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Lawrence v. Bingham Greenebaum Doll, L.L.P.

Supreme Court of Kentucky

August 29, 2019


          CORRECTED: DECEMBER 19, 2019



          COUNSEL FOR APPELLANT: CUT-N-SHOOT, LLC. Brandy Lawrence Katy Lawrence, Esq.

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



         We granted transfer of this ongoing dispute between Meredith L. Lawrence and the Bingham Greenebaum Doll law firm to address Lawrence's various claims of error in trial court proceedings resulting in the foreclosure and judicial sale of some of Lawrence's property. Although we reject most of Lawrence's claims of error, we find that the trial court's grant of summary judgment in favor of Bingham was erroneous. We vacate the summary judgment and remand this case to the trial court for further proceedings consistent with this opinion.

         I. BACKGROUND.[1]

         We recently dealt with the ongoing litigation between these parties.[2] In 2008, Lawrence retained Bingham attorney J. Richard Kiefer to defend him against federal tax-evasion charges. At some point in the representation, the parties agreed to revise their original fee agreement because Lawrence had fallen behind in his payments. The new agreement stated that Lawrence would pay a flat fee of no less than $450, 000 the principal not to exceed $650, 000. Lawrence agreed to secure his payment with a mortgage on real estate he owned, and he signed a promissory note evidencing his debt.

         Lawrence was convicted of three counts of filing false tax returns. He then sued Kiefer and Bingham, among others, in Kenton Circuit Court for legal malpractice. Because Lawrence had not paid for a portion of the legal services provided to him, Bingham filed a counterclaim to recover its fee; specifically, Bingham sued for enforcement of the promissory note. The Kenton Circuit Court dismissed Lawrence's malpractice claim and granted default judgment to Bingham on its counterclaim. We upheld this judgment.[3]

         Simultaneously occurring with the Kenton Circuit Court case, Bingham sued Lawrence in Gallatin Circuit Court to foreclose on the property Lawrence agreed to mortgage as security on his debt for Bingham's services. Gallatin County was the chosen venue for this action because the mortgaged real estate was situated in that county.[4] Lawrence counterclaimed for legal malpractice.

         Also occurring simultaneously with the above two cases was a collateral attack on his conviction that Lawrence filed in federal court based, in part, on a claim of ineffective assistance of counsel. The federal court ruled against Lawrence on his ineffective-assistance-of-counsel claim and issued its final order before the resolution of the Kenton and Gallatin cases.

         In the Gallatin Circuit Court foreclosure action, Bingham moved for summary judgment, which the trial court granted. Then, upon Bingham's motion, the trial court entered an order of sale. After several further procedural steps, the property was sold, and the sale was confirmed by the trial court on May 30, 2018.

         Lawrence appealed the trial court's judgment; the appeal eventually transferred to this court.

         II. ANALYSIS.

         Lawrence attacks the trial court's grant of summary judgment in favor of Bingham that enforced the mortgage on his Gallatin County property, and he attacks the validity of the judicial sale.

         The thrust of Lawrence's appeal can be summarized into two main arguments. First, Lawrence attacks the trial court's exercise of jurisdiction over this case. Second, Lawrence argues that the trial court erred when it upheld the enforceability of the mortgage.

          Because this case arrives here on the trial court's grant of summary judgment in favor of Kiefer and Bingham, we review the trial court's grant de novo.[5] A summary judgment should only be granted when there "is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law."[6]

         As a preliminary matter, throughout Lawrence's brief he alleges that Kiefer engaged in the unauthorized practice of law while representing him in the federal criminal prosecution. His argument is without merit.

         Kiefer was admitted to practice law in Indiana and sought and obtained pro hac vice admission to represent Lawrence in the U.S. District Court for the Eastern District of Kentucky. Lawrence argues, however, that regardless of those facts, Kiefer represented a Kentuckian and appeared in federal court within the geographical boundaries of the Commonwealth of Kentucky, so Kiefer should have sought admission to the Kentucky bar. Essentially, Lawrence is arguing that an attorney, duly admitted to the bar in another state and the federal bar in which he is practicing, cannot practice law in the state where that federal court is located without admission to the bar of that state, as well. We reject that contention.

         We find persuasive the Maryland Court of Appeals' articulation of the rules applicable in this situation.[7] In the conventional factual scenario involving an attorney who is not admitted in Kentucky and who maintains a principal office for the practice of law in the jurisdiction where that attorney is admitted, there is no tension between the Kentucky Rules of Professional Conduct and admission to the bar of the federal court in Kentucky.[8] That federal recognition allows the unadmitted attorney to render professional services on behalf of the client in the federal court in Kentucky.[9] It is only when the attorney establishes a principal office for the practice of law in Kentucky, where he is not admitted to practice, that creates tension between that attorney's federal bar admission and the Kentucky Rules of Professional Conduct.[10] Here, there is no evidence that Kiefer's principal office is in Kentucky; in fact, his principal office appears to be in Indiana.

         Moreover, we find persuasive the District of Connecticut bankruptcy court's articulation of the rule that an attorney who is not licensed in Kentucky but who is authorized to practice before a federal court may, notwithstanding the Kentucky Rules of Professional Conduct, practice law in Kentucky and even maintain an office here so long as the services rendered in Kentucky are limited to those reasonably necessary and incident to the specific matter pending in the federal court.[11] There is no evidence here that Kiefer's services to Lawrence exceeded the bounds of this rule. We decline to hold that Kiefer was engaged in the unauthorized practice of law when representing Lawrence on his federal tax-evasion charges after having been duly admitted in Indiana and the Eastern District of Kentucky pro hac vice and having his principal office in Indiana.

         A. Lawrence's arguments challenging the Gallatin Circuit Court's jurisdiction over this case are meritless.

         Lawrence argues that the Gallatin Circuit Court does not have jurisdiction over this case. All these jurisdictional arguments are meritless, however.

         First, Lawrence argues that the doctrine of claim preclusion prevents the Gallatin Circuit Court from hearing Bingham's case. Specifically, Lawrence argues Bingham's claim for enforceability of the promissory note, which has been adjudicated in favor of Bingham by default judgment, precludes Bingham from asserting a claim for enforceability of the mortgage.

         "For further litigation to be barred by claim preclusion, three elements must be present: (1) identity of the parties, (2) identity of the causes of action, and (3) resolution on the merits."[12] Lawrence's argument fails for lack of identity of the causes of action.

         "[W]ell-settled . . . case law permits lenders to bring separate enforcement actions on [a] mortgage and [a] note."[13] "A note and a mortgage given to secure it are separate instruments, executed for different purposes, and an action for foreclosure of the mortgage and upon the note are regarded and treated, in practice as separate and distinct causes of action, although both may be pursued in a foreclosure suit."[14] "Even when a promissory note is incorporated into the mortgage, it is still independent of the mortgage and is a separate enforceable contract between the parties, and logically, even when a mortgage is incorporated into a promissory note, the note remains independent of the mortgage and is a separate, enforceable contract between the parties."[15] In sum, a "mortgagee is allowed to choose whether to proceed on the note or guaranty or to foreclose upon the mortgage. These remedies may be pursued consecutively or concurrently.'"[16]

         This rationale also works to reject Lawrence's argument that Bingham's claims were impermissibly split. Additionally, "the rule against splitting causes of action is an equitable rule, and it is subject to a number of exceptions."[17]One of the exceptions to the general rule against claim splitting identified by the Restatement is when the claimant "was unable ... to seek a certain remedy or form of relief in the first action because of . . . restrictions on [the court's] authority to entertain multiple . . . demands for multiple remedies or forms of relief in a single action[.]"[18]

         When Lawrence filed his claim for legal malpractice in Kenton Circuit Court, Bingham most likely assumed it needed to file a counterclaim for enforcement of the promissory note, which prompted it to file that counterclaim. Bingham then became faced with KRS 452.400, which states, "Actions must be brought in the county in which the subject of the action, or some part thereof, is situated[] [f]or the sale of real property under a mortgage[.]" So Bingham brought a separate foreclosure action in Gallatin Circuit Court, which is located in the county in which Lawrence's property lies, in anticipation that Lawrence would allege improper venue in Kenton County if Bingham would have attempted to proceed with foreclosure on the property in Kenton County. We decline to apply the "equitable rule" against claim splitting in these circumstances.

         Next, Lawrence alleges that he was improperly served. Unfortunately, we have before us on appeal an incomplete record that has not been properly cited to by either party. Lawrence was in prison at the time he was served. Bingham alleges that service was completed, through a warning order attorney, by certified mail on May 21, 2014. The record does confirm that Lawrence responded with a filed Answer and Counterclaim to Bingham's complaint and did not do so by limited and special appearance:

An appearance to an action is the first thing that a defendant does in court, and the appearances are of two kinds and are defined as special and general. The special is one where the defendant appears for the purpose of testing the sufficiency of the summons to give the court jurisdiction of his person, and the general appearance is where the defendant by some act of his is considered to submit his person to the jurisdiction of the court. Where the court has jurisdiction of the subject-matter of the action, a general appearance by the defendant waives all defects in the process or in the service of the process, or even the service of process at all. A special appearance made for the purpose of objecting to the jurisdiction of the court over the person on account of defective process or defective service of the process does not have the effect of giving the court jurisdiction over the person. Although it has sometimes been held that it is necessary for one who makes a special appearance, if he would prevent his appearance from being considered a general one, that he should expressly state that his appearance is solely for the purpose of objecting to the jurisdiction; but the better rule seems to be that in courts of record the nature of the act of the defendant should determine whether the appearance is special or general. If the motions and pleadings of the defendant relate alone to the testing of the jurisdiction of the court over him, his appearance can only be considered to be special and not general.[19]

         We cannot read Lawrence's Answer and Counterclaim to indicate that he protested service. In fact, nowhere in the pleading does Lawrence specifically object to service; instead, Lawrence responds to the merits of Bingham's complaint. Additionally, Lawrence specifically stated in his pleading that he "does not object to the Gallatin Circuit Court's jurisdiction over this matter." Simply put, Lawrence's "pleadings [do not] relate alone to the testing of the jurisdiction of the court over him," and he therefore waived any allegation of improper service.

         Lawrence alleges that the trial court ordered, on July 7, Bingham to serve Lawrence personally. Our review of the record brought to us from below reveals no evidence of such an order.[20] The "[a]ppellant has a responsibility to present a 'complete record' before the Court on appeal."[21] An "[a]ppellant may not raise allegations of errors on appeal 'based entirely on a silent record.'"[22] So we decline to entertain Lawrence's argument in this regard.

         B. The trial court erroneously granted Bingham ...

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