Nicely v. McBrayer, McGinnis, Leslie & Kirkland, s. 1

• Decision Date: 17 December 1998
• Docket Number: Nos. 1,No. 97-5675,s. 1,97-5675
• Citation: 163 F.3d 376
• Parties: James NICELY; Sharon Nicely, Plaintiffs-Appellants, v. McBRAYER, McGINNIS, LESLIE & KIRKLAND; Phillip Bruce Leslie, Luke Bentley, III, and Phillip Faye, attorneys with McBrayer, McGinnis, Leslie & Kirkland; and John Doe,through 30, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 376

163 F.3d 376

59 Soc.Sec.Rep.Ser. 516

James NICELY; Sharon Nicely, Plaintiffs-Appellants, v. McBRAYER, McGINNIS, LESLIE & KIRKLAND; Phillip Bruce Leslie, Luke Bentley, III, and Phillip Faye, attorneys with McBrayer, McGinnis, Leslie & Kirkland; and John Doe, Nos. 1 through 30, Defendants-Appellees.

No. 97-5675.

United States Court of Appeals Sixth Circuit.

Argued April 23, 1998.

Decided Dec. 17, 1998.

Otto D. Wolff (argued and briefed), McMurtry & Wolff, Covington, Kentucky, for Plaintiffs-Appellants.

Richard W. Martin (argued and briefed), Martin, Picklesimer, Justice & Vincent, Ashland, Kentucky, for Defendants-Appellees.

Before: BATCHELDER and COLE, Circuit Judges; M CCALLA, District Judge. ^*

OPINION

BATCHELDER, Circuit Judge.

Plaintiffs/Appellants James Nicely and his wife, Sharon, appeal the district court's award of summary judgment in favor of Defendants-Appellees McBrayer, McGinnis, Leslie & Kirkland, et al. The Appellants claimed, inter alia, that the Appellees committed legal malpractice by incorrectly advising them concerning a potential medical malpractice claim, by failing to correct Mr. Nicely's average weekly wage figure in the workers' compensation action for which the Appellees did represent him, and by failing to pursue a safety violation claim against his employer which, if successful, would have penalized the employer by increasing Nicely's workers' compensation award by fifteen percent, KY.REV.STAT. ANN. § 342.165 (Banks-Baldwin 1997). The Appellants also sought punitive damages against the Appellees concerning a $3,000 fee allegedly taken improperly by the Appellees.

The district court granted the Appellees summary judgment on the issue of the Appellants' medical malpractice cause of action, finding that the Appellants' claim against the Appellees was time-barred. The court also stated that even if the claim were not time- barred, no attorney-client relationship concerning the medical malpractice claim had ever formed upon which a legal malpractice action could be based. The district court also granted the Appellees summary judgment on the average weekly wage and fifteen percent penalty issues, finding that an increase in Nicely's workers' compensation by either method would have resulted in a corresponding decrease in his social security disability benefits; therefore, Appellants suffered no cognizable damages even assuming Appellees had been negligent. Finally, the district court, sua sponte, granted the Appellees summary judgment on the Appellants' punitive damages claim, finding that while the Appellees had improperly taken the $3,000 fee, the Appellants had produced no evidence that the Appellees' acted with an intentional effort to deceive the Appellants in order to harm them, as required by KY.REV.STAT. ANN. § 411.184 (Banks-Baldwin 1997).

For the reasons stated below, we AFFIRM the district court's grant of summary judgment to Appellees regarding the Appellees' alleged negligence concerning the Appellants' medical malpractice action; REVERSE the grant of summary judgment premised upon the Appellants' inability to show damages resulting from the Appellees' alleged negligence concerning James Nicely's average weekly wage figure and the safety violation claim against his employer; and VACATE the grant of summary judgment on the issue of punitive damages.

I. BACKGROUND

On February 15, 1990, James Nicely was injured at work when the side-door of the front-end loader he was using to pick up steel from a scrap metal pile suddenly opened and a piece of the metal shot into the cab where he was seated, striking him in the side of the face and head, causing massive damage to his sinuses and eyes, and bruising his brain. He was taken to the emergency room at King's Daughters Hospital in Ashland, Kentucky, where an ophthalmologist and oral surgeon operated on his injuries. The oral surgeon performed this surgery in spite of the fact that he had only dental-related hospital surgical privileges. Nicely went home a week later and followed up with his personal physician. Shortly thereafter, his head swelled with infection and the pain from his injuries became unbearable. Nicely eventually consulted another surgeon in Louisville who informed Nicely that he would die without corrective surgery. He further advised Nicely and his fiancee (now wife) to get an attorney because the Ashland doctors had "botched things up." The Louisville surgeon performed the corrective surgery in September 1990. Despite this surgery, Nicely has lost the sight in his right eye, has blurred vision in his left eye, has lost his senses of smell and taste, and has chronic allergies and sinus infections. He also suffers from memory loss, altered personality, depression, and severe headaches.

On October 30, 1990, Nicely met with attorneys from a Louisville law firm to discuss pursuit of a medical malpractice claim against the Ashland hospital and doctors. When the firm learned that the accident might be attributable to safety violations on the part of Nicely's employer, Armco Steel ("Armco"), it declined to take the medical malpractice case because of a potential conflict-of-interest. The firm did, however, discuss with Nicely the statute of limitations period for his medical malpractice claim, including the ramifications of the "discovery" rule, see infra note 4, and referred him to another attorney. This second attorney also declined to accept Nicely's medical malpractice case, but suggested, and was retained to file, a workers' compensation claim against Armco. He filed the claim on January 8, 1991.

On January 25, 1991, Nicely met with Bruce Leslie, an attorney with McBrayer, McGinnis, Leslie & Kirkland, seeking representation on his medical malpractice claim. He met with Leslie and explained why he believed he had a legitimate medical malpractice claim against the Ashland doctors. The evidence viewed in the light most favorable to the Appellants indicates that Leslie said he would "look into" the medical malpractice action, but that he would have to get back with Nicely because he had concerns about the statute of limitations. Nicely and Leslie met again on April 2, 1991. At this meeting Nicely formally hired McBrayer, McGinnis, Leslie & Kirkland to take over the workers' compensation claim, as Nicely was dissatisfied with the counsel he had retained to pursue that claim. Leslie formally declined to represent Nicely on his medical malpractice claim, however, allegedly telling Nicely he did so because the claim had expired on February 15, 1991, one year after the alleged medical malpractice occurred, and was barred by the statute of limitations. Nicely did not pursue any medical malpractice claim afterward because, Nicely alleges, he believed, after talking with Leslie, that it would be time-barred.

McBrayer, McGinnis, Leslie & Kirkland attorney Phil Fay assumed responsibility for Nicely's workers' compensation claim shortly after Nicely hired the firm to pursue it. Fay handled the case until he left the firm in 1993. In April 1992, during Fay's tenure as counsel, Armco forwarded to the firm a check in the amount of $16,783.20 for "reimbursement of medical expenses," apparently intending to compensate Nicely's then-fiancee Sharon for home nursing care she had been providing to Nicely. The law firm took a $3000 fee from the proceeds without first obtaining the approval of the administrative law judge presiding over the workers' compensation claim. Although James and Sharon protested, the firm told them it was entitled to the fee and refused to endorse the check, made out to both James Nicely and the firm, unless Sharon agreed to it. The Nicelys claim that they were in such financial straits that they had no choice but to capitulate to the firm's demands.

Also during Fay's tenure as primary counsel, Nicely asked Fay to pursue a safety violation claim against Armco pursuant to KY.REV.STAT. ANN. § 342.165 (Banks-Baldwin 1997), which, if successful, would have penalized Armco by adding fifteen percent to Nicely's workers' compensation award. Fay responded to Nicely's request by letter, stating,

If we are unable to settle for a lump-sum then we would file an amended pleading alleging safety violation [sic]. As I mentioned to you, to win on this issue we have to show not only a failure, but an intentional failure on behalf of Armco. As I mentioned to you, I would suggest we use this as a bargaining tool in getting a lump sum settlement.

Fay, and later Luke Bentley (who took over Nicely's case when Fay left the firm in 1993), never amended the workers' compensation claim to allege a safety violation.

Finally, during Fay's tenure Nicely also brought to Fay's attention his belief that Armco was underpaying Nicely on his weekly workers' compensation temporary total disability ("TTD") benefit by about $50. However, Fay made no effort to discern Nicely's actual weekly wage upon which the TTD was calculated or otherwise investigate the matter, nor did Bentley when he took over Nicely's case. At a pre-hearing conference before the administrative law judge in 1994 Bentley stipulated, without objection from Nicely, that the average weekly wage currently used to calculate Nicely's TTD benefits was accurate, despite the fact that he had not investigated this issue and apparently was aware that Nicely felt otherwise.

The ALJ issued its decision on October 5, 1994, and Nicely received a copy of it on October 12, 1994. The opinion granted Nicely $306.67 per week for as long as he is disabled, along with twelve percent interest on unpaid installments; all expenses for "the cure and relief from the effects of the injury"; and $40 per day for the home medical care Sharon Nicely was providing and would need to continue to provide to her husband. The Nicelys met with Leslie on November 4, 1994, to discuss their remaining options and those benefits which the Nicelys felt were missing from the ALJ's award. The...