Full Opinion

RENDERED: OCTOBER 22, 2026 TO BE PUBLISHED Supreme Court of Kentucky 2024-SC-0268-DG MILLERS LANE CENTER, LLC, APPELLANTS A KENTUCKY LIMITED LIABILITY COMPANY; MILLERS LANE CENTER, LLC, A FLORIDA LIMITED LIABILITY COMPANY; AND MARK BREWER ON REVIEW FROM COURT OF APPEALS NOS. 2022-CA-1341, 2022-CA-1368, 2022-CA-1398, V. 2022-CA-1399, 2022-CA-1400 & 2022-CA-1402 JEFFERSON CIRCUIT COURT NOS. 21-CI-007148 & 22-CI-001338 MORGAN & POTTINGER, P.S.C.; JAMES P. MCCROCKLIN; AND MOSLEY & TOWNES, PLLC APPELLEES AND 2024-SC-0502-DG JAMES P. MCCROCKLIN; AND CROSS-APPELLANTS MOSLEY & TOWNES, PLLC ON REVIEW FROM COURT OF APPEALS NOS. 2022-CA-1341, 2022-CA-1368, 2022-CA-1398, V. 2022-CA-1399, 2022-CA-1400, & 2022-CA-1402 JEFFERSON CIRCUIT COURT NOS. 21-CI-007148 & 22-CI-001338 MILLERS LANE CENTER, LLC, CROSS-APPELLEES A KENTUCKY LIMITED LIABILITY COMPANY; MILLERS LANE CENTER, LLC, A FLORIDA LIMITED LIABILITY COMPANY; AND MARK BREWER AND 2024-SC-0505-DG MORGAN & POTTINGER, P.S.C. CROSS-APPELLANT ON REVIEW FROM COURT OF APPEALS NOS. 2022-CA-1341, 2022-CA-1368, 2022-CA-1398, V. 2022-CA-1399, 2022-CA-1400, & 2022-CA-1402 JEFFERSON CIRCUIT COURT NOS. 21-CI-007148 & 22-CI-001338 MILLERS LANE CENTER, LLC, CROSS-APPELLEES A KENTUCKY LIMITED LIABILITY COMPANY; MILLERS LANE CENTER, LLC, A FLORIDA LIMITED LIABILITY COMPANY; AND MARK BREWER OPINION OF THE COURT BY JUSTICE CONLEY AFFIRMING AND DISMISSING CROSS-APPEALS AS MOOT This Court granted discretionary review to two LLCs and their common member, who appealed summary judgment dismissing their legal malpractice claims and saw that dismissal upheld by the Court of Appeals. The case arises from an underlying action that was resolved through a settlement incorporated into a Chapter 11 bankruptcy proceeding, in which the settlement was 2 explicitly conditioned on approval by the bankruptcy court. These legal malpractice claims were filed after that settlement and the agreed-upon dismissal of the underlying action, and the key question before us is when the malpractice claims accrued. The Court of Appeals held that summary judgment dismissing the claims was appropriate because the one-year limitations period began with the execution of the settlement under KRS 413.245. Chief to their reasoning were two proposals. One was that if an assignment made by a settlement is actually prohibited, it may be disregarded and the original party retains the interest. The other was that the ordinary rule governing the accrual of litigation malpractice – that it does not do so until the underlying matter is final – is “trumped” when there is a settlement. We agree that the claims before us must be dismissed, but we do not adopt or approve either of these proposals. We also affirm dismissal of the claims asserted by the separately organized Kentucky limited liability company. These grounds resolve the appeal without requiring that we decide whether the Florida company assigned or otherwise surrendered its malpractice claim during the bankruptcy, and so we decline to decide that issue. I FACTUAL AND PROCEDURAL BACKGROUND A The Blue Sky litigation Millers Lane Center, LLC, a Florida limited liability company (“Millers FL”), was organized in 2005. It owned and operated commercial warehouse property on Millers Lane in Louisville, under members Mark Brewer and Harold 3 Harr. Blue Sky, Inc., rented approximately 26,000 square feet at the property for a shredding and recycling business. By November 2014, Blue Sky had fallen behind on rent. Morgan & Pottinger, P.S.C. (“M&P”), advised Millers FL concerning the default. According to the malpractice complaints, M&P advised that Blue Sky could be locked out and that its property could be sold to satisfy a statutory lien. Blue Sky was locked out on November 10, 2014, and its property was sold two weeks later. Blue Sky sued Millers FL, Brewer, Harr, Harr’s son, and another entity in February 2015, asserting conversion, contract, fraud, and related claims. M&P initially represented the defendants and withdrew in May 2016. James P. McCrocklin then assumed the defense and later became affiliated with Mosley & Townes, PLLC (“M&T”). The parties appeared to reach a $22,500 settlement (December 2016). However, that agreement was not consummated, and the case proceeded to a trial (April 2018), following which a jury awarded Blue Sky approximately $1.58 million in compensatory damages jointly and severally against the defendants. The defendants appealed. The Court of Appeals affirmed the compensatory judgment but remanded for further proceedings on punitive damages (July 2020). Blue Sky, Inc. v. Millers Lane Ctr, LLC, Nos. 2018-CA-001160-MR, 2018- CA-001205-MR, and 2018-CA-001217-MR, 2020 WL 4500590 (Ky. App. July 17, 2020). Millers FL and Brewer sought discretionary review in this Court. B The two Millers Lane entities and the bankruptcy plan 4 While the Blue Sky case was pending, Brewer organized a second company bearing the same name: Millers Lane Center, LLC, a Kentucky limited liability company (“Millers KY”; formed March 28, 2016). The companies shared management and operated the same business, but they remained legally distinct. Millers FL retained title to the warehouse, remained the defendant in the Blue Sky action, and remained active under Florida law. At no time was Millers KY substituted for Millers FL in the Blue Sky litigation. Millers KY filed a Chapter 11 petition in the United States Bankruptcy Court for the Western District of Kentucky (July 2019). It was the sole debtor, although it did not own the warehouse and was not liable on Blue Sky’s judgment. Its schedules nevertheless listed the Blue Sky judgment as a liability and listed contingent legal-malpractice claims involving McCrocklin and an M&P attorney as assets. Brewer signed the schedules as Millers KY’s managing member. A bankruptcy mediation produced a written Settlement Agreement dated December 18, 2020. Paragraph 1 required Millers KY to file a disclosure statement and plan incorporating the settlement’s terms and to seek confirmation. Paragraph 2 required pursuit of the existing sale of the warehouse. If that transaction did not close, the debtor could accept a backup bid exceeding $4 million; if no qualifying backup bid existed, the debtor was required to auction the property within sixty days. Paragraph 6 addressed Blue Sky. It fixed an agreed judgment of $2.7 million, including any punitive damages, and continued the judgment 5 defendants’ joint and several liability, subject to a cap for one estate. But the agreement did not direct immediate entry of that judgment. Instead, it provided that “Upon approval of the settlement by the bankruptcy court, the parties shall file an agreed judgment in the litigation styled Blue Sky v. MLC, et al. in the Jefferson Circuit Court. Thereafter, the lawsuit shall be dismissed with prejudice.” Settlement Agreement ¶ 6(a)(i). Paragraph 9 likewise provided that the bankruptcy adversary proceeding would be dismissed only “after this settlement is approved and the confirmation order is final.” Thus, the agreement specified the economic terms and a path for mandatory liquidation, but material performance of the Blue Sky resolution awaited judicial approval. On February 18, 2021, the Bankruptcy Court entered its Order Confirming Amended Chapter 11 Small Business Plan. The order approved and directed substantive consolidation of Millers KY and Millers FL for implementation of the plan and confirmation order. It deemed the two companies’ assets and liabilities to be the assets and liabilities of the debtor for that purpose and directed the debtor to execute and file instruments in appropriate jurisdictions to give effect to the consolidation. No state merger filings followed. The Bankruptcy Court entered a separate order on March 18, 2021, authorizing documents needed to consummate the selected private sale. The warehouse sold on March 24 for $4.45 million. Creditors, including Blue Sky, were paid, and approximately $290,000 remained for distribution. Although 6 this Court had granted discretionary review of the Blue Sky appeal on March 17, the parties notified the Court that the judgment had been satisfied. The underlying appeal was dismissed on June 1, 2021. C The malpractice actions Subsequently, Millers KY filed the first malpractice action in Jefferson Circuit Court on December 20, 2021. It alleged that M&P negligently advised the 2014 lockout and sale and mishandled the early defense, and that McCrocklin and M&T mishandled the attempted 2016 settlement that had been for far less than the jury’s award, and also that both defendants had mismanaged conflicts, trial preparation, proof, defenses, apportionment, and jury instructions. The attorneys moved to dismiss or for summary judgment, principally arguing that they represented Millers FL, not Millers KY. On February 17, 2022, Millers KY moved for leave to amend its complaint to add Millers FL. The circuit court denied leave, and the proposed amended complaint never became operative. 1 Millers FL and Brewer instead filed a separate complaint on March 16, 2022. That action asserted substantially the same malpractice theories and added Brewer’s claims for diminished membership value, emotional distress, legal expenses, and injuries arising from post-judgment collection proceedings. The two actions were consolidated. 1 The parties do not develop in this Court an independent argument that the unaccepted proposed pleading commenced an action by Millers FL. 7 The circuit court treated the dispositive motions as motions for summary judgment. 2 It held that Millers KY was neither the client nor the owner of the malpractice claim, that substantive consolidation was not a state-law merger, and that Kentucky law prohibited assignment of the claim to Millers KY. But it also concluded that the bankruptcy schedules, settlement terms, and plan distributions had divested Millers FL of beneficial ownership and control in favor of Millers KY and its stakeholders. In the circuit court’s view, Millers KY could not prosecute a claim it could not lawfully receive, and Millers FL could not prosecute a claim it had surrendered. It rejected Brewer’s attempt to recover diminished membership value but allowed certain direct claims, as asserted, to remain. As to limitations, the court selected March 18, 2021 — the date of the sale-implementation order by the bankruptcy court — as the point when damages became fixed. The Court of Appeals affirmed dismissal of Millers KY as a legitimate Plaintiff, agreeing that it was neither the client nor the real party in interest, and that substantive consolidation in bankruptcy was not a merger under state law. But it rejected the circuit court’s assignment analysis. Because assignment of a malpractice claim is prohibited, the court reasoned, the attempted assignment was ineffective and could not divest Millers FL; the claim therefore remained with that entity. It nevertheless held Millers FL’s and 2 It did so because it considered materials outside the pleadings; this treatment of the dispositive motions was reasonable. 8 Brewer’s claims untimely because the one-year period began when the settlement was executed on December 18, 2020. It stated that settlement “trumps” the litigation-conclusion rule and directed dismissal of all remaining claims. Millers Lane Center, LLC v. Morgan & Pottinger, P.S.C., Nos. 2022-CA- 1341-MR et al., slip op. at 21–32 (Ky. App. May 10, 2024). In other words, the circuit court granted summary judgment on the grounds that Millers KY was not a proper party to the malpractice claim, and that Millers FL had surrendered its claim through the bankruptcy proceedings. The Court of Appeals agreed that Millers KY was not a proper Plaintiff, but found that, in principle, Millers FL had retained its claim (because it could not have been lawfully assigned through the bankruptcy), but for the fact that the statute of limitations now bars it. Brewer’s claims derive their status from the fate of Millers FL. We granted discretionary review and both cross-motions. II STANDARD OF REVIEW Summary judgment is proper when the record presents no genuine issue of material fact and the movant is entitled to judgment as a matter of law. CR 56.03. We review summary judgment de novo because it presents legal questions and requires no deference to the circuit court’s conclusions. The material dates, operative settlement provisions, identity of the entities, and parties to the underlying litigation are not genuinely disputed. The questions before us concern the legal consequences of those facts. III ANALYSIS 9 We first review the decision of the Court of Appeals to affirm the finding of the circuit court that Millers KY is not a proper Plaintiff. We agree that Millers KY neither owned the malpractice claim nor was owed the client-based duty asserted. We then review the finding of the Court of Appeals that the claims of Millers FL and Brewer are barred by limitations. We find that KRS 413.245 indeed bars those claims, though we reject the categorical rule proposed by the Court of Appeals while still finding that the accrual date is such that the actions are barred. Third, Brewer’s membership-value theory is derivative, and the limitations ruling makes it unnecessary to decide the assignment and remedy questions presented by the cross-appeals. Nonetheless, some limited discussion of those issues remains necessary, as will become apparent. We address those issues in that order. A Millers KY cannot maintain the malpractice claims The lower courts often described Millers KY’s defect as “standing.” That label combines distinct inquiries. Constitutional standing asks whether a plaintiff has suffered an injury fairly traceable to the challenged conduct and likely to be redressed by a favorable decision. Commonwealth, Cabinet for Health & Fam. Servs. v. Sexton, 566 S.W.3d 185, 196–97 (Ky. 2018). Statutory and procedural standing, such as that provided by CR 17.01, asks whether the plaintiff is the real party in interest—the person who owns the asserted right and will receive the benefit of the action. Furthermore, the merits of legal malpractice require an employment relationship or other circumstantially- derivable duty to run from the attorney to the plaintiff. Stephens v. Denison, 64 10 S.W.3d 297, 298–99 (Ky. App. 2001). Economic injury alone does not permit one legal entity to recover on another entity’s personal malpractice claim. Millers KY did not exist when M&P gave the challenged lockout and lien advice or when Blue Sky filed suit. It did not own the warehouse, was never made a defendant in the Blue Sky action, and was not a judgment debtor. M&P appeared for Millers FL and the other named defendants; McCrocklin later did the same. The identity of the client did not change merely because the newly formed Kentucky entity continued the same business, used common accounts or tax information, or paid some legal invoices. Those facts may show operational continuity. Without evidence of a separate engagement, however, they do not establish that either attorney undertook to represent Millers KY as a distinct legal person in litigation to which it was not a party. Nor did the bankruptcy order supply the missing relationship or ownership. Substantive consolidation is an equitable bankruptcy remedy used to pool assets and liabilities for administration of a plan when affiliated entities have disregarded their separateness or entangled their affairs. See, e.g., In re Owens Corning, 419 F.3d 195, 205–11 (3d Cir. 2005). The confirmation order here expressly deemed the entities’ assets and liabilities those of the debtor “in implementation of the Plan and this Confirmation Order.” It then authorized and directed execution and filing of instruments in appropriate jurisdictions. That language did not retroactively make Millers KY the represented defendant in the Blue Sky litigation. 11 Kentucky law prescribes the acts that merge limited liability companies and the legal consequences of a completed merger. KRS 275.345 – 275.365. No plan or articles of merger were filed in Kentucky or Florida, and both companies continued to exist. Treating the federal consolidation order as a completed state-law merger would disregard both its terms, which limited its efficacy to its implementation, and its explicit direction to execute the necessary filings that would give effect to the consolidation. Millers KY was not the client, property owner, defendant, or judgment debtor in the underlying action. The record does not establish an attorney- client relationship giving rise to the malpractice duty asserted. The Bankruptcy Court’s substantive-consolidation order pooled assets and liabilities to implement the plan, but it did not complete a merger under Kentucky law or retroactively make the Kentucky company the client in the underlying case. We therefore affirm summary judgment against Millers KY because it did not establish the client-based duty or ownership required for the malpractice claims it asserted. 3 B The Florida company and Brewer filed outside KRS 413.245 KRS 413.245 requires a civil action arising from professional services to be brought within one year “from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by 3 We need not decide whether Millers KY could prove some separate claim arising from legal services rendered directly to it. The complaints do not make such a claim or seek such losses. They seek the losses generated by the Blue Sky judgment and litigation against Millers FL and the named individual defendants. 12 the party injured.” The occurrence limitation begins when negligence and legally cognizable damage coexist. Wolfe v. Kimmel, 681 S.W.3d 7, 12–17 (Ky. 2023). Further, the discovery provision (“discovered by the party injured”) is a savings clause for an accrued injury that was not reasonably discoverable; it does not postpone accrual merely because the claimant lacks legal certainty. Id. at 13–14. The bankruptcy schedules identified a malpractice claim in 2019, and the appellants do not establish a later discovery date. The occurrence inquiry depends on the nature of the alleged malpractice. For nonlitigation malpractice, damages become irrevocable and nonspeculative when the claimant is reasonably certain that damage will flow from the negligent act; the claimant need not know the exact dollar amount. Id. at 25– 26. Allegations of pre-litigation malpractice related to the Blue Sky matter that are contained in the malpractice actions filed in this case – that is, actions filed in 2021 and 2022 – are well outside the one-year limitations period for their 2019 accrual. Litigation malpractice, on the other hand, ordinarily awaits the final outcome of the underlying matter. This is because, so long as a favorable ruling remains possible, the claimant may be unable to establish that counsel’s conduct caused legal injury. Michels v. Sklavos, 869 S.W.2d 728, 730 (Ky. 1994); Hibbard v. Taylor, 837 S.W.2d 500, 502 (Ky. 1992). A settlement can provide the functional finality that those cases require. Once a client is bound to an adverse resolution, continued litigation can no longer eliminate the alleged injury. But the Court of Appeals stated the 13 principle too broadly when it said that settlement “trumps” the litigation- conclusion rule and selected execution as the accrual date for every settlement. The question remains whether the particular agreement was binding or whether a material condition still permitted the adverse resolution to disappear. A settlement may end the uncertainty that postpones accrual of a litigation-malpractice claim, but only when the settlement binds the parties to an adverse resolution. The December 18, 2020 agreement here made the contemplated state-court judgment and dismissal contingent on bankruptcy- court approval. It required the debtor to place its terms into a disclosure statement and reorganization plan and seek confirmation. More specifically, Paragraph 6 postponed entry of the agreed $2.7 million Blue Sky judgment until “approval of the settlement by the bankruptcy court.” Paragraph 9 postponed dismissal of the adversary proceeding until approval and finality of the confirmation order. We therefore need not decide when an ordinary unconditional settlement triggers KRS 413.245. This agreement’s execution did not yet make its contemplated state-court disposition irrevocable. The Bankruptcy Court’s February 18, 2021 Confirmation Order did. It confirmed the plan that incorporated the settlement, approved the substantive consolidation required to perform the plan, and bound the debtor, creditors, and equity holders. See 11 U.S.C. § 1141(a). From that point, Millers FL and Brewer were committed to the agreed Blue Sky resolution and to a mandatory path for satisfying it. Continued litigation on the merits of the Blue Sky claims 14 could no longer restore their preinjury position. The fact of injury, causation, and recoverable damage was no longer contingent, even if the eventual sale proceeds would determine the precise economic consequences. The settlement’s sale provisions confirm that conclusion. Paragraph 2 required pursuit of the existing sale, but failure of that transaction would not undo the Blue Sky compromise. The provision authorized a qualifying backup bid and, absent that, required an auction within sixty days. Paragraph 6 likewise required an auction after June 1 if Blue Sky had not been paid. The identity of the buyer, the closing date, and the proceeds remained uncertain, but the obligation to resolve and satisfy the Blue Sky claim was fixed and demarcated the accrual of the claim on February 18, 2021. The later dates urged by the appellants concern performance, which is logically and legally distinct from accrual. The March 18 order authorized instruments to consummate the selected sale. It did not first confirm the plan or first approve the Blue Sky settlement. The March 24 closing quantified available proceeds but was unnecessary to establish that damage would flow from the alleged malpractice. And the June 1 dismissal formally terminated litigation that the parties were already bound to resolve by their prior agreement ratified through judgment and payment. The litigation-conclusion rule is functional, not ceremonial. It postpones accrual while the underlying matter may still eliminate the claimed injury; it does not require waiting for a ministerial dismissal after an enforceable plan has fixed the adverse resolution. 15 We therefore hold narrowly that when resolution of underlying litigation is expressly conditioned on another court’s approval, a litigation-malpractice claim accrues when that approval makes the adverse resolution binding and leaves only performance or ministerial termination. On this record, that occurred no later than entry of the February 18, 2021 Confirmation Order. Millers FL and Brewer did not file their operative complaint until March 16, 2022—twenty-six days after the one-year anniversary. Their claims are time- barred. The same result follows claim by claim. M&P’s alleged pre-suit lockout and lien advice is nonlitigation malpractice and became actionable in 2019, or in any event certainly no later than confirmation of the plan adopted to satisfy the resulting judgment. The litigation-centered theories against M&P, McCrocklin, and M&T accrued no later than confirmation for the reasons stated. Brewer’s assertedly direct injuries—legal expenses, emotional distress, and harms from collection proceedings—were incurred and known before confirmation or became fixed by it. None first arose within one year of March 16, 2022. C Brewer’s derivative damages and the cross-appeals Brewer also seeks damages for diminution in the value of his interests in the Millers entities. A member ordinarily may not recover individually for injury suffered by a limited liability company. Turner v. Andrew, 413 S.W.3d 272, 276 (Ky. 2013). The loss of company assets or value belongs to the company, even when that loss reduces the value of a member’s interest. The Court of Appeals 16 correctly affirmed dismissal of the diminution theory. Any genuinely direct claims are untimely for the reasons already explained. The attorneys’ cross-appeals ask us to decide whether Millers FL assigned or surrendered control of the malpractice claim through the bankruptcy schedules, settlement terms, and plan distributions, and if we did, what remedy would follow under Davis v. Scott, 320 S.W.3d 87 (Ky. 2010). But all that has been said above renders these questions of no consequence to the judgment. Even assuming that Millers FL remained the real party in interest, KRS 413.245 bars its March 16 action. In other words, if Millers FL had retained the claim following the bankruptcy settlement, they filed too late. We disagree with the date the Court of Appeals fixed for the accrual, fixing it instead with the Bankruptcy Confirmation Order of February 18, 2021 rather than with the initial Settlement of December 18, 2020. But the outcome is the same: the claims of Millers FL are barred. We therefore decline to decide the assignment issue, including the evidentiary significance of the sworn bankruptcy schedules, and express no approval of the Court of Appeals’ conclusion that a prohibited assignment may simply be disregarded. The cross-appeals are moot. III. CONCLUSION The Kentucky LLC did not establish that it owned the malpractice cause of action or that the attorneys owed it the client-based duty asserted. Bankruptcy substantive consolidation did not complete a state-law merger or 17 retroactively substitute it as the client in the Blue Sky litigation. The operative complaint filed by the Florida LLC and Brewer came more than one year after the February 18, 2021 Confirmation Order made the approval-conditioned Blue Sky resolution binding. We affirm the Court of Appeals’ judgment dismissing all claims, while disapproving its categorical statement that execution of any settlement necessarily begins the limitations period. The cross-appeals in Nos. 2024-SC-0502-DG and 2024-SC-0505-DG are dismissed as moot. All sitting. Lambert, C.J.; Bisig, Goodwine, Keller, and Nickell, JJ., concur. Thompson, J., concurs in result only. COUNSEL FOR APPELLANTS/CROSS-APPELLEES MILLERS LANE CENTER, LLC, A KENTUCKY LIMITED LIABILITY COMPANY; MILLERS LANE CENTER, LLC, A FLORIDA LIMITED LIABILITY COMPANY; AND MARK BREWER: C. Thomas Hectus COUNSEL FOR APPELLEE/CROSS-APPELLEE/CROSS-APPELLANT MORGAN & POTTINGER, P.S.C.: Mark S. Fenzel David J. Kellerman McBrayer PLLC Loren Teller Prizant Manna Inc. COUNSEL FOR APPELLEES/CROSS-APPELLEES/CROSS-APPELLANTS JAMES P. MCCROCKLIN AND MOSLEY & TOWNES, PLLC: James P. Grohmann Justin William Janes O’Bryan Brown & Toner, PLLC 18