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: 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

Torts: Common Law Negligence

Elements of Proof

A common law negligence claim requires proof of

(1) a duty owed by the defendant to the plaintiff,
(2) breach of that duty,
(3) injury to the plaintiff, and
(4) legal causation between the defendant’s breach and the plaintiff’s injury.

Wright v. House of Imports, Inc., 381 S.W.3d 209 (Ky. 2012)

The standard of care applicable to a common-law negligence action is that of ordinary care—that is, “such care as a reasonably prudent person would exercise under the circumstances.” Slusher v. Brown, 323 S.W.2d 870, 872 (Ky. 1959).

 

2011-SC-000264-DG