A Lafayette interior decorator arrested and charged in 2005 with 32 counts of forgery and 32 counts of theft by fraud — and later acquitted — will get another crack at suing the wealthy oil-patch family she claims defamed and maliciously prosecuted her — a family she once counted among her close, personal friends.

The 3rd Circuit Court of Appeal recently reversed a ruling by Lafayette District Court Judge Marilyn Castle dismissing Judy Lyons’ civil suit against defendants Ann Knight, Mark Knight, Kelly Knight Sobiesk and Knight Oil Tools.

The case stems from Lyons’ hire by Ann Knight and Kelly Knight Sobiesk in 2002 to do interior design work in the Knights’ primary homes and other residences. However, according to the appeals court ruling, there was no small amount of cloak and dagger involved in the arrangement: “Rather than pay Ms. Lyons directly, [the Knights] instructed her to submit invoices to Knight Oil Tools, Inc., a family corporation that had previously been run by Mrs. Knight’s late husband but was now managed by her son, Mark Knight. In order to keep Mark Knight from knowing that personal work for Mrs. Knight and Mrs. Sobiesk was being paid for by Knight Oil Tools, Mrs. Knight instructed Ms. Lyons to alter invoices so that they looked like business expenses. Ms. Lyons would turn in invoices to the company’s accounts receivable department, and they would give her an unsigned check for Mrs. Knight to sign. At some point, Ms. Lyons, with or without the permission of Mrs. Knight, began signing Mrs. Knight’s name on the checks. While there is no dispute that Ms. Lyons signed some of the checks, there is no claim that Ms. Lyons did not do the work for which the checks were issued, though there is some dispute about the amounts she charged.”

Lyons’ bills for the Knights between 2002 and 2005 totaled more than $600,000 for goods and services provided by her and other vendors, according to the court record.

When company President Mark Knight discovered the subterfuge in 2005, he contacted police who, armed with accusatory affidavits signed by both Knight women, arrested Lyons.

After a three-day bench trial that began in August 2009, Lyons was acquitted by District Judge Herman Clause.

The 3rd Circuit ruling cites the fact that Ann Knight was unable to “identify any checks that she did not sign.” Clause also found that there was no intent on Lyons’ part to defraud the Knights — a requirement for a criminal conviction for forgery.

About six months after her acquittal, Lyons filed suit against the Knights, accusing them of defamation and malicious prosecution. Castle dismissed the suit. The appeals court reversed Castle's ruling.

The case has now been remanded to District Court in Lafayette for further proceedings.

We spoke last week with Lyons. Get her take in Wednesday's issue of ABiz on the psychological and physical impact the arrest and adjudication of her case have taken on her in the intervening years.


[EDITOR'S NOTE: This story has been corrected to reflect that the 3rd Circuit Court of Appeal reversed a lower court ruling dismissing Judy Lyons' defamation claims against the Knight family; Lyons, according to the ruling, may pursue both defamation and malicious prosecution claims against the Knights.]

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