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).


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


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.

Cause of Action: Retail Store (Wal-Mart) Owed No Duty to Patrons of store when altercation occurs Rose vs. Wal-Mart COA Not Published 9/12/2014; PJ Combs Affirming Held Wal-Mart had no duty either to prevent or to intervene in a physical altercation involving several of its patrons (Rose v. Wal-Mart, COA, NPO 9/12/2014)

Torts.  Duty Owed to Patrons of store when altercation occurs
Rose vs. Wal-Mart
COA Not Published 9/12/2014; PJ Combs Affirming
Held Wal-Mart had no duty either to prevent or to intervene in a physical altercation involving several of its patrons under facts of this case.

Cause of Action: Premises Liability Open and Obvious Hazard Distinguished by COA for licensee (as opposed to invitee) (Klinglesmith vs. Estate of Reba Pottinger, COA, NPO 9/12/2014)

Klinglesmith vs. Esate of Reba Pottinger
Premises Liability.  Slip and Fall.  Licensee treated differently on open and obvious.
COA Not Published 9/12/2014; PJ Stumbo Affirming

[Although the issue of plaintiff’s failure to offer proof of causation was the basis to the lower court’s summary judgment and the Court of Appeals’ affirmance of the dismissal, Judge Stumbo in her opinion addressed a distinction on how open and obvious interplays with the landowner’s duties to an invitee (as in Shelton and McIntosh vs. a licensee in Klinglesmith.  This is why the case is noted under the topic causes of action.]

STUMBO, JUDGE: Stella Klinglesmith appeals from an Order of the Jefferson Circuit Court dismissing via Summary Judgment her personal injury action against the Estate of Reba Pottinger. Klinglesmith contends that the court erred in concluding that the open and notorious doctrine barred her recovery, and that she would be unable to demonstrate causation if the matter proceeded to trial.

As a basis for the Order granting Summary Judgment, the Court noted that Klinglesmith testified in her deposition that she did not observe any defect in the porch and was not sure why she fell. After discussing Kentucky River Medical Center v. McIntosh, 319 S.W.3d 385 (Ky. 2010), and the exception to the open and obvious doctrine, the Court determined that Klinglesmith had over a year since the filing of this action to conduct discovery, and had not established that the condition of the porch was a substantial factor in causing her injury. The Court rendered Summary Judgment, and this appeal followed.

Klinglesmith contends that under Shelton, an open and obvious condition does not eliminate a landowner’s general duty to maintain premises in reasonably safe condition or the duty to warn of or eliminate unreasonably dangerous conditions, but, rather, is factor in determining whether landowner fulfilled his or her duty of care. Klinglesmith appears to contend that the Jefferson Circuit Court erred in absolving the Estate of liability because the defect in the

The parties agree and the record so demonstrates that Klinglesmith was a licensee when she entered upon the parcel then owned by Pottinger. She cannot properly be characterized as an invitee in that she was not connected with the owner’s business (as there was no business) nor did Klinglesmith engage in an activity of the type that the owner conducts or permits to be conducted on his land.

Cause of Action. Kentucky is not a “direct action” state. Insurance company not proper defendant in wrongful death claim resulting in dismissal withOUT prejudice (Estate of Moore vs. Kentucky Farm Bureau Mutual Ins. Co. COA, NPO 2/21/2014)

Estate of Moore vs. Kentucky Farm Bureau Mutual Ins. Co
COA, NPO 2/21/2014 PJ Caperton Affirming in Part, Reversing in Part, and Remanding
Allen County
Affirmed dismissal of wrongful death claim (but without prejudice) asserted against insurer rather than insureds.

Dr. Ephraim McDowell, Danville,Kentucky marker in front of his home. Picture of home next post.

Dr. Ephraim McDowell, Danville,Kentucky marker in front of his home. Picture of home next post.

CAPERTON, JUDGE: The Appellant, Dovie Moore, Administrator of the Estate of Peyton Spencer Green (hereinafter “Moore”), appeals the February 5, 2013, order of the Allen County Circuit Court, dismissing her wrongful death claimagainst the Appellee, Kentucky Farm Bureau Mutual Insurance Company (hereinafter “Farm Bureau”). Upon review of the record, the arguments of the parties, and the applicable law, we affirm. However, because we also conclude that the dismissal should be without prejudice, we reverse that portion of the order and remand for entry of an order dismissing without prejudice.

Cause of Action: Discrimination Based Upon National Origin

John Charalambakis v. Asbury College
COA PUB 2/7/2014

THOMPSON, JUDGE: John Charalambakis, a former professor at Asbury College, sued for employment discrimination, breach of contract and defamation. Charalambakis appeals from summary judgment on his discrimination and retaliation claims, dismissal of his defamation claim, the jury verdict on breach of contract claim and the final judgment awarding costs. 

Charalambakis ‘ first claim is the trial court erred in granting summary judgment on his claim of discrimination on the basis of national origin. Under the KCRA it is unlawful for an employer to discharge, discriminate against or adversely affect an individual’s status as an employee because of that individual’s national origin. KRS 344.040(1)(a), (b). Kentucky interprets the KCRA consistently with Title VII of the Federal Civil Rights Act. American General Life & Acc. Ins. Co. v. Hall, 74 S.W.3d 688, 691 (Ky. 2002). To establish a prima facie case of discrimination, “[a] plaintiff must show that: (1) he is a member of a protected class; (2) he was terminated; (3) he was qualified for the position; and (4) he was replaced by a person outside a protected class or was treated differently than a similarly situated, non-protected employee.” Abdulnour v. Campbell Soup Supply Co., LLC, 502 F.3d 496, 501 (6th Cir. 2007). A prima facie case of national origin discrimination can be established through direct evidence of discrimination or by establishing a circumstantial case raising an inference of discrimination pursuant to the burden-shifting framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).

CAUSES of ACTION: Legal Negligence and “Suit within a suit” resolution of underlying premises liability claim moots legal negligence suit (Freeman vs. Becker Law Office)

Legal Malpractice, Premises Liability and “Suit Within a Suit”

Tonia Freeman vs. Becker Law Office, Kevin Renfro, Bubalo Heistand & Rotman, and Dianne E. Sonne
COA, Not Published 1/10/20014

This is a legal malpractice claim against a private organization operating from a government building at Fort Knox which was treated as a “suit within a suit”. After a jury rendered a verdict that the private organization (Toys for Tots) was not in possession of the premises where Tonia Freeman was an employee and received her injuries on a slip and fall, the legal negligence claim premised upon the premises liability basically went away.

Wilma Jean Shelton vs. Kentucky Easter Seals Society, Inc., 2011-SC-000554-DG, SC, Published 11/22/2013 – Open and Obvious Doctrine Buried

slipandfallA 4-3 decision announced this past week and authored by Chief Justice Minton should end nearly three years of parsing and quibbling over their earlier decision in Kentucky River Medical Center v. McIntosh,  319 S.W.3d 385 (Ky. 2010) which by many accounts marked the demise of the “open and obvious” doctrine in premises liability cases.  Well, “open and obvious” is gone, gone, gone, and its eulogy recognized in Justice Scott’s dissent in the following case.

The Supreme Court’s decision in Wilma Jean Shelton vs. Kentucky Easter Seals Society, Inc.2011-SC-000554-DG, should serve as a landmark in Kentucky jurisprudence not only on the limited issue presented in premises liability law but on the  historical power of the common law of the Commonwealth as a bulwark in the protection of the public’s right to be secure and safe and the duty of care owed to others and to  yourself. More importantly (and I may well be alone on this), but I see this decision also as a Magna Carta moment for Chief Justice Minton and the current court on our historical and constitutional right to a civil jury trial – a right that seems to have eroded in the wake of summary judgment expansion and the convenience of the courts to handle a docket of cases growing in complexity and number.

Let us not forget the judiciary is a separate and equal branch of our government.  And that the common law and the right to a jury trial in civil cases are part and parcel of the judiciary’s power.  The right to an independent jury goes back to the Trial of William Penn (aka Bushell’s Case) in 1670 and was echoed in the Trial of John Peter Zenger, and the authority of the common law stood as a check on the Crown.


As Chief Justice Minton noted in the last paragraph of his opinion:

We reverse the Court of Appeals and remand the case for further proceedings because Cardinal Hill had a duty to Shelton and there remains a question of material fact whether that duty was breached or not. The approach we embrace in this opinion brings Kentucky even further into the modern era of tort law and takes one more step in our journey toward a fairer system less burdened by vestiges of contributory negligence. We may walk slowly in the law, but we should never walk backward. 65 Perpetuating the confusion engendered by the open-and-obvious doctrine would be a step backward. 

Although I applaud this decision for looking forward and not retrenching from Justice Noble’s opinion written in McIntosh, I cannot help but feel sorrow for those claimants who  met the “resistance” and ultimately were denied compensation or at least a chance to be heard on their claims following the remand of their cases the post-McIntosh remands but before Shelton.

Here is a brief summary of Wilma Jean Shelton vs. Kentucky Easter Seals Society, Inc.:

Cause of Action: Negligent Hiring, Training and Supervision (Carberry v. Golden Hawk Transportation, COA, PUB 6/21/2013)

COA.Neg.HiringCarberry vs. Golden Hawk Transportation Co.
COA, PUB 6/21/2013

Citing the Flor-Shin two-prong test for negligent hiring and retention:

Flor-Shin identifies the two elements necessary to prove a claim of negligent hiring and retention—an unfit applicant for a particular job and creation of an unreasonable risk of harm by the hiring of that applicant.

In Flor-Shin, an award of summary judgment to a floor maintenance company was vacated because it had hired and placed William Bayes, a man with an extensive criminal record,10 inside a locked K-Mart store with a single female employee whom he sexually assaulted. Here, we agree with the trial court’s application of Flor-Shin and its award of summary judgment. Ivey was hired as a truck driver. A check of his driving history, as required by 49 CFR § 391.25, revealed a few driving violations over a lengthy career but not enough to make him unfit to handle a big rig. Unlike Bayes in Flor-Shin, Ivey’s job with Golden Hawk did not place him alone in an enclosed space with the public and definitely not with Carberry. The attack occurred in the open and in public view..

On the allegation of negligent training and supervision, an employer may be held liable for the negligent supervision of its employees “only if he or she knew or had reason to know of the risk that the employment created.” Booker, 350 F.3d at 517 (quoting Restatement (Second) of Agency § 213 (1958) (Comment & Illustrations)); see also Smith v. Isaacs, 777 S.W.2d 912, 914 (Ky. 1989). On the strength of VanBuskirk’s affidavit, the trial court found Golden Hawk had no reason to suspect Ivey would commit an assault while on the job and went on to find Ivey “acted so outside the normal scope of employment that no reasonable amount of training or supervision could have prevented the attack.” On the facts presented, we agree. The meeting between Sexton, Carberry and Ivey occurred unbeknownst to Golden Hawk and was not in furtherance of Golden Hawk’s business interests. We see no basis upon which Carberry could succeed on a claim of negligent training and supervision.

In Wood v. Southeastern Greyhound Lines, 302 Ky. 110, 194 S.W.2d 81 (1946), a commercial bus driver stopped his vehicle, alighted and assaulted another motorist. Wood’s attempt to recover damages for the assault from the bus line was thwarted because: the master is liable only for the acts of his servant committed in the course or scope of the latter’s employment and not for the acts of the servant committed by him while not serving the master and outside of the scope of his employment. Hines v. Wall, 194 Ky. 379, 239 S.W. 451. Wood, 302 Ky. at 113, 194 S.W.2d at 82. Just as the bus driver in Wood did not assault the other driver in furtherance of the bus company’s interests, Ivey did not assault Carberry in furtherance of Golden Hawk’s interests. Therefore, the trial court’s order awarding summary judgment to Golden Hawk is affirmed.