Kentucky Court Report - SCOKY & COAKY

Rule 11 sanctions not pend time for appeal and appellate review on imposition of thereof per "abuse of discretion": HINES V. BARNETT BANK OF TAMPA, NA (COA 3/28/2008)

HINES V. BARNETT BANK OF TAMPA, NA
CIVIL PROCEDURE:  RULE 11; new standard of review on imposition of sanctions relying on abuse of discretion
2006-CA-000216
PUBLISHED: DISMISSING IN PART AND AFFIRMING IN PART
PANEL: ACREE PRESIDING; CLAYTON, WINE CONCUR
JEFFERSON COUNTY
DATE RENDERED: 3/28/2008

This appeal follows on a failed intervention in which the time for appealing had expired and the attorney and litigants were hit with Rule 11 sanctions for the attempted intervention.

A motion for sanctions under Rule 11 was collateral to the merits of the case and does not extend or toll the time for filing an appeal of a final judgment.  In reviewing the facts of this case, the COA believed that where sanctions have been denied, then appellate review is limited to a determination of whether the trial court abused its discretion.

A trial court should not impose sanctions without a hearing; this means "opportunity to be heard.”  Since a trial court ‘would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence,’ the COA adopted the unitary abuse-of-discretion standard for review of all aspects of the imposition of Rule 11 sanctions by a trial court.

If a litigant could purge his violation of Rule 11 merely by taking a dismissal he would lose all incentive to "stop think and investigate more carefully before serving and filing papers.”

As the Rule 11 violation is complete when the paper is filed ”Hines ’ withdrawal from representation “does not expunge the violation.”

By Michael Stevens

Judicial disqualification learned after the case: KESSLER HOMES, IC. V. PETZOLD (COA 1/18/2008)

KESSLER HOMES, IC. V. PETZOLD
JUDGES:  Disqualification
2006-CA-001127
PUBLISHED: VACATING AND REMANDING
PANEL: LAMBERT PRESIDING; DIXON, ROSENBLUM CONCUR
COUNTY: FAYETTE
DATE RENDERED: 01/18/2008

This action began when Kessler Homes sued the Petzolds for the outstanding balance on a house construction contract. The Petzolds denied liability and counter claimed, seeking compensatory damages for substandard workmanship. The circuit court conducted a bench trial on the parties' claims, ruling nearly uniformly in favor of the Petzolds in which the judge awarded the Petzolds, the customers, over $30,000.00 in compensatory damages and over $100,000.00 in litigation costs.

Following the entry of judgment, Kessler Homes learned that the Petzolds's daughter was the trial judge's personal tax accountant, and during the pendency of the litigation, also served as treasurer of the judge's reelection campaign. Kessler then petitioned to vacate the judgment on the ground that the trial judge had a conflict of interest in this case.

A judge is disqualified from presiding over a case “whenever the judge's impartiality might reasonably be questioned."  Recusal is mandatory when a judge's impartiality might reasonably be questioned.  Neither the court nor counsel dispute that had the trial judge's relationship to the Petzolds come to light prior to the entry of judgment, the trial judge should have, and would have, recused herself to avoid any appearance of impartiality.

The trial judge's ignorance of his conflict of interest during the pendency of the litigation was irrelevant because the legal standard is whether “a reasonable person, knowing all the circumstances, would expect that the judge would have actual knowledge.”

Where a judge lacks actual knowledge of facts indicating an appearance of partiality during litigation, but gains it postjudgment in circumstances in which a reasonable observer would have expected the judge to have been aware of the relationship, he must “take the steps necessary to maintain public confidence in the impartiality of the judiciary” by disqualifying himself and vacating his judgment. Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 860-61, 108 S.Ct. 2194, 2203, 100 L.Ed.2d 855 (1988).

The overriding policy concern here is not judicial veracity but rather public confidence in the impartiality of the judicial system. The typical, objective observer might well find it somewhat implausible that a judge running for reelection would be unaware that her campaign treasurer's parents were litigants in her court. Moreover, because this case was not tried by jury, but was rather conducted as a bench trial in which virtually all claims were resolved in the Petzolds's favor, including the award of litigation costs trebling the compensatory damages award, the same observer might well question the judge's impartiality.

While the COA did NOT find actual partiality, it did find there can be no question that the rule against appearance of impartiality has been violated and held that the extraordinary remedy of vacating the judgment is also appropriate here.  The verdict was vacated and remanded with directions to the trial court that the trial judge recuse and a new trial be granted.

Michael Stevens

CLIENT PERJURY AND COUNSEL'S DUTIES: BROWN V. COMMONWEALTH (SC 6/21/2007)

BROWN V. COMMONWEALTH
ETHICS: RULE 3.3 AND CLIENT'S INTENT TO COMMIT PERJURY AT TRIAL; AND RULE 1.63 DUTY OF CONFIDENTIALITY
2005-SC-000078-DG.pdf
PUBLISHED: REVERSING AND REMANDING
MAJORITY OP BY NOBLE; CUNNINGHAM CONCURS BY SEP. OP WITH LAMBERT, MINTON JOIN; SCOTT DISSENTS BY SEP. OP. WITH MCANULTY JOINING; SCHRODER NOT SITTING
LOWER:  JEFFERSON
DATE RENDERED: 6/21/2007

SC ordered new trial for Defendant whose counsel withdrew from representation during trial.  Here, defense counsel told the court that his client wanted to testify, and had the right to do so, but that counsel felt his ethical limitations created a conflict with the client.  Under SC Rule 3.3, a lawyer is prohibited from offering evidence known to be false, may refuse to offer evidence that she reasonably believes to be false, and shall inform the tribunal of all material facts known to her so that the tribunal can make an informed decision whether the facts are adverse.  The plain language of this rule contemplates that a lawyer will not advance false testimony of any witness, and that she will inform the court if such testimony is imminent and what facts support that belief. However, Rule 1.63 creates a duty of confidentiality that prohibits a lawyer from revealing information related to the representation of a client. Moreover, the client has a right to testify in his own defense and a right to counsel. This creates an apparent conflict when an attorney knows that a client intends to offer false testimony. (No such conflict exists when the witness is not a client).

TC erred in advising Brown and counsel that counsel could leave the courtroom during the narrative testimony. They either chose this option together or defense counsel chose his preference the record does not disclose which.  By completely leaving the courtroom, in the presence of the jury, counsel telegraphed a problem to the jury. This was improper absent a knowing and voluntary waiver of counsel by Brown as to representation beyond the perjured testimony.  Counsel should have remained to assist when he could, since only counsel knew what he believed to be a proper question or an improper one.  It remains unknown whether counsel had a good faith, firm factual basis to believe the testimony would be perjury.  Had counsel remained and assisted when he could, the need for specific findings would not have arisen until a motion for a new trial was filed. However, given that no one other than counsel and Brown knew the contested area of testimony, requiring Brown to testify wholly on his own and without benefit of counsel's objections on cross examination (which would have been directed at evidentiary rules rather than content), Brown was unconstitutionally deprived of his right to assistance of counsel.  This was compounded by requiring him to make his own closing argument and allowing counsel to return to conduct the sentencing phase.

Note:  This opinion demonstrates the ethical dilemma for a defense attorney who has a client that intends to lie on the stand.  It is rare when a client will outright admit this to you, but when it happens, the question becomes what to do.  Although the opinion of the court lays out a pretty good roadmap, the dissent makes clear that while safeguards are in place for the protection of the accused, the accused doesn't have to use them.

By Scott Byrd @ www.OlginandByrd.com