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Punitive Damages – Employer Authorization or Ratification
Allgeier v MV Transportation , ___ S.W.3d ___, 2012 WL 1649089 (Ky.App. May 11, 2012)
The trial Court had granted summary judgment on the issue of punitive damages. There was no question but that the employee/bus driver failed to follow policy in assisting with a disabled elderly woman disembark from the bus. Under KRS 411.184(3), an employer cannot be held liable for punitive damages based on the conduct of an employee unless it is shown that the employer authorized, ratified or should have anticipated the conduct in question. The Court of Appeals reversed, opining that the evidence was sufficient to meet the statutory standard. The opinion unfortunately treats ratification and authorization as one and the same, which makes the opinion less helpful as a precedent that it could be. At the heart of the Court’s decision, however, was 1) training to deny fault, and 2) failure to train employees on all safety policies. The real point is that the employer didn’t take safety seriously and was lax in training. It is here that the Court missed the point. If punitive damages are assessed for gross negligence in management, KRS 411.184(3) does not apply because punitive damages are assessed based on the employer’s conduct. In fact, in dealing with the cross-appeal, the Court observed that such claims are independent of respondeat superior.
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Negligent Hiring
Allgeier v MV Transportation, ___ S.W.3d ___, 2012 WL 1649089 (Ky.App. May 11, 2012)
At the time the defendant’s employee/bus driver was hired she was being treated for alcoholism, and she lied on her application. She testified that two of her superiors knew that, and given the employer’s zero tolerance policy it could be found that had she been truthful she would not have been hired. There was no evidence that alcohol was related to the accident, so causation should have been suspect. The opinion does not really deal with the issue, and the panel may have misunderstood causation in these cases. However, in this case the driver was not tested as was required, so the panel may have felt the need to allow some leeway on this point. The Court declined to adopt a rule rendering irrelevant a negligent hiring claim where the employer admits scope and course of employment. The main complaint was from the employer in terms of the prejudicial effect of the evidence concerning the employee’s alcoholism. It does not appear that the employer sought bifurcation, so the Court did not have that issue before it.
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Trespass to Chattels
Ingram Trucking, Inc. v Allen , ___ S.W.3d ___, 2012 WL 1649095 (Ky.App. May 11, 2012)
Trespass to chattel is an intentional tort whereby the tortfeasor disposes of or intermeddles with the personal property of another. The tort has no application to a claim for damage to an automobile. The argument was made in an effort to obtain a longer of statute of limitations.
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Employment – Violation of Public Policy- Concealed Carry
Mitchell v University of Kentucky, ___ S.W.3d ___, (Ky. April 26, 2012)
Mitchell was a graduate student and was employed by the University of Kentucky Medical Center. He also had a license to carry a concealed weapon. Co-workers reported to administration that Mitchell had a firearm in his locker. He denied the report and no firearm was found. Mitchell advised University police that he did have a firearm in his vehicle, which was parked on University property. He was suspended pending an investigation. He was ultimately terminated for violating policy against firearms on University property.
The court acknowledged at the outset that a public university had a right to control the use of its property. KRS 164.975(1). Further, while it is a crime to carry a concealed weapon, an explicit exception is set forth in KRS 527.020(8) where a weapon is kept in a glove compartment in an automobile. The same statute further provides that no person or organization can prohibit the carrying of weapon in the glove compartment. The Court then concluded that, assuming the firearm was in Mitchell’s glove compartment, his termination was in violation a of well established statutory public policy. This ruling would apply to any employee, whether or not the employee had a license.
The court held that the termination also violated Mitchell’s statutorily protected rights under the concealed carry law were violated as well. KRS 527.020(4) precludes any person from prohibiting a license holder from keeping a firearm in his or her vehicle. The Court held that this statutory provision takes precedence over the general provision allowing the university to control its property. For similar reasons, the court held that a claim could also be based on KRS 237.106(4), which provides for a cause of action where an employer punishes an employee for exercising the rights set forth in KRS 237.106.
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Employment - Whistleblower
Wilson v City of Central City, ___ S.W.3d ___, (Ky. April 26, 2012)
A former employee brought an action against his employer alleging that his termination was in retaliation for reporting alleged misconduct, relying on KRS 61.101 et. seq. That statute defines an employer as the Commonwealth or a political subdivision thereof. The Court held that a city was not a political subdivision.
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Abuse of Process – Improper Motive
Williams v Cline, ___ S.W.3d ___, 2012 WL 1365964 (Ky.App. April 20, 2012)
The portion of the case dealing with abuse of process is obiter dicta since the holding turned on immunity, but this may have significant ramifications on the civil side. The underlying case was criminal, and apparently a person who resembled and may have been related to the criminal was incarcerated and charged. At a pre-trial hearing, the prosecutor offered to dismiss the charges in exchange for a stipulation that the Commonwealth had probable cause to bring the claim, which was accepted. The plaintiff alleged that the motive for the offer was to protect the prosecutor from a malicious prosecution case, which was an improper motive. She claimed that the prosecution was in possession of exculpatory evidence at that time. The Court held that the claim raised a jury issue as to motive.
On the civil side, it is common for plaintiff’s attorneys, particularly in medical liability and product cases, to sue a number of defendants, and as the proof clears defendants the parties are dismissed in exchange for a covenant not to sue. It is difficult to see how this dicta would not apply. If the defendant has no liability, the plaintiff has a duty to end the litigation. Threatening to maintain groundless litigation unless a covenant not to sue is executed would seem to be the same improper motive. Of course, being dicta, and an intermediate court opinion, there is plenty of room for the Supreme Court to disagree. Plus, the Court would have to find that an agreement not to sue did not apply to the improper extraction of that promise.
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Malicious Prosecution – Probable Cause
Williams v Cline, ___ S.W.3d ___, 2012 WL 1365964 (Ky.App. April 20, 2012)
A prosecutor offered to dismiss criminal charges on the condition that the criminal defendant stipulate that there was probable cause to proceed. The criminal defendant agreed, then filed suit alleging malicious prosecution. The prosecutor raised the stipulation as a defense to the probable cause element of the tort. The Court first noted that such a stipulation passed constitutional muster so long as the stipulation was entered into voluntarily and without prosecutorial misconduct. The Court held that the same criterion would determine whether the stipulation was effective to negate a malicious prosecution action.
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Malicious Prosecution – Prosecutorial Immunity
Williams v Cline, ___ S.W.3d ___, 2012 WL 1365964 (Ky.App. April 20, 2012)
Once a formal prosecution is commenced, a prosecutor has absolute immunity for all conduct which occurs within his lawful authority, regardless of good faith. Prior to that, however, the immunity granted a prosecutor is qualified, and will apply only if the conduct was accompanied by good faith. The opinion implies but does not make an assessment of whether the facts supported a finding of bad faith, although the facts recited would suggest good faith.
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Malicious Prosecution – Relationship with Negligence
Williams v Cline, ___ S.W.3d ___, 2012 WL 1365964 (Ky.App. April 20, 2012)
While this opinion primarily dealt with abuse of process and malicious prosecution against a public prosecutor, the plaintiff also alleged that the prosecutor was negligent in its investigation. The Court discusses the role immunity would have, but glosses over the rather obvious problem, the absence of any duty. If the prosecutor were to be determined to owe a duty to exercise ordinary care to a criminal defendant, then the Court would have sanctioned a claim for negligent prosecution, which of course does not exist. This most likely was a mere oversight, but if this case stands it will be cited as relaxing the tort of malicious prosecution, allowing negligence to substitute for malice.
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Breach of Fiduciary Duty - Banks
Pallet v Monticello Banking Co., ___ S.W.3d ___, 2012 WL 1370878 (Ky.App. April 20, 2012)
The plaintiff was denied a loan, and a loan was made to another company. The president of the bank subsequently took a position with the company that obtained the loan. The plaintiff alleged that this was a conflict of interest and a breach of fiduciary duty. This case is significant because it seeks to draw some lines around the otherwise amorphous fiduciary duty concept. The court observed that ordinarily banks are not fiduciaries of their customers. It further observed that in cases where a fiduciary duty had been imposed on banks, the bank had profited by confidential information provided to it by the customer. The court held that this was not alleged here, and this appears to be correct. It is not clear that profit is the key, however, and a better formulation would require the use of confidential information in an attempt to advance its own interest at the expense of the customer. This same type of rationale should apply to professionals such as attorneys, accountants, etc.
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Interference with Contract
Pallet v Monticello Banking Co., ___ S.W.3d ___, 2012 WL 1370878 (Ky.App. April 20, 2012)
An essential element of this tort is the existence of a contract. An allegation of an informal agreement that the loan would be extended, the Court held, did not satisfy the contract element of the tort.
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Exclusive Remedy – Up the Ladder Immunity (Unpublished)
Hogg v ARCO National Construction Co., 2012 WL 1365858 (Ky.App. April 20, 2012)
Plaintiff Hogg sustained a work related injury and obtained a workers’ compensation award from Labor Ready. Labor Ready had contracted with ARCO to supply temporary employees to clean a dormitory ARCO was constructing before final completion. Labor Ready was required under the contract to provide workers’ compensation insurance. Hogg filed a tort suit against ARCO alleging negligence and violations of KOSHA. The Court held that the dormitory cleaning qualified as work of a kind that was regular and recurrent in ARCO’s business, and thus dismissed Hogg’s tort claim against ARCO.
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Professional Liability – Medical – Failure to Diagnose
Gill v Burress, M.D., ___ S.W.3d ___, 2012 WL 1231967 (Ky.App. April 13, 2012)
Gill, a female in her early forties, saw Dr. Burress for treatment, which included breast exam, but allegedly did not recommend a follow up mammogram. Subsequently, Gill detected a lump by self-examination, sought a mammogram, which resulted in a stage II or IIA diagnosis. Gill then underwent treatment that included radiation, a lumpectomy, chemotherapy and ovary removal. There was evidence that, following the treatment, Gill was disease free and it was more likely than not that Gill would remain disease free.
In her suit alleging a failure to diagnose earlier, Gill claimed damages as follows: 1) mental anguish due to an increased fear of cancer recurrence or death; 2) for the chemotherapy and ovary removal, 3) a five to twenty-five percent decrease in the chance of remaining cancer free, and 4) future medical treatment relating to a potential recurrence of cancer. The trial court dismissed all claims. In a sense, this case focuses on the conflict between two lines of cases previously highlighted here. In Davis v. Graviss, 672 S.W.2d 928 (Ky. 1984), the Kentucky Court permitted recovery for possible future complications. More recently, in Kemper v. Gordon, 272 S.W.3d 146 (Ky. 2009), the Court declined to allow a claim for loss of a chance. In so doing, the Court rejected the underlying thesis of Davis, at least to the extent future medical expense was allowed, which is that is sufficient to show it is probable that a potential loss will occur.
The Court of Appeals held that mental anguish related to increased fear of cancer recurrence was compensable. The idea is that while recurrence or cancer related death may be a mere possibility, it may be probable that worry over that possibility may cause emotional distress. How a reasonably jury is supposed to separate the emotional distress that would have occurred in any event from the alleged increase is ignored, as is the question of whether it is reasonable to think that a person is really less concerned about a risk of future cancer because it is slightly less likely. But practice often fails to meet theory in these cases. The Court also held that damages related to chemotherapy and ovary removal were compensable. This was based on its conclusion that the proof supported a finding that these would have been avoided had an earlier diagnosis been made. While its reading of the proof may be suspect, the logic works here. The Court, however, rejected the claim for recovery for decreased chance of remaining cancer free, and for possible future medical expense based on Kemper, just as we earlier predicted it should. Look for this case to show up on the Supreme Court’s docket.
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Automobile Liability
Golden v Paintsville City Utilities, ___ S.W.3d ___, 2012 WL 1139318 (Ky.App. April 6, 2012)
This is a rare summary judgment in an automobile accident case. The plaintiff was in a standing vehicle when he was stuck by a vehicle owned by the defendant and operated by an employee, Larry Herald. It was undisputed that Herald was in his lane of travel until he was struck by a third vehicle which suddenly turned into Herald’s lane of travel. The Court affirmed summary judgment based on the absence of a breach of duty. However, it is suggested that Herald fishtailed at one point in an effort to avoid the vehicle which suddenly appeared. Since the vehicle did not leave its lane of travel, the court correctly based the decision on the absence of a breach. Had Herald’s vehicle left its lane in the effort to avoid, however, summary judgment would have still been appropriate but based on sudden emergency.
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This Court addressed the scope of the Unfair Claims Settlement Practices Act (UCSPA) in the context of removal. While plaintiff had included a claim against the local adjuster, which had the effect of destroying diversity. On removal, the insurer argued that the joinder of the local adjuster was fraudulent since the UCSPA did not apply to adjusters. The UCSPA is silent on this point, which is logical since it was never intended to be a basis for a private cause of action in the first place.
The District court held that the UCSPA does not apply, relying on the prior Supreme Court opinion in Davidson v. American Freightways, Inc., 25 S.W.3d 94 (Ky. 2000) in which the Court held that a person was who had a self insured retention was not subject to the UCSPA. The rationale was that the UCSPA was intended to regulate insurers, and insureds with a self insured retention were not subject to such regulations. The District court held the same rationale applied to adjustors, since they were not engaged in the business of insurance either. The opinion lists a number of unpublished federal court decisions in which this result has been reached.
While the rationale makes perfect sense, one should not be too sure that logic will suffice in state court, since the whole concept of a private cause of action for violations of the UCSPA violates basic principles of logic. A lot will depend on who writes the opinion and who is on the Court when this issue does reach the Supreme Court.
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This is a case brought by a third party plaintiff against a liability insurer alleging delay in payment as a basis for a claim under the Unfair Claims Settlement Practices Act (UCSPA). The court held that the attorney-client privilege between the insurer and counsel retained to defend the remained intact despite a claim of bad faith by the claimant. The opinion discusses the various approaches taken by different states, since the Kentucky court had not decided the issue squarely. To a large degree the court relied on Riggs v Schoering, 822 S.W.2d 414 (Ky. 1991), which acknowledged that the discovery requests in such a case implicated attorney-client privilege.
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Warning: These opinions should not be cited as authority unless and until they become final except as provided in C.R. 76.28(4)(c).
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Medicare Secondary Payer
We are working ona section to assist in understanding and applying the MSP statutes and regulations. We will keep you posted, but in the meantime we have posted some basic resources for your use. To access them click here.
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See how the Court's decision to reject loss of chance claims may impact claims for loss of possible future complications.
Commentary
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Upcoming Events
Attending May 3-4, 2012, CLM Product Liability, Atlanta, GA
Presenting May 17, 2012, PESI Insurance Seminar, Lexington, KY
Presenting May 18, 2012, PESI Insurance Seminar, Louisville, KY
Presenting May 24, 2012, NBI Auto Insurance Coverage Seminar, Lexington, KY
Attending and presenting September 27-28, Professional Liability Defense Federation Annual Meeting, Chicago, IL
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Mission
This site is intended to evolve into a ready source of information that might be of interest to insurance adjustors, corporate counsel or attorneys who are working with cases in Kentucky involving personal injury, property damage or insurance coverage issues. We welcome all comments or suggestions as to what content might prove helpful.
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