Thompson v. Sherwin Williams Company Inc., Ky., 113 S.W.3d 140 (2003)—Damages
Plaintiff’s vehicle was rear-ended by a van owned by defendant, Sherwin Williams Company. After the second trial the jury apportioned 70% fault against Sherwin Williams and 30% fault against a co-defendant. Judgment was entered in favor of plaintiffs for the full amount. Sherwin Williams appealed. The Court of Appeals vacated the portion of the plaintiff’s judgment in the amount of $75,000 for future pain and suffering. During discovery, Sherwin Williams served upon plaintiff a set of interrogatories under C.R. §8.01(2) that requested plaintiff state each item of damage claimed in the action and the exact amount “you believe you are entitled to recover,” and “describe in detail how you calculate such amounts.” Plaintiff responded, in relevant part, as follows: “1) Personal and permanent injuries—$150,000.00; 2) Pain and suffering—$100,000.00.” The Supreme Court had to decide whether the Court of Appeals erred in concluding plaintiff’s discovery response did not comply with C.R. 8.01(2) and precluded an instruction on future pain and suffering because the plaintiff’s interrogatory response did not specify a claim for that “category” of unliquidated damages. The Supreme Court held under the circumstances plaintiff’s disclosure was sufficient and reinstated the trial court’s decision permitting the award for future pain and suffering.
Phelps v. Louisville Water Co., Ky., 103 S.W.3d 46 (2003)—Punitive Damages
The estates of two motorists killed when their car crashed into a flatbed trailer parked at a waterworks corporation work site on a closed road brought a civil action against the corporation, seeking compensatory and punitive damages. At trial, evidence showed the corporation changed the original detour route without notifying proper entities, implemented no traffic control plan, provided no advance warning signs, placed improper barricades in the work zone, and left only 90 feet of buffer zone between barricades and the trailer which required 220 feet. At trial, plaintiffs were awarded compensatory damages in the amount of $176,361.64 and $2 million in punitive damages. The Court of Appeals reversed the punitive damages award, but the Kentucky Supreme Court, upon discretionary review, held the award did not violate due process. The Supreme Court held the trial court correctly instructed the jury that punitive damages may be awarded upon merely a showing of gross negligence and this award was not excessive under the circumstances. When considering the constitutionality of a punitive damages award, the court is required to conduct a de novo review of the trial court’s award and analyze the following factors: 1) the degree or reprehensibility of the defendant’s conduct; 2) the disparity between the harm suffered by the plaintiff and the amount of the punitive damages award; and 3) the difference between the punitive damages and the civil penalties authorized or imposed in comparable cases.
Brewer v. National Indemnity Co., Ky., 163 S.W. 3d 885 (2005) - Settlement of Claims
This case presents a certified question from the United State Court of Appeals for the Fourth Circuit. The question pending before the Supreme Court was whether a fiduciary may maintain an action against an insurer for negligently underinsuring its insured, where the fiduciary, the insurer, and the insured have executed an agreement in which: (1) the fiduciary settled a wrongful death claim against the insured for the maximum limit of the insurance policy, which the insurer agreed to pay to the fiduciary in consideration for the insured’s release; (2) the insured assigned to the fiduciary the right to pursue its claim that the insurer negligently underinsured its insured; and (3) the insurer agreed to litigate with the fiduciary the claim that it negligently underinsured its insured. Brewer, National Indemnity, and the Maynards entered into a partial settlement agreement in a wrongful death case. National Indemnity agreed to pay Brewer the policy limits of $100,000.00 in exchange for a release of its insured, the Maynards. National Indemnity agreed to litigate the coverage claim with Brewer and the Maynards assigned to Brewer their rights and claims for indemnification under the policy against National Indemnity as well as all rights and claims against National Indemnity for extra-contractual, statutory or common law liability arising out of the coverage claim. The Supreme Court ultimately concluded that National Indemnity was a party to the agreement including the section that assigned all rights and causes of action that the Maynards possessed at the time of the assignment. The court stated under the circumstances the parties understood the agreement to assign the Maynards’ rights and causes of action to Brewer. The court held National Indemnity agreed to the assignment and in return secured a release in favor of its insured and eliminated the possibility of a bad faith claim from its insured or the plaintiff. The Supreme Court held under the facts presented Kentucky law allows a fiduciary to proceed against an insurer pursuant to the bargained for agreement entered into by the parties.
Coomer v. Phelps, Ky., 172 S.W. 3d 389 (2005) – Settlement
Coomer was injured when her left knee was struck by Phelps’ car. Coomer was treated and released from the emergency room and diagnosed with a bruised knee. The next day a representative of Progressive (Phelps’ insurance company) contacted Coomer and negotiated a $500.00 settlement in exchange for a release. One week later Coomer learned the physician who treated her had misdiagnosed her injury as a bruised knee when in fact her leg had been fractured. She sued Phelps and later she sued Progressive, claiming the company engaged in bad faith during the settlement of her claim.
Coomer argued the release should be ignored under the doctrine of mutual mistake. The Supreme Court noted existing Kentucky law holds a mutual mistake between parties to a release as to the “nature and extent of the plaintiff’s injuries” is insufficient grounds on which to invalidate a general release. The court stated to retreat from this rule would cast great doubt on the finality of releases in this state and unnecessarily complicate settlement considerations. The Supreme Court held absent fraud, incapacity, or other compelling evidence of wrongdoing, an injured party who executes a release of claims is bound by the terms of that release. Coomer also argued the doctrine of constructive fraud should also apply to invalidate her release. The Supreme Court rejected this argument finding Coomer failed to identify a legal duty that either Phelps or Progressive can be said to have violated and noting the case upon which Coomer relied is limited to workers compensation cases. Finally, Coomer alleges the release was ineffective due to her mental incapacity at the time it was executed. Coomer alleged she was prescribed and took more than the recommended dose of a narcotic pain reliever and does not remember reading or executing the release. The Supreme Court found she failed to establish a genuine issue of material fact as to her competence to execute the release.
As for Coomer’s bad faith claim, she alleged the insurer violated the UCSPA by failing to fully investigate the merits of her claim and by providing a settlement that was not “fair and equitable.” The Supreme Court held that while KRS 304.12-203 (4) prohibits any refusal to pay a claim without first conducting a reasonable investigation, no such obligation arises for an insurer that has agreed to the payment demands of an injured party. The court noted such a duty to “double check” the basis of third party claims would significantly and erroneously broaden an insurer’s obligation of good faith as set forth in the statute. Regarding the fairness of the settlement, the Supreme Court also found Coomer’s argument without merit. The court stated the statute only requires that an insurer make a good faith attempt to settle any claim, for which liability is beyond dispute, for a reasonable amount. The Supreme Court stated there was no question of liability, settlement actually occurred within one day of the accident, and Coomer had admitted the settlement was “fair” in light of the information known at the time.
Baptist Healthcare Systems v. Miller, Ky., 177 S.W. 3d 676 (2005) - Collateral Source Payments
Miller went to Central Baptist Hospital to have her blood drawn upon the doctor’s orders. The phlebotomist placed a tourniquet on Miller’s arm and left her without supervision for approximately 10 minutes, returning to find her arm swollen. Ms. Miller was 80 years old and experienced medical complications including nerve problems she claims resulted from the incident. Miller brought a negligence action against Central Baptist. Central Baptist argued the trial court should have granted a directed verdict on the issue of Ms. Miller’s medical expenses. Central Baptist sought to limit Ms. Miller’s recovery to the amount actually paid or the amount actually collectable as a matter of law. It asserts that this is not a collateral source issue, but the amount of alleged damages for which there is no obligation to pay is not a valid item to be submitted to the jury and awarded as damages. The jury awarded Ms. Miller $34,000.00 for medical expenses reduced to $22,100.00 by a 35 percent fault apportionment. She had sought $40,922.08 in medical expenses. $31,840.00 was billed by the doctor, but he received only $3,356.38 from Medicare. Central Baptist claims that Ms. Miller was only responsible for paying $3,356.38 (the amount actually paid by Medicare), and the remaining $28,483.80 was classified as a Medicare adjustment or Medicare write off. Central Baptist alleged that the Medicare adjustment was Ms. Miller’s windfall. The Supreme Court held Medicare benefits are governed by the collateral source rule and are treated the same as other types of medical insurance. The Supreme Court held evidence of collateral source payments or contractual allowances was properly withheld from the jury and Ms. Miller’s award of medical expenses was proper.
