HON. RON CHRISTOPHER, Director of SPECIAL FUND v. BILL SMITH, deceased; SALLY SMITH, widow; WOLF CREEK COLLIERIES; HON. DONNA H. TERRY, Chief Administrative Law Judge; and KENTUCKY WORKERS' COMPENSATION BOARD
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RENDERED: November 25, 1998; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-001306-WC
HON. RON CHRISTOPHER,
Director of SPECIAL FUND
v.
APPELLANT
PETITION FOR REVIEW OF A DECISION
OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-84-001497
BILL SMITH, deceased; SALLY SMITH, widow;
WOLF CREEK COLLIERIES; HON. DONNA H. TERRY,
Chief Administrative Law Judge; and KENTUCKY
WORKERS’ COMPENSATION BOARD
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
COMBS, JOHNSON, and MILLER, Judges.
COMBS, JUDGE: The Special Fund petitions for review of a decision
of the Workers’ Compensation Board (the Board) affirming the
decision of the Chief Administrative Law Judge (CALJ), which held
that Sally Estepp Smith (Smith), the widow of William B. Smith
(Bill), is entitled to the continuation of workers’ compensation
benefits previously awarded to Bill pursuant to Kentucky Revised
Statutes (KRS) 342.730.
We affirm.
Sally Smith was married to Bill in 1954.
work life was spent in the mining industry.
His entire
He was injured in
1984 while employed by Wolf Creek Collieries in Lovely, Kentucky.
In December 1986, Bill was determined to be totally
occupationally disabled and was awarded benefits, which were
apportioned 71.43% to his employer and 28.57% to the Special
Fund.
On January 10, 1995, Bill died of congestive heart failure
— a condition unconnected to his work-related injury.
Mrs. Smith, who was represented by the same attorney
who had represented her husband in the original workers’
compensation proceeding, moved to be substituted as a party as
Bill’s widow on July 16, 1996 — some eighteen months after Bill’s
death.
The petition was overruled “with leave to reinstate” at
such a time as her motion was accompanied by necessary
documentation (i.e., a copy of Bill’s death certificate and a
copy of their marriage certificate).
Accordingly, on September
3, 1996, she filed a renewed motion to substitute party.
Wolf
Creek responded on September 9, 1996, stating that it had no
objection to the substitution of Sally Smith for the purpose of
receiving the continuation of benefits.
A notice of representation was filed by counsel for the
Special Fund on September 25.
On October 22, 1996, the Special
Fund filed a special answer in which it asserted that the oneyear statute of limitations contained in KRS 395.278 was a
“complete and total defense for the widow’s claim for
continuation of benefits.”
In her response to that special
answer, Smith’s attorney outlined the following steps that he had
taken in representing Smith in this matter:
3) That on or about January 23, 1995, a
letter was sent to Wolf-Creek Collieries
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regarding benefits Mrs. Smith would be
entitled to as a result of her husband’s
death . . . .
4) That on or about February 3, 1995, we
received a letter from Wolf-Creek Collieries
. . . advising us to contact Ms. Molin.
Thereafter, we made numerous attempts to
contact Ms. Molin by telephone and, in fact,
we even faxed several letters to her before
we finally received a response from anyone
regarding these benefits.
5) That we wrote a letter to the Employers
Service Corporation on or about June 27,
1996, to obtain the status of the Plaintiff’s
claim and finally about the first of July we
were contacted by telephone and advised that
it would be necessary for us to have Mrs.
Smith substituted as the Plaintiff in this
action.
6) That immediately after we were advised
that it would be necessary to have Mrs. Smith
substituted as the Plaintiff in this action,
we did so. Although we had been attempting
to obtain these benefits for Mrs. Smith since
January, 1995, right after her husband’s
death, it wasn’t until July, 1996, that we
were advised that it would be necessary to
have her substituted in order for her to
receive these benefits.
In her order of January 21, 1997, the CALJ found that
Smith had “attempted on numerous occasions to contact appropriate
personnel for the defendant-employer” regarding her benefits and
that the employer’s failure to “respond in a timely fashion . . .
prevent[ed] Sally Smith from moving to be substituted as a party
plaintiff within the statutory period.”
The CALJ overruled the
Special Fund’s special answer and ordered the continuation of
benefits to Smith.
Appealing to the Board, the Special Fund relied on Hammons
v. Tremco, Inc., Ky., 887 S.W.2d 336 (1994), which held as
follows:
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Therefore, when considered together, KRS
395.278 and CR 25.01(1) require that when a
plaintiff dies any action pending on the part
of the deceased plaintiff must be revived by
the decedent’s successor or personal
representative within one year, and the
successor or personal representative must be
substituted as the real party in interest.
Although an opposing party may, by its
action, lose the right to require the timely
revival of an action, a party cannot, by such
action, confer personal jurisdiction over a
successor or personal representative who has
not appeared or been substituted as a party.
Mitchell v. Money, [Ky. App., 602 S.W.2d 687
(1980)]. Likewise, jurisdiction could not be
conferred over dependents who had not
asserted their rights to survivors’ benefits
and moved to be substituted as parties to the
action.
(Emphasis added.)
Id. at 338.
In its opinion, the Board recognized the implications of KRS
395.278 and Hammons v. Tremco, Inc., supra.
It also alluded to
the “difficult situation” in attempting to estop the Special Fund
from asserting a defense because of the employer’s actions since
its liability is no longer derivative.
The Board noted that
while it did “not necessarily agree with the basis for the CALJ’s
opinion," it was nonetheless affirming her decision because the
Special Fund had failed to comply with the directives of 803 KAR
25:010 § (8), which states in pertinent part as follows:
‘Special defenses’ means defenses that shall
be raised by ‘special answer’ filed within
twenty (20) days of the date of the
scheduling order, or within ten (10) days
after discovery of facts supporting the
defense if discovery could not have been had
earlier in the exercise of due diligence.
Special defenses are waived if not timely
raised. Special defenses which shall be
pleaded are defenses arising under:
. . .
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(g) Running of periods of limitations or
repose under KRS 342.185, 342.270, 342.316,
or any other applicable statute.
(Emphasis added.)
In a split decision, the majority of the Board ruled that
the Special Fund had waived the defense and stated as follows:
Here, the renewed motion to substitute Smith
as the widow of Bill Smith was filed with the
Department of Workers[’] Claims on September
3, 1996[,] and served upon the S[pecial]
F[und] on or about that date. The S[pecial]
F[und] filed a notice of representation of
September 25, 1996. The renewed motion to
substitute contained more than sufficient
information upon which the S[pecial] F[und]
could and should have asserted the special
defense but the defense was not actually
raised by them until October 22, 1996. The
failure to raise this special defense
constitutes a legal waiver.
(Emphasis added.)
Chairman Abell dissented, citing Schultz v.
Schultz, Ky., 332 S.W.2d 253 (1960), and Caldwell v. Bethlehem
Mines Corporation, Ky., 455 S.W.2d 67 (1970), and stating that
the statute of limitations contained in KRS 395.278 was
“jurisdictional and therefore need not be pled by a special
answer.”
On appeal, the Special Fund argues correctly that since
its liability is no longer derivative of that of the employer, it
is not bound by Wolf Creek’s waiver.
Yet the Special Fund has a
procedural problem of its own: the filing of its special answer
out of time.
803 KAR 25:010 § (8) provides for waiver of any
special defense not timely raised, specifically defining a
special defense to include any applicable statute of limitations.
The Special Fund seeks to cure its unquestionable
waiver by a bootstrapping argument in the alternative that since
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Smith did not object to the belated filing of the special answer
and since the CALJ did not address it, the issue was tried by
implied consent.
CR 15.02 and Collins v. Castleton Farms, Inc.,
Ky. App., 560 S.W.2d 830 (1978).
We disagree.
The CALJ decided the case on other grounds.
We cannot
agree that her failure to address the untimeliness of the Special
Fund’s filing clothed it with a special status capable of curing
its own omission by implication.
Such an interpretation is
convoluted to the point of becoming ludicrous.
We agree with both the Board and the CALJ, each of whom
found in favor of Mrs. Smith -- but for different reasons,
respectively.
In a procedurally-oriented approach, the Board
cited the waiver of the Special Fund as the flaw fatal to its
position.
In a substantive/equitable analysis, the CALJ looked
at the numerous efforts of Mrs. Smith to contact the employer and
cited the employer’s failure to respond as the real impediment to
timely substitution of Sally Smith as a party, impliedly relying
on the relative equities of the situation to uphold Smith’s right
to continuation of benefits.
The last argument to be addressed is the Special Fund’s
insistence that Hammons v. Tremco, supra, amounts to an absolute
jurisdictional bar to Sally Smith.
We disagree and hold that its
reliance is misplaced since Hammons is highly distinguishable
factually.
The Supreme Court in Hammons employed mandatory
language in dismissing an action to substitute more than a year
after the employee’s death.
Significantly, that case dealt with
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a situation in which the claim was still pending.
The claimant
died with his claim was on appeal to the Workers’ Compensation
Board, and the failure of the personal representative to move to
revive the action or to be substituted as a party within one year
proved to be a fatal flaw jurisdictionally.
Such is not the case in the matter before us.
There is
no question that Sally Smith — as Bill Smith’s widow — was
entitled to a continuation of the benefits awarded to him in
1986.
The underlying claim had long since been adjudicated
(December 1986) prior to the employee’s death in January 1995.
All rights, liabilities, and expectations had been settled
pendente lite.
There is no reason to invoke a hyper-technical
application of jurisdictional rules as to revival or survival
where the original claim is no longer pending.
This claim was at
most a matter of administrative paperwork and should not be
barred as the circumstances cited by the CALJ so clearly dictate.
Accordingly, the decision of the Board is affirmed.
MILLER, JUDGE, CONCURS.
JOHNSON, JUDGE, DISSENTS AND FILES SEPARATE OPINION.
JOHNSON, JUDGE, DISSENTING.
I respectfully dissent.
There is no question that Mrs. Smith, as Bill Smith's widow, was
entitled to a continuation of the benefits he was awarded in
1986.
However, it is also settled that in order to obtain those
benefits, Mrs. Smith was required to move to be substituted as a
party before the Board within one year of Bill's death.
See KRS
395.278; CR 25.01(1); and, Hammons v. Tremco, Inc., supra.
The
Majority attempts to distinguish Hammons on the basis that the
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claim in Hammons was pending as opposed to the fact that the
claim herein had been adjudicated.
However, it appears to me
that the Supreme Court in Hammons intended to establish a bright
line rule for revival of all workers’ compensation actions,
whether they were pending or finally adjudicated.
While the
claim by Bill Smith had been adjudicated, under our workers’
compensation laws his claim was still subject to modification
upon a reopening and Mrs. Smith was entitled to survivors
benefits if she met certain statutory requirements.
The
implication by the Majority that since Bill Smith had received an
award that Mrs. Smith had some type of vested interest in Bill’s
award is misleading.
The rights to survivor’s benefits that Mrs.
Smith had were only those rights that were statutorily provided.
As to the procedural issue, it is settled that the
limitations defense can be waived.
Indeed, CR 25.01(1)
contemplates that "the right to have the action dismissed [can
be] lost, as by waiver, estoppel, or consent."
Daniel v. Fourth
and Market, Inc., Ky., 445 S.W.2d 699, 701 (1968).
Obviously in
this case, the employer, Wolf Creek, voluntarily waived the
defense.
803 KAR 25:010 (8) plainly provides for waiver of any
special defense not timely raised, the regulation plainly defines
a special defense to include any applicable statute of
limitations, and the Special Fund plainly filed its special
answer out of time.
For these reasons, I would not hesitate to
affirm the Board's determination that the defense was waived had
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Mrs. Smith objected to the untimely assertion of the defense by
the Special Fund.
However, Mrs. Smith did not object to the untimely
special answer.
Its untimeliness was not addressed by the CALJ.
Accordingly, the issue was tried by implied consent.
See CR
15.02; and Collins v. Castleton Farms, Inc., Ky. App., 560 S.W.2d
830, 831 (1978).
Clearly, there was absolutely no allegation,
much less any evidence before the CALJ, that the Special Fund did
anything that would estop it from asserting the statute of
limitations defense.
The CALJ did not make any findings that the
Special Fund misled Mrs. Smith or in any way prevented Mrs. Smith
from timely filing her motion for substitution.
Essentially, the
CALJ held that the Special Fund was estopped from asserting the
issue solely because of the inaction of Wolf Creek in answering
inquiries made by Mrs. Smith's attorney.
I know of no authority
that would allow estoppel to be transferred or imputed to the
Special Fund in this regard.
Mrs. Smith, who has not filed a
brief in this Court, has not alleged the existence of any such
authority.
I hope the Supreme Court will clarify the scope of its
holding in Hammons and publish its decision in the case sub
judice to give more guidance in this area of the law.
BRIEF FOR APPELLANT:
NO BRIEF FILED FOR APPELLEES
Judith K. Bartholomew
Louisville, KY
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