REVIEW FROM COURT OF APPEALS CASE NO. 2016-CA-000102-MR
KENTON CIRCUIT COURT NO. 13-CI-01620.
COUNSEL FOR APPELLANT: Beverly Ruth Storm, Frank Kern
Tremper, Arnzen, Storm & Turner, P.S.C.
COUNSEL FOR APPELLEE: Meredith L. Lawrence.
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.
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.
2012, Lawrence was convicted and sentenced in federal
court.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. 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.
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).
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.
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.
Standard of Review.
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).