Click here for March 2013 monthly summaries.
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CIVIL PROCEDURE. Rule 11. COA affirmed denial of sanctions.
Lexington Investment Co. vs. Randy Willeroy
MAZE, JUDGE: Lexington Investment Company, Inc. and Mathew Stockham (collectively, “the Brokers”) appeal1 from an order and judgment by the Fayette Circuit Court denying their motion for sanctions and attorney fees against Randy Willeroy (Willeroy) and his attorneys Cliff and Lynn Stidham (Stidham). The Brokers assert that Willeroy and Stidham brought an action against them without adequately researching the factual and legal basis for the claims. Consequently, they argue that the trial court abused its discretion by denying their motion for sanctions pursuant to Kentucky Rule of Civil Procedure (“CR”) 11. But while Willeroy’s claims against the Brokers were not successful, we conclude that he and Stidham had a reasonable basis for the claims at the time the action was filed. Hence, we affirm the trial court’s denial of the Brokers’ motion for sanctions.
CIVIL PROCEDURE. Rule 11
Wright v. Commonwealth
Opinion by Judge Maze; Judges Keller and Moore concurred.An estate beneficiary brought an action against the estate’s co-administrator, an attorney, for professional negligence, and against a broker and brokerage firm for unsuitable trading, failure to properly advise the co- dministrator, and churning of the estate account. The circuit court granted summary judgment in favor of the broker and brokerage firm, but denied their motion for sanctions and attorney s’ fees under CR 11.
On appeal, the Court of Appeals held that the personal representative of the estate was not a necessary party to the appeal by the broker and brokerage firm of the circuit court’s denial of their motion for sanctions and attorney fees where, although the broker and brokerage firm had sought to hold estate funds in escrow to secure a potential award of attorneys’ fees, the estate beneficiary and his counsel would be solely liable for any potential award. The Court then held that the circuit court did not abuse its discretion in denying the motion for CR 11 sanctions and attorneys’ fees against the estate beneficiary and his counsel for allegedly failing to adequately investigate any potential claims against the broker and brokerage firm before initiating suit. Even though counsel for the estate beneficiary conceded that he did not know exactly what had transpir ed between the co-administrator of the estate and the broker, he had a reasonable basis to believe that either the co-administrator or the broker had engaged in wrongful conduct causing the estate losses. Moreover, given a looming statute of limitations deadline, and the co-administrator’s reluctance to provide supporting documentation, the decision to bring claims against the broker and brokerage firm was not unreasonable. The Court further n oted that a proposed tolling agreement signed by the broker and brokerage firm never became formally effective because not all of the potential defendants had signed it.
Brady v. Commonwealth of Kentucky
Opinion by Judge Maze; Judges Stumbo and Thompson concurred. The Court of Appeals affirmed a judgment convicting appellant, following a guilty plea, of two counts of first-degree sexual abuse and sentencing him to five years’ incarceration, five years’ post-incarceration supervision pursuant to KRS 532.043, and a lifetime sex offender registration obligation. The Court held that the conduct giving rise to at least one count of appellant’s indictment occurred after the revised and enhanced sentencing provisions of KRS 532.043 took effect. Accordingly, the circuit court properly sentenced appellant under those provisions.
Commonwealth vs. Steven Burton
Opinion by Judge Caperton; Judges Combs and Dixon concurred. The Court of Appeals affirmed an order disallowing testimony by a physician and police officer in appellant’s trial for second-degree manslaughter, second-degree assault, and operating a motor vehicle on a suspended license. The Court held that any error by the circuit court in determining that expert testimony from the physician, who was offered as a specialist in the field of toxicology, should be excluded because it was based upon inadmissible evidence was harmless. The Court noted that while experts are permitted to rely on information that is otherwise inadmissible, if the information is commonly relied on in their field, the subject matter of the expert opinion must still satisfy the test of relevancy, subject to the balancing of probativeness against prejudice as required by KRE 403. In this case, the physician’s opinion was properly excluded per the circuit court’s “gatekeeper role” because his opinion as presented to the circuit court was equivocal regarding the cause of appellant’s behavior. The physician admitted that he could not establish when appellant had ingested illegal substances or whether he was impaired at the time of the accident. The Court further held that the circuit court’s failure to hold an expert witness hearing on the admissibility of drug recognition testimony from a police officer was not an abuse of discretion where the officer did not personally observe appellant or subject him to drug-recognition testing, the drug-recognition examination was observation-intensive, and the reliability of the results was tied to the observer’s training.
Jody Wills vs. Commonwealth
Opinion by Judge Lambert; Judges Dixon and Taylor concurred. The Court of Appeals vacated and remanded an order revoking appellant’s probation. Citing to KRS 533.030(3), Bearden v. Georgia, 461 U. S. 660, 103 S. Ct. 2064, 76 L.Ed.2d 221 (1983), and Clayborn v. Commonwealth, 701 S.W.2d 413 (Ky. App. 1985), the Court held that the circuit court abused its discretion in revoking appellant’s probation and requiring her to complete her prison sentence, where the court recognized that appellant was making a good faith effort to comply with her restitution payment schedule, yet failed to consider any alternative form of punishment. The Court further noted that the circuit court was required to make findings on the record as to why it was revoking probation under Bearden as well as to show that it considered alternatives other than imprisonment.
Crutcher v. Harrod Concrete and Stone Co.
Opinion by Judge Nickell; Judges Combs and Moore concurred. A landowner filed suit for damages against a neighboring quarry owner and operator, alleging that the operator had encroached in its land and removed subsurface limestone. The circuit court entered judgment on a jury verdict for the landowner, but reduced the jury’s award of punitive damages. On appeal, the Court of Appeals affirmed in part, reversed and vacated in part, and remanded. The Court first held that the evidence supported the jury’s finding that the operator committed willful trespass, but it concluded that the measure of compensatory damages applied by the jury was improper.
The Court held that the proper measure of compensatory damages for an intentional trespass from the removal of limestone as result of subsurface mining activity is the value of the limestone material at the time and place of its removal, without deducting the expense of severing it, rather than the difference in the fair market value of the land immediately before and after the encroachment. The Court next held that while an award of punitive damages was appropriate, the measure of punitive damages applied by the jury was improper. It was erroneous to award appellants the market value of the limestone as punitive damages because there was no direct correlation between punitive damages and appellants’ loss, and because punitive damages cannot be transformed into compensatory damages without negating the specific purpose of the award. The Court then noted that an award of punitive damages at a rate of 25 times the award of compensatory damages could easily cross the line into the area of constitutional impropriety when it has been recognized that a ratio of just 4:1 might be close to the line.
Here are the published tort, insurance and civil decisions for this month.