## Facts

- Equitania Insurance Company had two shareholder factions competing for corporate control: the Vimont group and the Pavenstedt group.
- The Vimont group hired attorney Laurel Garrett and her law firm, Slone & Garret, P.S.C., to represent it in efforts to gain and keep control of Equitania during the shareholder dispute.
- Vimont’s effort resulted in Vimont purchasing the Pavenstedt group’s shares and obtaining control of the company.
- Equitania’s finances continued to worsen after Vimont obtained control.
- Equitania agreed to sell its book of business to another insurer; the transaction closed in January 1995.
- In March 1995, Vimont filed a circuit court action seeking to rescind the earlier stock-purchase transaction; the trial court ruled against Vimont, and the Court of Appeals later affirmed.
- In February 1997, Equitania and members of the Vimont group sued Garrett and her firm for legal malpractice arising from Garrett’s advice and conduct during the shareholder-control dispute.
- Plaintiffs alleged Garrett negligently failed to advise how Vimont could retain control, advised methods that violated the Kentucky Insurance Code, breached fiduciary duties to shareholders, acted unethically, and charged excessive fees.
- The Fayette Circuit Court granted partial summary judgment to Garrett and her firm on portions of the malpractice claims, and the remaining claims proceeded to a jury trial.
- Over plaintiffs’ objection, the trial court instructed the jury in part that an attorney cannot be held responsible for errors in judgment or for advising a course of action that later proves unsuccessful.
- The jury returned a verdict for Garrett and Slone & Garret, and the Court of Appeals affirmed.
- The Supreme Court of Kentucky granted discretionary review.

## Issues

1. Whether the trial court applied the correct standard for attorney-malpractice liability and erred by instructing that an attorney is not responsible for “errors in judgment” or a strategy that proves unsuccessful.
2. Whether the jury instructions improperly departed from Kentucky’s preference for “barebones” instructions by including fact-oriented explanatory language.
3. Whether collateral estoppel (issue preclusion) barred Equitania and/or Vimont from relitigating issues decided in the prior rescission litigation connected to the stock transaction.
4. Whether the trial court committed reversible error by excluding or limiting portions of plaintiffs’ expert testimony on malpractice and causation.

## Decision

- The Kentucky Supreme Court affirmed the Court of Appeals and the Fayette Circuit Court judgment for Garrett and Slone & Garret.
- The court held the instructions, read as a whole, correctly framed malpractice liability as turning on breach of the applicable professional standard of care and proximate causation, not on a bad outcome.
- The court concluded the “error in judgment/unsuccessful course of action” language did not misstate the law or improperly remove fact questions from the jury.
- The court found no reversible violation of Kentucky’s “barebones” instruction approach because the charge did not improperly direct a verdict or mislead the jury about the governing legal test.
- The court upheld the application of collateral estoppel to prevent relitigation of issues that had been actually litigated and necessarily decided in the earlier rescission action.
- The court determined the trial court acted within its discretion in limiting or excluding parts of plaintiffs’ expert testimony and that plaintiffs did not show the kind of prejudice required for reversal.

## Legal Principles

- A legal malpractice plaintiff must prove the existence of an attorney-client duty, a breach of the professional standard of care (failure to use the ordinary care and skill of a reasonably competent attorney), proximate causation, and damages.
- An attorney is not a guarantor of results; liability does not arise solely because a strategy fails or a choice later appears unwise in hindsight.
- A jury instruction may state that an attorney is not liable for “errors in judgment” or for an unsuccessful course of action if the overall instructions still require the jury to decide negligence under the professional standard of care and causation.
- Kentucky’s preference for “barebones” instructions allows limited explanatory language when it helps state the legal standard without deciding disputed facts for the jury or misstating the law.
- Collateral estoppel may bar relitigation of an issue when the issue is identical, actually litigated, necessarily decided in a final judgment, and the party to be bound had a full and fair chance to litigate it.
- Trial courts have broad authority over admission and scope of expert testimony; appellate review is for abuse of discretion, and reversal generally requires a showing of meaningful prejudice.

## Conclusion

The Kentucky Supreme Court affirmed a defense verdict and related summary-judgment rulings in a legal malpractice case arising from a shareholder-control dispute, holding that the challenged instructions properly stated Kentucky malpractice law (including the limited “error in judgment” concept), issue preclusion could bar relitigation of matters decided in earlier related litigation, and the trial court’s expert-testimony rulings did not warrant reversal.


Equitania Insurance Co. v. Slone & Garret, P.S.C., 191 S.W.3d 552 (2006)