May 2009
Supreme Court
Settlement - Release with Agreement to Indemnify for Subrogation as Applicable to No-Fault
Coleman v. Bee Line Courier Service, Inc. , 284 S.W.3d 123 (Ky. May 21, 2009)
In this case, the tortfeasor’s insurer’s offer was accepted and a release sent. The release had a standard subrogation indemnity provision, which applied to all claims to the "proceeds of the settlement". The case was resolved on a very simple basis. Since a no-fault subrogation claim is distinct and separate from the injury claim, the no-fault subrogation claim is not a claim on the proceeds. For future reference, it should noted that there was some support on the Court for finding such an indemnity agreement to violate the no-fault act. There is no basis in the statute for such a thing, but a fine point such as this will not always quiet the paternal urge of government.
While there is nothing wrong with settling the entire case at once and seeking an indemnity agreement as described, we recommend that this not be extended to no-fault. From the outset, internal valuations as well as all offers should clearly state that they are exclusive of no-fault. Then the no-fault subrogation claim can be separately resolved or quietly and inexpensively resolved in no-fault arbitration.
Duty - Auto Dealer’s Duty for Accident while Customer Test Drives Car
Morgan v. Scott , 291 S.W.3d 622 (Ky. May 21, 2009)
The Court reaffirmed the general rule that a dealer is not responsible for the negligence of a customer test driving a vehicle unless accompanied by the owner or his representative. In a footnote, the majority seems to open the door to a challenge to that portion of the rule providing for liability in that the idea of control is a fiction not really in accord with reality.
The verdict against the dealer was premised on the theory that the dealer had assumed a duty by adopting an internal policy requiring a customer to accompany a customer on a test drive. This theory was rejected because the plaintiff could not show that she relied on the internal policy (she could not have even known about it) and because the failure to follow the policy did not increase the risk of harm. This part of the holding is really pretty obvious. The most significant part of the opinion may be that the Court actually says what any student of tort law has always known: that when Justice Liebson announced the universal duty that one owes to all others, he was in fact wrong. The Court sets forth in some detail that this oft quoted statement does not change the traditional requirements of duty, causation and foreseeability.
Damages - Duty to Mitigate
Morgan v. Scott , 291 S.W.3d 622 (Ky. May 21, 2009)
A failure to follow medical advice, such as losing weight and quitting smoking, does not justify a mitigation instruction unless there is medical evidence that the failure contributed to the condition complained of.
Apportionment - Effect of Reversal of Part of Apportioned Verdict
Morgan v. Scott , 291 S.W.3d 622 (Ky. May 21, 2009)
The verdict was apportioned 50-50 between the dealer and the customer. The Court held that, the case against the dealer having been dismissed, the customer was responsible for 100% of the verdict. This result is in direct contradiction to the Court’s decision in Stratton v. Parker, 793 S.W.2d 817 (Ky.1990). In that case the jury found not liability on the part of the co-defendant and apportioned 0% fault. The Court held that since an apportionment had been made, the verdict was several and thus no credit could be taken for any sums paid by the co-defendant. The Morgan Court simply ignored the key point. The issue before the Court was not whether liability may be apportioned against one not at fault, since that really deals with whether an instruction should be given in the first place. The issue was whether a several judgment can be retroactively made joint and several, and the longstanding precedent is that once an instruction is given, the judgment is several. It remains to be seen whether this is just another ad hoc decision unrelated to any particular rule of law, or whether the Court has embarked a reconstruction of the law of several liability.
Duty - Negligent Hiring and Retention
Ten Broeck Dupont, Inc. v. Brooks, 283 S.W.3d 705 (Ky. May 21, 2009)
The Court emphasized that it is not enough to show that an employee was unsuitable for the position to which he was hired, but must further create a danger. The Court offered a pattern instruction for a sexual assault case with a consent defense. The Court also discussed at some length the civil "rape shield" evidentiary rule.
Trespass - Treble Damages for Cutting Timber under KRS 364.130
Meece v. Feldman Lumber Co., 290 S.W.3d 631 (Ky. May 21, 2009)
This opinion significantly changes the standard for awarding treble damages for a trespass resulting in the cutting of timber. The opinion is a good resource for the history of this tort in Kentucky. By statute the distinction between innocent and wilful trespassers is no longer relevant. The statute in section (1) provides for treble damages where the trespasser acts without legal right or without color of title. Section (2) provides for circumstances under which the owner may recover only actual damages and legal costs. The issue in the case was whether the defendant acted without color of title. He had a deed, as did the owner. He had a survey done. The prior rule was that any instrument purporting to convey the land would constitute color of title. The Court held that the defendant’s deed was insufficient because it did not fully describe the boundaries of the land. One of two things will need to happen in the future. The Court will distinguish this case down to the point where it will be limited to its facts, or the phrase color of title will be very close to the same as rightful title, rendering the first section nearly meaningless. Keep in mind that this holding, if followed in future cases, could also have an impact on adverse possession cases.
Court of Appeals
Civil Rights - Termination of Political Rival
Cook v. Popplewell, 2009 WL 1349145 (Ky.App. May 15, 2009), review granted January 13, 2010 (2009-SC-341-D)
This opinion serves as a nice survey of both federal and state cases discussing whether there is a fundamental right to run for office. At issue in the case was the typical deputy choosing to run against the official he or she works for. The Court held that neither the First Amendment nor the Fourteenth Amendment protects ones interest in running the office. The Court seems to anguish over the result, and it seems clear that the panel felt personally that to run for office was the epitome of speech. Missing from this dilemma seems to be the rather obvious fact that even if the US Constitution were implicated, clearly the state also has a compelling interest in its officials operating their offices in an efficient manner. This would be impossible with such a direct conflict of interest separating an official from his or her deputies.
Insurance - Ownership of Newly Acquired Auto
Franklin v. Safe Auto Ins. Co. , 290 S.W.3d 69 (Ky.App. May 01, 2009)
In determining coverage under an automobile liability policy, it is sometimes critical to determine who owned the vehicle in question at the time of the accident. Since Kentucky is a title state, this in turn requires reference to KRS 186.010(7) and KRS 186A.215. In the context of a private sale, the prior guidance was supplied by Omni Ins. Co. v. Kentucky Farm Bur. Mut. Ins. Co., 999 S.W.2d 724 (Ky.App 1999). In this case, the Court held that title transferred when the buyer and seller complete the transfer or title and odometer statement and the document is delivered to the buyer. It does not require filing with the clerk prior to the accident.
Sixth Circuit
Civil Rights - 1981 - Discrimination in Accommodations
Keck v. Graham Hotel Systems , 566 F.3d 634 (6th Cir. May 21, 2009)
The plaintiffs alleged racial discrimination on the part of a hotel in providing services for a wedding. For three months the couple tried to make arrangements to host their wedding reception, and they were met with what can only be described as the run-around from hell. Even though there was no evidence of overt rudeness or mistreatment, the Court held that a factual issue existed as to whether the hotel had acted in a markedly hostile manner. The Court held that the complete failure to consummate a transaction could be seen as contrary to the hotel?s financial interests and outside of widely accepted business norms. By way of non-discriminatory justifications, the hotel pointed to the fact that it had lost its franchise, had turnover in the wedding department, and was otherwise in transition. On the one hand, the Court suggested that the justifications may not have covered the entire time frame, but one has to wonder if the result would have been the same if the hotel did not act in a racially discriminatory manner when confronted with testers from the Fair Housing Center.
ERISA - Anti-Cutback Rule [29 U.S.C. 1054(g)]
Thornton v. Graphic Communications Conference , 566 F.3d 597 (6th Cir. May 14, 2009)
The rescission of a benefit increase made after retirement does not violate the anti-cutback rule since it does not reduce the benefits the participating employee had been promised and earned over time. Since the rescission did not violate the statute, the Board's adoption of the rescission did not constitute a breach of fiduciary duty.
Procedure - Res Ajudicata Bragg v. Flint Board of Education ,--- F.3d ---, 2009 WL 1323360 (6th Cir. May 13, 2009)
A dismissal under Rule 41(b) for lack of progress is an adjudication on the merits and precludes a subsequent suit based on the same transaction or occurrence.
Employment - Religion - Accommodation Claim Reed v. International Union --- F.3d ---, 2009 WL 1750601 (6th Cir. May 7, 2009)
This is an interesting decision in that each of the three judges hearing the case wrote separate opinions. The union had made an accommodation to the plaintiff based on his religious objection to the union itself. He was permitted to pay the amount of the dues to a charity. His claim was premised on the fact that a worker who objected to the use of dues for political purposes would have paid less in dues, while he had to pay the full amount but to charity. The third prong of the test for a prima facie case requires that the plaintiff show he was discharged or disciplined for failing to comply with a conflicting employment requirement. Applying this test literally, a union could never be the subject of an accommodation claim because it can neither discharge nor otherwise impose an employment condition. The primary opinion rejects the argument that an adverse employment action would not be sufficient, suggesting that perhaps the facts should have been presented as a disparate treatment case. The concurring opinion opined that since the accommodation given was reasonable, this fact alone was sufficient to sustain the dismissal. But this approach to the case seems to confuse the prima facie case with the defense of undue hardship. The dissent simply argued that an adverse employment action was sufficient, and a reduction in pay was sufficient. This case may be ripe for an en banc hearing if such is requested.
Arbitration - Federal - Non-Parties to Contract Arthur Anderson LLP v. Carlisle, --- U.S. ---, 2009 WL 1174853 (May 5, 2009) reversing Carlisle v. Curtis, Mallett-Prevost, Colt & Mosle, LLP, 521 F.3d 597 (6th Cir. 2008)
A non-signatory to the contract containing an arbitration provision invoking the Federal Arbitration Act may bring an action under that Act if state law would permit the non-signatory to enforce the contract itself. The Court also clarified that jurisdiction to appeal from an order denying a stay pending is not dependant on the merits of the claim for arbitration.
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