Kentucky Tort Report (COA) for Sept. 21, 2007 (2007:46)

Kentucky Tort Report (COA) for Sept. 21, 2007 (2007:46)

Published Decisions - COA

KENNEY V. HANGER PROSTHETICS & ORTHOTICS, INC.
CIVIL PROCEDURE: AMENDING COMPLAINT
BUSINESS LAW: BUSINESS TORTS
2006-CA-000939
PUBLISHED: AFFIRMING
PANEL: VANMETER PRESIDING; MOORE, STUMBO CONCUR
FAYETTE COUNTY
DATE RENDERED: 09/21/2007

This  Kentucky Court of Appeals decision provides a veritable grocery list of business related causes of action and their elements.

In the case, John M. Kenney had been an employee of Hanger Prosthetics, but ventured out on his own. Kenney and his company, Kenney Orthopedics, LLC, filed a petitioner alleging that Hanger employee Michael Adams made false representations about him, such as that he embezzled from Hanger and was barred from competing with Hanger per a non-compete contract provision, which harmed his business venture. Only Kenney's claim of breach of contract passed summary judgment while the defamation and tortious interference with business claims died there.

Since the litigation souffle made of the claims of tortious interference and defamation claims fell, Kenney attempted to make a stew instead by amending his complaint to incorporate a grocery list of other causes of action. The trial court refused to amend the petition. The breach of contract claim resulted in a hung jury and the trial court granted another summary judgment in Kenney's favor regarding his claim for a 4% commssion from Hanger. Kenney appealed the trial court's refusal to amend its complaint to incorporate the following list of claims accompanied by the definitions given by the Court of Appeals:

A. Interference with Prospective Contractual Relations
[t]he tort of interference with a prospective advantage is plagued with the absence of a uniformly recognized terminology. It has been referred to as the tort of interference with a business relationship, inducing refusal to deal, interference with a prospective economic advantage, interference with advantageous relations, interference with reasonable economic expectancies, or interference with prospective business expectancies. . . . The American Law Institute has named the tort "Intentional Interference with Prospective Contractual Relation."
. . . .
B. Defamation Per Quod
The difference between defamation per se and defamation per quod is that, in the former, damages are presumed and, in the latter, the plaintiff must prove special damages.. . . .

C. Unfair Competition/Trade Practices
[U]nfair competition consists of either (1) injuring the plaintiff by taking his business or impairing his good will, or (2) unfairly profiting by the use of the plaintiff's name, or a similar one, in exploiting his good will. Underlying the whole theory is the matter of actual or intended deception of the public for business reasons. . . . .

D. Slander of Title, Trade Libel/Disparagement, Injurious Falsehood
Corporations and other businesses can and do recover for libel or slander when they have been defamed by charges such as crime or fraud. But defamatory charges commonly made against individuals–adultery, for example–have little relevance to corporations and many of the imputations about corporations are harmful without being defamatory. When the publication asserts that the corporate product is defective, inadequate, or harmful without asserting personal defamation, the traditional view regards the claim as essentially different from the claim for defamation. The same is true if the publication merely says that the plaintiff has gone out of business. This different claim goes under the general name of injurious falsehood. When the publication attacks a product, it is also called trade libel or commercial disparagement. When the publication attacks title to property rather than quality of a product, the claim is likely to be called slander of title. . . . .

1. Slander of Title
[T]hat the defendant has knowingly and maliciously communicated, orally or in writing, a false statement which has the effect of disparaging the plaintiff's title to property; he must also plead and prove that he has incurred special damage as a result.
. . . .
2. Trade Libel/Disparagement
Trade libel involves disparaging and false assertions about the quality of one's property rather than title to it.
. . . .
3. Injurious Falsehood
One who publishes a false statement harmful to the interests of another is subject to liability for pecuniary loss resulting to the other if (a) he intends for publication of the statement to result in harm to interests of the other having a pecuniary value, or either recognizes or should recognize that it is likely to do so, and (b) he knows that the statement is false or acts in reckless disregard of its truth or falsity. Restatement (Second) of Torts § 623A (1977). . . . .

E. Illegal Restraint of Trade and Commerce
A restraint of trade may be adjudged unreasonable if it is per se unreasonable or violates the rule of reason. . . . Examples of per se unreasonable conduct include price-fixing arrangements, tying arrangements, agreements among competitors to divide markets or to allocate customers, group boycotts, and agreements to limit production. . . . Kenney has clearly not alleged any of these practices or any comparable practices. As for a restraint which violates the rule of reason, "showing merely injury to oneself as a competitor is insufficient." . . . . Thus, the trial court did not err by failing to permit Kenney to amend his claim in this regard.
(internal citations omitted)

The Court of Appeals found this cause of action stew rather bland and rejected each one of these attempts to amend the original complaint to survive summary judgment. The trial courts decision to disallow the complaint to be amended would not be disturbed unless it was an abuse of discretion. The Court of Appeals noted that the interference claim and the defamation per quod claims were so similar to the original claims of tortious interference and plain old defamation that they would not have survived summary judgment either. The other causes of action simply were not sufficiently supported by the facts to be viable.

Gregory A. Napier
http://troutmanhays.wordpress.com/

SINGLETON V. BRAVO DEVELOPMENT INC.
SETTLEMENTS AND RELEASES: 
2006-CA-002163
PUBLISHED: VACATING AND REMANDING
PANEL: ROSENBLUM PRESIDING; MOORE AND STUMBO CONCUR
CAMPBELL COUNTY
DATE RENDERED: 09/21/2007

[CONDENSED SUMMARY: CA vacates and remands dismissal of this class action suit for a restaurant's unlawful practice of "tipping out."  CA holds that the settlement and release, on its face, pertained only to damages under KRS 337.065, not 337.385. Also, the doctrines of exhaustion of administrative remedies and election of remedies do not apply to this case.]

CA vacates and remands dismissal of this class action suit for a restaurant's unlawful practice of "tipping out."

In August 2003, appellant began working as a server at Bravo Development Inc., d/b/a Brio Tuscan Grille in Newport, Kentucky. Servers were required to remit back to the restaurant 3% of their sales. This is called "tipping out" and is unlawful pursuant to KRS 337.065. Appellant complained; management refused to correct the practice. Appellant filed a DOL complaint; DOL investigated and confirmed the unlawful practice. Bravo made an offer of settlement for back wages; appellant rejected it and filed this class action. A reaudit confirmed that Bravo's offer of settlement was too low as significantly more had been withheld from the servers in violation of KRS 337.065. Revised offers were made; appellant accepted. Bravo then sought dismissal of the class action for failure to exhaust administrative remedies; dismissal was granted. The complaint was again prosecuted, seeking liquidated damages and attorney fees under KRS 337.385. This complaint was dismissed on the grounds that appellant had settled his claim and he had failed to exhaust administrative remedies.

CA holds that the settlement and release, on its face, pertained only to damages under KRS 337.065, not 337.385. Also, the doctrines of exhaustion of administrative remedies and election of remedies do not apply to this case.

Digested by John E. Hamlet

SIMPSON V. FRANKLIN INS. AGENCY, INC.
WORKERS COMPENSATION:  EVIDENCE
2007-CA-000578
PUBLISHED: AFFIRMING  IN PART, REVERSING IN PART, AND REMANDING
PANEL:  HOWARD, PRESIDING; ACREE, LAMBERT CONCUR
WORKERS COMPENSATION BOARD
DATE RENDERED: 09/21/2007

Evidence:  The ALJ may not disregard uncontradicted medical evidence.  He may reject uncontradicted medical evidence, but only if he states a sufficient basis for doing so.  The COA remanded for further findings as to why the ALJ rejected certain uncontradicted evidence, and affirmed where there was some evidence to support the ALJ’s findings.

Peter J. Naake

Not Published Decisions

ALEXANDER V. BOTELER
TORTS:  MALICIOUS PROSECUTION CLAIM; DIRECTED VERDICT
2006-CA-001725
NOT PUBLISHED: AFFIRMING
DATE RENDERED: 09/21/2007

WATSON V. WATSON
INSURANCE: DESIGNATION OF BENEFICIARY OF LIFE INS. POLICY AND ASSET OF ESTATE
PROBATE:  ESTATE WAS PROPER PARTY TO BRING CLAIM FOR LIFE INS. PROCEEDS
2006-CA-001598
NOT PUBLISHED: AFFIRMING
DATE RENDERED: 09/21/2007

JP MORGAN CHASE BANK V. ENGLE
CIVIL PROCEDURE: DEFAULT JUDGMENT AND SETTING ASIDE
2006-CA-001182
NOT PUBLISHED: AFFIRMING
DATE RENDERED: 09/21/2007

J.L. FRENCH AUTOMOTIVE V. DANIEL
WORKERS COMP: REMOVAL OF WORK RESTRICTIONS BY DOCTOR FOR ECONOMIC CONSIDERATIONS
2007-CA-000423
NOT PUBLISHED: AFFIRMING
DATE RENDERED: 09/21/2007

 

HAZARD V. TOYOTA MANUFACTURING, KENTUCKY, INC.
WORKERS COMP: INJURY VS. OCCUPATIONAL DISEASE AND SOL
2007-CA-000653
NOT PUBLISHED: AFFIRMING
DATE RENDERED: 09/21/2007