Michael Stevens of the Kentucky Law Review has digested the Reece v. Nationwide case offering his own perspective on its impact. Michael immediately notes the true impact, ironclad jury decisions, which will be practically irreversible on appeal. He likens the impact to the line of Miller v. Swift cases on pain and suffering verdicts. He anticipates a stronger approach when questioning experts regarding evidence of impairment, since the claim will now be considered by the jury. Both points are very well taken and insightful. I recommend reading his post.

The Supreme Court finally released its published opinion in Reece v. Nationwide, the case I posted about earlier and which recently determined the standard for authorizing an instruction on permanent impairment. Essentially, Reece argued she was only required to show evidence of permanent injury to entitle her to an instruction on permanent impairment. Nationwide argued that some evidence of the injury’s effect on her ability to earn was necessary since her injury, a back strain, was not the type which would typically impair her ability to earn. The trial court granted a directed verdict on this issue, finding that Reece did not present specific evidence how her earnings would be impaired. The court of appeals affirmed, finding that Reece’s back strain was not the kind from which a permanent impairment would follow and therefore, she was required to present some positive evidence of the injuries impact.

The Supreme Court found that Reece had presented evidence of a permanent injury and that alone was all that was required to bring her claim before the jury. The Court believes that “jurors are capable of determining, from the evidence and their common knowledge and experience, whether there has been a permanent impairment, the extent of such impairment, and the value of such impairment.” It found this to be the case even though it readily admitted, “that a permanent injury may not always result in permanent impairment of earning power.”

The Supreme Court found that Reece’s testimony was alone sufficient to create a jury question. This evidence consisted of her own claims:

[T]hat as a result of her “back/neck injuries from the 1997 accident, she is unable to lift any significant weight and cannot sit for long periods of time. Reece stated that she attended Western Kentucky University for a semester, but had to leave because she could not go to class due to back pain and doctors’ appointments. Thereafter, she attended Jefferson Community College (JCC) until she was placed on academic suspension. Reece stated that she ultimately wanted to finish college, become a registered nurse and work in a position that did not require heavy lifting. While attending JCC, Reece worked a data entry job at UPS for over a year, but was miserable because she had to sit and look up at a computer screen the whole time. After leaving UPS, Reece was employed in a secretarial position at Baptist East Hospital until she was asked to resign because of missing so much work. At the time of trial, Reece was not employed.

The Supreme Court reversed and remanded the case to the Jefferson Circuit Court for further proceedings, presumably for a trial on this issue.

Of course what isn’t really discussed is the fact that this opinion entirely changes the current status of Kentucky law. The Court sidesteps this issue by claiming an adherence to the case Chesapeake & O. Ry. Co. v. Hay, while overruling Herndon v. Waldon, a similar case decided three years earlier. However, there really is no significant difference between the two cases, except the result reached by the court. In Chesapeake the plaintiff suffered an “obviously disabling injury to his hand.” An injury so obvious that its permanency was not only apparent but so was its future affect on his ability to work. So obvious, that the jury had no trouble in using common sense to determine its impact and determine its worth. Here Reece merely had a back strain, with no such obvious showing. However, whether under Herndon or Chesapeake, because her “permanent” back strain is not the kind of injury that normally results in impairment, something more was required under prior Kentucky law. The evidence relied upon by the court fails mostly because even Reece fails to relate it to her back strain, but also because her prior injuries could just as easily have been the cause of her problems.

Essentially, all you need now is a doctor to say “permanent injury” and you are entitled to an instruction on impairment. Under this ruling a plaintiff isn’t even required to present evidence of her impairment. Simply have a doctor say “permanent” and you reach the jury. An attorney would be foolish not to simply ask a doctor if the injury is permanent. If a low back strain, such as this is permanent, any injury can be characterized as such. While Reece’s testimony may be helpful to the jury in determining the value to place on her impairment claim, it is not required and apparently would not be needed to support any alleged award given. Kentucky law now awards “permanency” NOT “impairment to the ability to labor and earn money.”

Another issue simply glossed over was the fact that Reece had two herniated discs in her low before this accident, suffered a cheerleading injury after the mva, and a third herniated disc from another accident. Reece has back problems, which no one doubts, but to allow her to reach a jury simply by claiming these result from this accident falls far short of the standard previously required under Kentucky law. Especially on such flimsy evidence as relied upon by the Court. This claim is simply speculation on Reece’s part, speculation that this court believes is sufficient enough to warrant removal of the judge’s oversight. While I certainly agree that a jury is capable of determining the extent and value of an impairment in cases such as Chesepeake, they shouldn’t be allowed to simply speculate on every injury opined to be “permanent” without any evidence showing the affect of the injury on the ability to work.

Finally, I must comment on the Court’s failure to mention Reece’s attempts to recover from Nationwide for her two prior herniated discs. Reece relied on Raque’s opinion that 2/3rds of her problems were related to this accident, because two herniated discs were present after this accident. Of course, Raque admitted on cross examination that his opinion failed to take into consideration that the two herniated discs PREDATED this accident. Reece tried to use this failure to her advantage. She even argued to the Supreme Court of Kentucky that this was evidence to support her impairment claim. The court of appeals noted her failure to be open about her preexisting injuries. The Supreme Court didn’t even think it warranted a footnote.

With all that being said, the decision was 7-0 with all justices concurring. Perhaps, that is an indication that this Court believes the jury is the best arbitrator of what is and is not sufficient evidence to warrant a recovery. While this may sound admirable in theory, it is a complete reversal of the current status of the law, which had relied on judges to make that initial determination. It begs the question; “Is this the end of the directed verdict on damage claims?”

The KDC will hold its 2007 Spring Seminar and Annual Meeting on Friday April 27, 2007 in Lexington, Kentucky. The titled program is Advanced Trial Practice and Techniques. The seminar will be held at the Lexington History Museum (former Fayette County Courthouse) on W. Main Street. The seminar is approved for 6 hours of CLE credits. For questions call (502) 228-9256 or email ky.def.csl@att.net. For more information visit the KDC website.

Interesting unpublished opinion from the court of appeals in Little v. Kentucky Farm Bureau Mut. Ins. Co., which dealt with the loss of items, resulting from a burglary of a mobile home. The Little’s claimed losses after a burglary. The losses claimed were disputed by Farm Bureau. Evidence was presented at trial that suggested the list of items was more than initially reported, contained items previously seen by police at the scene, and was excessive for the geographical area. A jury found that while the loss had occurred, the plaintiffs’ had violated one or more of the provisions relating to fraud or concealment in reporting the claim to Farm Bureau. The Plaintiffs moved for a JNOV, to set aside the verdict, and for a new trial, which were all denied.

On appeal the Plaintiffs argued there was a complete absence of evidence that they acted fraudulently or dishonestly. The court of appeals disagreed citing evidence in the record that supported the juries’ verdict. The trial court’s rulings were affirmed.

Opinion is interesting mainly because it reiterates that fraud or concealment in the reporting a claim voids the policy in its entirety. Even though the jury found the loss did occur, there was no coverage under the policy for any of the claimed losses, due to the material misrepresentation.

The Court of Appeals recently published Stinson v. Mattingly, which can best be described as Earle v. Cobb II. Here, the trial court ordered the case to be tried without mention of liability insurance or underinsured motorists coverage. At trial the jury found in favor of Mattingly on the issue of liability. Stinson maintained on appeal that this procedure violated the Supreme Court’s ruling in Earle v. Cobb.

Unlike the UIM carrier in Earle, Kentucky Farm Bureau, the UIM carrier in Stinson, never advanced the settlement offered by the liability defendant nor did it participate at trial. On appeal, Kentucky Farm Bureau argued this distinguished the Earle decision. Judge Abramson, writing for the three panel appellate court, noted the force to this argument. However, she could not find any grounds for distinguishing the Earle decision, when as here, the UIM carrier was still a named party. Judge Abramson noted:

We certainly agree with Mattingly that the existence of insurance, liability or UIM, had no relevance whatsoever to the jury’s liability determination. However, we are not writing on a clean slate with respect to this issue.

The Court of Appeals found this was not only error, but error which required reversal, regardless of the finding of liability. According to Abramson; “[L]iability is not dispositive. Reversal is required, according to Earle and Hughes, to ensure that our court system is not tainted by “deception” or “subterfuge.” citing Hughes, 197 S.W.3d at 568.

I commend Judge Abramson for her candor in noting the decision was one, which was practically compelled by the Supreme Court’s Earle decision. What I do disagree with is the language used to circumvent the clear rule against mentioning liability insurance at trial. Claiming that the failure to identify the UIM carrier is akin to tainting our court system with “deception” or “subterfuge” is ridiculous. Our entire Rules of Evidence are based on “deception” and “subterfuge.” Here is a book dedicated to keeping information from the jury. Why do we have it then, if as mentioned, the taint on our court system is so dramatic.

Simple, to prevent the jury from hearing things, which have no bearing on the true determination, but which may ultimately sway their decision. Like the prohibition against the mention of liability insurance. Whose lack of relevance was acknowledged by the Court of Appeals when it said, “[I]nsurance should have absolutely no bearing on a jury’s findings as to liability and damages.”

I also disagree that this is the “harbinger of a new era of disclosure regarding insurance in our courts.” Health and disability insurance are still prohibited from being mentioned by the collateral source rule. What about the “deception” or “subterfuge” of this rule. What about the legal fiction created when we allow the plaintiff to recover the full amount of medicals billed, which no one ever even paid? What we have is a Supreme Court mandate requiring the injection of “liability” insurance, with the express hope that the jury will disregard fault and give the plaintiff money anyway. It has absolutely no relevance to the true issue of liability or damages resulting from the accident, has no business being mentioned and frankly, is the true “deception” or “subterfuge” on the court system.

The extent to which this rule is to be applied still awaits to be seen. I believe the Earle opinion only requires the mention of the UIM carrier as a party. Nothing suggests the trial court is forced to mention the type of claim or the effect of the UIM carrier’s participation at trial. I think the trial court is well within its discretion to mention only that the UIM carrier is a named party or that a claim has been brought against insurance company X. I see nothing that requires the trial court to say anything further. I anticipate what IS or IS NOT said about the insurance company’s participation will be the next issue the courts will need to determine.

The Courts of Appeal were quite busy this week issuing 11 published decisions. As usual these published decisions frequently dealt with tort and insurance issues. I have listed some of those worth mentioning with a short digest and link to the opinion.

Stephenson v. American Family Mut. Ins. Co., (Promissory Estoppel). As a general rule, out-of-state insurance companies are not required to comply with Kentucky no-fault requirements for their insureds who are not Kentucky residents even when involved in motor vehicle accidents in Kentucky. However, when the insurer states that it will provide those benefits, which are relied upon to the insured’s detriment, the insurer will be estopped from later denying benefits.

Batts v. Illinois Central Railroad Co., (Statute of Limitations, Revival). Appointment of executor of estate takes place for purposes of revival at the time the order is signed by the judge and not when it is entered. Standing to file motion for revival exists at that point. As long as that motion is filed within one year, the action is revived even if the order is not entered until later.

Estate of Turner v. Globe Indemnity Co., (UIM, Covered Auto). For UIM to be implicated party must be operating a covered vehicle or a temporary substitute for covered vehicle. The substitute must be out of service because of its breakdown, repair, servicing, loss or destruction. Evidence showed that there were serviceable fleet vehicles available to Turner, but that he chose to drive his own vehicle for his own convenience.

Rippetoe v. Feese, (Zero Damages, Experts). Rear end accident case where jury awarded zero damages upon stipulation of liability. No error to award zero damages when evidence exists that injuries result from cause other than motor vehicle accident. Also, no error in allowing expert testimony when expert was listed by Plaintiff as possible expert, Plaintiff never objected to deposition notice, and deadlines were moved due to continuances.

The Court of Appeals in the published opinion, Jackson v. Duncan, et al., issued two important ruling regarding dram shop liability. First, it reiterated that apportionment of fault is not allowed against drams shops. Second, punitive damages are not recoverable. The Jackson case stems from an auto accident involving Jackson, a passenger in Duncan’s car. Both parties had been drinking at several nightclubs before the accident. Jackson sued Duncan, the Big Kahuna nightclub and its shareholders, Sweet and Sassy, Inc. d/b/a Ginger & Pickles, nightclub and its owner Tullar. Before trial Jackson settled with the Big Kahuna. The trial court allowed a four way apportionment against Duncan, the Big Kahuna, Jackson and Sweet and Sassy. The jury found negligence against all parties. It also awarded punitive damages against Sweet and Sassy and Tullar.

All the parties appealed, except the Big Kahuna, who for some reason was still listed as cross-appellee. Jackson contended that her 10% fault should be deducted from the total fault (100%) and that the remainder should be placed on Duncan. The dram shop defendants would then be vicariously liable for whatever portion Duncan could not pay? The dram shop defendants argued that apportionment simply was not available.

The Court of Appeals began by reviewing KRS 413.241, enacted in 1988 and commonly referred to as the Dram Shop Act. It noted that in DeStock # 14, Inc. v. Logsdon, 993 S.W.2d 952 (Ky. 1999), the Kentucky Supreme Court concluded that liability may be imposed upon a dram shop despite the statute’s language regarding proximate cause. It noted; “Liability is imposed on the intoxicated tortfeasor for his actions in injuring the plaintiff, while liability is imposed upon the dram shop for the entirely separate and “independently negligent” act of serving alcohol to the intoxicated tortfeasor before the accident.” “Thus, since the actions of the dram shop and the intoxicated tortfeasor are separate, the two “ought [not] to be considered in pari delicto.””

“It is because of these distinctions between the tortfeasor and the dram shop, that apportionment of fault between the injured party, the tortfeasor, and the dram shop is improper.” “The instruction should have required the jury to apportion fault between just Duncan and Jackson. Then, only after the jury found Duncan to have some percentage of fault, should the jury have determined whether the elements under KRS 413.241 were satisfied such that either or both dram shops could be held secondarily liable.” Because it was impossible to determine how the jury would have apportioned fault between Jackson and Duncan the Court of Appeal reversed and remanded the case for a new trial.

Both parties also appealed the award of punitive damages. The Court noted; “Kentucky law is clear that a plaintiff cannot recover punitive damages against a defendant unless that defendant’s conduct was the proximate cause of any injury to the plaintiff.” Since there can be no punitive damages absent proximate cause and since the legislature had removed proximate cause in dram shop liability, there could be no punitive damages awarded as a matter of law.

The Court found this holding to be consistent with the dram shop statute, which allowed recovery only for “injuries suffered” and not simply damages, which might encompass punitives. It also noted that the punitive damages statute and the dram shop act were adopted during the same legislative session, and it was reasonable to assume the legislature was aware of the punitive damages scheme when it adopted KRS 413.241.

A very well written and well grounded opinion, using existing case law to reach the correct result. It should be noted that the jury returned a verdict for punitives of $500,000.00 against Sweet and Sassy and Tullar only. Duncan was not included, despite his obvious intoxication. It also raises the question; Where does Jackson’s gross negligence, if any, play in an instruction and award of punitive damages?