Nov. 16, 2007 KENTUCKY COURT OF APPEALS DECISIONS (2006:55)
PUBLISHED (COA).
This appeal involves a dispute over the cancellation of a
"claims made" medical professional liability policy with OHIC Ins.
Co. Riverside was owned by Haj-Hamed and had multiple urgent medical care and professional medical offices in Northern Kentucky and Ohio.
The policy included Kentucky endorsements which addressed both cancellation and nonrenewal of the policy. OHIC notified
the insureds in writing that the policy would be canceled, effective September 6, for nonpayment of premium unless
$19,461 was “received in OHIC's office” prior to that date. A payment of $16,642
(less than the amount required) was made prior to September 6.
On September 27, based on the media coverage of Haj-Hamed's arrest and the criminal allegations against him, OHIC's underwriting department notified
the insureds that their coverage would be canceled on December 11, 2002, due to the “[d]iscovery of willful or reckless acts” by the insured.
Several malpractice claims were filed during this interim. One was for an incident that occurred prior to Sept. 6, but no claim filed until after Dec. 11. The remaining claims were for incidents after Dec. 11.
At trial, the jury found that OHIC, by and through its employees, had failed to comply with its duty “to exercise ordinary care in issuing and canceling insurance
policies” and
that such failure “was a substantial factor in causing damages” to Haj-Hamed and Hamed
and that OHIC had failed to comply with its statutory and administrative duties regarding the issuance or cancellation of an insurance policy. The jury awarded $175,000 to Haj-Hamed, reduced to $157,500 based on a finding of 10% fault. The court denied OHIC's motion for judgment notwithstanding the verdict or for a new trial. This appeal and cross-appeal followed.
COA rejected OHIC's first assertion that the trial court erred by failing to apply Ohio substantive law rather than Kentucky law. The modern test is “which state has the most significant relationship to the transaction and the parties.” Restatement of Conflict of Laws 2d, sec. 188 (1971). Using this test, in most cases the law of the residence of the named insured will determine the scope
of his automobile liability insurance policy.
The trial court did not err by determining that Kentucky had the most significant relationship to the transactions and parties, and by applying Kentucky rather than Ohio substantive law. Pursuant to KRS 304.20-320(2)(b) and 806 KAR 20.010, as well as the policy's terms, OHIC was obligated to provide written notice of any cancellation of insurance. The notice was required to be mailed or delivered at least fourteen (14) days prior to the effective date of the cancellation if the cancellation is for nonpayment of premium[, . . . or] at least seventy-five (75) days prior to the effective date of the cancellation if the policy has been in effect more than sixty (60) days."
After the COA concluded the trial court properly applied Kentucky law, the COA then held the trial court erred by failing to direct a verdict in OHIC's that the insured's were properly notified of the cancellation and that there would be no coverage after Dec. 11 (75 days after the notice). Even if an ambiguity existed as to whether the policy was canceled at an earlier date due to the nonpayment of premium, the policy clearly was clearly canceled no later than December 11.
The COA then set aside the jury's award of $60,000 for defense of the malpractice
action since this was a "claims made" policy and thus only applied to those claims which were filed by December 11, 2002. As the malpractice action was not filed until January 2003, it necessarily fell outside of the policy's term of coverage and the claim for
costs associated with the defense of that action should not have been submitted to the jury.
As to the $85,000 awarded for defense of the medical licensure board proceedings, OHIC correctly notes that any award to Haj-Hamed of more than $25,000
was excessive in light of the insurance policy's specific limitation of coverage for “Formal Charges or Disciplinary Proceedings” to “$25,000 per named
individual.” On remand, therefore, another $60,000 of the award must be set aside.
As to the award of $30,000 as damages for the additional costs incurred in order to purchase replacement liability insurance after the OHIC
policy was canceled, COA agreed with OHIC that the trial court erred by submitting the issue to the
jury as the record is undisputed that the insurance policy was a “claims made” policy which covered only those claims made before the policy's expiration on December 11, 2002. As the alleged malpractice occurred in October 2002, but the resulting claim was not filed until January 2003,
the insureds clearly were not entitled to coverage of the claim under the policy's terms. Absent proof of an obligation to pay the claim, the trial court properly granted a directed verdict for OHIC.
Digested by Michael Stevens
BACIGALUPO V. KOHLHEPPAppellants Bacigalupo brought this shareholder's double derivative action on behalf of FNB
Bancorporation, Inc. alleging the appellees, a minority of the officers and directors of FNB, had breached their fiduciary
duties to FNB thereby causing FNB and its wholly owned subsidiary, First National Bank of Northern Kentucky (hereinafter “Bank”), to violate laws and suffer long-term financial losses. The trial court granted the appellees' separate motions to dismiss on April 18,
2006, holding that Bacigalupo had failed to make a demand on FNB's Board of Directors or to particularize why such a demand would be futile, and had failed to name an indispensable party.
Order entered dismissing appeal.
During the pendency of this appeal, on or about May 18, 2007, FNB completed a merger with The Bank of Kentucky Financial Corporation and BOK Sub.
Corp. As a result of the merger Bacigalupo's shares of stock in FNB were cancelled.
Shortly thereafter, the appellees filed a motion to dismiss this appeal alleging Bacigalupo was no longer a shareholder in FNB and thus had no standing to continue prosecuting the appeal.
Although the shareholders Bacigalupo had standing when the derivative action was
commenced, the COA held continuous ownership by a shareholder to be a necessity in order to retain standing to
prosecute a derivative action under KRS Chapter 271B in Kentucky and thus no
longer had standing to continue prosecuting this appeal.
KRS 271B.7-400(1) requires derivative actions to be initiated only by persons who were shareholders of the corporation at the time the transaction complained of occurred. Bacigalupo satisfied this requirement prior to commencing the instant action. However, KRS 271B.7-400(1) further states such actions “shall not be maintained if it appears that the person commencing the proceeding does not fairly and adequately represent the interests of the shareholders in enforcing the right of the corporation.” The question presented then is whether a person must maintain shareholder status throughout the course of the litigation in order to retain standing. Although there is no Kentucky case on point, the language of KRS 271B.7-400 is substantially the same as that found in Federal Rules of Civil Procedure (FRCP) 23.1. Numerous state and federal courts have held continuous stock ownership in a corporation is implicitly required by FRCP 23.1 or state statutes and rules that mirror its language. COA agreed.
Digested by Michael Stevens
NOT PUBLISHED (COA)
COM. V. SHARPCLAYVILLE V. HUFF
CONTRACTS: UNILATERAL MISTAKE TO RESCIND CONTRACT NOT FOUND
2005-CA-001497
NOT PUBLISHED: 117 kb
DATE RENDERED: 11/16/2007
LOSEY V. LOSEY
FAMILY LAW: Marital property division of retirement accounts and "just
proportions" does not necessarily mean "equal"
2006-CA-000488
NOT PUBLISHED: 86 kb
DATE RENDERED: 11/16/2007
Question: What impact could this have in military retirements since soldiers must continue to serve, could be subject to death or disability for continued service, military retirement does not "vest" in normal sense of the word, spouse in reality contributed to that portion of the service in which soldier is at risk or in harm's way, increases in retirement that accrued from continued years of service and promotions subsequent to divorce? Thus just may not be equal, and federal law simply provides that the states cannot divide more than 1/2 of the retirement. If Kentucky law provides for "just" proportions, then specific findings might be required for the record in support of this and addressing those future increases which clearly are not related to the marital period.
DAY V. COM.
ARMSTRONG V. HOLSCLAW
GOVERNMENT: Summary judgment banning appellant from all clerk's office was
reversed and remanded for further proceedings
2006-CA-000913
NOT PUBLISHED: 95 kb
DATE RENDERED: 11/16/2007
MCMILLEN V. COM.
CRIMINAL: Death penalty and those under 18, retroactive effect of Roper
limited to those under 18 at time of commission AND time sentenced
2006-CA-001806
NOT PUBLISHED: 130 kb
DATE RENDERED: 11/16/2007
COM. OF KY, EX REL COMMISSIONER V. KELLY
BUSINESS: Unregistered security sales
2006-CA-001934
NOT PUBLISHED: 88 kb
DATE RENDERED: 11/16/2007
MERIDA V. COM.
CRIMINAL: Prior bad acts admissibility
2006-CA-002309
NOT PUBLISHED: 100 kb
DATE RENDERED: 11/16/2007
BROWNING V. CORNN
PROBATE: Reopening estate and settlement agreement; conversion and
removal; consent judgments not appealable but subject to collateral attack
2006-CA-002528
NOT PUBLISHED: 96 kb
DATE RENDERED: 11/21/2007
BASS V. COM.
CRIMINAL: Jail time credit and other charges
2007-CA-000226
NOT PUBLISHED: 81 kb
DATE RENDERED: 11/16/2007
RUFFIN V. COM.
CRIMINAL: 11.42
2007-CA-000827
NOT PUBLISHED: 80 kb
DATE RENDERED: 11/16/2007
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