This past week, Adams Stepner attorneys secured two important victories in the Kentucky Supreme Court. Both opinions have been designated for publication and will therefore set binding precedent impacting countless cases across the Commonwealth.
First, Partners Jeffrey Mando and Jennifer Langen won a significant malpractice case for criminal defense attorneys across the state. In Lawrence, et al., v. Bingham, Greenebaum, Doll, LLP, et al., 2017-SC-000531-DG, the Court clarified its precedent on the elements necessary for a criminal defense client to establish a malpractice claim against his/her defense attorney after the client has been convicted. The Kentucky Supreme Court upheld the lower court’s dismissal of a Complaint alleging professional negligence against a criminal defense firm. The Court’s unanimous opinion, authored by Justice Venters and released on December 13, 2018, the Court unanimously adopted the Exoneration Rule that had previously been cited with approval in two published COA rulings (Ray v. Stone, 952 S.W.2d 220 (Ky. App. 1997); Stephens v. Denison, 150 S.W.3d 80 (Ky. App. 2004)). Based on this opinion, Kentucky has now officially joined a majority of states in holding that a criminal defendant cannot maintain a malpractice claim against his or her defense attorney unless and until the conviction is set aside on appeal or via post- conviction relief.
Additionally, Partner Gerry Dusing helped secure a judgment of over $100 million in damages in Yung, et al., v. Grant Thornton, LLP, 2016-SC-000571-DG and 2017-SC-000151-DG. This historic Kentucky Supreme Court decision set a standard in Kentucky to address when a trial court’s award of punitive damages passes the threshold of “constitutionally excessive.” The Kentucky Supreme Court relied on the US Supreme Court’s three factor test, noting that “an award of punitive damages is based on an application of law rather than a decision-maker’s caprice.” Grant-Thornton’s Cincinnati office had marketed a tax shelter strategy to William Yung designed to transfer millions of dollars from the Cayman Islands, without paying taxes – all in violation of established tax laws. The Supreme Court described Grant Thornton’s conduct as “egregious and highly reprehensible” and affirmed that in such circumstances a Trial Court has considerable flexibility in determining an appropriate award of punitive damages. This opinion additionally lays out the legal standard for liability when a client acts in reliance on a professional opinion which uses the “more likely than not” standard, and provides clarifying guidance on technicalities of the partial wavier of the attorney-client privilege.
The opinions are available for view here (http://apps.courts.ky.gov/Supreme/Minutes/MNT122018.pdf)