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.

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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?