Sept. 2, 2011 COA Minutes — Nos. 781-802 (22 decisions; 2 published)
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PUBLISHED DECISIONS OF COA:
782
KINCAID (JOAN), ET AL
VS.
KINCAID (BRETT), ET AL
OPINION AND ORDER UNSEALING RECORDS AND OPINION AFFIRMING IN PART, REVERSING AND REMANDING IN PART
THOMPSON (PRESIDING JUDGE)
ACREE (CONCURS) AND LAMBERT (CONCURS)
2009-CA-002202-MR
2009-CA-002203-MR
2009-CA-002263-MR
TO BE PUBLISHED
FAYETTE
THOMPSON, JUDGE: The controversy between the parties is whether Joan Kincaid and Jane Kincaid (the Kincaid daughters) and Michael D. Foley, an unrelated accountant, collectively referred to as (the advisory committee members), are entitled to compensation for their service as advisors to the estate and trust of Garvice D. Kincaid.1 However, before addressing the issues presented by the parties, this Court is compelled to discuss the sealing of the record. Although the parties sought and achieved the sealing of the entire record, we believe that the matter is one that is of significant public interest that has infrequently been the subject of judicial opinion. Therefore, we take this opportunity to provide guidance to the trial courts.
DISCUSSION ON SEALING RECORDS IN INSTANCES WHERE LEGISLATURE HAS NOT DESIGNATED AS CONFIDENTIAL.
The sealing of court records offends the public’s right to access court documents or material that derives from the common law and the First Amendment. Roman Catholic Diocese of Lexington v. Noble, 92 S.W.3d 724 (Ky. 2002).4 It is a right so entrenched in our judicial system that there is a presumption that judicial records are available to the public. Courier-Journal v. McDonald- Burkman, 298 S.W.3d 846 (Ky. 2009). Yet, it is becoming an increasing practice for trial courts to seal records without a hearing or findings and only because the parties do not want their case open to the public. While it is understandable that parties seek to avoid public embarrassment, scrutiny, or financial exposure, the courts must use caution when denying public access to court records.
Although a trial court retains the inherent supervisory power over its own records and files and has the discretionary authority to deny access to its records and files, it should be done only for compelling reasons. Roman Catholic Diocese of Lexington, 92 S.W.3d at 730. When exercising that discretion, the trial court is required to balance its inherent right to control and the public’s presumptive right of access. Cline v. Spectrum Care Academy, Inc., 316 S.W.3d 320, 325 (Ky.App. 2010). Our concern in this case is the procedure followed by the trial court when determining whether to seal court records. Unfortunately, there is no applicable Kentucky Rule of Civil Procedure. However, we believe that the case law does provide guidance to the trial court in deciding whether to seal a record and the procedure that must be followed.
In Lexington Herald-Leader Co., Inc. v. Meigs, 660 S.W.2d 658 (Ky. 1983), the Court addressed the issue in the context of an order closing a criminal proceeding to the public and the press. We summarize the procedure set forth:
(1) There must be a hearing; (2) The trial court must consider less restrictive means;
(3) The burden of proof is upon the party seeking closure and it must be established that:
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(a) the right or interest sought to be protected is sufficiently important to warrant the extraordinary protection of the closed court;
(b) the asserted right or interest probably cannot be adequately protected by less restrictive alternatives to closure; and
(c) the right or interest he seeks to protect will be protected by a closed proceeding.
Id. at 664. The Kentucky Supreme Court has held that the principles enunciated in Meigs are applicable to court records and civil proceedings. Courier-Journal and Louisville Times Co. v. Peers, 747 S.W.2d 125 (Ky. 1988). Thus, although guidance is absent from our civil rules, the procedure in Meigs must be followed.
We add an additional principle that emerges from the facts in the present case. There was no hearing conducted and no findings by the trial court and, as a result, there was no compelling reason to seal the court record. It was sealed solely because the parties requested confidentiality. We conclude that the parties’ agreement to seal a court record without a hearing and appropriate findings cannot be the basis for denying public access. Otherwise, the fundamental premise of an open and transparent judicial system is undermined.
In conclusion, we note that the rule adopted in Meigs is similar to the comprehensive rule adopted in California. California Rules of Court, Rule 2.550 and 2.551. To provide clarity to our trial courts and to preserve the integrity of an open and transparent judiciary, we encourage the Kentucky Supreme Court to follow those states that have promulgated civil rules providing procedural guidance for sealing records.
NOW, THEREFORE, this Court hereby ORDERS that all records in these appeals are hereby unsealed.
TRUSTEE FEES
n summary, we hold that Central Bank is entitled to supplement its executor fee to which it is entitled pursuant to KRS 395.150 and KRS 395.195(18) for the purpose of compensating the advisory committee members for their sixteen years of service as advisors to the Bank, as executor and trustee. During their service, the advisors were entangled in complex litigation and burdened with increasing estate assets on the verge of financial collapse to a value of $240 million. Because the circuit court found that the compensation requested is reasonable, it is required to permit Central Bank to supplement its fee in the amount of $1.65 million.
Based on the foregoing, to the extent that the October 28, 2009, order permits Central Bank to compensate the advisory committee members for future services, it is affirmed. However, to the extent that it denied past compensation to the advisory committee members, it is reversed and the case remanded for entry of an order approving the requested supplemental fee to allow Central Bank, as executor and trustee, to compensate the advisory committee members for their service. The advisory committee members’ appeal from the summary judgment denying their request for compensation is moot.
785. OSHA.
DEPARTMENT OF LABOR
VS.
HAYES DRILLING, INC., ET AL.
OPINION REVERSING
THOMPSON (PRESIDING JUDGE)
ACREE (CONCURS) AND LAMBERT (CONCURS)
2010-CA-000021-MR
TO BE PUBLISHED
FRANKLIN
HOMPSON, JUDGE: The substantive issues presented concern the issuance of a citation and imposition of penalties under the Kentucky Occupational Safety and Health Act (KOSHA), Kentucky Revised Statutes (KRS) 338.011 through 338.991 upon Hayes Drilling Inc., a subcontractor working at a multi-employer work site. After the Franklin Circuit Court reversed the decision and order of the Kentucky Occupational Review Commission, the Kentucky Department of Labor appealed. The issues presented are: (1) whether the Department’s failure to provide Hayes an opportunity to be present for the opening conference and the walk around inspection mandated dismissal of the citation; (2) whether the citation issued was invalid because the abatement date was prior to its issuance; (3) whether Hayes was a creating or controlling employer on a multi-employer work site; (4) whether the contract between Hayes and Wilburn relieved Hayes of responsibility for KOSHA violations; and (5) whether the intentional removal of a hole cover precluded the citation.
788. TEACHERS. DISCIPLINARY ACTION AND DUE PROCESS RE TEACHER.
SILBERMAN (STU), ET AL.
VS.
HURLEY-RICHARDS (ROSALIND)
OPINION AFFIRMING
SHAKE (PRESIDING JUDGE)
LAMBERT (CONCURS) AND KELLER (DISSENTS)
2010-CA-000840-MR
TO BE PUBLISHED
FAYETTE
SHAKE, SENIOR JUDGE: The Fayette County Board of Education (“Board”) and Stu Silberman, in his official capacity as superintendant of the Fayette County Public Schools (“FCPS”), appeal from the Fayette Circuit Court’s April 20, 2010, order. That order reversed the administrative decision from a tribunal hearing regarding the discipline of teacher Rosalind Hurley-Richards (“Richards”). Because we find no error with the trial court’s order, we affirm.
TORT REPORT FOR NONPUBLISHED DECISIONS (MINUS WORKERS COMP):
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783. COURTS. COURT'S AUTHORITY TO SEAL RECORDS DISCUSSED.
MOUNTAIN CITY FORD, LLC.
VS.
OWNERS INSURANCE COMPANY, ET AL.
OPINION AFFIRMING
LAMBERT (PRESIDING JUDGE)
CLAYTON (CONCURS) AND VANMETER (CONCURS)
2009-CA-002233-MR
NOT TO BE PUBLISHED
LAWRENCE
LAMBERT, JUDGE: Mountain City Ford (Mountain City or Mountain City Ford) appeals from a jury verdict in favor of Owners Insurance Company and Auto- Owners Insurance Company (Auto-Owners) and from the Lawrence Circuit Court’s denial of its motion for a judgment notwithstanding that verdict. After careful review of the record and the applicable law, we affirm the judgment of the Lawrence Circuit Court.
Ultimately, the issue to be resolved by this Court is whether Mountain City Ford or Auto-Owners should bear the loss for the $1,030,000.00 sum paid in settlement to the original plaintiffs for injuries, including the death of Joey Kirk. These injuries were incurred in a motor vehicle accident between a Mountain City Ford vehicle driven by Rick Gussler and another vehicle driven by Paul Justice. Auto-Owners’ policy insuring Mountain City Ford was predicated upon an insurance application prepared by The Elite Agency, Inc. (Elite) and signed by Mountain City, but the policy did not list Gussler as a driver. All parties agree that Auto-Owners never knew of Gussler’s existence as a driver of Mountain City vehicles, and it is undisputed that Gussler was not listed anywhere on Mountain City’s application to Auto-Owners. Further, the proof at trial was undisputed that had Gussler been listed, Auto-Owners would never have issued the policy to Mountain City Ford.
In the underlying trial, Auto-Owners defended Mountain City Ford and Rick Gussler, but did so under a reservation of rights. Despite its misrepresentation coverage defense, Auto-Owners settled the claims for a total of $1,030,000.00 and then pursued this action to void the policy and seek reimbursement from Mountain City and Elite under theories of material misrepresentation and negligence.
The trial court denied Mountain City’s motion for judgment notwithstanding the verdict, holding that Elite was acting as the agent of Mountain City or as a dual agent for both Auto-Owners and the dealerships when it submitted the application for insurance coverage. Citing Flener v. Pac. Indem. Ins. Co. (In re Miller), 267 B.R. 785 (Bankr. W.D. Ky. 2000) (applying Kentucky law), and State Farm Mutual Ins. Co. v. Crouch, 706 S.W.2d 203 (Ky. App. 1986), the court held:
The jury has made the factual finding to the effect that Richard Gussler was in fact a driver of insured vehicles. The jury has also made a finding that the omission was material to the risk, and that the Plaintiff [Owners] would not have issued the policy of insurance had that fact been known. Those facts, coupled with the extraordinarily close relationship between Mountain City Ford, LLC, and the Elite Agency, persuades the Court that Elite was acting either as the agent for Mountain City, LLC, or at the very least, was acting in the capacity as a dual agent, for both Mountain City Ford, LLC, and Auto-Owners in preparing and submitting the application for insurance, and then issuing a binder. That being the case, the inaccuracy in the application cannot be attributed to the Plaintiff and the Plaintiff is entitled to have the insurance policy rescinded ab initio.
On appeal, Mountain City challenges the trial court’s conclusions of law in the order denying its motion for judgment notwithstanding the jury verdict. Mountain City contends as a matter of law that Elite was an agent for Auto- Owners and, therefore, all the information Mountain City provided to Elite was imputed to Auto-Owners. Therefore, Auto-Owners is estopped from claiming rescission. Alternatively, Mountain City alleges that there were serious errors in the jury instructions requiring a new trial.
Furthermore, careful examination of the insurance treatises such as Couch on Insurance 3d, Vol. 3 (2009) § 45:1 reveals the general rule that where an agency is “independent” (represents many insurers) as opposed to a sole agent (represents one insurer exclusively), the broker acts as an agent for the insured in the application process. Couch notes that the courts often use the terms “broker” and “agent” interchangeably, but that there is an important distinction in that acts of a broker are imputed to the insured versus the acts of an agent, which are imputable to the insurer. Id. Finally, it explains that state statutes may be examined to establish agency, but the “statutes are not determinative of the issue.” Id. at §45:2.
Applying Couch to these facts, Elite was a broker and an agent for Mountain City. Because Elite did not represent Auto-Owners exclusively and instead had relationships with fifteen different insurance carriers, it would be deemed a broker and not a sole agent for one insurer exclusively.
Again, in summation, we do not find the jury’s determination that Richard Gussler was driving insured vehicles and that this information was material to the risk to be in error. Nor do we find the trial court’s conclusion that Elite was acting as Mountain City’s agent to be in error, given the long- standing relationship and common ownership between the two entities. Accordingly, the trial court’s denial of Mountain City’s motion for JNOV was appropriate.
For all the foregoing reasons, we affirm the Lawrence Circuit Court’s November 2, 2009, order denying Mountain City’s motion for judgment notwithstanding the verdict and finding that Elite was Mountain City’s agent. Furthermore, no error with the jury instructions warrants a new trial.
STANDARD OF REVIEW ON APPEAL FOR JUDGMENT NOV
We initially note that the standard of review on appeal regarding a motion for judgment notwithstanding the verdict (JNOV) is a high one for an appellant to meet. In Peters v. Wooten, 297 S.W.3d 55 (Ky. App. 2009), this Court explained that a trial court cannot enter a JNOV “unless there is a complete absence of proof on a material issue in the action.” Id. at 65. The Court then explained that a reviewing court cannot disturb a trial court’s decision on a motion for a judgment notwithstanding the verdict “unless that decision is clearly erroneous.” Id. The Court concluded, “[t]he denial of a motion for a judgment notwithstanding the verdict should only be reversed on appeal when it is shown that the verdict was palpably or flagrantly against the evidence such that it indicates the jury reached the verdict as a result of passion or prejudice.” Id.
795. ARBITRATION.
HQM OF PIKEVILLE, LLC D/B/A PIKEVILLE HEALTH CARE CENTER, ET AL
VS.
SHERRY COLLINS, ET AL
OPINION REVERSING AND REMANDING
VANMETER (PRESIDING JUDGE)
DIXON (CONCURS) AND STUMBO (CONCURS)
2010-CA-001630-MR
NOT TO BE PUBLISHED
PIKE
VANMETER, JUDGE: Appellants1 (hereinafter collectively referred to as “the nursing home”) appeal from the Pike Circuit Court order which denied the nursing home’s motion to compel arbitration against Sherry Collins, as administratrix of the estate of Myrtie Chaney, deceased, and on behalf of the wrongful death beneficiaries of Myrtie Chaney (hereinafter collectively referred to as “the estate”). For the following reasons, we reverse the order and remand this case for further proceedings.
On appeal, the nursing home claims that the agreement reasonably provides for arbitration to take place in Kentucky, as required by the KUAA; the language in Ally Cat relied upon by the trial court is not binding; and alternatively, if jurisdiction does not exist under the KUAA, then the agreement is by its express terms governed by the FAA. We find that the holding in Ally Cat precludes jurisdiction under the KUAA, but that the FAA could supply the trial court with jurisdiction. Thus, we remand this case for the trial court to address the applicability of the FAA to the agreement.
Recently, the Kentucky Supreme Court clarified its holding in Ally Cat, stating “Ally Cat has no applicability to an arbitration agreement governed exclusively by the Federal Arbitration Act.” Ernst & Young, LLP v. Clark, 323 S.W.3d 682, 687 n.8 (Ky. 2010). See also North Fork Collieries, LLC v. Hall, 322 S.W.3d 98, 102 n.2 (Ky. 2010) (the FAA is enforceable in state and federal court) (citations omitted). Since we have determined the portion of the agreement stating that arbitration is to be conducted “at a location agreed upon by the parties, or in accordance with the Code of Procedure of NAF” does not confer jurisdiction upon Kentucky courts, that portion of the agreement is severed pursuant to the aforementioned severability clause and the FAA exclusively governs, if applicable.
The Kentucky Supreme Court has held that the FAA applies “to actions brought in the courts of this state where the purpose of the action is to enforce voluntary arbitration agreements in contracts evidencing transactions in interstate commerce.” Fite and Warmath Constr. Co. v. MYS Corp., 559 S.W.2d 729, 734 (Ky. 1977); see also Kodak Mining Co. v. Carrs Fork Corp., 669 S.W.2d 917 (Ky. 1984). Because the trial court did not consider the applicability of the FAA, i.e., whether the arbitration agreement was “a contract evidencing a transaction involving interstate commerce,” and instead disposed of the motion to compel arbitration on jurisdictional grounds, we believe remand is appropriate in order for the trial court to make the necessary findings of fact and conclusions of law related to this issue.
The order of the Pike Circuit Court is reversed and this case is remanded for further proceedings consistent with this opinion.
