Kentucky Law Review

Lawyers: "Ex-client targets Louisville firm Becker Law"

From Courier-Journal:

Ex-client targets Louisville firm Becker Law

With its ad campaigns advising the injured and maimed that they "better call Becker," Louisville's Becker Law Office says it has represented 30,000 people over 25 years. Now it is embroiled in a legal battle with one of them.

PS:  I was NOT going to post this story in the midst of a trial.  The contents and the quotes are quite sensational, and I was perplexed why couldn't the newspaper wait at least a day until AFTER a jury was empaneled. Well, the CJ did not wait, sold a little sensationalism, and basically laid the foundation for the trial to stop before a jury was even selected.  The details have not come out yet in the news, but I know the trial is off, and the reason was the jury and jury pool was affected by the news.  Good job Courier-Journal.  The old adage - justice delayed is justice denied?  A plaintiff has waited years to have her case heard, and a lawyer too has been denied the opportunity to tell his or her side in cour.  Not a win-win but a lose-lose for the litigants. What next a change of venue at the cost of your circulation?

No Fault, PIP Benefits, Wage Loss and Self Employed Income - Proof needed and more addressed in NPO COA decision of Gant v. State Farm

In Gant v. State Farm, NPO, COA 4/22/2011, Judge Moore in a nonpublished COA decision dealt within the PIP context the proof needed to obtain lost wages by a self-employed claimant.  In this case, the claimaint presented a spreadsheet on lost income, but the PIP carrier requested tax returns.  The returns were never provided presuit or during suit.  State Farm obtained summary judgment, and the issues were the burden and the opportunity to present evidence. 

The reason I am noting this decision is the fact that obtaining wage loss for self-employed persons is difficult. Although the tax returns were requested, they were not provided.   However,  if the tax returns had been provided, what would they have calculated the wage loss on gross sales/earnings or net earnings (after expenses etc)? 

All too often, I encounter adjusters who want the net as the basis for calculating wage loss.  This is not correct (IMHO).  Why?  The expenses continue, and it is the wages/earnings that stop.  If the person was employed, then looking at net business income would be the same as looking at the claimant's individual tax returns after deductions, exclusions, standard deductions, etc.  I just wanted to make that point since I am sometimes concerned that appellate decisions ignore the realities of the world.

The other issue which I thought was of interest is that summary judgment motions sometimes are fast and furioius and forego the opportunity to flesh out the facts.  This case has some good law regarding the standard of review on this point.  Please note that the COA held that the opportunity to engage in discovery and prove her point was amply given to the claimant/plaintiff.

The standard for summary judgment is as follows: “if the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  CR3 56.03.

Summary judgment is appropriate when it “appears that it would be impossible for the respondent to produce evidence at the trial warranting a judgment in his favor.” Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky. 1991). Also, summary judgment cannot be avoided solely on the basis that a party hopes to obtain evidence in the future that will create a genuine issue of material fact. Neal v. Welker, 426 S.W.2d 476, 479-80 (Ky. 1968). However, “summary judgment is only proper after a party has been given ample opportunity to complete discovery[.]” Pendleton Brothers Vending, Inc. v. Commonwealth Finance and Administration Cabinet, 758 S.W.2d 24, 29 (Ky. 1998). It is not necessary that a party actually complete discovery, only that they had an opportunity to do so. Hartford Insurance Group v. Citizens Fidelity Bank & Trust Co., 579 S.W.2d 628, 630 (Ky. App. 1979). We review a grant of summary judgment de novo. Burton v. Kentucky Farm Bureau Mut. Ins. Co., 326 S.W.3d 474, 475 (Ky. App. 2010).

APPELLATE DECISIONS: COA reverses a denial of JNOV and addresses prejudice of voir dire questions relating to plaintiff's occupation/profession as lawyer

This COA decision announced Mar. 5, 2010 and authored by Judge Combs arose from a trial out of Jefferson County and resulted in Judge Judith McDonald-Burkman being reversed.  The decision was styled Jospeh L. and Julie Hardesty vs. Scot-Bilt Homes and Kenneth S. Burns (No. 2008-CA-000564), not to be published and withdrawing an earlier opinion rendered Oct. 23, 2009.  Click here for the current opinion.

Although the case arose from a construction project and the implied warranties of habitability and alleged violations of the building code, the interesting part of this decision was that the trial judge was reversed for not granting the plaintiff's motion JNOV.  Specifically, the COA stated:

Burns disagrees and disputes at length each of the Hardestys’ claimed errors. After a review of the arguments presented by the parties, the voluminous record and applicable law, we reverse the trial court. Although there was evidence presented to support Burns, it was simply inadequate substantively to support the verdict of the jury in this case. We are persuaded that the Hardestys were entitled to a JNOV.

* * *

Appellate restraint dictates that we grant great deference to a jury verdict and the discretion of a trial court. However, we have indeed reversed jury verdicts when the evidence was lacking in sufficiency to sustain a verdict. Shreve v. Biggerstaff, 777 S.W.2d 616 (Ky. App. 1989). After our review of the records, we are persuaded that the evidence was so compelling against Burns that no reasonable jury could have returned a verdict in his favor. The verdict was truly puzzling in light of the scant evidence offered to absolve Burns of liability. In an abundance of caution, the trial court allowed this case to proceed to a jury rather than entering a directed verdict. However, after the jury failed to return a verdict in compliance with the evidence, we conclude that the trial court erred in not granting a JNOV.

What I also found troubling at the trial court was the voir dire questioning into wholly inadmissible areas pertaining to the plaintiff's profession as lawyers.  As the COA noted -

During voir dire, the Hardestys’ counsel informed the jury that Mr. Hardesty was a partner at the “large” law firm of Stites and Harbison and that Mrs. Hardesty was an attorney with the Jefferson County Attorney’s office. Over the Hardestys’ objection, the jury also learned that Mr. Hardesty is a member of the construction group in his firm. The Hardestys believe that the jury was tainted from the outset to their detriment. Although we agree that this evidence was wholly inadmissible on relevancy grounds, its erroneous admission would not suffice alone to warrant a reversal. We shall not speculate on the subjective impact  of such information. Therefore, our inquiry will focus solely on the substantiality of the evidence presented and the pertinent law.

TORTS (wrongful termination): Brett v. Media General Operations, Inc. (COA 1/29/2010)

Brett v. Media General Operations, Inc.
2008-CA-000620 01/29/2010 2010 WL 323136

Opinion by Senior Judge Harris; Judges Lambert and VanMeter concurred. The court affirmed a summary judgment entered by the circuit court in favor of appellant’s former employer, a television station, and its general manager and an order awarding costs to the employer. The Court first held that summary judgment was not based upon improper evidence when the majority of the proof consisted of witness depositions that were properly certified and notarized. Further, appellant’s deposition was complete, as he did not request a re-direct examination, nor did he file an affidavit to explain, correct, or contradict the testimony he gave under examination by opposing counsel, which was authorized by CR 56.03. The Court also held that although the employer and general manager may have violated office policies by destroying documents, appellant failed to demonstrate that any law or court orders were violated or that they were lost or destroyed in anticipation of litigation. The Court next held that appellant failed to present evidence demonstrating any genuine issue of material fact on his breach of contract claim. His contract contained a morals clause and his termination letter made it clear that he was terminated for cause after four women complained that he had sexually harassed them on numerous occasions. Absent a specific contractual provision, the employer was under no obligation to provide additional investigative measures or an opportunity to be heard. The Court next held that appellant failed to demonstrate the existence of any genuine issue of material fact on the basic element of material misrepresentation to support his claim that he was fraudulently induced into entering the employment contract. The Court next held that appellant failed to show how his allegations of misrepresentations and improper termination constituted contractual interference. The Court next held that appellant failed to specifically describe any alleged defamatory statements or state where they were published to show how the employer was responsible for dissemination of information to support a claim for defamation. The Court next held that appellant failed to produce evidence to show that his termination was outrageous or intolerable in the manner required under Kentucky law to support his claim for intentional infliction of emotional distress. The Court finally held that the ruling by the Kentucky Supreme Court in the employer’s favor, in an original action wherein appellant argued that the trial court lost jurisdiction under CR 52.02 to award costs after appellant filed his Notice of Appeal, was dispositive of the appeal from the order awarding costs.

APPELLATE DECISIONS: Subrogation/reimbursement language in policy did not include UM/UIM proceeds

The Court of Appeals in a case of first impression interpreted an insurance policy's subrogation language to rule that the clause was ambiguous and did not include a claim against the uninsured motorist policy.  The language in the policy - "claim against any person, firm, or corporation for the injuries and damages sustained as a result of the occurrence on or about the above referenced date," and the language in the subsequently signed reimbursement agreement (which was objected to as changing the terms of the policy and  without additional consideration) - "the amount paid by the third party which represents reimbursement to the Insured for such expenses" were interpreted to include a third party tortfeasor and not another insurer.

This case may be limited to the policy language concerned but reminds us that the insurance policy will be interpreted against the drafter.  Furthermore, dicta in the decision reveals an attitude in the appellate courts to finally recognize the very existence of a subrogation entitlement against UM/UIM proceeds is not to be cavalierly applied and may not exist regardless of policy language, to wit:  "Not only does this appear to be a case of first impression in Kentucky, but we recognize there is no clear consensus in other jurisdictions as to whether a health care contractor has a subrogation right (under contractual or equitable terms) against a UIM/UM carrier or UIM/UM proceeds."   This issue did not need to be addressed as the language of the policy fell short.

Although it was clear that this COA did not express anything further than the ruling hinged on the particular policy language,  I would submit that the door has been left ajar. 

I further submit that the practice of insurance carriers writing contracts of adhesion which expand the former concepts of subrogation (sitting in the shoes of the claimant for a recovery of their payments) to a claim of "reimbursement" from any and all sources of recovery (and without consideration of attorneys fees in obtaining the recovery or a reductions for comparative negligence or made whole plus subordinating the insured's claims) is one-sided, arbitrary, and unevenly applied (since there is no reduction in the premiums paid for those who lose part of their claim to the subrogor/reimbursed insurer). 

Worse yet, the subrogor/reimbursed insurer does not require all insureds to obtain UIM/UM coverages as a condition to obtaining health insurance, does not contribute to the payment of the premiums, is not a party to the UIM/UM agreements, and allows the putative savings inuring to the recovery to inure to the benefit of all without any concomitant benefits in future premiums etc to the insured who watches his or her recovery go down the proverbial deep pocket of the insurer!  Insurance law is typically a state regulated enterprise, and insurers like AIG and others who get federal assistance to help them through their mismanagement of investments to exploit their insureds is unforgivable and needs to be regulated by the state.  If the legislatures won't step up to the plate, then the Courts will need to address these issues.  And the Courts will not be afforded the opportunity with attorneys protecting the injured claimants and challenging the practice, policies and procedures in Court.

Equitable concepts of sharing in the costs of the recovery, reducing the lien for comparative negligence, considering the make whole doctrine, AND sharing proportionately in the recovery based upon the insured's and insurer's damages harken  back to the common law and needs to given effect.  These concepts developed out of equity and fairness.  Abrogating them in one-sided agreements for the reasons stated above should not be allowed to ignore scrutiny in the courts.

Now you are probably wondering what is the source of this rant.  Well, I (Michael Stevens) together with Kevin Burke were counsel for the the claimant.   It is no wonder under these circumstances that claimants would feel that the subrogor's swooping down to steal his recovery converting his policy of insurance for health benefits to nothing more than a loan and robbing him of the benefits of his UM policy.

Finally, the result was the right result.  Hopefully, this soliloquy will encourage others to challenge the subrogation/reimbursement language in policies which reduce and deny altogether one's recovery rights under a policy of insurance (UM and UIM).

The bottom line is that UIM and UM policies are designed to compensate an INSURED for losses that are not recovered against the tortfeasor who either had no liability insurance or insufficient liability insurance without allowing the insured a double recovery for the same items of damages.  UM/UIM policies are purchased to protect the individual claimant for a loss.  UM/UIM policies are not purchased to protect a health insurer.  Nor are they designed or intended to insure another insurer for losses and transfer the money to another insurance company with the net effect of DENYING the insured of any recovery whatsoever.  

Meanwhile, here's the squib with links to the full text of the decision.  Please do not misunderstand this post.  The decision as to the insurance policy is correct, but this decision (like Coleman vs. Bee Line and the Jewell decision) leaves some important issues hanging as the edges of this problem are addressed only.

Lynch v. Claims Management Corporation
2007-CA-001840 01/22/2010 2010 WL 199343

Opinion by Judge Wine; Judges Clayton and Dixon concurred. The Court reversed and remanded a summary judgment in appellee’s favor on its intervening subrogation/reimbursement claim from settlement proceeds appellant received from his uninsured motorist carrier. Appellee was the claims administrator for a disability policy purchased by appellant, an independent contractor. The Court held that the trial court erred in granting summary judgment to appellee and denying summary judgment to appellant on the intervening claim. The insurance contract was both ambiguous and subject to a reasonable interpretation that appellee would only seek reimbursement from a third-party tortfeasor, not another insurer. Therefore, appellant was entitled to summary judgment.

The following language is also noteworthy on the extent of any contractual or equitable subrogation rights or entitlements against a underinsured or uninsured motorist benefits policy.

In Suchy v. Illinois Farmers Ins. Co., 574 N.W.2d 93 (Minn. App. 1998), the Minnesota Court held a health insurer did not have an equitable subrogation right against UIM award. The Ohio Court of Appeals held in Csik v. Blue Cross & Blue Shield of Ohio, 109 Ohio App.3d 9, 671 N.E.2d 1028 (1996), that the health insurer did not possess a contractual subrogation right against the UM carrier as "responsible third party" is an ambiguous term. Likewise, in Employers Health Ins. v. General Cas. Co. of Wisconsin, 161 Wis.2d 937, 469 N.W.2d 172 (1991), the Wisconsin Supreme Court concluded that the health insurer did not possess a contractual subrogation right against the UM carrier where the health insurer was subrogated to the insured’s “right to recover damages from a responsible third party”, and further concluding that the health insurer had no equitable subrogation right against the UM carrier. Dailey v. Secura Ins. Co., 164 Wis.2d 624, 476 N.W.2d 299 (Wis. App. 1991) (health insurer did possess a contractual subrogation right against the UM carrier, as "any party who may be liable" is not limited to wrongdoers and includes other insurers).

INSURANCE - Unfair Claims: SHAHEEN v. PROGRESSIVE CASUALTY INSURANCE COMPANY

Judge Russell's opinion addresses an attempted dismissal of a claim alleging a violation of the Kentucky Unfair Claims Settlement Practices Act in which the liability insurer's proffer of policy limits was rejected by the plaintiff who wanted an unconditional offer but the insurer conditioned its tender upon a release of its insurer.  "Progressive, through Yonts's counsel, offered to pay the $250,000 liability policy limit, conditioned upon the release of all claims against Yonts and dismissal of the underlying suit. On April 27, 2007, Plaintiff responded that only an unconditional payment of the liability policy limit without releasing the claims against Yonts or Plaintiff's rights to recover all damages assessed against Yonts was acceptable.

On August 5, 2008, while the present motion was pending, Yonts tendered an offer of judgment against himself in the underlying wrongful death action in the amount of $1.5 million, which Plaintiff accepted on August 12, 2009. Shortly thereafter, the Court entered final judgment in the matter.

Plaintiff now seeks damages from Progressive for violating KUCSPA. Plaintiff alleges that Progressive violated the act by not responding to his April 27 demand and by refusing to unconditionally pay its $250,000 policy limit."

The matter withstood a motion to dismiss as follows:

SHAHEEN v. PROGRESSIVE CASUALTY INSURANCE COMPANY

JOSEPH SHAHEEN, Ancillary Administrator of the Estate of Nadia Shaheen, deceased, Plaintiff,
v.
PROGRESSIVE CASUALTY INSURANCE COMPANY, Defendant.

Case No. 5:08-CV-00034-R.

United States District Court, W.D. Kentucky, Paducah Division.

February 10, 2010.

MEMORANDUM OPINION & ORDER

THOMAS B. RUSSELL, Chief District Judge.

This matter comes before the Court upon Defendant's Motion to Dismiss (DN 12). Plaintiff has responded (DN 18), Defendant has replied (DN 20), and Plaintiff has submitted a supplemental memorandum in opposition (DN 23). This matter is now ripe for adjudication. For the reasons that follow, Defendant's Motion is DENIED.

BACKGROUND

This is an action for the recovery of insurance proceeds under the Kentucky Unfair Claims Settlement Practices Act ("KUCSPA"), KRS 304.12-230. Defendant Progressive Casualty Insurance Company provided coverage for a vehicle insured by Bret and Janice Yonts and provided to their son, Burgess Harrison Yonts ("Yonts"). In the early morning hours of November 11, 2005, Yonts struck decedent Nadia Shaheen with his vehicle as she was walking home from the computer lab at Murray State University. Yonts was intoxicated. He left the scene and attempted to conceal his wrongful acts. Nadia Shaheen's body was discovered several hours later.

On February 1, 2007, Yonts was convicted of wanton murder, tampering with physical evidence, driving under the influence, and leaving the scene of an accident. He was sentenced to twenty years in prison on April 9, 2007. His conviction became final after he dropped his appeal and executed an affidavit accepting responsibility for Shaheen's death.

On October 17, 2006, Plaintiff filed suit against Yonts and others for recovery of compensatory and punitive damages. Based upon the disclosure of his counsel that Progressive afforded Yonts $250,000 of coverage for Nadia Shaheen's death, Plaintiff demanded the prompt and unconditional payment of Progressive's full coverage on March 20, 2007. On April 18, 2007, Progressive, through Yonts's counsel, offered to pay the $250,000 liability policy limit, conditioned upon the release of all claims against Yonts and dismissal of the underlying suit. On April 27, 2007, Plaintiff responded that only an unconditional payment of the liability policy limit without releasing the claims against Yonts or Plaintiff's rights to recover all damages assessed against Yonts was acceptable.

On August 5, 2008, while the present motion was pending, Yonts tendered an offer of judgment against himself in the underlying wrongful death action in the amount of $1.5 million, which Plaintiff accepted on August 12, 2009. Shortly thereafter, the Court entered final judgment in the matter.

Plaintiff now seeks damages from Progressive for violating KUCSPA. Plaintiff alleges that Progressive violated the act by not responding to his April 27 demand and by refusing to unconditionally pay its $250,000 policy limit.

STANDARD

"When considering a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the district court must accept all of the allegations in the complaint as true, and construe the complaint liberally in favor of the plaintiff." Lawrence v. Chancery Court of Tenn., 188 F.3d 687, 691 (6th Cir. 1999) (citing Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995)). To survive a Rule 12(b)(6) motion to dismiss, the complaint must include "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007).

The "[f]actual allegations in the complaint must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Id. at 1965 (internal citation and quotation marks omitted). "[A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. A plaintiff must allege sufficient factual allegations to give the defendant fair notice concerning the nature of the claim and the grounds upon which it rests. Id. at 1965. Additionally, "the conclusory nature of particular allegations cannot alone justify dismissing a complaint." Back v. Hall, 537 F.3d 552, 558 (6th Cir. 2008) (dismissal not appropriate although one essential element of the claim was pled in a conclusory manner).

DISCUSSION

KUCSPA requires an insurance company "to deal in good faith with a claimant, whether an insured or a third-party, with respect to a claim which the insurance company is contractually obligated to pay." Davidson v. Am. Freightways, Inc., 25 S.W.3d 94, 100 (Ky. 2000) (emphasis omitted); see also State Farm Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116, 118 (Ky. 1988) (holding third-party claims may be premised upon a violation of KUCSPA). The duties imposed by KUCSPA on an insurer to a third-party apply both before and after the commencement of litigation by the third-party against the insured. Knotts v. Zurich Ins. Co., 197 S.W.3d 512, 517 (Ky. 2006).

Progressive argues that it could not have violated KUCSPA by insisting on the release of liability for its insured in exchange for offering the liability policy limit. It states that it is obligated to protect its insured from excess judgments, and settling Plaintiff's claim without a release for its insured would have done just that. Essentially, it reasons that its duties to its insured, Yonts, trumped whatever duties it had to Plaintiff.

The Kentucky Supreme Court has recognized that, in addition to the duties owed to a third party, an insurer owes a duty to its insured to protect them from a potential excess judgment. Motorists Mut. Ins. Co. v. Glass, 966 S.W.2d 437, 453 (Ky. 1997) (citing Manchester Ins. & Indem. Co. v. Grundy, 531 S.W.2d 493 (Ky. 1976)). That duty includes obtaining from a third party a release of all claims against an insured in exchange for the payment of a liability settlement. Id. Unlike the case cited by Progressive, however, Kentucky does not believe that "[a]n insurer cannot logically owe a duty of good faith and fair dealing to the insured and a fiduciary duty to an adversarial third party in the same matter." Gallagher v. Allstate Ins. Co., 74 F. Supp. 2d 652, 657 (N.D.W. Va. 1999).

In Knotts v. Zurich Insurance Company, the Kentucky Supreme Court held that KUCSPA applies during litigation. 197 S.W.3d at 517. Justice Cooper, dissenting, highlighted potential problems with the court's holding. He stated that "[w]hen the tort plaintiff commences the tort action against the insured tortfeasor, the insurer's primary obligation is the defense of its insured." Id. at 524 (Cooper, J., dissenting). He continued: "[I]t makes no sense to say that the insurer is answerable to the tort plaintiff for the manner in which it performs its contractual duty to defend its insured against the tort action. The potential for a conflict of interest in that scenario is self-evident." Id. (Cooper, J., dissenting).

In this case it seems Progressive may have faced the conflict of interest predicted by Justice Cooper. Progressive offered to pay the $250,000 liability policy limit to Plaintiff, but owed a duty to Yonts to obtain a release of all claims against him. Kentucky law, however, does not state that Progressive's duty to Yonts must be favored over its duties to Plaintiff. Additionally, there may be additional facts which would surface during discovery. Therefore, the Court believes that the most prudent course is to deny the motion at this time.

CONCLUSION

For the foregoing reasons, IT IS HEREBY ORDERED that Defendant's Motion to Dismiss (DN 12) is DENIED.

NUNN: "Nunn's legal team in 'quandary'" from Herald Leader

This story highlights a legal issue of some interest relating to the rights of a potential claimant to a civil defendant's assets who is also a criminal defendant.  Fifth Amendment rights against self-incrimination come into play in both the civil and criminal matters; not to mention the criminal defendant's rights to his or her assets to defend the criminal matter.

Should anyone have access to the motions, briefs, orders, and other matters filed pertaining to these issues, it would be interesting for sharing with attorneys.  Email them to me in PDF, and I will post them.

Here's the story:

Nunn's legal team in 'quandary'

A Fayette Circuit judge said he needs more time and information before he can decide whether to release money from the sale of former state Rep. Steve Nunn's home in Glasgow to pay legal fees.

Judge James Ishmael also delayed a decision about whether to suspend a civil wrongful death lawsuit against Nunn until the criminal case against him is completed.

Nunn, 57, is accused of killing his former fianc e, Amanda Ross. Ross, 29, was shot to death Sept. 11 outside her townhome in downtown Lexington. Nunn pleaded not guilty Nov. 19 to charges of murder and violating an emergency protective order.

Ross's mother, Diana Ross, filed a wrongful-death lawsuit against Nunn in late September. Attorneys for Ross and Nunn were in Fayette Circuit Court Friday to discuss the lawsuit.

Friday's proceedings focused heavily on Nunn's finances, which have been the subject of recent filings in the civil lawsuit.

Lawyers: CJ Feature Story on Attorney Angela Ford and her fight for Fen Phen Victims against the Diet Drug Lawyers - Cunningham, Gallion and Mills

Here's a Courier Journal story by Andrew Wolfson featuring Angela Ford and her efforts at protecting her clients who were victimized by the Diet Drug Lawyers case:

Attorney toppled diet-drug case Goliaths Monday Sep 7, 2009

She stands only 5-foot-3 and says she weighs “just north of 100 pounds."

She has said she once was so painfully shy that the thought of speaking before a group would cause her stomach to knot and her hands to perspire. She disliked school, earning mostly Bs and Cs at Louisville's Mercy Academy, and in her first year after high school she worked as a dental hygienist.

But Angela Ford grew increasingly confident as she grew older, and went on to become the first female student government president at the University of Louisville.

And now the 51-year-old lawyer has proven herself on a much larger stage.

Taking on powerful interests, virtually by herself, the Lexington practitioner helped expose one of the biggest legal scandals in U.S. history — the theft of tens of millions of dollars from Kentuckians injured by the diet drug fen-phen.

Her five-year fight culminated last month in the sentencing of disbarred lawyers William Gallion and Shirley Cunningham Jr. to long prison terms and a court order of $127million in restitution to her 423 clients, who previously were represented by those same lawyers.

CLICK ON HEADING FOR REST OF STORY.

See the following story for a take on this story from another perspective:

Small Town Players Can Make a Big Difference

Are the blawgers getting the law right on dealership liability following the tragic fatalities involving a test drive of the Dodge Challenger from Commonwealth Dodge in Louisville?

I am saddened by the deaths of two innocent people who were killed last Sunday in Louisville when a high performance vehicle (Dodge Challenger) was speeding during a test drive.

I am also saddened by the fact that some law firms were blogging away on this story seemingly within hours regarding potential legal liability and potential wrongful death lawsuits arising from this tragedy.

However, I am also concerned that the brevity of these blawg posts may be providing incomplete legal analysis as they focus on actions of the employee of the dealer in the car at the time of the crash to the near exclusion of the applicable law.  Although I also believe these law firm blogs may be treading on dangerous or at least unchartered territory involving tragedies, disasters, advertising, and solicitation which may be inappropriate and insensitive in the least and violative of the advertising rules at the worst.  Even so, these latter points may be the topic of future posts.  Today, we will address the applicable law on the  liability of a dealership to people who get hit by during a test drive of the dealer's car with an employee accompanying the test driver. 

Kentucky law is pretty clear on the dealership's liability when the employee is in the car at the time of the accident.  In fact, just three months ago the Kentucky Supreme Court addressed legal issues pertaining to the dealer's liability for injuries to innocent third parties caused during a test drive of one of its cars when the employee salesperson was supposed to be in the car with the customer.  A close reading of this decision (footnotes!) contain a hint that the Supreme Court may be receptive to changing the law.

The Kentucky Supreme Court held in Morgan v. Scott on May 19, 2009 that the dealership did not, by adopting and then failing to follow its in-house rule requiring an employee to accompany customers on a test drive, assume a duty of ordinary care to another motorist when injured when she was hit by the dealership's car during the test drive.

However, two footnotes in this case address long-standing Kentucky law which must be addressed and considered.  Although the recent news stories about the protestations of the salesman to slow down have been questioned for potential bian and also seem to be presented in the media as a factor in severing the dealership's liability, the fact that the employee/salesman was in the car at the time of the accident is a critical element of dealer liability under the current state of the law. 

The Kentucky Supreme Court in a footnote that is clearly dicta, however did offer a hint that the issue may be revisited in another case in the future.  Consequently, the actions of the salesman in the car is not critical to the issue of liability today, but may be critical if the issue is revisited in subsequent decisions and thus must be addressed now and will most certainly be a distinguishing point should the insurance company for the dealership appeal an adverse verdict or ruling at trial.  For example, what are the salesman's obligations regarding discouraging or prohibiting the excessive speed and what affect will the law of joint venture have regarding dealership liability versus a simple bailment of property.

As the Kentucky Supreme Court noted:

It has long been the law in this Commonwealth that a vehicle's owner, such as a dealership, is not liable for injuries sustained by a third party during a test drive if the vehicle's owner or a representative of the owner, such as a salesperson, is not present in the vehicle during the test drive. On the other hand, a vehicle's owner may potentially be liable for injuries sustained by a third party if the owner or his or her representative is present during the test drive.FN5 Our holdings on those issues appear to be in accord with the general rule in these types of cases.FN6 (emphasis added).

The footnotes explain the issues further:

FN5. See, e.g., Wayne's Adm'x v. Woods, 275 Ky. 477, 121 S.W.2d 957 (1938) (“In Wilhelmi v. Berns, 274 Ky. 618, 119 S.W.2d 625, we held a dealer liable to a third person for injuries received where the car was being driven by a customer, accompanied by one of the dealer's salesmen. There, of course, it could with propriety be said that the car was actually within the control or custody of the salesman. The great weight of authority recognizes the liability of the dealer in such a situation. On the other hand, the authorities are unanimous, so far as we can discover, in holding that a dealer is not responsible, in the absence of a statute to the contrary, for injuries received by third persons where an automobile is loaned to a prospective purchaser, who is a competent driver, for trial. Clearly, the customer was acting for the dealer only in a restricted sense. It was not the purpose of the transaction to affect the dealer's relationship with third persons. Such benefit as might accrue to the dealer arose from the reactions of the customer himself, and not from dealings between the customer and third persons.”) (citations omitted); Johnson-Kitchens Ford Corp. v. Shifflett, 462 S.W.2d 430, 432 (Ky.1970). (emphasis added)

FN7. Although our precedent appears to be based upon the theory that a passenger may have some control over the operation of a vehicle, we recognize that, although distinguishable from the case at hand, at least one state appellate court has opined that “[i]t is unrealistic to hold, in the present day uses of motor vehicles when heavy traffic is the rule and not the exception, that the occupant of a motor vehicle has factually any control or right of control over the driving of the operator.” Gaspard v. LeMaire, 245 La. 239, 158 So.2d 149, 154 (1963). Although also distinguishable, another state court has held that the imputation of negligence to a passenger because of the driver's negligent conduct based upon a theory that the passenger had control over the vehicle is a “legal fiction....” Watson v. Regional Transportation District, 762 P.2d 133, 138 (Colo.1988).

Also, an argument could be made that holding an automobile dealer liable for injuries resulting from a test drive only where the dealer had an employee present during the test drive could serve as a disincentive for dealers to have an employee accompany prospective purchasers on test drives. Such a diminution in the number of dealer-accompanied test drives would not appear to have the socially desirable goal of furthering public safety, since implicit in the theory that a dealer should only be liable when it has a representative present is an assumption that test drivers will operate vehicles more carefully when a representative of the dealer is present (based upon the now-disputed belief that the dealer's representative would have at least some theoretical control over the test driver's operation of the vehicle).

So, in a proper case, we perhaps should re-examine our earlier holdings pinning liability on a car dealer or other vehicle owner for injuries occurring during a test drive only if a representative of the dealer or other vehicle owner is physically present in the car during the test drive. But we need not explore further that interesting issue in this opinion because the Scotts have not challenged our holdings in this area, many of which are based upon bailment doctrine. (emphasis added).

In the rush to get a post out during the early days following this accident, the legal analysis by some may have fallen short by ignoring a Supreme Court decision so recent as three months ago containing cues and clues for potential changes in the law and portents of what may come.

As most lawyers know, this is extremely complicated as there are potential punitive damages against the driver and/or the dealership depending on the actions of the salesmen in the car and/or by permitting a prospective purchaser who was charged with speeding in 2005, which was amended to careless driving, but has no criminal history in Louisville to get behind the wheel of a "muscle" car.

Insurance coverage issues relative to limits of liability, exclusions for certain acts may come into play under the commercial general liability policy.  Potential sources of insurance coverage include liability policy on the driver, the commercial general liability or garage policy of the dealer; underinsured motorist benefits and personal injury protection benefits  for those who died.

Two other topics come into play for a later post or posts. 

Firstly, what is the legal propriety of a law firm blogging in its firm's web site or a blog closely associated with or "mirroring" its web site on recent s,news stories involving potential cases.  The lines  between solicitation, advertising, commercial speech, and public speech and public commentary might need some clarification by the Kentucky Bar Association as the number of law blogs increase with little or no specific guidance beyond controlling commercial solicitation and advertising.  In fact, my post may even come under their scrutiny in spite of my contention that this is a legal publication for lawyers.

Secondly, is there much difference between posts on tragedies in the news and the 30 day window prohibiting certain advertisements and solicitations following "disasters" such as what followed the Conair Crash at Lexington?  The use of an embedded web page law blog (or even one that is not part and parcel of the site but closely associated with the firm's web site) to discuss recent accidents and potential lawsuits sounds like another area that the Bar Association may need to also address. 

Here are some links to the stories in the Courier Journal. 

Car involved in fatal crash was on test drive from auto dealership Sunday Aug 23, 2009

Driver topped 100 mph in fatal collision, police report Monday Aug 24, 2009

Dealer says driver told to slow down Tuesday Aug 25, 2009

Insurance: NY Health insurer fined for promising "peace of mind" for just 5 bucks a day

Could this mark a trend in insurance advertising?  Promising security and peace of mind seems to be a common advertising spiel of insurance companies while overlooking the cancellations and the uncommon exclusions of coverage which negate that promise or assurance.

N.Y. fines health insurer for 'misleading' TV ads

A health insurer whose TV commercials promised "peace of mind" for just $5 a day must stop running the national ads and pay a fine . . . .

Now would this extend to other states and other insurer's advertising claims?  Or does the law of bad faith and unfair claims settlement practices already hold Kentucky insurers to a fiduciary duty in dealing with their insureds?

• Like a good neighbor, will they be there or just a bad neighbor who never cleans his/her yard?
• Are you really in good hands or does it feel like boxing gloves?
• Will they always be on your side? Or will it just be a push aside?
• Do you really sleep better knowing  your insurer says insurance is a promise of safety, security and peace of mind?
• Do you really want a company as responsible as you are or would you rather it be more responsible?
• And by golly are they really there when YOU need them most or just when the premium is due?

In any event, there is sales puffing and there are promises made.  Some of these promises not only must be kept, but enforced with a duty and responsibility commensurate with the claim being made to attract that customer and that premium dollar.