Brenda Osborne sued her lawyer, Steven Keeney, after Keeney allowed the limitations period to lapse on her personal injury claims that arose after an airplane crashed into her home. The Kentucky Supreme Court explained in Osborne v. Keeney, No. 2010-SC-397 (December 20, 2012), that the case-within-a-case approach is used in legal malpractice cases in Kentucky and how it should be applied.
A pilot, Quesenberry, experienced mechanical problems with his plane before taking off. But not long after take-off the engine lost power and the plane struck Osborne's home, slicing "through her chimney, inflict[ing] significant damage to the second story and set[ting] the house afire[.]" Osborne heard noise from the crash, ran outside to see her house afire; she was not struck by any crash debris and suffered no physical injury Osborne had some preexisting anxiety and depression problems, which, according to her treating doctor, were exacerbated by the destruction of her home and personal property. She received treatment for the the Court described as an "extended period of time after the crash[.]"
Osborne hired Keeney about 6 months after the crash, and he helped her settle a homeowner's insurance claim. But nearly two years after the crash Keeney tried to persuade Osborne against suing Quesenberry, perhaps because the claims were subject to a one-year limitation period that had lapsed. But Keeney filed suit for Osborne against Quesenberry, and it was dismissed as untimely. Keeney did not contest Osborne's case and was warned by a federal district judge about his bad-faith conduct. Keeney never told Osborne that her case had been dismissed.
Osborne sued Keeney for legal malpractice. A jury returned a verdict in Osborne's favor as follows: (1) $54,924.04 for loss of her personal property; (2) $500,000 for pain and suffering from the airplane crash; (3) $750,000 as punitive damages against Quesenberry; (4) $53,025.39 for legal fees paid to Keeney; (5) $250,000 for mental anguish resulting from Keeney's representation. And the jury awarded Osborne $3,500,000 in punitive damages against Keeney.
The Court explained that legal malpractice cases of this sort should use a case-within-a-case method. This requires the plaintiff to prove both the underlying claim that was lost on account of the malpractice; it allows the lawyer to assert all defenses that the defendant in the underlying case would have. The Court summarized as follows:
For an attorney to be found liable for legal malpractice, it must be shown
that the attorney violated the standard of care and that such violation was the
proximate cause of injury to the client, i.e., the client would have been
successful in the underlying claim but for the negligence of the attorney. The
client cannot be found successful on the underlying claim if the jury is not fully
instructed on the underlying claim. And it follows then that the attorney
cannot be found liable without fully litigating the underlying claim and properly
instructing the jury.
The Court then ruled that the trial court had committed reversible error in failing to instruct the jury that it had to find that Osborne would have prevailed on her underlying claim against Quesenberry in order to find for her on her legal malpractice claim against Keeney.
Chief Justice John D. Minton Jr. wrote the Court's opinion which on the case-within-a-case approach issue was unanimous.
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