KARL G. BERGKLINT v. FIFTH THIRD BANK OF KENTUCKY
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RENDERED: December 10, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-001861-MR
KARL G. BERGKLINT
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE F. CONLIFFE, JUDGE
ACTION NO. 95-CI-04898
v.
FIFTH THIRD BANK OF KENTUCKY
APPELLEE
OPINION
AFFIRMING IN PART - REVERSING IN PART AND REMANDING
** ** ** ** **
BEFORE:
COMBS, EMBERTON AND GUIDUGLI, JUDGES.
GUIDUGLI, JUDGE.
Karl G. Bergklint (Bergklint) appeals an order
of the Jefferson Circuit Court entered on June 25, 1998, granting
summary judgment in favor of The Fifth Third Bank of Kentucky,
Inc. (Fifth Third) on his wage and hour claim arising under KRS
337.385 and on his claim of fraud.
We affirm in part and reverse
in part and remand.
Bergklint began working for the Cumberland Federal
Savings Bank (Cumberland) on January 29, 1982, as a financial
analyst.
He worked for Cumberland for the next twelve years
until he was terminated on September 1, 1994.
In December of
1993, prior to his termination, Fifth Third began merger talks
with Cumberland.
with Fifth Third.
On or about August 27, 1994, Cumberland merged
Bergklint claims that despite repeated
assurances that he would "be kept on," Fifth Third terminated his
employment on September 1, 1994.
Bergklint claims that throughout 1994, Fifth Third
management personnel assured him that his employment would
continue with Fifth Third following the merger.
Although
Bergklint was an at-will employee, he signed an employment
agreement with Fifth Third on July 26, 1994, wherein Fifth Third
agreed not to terminate his employment prior to publication of
financial results covering at least thirty days of post-merger
operations.
Bergklint contends the publication date of the post-
merger operations report was October 14, 1994.
Fifth Third paid
Bergklint only through October 10, 1994, the date they alleged to
be the publication date.
In addition, Fifth Third paid Bergklint
$25,089.00 in severance pay.
Bergklint never contacted Fifth
Third regarding the additional week’s pay of $1,325.00 owed to
him.
During the merger talks, Bergklint was one of forty-two
applicants for a position as Chief Financial Officer of the
Oldham County Public Schools, a position that paid approximately
$50,000.00 per year.
After the initial screening process,
Bergklint remained as one of five and eventually one of three
candidates for the position.
However, Bergklint later removed
himself from consideration for the position, informing the Oldham
County Department of Education (OCDE) that he planned to stay at
Fifth Third.
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On August 31, 1995, Bergklint filed a complaint in the
Jefferson Circuit Court alleging fraud.
His claim for fraud
sought damages based upon his lost salary with the OCDE.
On May
29, 1996, Bergklint filed his First Amended Complaint, adding
claims against Fifth Third for a violation of KRS 337.385 and
breach of contract.
Prior to filing the amended complaint,
Bergklint did not seek a hearing through the Labor Cabinet
regarding his claim under KRS 337.385.
Under his statutory
violation claim, Bergklint sought $2,385.00 for unpaid
compensation, the same amount as liquidated damages and
reasonable costs and attorney's fees.
Under his breach of
contract claim, Bergklint sought $1,325.00 in unpaid severance
benefits.
After a lengthy discovery period, both parties moved
the trial court for summary judgment.
On June 25, 1998, the
trial court granted summary judgment in favor of Bergklint on his
claim of breach of contract and awarded Bergklint $1,325.00.
However, with regard to the wage and hour claim under KRS 337.385
and the claim of fraud, the trial court granted summary judgment
in favor of Fifth Third.
The trial court held that pursuant to
KRS 337.310(1), it did not have original jurisdiction to hear the
wage and hour claim made under KRS 337.385.
The trial court
found that original jurisdiction for a wage and hour claim under
KRS 337.385 lies with the Labor Cabinet.
Further, with regard to
fraud, the trial court held that Bergklint's claim for damages
was merely speculative and that he could not prove actual
damages.
This appeal followed. On September 14, 1998, and
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October 27, 1998, Fifth Third tendered three checks to Bergklint
totaling $2,650.00: $1,325.00 representing the amount owed to
Bergklint for one week's severance pay and an additional
$1,325.00 for five days pay between October 10, 1994, and October
14, 1994.
Bergklint raises two issues on appeal.
First,
Bergklint argues that the trial court did in fact have original
jurisdiction to hear his claim under KRS 337.385.
Second,
Bergklint argues that the damages under his claim for fraud were
not speculative.
Fifth Third argues that Bergklint's claim under
KRS 337.385 is moot because it has paid the additional week's pay
to Bergklint.
Moreover, Fifth Third argues that the trial court
appropriately granted summary judgment in its favor with regard
to this claim because Bergklint did not exhaust applicable
administrative procedures as required by law.
Finally, Fifth
Third argues that Bergklint did not establish the elements of
fraud and, specifically, that his claim for damages was
speculative thus barring recovery for fraud.
Bergklint claims that he is entitled to recover actual
damages, liquidated damages and reasonable costs and attorney's
fees associated with Fifth Third's failure to pay him one week's
salary from October 10, 1994, through October 14, 1994, as
contracted.
As such, he filed an original action in circuit
court but without first pursuing administrative remedies.
However, pursuant to KRS 337.310(1), claimants must generally
exhaust all administrative remedies for violations of KRS 337.020
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to 337.405 prior to seeking redress in circuit court.
Specifically, KRS 337.310(1) states:
All questions of fact arising under KRS
337.020 to 337.405 except as provided in this
section, shall be decided by the secretary.
There shall be no appeal from the decision of
the secretary on any question of fact, but
there shall be a right of review by the
circuit court. . . .1
In interpreting KRS 337.310, we held in Early v.
Campbell County Fiscal Court, Ky.App., 690 S.W.2d 398, 399
(1985), that while the circuit court "is a court of competent
jurisdiction [to hear wage and hour claims] . . . it is not one
of original jurisdiction."
We revisited the issue of a circuit
court's jurisdiction to address wage and hour issues in Noel v.
Season-Sash Inc., Ky.App., 722 S.W.2d 901 (1987), where we
significantly clarified the Early decision.
In Noel we held that
where a claim for earned but unpaid wages stems from the breach
of a written contract, a claimant is not required to exhaust
administrative remedies prior to filing an action in circuit
court.
Distinguishing between claims that arise by virtue of the
wage and hour statutes and claims that arise by virtue of a
written contract, we held:
[I]n those instances where an employee
alleges he is not receiving the benefits
mandated by the wage and hour chapter, we
find no defect in KRS 337.310(1) which
requires that he take such a claim to the
Commissioner of Labor for a hearing and
resolution, subject, of course, to
appropriate judicial review. However, where,
1
This statute was amended in 1996 by the Kentucky General
Assembly. However, Bergklint filed this action in August of
1995, prior to the amendment. Therefore, we rely on the former
language of KRS 337.310 in this decision.
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as in the instant case, an employer and
employee have contracted for certain wages
and benefits, a claim for wages arising from
that contract is clearly a matter for which
jurisdiction is vested in our trial courts.
Id. at 902 (emphasis in the original).
In the case sub judice, Bergklint claims that Fifth
Third failed to pay him a week’s salary to which he was entitled
by virtue of a written contract.
As we held in Noel, the fact
that:
he made reference to certain sections of KRS
337 in his complaint did not otherwise
destroy the underpinnings of his claim.
Furthermore, we believe it appropriate for
the appellant to have mentioned these
statutory provisions in order to recover
double damages, costs and attorney's fees as
provided for in KRS 337.385. That one can
recover these damages in state court actions
for breach of contract in wage-related cases
was [decided in]... Healthcare of Louisville
v. Kiesel, Ky. App. 715 S.W.2d 246 (1986)....
Id. at 903.
We agree with Bergklint that his claim for
additional wages is based upon a written contract with Fifth
Third.
As such, the trial court had original jurisdiction to
hear Bergklint's wage and hour claim and award damages pursuant
to KRS 337.385.
Fifth Third argues that Bergklint's claim pursuant to
KRS 337.385 is moot because it paid Bergklint $1,325.00 in actual
damages after the trial court granted summary judgment.
However,
Bergklint sought liquidated damages and reasonable costs and
attorney's fees as well in his complaint and again raised the
issue in this appeal.
The trial court below did not consider the
issue of liquidated damages and costs and attorney's fees because
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it incorrectly held that it lacked jurisdiction to hear the wage
and hour claim pursuant to KRS 337.385.
In light of our finding
that original jurisdiction lies with the trial court in wage and
hour claims pursuant to KRS 337.385, which are based upon breach
of contract, we must reverse the trial court's decision to grant
summary judgment in favor of Fifth Third on the statutory claim
and remand this case for further consideration with regard to
Bergklint's liquidated damages, costs, and attorney's fees.
Bergklint next argues that the trial court erred in
granting summary judgment in favor of Fifth Third regarding his
fraud claim.
We disagree.
"Under familiar principles of law,
the findings of fact of a trial judge will not be disturbed on
appeal unless found to be clearly erroneous." Mobley v.
Armstrong, Ky., 978 S.W.2d 307, 310 (1998) (citations omitted).
The law requires Bergklint to prove fraud by clear and convincing
evidence. Wahba v. Don Corlett Motors, Inc., Ky.App., 573 S.W.2d
357 (1978).
In order to establish fraud, Bergklint must prove:
1. a material misrepresentation;
2. which is false;
3. known to be false or made recklessly;
4. made with inducement to be acted upon;
5. acted in reliance thereon; and
6. causing injury.
Id. at 359.
Bergklint argues that he relied on Fifth Third's
assurances of continued employment when he withdrew his name from
consideration for the position of Chief Financial Officer with
the OCDE.
His salary as Chief Financial Officer would have been
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approximately $50,000.00 per year.
The trial court held that
Bergklint's basis for damages was speculative.
We agree.
Bergklint was not offered the job of Chief Financial Officer and
remained one of three candidates for the position at the time he
withdrew his name from consideration.
damages is speculative.
Clearly such a basis for
We held in Johnson v. Cormney, Ky.App.,
596 S.W.2d 23, 27 (1979), that:
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. 37 Am.Jur.2d Fraud and
Deceit s 342; and Sanford Construction Co.
[v. S & H Contractors, Inc., Ky. 443 S.W.2d
227 (1969)]. All recoverable damages are
subject to some uncertainties and
contingencies, but it is generally held that
the uncertainty which prevents a recovery is
uncertainty as to the fact of damage and not
as to its amount. Where 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. 22 Am.Jur.2d
Damages s 23 and s 25; Kellerman v. Dedman,
Ky.,411 S.W.2d 315 (1967); and Roadway
Express, [Inc. v. Don Stohlman & Assoc.,
Inc., Ky., 436 S.W.2d 63 (1969)].
(emphasis added).
Bergklint cannot recover damages when he voluntarily
withdrew his name from consideration for the position of Chief
Financial Officer for the OCDE.
There is no evidence that
Bergklint would "in fact" have been offered the job by the OCDE
if he had not withdrawn.
The trial court correctly held that
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Bergklint could not recover under a claim for fraud based upon
speculative damages.2
For the foregoing reasons, the decision of the trial
court granting summary judgment in favor of Fifth Third regarding
Bergklint's claim for fraud is affirmed; the decision of the
trial court granting summary judgment in favor of Fifth Third
regarding Bergklint's statutory wage and hour claim is reversed
and this case is remanded for proceedings consistent with this
opinion.
ALL CONCUR.
ORAL ARGUMENT FOR APPELLANT:
BRIEF AND ORAL ARGUMENT FOR
APPELLEE:
H. Kevin Eddins
Louisville, KY
J. Mark Grundy
Louisville, KY
BRIEF FOR APPELLANT:
H. Kevin Eddins
John M. Nader
Louisville, KY
2
We note that the trial court only considered the issue of
damages in its opinion and order and did not find that Bergklint
had proven any other element of fraud.
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