Kentucky Tort Report

April 20,2007 Tort Report of COA Decisions

PUBLISHED COA DECISIONS:

• GMRIK INC  F/K/A GENERAL MILLS RESTAURANTS, INC.  V. EMBERTON
  CIVIL: Limitation of actions in medical negligence (accrual of cause of action and discovery rule)
  MEDICAL NEGLIGENCE:  Statute of limitations and discovery rule
  2005-CA-002355.pdf
  PUBLISHED: REVERSING AND REMANDING (VANMETER)
  DATE RENDERED: 4/20/2007

GMRI appeals judgment entered by Warren Circuit Court following a jury trial awarding Appellee $233,666.05 for him having contracted hepatitis A from dining at Appellant's Red Lobster restaurant. Appellant argued that the 1-year statute of limitations had expired prior to Appellee filing suit while Appellee countered that suit was timely filed pursuant to the discovery rule.

The relevant timeline was that Appellee had eaten at the restaurant on 7/28/01 and was hospitalized on 8/30/01. Prior to his release on 9/05/01, Appellee was given the diagnosis following which the health department investigated the matter to determine the source. Appellee never followed up with the department to see if the source had been identified and admittedly never attempted to conduct his own independent investigation. The record reflects that Appellee did not suspect Red Lobster as the source until his attorney visited him in May 2004 about the condition (the attorney was representing other people who had also contracted the condition at Red Lobster).

The COA began by noting the legal history of the discovery rule, and that it applied to tort actions for injury from latent disease caused by exposure to a harmful substance. However, the COA agreed with GMRI that hepatitis A cannot be considered a latent disease since Appellee knew of his disease only a month after eating at the restaurant. The COA also notes Appellee's duty to reasonably investigate the source once he was given the diagnosis, and found a complete failure to do so even when the health department was offering him aid in this regard. At worst, the COA held that suit should have been filed within 1 year of the date of diagnosis since the time begins to run once the occurrence of an injury is known even if the source is not yet known.

Digested by Chad Kessinger

• EASTERLING V. MAN-O-WAR AUTOMOTIVE, INC.
  TORTS:  Vicarious liability (respondeat superior and scope of employment)
  2005-CA-000114
  PUBLISHED: AFFIRMING; DIXON
  DATE RENDERED: 4/20/2007
  
  This case arose from a one-car accident.  The passenger Easterling sued Tudor and his employer Man-O-War successfully obtained a dismissal at summary judgment who defended on the grounds that since Tudor was not acting within the scope of his employment at the time of the accident, the theory of respondeat superior liability was inapplicable.  Tudor was a sales manager at Man-O-War who was given concert tickets by the owner and was driver a "demonstrator vehicle" when he was traveling from the concert with Easterling and another person as a passenger when the accident occurred.

To hold an employer vicariously liable for the actions of an employee, the doctrine of respondeat superior requires a showing that the employee's actions were in the course and scope of his employment and in furtherance of the employer's business. As was noted in Sharp v. Faulkner, 166 S.W.2d 62, 63 (Ky. 1942), the respondeat superior doctrine has no application when an employee engages on a “personal and private trip” which has “no connection with his masters' business.”

The COA could not perceive how giving someone concert tickets meets the necessary “foreseeability test” required in Kentucky to create causation for a subsequent automobile accident. See Lewis v. B&R Corp., 56 S.W.3d 432 (Ky.
App. 2001) and held that at the time of the collision, Tudor was engaged in a purely personal activity, and was not in any manner acting within the scope and course of his employment.

Digest by Michael Stevens

NONPUBLISHED DECISIONS OF COA:

• ATTORNEYS FEES:  Quantum meruit and discharge for cause
  2006-CA-000689.pdf
  NOT PUBLISHED: 93
  DATE RENDERED: 4/20/2007

• CIVIL PROCEDURE:  Sanctions for not attending mediation (attorneys fees and mediator fees)
  2006-CA-000586.pdf
  NOT PUBLISHED: 84
  DATE RENDERED: 4/20/2007

• EVIDENCE:  KRE 803(6) business records; KRE 902(11) self authentication
  DAMAGES:  Unjust enrichment
  2005-CA-002265.pdf
  NOT PUBLISHED: 151
  DATE RENDERED: 4/20/2007

• EVIDENCE:  KRE 404(b) and other crimes, wrongs, acts not proof of character; exceptions (MO)
  2006-CA-000485 and 2006-CA-000784
  NOT PUBLISHED: 87
  DATE RENDERED: 4/20/2007

• INSURANCE:  Underinsured motorist exclusion for non-resident relatives affirmed and listing as potential driver irrelevant
  2006-CA-000469.pdf
  NOT PUBLISHED: 84
  DATE RENDERED: 4/20/2007

• INSURANCE:  Policy interpretation of ambiguous exclusions; court cannot rewrite policy; medication exclusion in life insurance policy
  2006-CA-000914.pdf
  NOT PUBLISHED: 86
  DATE RENDERED: 4/20/2007

• TORTS:  Intentional interference with business relationships against his former employee
  2005-CA-001777.pdf
  NOT PUBLISHED:
  DATE RENDERED: 4/20/2007

• TORTS:  Premises liability; open and obvious; wearing flip flops
  2005-CA-002553.pdf
  NOT PUBLISHED: 97
  DATE RENDERED: 4/20/2007

Failure to bifurcate first party insurance (UIM) claim from staturory bad faith claim is not an automatic error

The Kentucky Court of Appeals ruled recently in a non-published decision that it was NOT palapale error when the trial judge did NOT bifurcate the claim for statutory bad faith (unfair claims settlement practices act) from the underlying UIM/underinsured motorist claim.   

The case was American Commerce Ins. Co. v. Hall, 2005-CA-002183, COA, Apr. 6, 2007.  Senior Judge Buckingham wrote this decision for a unanimous panel of Stumbo and Lambert.

The significance of this decision is that all too often, trial judges have a knee-jerk reaction to an insurance company's bifurcation motion.  Well, bifurcation makes sense when you have a claim against the defendant driver tied in with a bad faith claim against either a third party or first party insurance company.   It sounds fair to the defendant that the liability claim should be held in abeyance and should not unfairly affect the claim of liability and damages against him.  Furthermore, the resolution of the underlying tort claim might even foreclose and preclude the bad faith claim.

However, bifurcation is problably not appropriate when there is no defendant driver in the suit and all the claims are against the insurer!

How and when does this happen.  Well, it happened here.  In the facts of this case,  the plaintiff's settled with the liability carrier (with presumable compliance under the Coots v. Allstate procedure), then sued the underinsured motorist carrier (American Family) for UIM or first party insurance benefits AND for violations of the Unfair Claims Settlement Practices Act.  Oddly enough, American Family did not answer, and liability was entered.  The matter was later tried on damages on both the UIM and the UCSPA claims and American Family still was not in attendance and the verdict exceeded the policy limits. 

Here.  The claims against the defendant resolved, and the only claims left were those for UIM and unfair claims.  When American Family learned of the verdict, it jumped in and tried to set it aside with one of the reasons being it was palpable error not to have bifurcated the contractual UIM claim from the tort of statutory bad faith.

American Family lost, and even though this set of facts is odd, the result is that bifurcating the contractual UIM claim from the UCSPA claim is not automatic and not palpable error to include thus giving judges some leeway in consolidating their dockets and putting pressure on the insurance companies not to deny, delay, and defend and maybe, just maybe, attempt to resolve these claims without the bifurcation card and its cocomitant expense of two, yes two, trials.