Ky. Cases: Published Decisions of Court of Appeals - Apr. 14, 2006

JAGO V. SPECIAL NEEDS HOME CARE
CIVIL - SETTLEMENT & RELEASE (actual authority of attorney)
2004-CA-002569
PUBLISHED
DATE: PUBLISHED 3/10/2006; MODIFIED Apr. 14, 2006

Click here for earlier digest at KyCases.com

POWERS V. PARK, M.D.
CIVIL PROCEDURE - Jurisdiction (long arm statute)
2005-CA-000707
PUBLISHED
AFFIRMING (HUDDLESTON)

Powers was hurt at work in Kentucky, and his WC sent him to a doctor in Missouri for evaluation.  Powers was operated on in Kentucky by his treating doctor, and the MO doc eventually saw him again to recommend his recommence work at light duty.  When Powers' back still hurt, the WC sent the MO doc CT studies for interpretation, and Powers claimed the doc at some point said further surgery was unnecessary.  Powers eventually did undergo another surgery, lost his job, and sued the doctor and his company for malpractice.  The doc moved for SJ claiming personal JD was lacking in KY, and the trial court granted his motion.  This appeal followed.

 

The KY long arm statute is found at KRS 454.210.  KY has a 3-pronged test to determined whether the exercise of personal JD over a defendant violates due process: (1) whether a defendant purposefully availed himself of the privilege of acting within the forum state or causing a consequence in the forum state; (2) whether the cause of action arises from the alleged in-state activities; and (3) whether connections to the state make JD reasonable.  This is a fact-specific determination, and each case involving the issue of a personal JD over a non-resident defendant must be decided on its own facts.  The CA found the doc did not conduct business in KY; did not advertise in KY; did not solicit business in KY.  "The regular solicitation of business in Kentucky is not exclusively a requirement for the exercise of general JD; it is also necessary when the act that caused the alleged tortious injury did not occur in Kentucky."  CAs pointed out that the doc simply did not act in KY.  He may have committed an act that had a consequence in KY, but he did not commit that act in KY.  Nor were there sufficient minimum contacts as described in KRS 454.210(2)(a)(4) to justify the exercise of personal jurisdiction.

SPENCER V. SPENCER
FAMILY LAW -  Domestic Violence (jurisdiction)
2005-CA-001419
PUBLISHED
VACATING AND REMANDING (HUDDLESTON)
DATE: Apr. 14, 2006

The issue before the COA was whether under Kentucky Revised Statutes (KRS) 403.725(1), a provision of Kentucky’s domestic violence statute, a Kentucky court may issue a protective order against an individual over whom the court does not have personal jurisdiction. 

Husband, wife, and child were Oklahoma residents when husband went to visit Las Vegas looking for employment.  While husband was away, the wife viewed this as an opportunity to escape domestic violence.  Wife and son traveled to Kentucky to stay with a close friend whereupon wife filed a domestic violence petition in Warren Circuit Court.

The court issued on Emergency Protective Order on the same day, granting immediate relief, including restraining husband from any contact or communication with wife, and granting her temporary custody of child.

Husband obtained counsel and filed a Special Entry of Appearance and Motion to Dismiss for Lack of
Jurisdiction, arguing that a Kentucky court could not constitutionally exercise personal jurisdiction over him because he had no contact with the state.

Kentucky has adopted a three-pronged test to determine personal jurisdiction.

The first prong of the test asks whether the defendant purposefully availed himself of the privilege of acting within the forum state or causing a consequence in the forum state.

The second prong considers whether the cause of action arose from the alleged in-state activities. 

The third and final prong requires such connections to the state as to make jurisdiction reasonable.

“Each of these three criteria represents a separate requirement, and jurisdiction will lie only where all three are satisfied.”  Applying this three-pronged test, COA concluded that Warren Circuit Court did not have personal jurisdiction over husband.  He had not purposely availed himself of the opportunity of acting within Kentucky, or causing consequences within Kentucky; the cause of action did not arise from activities in Kentucky; and he did not have any connections to this state that would make jurisdiction reasonable.

Yet the language of KRS 403.725 clearly envisions a court granting a protective order when a victim of domestic abuse has fled to this state.   COA held it must balance the due process rights of the defendant against the interest of the Commonwealth in protecting the victims of domestic violence.

The scope of jurisdiction of a court issuing protective orders under these circumstances is an issue of first impression in Kentucky.  In COA's view, the distinction made by New Jersey’s highest court between prohibitory and affirmative orders represents the fairest balance between protecting the due  process rights of the nonresident defendant and the state’s clearly-articulated interest in protecting the plaintiff and her
child against domestic violence.

Insofar as the order prohibits dad from breaking the law in Kentucky by approaching his wife or child, it comports with due process. In all other respects, it goes beyond the permissible limits of Kentucky courts’ jurisdiction.

CABINET FOR HEALTH AND FAMILY SERVICES V. EPI CORP.
GOVERNMENT -  Recouping Medicaid Payments by State
2005-CA-000274
PUBLISHED
AFFIRMING IN PART, REVERSING AND REMANDING IN PART (BARBER)
DATE: Apr. 14, 2006

The primary issue in this current appeal is recoupment by the Cabinet for alleged overpayments of Medicaid benefits to EPI’s long-term care facilities.  There is a long history of disagreement between the parties spanning nearly three decades

Each year, facilities participating in the Medicaid program are required to submit cost reports to the Cabinet in a timely manner per the Cabinet’s regulations.  The time period for recoupment shall not exceed twelve (12) months from the date the overpayment is established, and shall be accomplished within twenty-one (21) months from the end of the provider’s cost reporting period . . . (Emphasis added.) 907 KAR 1:110(1988-1995).  The record reflects that the Cabinet did not recoup any funds for cost years 1988 through 1995 within twenty-one months from the end of the provider’s cost reporting period.   Therefore, it is now barred from recouping said funds in accordance with its own regulation.

KENTUCKY LEGAL SYSTEMS CORP. V. DUNN
PROPERTY - Lien priorities; judgment liens
2004-CA-002352
PUBLISHED
AFFIRMING (TACKETT)
DATE: Apr. 14, 2006

Kentucky Legal Systems Corporation (KLS) appeals from the judgment finding that its judgment lien against all property owned by the Dunns was inferior to the mortgage held by Community Trust Bank, where the mortgage enabled the purchase of the subject real property.

KLS argued that Kentucky law requires that its first-recorded judgment lien have priority over the Community Trust mortgage, but the COA thought otherwise and affirmed the lower court.

The judgment held by KLS was entered in 1992, and the judgment lien filed and properly recorded in 1998 against all real property owned by Dunn. KLS argues that the bank was on constructive notice of its judgment lien and that it failed to exercise due care before giving Dunn a loan.

Dunn later defaulted on the mortgage and the bank sought foreclosure and a declaration that its mortgage held priority over the judgment lien. The circuit court agreed that the mortgage should be considered a purchase money mortgage in accord with the Restatement (Third) of Property, Mortgages § 7.2. The circuit court adopted the Restatement’s reasoning and held the bank’s mortgage was superior to KLS’s judgment lien.

Community Trust, citing the Restatement (Third) and other treatises, argues that the judgment was correct because without its grant of a loan with a mortgage reserved, the debtor would have no interest in the property at all to which KLS’s judgment lien could attach, and cites many cases in other jurisdictions which follow this rule. With respect to KLS’s argument that Community Trust did not exercise due care in failing to discover its judgment lien, for the reasons stated in the Restatement (Third) COA held that Community Trust, as a purchase money lender, did not need to search for judgment liens, as they should be given first priority over a judgment lien regardless of whether they had notice of any kind of the interest.

Even had Community Trust discovered the lien by exercise of due diligence, it should be granted priority over the judgment creditor’s lien due to its status as a purchase money lender.

HILLTOP BASIC RESOURCES, INC. V. COUNTY OF BOONE, KY
ZONING - Due Process and impartiality
2002-CA-001081
PUBLISHED
AFFIRMING (COMBS)
DATE: Apr. 14, 2006
The Kentucky Supreme Court remanded this case to the court of appeals after reversing the decision of the Court of Appeals that Hilltop Basic Resources, Inc. (“Hilltop”) had been denied due process by the Boone County Fiscal Court (the “Fiscal Court”) because members of the Fiscal Court made statements concerning the case before the case had been presented to them. The Kentucky Supreme Court held that impartiality is more relaxed and informal in administrative contexts. Because there was nothing in the record to indicate that the Fiscal Court did not seriously consider Hilltop’s proposal, it concluded that due process had been afforded and reversed and remanded the case to the court of appeals for consideration of Hilltop’s other arguments. On remand, the Court of Appeals affirmed the judgment of the Circuit Court under the standard announced by the Supreme Court, holding that the Fiscal Court’s denial of Hilltop’s application for a zoning map amendment was adequately supported by the evidence. 

Thanks to Scott Byrd, Patrick Bouldin,  John Hamlet, Cherry Henault, Sam Hinkle,  Chad Kessinger,  Stephen Keller,  J. Russell Lloyd, Michelle Eisenmenger Mapes , Peter Naake,   Bryan Pierce, Alma Puissegur, Paul Schurman, Michael Stevens and James Worthington for their efforts in digesting Kentucky's appellate decisions.