NATIONAL HEALTH LABORATORIES, INC. v. LYNN B. CAUDILL
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RENDERED:
October 19, 2001; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
NO.
2000-CA-000983-MR
2000-CA-001142-MR
NATIONAL HEALTH LABORATORIES,
INC.
APPELLANT
APPEALS FROM FAYETTE CIRCUIT COURT
HONORABLE LAURANCE B. VANMETER, JUDGE
ACTION NO. 92-CI-00414
v.
LYNN B. CAUDILL
APPELLEE
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE:
DYCHE, GUIDUGLI, AND KNOPF, JUDGES.
DYCHE, JUDGE:
National Health Laboratories, Inc. (hereinafter
“National”) appeals from an order of the Fayette Circuit Court
granting judgment to Lynn B. Caudill on her claim of retaliatory
discharge against National and from the court’s order denying
National’s motion for a new trial (No. 2000-CA-001142).
National
also appeals from an order of the Fayette Circuit Court denying
its motion to set aside the judgment as void pursuant to Kentucky
Rules of Civil Procedure (CR) 55.01, 55.02, and 60.02 (No. 2000CA-000983).
By previous order of this Court, the appeals were
consolidated for review.
Having reviewed the record and
applicable law, we vacate the judgment and remand for further
proceedings.
This case has an unusual and extraordinarily protracted
procedural history.
October, 1981.
Caudill began working for National in
She suffered two work-related injuries while in
National’s employ.
The first was in September, 1987, after which
she returned to work; the second, which is of more concern in
this appeal, was in January, 1991.
Following the second injury
she filed an unsuccessful claim for workers’ compensation.
In
July, 1991, she was released to perform light-duty work, but
National informed her that at the time none was available, and
her job was terminated.
Caudill filed this action for retaliatory discharge
against National on February 4, 1992.
National’s response was
filed in March, 1992, by attorney Barry Willett.
After Caudill
filed amended answers to interrogatories in June, 1992, she took
no further action in the case until after National filed a motion
for pretrial conference in April, 1993.
On April 30, 1993,
Caudill was given ninety days to complete her discovery.
On June
28, 1993, Caudill filed a motion requesting ninety additional
days to complete discovery.
On September 23, 1993, National
filed a motion for summary judgment.
Caudill propounded interrogatories to National on April
18, 1994; National responded in mid-November, 1995.
On March 17,
1997, Caudill moved to have the case assigned to mediation.
case was mediated on August 20, 1997, and was not settled.
The
On
February 10, 1998, the court denied National’s renewed motion for
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summary judgment.
On February 23, 1998, Caudill filed a motion
to again set the case for a pretrial conference, which was held
on March 13, 1998.
At that pretrial conference, the initial trial judge in
this case, Judge Rebecca M. Overstreet, revealed that she might
have a conflict of interest.
She recused herself from the case
on March 20, 1998; it was then assigned to Judge Sheila Isaac.
Caudill filed a motion that Judge Isaac also recuse herself,
because Caudill’s counsel had engaged in a “heated debate” with
Judge Isaac in district court and did not believe Caudill could
obtain a fair hearing.
On May 4, 1998, the case was assigned to
then-Judge James E. Keller.
Justice Keller’s election to the
Kentucky Supreme Court required that the case again be
transferred, this time to Judge Laurance B. VanMeter.
On September 16, 1999, Caudill filed a motion that the
case be set for yet a third pretrial conference, which was held
on October 15, 1999.
At that time Willett was a candidate for
circuit judge in Jefferson County, and Judge VanMeter inquired of
Willett as to whether an attorney would be available to try the
case should he win the election.
Willett responded
affirmatively, and the case was set for trial on February 7-8,
2000.
The order setting the case for trial indicated that there
would be no extensions of dates set in the order.
Willett was
elected as circuit judge in Jefferson County, and his last day in
private practice was December 28, 1999.
hernia surgery the following day.
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He underwent double
When the case was called for trial on February 7, 2000,
only Caudill and her counsel were present.
The trial court
granted Caudill’s motion to waive a trial by jury, ruling that
National’s failure to appear for trial constituted a waiver of
its right to a jury trial.
Caudill then testified concerning the
amounts of paid and unpaid hospital and doctor’s expenses she had
incurred.
Her attorney then announced that he had concluded his
examination, but was reminded by the court that part of her case
was that she was wrongfully terminated for filing for workers’
compensation benefits.
Caudill’s counsel stated that “the facts
[spoke] for themselves,” but proceeded with the following
exchange:
Counsel: Yeah, the fact is that she filed
this workers comp[ensation] claim and we were
unsuccessful. Linda, I think I helped you
with that, didn’t I?
Caudill: Yeah, and we had some kind of
hearing and they just kept digging up a lot
of other things and, like I tried to explain,
you know, I mean, I come [sic] back and gave
them nearly four years, and I wanted more
than anything to return to work . . . .
Counsel: Okay . . . . But you were unable
to because you would have gone back to light
duty . . . . Tell the court what you thought
you could have done with light duty.
Caudill: I think if given a chance I could
have probably proceeded doing the port office
manager duties that I did . . . ever since we
started this with National Health in the
Lexington area . . . .
Counsel: Ma’am, let me ask you one other
question. You had almost ten years’ service,
right?
Caudill:
Yes, sir.
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Counsel: And in ten years you would have
become fully vested, right?
Caudill:
Fully invested [sic], yes, sir.
Counsel: [So], . . . in October of ‘91 you
would have been a vested employee, right?
Caudill:
Yes, sir.
The trial judge and counsel then calculated Caudill’s
damages, and as the trial ended, the trial judge remarked, “I
guess I need to include in [the order] a finding that she was
discharged due to the workers’ compensation and due to the fact
that she was going to become a vested employee, based on the
evidence heard here today, there being no evidence to the
contrary.”
The court denied National’s motion for new trial or
relief from the judgment on March 22, 2000.
On April 20, 2000,
the court granted the portion of National’s motion setting aside
the award of unpaid medical expenses, but denied the balance of
the motion to set aside the judgment.
This appeal followed.
The first question we must address is the nature of the
judgment entered by the trial court.
National asserts that it
was a default judgment, and as such they were entitled to notice
prior to its entry.
Caudill disputes this claim, and the trial
court, in its order denying the motion to set aside the judgment,
stated that CR 55.01 — the rule dealing with default judgment —
was inapplicable to this case.
The court cited Pound Mill Coal
Company v. Pennington, Ky., 309 S.W.2d 772 (1958), in support of
its order.
In Pennington, the appellants failed to file an
answer or enter any appearance in the action and did not appear
for trial.
Pennington’s motion that the allegations in his
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complaint be taken as true was granted, and the trial court heard
evidence concerning damages.
The appellants argued that the
default judgment was not entered following the provisions of CR
55.01, and the Court held that “[a]ppellants had failed to
‘appear’ in the action, and in such cases it is not necessary to
serve written notice of the application under CR 55.01, and this
section does not require a written motion for judgment to be
filed during the course of the trial.”
Id. at 773 (emphasis
added).
The facts of this case are markedly different.
National had diligently defended the case for over seven years at
the time of trial, while Caudill had on several occasions sought
to have the trial delayed; nevertheless, the trial was conducted
without even a representative from National present.
While the
judgment might not have been entered according to the literal
language of CR 55.01, it operated as the functional equivalent of
a default judgment by depriving National of its ability to
present a defense on the merits.
As such, we will apply the same
standard in reviewing this case as we would apply a proper CR
55.01 judgment.
The standard of review of a trial court’s ruling on a
default judgment is whether the court abused its discretion.
“This discretion, however, is not unbridled, but must rest upon a
finding of willfulness or bad faith on behalf of the party to be
sanctioned.”
Greathouse v. American National Bank and Trust Co.,
Ky. App., 796 S.W.2d 868, 870 (1990).
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Even in light of the trial
court’s pretrial conference order entered on October 18, 1999,1
National’s motions for a new trial pursuant to CR 60.02(a)
(providing relief from a final judgment on the grounds of
“mistake, inadvertence, surprise or excusable neglect”), or
National’s motion to set aside the judgment were well-taken.
See
CR 55.02 (“For good cause shown the court may set aside a
judgment by default in accordance with Rule 60.02.”).
The
failure to grant relief from what was, in effect, a default
judgment against a party who had faithfully defended an action
for over seven years was an abuse of the trial court’s
discretion.
Even had we determined that the trial court had not
abused its discretion, the evidence presented at trial by Caudill
was insufficient to establish that she had been discharged in
retaliation for her claim to workers’ compensation benefits.
“The employee carries his burden by proving that retaliation for
filing or pursuing a workers' compensation claim was a
substantial motivating factor in causing his discharge.”
First
Property Management Corp. v. Zarebidaki, Ky., 867 S.W.2d 185, 189
(1993).
Caudill merely testified that she filed an unsuccessful
workers’ compensation claim.
She also testified that when she
tried to return to work, National told her it had no light duty
work for her to perform.
There was no testimony that the filing
of the claim was a substantial factor in the termination.
1
She
The order concluded with the following language: “THERE
WILL BE NO EXTENSION OF A DEADLINE OR DATE ESTABLISHED IN THIS
ORDER BY AGREEMENT OF THE PARTIES. A MOTION AND ORDER ARE
REQUIRED FOR ANY MODIFICATION.”
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failed to meet her burden of proof.
We are unwilling to draw
from her testimony the inference drawn by the trial court, that
“she was discharged due to [her filing of a] workers’
compensation [claim].”
Given our decision in this case, the remaining two
issues raised by National — whether the trial court erred in its
determination that sufficient evidence was presented to establish
the terms of Caudill’s disability policies, and whether the trial
court erred in awarding front and back pay to Caudill — are not
properly before us, and any opinion rendered in that regard would
be advisory in nature.
The judgment of the Fayette Circuit Court is vacated,
and this case is remanded for further proceedings not
inconsistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Raymond G. Smith
Edward H. Stopher
David William Hemminger
Louisville, Kentucky
Samuel H. Whitehead
Lexington, Kentucky
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