Wrongful death settlement without any earnings impairment treated as personal injury settlement going to heir and not statutory beneficiaries: SMITH v. MCCURDY (COA 3/28/2008)

PROBATE: Wrongful death proceeds versus personal injury action and distribution of the proceeds; Wrongful death settlement without any earnings impairment treated as personal injury settlement going to heir and not statutory beneficiaries
DATE RENDERED: 3/28/2008

This appeal involved a most unfortunate dispute between two sisters regarding the proceeds of a settlement reached in a federal lawsuit filed based on allegations of maltreatment of their deceased mother in a nursing home.  At the heart of the appeal was the characterization of the settlement with the nursing home as a wrongful death action or a personal injury action since the beneficiaries for the former are statutorily defined and would have included both sisters equally but if a personal injury action then the sole beneficiary under the will would receive all of the proceeds!

Diana Smith and Denica McCurdy are sisters. Their mother, Thelma Nanney, was a resident of Britthaven Nursing Home from July 17 1998 until June 1, 2001. Thelma was described in the pleadings as “morbidly obese and generally unable to care for personal needs. Diana later learned that her mother left a Last Will and Testament naming Denica as sole beneficiary. Accordingly,the probate court named Denica as executrix of Thelma ’s estate.  Denica as personal representative of Thelma ’s estate did file suit in Marshall Circuit Court against Britthaven Nursing Home Incorporated and twenty unknown defendants. Diana was not a party to that action and as a potential beneficiary under a wrongful death action under typical circumstances could not intervene.

Diana first filed in district court which had no jurisdiction, and then filed suit in the circuit court arguing that the settlement in the federal action having released all claims, which Diana asserts necessarily includes the wrongful death claim having joined with the personal injury action that pursuant to KRS 411.130 Diana is entitled to a portion of the settlement.

Diana argues that because Denica filed a wrongful death cause of action in the federal lawsuit in conjunction with a survival action for personal injuries Thelma allegedly sustained while at Britthaven then all proceeds derived from the federal settlement should be distributed to Thelma ’s heirs in accordance with KRS 411.130(2), rather than passing through Thelma ’s estate.

Diana is not a beneficiary under Thelma ’s will. If she cannot establish that KRS 411.130(2) governs the distribution of the settlement proceeds, the proceeds will pass through the estate. She will receive nothing.

Notwithstanding Diana ’s insistence that the only controversy is the legal issue of whether KRS 411.130 controls when pursuant to KRS 411.133 both a wrongful death action and a survival action are brought in a complaint i.e. once pled they are forever joined for purposes of a generic settlement the COA did agree with the circuit court that there was an issue regarding whether the federal action was pursued and settled as a wrongful death matter.

Diana failed to file anything to rebut or contradict the Notice of Disallowance of Claim.

The subject of the lawsuit in Federal District Court was a survival claim mainly concentrating on the gross negligence of Britthaven in their failure to properly care for Ms.Nanney, which resulted in her pain, suffering, emotional distress, humiliation and feelings of abandonment. There were no proceeds allocated for wrongful death in the confidential settlement of the Federal Court lawsuit.

To defeat summary judgment Diana was compelled to present affirmative evidence to contradict these evidentiary averments by Denica to create a genuine issue of material fact.  Diana failed to do so apparently having relied solely on her theory that the matter involved only a legal issue.

Under existing Kentucky law damages for a wrongful death claim are based on the destruction to the decedent ’s power to labor and earn money.

This result is well illustrated in Turfway Park Racing Ass ’n v.Griffin 834 S.W.2d 667 671 (Ky.1992) holding that “damages flow naturally from the wrongful death of a person unless there is evidence from which the jury could reasonably believe that the decedent possessed no power to earn money.”  A wrongful death claim brought under the facts of the underlying federal action would not be recoverable i.e.it would have no monetary value. Accordingly, this undisputed fact supports a finding that the settlement was not based upon a wrongful death claim.

Consequently, we conclude the circuit court reached the correct decision regarding the federal wrongful death claim and settlement.

We conclude that KRS 411.133 only omits the prior obligation to elect remedies and now allows wrongful death claims and survival actions to be jointly pled.  Obviously, this cannot eliminate the inherent necessity for the elements of either causes of action to be met for a recovery.

While Denica pled a cause of action for wrongful death this is permitted under KRS 411.133.  But as is undisputed under the facts of this case there is not a factual basis for a recovery under a wrongful death theory pursuant to existing Kentucky law.

Consequently, there is no merit to an argument regarding how proceeds for a non-existent recovery should be distributed.

Such an argument is academic at best and not legitimately before this Court. Affirmed.

By Michael Stevens

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