TO BE PUBLISHED
2018-SC-000377-KB
KENTUCKY BAR ASSOCIATION MOVANT
V. IN SUPREME COURT
STEVEN HARRIS KEENEY RESPONDENT
OPINION AND ORDER
Steven Keeney was admitted to practice law in the Commonwealth on
May 19, 1981. His Kentucky Bar Association (“KBA”) Number is 37760, and
his bar roster address is 5208 Moccasin Trail, Louisville, KY 40207. The Board
of Governors (“Board”) recommends that this Court find Keeney guilty of six of
the eight charges against him. The Board considered two separate
suspensions, one for two years and the other for four, and ultimately voted 11-
5 in favor of a two-year suspension. For the following reasons, we adopt the
Board’s recommendation on the guilty findings, but determine that Keeney
should be suspended from the practice of law for four years.
I. Factual and Procedural Background.
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
2 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
3 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. He (1) failed to file the claim even after the adjuster for one
of the insurance companies alerted him to the statute of limitations deadline in
2003, (2) failed to give her a copy of the complaint before filing, (3) waited two
months to inform Osborne of discovery requests propounded by defendants, (4)
did not assist Osborne with discovery requests, (5) never responded to
defendants’ request for Osborne’s medical records, (6) did not provide a list of
proposed doctors for Osborne’s IME, even though she had given him a list, (7)
failed to inform Osborne that the doctor chosen by the defendants was a
psychiatrist, looking into her mental health, not a doctor looking into her
4 physical damages, (8) failed to provide defendants’ counsel with answer to
interrogatories and discovery requests which Osborne had hand-delivered to
Keeney, (9) failed to file a response to defendants’ summary judgment motion,
and (10) failed to respond to motions to compel and requests for sanctions.
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.
Osborne filed a bar complaint against Keeney in February 2006 and filed
a civil suit against him soon after. Keeney requested that the bar complaint be
held in abeyance until completion of the civil suit. Eventually the malpractice
suit was tried and subsequently appealed to the Court of Appeals, after which
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TO BE PUBLISHED
2018-SC-000377-KB
KENTUCKY BAR ASSOCIATION MOVANT
V. IN SUPREME COURT
STEVEN HARRIS KEENEY RESPONDENT
OPINION AND ORDER
Steven Keeney was admitted to practice law in the Commonwealth on
May 19, 1981. His Kentucky Bar Association (“KBA”) Number is 37760, and
his bar roster address is 5208 Moccasin Trail, Louisville, KY 40207. The Board
of Governors (“Board”) recommends that this Court find Keeney guilty of six of
the eight charges against him. The Board considered two separate
suspensions, one for two years and the other for four, and ultimately voted 11-
5 in favor of a two-year suspension. For the following reasons, we adopt the
Board’s recommendation on the guilty findings, but determine that Keeney
should be suspended from the practice of law for four years.
I. Factual and Procedural Background.
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
2 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
3 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. He (1) failed to file the claim even after the adjuster for one
of the insurance companies alerted him to the statute of limitations deadline in
2003, (2) failed to give her a copy of the complaint before filing, (3) waited two
months to inform Osborne of discovery requests propounded by defendants, (4)
did not assist Osborne with discovery requests, (5) never responded to
defendants’ request for Osborne’s medical records, (6) did not provide a list of
proposed doctors for Osborne’s IME, even though she had given him a list, (7)
failed to inform Osborne that the doctor chosen by the defendants was a
psychiatrist, looking into her mental health, not a doctor looking into her
4 physical damages, (8) failed to provide defendants’ counsel with answer to
interrogatories and discovery requests which Osborne had hand-delivered to
Keeney, (9) failed to file a response to defendants’ summary judgment motion,
and (10) failed to respond to motions to compel and requests for sanctions.
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.
Osborne filed a bar complaint against Keeney in February 2006 and filed
a civil suit against him soon after. Keeney requested that the bar complaint be
held in abeyance until completion of the civil suit. Eventually the malpractice
suit was tried and subsequently appealed to the Court of Appeals, after which
this Court granted discretionary review. We reversed the multi-million-dollar
jury verdict due to the giving of improper jury instructions at trial. See
Osborne v. Keeney, 399 S.W.3d 1 (Ky. 2012). The malpractice action was
eventually settled, after which the bar complaint was reopened, and the Inquiry
Commission issued a charge on December 29, 2014. The Inquiry Commission
5 charged Keeney on the following eight counts, (1) Lack of Diligence, SCR1
3.130(1.3); (2) Inadequate Communication, SCR 3.130(1.4)(a); (3) Unreasonable
Fee, SCR 3.130(1.5)(a); (4) Conflict of Interest, SCR 3.130(1.8)(h); (5)
Safekeeping property, SCR 3.130(1.15)(a); (6) Failure to Obey Court
Orders/Rules, SCR 3.130 (3.4)(c); (7) Criminal Conduct, former SCR 3.130
(8.3)(b), now (8.4)(b) and; (8) Dishonesty, Deceit, or Misrepresentation, former
SCR 3.130 (8.3)(c), now (8.4)(c).2 After a hearing and briefing by both parties,
the Trial Commissioner found Keeney guilty of all eight counts and
recommended a five-year suspension. Subsequently, the Board found Keeney
guilty on all but Counts Three and Seven and recommended a two-year
suspension. Pursuant to SCR 3.370(7), both parties filed a notice of review
with this Court.
II. Analysis.
First, we agree with the Board that Keeney committed at least six of the
charges against him. The facts in this case detail a complete lack of diligence,
inadequate communication, and failure to obey court orders by Keeney, thus
establishing guilt on Counts One, Two, and Six. By including a release of
liability provision in his eight-page contract with Osborne, and then providing
no evidence that she was independently represented, Keeney created a conflict
of interest, demanding a finding of guilt on Count Four. Further, by depositing
a check for Osborne’s insurance proceeds into his personal account Keeney is
1 Kentucky Rules of the Supreme Court. 2 Counts Seven and Eight were in effect at the time of the misconduct.
6 guilty of commingling, Count Five. Lastly, by not informing Osborne of the
dismissal of her case or the sanctions against her, Keeney is guilty of Count
Eight.
The last two counts are Count Three (unreasonable fee) and Count Seven
(criminal conduct). While Keeney’s fee is unconventional, it does not appear to
be unreasonable. His eventual recovery was around 23% of Osborne’s total
insurance proceeds. Although his complete lack of records and other instances
of misconduct are egregious, this “blended” fee arrangement does not seem so
unreasonable as to warrant additional discipline. See Kentucky Bar Ass’n v.
Earhart, 360 S.W.3d 241, 244 (Ky. 2012) (“Although ‘reasonableness’ at the
time of contracting is relevant, consideration is also to be given to whether
events occurred after the fee agreement was made which rendered the fee
agreement fair at the time it was entered into, but unfair at the time of
enforcement^”) (internal citation omitted).
Count Seven is a close call. We first note that “a prosecution or / conviction is not a prerequisite for finding a violation of the rules of
professional conduct, which need only ‘be proven by a preponderance of the
evidence.’” Kentucky Bar Ass’n v. Glidewell, 348 S.W.3d 759, 762 (Ky. 2011)
(quoting SCR 3.330). Arguably, Keeney may have committed forgery in the
second degree under KRS3 516.030 which provides that “when, with the intent
to defraud, deceive, or injure another, he falsely makes, completes or alters a
3 Kentucky Revised Statutes.
7 written instrument].]” However, even if we believe that the Osbornes did not
authorize Keeney to sign checks for them, it appears that Keeney believed he
had authority to do so, as he had signed their signature in other places as well.
Therefore, we are unable to find Keeney’s actions criminal by a preponderance
of the evidence and must dismiss the charge.
That said, 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.
“Upon an adjudication of guilt, our task is to impose the appropriate
sanction in light of the ethical misconduct.” Kentucky BarAss’n v. Hill, 476
S.W.3d 874, 881 (Ky. 2015). Although not recommended by the Board nor
either party, we believe that a four-year suspension is warranted, given the
egregiousness of Keeney’s misconduct, the striking similarity of the misconduct
8 to Keeney’s past-sanctioned behavior, and the vulnerability of the client.4 See
id. at 885 (this Court imposed its own disciplinary sanction since “none of the
proposed sanctions strikes the appropriate balance for a disciplinary
disposition of this matter[]”).
Accordingly, it is hereby ORDERED that:
1. Steven Harris Keeney is hereby suspended from the practice of law in
Kentucky for four years; and
2. In accordance with SCR 3.450, Keeney must pay all costs associated
with these proceedings, said sum being $4,152.56, for which execution
may issue from this Court upon finality of this Opinion and Order; and
3. Under SCR 3.390, Keeney shall, within ten days from the entry of this
Opinion and Order, notify all clients, in writing, of his inability to
represent them; notify, in writing, all courts in which he has matters
pending of his suspension from the practice of law; and furnish copies of
all letters of notice to the Office of Bar Counsel. Furthermore, to the
extent possible, Keeney shall immediately cancel and cease any law
practice-based advertising activities in which he is engaged.
All sitting. Minton, C.J.; Hughes, Keller, VanMeter, and Venters, JJ.,
concur. Cunningham, J., dissents by separate opinion in which Wright, J.,
joins.
4 Keeney claimed Osborne was incapacitated from the incident, and her original treating physician stated that she was suffering from “increased anxiety and depression” from the plane crash.
9 CUNNINGHAM, J., DISSENTING: I would defer to the Board of Governors.
Wright, J., joins.
ENTERED: December 13, 2018.