February 2009
Supreme Court
Procedure - Failure to Answer Rule 8 Interrogatories
Tennill v. Talai, 277 S.W.3d 248 (Ky. Feb 19, 2009)
The Supreme Court held that, in the context of a default judgment, the failure to respond to Rule 8 Interrogatories (seeking the amount claimed) was harmless error because the Defendant took the deposition to ask about the amount of damages and failed to do so. This result ignores the purpose of Rule 8, which is to replace the ad damnum clause in the Complaint. It is counsel, not the Plaintiff, who generally decides the amount to claim. It is possible that the Court will limit this holding to default judgments, but if not, the case may eliminate the Rule 8 issues in any case in which a Plaintiff is not asked Rule 8 questions. While finding out, it may be best practice to go ahead and ask the Plaintiff, assuming the interrogatories have not been answered.
Medical Malpractice -Psychiatrist Duty to Warn
Devasier v. James, 278 S.W.3d 625 (Ky. Feb 19, 2009)
This case is the first time the Supreme Court had an opportunity to pass on the significance of KRS 202A.400 since the Court of Appeals had held that a psychiatrist did have a duty to warn in Evans v. Morehead Clinic, 749 S.W.2d 696 (Ky. App. 1988). KRS 202A.400 was enacted to provide immunity from suit for mental health workers except in certain circumstances. One such circumstance is where "the patient has communicated to the mental health professional an actual threat of physical violence against a clearly identified or reasonably identifiable victim, or unless the patient has communicated to the mental health professional an actual threat of some specific violent act". The Court held that, while the communication can be through third persons, it must be an actual threat by the patient as opposed to a feeling generally that the patient may pose a threat.
Fraud - Business Projections as Misrepresentation of Fact
Flegles, Inc. v. Truserv Corp., 289 S.W.3d 544 (Ky. Feb 19, 2009)
This 4-3 opinion is a must read for anyone with a fraud case based on opinion, and there is no real dispute in the opinion about the basic legal principle. An opinion in the form of a business projection is not actionable fraud, unless the opinion either incorporates falsified past or present facts or is so contrary to the true current state of affairs that the purported prediction is an obvious sham. The Plaintiff was a member of the Defendant's co-op. Defendant prepared audits using information supplied by the Plaintiff. The Plaintiff then allegedly relied upon the audits in expanding its business, which for several reasons ended up a losing proposition. The majority viewed these as forward looking forecasts which were not actionable. The dissent, however, suggested that the audits contained falsified facts because "conflicting" information was withheld. The majority describes this information as other projections based on less optimistic assumptions. If this is accurate, the "withheld" information was neither false nor misleading. Surely it is common knowledge that any forecasts or projection will be different if the underlying assumptions are changed. But it is more likely that the split on the Court reflects a difference of opinion as to the relative roles of court and jury. In the past the Court has been too quick to abrogate its gate keeping function, leaving it in many cases to juries to actually define torts such as this. It remains to be seen whether the present Court intends to resume its gate keeping function.
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