LOUISVILLE WATER COMPANY v. BEVERLY KAY PHELPS, AS ADMINISTRATOR OF THE ESTATE OF DANNIE PHELPS, JR., AND LAWRENCE M. CASON, AS ADMINISTRATOR OF THE ESTATE OF LAWRENCE MICHAEL CARSON, JR.
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RENDERED:
MAY 18, 2001; 2:00 p.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-000214-MR
LOUISVILLE WATER COMPANY
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE ANN SHAKE, JUDGE
ACTION NO. 97-CI-001627
v.
BEVERLY KAY PHELPS, AS ADMINISTRATOR
OF THE ESTATE OF DANNIE PHELPS, JR., AND
LAWRENCE M. CASON, AS ADMINISTRATOR OF
THE ESTATE OF LAWRENCE MICHAEL CARSON, JR.
APPELLEES
OPINION
AFFIRMING IN PART AND REVERSING IN PART
** ** ** ** **
BEFORE:
GUDGEL, CHIEF JUDGE; BARBER, AND COMBS, JUDGES.
BARBER, JUDGE:
Lawrence Michael Cason, Jr., a 19-year-old
driver, and Dannie R. Phelps, II, his 18-year-old passenger, were
killed on February 17, 1997, when the car in which they were
riding crashed into a barricaded construction site where the
Louisville Water Company (“LWC”) was working.
According to
toxicology results, Cason’s blood alcohol was 0.129 and Phelps’
was 0.130.
The Cason and Phelps Estates (“Appellees”) filed suit
against the LWC, and Protection Services, Inc., the company which
provided signs and barricades to the LWC, seeking compensatory
and punitive damages.
The jury returned a verdict in favor of
the Plaintiffs on their claims against LWC and Protection
Services, Inc., in the amount of $150,000.00 for loss of earning
power and $5,317.00 for funeral expenses to the Cason Estate, and
$150,000.00 for loss of earning power, and $15,340.53 for funeral
expenses to the Phelps Estate.
The jury apportioned causation as
follows: LWC 55%; Protection Services, Inc., 10%; Cason 25%;
Phelps 10%.
The jury also awarded punitive damages against the
LWC in the amount of two million dollars, and punitive damages
against Protection Services, Inc., in the amount of $325,000.00.
By judgment entered November 6, 1998, the trial court ordered
that the Cason estate recover $1,085,424.35 from the LWC and
$178,031.70 from Protection Services, Inc., and that the Phelps
estate recover $1,090,937.29 from the LWC and $179,034.05 from
Protection Services, Inc.
The LWC appeals.
According to LWC, Protection
Services, Inc., paid the judgment against it and did not pursue
an appeal.
We are asked to decide: (1) Whether a municipal
corporation can be liable for punitive damages; (2) Whether the
decedents’ reckless conduct bars recovery of punitive damages;
(3) Whether the jury should have been instructed that a finding
of malicious or willful action by the LWC was a prerequisite to
an award of punitive damages; (4) Whether the award of punitive
damages is excessive and violates due process; and (5) Whether
the trial court erred in its rulings regarding evidence of
subsequent remedial measures.
Appellant contends that the LWC is a municipal
corporation and, as such, cannot be liable for punitive damages.
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In its January 11, 1999 opinion and order ruling on various postjudgment motions, the trial court states that the
“. . .
Louisville Water Company is a municipal corporation. . . .”
Nevertheless, Appellees assert that "LWC is not in any way, shape
or form a municipality or a municipal agent.”
We disagree.
In
Barber v. City of Louisville, Ky., 777 S.W.2d 919 (1989), our
Supreme Court held that the LWC was an agent of the City of
Louisville.
In Board of Education of Jefferson County v.
Louisville Water Co., Ky. App., 555 S.W.2d 587, 588
(1977), this
Court stated that:
The Louisville Water Company was
incorporated pursuant to Chapter 507 of the
Acts of the General Assembly of 1854 and
operated as a private corporation until 1906
when the General Assembly adopted an act, now
codified as KRS 96.230-.310, which changed
its status to an agency of the City of
Louisville.
Louisville Water Co. v. Wells, Ky. App., 664 S.W.2d 525
(1984), relied upon by Appellees, also held that the LWC was an
agency of the City of Louisville.
The issue in Wells was whether
the LWC was a “city” as used in KRS 337.010(3)(e).
The statute
exempted “cities” from paying prevailing wages on public works
projects.
This court held that the language of the statute did
not include agencies.
The court explained that if “the exclusion
is to be broadened to cover such public authorities and agencies
of governments, the legislature will have to make the change.
If
the General Assembly truly desires to broaden the exclusion,
exemptions could be simply provided for all ‘public authorities’
. . . .”
Id. at 527.
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LWC notes that there is no published Kentucky decision
directly addressing whether punitive damages can be awarded
against a municipality.
LWC submits that KRS 65.2002, enacted in
1988 as part of the Municipal Tort Claims Act, is a good
indicator of the Legislature’s intent.
LWC contends that under
KRS 65.2002 cities and municipalities may not be assessed
punitive damages and that the same logic is true with regard to
this case.
We agree, but need not extend the statute by analogy,
because it applies.
KRS Chapter 65.200-65.2006 is entitled, “Claims Against
Local Governments.”
KRS 65.200 is the definitional section for
KRS 65.2001 to 65.2006.
KRS 65.200(3) defines “local government”
as “any city incorporated under the law of this Commonwealth, the
offices and agencies thereof, any county government or fiscal
court, any special district or special taxing district created or
controlled by a local government.”
(Emphasis added.)
As noted
above, the LWC is an agency of the City of Louisville pursuant to
statutory law as well as judicial construction.
KRS 65.2001(1) provides:
Every action in tort against any local
government in this Commonwealth for death,
personal injury or property damages
proximately caused by:
(a) Any defect or hazardous condition
in public lands, buildings or other
public property, including personalty;
(b)
Any act or omission of any
employee, while acting within the scope
of his employment or duties; or
(c)
Any act or omission of a person
other than an employee for which the
local government is or may be liable
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shall be subject to the provisions of
KRS 65.2002 to 65.2006. (Emphasis
added.)
KRS 65.200(1) defines “Action in tort” as “any
claim for money damages based upon negligence, medical
malpractice, intentional tort, nuisance, products liability
and strict liability, and also includes any wrongful death
or survival-type action.”
Clearly, this action is an action
in tort against a local government subject to the provisions
of KRS 65.200-65.2006.
KRS 65.2002 is entitled, “Amount of damages
recoverable against local governments” and provides:
The amount of damages recoverable against a
local government for death, personal injury
or property damages arising out of a single
accident or occurrence, or sequence of
accidents or occurrences, shall not exceed
the total damages suffered by plaintiff,
reduced by the percentage of fault including
contributory fault, attributed by the trier
of fact to other parties, if any.
KRS 65.2002 does not provide that punitive damages are
recoverable against a local government.
The damages recoverable
under the statute are compensatory -- for “death, personal injury
or property damages” -“suffered by plaintiff,”
not to exceed the total damages
reduced by the percentage of fault
attributable to other parties.
“Punitive damages are not
‘damages sustained’ by a particular plaintiff.
Rather, they are
private fines levied by civil juries to punish a defendant for
his conduct and to deter others from engaging in similar conduct
in the future. [citations omitted].”
In Re Air Crash Disaster at
Gander, 684 F. Supp 927, 931 (W.D. Ky. 1987).
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“The general rule
today is that no punitive damages [against a municipality] are
allowed unless expressly authorized by statute.”
City of Newport
v. Fact Concerts, Inc., 453 U.S. 247, 261, 101 S.Ct. 2748, 69
L.Ed.2d 616 (1981).
KRS 65.2002 does not expressly authorize
punitive damages.
Appellees contend that Williams v. Wilson, Ky., 972
S.W.2d 260 (1998), “states that immunizing parties from liability
for punitive damages based upon municipal status is
unconstitutional.”
Williams.
We disagree with Appellee’s reading of
Williams involved the constitutionality of KRS 411.184
which established a new legal standard for punitive damages,
departing from the common law standard of gross negligence.
The
issue was whether the statute had actually changed the common law
of Kentucky, as it existed prior to the adoption of our present
Constitution, in violation of the jural rights doctrine.
The
Supreme Court declared KRS 411.184(1)(c), the provision defining
malice, to be unconstitutional.
Williams did not involve the
issue of municipal liability for punitive damages.
Appellees assert that under Happy v. Erwin, Ky., 330
S.W.2d 412 (1959), “it makes no difference whether LWC is a
private corporation . . . or a municipal corporation.”
Happy
involved a motor vehicle accident between an individual and a
firefighter driving a City of Mayfield fire truck en route to a
fire in the City of Murray.
At issue was the constitutionality
of a statute exempting city officers and employees from personal
liability in the use of fire apparatus.
Happy did not involve
the issue of a punitive damage award against a municipality.
-6-
Appellees attempt to persuade us that punitive damages
are “a common law right” which cannot be abrogated by the
Legislature or this Court without offending the Constitution.
Any constitutional challenge to a statute requires notice to the
Attorney General before entry of judgment.
KRS 418.075; CR
24.03; Allard v. Kentucky Real Estate Com., Ky. App., 824 S.W.2d
884, 887 (1992).
There is no indication that the Attorney
General was notified.
It does not appear that the issue was
properly preserved for review.
Moreover, “municipal immunity
from punitive damages was well established at common law by 1871
. . . . ”
Fact Concerts, 453 US 247, 263 (1981).
Fact Concerts dealt with the issue of whether a
municipality may be held liable for punitive damages under 42
U.S.C. §1983.
The Supreme Court examined the common law with
respect to municipal liability for punitive damages:
By the time Congress enacted what is now
§1983, the immunity of a municipal
corporation from punitive damages at common
law was not open to serious question. It was
generally understood by 1871 that a
municipality, like a private corporation, was
to be treated as a natural person subject to
suit for a wide range of tortious activity,
but this understanding did not extend to the
award of punitive or exemplary damages.
Indeed the courts that had considered the
issue prior to 1871 were virtually unanimous
in denying such damages against a municipal
corporation. [citations omitted]. Judicial
disinclination to award punitive damages
against a municipality has persisted to the
present day in the vast majority of
jurisdictions. [citations omitted].
(Emphasis added.)
Id. at 259-260.
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Appellees have not convinced us that punitive damages
were recoverable against a municipality under Kentucky common
law.
KRS 65.2001(2) provides, in pertinent part:
Except as otherwise specifically provided in
KRS 65.2002 to 65.2006, all enacted and casemade law, substantive or procedural,
concerning actions in tort against local
governments shall continue in force.
No
provision of KRS 65.2002 to 65.2006 shall in
any way be construed to expand the existing
common law concerning municipal tort
liability as of July 15, 1988 . . . .
(Emphasis added.)
In light of the foregoing, we reverse the judgment with
respect to the punitive damage award against LWC.
It is not
necessary to address the remaining issues pertaining to the
punitive damage award.
LWC contends that the trial court erred in its rulings
on subsequent remedial measures.
“[A]buse of discretion is the
proper standard of review of a trial court’s evidentiary
rulings.”
Goodyear Tire & Robber Co. v. Thompson, Ky., 11 S.W.3d
575, 577 (2000).
Following the accident, additional traffic
control equipment was delivered to the work zone.
LWC‘s motion
in limine to exclude this evidence under KRE 407 was denied by
the trial court.
The court’s October 20, 1998 order reflects
that “Louisville Water Company’s Motion to Exclude Evidence of
Subsequent Remedial Measures is overruled; such evidence is
admissible to show whether Louisville Water Company or Protection
Services, Inc. exercised control over the signage.”
KRE 407 does not require exclusion of evidence of
subsequent measures “when offered for another purpose, such as
proving ownership, control, or feasibility of precautionary
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measures, if controverted, or impeachment.”
LWC argues that the
issue of control between LWC and Protection Services, Inc., is
not the type of control contemplated by the rule.
Robert G.
Lawson, Kentucky Evidence Law Handbook, §2.45 (3d ed. 1993)
states, “the language of KRE 407 plainly indicates that the list
of exceptions in the rule is illustrative, rather than
exhaustive.”
Appellees contend that the “issue of who controlled
the traffic control devices and signage . . . [was] vehemently
contested, . . . .”
We agree with Appellees that the trial court
was in a better position to evaluate the matter.
We find no
abuse of discretion.
LWC also contends that the trial court erred in denying
its motion for a mistrial, after an LWC employee was asked about
placement of a flashing arrow board at the accident scene.
Absent manifest error or abuse of discretion, a trial court’s
denial of a motion for mistrial cannot be disturbed on appeal.
Gould v. Charlton Co., Ky., 929 S.W.2d 734 (1996).
A mistrial is
an extreme remedy which should only be granted where a
fundamental defect in the proceedings will result in manifest
injustice, and the prejudicial effect can be removed in no other
way.
In most instances, the prejudicial event can be rectified
by a curative admonition.
Id.
We are not persuaded that the
event complained of resulted in manifest injustice which could
not be cured.
Further, Appellees assert that LWC failed to
preserve the issue by refusing the admonition offered by the
trial court.
LWC does not dispute this fact in its reply brief.
Thus, the judgment is affirmed in regard to the trial
court’s denial of LWC’s motion for mistrial, as well as the
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denial of LWC’s motion to exclude evidence of subsequent remedial
measures.
The judgment is reversed with respect to the punitive
damage award against LWC.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
Donald L. Miller, II
Brown, Todd & Heyburn
Louisville, Kentucky
F. Thomas Conway
Counsel for Phelps
Louisville, Kentucky
ORAL ARGUMENTS FOR APPELLANT:
Donald L. Miller, II
Louisville, Kentucky
Ronald P. Hillerich
Counsel for Cason
Louisville, Kentucky
Michael D. Morris
Counsel for Phelps
Louisville, Kentucky
ORAL ARGUMENTS FOR APPELLEES:
F. Thomas Conway
Counsel for Phelps
Louisville, Kentucky
Ronald P. Hillerich
Counsel for Cason
Louisville, Kentucky
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