Kentucky Court of Appeals - Unpublished
Settlements
Hundley v. Wilson, 2015 WL 1880494 (Ky.App. April 24, 2015)

This was a death case arising from a motor vehicle accident. The alleged tortfeasor had a $250,000.00 liability policy and the amount of limits was disclosed in written discovery. An agreement was reached at some point to settle for policy limits. The settlement process involved a structure and required some approval as to the minor plaintiff. Somewhere in this process plaintiff counsel decided the limits were $300,000.00, and sought to enforce a settlement on that basis. This argument was rejected and the claim was seen as a unilateral mistake by plaintiff's counsel, but this may have been largely because of the formal disclosure of the amount of the limits. It is best to be precise as to settlement terms to avoid such problems, although this entire misunderstanding must be laid at the feet of the plaintiff attorney. Had the defense attorney made such a representation to the court the scream of bad faith would have been loud indeed, so one has to wonder why sanctions were not mentioned in this one.

Kentucky Court of Appeals
Exclusive Remedy
Ervin Cable Construction, LLC v. Lay, ___ S.W.3d ___, 2015 WL 1537619 (Ky.App. April 3, 2015)

This action was brought by an employee of Advanced Cable against Ervin Cable for injuries allegedly caused by an employee of Ervin Cable. Advanced Cable and Ervin Cable were operating under a contractor/subcontractor agreement. The accident did not take place at the job site, but while the two companies employees were fueling and stocking supplies at a service station in preparation for work at a remote site. Mr. Lay also brought a workers' compensation claim against Advance Cable. The trial Court denied Ervin Cable's motion to dismiss based on up the ladder immunity, and a direct appeal was taken.

The arguments on appeal by the employee were largely specious. He argued that Ervin Cable did not require Advanced to procure workers' compensation insurance, but the Court observed that Advanced di in fact have such insurance. Plaintiff also argued that his injury was not work related, which the Court summarily dismissed.

Kentucky Supreme Court
Limitations - Automobile - Payment of Last BRB
Beaumont v. Zeru, ___ S.W.3d ___, 2015 WL 1544241 (Ky. April 2, 2015)

The limitations for personal injury actions arising from the use of a motor vehicle are tolled until the last basic reparations benefits have been paid. KRS 304.39-230(6). In this decision, the Court clarifies what is meant by the last benefit paid. In that case, a check had been issued to a provider but the check was lost. The no-fault carrier issued a replacement check. The Court stood by its earlier rulings that the date of payment was the date the check was issued. However, the Court further held that the date of the replacement check was the date of last payment, even though the benefit had been paid earlier. This would appear to be based on the provider's failure to negotiate the check. If the first check were to be negotiated and a second check was issued in error, the reasoning of this opinion would not seem to apply.

Kentucky Supreme Court
Damages - Wrongful Removal of Minerals
Harrod Concrete and Stone Co. v. B. Todd Crutcher, ___ S.W.3d ___, 2015 WL 1544444 (Ky. April 2, 2015)

Innocent vs Wilful Trespass

In trespass cases the measure of damages turns on the determination of whether the trespass was innocent or willful. While this seems redundant since trespass is an intentional tort, the issues are distinct. The intent required to commit the tort relates to the act itself, not intent to trespass. For example, if a driver's negligence leads to his car crashing through a fence into a stranger's property, the driver has not committed a trespass because he did not intend to leave the roadway. However, if he intentionally pulls onto a stranger's land a trespass has been committed, even if he thought it was his property or that he had permission to do so. The innocent vs willful distinction relates not to the act of trespass, but the mental state leading to the trespass.

In this case, Harrod operated an underground limestone quarry, and Crutcher owned adjoining land. In the process of mining, Harrod removed a substantial amount of limestone from below Crutcher's land. There apparently was no evidence that Harrod intended to mine and remove Crutcher's property. But the Court noted that reckless conduct may also constitute willful conduct. While the Court observed that negligent conduct was innocent conduct in this context, it went on to hold that the evidence of a failure to take precautions would support a finding of willful misconduct. It is stated that Harrod 1) failed to have a boundary survey done for six years while Harrod knew the mining was approaching Crutcher's property; 2) plan sheets that were used by the engineers used approximate boundary lines; and had no procedure for correlating subsurface activity to surface boundaries. While this all sounds like negligence, the Court seems to find recklessness from the fact that it was known the mining activities were approaching the Crutcher boundaries. It should be noted that the Court held that the jury could infer recklessness from this conduct, not that the jury had to.

Measure of Damages

The Court first rejected the argument that limestone removal should be treated differently than minerals, even though this distinction may be important for contract or other purposes. Where the trespass is innocent, the measure of damages is the value of the removed stone at the mouth of the mine less the reasonable costs incurred in the mining. Where the trespass was willful, however, the plaintiff may recover the value of the removed stone without a deduction for the cost of removal. This, the Court held, was sufficient penalty and thus a separate claim for punitive damages was disallowed.

Kentucky Supreme Court
Arbitration - Contract Formation
Dixon v. Daymar Colleges Group, LLC, ___ S.W.3d ___, 2015 WL 1544450 (Ky. April 2, 2015)

A group of students sought to bring claims against Daymar College, a for-profit educational institution and Daymar asserted a right to arbitration. During the enrollment process the students signed a number of documents, including a single page agreement. The students complained about the process, and some even claimed they did not know they had enrolled at all. The signature line was on the front page, and a provision above the line incorporated the terms set forth on the reverse. One of the terms on the reverse was an agreement to arbitrate. It included requirements that the students pay half the cost of arbitration and pay their own attorney fees; that the arbitrator was to decide the validity of the agreement; and that Kentucky law would govern. The trial Court found the agreement to be procedurally and substantively unconscionable, but the Court of Appeals reversed. See Daymar Colleges Group, LLC v. Dixon, 2012 WL 4335393 (Ky.App. September 21, 2012). The Supreme Court first noted that the choice of law provision may have constituted a waiver of any claim that the Federal Arbitration Act governed the case, but did not decide the issue because it was deemed immaterial.

Delegation Provision

A delegation provision provides that the arbitrator will decide whether a particular matter is subject to arbitration. These have become popular in part because of the hostility state courts have often shown to arbitration. In this case, the language was quite broad and stated "[a]ll determinations as to the scope or enforceability of this arbitration provision shall be determined by the arbitrator". This language clearly satisfies the requirement that a delegation provision must clearly and unequivocally the intent to submit the issues. Notwithstanding a tortured attempt to distinguish federal precedent, the Court essentially held that the intent was no clearly expressed because the gravamen of the students' claims was that they did not consent to the provision at all. In short, the Court held that a delegation provision cannot apply to issues concerning the formation of the agreement.

Arbitration Agreements Must be Signed

The arbitration statutes require agreements to be in writing but do not require them to be executed. The Court found a signature requirement in KRS 371.010(7), which requires a signature for contracts to be performed in more than a year. In reaching this conclusion the Court focused on the contract to educate, noting that a degree cannot be obtained in less than a year. But that contract was signed, the issue related to the arbitration agreement, which clearly could be performed in less than a year, at least where the claim was that the enrollment was procured improperly. Nonetheless, having reached the conclusion that a signature was necessary, the Court was able to entertain the student's argument that the arbitration agreement, being on the reverse, violated KRS 446.060 which requires the signature to be at the end of the writing.

Recall that in this case Daymar argued that the terms on the reverse were incorporated by reference by a provision which did appear prior to the signature, and KRS 446.060 does not bar this practice. However, the incorporation must be clear, and in this case the Court found the incorporation provision to be unclear, reading it to apply only to amendments. Accordingly, the Court found the arbitration agreement to be unenforceable.