COA: November 3, 2017 Court of Appeals Decisions (Minutes)

Nos. 929-941: 13Decisions Posted with a 2 decisions designated 'to be published' with links to full text of each decision

PUBLISHED DECISIONS:

937.  Criminal Law.  Due Process and Missing Evidence Instruction.
Anderson v. Commonwealth of Kentucky
Affirmed trial court order denying missing evidence instruction in second trial regarding evidence destroyed at conclusion of first trial.  Allowed photographs.
[T]o make out a due process violation where evidence has been destroyed a defendant must show (1) the Commonwealth acted in bad faith in destroying the evidence; (2) the potential exculpatory value of the evidence was apparent before its destruction; and (3) the evidence destroyed was, at least somewhat, irreplaceable.

939.  Child Support Arrearages. Laches and Estoppel by Acquiescence.
Dixon v. Dixon
Affirmed family court ruling of no arrearages.
The doctrine of laches is based in equity and premised on the question of whether a party has failed or neglected to assert their rights within a reasonable period of time where the delay has acted to the disadvantage of the other party. Wigginton v. Com. ex rel. Caldwell, 760 S.W.2d 885, 887 (Ky. App. 1988). The court found that Karen had failed to consistently pursue her claim. The court based this finding on the court’s order of July 28, 2014, that no arrearages were due noting that Karen did not object; the fact that no request for a hearing on the issue was made until almost two years after the original motion on the issue; and that she failed to bring the issue up until more than a year after Charles stopped making the mortgage payments on the marital residence.

While the court applied the doctrine of laches to this case, we find that the facts of this case more fairly fit an estoppel by acquiescence, but result in the same outcome based upon the same facts. The doctrine of estoppel by acquiescence is applied to transactions in which it would be unconscionable to permit a person to maintain a position which is inconsistent with one in which he has previously acquiesced. Sparks v. Trustguard Ins. Co., 389 S.W.3d 121, 126-27 (Ky. App. 2012).

Selected cases that were not designated for publication in tort, insurance and civil law. None.

929.  Multiple claims and claimants against Louisville Police Detective.  Qualified Official Immunity.
Washington v. Crystal Marlowe

The parties should not misconstrue this Opinion as deciding Marlowe’s ultimate liability upon the relevant underlying claims. To maintain an actionable negligence claim, the plaintiff must demonstrate duty, breach, causation, and injury. Wright v. House of Imports, Inc., 381 S.W.3d 209 (Ky. 2012). This Opinion only addresses with the elements of duty and breach in connection with qualified official immunity. Upon remand, in order for claimants to prevail upon their claims:

[T]here must be a causally related “violation of a constitutional, statutory, or other clearly established right” of the complainant. Id. It is these causally related violations or acts which are measured against the standards of discretionary or ministerial duties, not the distant myriad acts or omissions that one could logically construct to have preceded them. “[I]f one retreats far enough from a … violation [, a distant act or omission] can be identified behind almost any such harm inflicted  . . . . At the very least there must be an affirmative link between [the act or omission] and the . . . violation alleged.” City of Oklahoma City v. Tuttle, 471 U.S. 808, 823, 105 S. Ct. 2427, 2436, 85 L. Ed. 2d 791 (1985).

Sloas, 201 S.W.3d at 476.

 

938.  Default Judgement.  Dismissal for Lack of Prosecution.
Price v. Norrington
Affirmed denial of default judgment and dismissed for lack of prosecution.

MNT11032017

For the index to archived minutes at the official AOC page, then click here.

For more information on unpublished decisions and obtaining case information, then continue reading below the fold.

COA: October 27, 2017 Court of Appeals Decisions (Minutes)

Nos. 910-928: 19 Decisions Posted with a 24 decisions designated 'to be published' with links to full text of each decision

PUBLISHED DECISIONS:

913.  Family Law. Held family court erred in denying motion to continue the trial and reverse and remand.
Deleo v. Deleo

914.  Criminal Law. Held KRS 161.190, a Kentucky statute addressing teacher abuse, to be unconstitutional.
Masters v. Commonwealth of Kentucky

926.  Criminal Law.  Affirmed dismissal of petition for declarations of rights on claim for education credit on sentence.
Meacham v. Department of Corrections

927.  Criminal Law.  Trial court erred on voiding pretrial diversion.
Burnett v. Commonwealth of Kentucky

Selected cases that were not designated for publication in tort, insurance and civil law. None.

911.  Torts.  Affirmed summary judgment dismissing of claims against manufacturer who was successor in interest of company that made the ladder on claim it was defective ladder.
Whiteman v. Werner Company

919.  Piercing the corporate veil.
Albakri v. A&M Oil Co. Inc.

 

MNT10272017

For the index to archived minutes at the official AOC page, then click here.

For more information on unpublished decisions and obtaining case information, then continue reading below the fold.

COA: October 20, 2017 Court of Appeals Decisions (Minutes)

Nos. 890-909: 20 Decisions Posted with a 2 decisions designated 'to be published' with links to full text of each decision

PUBLISHED DECISIONS:

895.  Revenue & Taxation
Fayette County Clerk v. Kings Right LLC
Opinion Reversing and Remanding ruling that KY Board of Tax Appeals  erred in upholding Appellant’s refusal to refund the purchase price of certificates of delinquency to Appellees, King’s Right, LLC and Dot Capital Investments, LLC.

903.  Business Agreement.  LLC regarding computer analysis of thoroughbred horses.  Dispute developed over source codes and terms.
The Mostert Group LLC v.  PaulMostert

Selected cases that were not designated for publication in tort, insurance and civil law. None.

For the index to archived minutes at the official AOC page, then click here.

For more information on unpublished decisions and obtaining case information, then continue reading below the fold.

MNT10202017

Torts: Bad Faith and Nonpayment or Delay of Payment of PIP benefits (MVRA)

Elements of Proof

The Kentucky Motor Vehicle Reparation Act, KRS 304.39, et seq., provides an exclusive remedy where an insurance company wrongfully delays or denies payment of no-fault benefits. There is no other Kentucky statute, regulation or case law which permits Foster to claim work loss for BRB. The MVRA is the exclusive remedy. Grzyb v. Evans, 700 S.W.2d 399 (Ky.1985), provides that where a statute both declares the unlawful act and specifies the civil remedy available, the aggrieved party is limited to the remedy provided by the statute. General damages are not available when a specific remedy is provided such as in this case. KRS 304.39–210 states that the penalty for any delay in payment of basic reparation benefits is payment of interest at the rate of 12% per annum on the delayed benefits, or 18% per annum if the delay was without reasonable foundation. Interest, which is set out in certain situations in KRS 304.39–220, and the award of attorney fees are the remedies provided to an insured if an insurance company fails to pay basic reparation benefits in a timely manner and/or without reasonable foundation.

Grzyb, supra, involves a special body of law, the Kentucky Civil Rights Act, KRS 344 et seq. FB Ins. Co. v. Jones, 864 S.W.2d 926 (Ky.App.1993), does not control because it relates to general insurance law questions. The Kentucky MVRA preempts general insurance law where an insurance claim arises as a result of physical injury caused by a motor vehicle accident and establishes remedies for violations of the statute. This can be compared to the civil rights provision of Grzyb. MVRA is a comprehensive act which not only relates to certain tort remedies, but also establishes the terms under which insurers pay no-fault benefits, and provides for the penalties to which insurers are subjected if they fail to properly pay no-fault benefits.

Here, the circuit judge dismissed the claim of Foster seeking punitive damages under the Unfair Claims Settlement Practices Act, but allowed the suit based on the MVRA to proceed to a jury trial. Because the MVRA is the exclusive remedy, the decision of the circuit judge was correct.

Foster v. Kentucky Farm Bureau Mut. Ins. Co., 189 S.W.3d 553 (SC 2006).

2004-SC-000461-DG

Torts: Breach of Fiduciary Duty

Elements of Case

The common law tort of breach of fiduciary duty requires the plaintiff to plead and prove four basic elements: “(1) the existence of a fiduciary duty; (2) the breach of that duty; (3) injury; and (4) causation.” Baptist Phys. Lexington, Inc., 436 S.W.3d at 193.

Whether a fiduciary duty exists by virtue of the relationship between various actors is generally a question of law for the courts to decide as it essentially involves a policy determination. Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245, 248 (Ky.1992).

A fiduciary duty is “the highest order of duty imposed by law.” Abbott v. Chesley, 413 S.W.3d 589, 600 (Ky. 2013)

A fiduciary duty is “the highest order of duty imposed by law.” In re Sallee v. Fort Knox Nat’l Bank, N.A., 286 F.3d 878, 891, 893 (6th Cir.2002), Henkin, Inc. v. Berea Bank and Trust Co., 566 S.W.2d 420 (Ky.App.1978). It is not to be lightly required. In an arms-length commercial transaction, where each party is assumed to be protecting its own interest, no such duty arises. Id. at 894.

If a fiduciary relationship does exist between the parties, the question of whether one party breached that duty is one of fact. See Priestley v. Priestley, 949 S.W.2d 594 (Ky.1997).

See, Conlon v. Haise, Court of  Appeals, To Be Published, 2014-CA-001581, Sept. 30, 2016.  Note that WestLaw has this not be be published, but the designation on the opinion says “To Be Published”)

“A fiduciary duty requires more than the generalized business obligation of good faith and fair dealing.” Ballard v. 1400 Willow Council of Co–Owners, Inc., 430 S.W.3d 229, 242 (Ky.2013). “A fiduciary duty is ‘the highest order of duty imposed by law.’ ” Abbott, 413 S.W.3d at 600 (quoting In re Sallee, 286 F.3d at 891). It goes “beyond the standard duty of reasonable care we ordinarily impose.” Associated Ins. Serv., Inc. v. Garcia, 307 S.W.3d 58, 63 (Ky.2010). “It exists where a special confidence is reposed in another who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.” Lappas v. Barker, 375 S.W.2d 248, 251 (Ky.1963). If a fiduciary relationship exists, the fiduciary must place the other party’s interests ahead of his own. Ballard, 430 S.W.3d at 242. “The fiduciary cannot profit from the relationship without the knowledge and permission of the principal.” Id. at 241–42. When conflict is unavoidable the fiduciary must place the interests of the other above his own. Id.

Such onerous, self-sacrificing duties dictate that the fiduciary relationship “is not to be lightly required.” Snow Pallet, Inc. v. Monticello Banking Co., 367 S.W.3d 1, 5 (Ky.App.2012). Fiduciary relationships arise only when it can be determined that nature of the relationship between the parties is such that the fiduciary “has expressly undertaken to act for the plaintiff’s primary benefit.” Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544, 552 (Ky.2009). “The fact that one businessman trusts another, and relies upon his promise to perform a contract, does not rise to a confidential relationship. … Neither is the fact that the relationship has been a cordial one, of long duration, evidence of a confidential relationship.” Ballard, 430 S.W.3d at 242 (quoting In re Sallee, 286 F.3d at 891–92). “Although fiduciary relationships can be informal, a fiduciary duty does not arise from the universal business duty to deal fairly nor is it created by a unilateral decision to repose trust and confidence; it derives from the conduct or undertaking of the purported fiduciary.” Flegles, Inc., 289 S.W.3d at 552.3

2014-CA-001581

Torts: Breach of fiduciary duty and first party insurance claims

Elements of Proof

Punitive damages were not permitted for the breach of contract claim in Federal Kemper Ins. Co. v. Hornback, 711 SW 2d 844 (Ky. 1986).  However, Justice Liebson’s dissent is noted for future reference on the existence of a fiduciary relationship involving a first party claim.

Movant cites Anderson v. Continental Ins. Co., 85 Wis.2d 675, 271 N.W.2d 368 (1978), in which the Wisconsin court stated that an insured must prove three elements in order to prevail against an insurance company for alleged refusal in bad faith to *847 pay the insured’s claim: (1) the insurer must be obligated to pay the claim under the terms of the policy; (2) the insurer must lack a reasonable basis in law or fact for denying the claim; and (3) it must be shown that the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed. Subsequently, in Davis v. Allstate Ins. Co., 101 Wis.2d 1, 303 N.W.2d 596 (1981), the Wisconsin court amplified this rule, stating an insurer is, however, entitled to challenge a claim and litigate it if the claim is debatable on the law or the facts.
These guidelines as presented by the movant are a fair statement of the law. This amounts to the same standard for imposing punitive damages described by the Kentucky Court of Appeals in Feathers v. State Farm Fire and Casualty Co., Ky.App., 667 S.W.2d 693 (1983). Feathers stated that the insurance company may be liable for punitive damages where it denies payment after “the policyholder has substantially complied with the terms and conditions required by the policy, and there is no substantial or credible evidence that the policyholder directly or indirectly set fire to his property for personal gain….” 667 S.W.2d at 696.

Torts: Intentional Interference With Contractual Relations

Elements of Proof

To recover for a claim for intentional interference with contractual relations, a plaintiff must establish the following elements:

(1) the existence of a contract;

(2) Defendants’ knowledge of this contract;

(3) that it intended to cause its breach;

(4) its conduct caused the breach;

(5) this breach resulted in damages to [the plaintiff]; and

(6) Defendant had no privilege or justification to excuse its conduct.

CMI, Inc. v. Intoximeters, Inc., 918 F.Supp. 1068, 1079 (W.D.Ky.1995); see also Hunt, 18 F.Supp.2d at 702–703 (citing Blair v. Gen. Motors Corp., 838 F.Supp. 1196, 1200 (W.D.Ky.1993)) (internal quotation marks omitted) (“In order to prove a claim for tortious interference, [a plaintiff] must demonstrate that a wrongdoer intentionally meddled with an agreement without justification or invaded contractual relations by engaging in significantly wrongful conduct.”).

However, as an affirmative defense, a defendant “may escape liability by showing that he acted in good faith to assert a legally protected interest of [its] own.” NCAA v. Hornung, 754 S.W.2d 855, 858 (Ky.1988). Kentucky courts have consistently held that a conduct within the scope of a contractual agreement cannot form the basis for an intentional interference claim. E.g., Hunt, 18 F.Supp.2d at 702; Hornung, 754 S.W.2d at 860 (holding that defendant’s decision to decline to approve and hire the plaintiff as a broadcaster was a bargained-for right that was an essential element of the contract, so defendant “entitled to assert its right even to the detriment of [plaintiff’s] prospective contractual relation”); cf. Blair, 838 F.Supp. at 1200 (“[A] claim of tortious interference should not [lie] where [a manufacturer in a dealership agreement] is asserting legitimate contract rights.”).

From Epps Chevrolet Company, D/B/a Tom Epps Nissan, Plaintiff, V. Nissan North America, Inc., Defendant, 99 F.Supp.3d 692 United States District Court, E.D. Kentucky, Central Division, at Frankfort.  District Court, Gregory F. Van Tatenhove, J. (now on Sixth Circuit).

See also,

Throughout this litigation, the parties and the lower courts have relied upon Sections 766B, 767, and 773 of the Restatement (Second) of Torts. While this Court has never adopted these sections, the Court of Appeals in Cullen v. South East Coal Co., Ky.App., 685 S.W.2d 187 (1983), followed Section 766B and recognized that intentional and improper interference with the prospective contractual relations of another gives rise to liability. Several other Kentucky decisions recognize that contractual relations or prospective contractual relations are protected from improper interference. See Brooks v. Patterson, 234 Ky. 757, 29 S.W.2d 26 (1930); Derby Road Building Co. v. Commonwealth, Ky., 317 S.W.2d 891 (1958); Carmichael – Lynch – Nolan, Etc. v. Bennett, Etc., Ky.App., 561 S.W.2d 99 (1977); and Henkin, Inc. v. Berea Bank & Trust Co., Ky.App., 566 S.W.2d 420 (1978). Upon examination of our decisions, we conclude that the foregoing sections of the Restatement fairly reflect the prevailing law of Kentucky.

Our law is clear that a party may not recover under the theory presented in the absence of proof that the opposing party “improperly” interfered with his prospective contractual relation. To determine whether the interference is improper, Section 767 sets forth seven factors to be considered by the court in ruling on the motion for directed verdict and, if the case is submitted, considered by the jury. Unless there is evidence of improper interference, after due consideration of the factors provided for determining such, the case should not be submitted to the jury. Even if evidence is presented which would otherwise make a submissible case, the party whose interference is alleged to have been improper may escape liability by showing that he acted in good faith to assert a legally protected interest of his own. While the party seeking recovery bears the burden of proving that the interference was improper, the party asserting a right to protect his own interest bears the burden of proving his defense.

National Collegiate Athletic Ass’n By and Through Bellarmine College v. Hornung, 754 S.W.2d 855 (SC 1988).

Torts: Tortious Interference With Prospective Economic Advantage

Elements of Proof

Tortious interference with a prospective business advantage does not require the existence of a contract.

Elements are:

(1) the existence of a valid business relationship or expectancy;

(2) Defendant was aware of this relationship or expectancy;

(3) that defendant intentionally interfered;

(4) that the motive behind the interference was improper;

(5) causation; and

(6) special damages.

Monumental Life Ins. Co. v. Nationwide Retirement Solutions, Inc., 242 F.Supp.2d 438, 450 (W.D.Ky. 2003). This analysis turns primarily on motive. National Collegiate Athletic Ass’n By and Through Bellarmine College v. Hornung, 754 S.W.2d 855, 859 (Ky. 1988). To prevail under this theory of liability, the “party seeking recovery must show malice or some significantly wrongful conduct.” Id.

2011-CA-000696