Kentucky Tort Report

Tort Report (COA) for Sept. 7, 2007 (2007:43)

The complete list of decisions from COA for Sept. 7, 2007 can be found by clicking HERE.

This week the COA addressed:

• the mandatory requirements of 10 days to respond to motions for summary judgment in a a mechanics lien case styled Brock v. Pilot Corp.
• the validity of the appointment of the administrator of an estate in the filing of a wrongful death action and the appointment was voidable and not void in Bennett v. Nicholas.
• the extraterritorial application of workers compensation coverage was reviewed in KAGC v. Tri-State Crane Rental.

PUBLISHED TORT DECISIONS:

BROCK V. PILOT CORP.
CIVIL PROCEDURE: SUMMARY JUDGMENT AND GENUINE ISSUE OF MATERIAL FACT & 10 DAYS TO RESPOND
PROPERTY: MECHANICS LIEN AND PRE-LIEN NOTICE
TORTS:  UNJUST ENRICHMENT
2006-CA-001498
PUBLISHED: AFFIRMING
PANEL:  THOMPSON, PRESIDING; VANMETER, PAISLEY CONCUR
COUNTY: BELL
DATE RENDERED: 09/07/2007

Plaintiff was a third-in-line subcontractor hired to perform some hauling of excavated material from a property upon which the Defendant was building a Pilot Food Mart. The party who subcontracted the Plaintiff never paid him for his work, and he brought the instant action against the Defendant. The trial court granted Defendant's Motion for Summary Judgment, which was styled "Memorandum in Opposition to [Plaintiff's] MSJ and In Support of [Defendant's] MSJ."

The CA held that the requirement that a party be given ten days to respond to an MSJ is mandatory "unless waived," according to Storer Communications v. Oldham County, 850 S.W.2d 340, 342 (Ky., 1993) and CR 56. The CA noted that the Plaintiff failed to cite to any place in the record where he objected to the trial court's consideration of the Defendant's MSJ, and the CA deemed his objection waived.

The CA also held that in order for the Plaintiff to recover under the theory of unjust enrichment, he had to show not only that the Defendant benefited from his efforts, but also that it did not pay any person for the work he performed. The evidence proved that the Defendant paid the first-in-line subcontractor for the Plaintiff's work and that the second-in-line subcontractor failed to pay the Plaintiff. The unjust enrichment claim was therefore deemed precluded.

The Plaintiff argued that one of the Defendant's agents assured him the Defendant would pay for his work, and hence there was no need to provide the requisite notice under KRS 376.010(3) to the Defendant within 120 days of his intent to file a mechanic's lien (which he did not provide, by the by). The CA noted that a general contractor is not deemed an agent of a landowner as a matter of law, Middletown Engineering Co. v. Main Street Realty Co., Inc., 839 S.W.2d 274 (Ky., 1974). It examined the factors in Sam Horne Motor & Implement Co. v. Gregg, 279 S.W.2d 755, 757 (Ky., 1985), as to whether one acting for another is a servant or an independent contractor, and held that the Plaintiff failed to establish that the original subcontractor was the Defendant's agent. In that there was not direct contact between the Plaintiff and the Defendant or any of its agents, the CA held his prelien notice was untimely.

Cherry Henault

BENNETT V . NICHOLAS
TORTS: WRONGFUL DEATH ACTION
PROBATE: CONSTRUCTIVE KNOWLEDGE OF WILL
2006-CA-001467
PUBLISHED: REVERSING AND REMANDING
PANEL: HOWARD, PRESIDING; ACREE & LAMBERT CONCUR
COUNTY: MCCRACKER
DATE RENDERED: 09/07/2007

CA reverses and remands TC dismissal of malpractice claims.

Decedent's nephew was appointed as the administrator of her estate and then filed a wrongful-death action against the appellees. Appellees deposed decedent's former husband and discovered that she had a valid will appointing husband as Executor. Appellees moved to dismiss  the complaint; Appellant sought leave to have will probated and husband appointed Executor and substituted as personal representative for litigation purposes. TC granted motion to dismiss.

First, the dismissal was actually an entry of SJ against the personal representative and must be reviewed as such. Second, CA holds that Kentucky law is clear that appointment of nephew was a valid, voidable, NOT VOID, order, and that all actions taken, including filing suit, were valid. While there was absolutely no evidence, as appellees suggest, that nephew knew of the will prior to seeking appointment, such knowledge would be immaterial regardless. The motion to allow the will to be probated and the new personal representative to be substituted should have been granted; summary judgment was improper. Reversed and remanded.

Digested by John E. Hamlet.

KENTUCKY ASSOCIATED GENERAL CONTRACTORS SELF-INS. FUND V. TRI STATE CRANE RENTAL
WORKERS COMP: OUT OF STATE COVERAGE
2006-CA-002564
PUBLISHED: AFFIRMING
PANEL: VANMETER (PRESIDING);  THOMPSON, PAISLEY CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 09/07/2007

The Court of Appeals affirmed the Workers' Compensation Board and the ALJ in finding that a crane operator's injury in Ohio was covered under Kentucky Workers' Compensation law. The employer had jobs in many states and the claimant had worked for Tri-State Crane Rental before, in Kentucky as well as other states. Analyzing the extraterritorial application of the workers' comp law, the COA adopted the Board's decision which found that when the claimant had worked for the employer previously, the contract of hire was made in Kentucky. A six-month hiatus occurred where the claimant worked for another employer, since he was a member of the operating engineer's union. But the ALJ found, based on conflicting evidence, that the employment relationship continued when he was injured on the first day back to work for this employer. Therefore, the injury could be covered under Kentucky workers' compensation law. Although the employer contacted the claimant directly, on the occasion of this period of employment, the opinion lacks any information about the Union's collective bargaining agreement. It seems that the CBA should have been considered the 'contract of hire' since it established the terms and conditions of employment. The COA also affirmed the Board's reversal of the ALJ's imposition of sanctions for denying the claim.

Digested by Peter Naake - Priddy, Cutler, Miller & Meade

COA Tort Report for Aug. 31, 2007 Decisions (2007:42)

AUGUST 31, 2007 KENTUCKY COURT OF APPEALS DECISIONS (2007:42)
TORT REPORT

PUBLISHED COA TORT DECISIONS

MEYERS V. PETRIE
CIVIL PROCEDURE: CONTEMPT
2006-CA-001112
PUBLISHED: AFFIRMING
PANEL: MOORE PRESIDING; DIXON, TAYLOR CONCUR
COUNTY: BOYLE
DATE RENDERED: 8/31/2007

The family court held Meyers in contempt for violating a provision of a Domestic Violence Order (DVO) that required Meyers to attend domestic violence counseling.

As punishment for his contemptuous behavior, the family court ordered Meyers to complete domestic violence counseling. On appeal, Meyers argues that he only had a duty to comply with the DVO as long as it remained in effect, and, once the DVO had expired, the family court lacked the authority to extend the DVO's provisions past its expiration date to require Meyers to complete the previously-ordered counseling. Finding that the family court properly exercised its contempt power, the COA affirmed.

The family court acknowledged that the DVO had previously expired but noted that it had issued the show cause order prior to the DVO's expiration date. Consequently, the family court determined that it continued to have jurisdiction over Meyers' contemptuous behavior.

When a court exercises its contempt powers, it has nearly unlimited discretion. Smith v. City of Loyall, 702 S.W.2d 838, 839 (Ky.App. 1986). Consequently, the COA will not disturb a court's decision regarding contempt absent an abuse of its discretion.

When Meyers refused to attend counseling, he refused to obey one of the family court's orders, thus, committing civil contempt. However, Meyers' conduct not only constituted civil contempt, but it also constituted criminal contempt. By willfully defying the DVO, Meyers demonstrated great disrespect for the family court, bringing the family court into disrepute and degrading its authority a court not only has the right but also the duty to protect its authority and dignity against contemptuous conduct. Marcum v. Commonwealth, 272 Ky. 1, 113 S.W.2d 462, 466 (1938).

COA concluded when the family court sentenced Meyers to complete domestic violence counseling, it was not attempting to enforce the defunct DVO but was properly exercising its contempt powers. This was was not an abuse of discretion.

By Michael Stevens

STANDARD FIRE INS. CO. V. EMPIRE FIRE AND MARINE INS. CO.
INSURANCE:  "OTHER INSURANCE" CLAUSES; "REASONABLE BELIEF" AND PERMISSION
2006-CA-000698
PUBLISHED: AFFIRMING
PANEL: HOWARD PRESIDING; DIXON, THOMPSON CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 8/31/2007

The Standard Fire Insurance Company appealed from a summary judgment in which Standard was ordered to indemnify Empire Fire and Marine Insurance Company in the amount of $19,870.44, plus attorney fees and costs incurred in the settlement of third-party personal injury claims arising from an automobile accident. COA affirmed.

Standard had issued an insurance policy to the Kaelins on a 1999 Honda Accord, which the Kaelins had leased from Wells Fargo. When the Kaelins defaulted on the lease, Imperial Recovery went out to repossess it.  However, the Kaelins gave Imperial the keys to Richardson, the Imperial's driver, who  had an accident on the way back to the storage facility.  Empire issued a garage policy to Imperial R which provided coverage for any “non-owned autos used in your garage business,” which business included the repossession of automobiles.

Richardson was at fault in causing the two-vehicle collision, and both insurance policies, that issued by Standard to the Kaelins and that issued by Empire to Imperial, remained infull force and effect on the date of the accident.  Empire settled with the injured driver and sought indemnity from Standard.

COA addressed three separate issues. First, did Standard’s policy provide coverage to Richardson for this accident? Second, did Empire’s policy provide such coverage? Third, if both policies apply, which policy is primary?

First, Richardson clearly had “a reasonable belief” that he was entitled to drive the Honda, and, in fact, he had implied permission from both Imperial and the Kaelins to drive the car. Imperial had given him clear instructions to repossess the automobile, and there is no evidence that he varied from his instructions by driving the vehicle instead of transporting it on the truck. Once he arrived at the Kaelin residence, they gave him the keys.  Therefore, Richardson had a “reasonable belief” that he was entitled to drive the 1999 Honda and that Standard's insurance policy did apply and
provided liability coverage to Richardson at the time of this accident.

Empire admits that its policy provided coverage for this accident. Such coverage is the reason Empire paid the settlement claims in the first place. Therefore, both the Standard and the Empire policies apply in this case.

Kentucky law is well established that, “[w]hen the contest is between two insurers, the liability for a loss should be determined by the terms and provisions of the respective policies. . .” Chicago Ins. Co. v. Travelers Ins. Co., 967 S.W.2d 35, 37 (Ky.App. 1997) (quoting State Farm Mutual Automobile Ins. Co. v. Register, supra., at 706-707.)  “Furthermore, where the terms of an insurance policy are clear and unambiguous, the policy should be enforced as written.” Chicago Ins. Co., supra, at 37. Thus, this Court will look to the strict language of the insurance policies in determining which coverage is primary, rather than to public policy.

Although the Kaelins could have cancelled the policy at time of repossession, they had not.  Thus the vehicle was an "owned" rather than a "non-owned" vehicle with coverage provided by Standard.

Kentucky law is well settled that when a policy containing a pro rata “other insurance” clause conflicts with a policy having an excess “other insurance” clause, the policy with the pro rata provision should be applied first and the policy with the excess clause would become effective only when the first policy is exhausted. Hartford Ins. Co. v. Kentucky Farm Bureau Ins. Co., 766 S.W. 2d 75 (Ky. App. 1989).

Pursuant to the terms of the two insurance policies, Standard's policy provides the primary liability insurance for this accident and Empire’s policy provides only excess coverage. Therefore, Empire is entitled to reimbursement from Standard for the sums it paid on behalf of its insured to the injured parties.    Therefore, Empire is entitled to reimbursement from Standard for the amount of its settlement of those claims, as well as its costs and fees incurred.

As an FYI, Judge Tom Wine was the trial judge who granted summary judgment in this matter.

By Michael Stevens

BARNETT V. MERCY HEALTH PARTNERS-LOURDES
TORTS: MEDICAL NEGLIGENCE AND CONSUMER PRACTICES ACT; INFORMED CONSENT
2006-CA-000889
PUBLISHED: AFFIRMING
PANEL: THOMPSON PRESIDING; COMBS, BUCKINGHAM CONCUR
COUNTY: MCCRACKEN
DATE RENDERED: 8/31/2007

In this lawsuit, the decedent was suspected of lymphoma and underwent surgery to remove it.  Complications developed and the decedent died later.  It was claimed by the decedent's estate that the surgeon was intoxicated during surgery.  However, no evidence was offered at trial on damages which resulted in a dismissal of those claims for tort.  With regard to a claim that the hospital and surgeon violated the Consumer Practices Act, the COA concluded that there must be some nexus between the contract act and the business or entrepreneurial activity, and since there was none, the CPA violation must be dismissed. 

This lawsuit was brought by the personal representative (Barnett) following the decedents (Evert) death after surgery at Lourdes Hospital.  While evaluating Evert  for his complaints of chest pains, a physician discovered a lump under Evert's arm. The physician believed the lump could be a lymphoma and so Evert underwent surgery to remove the lump.   Barnett alleges that the surgeon who performed the biopsy, Dr. Brunson, was intoxicated at the time of the surgery, that other personnel at Lourdes and in the operating room knew of Dr. Brunson's condition, and that they unsuccessfully tried to stop him from performing the surgery. Following surgery, Evert developed some complications and ultimately suffered a stroke. Evert managed to live at home for a short period of time following his release from Lourdes, but he eventually was placed in a nursing home, where he died several months later.

Summary judgment was granted dismissing the personal injury claim for no damages shown. Furthermore, Barnett argues that the Kentucky Consumer Protection Act (the Act) applies to Lourdes and that he suffered damages as a result of Lourdes's violation of provisions of the Act. Lourdes argues that Barnett failed to prove any damages based on the breach of contract claim and that, even if the Act applies to Lourdes, it did not violate any provisions of the Act and Barnett has failed to prove any damages under the Act.

Barnett argues that when he signed a document agreeing to be responsible for payment for Evert's treatment, he created a contract with Lourdes Barnett is arguing that, in consideration for his agreement to pay for Evert's treatment if insurance would not cover the expenses, Lourdes agreed to treat Evert, exercising appropriate care. Barnett argues that Lourdes breached the contract when it permitted an intoxicated surgeon to perform surgery on Evert. Finally, Barnett argues that he performed all of his obligations under the contract as Lourdes has been paid for its services.

To be enforceable, a "contract must contain definite and certain terms setting forth promises of performance to be rendered by each party."  Although the documents do not contain any specific promise by Lourdes to provide care or as to the quality of care, the fact that Lourdes rendered care implies such a promise. Therefore, we hold that an express contract existed between Barnett and Lourdes.

However, establishing the existence of a contract is not sufficient to sustain a cause of action for breach of contract. Barnett must also prove that Lourdes breached the contract and that he suffered damages as a result of that breach. In an action for breach of contract, the measure of damages "is that sum which will put the injured party into the same position he would have been in had the contract been performed." Perkins Motors, Inc. v. Autotruck Federal Credit Union, 607 S.W.2d 429, 430 (Ky.App. 1980).

Assuming for the sake of argument that Lourdes did breach the contract, Barnett has not put forth any evidence that he suffered any damages. Because Barnett has failed to prove that any amount was paid by the  estate to Lourdes on behalf of Evert, he has failed to prove that the estate suffered any damages. Therefore, whether a contract existed between Evert and Lourdes and whether any such contract was breached is of no consequence.

In order for the Act to apply, there must be some allegations that the actions complained of were part of the business aspect of the practice of medicine.  Such actions would include advertising for a particular procedure or surgery then failing to advise the patient of the risks involved or of alternative treatment; entering into a financial agreement that would increase profits to the possible detriment of patients; or advertising services at a particular cost then charging at a different rate.  Negligently performing surgery or providing treatment that is below the standard of care and failing to inform a patient of such actions are not included in the business aspect of the practice of medicine. Therefore, they are not covered under the Consumer Protection Act.

COA held that Barnett failed to provide any evidence of damages; therefore, the circuit court appropriately granted Lourdes' motion for summary judgment. Furthermore,  because the actions of Lourdes did not involve the entrepreneurial, commercial, or business aspects of Lourdes' practice of medicine, the Consumer Protection Act does not apply to this set of facts.

By Michael Stevens

LLOYD V . CSX TRANSPORTATION, INC.
TORTS: FELA (SUBSTANTIVE AND PROCEDURAL LAW); ACCRUAL OF CAUSE OF ACTION FOR PROGRESSIVE TRAUMA
2006-CA-000912
PUBLISHED: REVERSING AND REMANDING
PANEL: THOMPSON PRESIDING; DIXON CONCURS; HENRY DISSENTS WITH SEPARATE OPINION
COUNTY: JEFFERSON
DATE RENDERED: 8/31/2007

CA reverses and remands grant of SJ to CSX on statute of limitations grounds in this toxic exposure case.

Plaintiff-appellant worked for CSX from 1974-1980 and was exposed daily to chemicals and solvents. Beginning in 1994 he consulted doctors for headaches, GI problems, depression, anxiety, mood swings, and problems with memory and attention. At that time he expressed concern about his toxic exposure at CSX. In 1995, he requested his internist's assistance in getting a referral to an occupational health specialist in Michigan; his insurance denied coverage for the referral and, instead, he went to a neurologist. The neurologist diagnosed only migraines and missed toxic encephalopathy. Finally, in June 2001, he was diagnosed with toxic encephalopathy attributed to the chemical exposure at CSX. He filed suit within the 3-year FELA SOL.

CSX argues that the record shows he knew or should have known that his complaints were attributable to the exposure as early as 1996, but that he delayed filing suit until 7 years later. CA holds that, because toxic encephalopathy is a progressive disease whose symptoms mimic other conditions, and because 5 highly qualified physicians missed its source, the claimant cannot be charged with notice of his condition, and its cause, under Lipsteuer. A spirited dissent follows.
By John Hamlet

NONPUBLISHED TORT DECISIONS THIS WEEK

RIDDLE V. WESTRICK
CIVIL PROCEDURE:  DISMISSAL AND WARD V. HOUSMAN FACTORS
2006-CA-001284
PUBLISHED: 72
DATE RENDERED: 8/31/2007

WALLING V. ABNEY
TORTS: JAILER'S SOVEREIGN IMMUNITY & WAIVER; ASSAULT BY FELLOW INMATE
2006-CA-001570
PUBLISHED: 95
DATE RENDERED: 8/31/2007

COA Tort Report for Aug. 24, 2007 decisions (2007:41)

AUGUST 24, 2007 KENTUCKY COURT OF APPEALS DECISIONS (2007:41)
TORT REPORT

PUBLISHED DECISIONS FOR THE WEEK

GOEBEL V. ARNETT
TORTS:  PARENTAL CONSORTIUM IN A NON-DEATH CASE; INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; ADOPTION MALPRACTICE

2006-CA-001656
PUBLISHED: AFFIRMING IN PART, AND VACATING AND REMANDING
PANEL: COMBS, PRESIDING; NICKELL AND WINE CONCUR
COUNTY: CAMPBELL
DATE RENDERED: 08/24/2007

CA affirms in part and vacates and remands in part TC entry of SJ for attorney in this case of adoption malpractice, fraud, negligent misrepresentation, loss of consortium and intentional infliction of emotional distress.

Appellant, depressed, pregnant and estranged from the baby's father, contacted Adoptions of Kentucky, Inc. She was told she needed an attorney and was referred to Arnett without being told that Arnett was the owner/sole shareholder of Adoptions of Kentucky. Arnett also represented the mother, the adoptive parents and her own agency at the termination proceedings. She did not tell the mother that the adoptive parents had paid the firm a fee in excess of $6,000. The mother also alleges that Arnett ordered her avoid the father before the termination occurred, to falsely inform the court that she did not know the identy of the father, and to terminate her own parental rights under threat of a countersuit from the adoptive parents. The termination was entered. Since, the father was able to regain custody; he and the child now live in Egypt. The mother's motion to set aside her termination was denied and she did not appeal. She filed suit against Arnett and Adoptions of Kentucky. The TC entered SJ against the appellant, noting that since she did not appeal the denial of her motion to set aside her termination she could not recover on her claims as a matter of law. The TC believed that appellant was attempting to re-litigate issues raised, and denied, in her CR 60.02 motion.

The CA affirms in part and vacates and remands in part, holding that the TC erred in concluding that appellant was attempting to re-litigate adjudicated issues. Appellant's claims of Arnett and Adoptions of Kentucky's wrongdoing and negligence had never been litigated. The loss of consortium claim, however, was properly dismissed. The IIED claim, however, remains.

Digested by John E. Hamlet
Sitlinger, McGlincy, Theiler & Karem

NONPUBLISHED TORT DECISIONS

TRANSPORTATION CABINET V. JOHNSON
BOARD OF CLAIMS:  CAR ALONG HIGHWAY, DEFENSE OF CONTRIBUTORY NEGLIGENCE
2006-CA-001512
NOT PUBLISHED: 92
DATE RENDERED: 08/24/2007

The Commonwealth relies chiefly on Commonwealth, Transp. Cabinet v. Shadrick, 956 S.W.2d 898 (Ky. 1997), for the proposition that it owes no duty to motorists, such as the Johnsons, who collide with obstructions that are in plain view in the right of way.  Our Supreme Court further construed and refined the Shadrick holding in Commonwealth, Transp. Cabinet v. Babbitt, 172 S.W.3d 786 (Ky. 2005), which holds that [i]n the context of the facts in Shadrick, that meant only that the Department was not required to remove vehicles parked by someone else in the right-of-way unless they obstructed the traveled portion of the highway where persons exercising due care for their own safety would be operating their vehicles.  It did not mean that the long-discarded doctrine of contributory negligence as a complete defense applies to claims against highway authorities in Kentucky.  Court further held that Shadrick does not completely exonerate the Cabinet when the hazard is in plain view even when the driver is contributorily negligent.   There was abundant evidence to support the facts found by the hearing officer which were accepted and adopted by the Board.  Finding no basis to disturb those findings, COA recognized that “a highway authority is not automatically liable every time a motorist drives his vehicle off the traveled portion of the highway and strikes a roadside hazard.”  The determination of whether the highway authority has breached its duty to a motorist who leaves the highway and collides with an obstruction near the road is a fact-intensive inquiry, and COA agreed with the Board that under the particular facts of this case, the Commonwealth had a duty to the Johnsons and that it breached that duty. There was no basis for the circuit court to disturb the findings of the Board.

SUNNYSIDE HOMES OF RECKLEDGE, INC. V. OWEN
CIVIL PROCEDURE: DEFAULT JUDGMENT BASED ON DISCOVERY SANCTIONS AFFIRMED ON APPEAL
2006-CA-000432
NOT PUBLISHED: 107
DATE RENDERED: 08/24/2007

GREEN V. BARBOUR
CIVIL PROCEDURE:  SOL; DEFAULT JUDGMENT SET ASIDE ON APPEAL; TOLLING SOL; SERVICE ON SEC'Y OF STATE
2005-CA-001599
NOT PUBLISHED: AFFIRMING
PANEL: TAYLOR PRESIDING; WINE AND PAISLEY CONCURRING
COUNTY: JEFFERSON
DATE RENDERED: 8/24/2007

This is an interesting case on the nuances of a hit and run motorist when suit is eventually filed and the identity of the actual driver discovered after the statute of limitations expired.

Green was a pedestrian who was struck by a "hit and run" motorist.  Green tracked down the car later, wrote the owners, and obtained the name of the insurer but did not ask the identity of the driver (who later turned out to be the Barbour's daughter working in Louisville).  Suit was filed more than two years after the accident against the owners.  No pip was paid and all medicals were covered by Medicare.  Owners moved for summary judgment dismissing the claim under SOL.  Green submitted discovery to identify the driver learning then it was Barbour's daughter, Eloyce.  Eventually, the claims against the parent/owners was dismissed by the Court, the complaint was amended to include the daughter who was eventually served by Sec'y of State and a default judgment entered against Eloyce for $50,000.

An insurance defense lawyer appeared on behalf of Eloyce moving to set aside the default judgment and to dismiss the claims against Eloyce per SOL.  Both motions were granted and this appeal followed.  COA affirmed both.

Two issues were raised on appeal claiming error in setting aside the default judgment and error in dismissing the claim based upon the statute of limitations and specifically arguing it was tolled by KRS 413.190.

In addressing setting aside the default judgment, the COA noted that there was no dispute that a meritorious defense was available as the SOL had been successfully used by her parents to dismiss the claim against them.  However, Eloyce claimed she had never been served with the default judgment motion.  The COA noted there was no certificate with the motion which was not captioned a default motion but rather a motion for judgment. 

Since Green was relying on KRS 454.210 to obtain personal jurisdiction over Eloyce and given that this statute “deems” the secretary of state to be Eloyce's statutory agent in this proceeding, we believe it was incumbent upon Green, at minimum, to serve a copy of the motion upon the secretary of state. In fact, it appears the motion was served on no one.

With regard to the default judgment, the COA noted that if the claimed "actual" notice to Eloyce's agents had knowledge of the claims set forthin in the amended complaint then then that would have sufficed for CR 55.01 notice.  However,

In this case the record clearly reflects that the “representatives” of Eloyce, as alleged by Green, were not served notice of the motion for judgment nor were they given notice of the hearing conducted in January 2005 to determine damages on the default judgment. Thus, we agree with the circuit court's finding that these circumstances constitute a valid excuse for Eloyce's default and further, given the totality of the circumstances, does not constitute any prejudice against Green to allow the matter to be resolved on the merits rather than by default judgment. Accordingly, we do not believe the circuit court abused its discretion in setting aside the default judgment against Eloyce.

COA then dispensed with the tolling argument as follows:

KRS 413.190 tolls the running of statutes of limitation against residents of this state if the resident is absent from the state or absconds or conceals himself to prevent the prosecution of the action against him. The record in this case reflects very little on the status of Eloyce as a “resident.” The meager discovery taken in this case indicates that Eloyce worked in Louisville during the summer of 2000. There is no other evidence to support her residency in Kentucky. Green failed to establish that Eloyce was a Kentucky resident. Accordingly, we conclude that KRS 413.190 is simply not applicable in this case since it can only accrue against a resident of this Commonwealth. Further, we note that Green's argument that Eloyce is a resident of Kentucky totally contradicts his argument that she was properly before the court since he obtained service on Eloyce pursuant to KRS 454.210, which is the primary method for obtaining personal jurisdiction over nonresidents by Kentucky courts.

SCOKY Tort Report for Aug. 23, 2007 (2007:40)

AUGUST 23, 2007 SUPREME COURT OF KENTUCKY DECISIONS (Vol. 2007:40)
TORT REPORT

PUBLISHED TORT DECISIONS THIS WEEK

MATHERLY LAND SURVEYING, INC. V. GARDINER PARK DEVELOPMENT
TORTS: LEGAL NEGLIGENCE; INDEMNITY
CIVIL PROCEDURE: STATUTE OF LIMITATIONS
2005-SC-000576-DG.pdf
2006-SC-000163-DG.pdf
PUBLISHED: REVERSING
OPINION OF THE COURT BY SCOTT
FROM: JEFFERSON
DATE RENDERED: 08/23/2007

SYNOPSIS: Engineering and Land Surveying (as a part of the engineering services) are professional services under KRS 413.245 and although damages were not EXACT they did not toll the statute of limitations.

Gardiner hired Matherly to design sewers and roads for a subdivision. Gardiner alleged that Matherly's work was incorrect and hired other companies to finish the subdivision project. Gardiner also alleged that their attorneys committed malpractice by allowing the statute of limitations to run. The trial court granted the Matherly's motion for summary judgment on the grounds that Gardiner's claims were barred by KRS 403.245, Kentucky's one-year professional services statute of limitations. The Trial court reasoned that Matherly performed engineering services that were supervised by a professional--the engineer. The Court of Appeals reversed on the grounds that Matherly also performed land surveying, which it opined was NOT a professional service and under KRS 413.245. Kentucky Supreme Court disagreed and held that Matherly held itself out as a professional engineering firm and had a professional engineer overseeing work on the ENTIRE project--even the land surveying. In addition, Gardiner believed Matherly was going to perform engineering services. The Supreme Court held that both the engineering and land surveying by Matherly were "professional" and subject to KRS 413.245. The court also held that Gardiner's action was time barred and even if the exact damages may not have been known. Lastly the court rules that KRS 413.120 does not apply because this action is not an indemnity action.

Digested by Paul O'Bryan
O'Bryan & Denbow

KENTUCKY EMPLOYERS MUTUAL INS. V. HON. EDDY COLEMAN
WORKER COMPENSATION:  Bad faith refusal to provide medical treatment barred by exclusive remedy provision
2006-SC-000608-MR.pdf
PUBLISHED: REVERSING
OPINION BY NOBLE (SCOTT DISSENTS BY SEPARATE OPINION)
DATE RENDERED: 08/23/2007

The Supreme Court determined that the Circuit Court could not proceed with a civil suit against the workers' compensation insurance company for what were found to be bad faith refusals to allow medical treatment and pay for medications required by a work related in jury. The Administrative Law Judge found in favor of the injured worker and awarded sanctions against the workers' compensation insurance carrier in the form of attorneys fees and costs. The case was also referred to the Executive Director of the Office of Workers' Claims for imposition of fines for unfair settlement practices. The Executive Director fined the insurance company $9,000, which has been appealed. The claimant filed a bad faith action against the carrier, which the carrier sought to dismiss on the grounds of lack of jurisdiction, relying on the exclusive remedy provisions of the work comp act. The Circuit Court denied the motion, and the carrier then sought a writ of prohibition against the Circuit Court, which was denied. The Supreme Court reversed, holding that the workers' compensation insurance company was immune from a civil tort action because of the exclusive remedy of the workers' compensation act. A dissenting opinion by Justice Scott points out that this violates the jural rights of workers guaranteed by the Kentucky Constitution, and that a tortious act of an insurance company, such as sending private investigators to harass the injured worker or inflicting harm upon the worker by denying necessary medical treatment, are separate non-work related injuries. Granting immunity for even the most contemptible acts will allow workers' compensation insurers to act with impunity while suffering only minor sanctions under the workers' compensation act.

Digested by Peter Naake
Priddy, Cutler, Miller & Meade

HUBBARD DBA B&H LOGGING V. HENRY
WORKERS COMPENSATION:  Employer-employee relationship
2006-SC-000750-WC.pdf
PUBLISHED: AFFIRMING (OPINION OF THE COURT)
FROM COURT OF APPEALS
DATE RENDERED: 08/23/2007

The claimant agreed to work for Hubbard on a trial basis with no pay for two days. He was severely injured and theefore, never hired. THe ALJ dismissed the workers’ comp claim finding the was no employee-employer relationship, but the Worker’s Comp Board reversed, and the Court of Appeals and Supreme Court affirmed, citing the statute sating that there does not need to be an express contract of hire.

Digested by Peter Naake
Priddy, Cutler, Miller & Meade

GENERAL ELECTRIC CO. V. REHM
WORKERS COMPENSATION:  "Up the Ladder" immunity
2004-SC-000043-DG.pdf
2005-SC-000242-DGE.pdf
PUBLISHED: AFFIRMING IN PART AND REVERSING IN PART
OPINION OF COURT BY NOBLE
FROM: JEFFERSON COUNTY
DATE RENDERED: 08/23/2007

In this set of civil cases regarding the immunity of contractors from civil suits, the Supreme Court explored the definition of “contractor” set forth in KRS 342.610(2). These were asbestos exposure cases, where there were multiple defendants. Each defendant’s business was analyzed to determine whether the work of the subcontractor, for whom the plaintiff worked, performed work which was a “regular and recurrent” part of the work of the defendant. The Supreme Court found that if the defendant had employees who would regularly perform the work that the subcontractor performed, the exclusive remedy provisions of the workers’ comp act would apply. If the subcontractors work was not a regular part of defendant’s business, as in the case where the work would be subcontracted out, the defendant would remain liable to the subcontractor’s employees. The case also discussed the ‘jural rights’ doctrine, but finds the exclusivity provision of the workers’ compensation act constitutional in that regard.

Digested by Peter Naake
Priddy, Cutler, Miller & Meade

NONPUBLISHED TORT DECISIONS THIS WEEK

None.

COA Tort Report for Aug. 17, 2007 (2007:39)

AUGUST 17, 2007 KENTUCKY COURT OF APPEALS DECISIONS (2006:39)

Tort Report

PUBLISHED COA DECISIONS

REYNOLDS V. THE TRAVELERS INDEMNITY CO.
INSURANCE:  Homeowners exclusions to coverage
2005-CA-002246
PUBLISHED: REVERSING AND REMANDING
PANEL: COMBS PRESIDING; MOORE, NICKELL CONCUR
COUNTY: MARION
DATE RENDERED: 8/17/2007

Reynolds appeals TC's entry of Summary Judgment for Travelers finding that exclusions contained in Appellant's homeowner's insurance policy with Travelers precluded coverage for substantial losses incurred at their home. At issue was whether the theft of appliances and resulting water damage (from severing of the water line to a refrigerator) and mold damage to the Appellant's home by an employee of a contractor working on a drainage improvement project at the home was a covered loss under the policy. Specifically, Reynolds alleged error in the TC applying 3 different exclusions: 1) exclusion for losses caused by theft of home under construction 2) exclusion for losses caused by vandalism and malicious mischief; 3) exclusion for losses caused by continuous or repeated seepage or leakage of water; and 4) exclusion for loss caused by mold.

The COA held that none of the 4 exclusions applied to preclude coverage for any of the Appellant's losses. As to exclusion 1, the COA held that the home was not "under construction" at the time of the theft (it was originally built several years prior), but rather was merely undergoing repairs. The COA ruled exclusion 2 was inapplicable since the losses stemmed from a theft rather than vandalism or malicious mischief. On exclusion 3, the COA for the phrase "period of time" ambiguous as it relates to how long the seepage must have lasted before the exclusion applies, and found both side's interpretation reasonable under the case facts. The ambiguity thus benefited Appellants as the non-drafting party of the insurance contract. Finally, on exclusion 4 the COA felt the mold damage was a direct and proximate result of the theft of the refrigerator and not a separate loss, and thus did not apply to preclude coverage. The COA referenced the "efficient proximate cause doctrine" as adopted by a Washington state court in support of its conclusion that the mold damage was directly caused by the covered theft loss.

By Chad Kessinger
Schiller Osbourn Barnes & Maloney

MCCULLOCH V. SULLIVAN
TORTS:  DAMAGES - MILLER V. SWIFT and ZERO PAIN AND SUFFERING VERDICT
2006-CA-000482
PUBLISHED: AFFIRMING
PANEL: NICKELL PRESIDING; COMBS AND MOORE CONCUR
COUNTY: FAYETTE
DATE RENDERED: 8/17/2007

This appeal involved a trial court's denial of plaintiff's new trial motion and judgment NOV for a zero pain and suffering (and inconvenience) verdict in a trial in which medical testimony supported pain and suffering and the plaintiff was awarded nearly $18,000 in medicals and nearly $14,000 in wage loss. Two other errors raised involved the zero verdict for an impairment award and the zero pain and suffering verdict were both contrary to the evidence, and that she should have been awarded a directed verdict on liability..

In addressing this "Miller v. Swift" issue, Judge Nickell noted "[a]s a reviewing court, however, we focus not on what the jury did, but rather on what the trial court did . . . . [and] will presume the trial court's denial of a JNOV or a new trial to be correct and will reverse only upon a finding of clear error."

The plaintiff noted she had two doctors give unrefuted testimony about her pain (herniated disc and disectomy), but the defendant argued "there was sufficient evidence from which jurors could, and did, conclude [plaintiff] had a high threshold for pain . . . ."  The COA agreed with the defendant.

While there was testimony from which jurors could conclude McCulloch [injured plaintiff] experienced pain as a result of the collision with Sullivan [defendant], there was also sufficient evidence from which they could just as easily conclude she did not. Keeping in mind that jurors are “not bound to believe a plaintiff or her doctors,” Spalding v. Shinkle, 774 S.W.2d 465, 467 (Ky.App. 1989), we cannot say the jury’s verdict was unrelated to the evidence. We therefore cannot say the trial court abused its discretion and clearly erred in overruling the motions for a JNOV or, alternatively, for a new trial.

Digested by Michael Stevens

NONPUBLISHED COA DECISIONS

NOE V. COM.
APPEALS:  EFFECT OF OMITTED RECORD AND SUPPORTING TRIAL COURT'S DECISION
2006-CA-001364
NOT PUBLISHED: 74
DATE RENDERED: 8/17/2007
SPENCER V. PLAYTEX PRODUCTS, INC.
TORTS: PRODUCTS LIABILITY AND CAUSATION PER CIRCUMSTANTIAL EVIDENCE 
2006-CA-000995
NOT PUBLISHED: 87
DATE RENDERED: 8/17/2007

ADDINGTON V. LEWIS
TORTS: BREACH OF FIDUCIARY DUTY CLAIM AGAINST AUCTIONEER 
2006-CA-001340
NOT PUBLISHED: 96
DATE RENDERED: 8/17/2007

COA Tort Report for August 10, 2007 (2007:37)

AUGUST 10, 2007 KENTUCKY COURT OF APPEALS DECISIONS (2006:38) - TORT REPORT

PUBLISHED TORT DECISIONS FOR COA - AUG. 10

• DAVIS V. FISCHER SINGLE FAMILY HOMES, LTD.
  CIVIL PROCEDURE:  JUROR PEREMPTORY CHALLENGES; DEPOSITIONS BY VIDEO
  EVIDENCE:  SCIENTIFIC "DAUBERT"; PRIOR ACTS
  TORTS: NEGLIGENCE PER SE AND BUILDING CODES
  2006-CA-000005
  PUBLISHED: AFFIRMING
  PANEL: NICKELL PRESIDING; KNOPF CONCURS; ABRAMSON CONCURS WRITING SEPARATE OPINION
  COUNTY: KENTON
  DATE RENDERED: 8/10/2007
  The case involves a family suing its contractor and a subcontractor brick layer after the home developed a mold problem.  The jury apportioned 100% fault to the plaintiff, who argued a hill of issues on appeal.  Some highlights:
  CR 47.03(1): coparties having antagonistic defenses get three peremptory challenges each in jury selection.  Sommerkamp v. Linton, 114 S.W.3d 811 (Ky., 2003), has three elements to be considered in this determination: (1) whether the coparties are charged with separate acts of negligence; (2) whether they share a common theory of the case; and (3) whether they've filed crossclaims.  Appellate court will not overturn trial court's determination in this regard absent an abuse of discretion.  Court must weigh all factors in balance with each other.  Also, inherent in law of apportionment, KRS 411.182, is that the interests of codefendants are considered antagonistic.
  KRE 407: subsequent remedial measures.  In absence of controversy, the feasability exception to this rule does not apply.
  Evidence of prior negligent acts or customary practices offered solely in an attempt to prove negligence on a different occasion is inadmissible, as it offers very little probative value and present the potential for confusion of issues.  Dowell v. Bivins, 586 S.W.2d 297 (Ky. App., 1979).  No testimony of the builder's other homes was admitted because it had no bearing on the facts of the issues in this case.
  The CA refused to recognize a preference for live testimony as opposed to videotaped deposition and said that even if it expressed such a preference, it is within the trial courts' sound discretion to determine both admissibility of evidence and how it is admitted.
  After a Daubert hearing, the trial court excluded future health effects of mold exposure tsetimony.  The CA gives the trial court's decision on the admissibility of expert witness testimony deference, as it is in the best position to judge the credibility of evidence presented.  Miller v. Eldridge, 146 S.W.3d 909 (Ky., 2004).
  Party must mitigate damages.  Howard v. Adams, 246 S.W.2d 1002 (Ky., 1952).  CA held the plaintiff failed to mitigate, and trial court was correct to exclude evidence of exaggerated damages.
  KY does not allow for recovery for damages to reputation of real estate.  Morgan v. Hightower's Adm'r, 291 Ky 58, 163 S.W.2d 21, 22 (Ky., 1942)

  Digested by Cherry Henault

• CODISPOTI V. PRESTON HIGHWAY MOTORS, INC.
  INSURANCE:  LIABILITY EXCLUSIONS; UNINSURED MOTOR VEHICLE
  2006-CA-001552
  PUBLISHED: AFFIRMING
  PANEL: THOMPSON, PRESIDING; MOORE AND GRAVES CONCUR
  COUNTY: JEFFERSON
  DATE RENDERED: 8/10/2007

  This appeal dealt with an exclusion to coverage for injury to an employee of the "insured." The circuit court entered summary judgment holding that an employee exclusion in the liability policy precluded coverage to Joseph M. Codispoti.
  
  Eric Jameson was driving a vehicle with the permission of the owner Codispot who also was the owner and president of Preston Highway Motors.   Jameson was an independent contractor and, therefore, not an employee of Preston Highway Motors, who was hired to drive a Preston Highway Motors car to Indianopolis for an auction.  Jameson was driving, and Codispoti was a passenger, when  Jameson fell asleep, and wrecked the car injuring himself and his passenger Codispoti.
  
  The vehicle was insured under a policy with First Financial Insurance naming Preston Highway Motors as the named insured who did that pursuant to the terms of the policy, Jameson was a permissive user of the vehicle and, therefore, an insured. However, the policy had an exclusion precluding coverage to indemnify injuries to an employee of the owner.

  This insurance does not apply to any of the following:
  
  EMPLOYEE INDEMNIFICATION AND EMPLOYER'S LIABILITY
  
  “Bodily injury” to:
  
  a. An “employee” of the “insured” arising out of and in the course of:
  
  (1) Employment by the “insured”; or
  
  (2) Performing the duties related to the conduct of the “insured's” business.

  Codispoti argued that the exclusion did not apply because he was not an employee of the insured Jamison. The Court of Appeals found that it did not matter, because Condispoti was an employee of Preston Motors, who was also an insured. Therefore, the exclusion applied.
  
  COA also held the exclusion was not void against public policy rejecting Codispoti's argument that it eliminated insurance coverage for Jameson. The Court of Appeal found this argument lacking as well. It noted that the same exclusion was previously found not to violate public policy in the case of Brown v. Indiana Insurance Co., 184 S.W.3d 528 (Ky. 2005).  Although the COA recognized the factual distinction between Brown and the present case because unlike in Brown where the accident victim and the tort-feasor were both employees of the named insured, Jameson was not an employee of the named insured.  This made no difference to the outcome, as they affirmed the summary judgment.

  By Michael Stevens

• GREEN V. OWENSBORO MEDICAL HEALTH SYSTEM, INC.
  TORTS:  MEDICAL NEGLIGENCE (EXPERT TESTIMONY)
  2005-CA-001422
  PUBLISHED: AFFIRMING
  PANEL:  NICKELL PRESIDING; ABRAMSON, PAISLEY CONCUR
  COUNTY: DAVIESS
  DATE RENDERED: 8/10/2007

  CA affirms entry of SJ for defendants in this medical negligence case.

  Appellant fractured her finger and underwent surgery. All went well with her hand, but upon awaking appellant found her four front teeth loose, misaligned & bloody. She sued the surgery practice, the facility and the anesthesiologist. By interrogatory, the facility asked the name of any expert witness and whether appellant had obtained an expert opinion as to the applicable standard of care. With no response, it filed a motion to compel; an order compelling followed. She responded, but with no expert's name. She was again directed to disclose by a date certain. She eventually named her regular treating dentist as her expert, but his testimony was to be limited to pre- and post-operative condition and his opinion that the condition was from trauma and not disease.

  Defendants eventually sought SJ for failure to name an expert on the applicable standards of care. The TC denied, giving appellant 90 more days to produce an expert. No expert was produced and SJ was entered against appellant. She appealled, arguing abuse of discretion in that a jury could infer negligence on these facts.

  CA holds that whether expert testimony is necessary is in the TC's discretion and, as the CA does not believe the average layperson has sufficient medical knowledge about anesthesia procedures, no abuse of discretion is found.    
  
  Digested by John Hamlett
  

• CARMICAL V. BULLOCK
  TORTS:  DOGS, STATUTORY LIABILITY, AND COMPARATIVE NEGLIGENCE 
  2006-CA-001595
  PUBLISHED: AFFIRMING
  PANEL: WINE PRESIDING; COMBS AND NICKELL CONCUR
  COUNTY: MADISON
  DATE RENDERED: 8/10/2007

  Appellant challenges TC's jury instructions in that he felt the TC should only have included a strict liability instruction consistent with KRS 257.275(1) (now KRS 258.235(4)) on his personal injury claim stemming from a dog attack on Appellee's property. Appellant argued that this statute and Palmore's model instructions in dog bite cases call only for a strict liability instruction. The COA disagreed, noting Kentucky courts have previously held this statute does not impose strict liability on a dog owner. The COA determined that an owner's liability should be subject to comparative negligence, which it found consistent with the law of other states. The COA ultimately found the TC's instruction to the jury to be consistent with Kentucky legal precedent on dog bite cases.

  By Chad Kessinger
  

• COLEMAN V. BEE LINE COURIER SERVICE INC.
  TORTS:  SETTLEMENTS (INDEMNITY AND PIP)
  2006-CA-000994
  PUBLISHED: AFFIRMING
  PANEL:  WINE PRESIDING; COMBS AND ACREE CONCUR
  COUNTY:  JEFFERSON
  DATE RENDERED: 8/10/2007

  The COA held that a release and indemnification agreement settling a personal injury claim from a car accident against a self-insured employer and its employee which included the plaintiff indemnifying the defendant-employer for any medical expenses it paid was valid and enforceable in spite of the purpose of the Kentucky Motor Vehicle Reparations Act.
  
  In this car accident, Coleman was hit and injured by Huff, an employee of Bee Line and while in the course of his employment by Bee Line. Coleman’s vehicle
  suffered property damage which was settled between Coleman and Bee Line without the aid of counsel.
  
  Bee-Line and Coleman settled the injury claim for $6,500. Coleman had received PIP benefits from Nationwide his auto insurance company for $5,737 who later submitted it's subrogation claim directly to the self-insured Bee-Line who then requested Coleman to indemnify it pursuant to the agreement. When Coleman refused, Bee Line negotiated a settlement in the amount of $4,737 (after deducting the "intercompany" offset), which it paid to Nationwide. Bee Line sought indemnification from Coleman, relying on the language set out above in the Release signed by Coleman. Coleman refused and Bee Line filed suit for indemnity. Coleman counterclaimed alleging violation of the Fair Claims Settlement Practice Act, infliction of emotional distress and tortious bad faith.
  
  Issues were raised on discovery and the taking of evidence prior to the grant of summary judgment by the trial judge whoexplained that because an AOC-280 form had been filed and because nearly five months had passed since that notice was filed, she believed discovery for those issues had been completed. Further, she explained the filing of an AOC-280 form triggered an inquiry from the Administrative Office of the Courts (“AOC”) as to why there had not been a decision after ninety days.
  
  Bee Line argues that the Release signed by Coleman clearly provides that she must indemnify Bee Line against any third party, including the reparations obligor for PIP benefits. Coleman defended against the suit, claiming it was never the intention of the parties that she should be responsible for any reimbursement claims for PIP benefits made by her insurance carrier, Nationwide.
  
  The COA's analysis turned on the interpretation of the language in the Release - “The undersigned agrees to hold the released parties harmless and indemnify them from any claims asserted by any third parties or lien holders, including but not limited to, all medical providers and any other insurance carriers against the proceeds of this settlement.”
  
  A reparations obligor has no claim against the adverse driver but a subrogation claim against the liability insurer or, in this case, the self-insurer Bee Line. Nationwide, as a reparation obligor, has a separate right of recovery for PIP amounts expended on behalf of Coleman and may intervene in Coleman’s tort action against the tortfeasor, Bee Line, in order to assert a direct claim against the tortfeasor’s insurer, which is again, Bee Line. It is well established that a policy of insurance cannot abrogate a mandatory provision of the Motor Vehicle Reparations Act. State Farm Mutual Automobile Insurance Co. v. Mattox, 862 S.W.2d 325 (Ky. 1993).
  
  The release/indemnification agreement signed by Coleman does not compromise Nationwide’s right to assert a basic reparation benefit subrogation claim against the tortfeasor or its insurer. Rather, it shifts the responsibility for paying the claim from Bee Line to Coleman. The court found while Coleman had no statutory obligation to reimburse Nationwide for its PIP payments, she did have a contractual obligation to reimburse Bee Line for the amounts it was forced to expend to settle Nationwide’s claim.
  
  Contrary to Coleman’s argument, nothing in the Release would suggest indemnification is limited to health care providers, Medicare or Medicaid. The Release was the contract, whereas the faxed letters were the negotiations between the parties. It was incumbent upon Coleman and her counsel to reject the Release if it did not accurately portray the terms of their agreement. She was free to refuse to sign the Release and the parties could have proceeded with the lawsuit.
  
  Bee Line agreed to pay Coleman $6,500 and Coleman agreed to indemnify and hold harmless Bee Line against any third party claims. Those terms in the Release are clear and unambiguous. Under the peculiar facts of this case, COA concluded summary judgment in favor of Bee Line should have been granted. Because the trial court properly granted Bee Line’s motion for summary judgment, it is not necessary to address Coleman’s motion for summary judgment or her motion to dismiss the counterclaims. The order denying Coleman’s motion to reconsider as entered by the Jefferson Circuit Court are affirmed.

  By Michael Stevens

NONPUBLISHED TORT DECISIONS

C.L.N. V. T.R.R.
APPEALS: FINALITY AND CR 54.02(1) 
2006-CA-002078
NOT PUBLISHED: 74
DATE RENDERED: 8/10/2007

SCHENKEL & SCHULTZ, INC. V. MIDWEST CONSTRUCTION CO.
BUSINESS LAW:  SETTLEMENT AGREEMENT AS CONTRACT AND "FOUR CORNERS OF THE EMAIL" 
2006-CA-000149
NOT PUBLISHED: 99
DATE RENDERED: 8/10/2007

GREEN V. BARBOURVILLE NURSING HOME, INC.
CIVIL PROCEDURE: DEFAULT JUDGMENT AND COMPETENCY OF DEFENDANT 
2006-CA-001143
NOT PUBLISHED: 77
DATE RENDERED: 8/10/2007

MEFFORD V. SWINNEY
CIVIL:  STATUTE OF LIMITATIONS, FRAUD
TORTS: FIDUCIARY DUTY ISSUES IN ESTATE
2006-CA-001392
NOT PUBLISHED: 95
DATE RENDERED: 8/10/2007

THACKER V. CITY OF CRITTENDON
TORTS:  WORKERS COMP EXCLUSIVE REMEDY
WORKERS COMP: UP THE LADDER AND REGULAR AND RECURRENT WORK
2005-CA-001261
NOT PUBLISHED: 112
DATE RENDERED: 8/10/2007

COA Tort Report for August 3, 2007 (2007:36)

AUGUST 3, 2007 KENTUCKY COURT OF APPEALS DECISIONS (2006:37)
PUBLISHED DECISIONS

• MANNING V. WILKINSON
  CIVIL PROCEDURE:  DISMISSAL FOR LACK OF PROSECUTION
  2005-CA-002491
  PUBLISHED: AFFIRMING
  PANEL:  DIXON PRESIDING; MOORE AND TAYLOR CONCUR
  COUNTY: FAYETTE
  DATE RENDERED: 8/3/2007
  
  This legal malpractice case, initiated in 1994, was thrice subjected to the trial court's sua sponte 77.02 notice to dismiss for lack of prosecution.  After exercising an abundance of patience, the trial court dismissed the case without prejudice on the third go-around in 2005.  On appeal from that ruling, the CAs discussed the two different rules, 77.02 and 41.02, by which courts may dismiss cases for lack of prosecution, noting that the former is a "housekeeping rule" that results in a dismissal without prejudice.  Conversely, 41.02 dismissals operate to dismiss with prejudice and operate as an adjudication upon the merits. 

  In making a 41.02 ruling, which effectively deprives a litigant of an opportunity to pursue a claim, the trial court is bound to consider the factors in Ward v. Housman, 809 S.W.2d 717 (Ky. App., 1991), and should only so rule in the most extreme cases.  Both rulings are reviewed under an abuse of discretion standard, and the CAs noted that a 77.02 dismissal serves a different function than a 41.02 dismissal and has its own distinct requirements.  After considering the facts of this case, the CA held that 77.02 dismissal was proper, in that no work had been done on the case for over ten years, despite the issuance of three separate 77.02 notices.  It refused to consider the appellant's arguments concerning a years-old ruling granting partial summary judgment, stating that its determination that dismissal was proper rendered any prior rulings by the trial court moot.
  
  Digested by Cherry Henault

NONPUBLISHED TORT DECISIONS THIS WEEK

• SAFE AUTO INS. CO. V. VANHOOSE
  APPEALS: FINALITY LANGUAGE NOT DETERMINATIVE; INTELOCUTORY ORDERS
  2006-CA-001932
  NOT PUBLISHED: 85
  DATE RENDERED: 8/3/2007

  ONE-MINUTE CLE:

  The well-established rule under CR 56.03 is that the denial of a motion for summary judgment is interlocutory and not appealable. Ford Motor Credit Co. v. Hall, 879 S.W.2d 487 (Ky.App. 1994).
  
  There is an exception to this general rule that applies where: "(1) the facts are not in dispute, (2) the only basis of the ruling is a matter of law, (3) there is a denial of the motion, and (4) there is an entry of a final judgment with an appeal therefrom." Transportation Cabinet, Bureau of Highways, Com. of Ky. v. Leneave, 751 S.W.2d 36, 37 (Ky.App. 1988);
  
  
  However, the exception does not apply herein because the trial court has never entered a final judgment. “A final or appealable judgment is a final order adjudicating all the rights of all the parties in an action or proceeding, or a judgment made final under Rule 54.02.”2 CR 54.01.
  
  The mere recitation of finality language will not make an order appealable when it is interlocutory by its very nature. Preferred Risk Mutual Insurance Co. v. Kentucky Farm Bureau Mutual Insurance Co., 872 S.W.2d 469 (Ky. 1994); see also Hook v. Hook, 563 S.W.2d 716, 717 (Ky. 1978).

• CAUDIL V. THOMAS
  APPEALS:  TARDY NOTICE OF APPEAL; CR 60.01; 
  2006-CA-000644
  NOT PUBLISHED: 90
  DATE RENDERED: 8/3/2007

• NORTHERN KY ELECTRIC SERVICE, INC.  V. STONE
  BUSINESS LAW:  COVENANT NOT TO COMPETE 
  2006-CA-000306
  NOT PUBLISHED: 112
  DATE RENDERED: 8/3/2007

• LUDWIG V. BOARD OF REGENTS
  CIVIL: JURISDICTION (JUSTICIABILITY; STANDING; CASE OF CONTROVERSY)
  2006-CA-001002
  NOT PUBLISHED: 92
  DATE RENDERED: 8/3/2007

  FYI:  Here are some black letter rules that do not come up often.  Consider this a short one-minute CLE -

  In order to prosecute a claim, “a party must have a judicially recognizable interest in the subject matter of the suit.” Healthamerica Corp. of Kentucky v. Humana Health Plan, Inc., 697 S.W.2d 946, 947 (Ky. 1985)
  
  “An ‘actual controversy’ is not one which involves a question which is academic or hypothetical or which calls for nothing more than an advisory opinion. Rather, it is a controversy over present rights, duties, and liabilities [citations omitted].” Bischoff v. City of Newport, 733 S.W.2d 762, 764 (Ky.App. 1987).
  
  Further, a court “‘will not decide speculative rights or duties which may or may not arise in the future, but only rights and duties about which there is a present actual controversy presented by adversary parties, and in which a binding judgment concluding the controversy may be entered.’” Veith v. City of Louisville, 335 S.W.2d 295, 297 (Ky. 1962) (quoting Black v. Elkhorn Coal Corp., 233 Ky. 588, 26 S.W.2d 481, 483 (Ky. 1930)).

• HAMILTON V. SEARS
  CIVIL PROCEDURE: SUMMARY JUDGMENT IN NEGLIGENCE CLAIM WITH DISCUSSION OF THE ELEMENTS
  TORTS: DUTY TO SUMMON EMERGENCY MEDICAL AID?
  2006-CA-001080
  NOT PUBLISHED: 99
  DATE RENDERED: 8/3/2007

  ONE-MINUTE CLE:

  Under negligence law, in order to prevail the plaintiff must prove (1) the defendant owed him a duty of care, (2) a breach of that duty, and (3) a causal connection between the breach and the plaintiff's consequent injury. 

  The existence of a duty is a question of law, a duty voluntarily assumed cannot be carelessly abandoned without incurring liability for injury resulting from the abandonment.”   

  Assuming that there may arise circumstances when the duty would be imposed upon a host to summon emergency medical aid when a houseguest is in need of such aid, those circumstances are not present here.
  
  The existence of a duty is a question of law, Lewis v. B & R Corporation, 56 S.W.3d at 438, and is accordingly reviewed de novo. Brewick v. Brewick, 121 S.W.3d 524, 526 (Ky.App. 2003).
  
  "The most important factor in determining whether a duty exists is foreseeability." Pathways, Inc. v. Hammons, 113 S.W.3d at 89. Foreseeable risks are determined in part on what the defendant knew at the time of the alleged negligence. (Holding that liability for negligence is based on what the defendant was aware of at the time of the alleged negligent act and not on what the defendant should have known in hindsight); Pathways, Inc. v. Hammons, 113 S.W.3d at 90. Moreover, “a duty voluntarily assumed cannot be carelessly abandoned without incurring liability for injury resulting from the abandonment.” Johnson v. Brey, 438 S.W.2d 535, 536 (Ky. 1968).
  
  Assuming that there may arise circumstances when the duty would be imposed upon a host to summon emergency medical aid when a houseguest is in need of such aid, those circumstances are not present here.

  Hamilton has failed to plead facts or adduce evidence through discovery that Seals was aware of his perilous brain injury during the relevant time and thus could foresee the need to summon medical aid.

• KELLEY V. NATIONWIDE AUTO RESTORATION, LLC
  JURISDICTION: CIVIL; DISTRICT COURT NOT HAVE EQUITABLE JURISDICTION
  TORTS: ABANDONMENT OF PROPERTY AND OWNERSHIP
  2006-CA-001343
  NOT PUBLISHED: 89
  DATE RENDERED: 8/3/2007

  ONE-MINUTE CLE:

  District courts are prohibited from entertaining “matters of equity.” However, the Jefferson District Court did not violate this prohibition when it found that Kelley had abandoned the Jaguar parts at issue because in so ruling it did not exercise equitable powers.
  
  “Abandonment” is the relinquishment of property with the intention of not reclaiming it or reassuming its ownership or enjoyment.

  More specifically, under Kentucky law abandonment consists of a voluntary relinquishment of possession along with an intent to repudiate ownership.
  
  The intent to repudiate ownership may be inferred when the facts justify it, and the lapse of a long period of time following relinquishment of possession constitutes significant evidence of the intention to abandon property.
  
  Equitable issues are clearly not triable by juries.
  
  Property which is abandoned becomes subject to appropriation by the first taker or finder who reduces it to possession.

• H. (J.)  V. COM.
  EVIDENCE: OUT OF COURT SOCIAL WORKER'S STATEMENTS INADMISSIBILITY; RELAXED STANDARDS AT REMOVAL HEARING NOT APPLICABLE AT ADJUDICATION
  CIVIL PROCEDURE: AVOWALS (WITHOUT ONE, NO WAY TO DETERMINE PROFFERED TESTIMONY)
  2006-CA-002525
  NOT PUBLISHED: 112
  DATE RENDERED: 8/3/2007

• ALLIED COLLECTION SERVICES INC. V. BRYD
  TORTS: CONSUMER; FEDERAL DEBT COLLECTION PRACTICE ACT 
  CIVIL: RULE 11 SANCTIONS
  2006-CA-000420
  NOT PUBLISHED: 90
  DATE RENDERED: 8/3/2007

• CRAIG V. HITACHIE AUTOMOTIVE PRODUCTS USA
  WORKERS COMP: ESTOPPEL AND APPLICABILITY OF UCSPA TO WORKERS COMPENSATION PER KRS 342.267
  2007-CA-000139
  NOT PUBLISHED: 100
  DATE RENDERED: 8/3/2007
  
  Adjuster had incorrectly advised claimant he had two years from termination date to file claim.  When he did file claim, employer moved to dismiss as untimely and ALJ and WCB agreed.  COA determined employer was equitably estopped to plea timeliness of filing and ruled UCSPA incorporated into workers comp via KRS 342.267.

  Estoppel is appropriate because Hitachi’s insurer, Liberty, violated regulations intended to promote the fair settlement of workers' compensation claims and because the violations led him to believe that his claim would be settled without litigation.
  
  Agreeing with Craig that Liberty engaged in conduct proscribed as unfair claims settlement practices under Kentucky statutes and regulations, COA reversed and remanded so that Craig’s claim may proceed.
  
  As Craig notes, KRS 342.267 incorporates within the Workers’ Compensation Act the provisions of KRS 304.12-230, which outlaws certain acts and omissions by insurers or their adjusters as “unfair claims settlement practice[s],” including the insurer’s “fail[ure] to affirm or deny coverage of claims within a reasonable time.” KRS 304.12-230(5).
  
  Pursuant to those statutes and to KRS 342.260(1), the Department of Workers’ Claims promulgated 803 KAR 25:240, which imposes duties on workers’ compensation carriers with respect to the fair settlement of compensation claims.
  
  Carriers are obliged to “diligently investigate a claim for facts warranting the extension or denial of benefits.” Section 4. They must “attempt in good faith to promptly pay a claim in which liability is clear.” Section 6. And, under Section 5 of 803 KAR 25:240:
  
  The adjuster did not inform Craig that she needed additional information, nor did she thereafter provide him with written notice specifying reasons for denying his claim.
  
  Clearly, the adjuster violated her statutory and regulatory duties (1) to inform Craig that additional information was needed to process his claim; (2) to affirm or deny his claim as soon as reasonably practicable; and (3) to provide written reasons for a denial if that was Liberty's position. Arguably she also failed to investigate the claim diligently, when she failed to follow-up her unanswered May 2005 letter to the surgeon, and perhaps, as Craig insists, she improperly denied Craig’s entire claim where at least some liability was reasonably clear.
  
  As the Ky Supreme Court has observed, estoppel is an equitable remedy often invoked to prevent a party from benefiting from its own misconduct. Akers v. Pike County Board of Education, 171 S.W.3d 740 (Ky. 2005).

Tort Report for COA for July 27, 2007 (2007:36)

PUBLISHED DECISIONS ON TORTS, ETC FROM COA FOR JULY 27, 2007

• KINDRED HOSPITALS LIMITED PARTNERSHIP V. LUTTRELL
  ALTERNATE DISPUTE RESOLUTION:  ARBITRATION AGREEMENTS
  2006-CA-000221
  PUBLISHED: AFFIRMING
  PANEL: KELLER PRESIDING; NICKELL, KNOPF CONCUR
  DATE RENDERED: 7/27/2007

  Kindred appealed from the circuit court's order denying their motion to dismiss or in the alternative to stay the circuit court proceedings pending completion of alternative dispute resolution (ADR) proceeding arguing that Susan Luttrell, Administratrix of the Estate of Altha Duncan, (the "estate") signed an ADR agreement binding her mother, Altha Duncan (Duncan) to pursue any disputes with Kindred through ADR proceedings. The estate argues that Susan Luttrell (Luttrell) did not have the authority to enter into that agreement on behalf of Duncan; therefore, the estate is not bound by the agreement.  The COA affirmed the agreement and enforced the mandatory arbitration provision, holding that Luttrell did not have the authority, either actual, apparent, implied, or by statute, to bind her mother Duncan or her estate to the ADR agreement.
  
  Luttrell signed on behalf of her mother Duncan various admissions documents upon entering the nursing home; however, beyond believing that the documents were necessary to admit Duncan to Liberty, Luttrell testified that she did not understand the documents she was signing. Luttrell acknowledged that she should have read the documents but did not do so. Furthermore, Luttrell testified that, even  though she did not believe she would have been able to read the documents, she did not ask anyone to read them to her.  Furthermore, the ADR agreement was not a condition to the admission, Luttrell did not have a POA from her mother, and Luttrell had 30 days thereafter to revoke the mandatory ADR.  Luttrell testified that she did not remember if the admission person (Debra) at the nursing home discussed the nature of the ADR agreement with her, but it was noted that Luttrell's testimony is directly contradicted by Debra, who testified that she read the entire ADR agreement to Luttrell at the time of Duncan's admission to Liberty.
  
  The ADR agreement states that determining the extent of permissible discovery is left solely to the discretion of the
  neutral mediator and/or arbitrator. The ADR agreement does not indicate that discovery is subject to the Civil Rules, which are available to litigants in circuit court and which provide certain ground rules regarding discovery.
  
  The Supreme Court noted that a party aggrieved by a circuit court's ruling on the applicability of an ADR agreement could pursue relief under CR 65.07 or through the regular appeal process under CR 73. The Supreme Court noted that a party seeking relief pursuant to CR 65.07 has a high burden to meet, i.e. immediate and irreparable injury, loss, or damage pending a final judgment, and that this Court had appropriately denied Kindred's CR 65.07 motion.
  
  The Supreme Court also held that, although a party could choose which avenue of appeal to follow, it could not pursue one path and, if unsuccessful, pursue the other. Id. at 921. However, since this was a new rule, the Supreme Court held that it would not apply to Kindred and Kindred's CR 73 appeal could move forward.
  
  Before addressing the issues in this case, the COA reviewed the law in Kentucky on arbitration and authority:

  Kentucky law generally favors the enforcement of arbitration agreements, and “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration . . . .”  However, "the existence of a valid arbitration agreement as a threshold matter must first be resolved by the court."  ADR agreements are "valid, enforceable, and irrevocable, save upon such grounds as exist at law for the revocation of any contract." KRS 417.050. With these legal principles in mind, we will address the primary issue of whether there was a valid and enforceable ADR agreement. “[O]rdinary principles of contract and agency determine which parties are bound by an agreement to arbitrate.”   It is well-established in Kentucky that “[a]gency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.”   

  A person can grant actual authority to an agent by way of a written document such as a power of attorney, and Kindred next argues that Luttrell, when she advised Debra that she was authorized to sign the admissions for Duncan, cloaked herself with the implied or apparent authority to do so.  Implied authority is actual authority circumstantially proven which the principal actually intended the agent to possess and includes such powers as are practically necessary to carry out the duties actually delegated.  Apparent authority on the other hand is not actual authority but is the authority the agent is held out by the principal as possessing. It is a matter of appearances on which third parties come to rely.

  The COA concluded there can be no serious argument that signing an ADR agreement is necessary to carrying out the actual limited duties Luttrell had, holding that Luttrell did not have implied authority to sign the ADR agreement
  
  Kindred argues that the assertion by Luttrell that she had the authority to sign documents on her mother's behalf have Luttrell the apparent authority to do so. However, it is the authority the agent is held out by the principal as having that constitutes apparent authority and the agent cannot create apparent authority, absent some affirmation by the principle, simply by holding herself out as having it. Therefore,  Luttrell did not have apparent authority to sign the ADR agreement on behalf of Duncan.
  
  The ADR agreement does not involve "health care decisions" as defined by KRS 311.621(8). It involves what method parties to the agreement can use to resolve disputes. It does not involve medical procedures, judgments, or interventions. Therefore, KRS 311.631, in and of itself, does not provide any authority for Luttrell to bind Duncan to the ADR agreement.
  
  The COA held that Luttrell did not have the authority, either actual, apparent, implied, or by statute, to bind Duncan or her estate to the ADR agreement.

• MIRACLE V. BELL COUNTY FISCAL COURT
  PROFESSIONS: PARAEMEDIC LICENSURE
  TORTS: WRONGFUL DISCHARGE; WHISTLEBLOWER
  2005-CA-002205
  PUBLISHED: AFFIRMING
  PANEL: VANMETER PRESIDING; THOMPSON, PAISLEY CONCUR
  COUNTY: BELL COUNTY
  DATE RENDERED: 7/27/2007

  This appeal arose from a paramedic's suspension by physician director who would not allow the paramedic to "perform work in any capacity that requires use of my medical license.”  Trial court granted summary judgment dismissing the wrongful discharged for wrongful termination claim and this appeal followed.

  COA held that Brumbach, as a paramedic, is not entitled to relief for his claim of wrongful discharge; KRS 311A.170(4) specifically provides that “[a] paramedic shall be permitted to render services only under the supervision of an emergency medical services medical director.”   KRS 311A.010(12) defines an emergency medical services medical director as “a physician licensed in Kentucky who is employed by, under contract to, or has volunteered to provide supervision for a paramedic or an ambulance service, or both.”
  
  In the absence of a specific contractual provision to the contrary, employment in Kentucky is terminable at-will, meaning that an employer may ordinarily discharge an employee “for good cause, for no cause, or for a cause that some might view as morally indefensible.”   The mere termination of employment and the resulting embarrassment do not rise to the level of outrageous conduct and resulting severe emotional distress necessary to support a claim for intentional infliction of emotional distress.

Nonpublished Tort decisions this week:

• BROWN V. LOWE'S HOME CENTERS, INC.
  CIVIL PROCEDURE: DISMISSAL FOR LACK OF PROSECUTION AND WARD V. HOUSMAN VACTORS
  2006-CA-001253
  NOT PUBLISHED: 97
  DATE RENDERED: 7/27/2007

• LOVELESS V. RINGSTAFF
  CIVIL PROCEDURE:  SUMMARY JUDGMENT STANDARD AND "IMPOSSIBLE"
  TORTS:  NEGLIGENCE ELEMENTS; PREMISES LIABILITY; DOMESTIC ANIMALS 
  2005-CA-000860
  NOT PUBLISHED: 95
  DATE RENDERED: 7/27/2007

• WATSON V. SMITH
  REMEDIES:  INJUNCTIVE RELIEF AND TRESPASSING STRUCTURES
  2006-CA-001046
  NOT PUBLISHED: 82
  DATE RENDERED: 7/27/2007

• SMALLWOOD V. SCHNEIDER
  TORTS: THRESHHOLD AND DIRECTED VERDICT RE $1,000 
  2006-CA-000719
  NOT PUBLISHED: 82
  DATE RENDERED: 7/27/2007

• LOONEY V. BERK & JONES, PLLC
  TORTS: LEGAL