Kentucky Court Report - SCOKY & COAKY

TORTS - FELA, SOL, judicial admissions: Zapp v. CSX Transportation, Inc. (COA 9/25/2009)

Zapp v. CSX Transportation, Inc.
2008-CA-001362 9/25/09 2009 WL 3047630 Rehearing pending

Opinion by Judge Taylor; Chief Judge Combs and Judge Nickell concurred. The Court reversed and remanded an order of the circuit court granting a motion for directed verdict for an employer on an employee’s claim under the Federal Employers’ Liability Act (FELA).

The circuit court found that the claim was barred by the statute of limitations. The Court held that the circuit court erred by deeming the employee’s testimony a judicial admission and by usurping the prerogative of the jury to decide a disputed issue of fact - when the statue of limitations was triggered. While the employee testified that his hand symptoms worsened while working in 1999, the circuit court erroneously inferred that the employee knew or should have known that the injury was caused by work duties in 1999.

CIVIL - SOL for claims against gov't employees is one year even if mva: Wagoner v. Bradley (CPA 9/4/2009)

Wagoner v. Bradley
2008-CA-001179 9/4/09 2009 WL 2835122 Released for pub.

Opinion by Judge Lambert; Judge Stumbo and Senior Judge Henry concurred. The Court affirmed an order of the circuit court dismissing appellant’s complaint related to a single-car accident in which she claimed that the appellees negligently erected a stop sign.

The Court held that the trial court did not incorrectly apply the one-year statue of limitations in KRS 44.110(1) and that the Motor Vehicle Reparations Act (MVRA) did not extend the one-year statute of limitations. The Court further held that the same statute of limitations applied to the Commonwealth and its employees, regardless of whether the alleged negligence involved discretionary or ministerial acts.

GOVERNMENT IMMUNITY - Gov't vs. proprietar function re housing provided to mainentance person working for school board: Breathitt County Board of Education v. Dot Prater (SC 8/27/2009)

Breathitt County Board of Education v. Dot Prater
2008-SC-000041-DG August 27, 2009
Opinion by Justice Abramson; all sitting.

As part of her compensation for providing security and maintenance services at an elementary school, the school board allowed an employee to live in a house located on school grounds. Prater was visiting the employee at the house when she suffered a permanent injury. Prater sued the school board, alleging negligence in the maintenance of the house. The board moved for dismissal, claiming it was absolutely immune from damage claims brought in court. The trial court denied the motion on the grounds that the board’s maintenance of the house served a proprietary function rather than a governmental function.

The Supreme Court noted that denials of motions to dismiss are typically not final and thus not subject to appellate review. However, since immunity is meant to shield its possessor not just from liability, but from the costs and burdens of litigation as well, a denial of immunity is subject to interlocutory appeal. The Court also concluded that the board’s furnishing of a residence was a governmental function because it furthered the board’s educational mission and was thus within the scope of governmental immunity.

Justice Venters dissented, taking the position that “maintaining the personal, private house for the use of a school maintenance worker and her social guests has nothing to do with the school district’s educational mission.”

TAXATION - Federal Telecommunications Act preempting local tax: Directv, Inc. and Echostar Satellite, LLC v. Commissioner, Dept. of Revenue (SC 6.25.2009)

Directv, Inc. and Echostar Satellite, LLC v. Commissioner, Dept. of Revenue and Frankfort Independent School District
2007-SC-000714-DG June 25, 2009
Opinion by Justice Abramson. All sitting; all concur.

Direct broadcast satellite (DBS) television providers brought an action seeking to have KRS 160.140, which imposes a gross receipts tax declared preempted under the federal Telecommunications Act of 1996. The circuit court awarded summary judgment to the DBS providers. The Court of Appeals reversed, holding that because the tax was levied to fund schools, it was, in effect, a state tax, not local, and thus was not preempted by the Act. The Supreme Court reversed the Court of Appeals and reinstated the circuit court’s summary judgment in favor of the DBS providers. The Court held that the tax was of the type expressly prohibited by the Act because the taxes were imposed on a district-by-district basis. The Court noted that the Act’s legislative history buttressed this conclusion.

BUSINESS LAW / SOL - Adverse domination and tolling of shareholder suits against directors; equitable tolling: John R. Wilson, Trustee for Franklin Career Services, LLC v. David B. Paine & John Newton (SC 6/25/2009)

John R. Wilson, Trustee for Franklin Career Services, LLC v. David B. Paine & John Newton
2008-SC-000905-CL June 25, 2009
Opinion by Justice Cunningham. All sitting; all concur.

The U.S. Bankruptcy Court for the Western District of Ky. certified the following question to the Kentucky Supreme Court: Does the equitable doctrine of adverse domination apply to toll the statute of limitation on lawsuits against corporate directors for unlawful distributions (KRS 271B.8-330)? The Court answered this question in the affirmative. The doctrine of adverse domination provides that a cause of action by a corporate plaintiff against the board of directors will be tolled during the period that the corporation is under the control of wrongdoers.

Equitable tolling is based upon a lack of knowledge of an injury. Accordingly, a corporate plaintiff cannot be deemed to have knowledge until such time that the individuals who control the corporation are aware of the injury and are willing to act upon the knowledge. The Court adopted the “disinterested majority” test for adverse domination, wherein the plaintiff is required to show that a majority (not all) of the board members engaged in intentional wrongdoing (not mere negligence) in order to toll the statute of limitation.

SETTLEMENTS & RELEASES - Hold harmless, indemnity, and applicability to PIP claims: Myanh Coleman v. Bee Line Courier Service, Inc. (SC 5/21/2009)

Myanh Coleman v. Bee Line Courier Service, Inc.
2007-SC-000628-DG May 21, 2009

Opinion of the Court. Justice Abramson not sitting.

Coleman suffered injuries in an accident involving a vehicle owned by Bee Line. She received $5,737 in basic reparation benefits (BRB) from her insurer, Nationwide, before settling with Bee Line for $6,500. As part of the settlement with Bee Line, Coleman signed a release in which he agreed to indemnify Bee Line for all claims “against the proceeds of the settlement.” Nationwide then sought reimbursement of its BRB payment from Bee Line in arbitration proceedings. After agreeing to pay Nationwide $4,737, Bee Line demanded indemnity from Coleman. When she refused, Bee Line filed suit. The trial court awarded summary judgment to Bee Line, holding she was contractually obligated to reimburse Bee Line for the payment. The Court of Appeals affirmed.

The Supreme Court reversed, holding that the language of the agreement limited indemnity to “claims against the proceeds of the settlement” of personal injury tort claims and did not include BRB benefits. The Court declined to address the issue of whether a sufficiently specific agreement to indemnify the tortfeasor for BRB recoupment claims would contravene the purposes of Kentucky’s Motor Vehicle Reparations Act.

Justice Noble (joined by Justice Venters) concurred in result only, contending that the Court should have addressed the “next question” regarding the propriety of tortfeasors extracting BRB recoupment agreements when settling claims. The minority asserted that the legislative intent and public policy behind the MVRA prohibit such agreements.

Business Law - piercing corporate veil, fraud claims, standing: Daniels v. CDB Bell, LLC (COA 7/17/2009)

Daniels v. CDB Bell, LLC
2007-CA-001608 07/17/2009 2009 WL 2059079
Opinion by Judge Clayton; Chief Judge Combs and Judge Caperton concurred.

In an appeal and cross-appeal, the Court affirmed a trial court order granting a directed verdict in favor of appellants on appellees’ claims for fraud and punitive damages and reversed a judgment imposing personal liability on investors in a corporation pursuant to a jury verdict finding that the corporate veil should be pierced. The Court first held that the trial court erred in submitting the question of whether the corporate veil should be pierced to the jury. The decision to pierce the corporate veil was an equitable one to be decided by the trial court and not a jury. The Court then held that appellees failed to show appellants exercised control or actively participated in harming appellees in order to support an “instrumentality theory” to justify pierce the corporate veil. The Court then held that appellees did not lack standing to pursue a default judgment because they adequately listed the judgment to allow the trustee in bankruptcy to decide not to pursue collection of the debt. The Court finally held that the trial court did not err in granting appellants’ motion for directed verdict on the fraud claims when there was no evidence establishing that appellants had any knowledge of the questionable activities of the corporation’s president in defrauding appellees.

Arbitration Clauses for claims against nursing home and authority: Beverly Health and Rehabilitation Services, Inc. v. Smith (COA 4/10/2009)

Beverly Health and Rehabilitation Services, Inc. v. Smith
2008-CA-000604
04/10/2009
2009 WL 961056
Opinion by Judge Wine; Judges Dixon and Keller concurred.

The Court affirmed an order of the circuit court denying a motion to compel arbitration on an estates’ claim that treatment the deceased received in a nursing facility hastened his death. The Court first held that the law of third party beneficiaries was inapplicable because neither the deceased nor his power of attorney were strangers to the contract. The Court then held that there was no evidence indicating that the deceased’s daughter had the authority to sign and therefore, there was no binding, written contract with regard to the arbitration agreement.

CIVIL PROCEDURE - Res judicata: Clemmer v. Rowan Water, Inc. (COA 1/23/2009)

Clemmer v. Rowan Water, Inc.
2007-CA-000355
01/23/2009
2009 WL 152867
Opinion by Senior Judge Guidugli; Chief Judge Combs and Judge Stumbo concurred.

The Court reversed and remanded a partial summary judgment in favor of appellee concluding that appellants’ claims for trespass, nuisance, and fraud were barred by the doctrine of res judicata. The Court held that a federal court order dismissing the claims for lack of subject matter jurisdiction did not preclude relitigation of the same claims in state court because there was no adjudication in federal court on the merits of the claims.

TRIAL - Instructions on threshold, apportionment in error; no DV for settling defendant: COMBS V. STORTZ (COA 1/9/2009)

Combs v. Stortz
2007-CA-001232
01/09/2009
2009 WL 50174
Opinion by Judge Caperton; Judge Keller and Wine concurred.

The Court reversed and remanded a judgment of the circuit court entered pursuant to a jury verdict finding liability but awarding no damages on appellant’s claims for negligence arising from an automobile accident.

The Court held that 1) the damage instructions impermissibly linked the two threshold questions of monetary damages for reasonably necessary medical expenses exceeding $1,000 and the specifically enumerated physical or permanent injuries, loss, or death, as allowed by KRS 304.39-060(2)(b); 2) appellant was not entitled to a directed verdict on the liability of a settling party; 3) the apportionment instruction as to the liability of the settling party was not improper and even so, any error was harmless; 4) the trial court did not commit reversible error by excluding reference to the insurer as the provider of UIM coverage; 4) the trial court did not err in admitting expert opinion testimony that took into account the mechanism of injury, appellant’s medical history and available medical records, in addition to the information derived from a physical examination; 5) the trial court did not err by allowing testimony regarding prior workers’ compensation claims and insurance payments for impeachment purposes; 6) the trial court did not err in excluding expert medical testimony regarding appellant’s condition that was couched in terms of possibility, rather than probability or certainty, and that was not timely produced; 7) appellant placed her medical condition at issue and therefore, defense counsel did not improperly cross-examine her regarding past workers’ compensation claims, past treatment and injury claims with past employers; 8) while cross-examination about appellant’s nephew’s employment by appellant’s counsel was admitted in error, the error was harmless; and 9) expert testimony by an auto mechanic regarding alleged brake failure was properly admitted.