Appellant, a thoroughbred trainer, appeals an order of Franklin Circuit Court affirming the Kentucky Racing Commission’s imposition of a 150-day suspension. The trainer was suspended after a post-race urinalysis showed Prozac in the trainer’s horse, Explodo Red. The horse’s owner wrote a letter to the KRC admitting he had put the Prozac in the horse’s feed mixture, unbeknownst to the trainer. The hearing officer for the KRC concluded that the Appellant had no knowledge of the presence of the Prozac, but nonetheless suspended Appellant for 150 days pursuant to 810 KAR 1:018, the so-called “trainer responsibility rule”. After the decision was upheld in Franklin Circuit Court, this appeal followed.

On appeal, the trainer argued that 810 KAR 1:018 improperly shifts the burden of proof from the KRC to the accused. The regulation states, in relevant part, that the trainer is subject to disciplinary action “if he does not establish that he had…not been negligent by failing to exercise a high degree of care in safeguarding the horse from tampering.” The Court of Appeals disagreed, holding that the regulation merely created a rebuttable presumption of liability on the part of the trainer. 

The Court relied largely on Allen v. Kentucky Horse Racing Authority, 136 S.W.3d 54 (2004), which held that the trainer responsibility rule is “a practical and effective means of promoting…State interests- both in deterring violations and in enforcing sanctions.” Furthermore, the Court of Appeals noted that the trainer responsibility rule has been upheld in every jurisdiction in which it has been challenged. Lastly, the Court rejected Appellant’s claim that the suspension was arbitrary because it was not commensurate with the violation. In affirming, the Court held that in light of the lack of reasonable care, a five-month suspension, where the regulation allows for a suspension of up to five years was not excessive, unreasonable or without justification in fact.

PUBLISHED

This case arose from the ALJ's imposition of the penalty provided in KRS 342.165 which enhances the award by 30%.   The COA held there was substantial evidence to support ALJ's finding that employer intentionally violated known safety regulations so as to justify imposition of penalty. Citing,  Western Baptist Hospital v. Kelly, Ky., 827 S.W.2d 685, 687-88 (1992), and Whittaker v. Rowland, Ky., 998 S.W.2d 479, 482 (1999). T

Quentin Little,  a construction worker,  was fatally injured when his truck rolled off the road and fell 800 feet down a steep embankment.  As reclamation work was being performed, Hawkeye was required by federal regulations to maintain on the outer edge of the roadway a berm of sufficient height to restrain Little's vehicle. See, 30 CFR [FN2] § 77.1605(k) and § 77.2(d). At the time of Little's tragic accident, the berm had been worn away.  Following Little's death, the U.S. Department of Labor, Mine Safety and Health Administration (MSHA) conducted an investigation and determined that the berm in the area where Little's truck left the road was far below the required height, and the MSHA cited Hawkeye for its violation of the federal safety regulations relating to elevated roads and in its report report concluded that the faulty condition of the berm had contributed to the accident.

The only contested issue before the ALJ was whether Hawkeye intentionally violated the statute so as to justify the imposition of penalties provided in KRS 342.165, which provides: "If an accident is caused in any degree by the intentional failure of the employer to comply with any specific statute or lawful administrative regulation made thereunder, communicated to the employer and relative to installation or maintenance of safety appliances or methods, the compensation for which the employer would otherwise have been liable under this chapter shall be increased thirty percent (30%) in the amount of each payment."

(2) DENYING MOTION TO STRIKE REPLY BRIEF
Rendered:  12/3/2004

UNPUBLISHED

HELD KRS 426.006 required foreclosure actions to conform to the generally accepted rule that cross petitions were the commencement of an action and should be served as provided for in the Rules of Civil Procedure.  Since faulty service of process can make a judgment void. Hertz’ You Drive It Yourself System, Inc. v. Castle, Ky., 317 S.W.2d 177, 177-178 (1958), then as a matter of law it must hold that the judgment is a nullity.  Foremost Insur. Co. v. Whitaker, Ky. App., 892 S.W.2d 607, 610 (1995).  Consequently, the issue on appeal was not an abuse of discretion in failing to set aside the default judgment but rather as a matter of law the court would be required to set the judgment aside if there has been insufficient service of process, a question.  "A void judgment is not entitled to any deference or respect and a court has no discretion about whether or not to set it aside. As a matter of law it must hold that the judgment is a nullity."

Staley was driving and noticed the cars ahead of him were slowing down.  When he put on his brakes to avoid hitting them, the brakes locked, and he lost control of the car, skidding across the center line and hitting Judy Rees.  A year later she sued for negligence.  At trial, Staley testified that he had crossed the line, that he had left skid marks on the road, that the brakes had locked, and that Rees had been very helpful by getting as far into the ditch on her side of the road as she could.  The jury found he was not negligent, that she had incurred expenses of $1,000 for medical treatment, but that she had not suffered permanent injury.  The Circuit Court refused to grant her motion for a new trial on grounds of juror misconduct and insufficient evidence to sustain the jury verdict.

During Judy’s cross, a juror approached the bench and stated that she thought she knew the Rees, specifically Jim Rees.  She appeared genuinely upset and said she had last seen him fifteen years earlier and simply didn’t realize during voir dire who he was.  She said she did not like Jim.  Without objection from Judy’s counsel, the judge dismissed the juror and explained to the jury (who’d not heard any of this) that she had known the parties and was therefore excused.  Judy claimed this was juror misconduct.  The CA held that the juror’s explanation for not speaking at voir dire was reasonable, and that since she’d had no hand in juror deliberations, Judy had suffered no prejudice of any kind.

Judy also claimed the evidence at trial did not support the jury’s finding of no negligence.  The CA pointed out that the defense has an opportunity to rebut the plaintiff’s case, and that Staley’s own testimony, without the aid of an expert witness to testify as to possible brake failure, was sufficient in and of itself to create a fact question for the jury to determine.

This pro se appeal arose when the trial court dismissed Jerry Leonard’s civil case with prejudice after his attorney continually failed to honor a deadline to present a written transcript of an administrative hearing concerning Jerry’s termination from the City Police Department.  The attorney claimed at various times that his mother’s ill health, along with his visits to her in Florida, precluded him from getting the transcript made.  After missing the deadline, the opposing party moved for dismissal; neither Jerry nor his attorney attended the hearing on the motion, and the judge granted dismissal.  The attorney filed to vacate the dismissal, arguing, among other things, that his secretary was to blame for him not appearing in court.  The trial court grudgingly set aside the dismissal and issued new deadlines, along with a warning that failure to adhere to such would result in dismissal.  The attorney again failed to provide the transcript, and the judge dismissed the case with prejudice.

The CA noted that dismissal with prejudice, while within a trial court’s broad discretion, is to be considered a sanction of last resort.  To determine whether dismissal is proper for failure to obey discovery schedules or other procedural rules, the CA held that the factors listed in Ward v. Housman, Ky. App., 809 S.W.2d 717 (1991), were to be considered:  (1) the extent of the party’s personal responsibility; (2) the history of dilatoriness; (3) whether the attorney’s conduct was willful or in bad faith; (4) the meritoriousness of the claim; (5) prejudice to the other party; and (6) alternative sanctions.

The CA found that while Jerry was not entirely responsible for his own attorney’s conduct, one cannot simply hire an attorney and wash one’s hands of the matter.  It declined to address the difficult question of where to draw the line between a client’s responsibility in light of his attorney’s behavior.  It found a decided history of dilatoriness on the attorney’s part.  It found the attorney had acted willfully.  The CA held that the trial court had not discussed the merit of Jerry’s claim in the dismissal, nor could it do so on the record alone.  It found the other party was not prejudiced by the attorney failing to provide a written transcript alone, since the other party had audio tapes of the hearing.  Finally, it found that alternative sanctions, like attorney fees, etc., were available to compensate the other party for the attorney’s behavior.  Because the dismissal with prejudice is such a serious step to take, the CA held that the trial court had abused its discretion and reversed.

Appellees’ experts who testified at trial were not precluded from reviewing the transcript of Dr. Minnefor’s “rebuttal” deposition taken four days prior to trial.  The purpose of CR 43.09 is to prevent a witness from being unduly influenced by the testimony he hears being given by other witnesses.

UNPUBLISHED

UNPUBLISHED

The sole issue in this appeal was whether a child who is adopted after support has been determined for another child is to be considered a “prior born child” for purposes of amending the support of the later born child.  KRS 403.212 (2) (g) 3. and KRS 199.520 (2) both contemplate that the adopted child be a member of the household at the time support is determined, not, as here, that the child’s adoption be considered retroactively to reduce an already set amount. 

Mom appealed from a judgment of the Jefferson Family Court terminating her parental rights to her minor child, alleging TC erroneously found, by clear and convincing evidence that she engaged in conduct sufficient to establish grounds for terminating her parental rights and that termination of her parental rights was in the child’s best interest.  CA held there was sufficient evidence of a probative and substantial nature to support the TC’s findings of fact, including the testimony of appellant’s social worker, counselor and psychologist, as well as appellant’s own testimony.

CA placed significance on the following testimony:  social worker’s testimony that appellant showed no progress during the Cabinet’s early work with her and that later progress was followed by setbacks; domestic violence counselor’s testimony that appellant had a long history of domestic violence that included several abusive paramours; and psychologist’s admission that she could not definitively state that appellant was capable of providing a safe home for the child.

Grandmother appealed TC’s decision to commit grandchild to CFC based on four separate abuse and neglect petitions.  CA affirmed TC’s decision, finding existing errors to be harmless and that grandmother had ultimately failed to protect the child.  “Although there certainly is evidence that the child needed intensive counseling and there are indications that L.B. was so advised by Indiana authorities, it is undisputed that L.B. was not specifically ordered by any court to obtain such counseling.”  Further, L.B. admitted below that she was aware of the domestic violence inflicted by her son upon the child’s mother. Despite this knowledge, L.B. allowed the parents extensive, minimally supervised visitation with the child. Under these circumstances, we cannot say that the evidence was insufficient or that the trial court erred by finding that L.B. “failed to protect the child” while the child was in her custody, or that the evidence was insufficient to support that finding.

 L.B. also contended that the TC erred by admitting hearsay testimony during the disposition hearing.  “Just as the burden of proof applicable to the guilt phase of a criminal proceeding is greater than the burden of proof applicable to a juvenile dependency, neglect or abuse proceeding, the evidentiary rules applicable to the sentencing phase of a criminal or juvenile public offender proceeding are at least as stringent as those applicable to the disposition stage of a dependency, neglect or abuse proceeding. Since hearsay would have been admissible during a criminal disposition hearing, we conclude that it was admissible during the neglect disposition hearing below, and that the trial court did not err by overruling L.B.’s objections.”

The law in this case was cut and dry, but the facts make for interesting reading.  The genesis of the bad faith claim arose from a car accident in which Coe hits Shaffer.  Coe sues Shaffer for tort and State Farm for underinsured motorist benefits.  Coe's insurer offers his $25,000 limits which are advanced per Coots v. Allstate by State Farm.  Coe continues to be defended by his insurance counsel.  Just prior to trial Shaffer discovers Coe  was in the scope of his employment and third-parties Caspar the employer into the fray.  Caspar is insured with Kentucky National under a commercial liability policy with $50,000 in liability limits.  

During trial, State Farm settled the UIM portion of the claim for $125,000 and would look for recovery of the $25,000 against Coe  and the $50,000 against Caspar and Kentucky National.   The plaintiff rejected Kentucky National's offer of $50,000 just prior to closing argument, and the matter went to the jury which returned a verdict of $200,000.  Kentucky National attempted to offer its $50,000 which was again rejected, and the bad faith claim was assigned by Caspar to Schaffer and the second suit ensued.  The matter eventually went to a jury who awarded the plaintiff $10,000.

It is now undisputed that Kentucky National had a clearly applicable policy exclusion as a defense to coverage which was not discovered by Kentucky National until after the trial.  [LouisvilleLaw Note:  The tri-partite relationship of defense counsel is revealed by this coverage issue since the defense counsel owes a duty to the insured to defend and not raise coverage issues with the insurer; or to put it another way, it is not defense counsel's job to lose coverage for the insured! New counsel was on board for the bad faith trial and the appeal thereof.]

The Court of Appeals concluded that as a matter of law, there can be no claim for bad faith if there is no insurance coverage.

"In Davidson v. American Freightways, Inc., Ky., 25 S.W.3d 94, 100 (2000), the Court noted that, “[w]riting for a unanimous Court in Wittmer, Justice Leibson gathered all of the bad faith liability theories under one roof and established a test applicable to all bad faith actions, whether brought by a first party claimant or a third-party claimant, and whether premised upon common law theory or a statutory violation.” Pursuant to Wittmer, 864 S.W.2d at 890 (citation omitted), the three required elements for a cause of action for bad faith are as follows:
(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.

Consequently, it is sound principle that, in absence of a contractual obligation in an insurance policy for coverage, there can be no claim for bad faith. 

Comment.   Kentucky National conceded it was estopped from withdrawing legal defense and paying under the policy.  Since Coe was defended by his insurer, he has no bad faith claim.  Since the employer got a free defense and $50,000 in free indemnity, he has no bad faith claim to assign to anyone.  Since Shaffer took the assignment from the employer, she presumably has no more claim against Caspar.  State Farm who got $50,000 it would not have been otherwise entitled to has no bad faith claim either. 

CA affirms TC (Hon. Thomas B. Wine, Jefferson Cir. Ct., presiding) entry of SJ for contractor against customer in this assault/negligent hiring case.

Appellant and her husband hired Atlas; Atlas employed individual with a known violent history including assault and jail time. TC held that it was not foreseeable to Atlas that the employee would return to customer's house to burglarize it and assault customer.

Even assuming Atlas knew of all of employee's past violent acts, CA held they were too remote in time and completely unrelated to his employment with Atlas to be foreseeable by Atlas. His prior crimes were of a different type from those committed against the customer.