Plane Error

A four-year suspension has been ordered by the Kentucky Supreme Court

In October 2002, a small plane flew into Brenda Osborne’s house in Middlesboro, Kentucky, while she was watching TV in her living room. She hired a lawyer to pursue her insurance claims with State Farm. Six months later, after her original lawyer had not collected any insurance proceeds for her, she terminated initial counsel and hired Keeney. Notably, prior to commencing representation, Keeney instructed Osborne on the proper way to terminate her first attorney.

Keeney told Osborne that he required a $5,000 retainer, and the contract for services entitled Keeney to 20% of recovery, plus a $75.00 an hour “reduced” fee, given that he would normally be entitled to 30% of total recovery. Osborne did not receive a copy of the contract until she initiated a civil suit several years later. The contract produced by Keeney was eight pages long with two pages numbered six—one with Osborne’s ex-husband’s name and one without it— whereas Osborne claims the contract she signed was only three pages long and included a $50,000 cap on Keeney’s portion of recovery. The eight-page contract also included indemnification language and a provision stating that representation did not include the filing of a civil suit.

State Farm never questioned coverage. Only a few days after Keeney’s representation started. State Farm gave Keeney and Osborne two checks totaling $151,390.52. By August 2003, State Farm had paid over $230,000, with Keeney taking 20% of the recovery. During this time, Osborne stated that her intention from the outset was to file a civil suit against the pilot of the airplane and his company. The one-year statute of limitations expired in October 2003, with Keeney never filing the case. Keeney claimed that he was worried about Osborne’s mental health during this time and maintains that he met with her monthly even though no records of these meetings, nor proof that he ever gave her the original contract, exists. Keeney was unresponsive to Osborne’s repeated attempts to contact him by phone.

In June 2004, Keeney received another check from State Farm for $11,076.11, payable to Keeney, Osborne, and Osborne’s ex-husband. The check was dated June 7, 2004. In July 2004, Keeney endorsed the check for all three parties—which both Osborne and Osborne’s ex-husband claim they did not give Keeney permission to do—and deposited it into his personal account that had been overdrawn for twelve days. Finally, in August 2004, Keeney sent Osborne $2,920.88 from the above check, and claimed that Osborne owed him an additional $5,780.00 for his $75 hourly fee working on the case. Keeney did not provide an accounting for how he calculated that total. Further, Osborne did not know about the actual $ 11,076.11 check until discovery during the civil malpractice case.

During the fall of 2004, Keeney and Osborne finally discussed the possibility of filing a civil suit against the pilot and his company. Keeney strongly discouraged filing, because he believed they would at most receive $50,000, and an expert would “eat up” $30,000. Conversely, the aviation expert at the civil malpractice trial opined that “[i]f it had been filed on time it was definitely a case of punitive damages and it is the strongest case of punitive damages I’ve ever seen in an aviation case.” Osborne later stated that she “was just astonished because [a lawsuit] had been the goal from the beginning and I was willing to pay him some of the money from State Farm because he told me I could get some of the difference and more from the airline insurance.” Additionally, Keeney never informed Osborne that the statute of limitations had passed.

Around this time, Keeney claimed that Osborne terminated their relationship, however, nothing exists in Keeney’s records. State Farm’s records or Osborne’s records that would indicate this. In fact, exactly two years after the incident, Keeney filed a civil claim on Osborne’s behalf in Bell Circuit Court and attempted to circumvent the statute of limitations by arguing that Osborne was of “unsound mind” after the accident, and therefore, the statute of limitations should have been tolled. The case was removed to federal court. At the later civil malpractice trial, defense counsel for the pilot testified that had it not been for the statute of limitations, he would have recommended settlement within policy limits once limited discovery had taken place as to damages.

However, instead of pursuing a settlement, Keeney failed to take action on Osborne’s case…

Keeney never formally withdrew from the case and in fact represented Osborne at her deposition. Defense counsel filed a summary judgment motion based on a statute of limitations defense in October 2005. In November 2005, after receiving no response from Keeney, the federal court granted summary judgment, dismissed Osborne’s case, and issued sanctions in the amount of $1,100. Not until January 2006 did Osborne discover that her claim had been dismissed and sanctions issued against her. To add insult to injury, Osborne’s doctor let her know of the dismissal, not Keeney.

A civil malpractice suit and bar complaint followed.

The court

the facts of this case establish a litany of misconduct by Keeney during his representation of Osborne. These acts of misconduct were detrimental to Osborne’s case and adversely impacted her health and welfare. Further, several aggravating factors exist in this case. First, Keeney has a history of prior discipline. In 1993, he was suspended 59 days for failing to return an unearned fee to a client and for failure to exercise diligence and promptness in the representation of a client. In 1994, Keeney was suspended 60 days for failing to keep a client reasonably informed about the status of a matter, failing to comply with reasonable requests for information, as well as failing to act with reasonable diligence and promptness in representing a client.

A dissent would adopt the proposed two-year suspension proposed by the Board of Governors.

The Court of Appeals decision in the legal malpractice case is linked here.

The Kentucky Supreme Court opinion remanding the malpractice matter may be found here.

the omission of the instruction as to the underlying negligence action against [pilot] Quesenberry certainly made it easier to find Keeney liable to Osborne, as one less finding was required. The failure properly to instruct the jury on the underlying case, however, had the effect of allowing the jury to find Keeney liable without the necessary element of causation. We cannot say that the error in this case was harmless.

(Mike Frisch)