ROBERT WILEY v. MARK ADAMS, and Additional Appellees as Named on a List Attached to the Notice of Appeal
Annotate this Case
Download PDF
RENDERED:
October 15, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-001493-MR
ROBERT WILEY
APPELLANT
APPEAL FROM KNOX CIRCUIT COURT
HONORABLE RODERICK MESSER, JUDGE
ACTION NO. 90-CI-00440
v.
MARK ADAMS, and Additional
Appellees as Named on a
List Attached to the
Notice of Appeal
APPELLEES
OPINION
AFFIRMING
* * * * * * * * * *
BEFORE:
GUDGEL, CHIEF JUDGE; BUCKINGHAM, and KNOX, Judges.
BUCKINGHAM, JUDGE.
Robert G. Wiley appeals from a judgment of
the Knox Circuit Court awarding $2,188,950.00 damages in a class
action suit.
Finding no error, we affirm.
On October 17, 1990, a number of former students
(“appellees”) of Excel College (“College”), a proprietary
business college in Corbin, Kentucky, filed suit against the
College, a Kentucky corporation, and Wiley, its “defacto [sic]
manager.”
The appellees alleged that the college and Wiley
committed fraud by inducing them to enroll in the College with
false promises, by causing misleading advertisements to be placed
in the newspapers, by indicating that the appellees’ credits
could be transferred to other colleges and universities, by
arranging government-sponsored federally insured loans, and by
otherwise defrauding them.
The appellees contended that they
were entitled to recover compensatory damages for lost tuition,
damages for lost educational opportunities including delay of
entry into the labor market, and punitive damages.
The appellees were later permitted to amend their
complaint to name Huntington Federal Savings and Loan Association
of Huntington, West Virginia (“Huntington Federal”), as a
defendant.
The amended complaint alleged that Huntington Federal
likewise committed fraud against the appellees by continuing to
allow the College and Wiley to act as its agents in soliciting
federally insured loans from a majority of the appellees despite
its knowledge of the College’s fraudulent operations.
Wiley was initially represented by counsel, but his
attorney was allowed to withdraw from Wiley’s representation by
an order of the trial court entered on October 30, 1992.
Wiley
moved to Texas to operate another business school and did not
retain new counsel to represent him.
Because Wiley failed to
advise the court or counsel for the appellees of a new address,
efforts to locate him were unsuccessful.
The case was actively litigated between the appellees
and Huntington Federal for several years and, at one point, was
removed to federal court only to be remanded to the trial court.
Further, the trial court certified the case as a class action and
-2-
later denied a motion by Huntington Federal to decertify the
class.
On August 1, 1997, a hearing was held before the trial
court, and the trial date was rescheduled to November 17, 1997.1
On October 22, 1997, an order was entered which stated that the
trial would be bifurcated with the first phase addressing the
issue of Huntington Federal’s liability and the second phase
addressing the issues of individual reliance by the appellees and
damages.
Neither this order nor the order rescheduling the trial
date were sent to Wiley, as his whereabouts had not been
communicated to the court.
On October 13, 1997, four days before the trial date,
Wiley filed a motion and affidavit wherein he moved the trial
court to continue the trial on the grounds that he had received
no notices, pleadings, or orders in the case and that he was
unaware that the case was still pending until he was contacted in
late October by an attorney representing Huntington Federal.
trial court denied Wiley’s motion, and the case proceeded to
trial as scheduled with Wiley being absent.
On the second day of the trial, Huntington Federal
settled the appellees’ claims against it for $323,000.00.
Because Wiley did not appear for the trial, the trial court
granted judgment to the appellees on the issue of Wiley’s
liability and scheduled the damages portion of the trial for
March 9, 1998.
The damages portion of the trial was held as
1
The order rescheduling the trial date was entered on
August 26, 1997.
-3-
The
scheduled, and Wiley was present and represented by counsel.
After hearing testimony from witnesses on behalf of the parties
and after being instructed by the court, the jury awarded
compensatory damages against Wiley in the amount of $1,188,950.00
and punitive damages in the amount of $1,000,000.00, for a total
award of $2,188,950.00.
Following the entry of a judgment by the
trial court in accordance with the jury’s verdict, Wiley appealed
to this court.
Wiley’s first argument on appeal is that the trial
court erred in maintaining the case as a class action and by
specifically allowing the jury to award monetary damages to the
appellees as a class.2
He argues that “it became apparent that
there was a disparity among the class members as to the question
of damages” and that “any commonality of interest that the
Appellees may have had insofar as liability of the Appellant is
concerned breaks down when we reach the question of damages
. . . .”
Kentucky Rule of Civil Procedure (CR) 23.01 states the
prerequisites to a class action as follows:
Subject to the provisions of Rule 23.02,
one or more members of a class may sue or be
sued as representative parties on behalf of
all only if (a) the class is so numerous that
joinder of all members is impracticable, (b)
there are questions of law or fact common to
the class, (c) the claims or defenses of the
representative parties are typical of the
claims or defenses of the class, and (d) the
representative parties will fairly and
adequately protect the interests of the
class.
The relevant portion of CR 23.02 states that
2
There were over 300 individual members of the class.
-4-
[a]n action may be maintained as a class
action if the prerequisites of Rule 23.01 are
satisfied, and in addition:
. . . .
(c) the court finds that the questions of
law or fact common to the members of the
class predominate over any questions
affecting only individual members, and that a
class action is superior to other available
methods for the fair and efficient
adjudication of the controversy.
Wiley challenges only the commonality requirement for
class certification and argues that there were significant
differences among the members of the class, including their
period of time at the school, whether or not they finished the
course, whether they received Pell Grants, the amount of tuition
paid, whether they participated in the settlement with Huntington
Federal, whether they had any interest in the transfer of
credits, and whether they obtained work in a job-related field.
Wiley contends that these factors were significant in determining
the damages of the individuals who make up the class and that
placing all the individuals in one class was error.
Although CR 23.01(b) requires that there must be
questions of law or fact common to the class, it does not require
that all questions of law or fact be common.
See 6 Kurt A.
Philipps, Jr., Kentucky Practice, CR 23.01, cmt. 6, at 397 (5th
ed. 1995).
Furthermore, CR 23.02(c) requires only that the
questions of law or fact that are common to the members of the
class predominate over the questions which affect individual
members.
In short, as each member of the class was a former
student of the College who claimed to have been the victim of
-5-
fraud, we conclude that the trial court did not err by
maintaining this case as a class action.
“It is not necessary
that there be a complete identity of facts relating to all class
members, as long as there is a common nucleus of operative
facts.”
Id. at 416.3
Wiley’s second argument is that the trial court erred
in requiring him to proceed to trial on the issue of liability
when the trial court’s order specifically stated that the first
phase of the trial would involve only the liability of Huntington
Federal.
He also claims that he had insufficient notice of the
trial date and that the trial court should have granted his
motion for a continuance.
CR 40 provides that “no case shall be
assigned for trial without giving reasonable notice to all
parties not in default of the day on which a trial date will be
fixed.”
The uncontroverted truth in this regard is that Wiley’s
attorney withdrew from representation of Wiley, that Wiley did
not retain another attorney to represent him in these
proceedings, that Wiley moved to Texas and did not make the court
or opposing counsel aware of his location or his new address, and
that Wiley made no effort to otherwise defend himself in these
3
We question whether Wiley has preserved any error in this
regard, since he neither objected to the motion to certify the
class nor joined in Huntington Federal’s motion to decertify the
class. He does not state in his brief where he preserved this
error for our review as required by CR 76.12(4)(c)(iv), other
than stating that he objected to the jury being instructed as a
single class during the damages trial. See Broaddus v. Campbell,
Ky. App., 911 S.W.2d 281, 283 (1995). However, as we have
reviewed Wiley’s argument on the merits and have rejected it, we
will not address this issue.
-6-
proceedings from October 1992 until four days before trial.
“[I]t is a familiar rule that parties litigant, once in court,
either for themselves or through their attorneys, must keep track
of their cases and take notice of the time of trial when the date
has been fixed according to rules.”
S.W.2d 908, 910 (1960).
Burns v. Brewster, Ky., 338
Neither the trial court nor opposing
counsel can be blamed for Wiley’s failure to defend himself at
trial.
“The decision whether to grant or to deny a motion for
continuance lies within the sound discretion of the trial court.”
Kentucky Farm Bureau Mut. Ins. Co. v. Burton, Ky. App., 922
S.W.2d 385, 388 (1996).
We conclude that the trial court did not
abuse its discretion in denying Wiley’s motion for a continuance.
Wiley’s third argument is that the trial court erred by
failing to grant a directed verdict due to the appellees’ failure
to produce competent evidence showing their damages.
The trial
court instructed the jury to award damages to the appellees based
on “the difference in the tuition paid by them and the value of
the education they received and thereby place them in the same
position they would have been had they not been defrauded.”
While Wiley himself testified that tuition at the College for a
full year ranged from $4,500.00 to $5,400.00, he maintains that
the appellees failed to offer evidence of the cost of the
education for which they had paid and the value of the education
they actually received.
He further argues that the appellees
presented no evidence showing the amount of tuition paid by each
of the class members and the amount of tuition for a course of
-7-
less than a full year.
In short, Wiley argues that the trial
court allowed the jury to speculate concerning damages.
In Johnson v. Cormney, Ky. App., 596 S.W.2d 23, 27
(1980), overruled on other grounds by Marshall v. City of
Paducah, Ky. App., 618 S.W.2d 433 (1981), this court held as
follows:
As a general rule, the measure of damages for
fraud is the actual pecuniary loss sustained,
and one injured by the commission of fraud is
entitled to recover such damages in a tort
action as would place him in the same
position as he would have occupied had he not
been defrauded.
However, “[w]here it is reasonably certain that damage has
resulted, mere uncertainty as to the amount does not preclude
one’s right of recovery or prevent a jury decision awarding
damages.”
Id.
As Wiley testified concerning the cost of
tuition, and as the jury heard testimony from representatives of
the class concerning the benefits or value they received from
their education at the College, we conclude that the uncertainty
as to the exact amount does not preclude the appellees’ recovery
of damages in this class action suit.
Wiley’s fourth argument is that the trial court erred
in allowing the jury to award punitive damages, as this was a
breach of contract case and not a fraud case.
He cites Kentucky
Revised Statute (KRS) 411.184(4) which states that “in no case
shall punitive damages be awarded for breach of contract.”
We
first note that it had already been determined prior to the
damages phase of the trial that Wiley had engaged in fraudulent
conduct and was liable to the appellees; thus, this is a fraud
-8-
case.
Furthermore, punitive damages are allowed where a party
has been induced by fraud to enter into a contract.
Hanson v.
American Nat’l Bank & Trust Co., Ky., 865 S.W.2d 302, 306 (1993).
The trial court properly submitted the issue of punitive damages
to the jury.
For the foregoing reasons, the judgment of the Knox
Circuit Court is affirmed.
KNOX, JUDGE, CONCURS.
GUDGEL, CHIEF JUDGE, CONCURS IN RESULT ONLY.
BRIEF AND ORAL ARGUMENT FOR
APPELLANT:
BRIEF FOR APPELLEES:
John David Preston
Paintsville, KY
Debra Hembree Lambert
David H. Steele
Mt. Vernon, KY
Ned Pillersdorf
Prestonsburg, KY
ORAL ARGUMENT FOR APPELLEES:
Joseph Lane
Prestonsburg, KY
-9-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
