lawrence still had "time on the clock" in which to pay the note. Without a justiciable claim, the Court of Appeals held that the trial court lacked subject matter jurisdiction, thereby rendering the default judgment void. This Court granted discretionary review, and we hereby reverse and remand.

         II. Standard of Review.

         While the Court of Appeals correctly noted that the standard of review for a CR 60.02 motion is generally abuse of discretion, since the only determination made by the Court of Appeals was regarding the existence of subject matter jurisdiction, a question of law, we review the entire proceeding de novo. See S. Fin. Life Ins. Co. v. Combs, 413 S.W.3d 921, 926 (Ky. 2013); see also Grange Mut. Ins. Co. v. Trude, 151 S.W.3d 803, 810 (Ky. 2004) (whether the court has acted outside its jurisdiction is a question of law, and the standard of review on appeal is therefore de novo).

         III. ...

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