KEENEY (STEVEN H.) VS. OSBORNE (BRENDA C.), ET AL.
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Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-002112-MR
STEVEN H. KEENEY
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE MARTIN F. MCDONALD, JUDGE
ACTION NO. 06-CI-001717
BRENDA C. OSBORNE;
CAROLINA CASUALTY INSURANCE
COMPANY; AND MONITOR LIABILITY
MANAGERS, INC.
AND
NO. 2007-CA-002177-MR
CAROLINA CASUALTY INSURANCE
COMPANY; AND MONITOR LIABILITY
MANAGERS, INC.
v.
CROSS-APPELLANTS
CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE MARTIN F. MCDONALD, JUDGE
ACTION NO. 06-CI-001717
STEVEN H. KEENEY;1
AND BRENDA C. OSBORNE
1
APPELLEES
CROSS-APPELLEES
The notice of appeal incorrectly listed Steven H. Keeney as appellant instead of cross-appellee.
OPINION
AFFIRMING IN PART,
VACATING IN PART, AND REMANDING
** ** ** ** **
BEFORE: CLAYTON, MOORE, AND STUMBO, JUDGES.
CLAYTON, JUDGE: Steven H. Keeney (“Keeney”) appeals from both the August
30, 2007 judgment, in an action for legal malpractice which was entered by the
Jefferson Circuit Court in favor of Brenda C. Osborne (“Osborne”), and also the
October 10, 2007 opinion and order denying Keeney’s various posttrial motions.
The judgment was based on a jury verdict against Keeney that awarded Osborne
compensatory and punitive damages of more than $5.1 million. The claim for
negligent representation arose out of an October 22, 2002 incident in which a small
airplane crashed into Osborne’s home. Osborne retained Keeney to represent her
in an action against the airplane pilot; however, the underlying action was
dismissed on statute-of-limitations grounds.
Following the entry of the judgment, Carolina Casualty Insurance
Company and Monitor Liability Mangers, Inc. (hereinafter “Carolina”), which
were Keeney’s professional liability insurer and policy administrator, appealed
both the judgment and also the October 10 order which granted Osborne leave to
file a second amended complaint against them.
For the following reasons, we affirm in part, vacate in part, and
remand.
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BACKGROUND
Osborne is a high school English teacher in Pineville, Kentucky. On
October 22, 2002, Osborne was sitting in her living room when a small plane hit
the roof of her two-story home, causing a fire with resulting damages including
loss to real and personal property. While she suffered no physical injury from the
impact of the airplane, she did go into a state of shock, her blood pressure rose, and
she experienced tachycardia. Osborne was transferred to the local hospital and
treated for these conditions. Prior to the airplane accident, Osborne had suffered
for more than a decade from anxiety, depression, hypertension, insomnia, and
diabetes.
Initially, Osborne retained a Pineville attorney to represent her in
claims against airplane pilot Clifford Quesenberry (“Quesenberry”). Six months
later, without any suit having been filed against Quesenberry or having received
any recovery from her homeowner’s insurance, Osborne dismissed this attorney
and hired Louisville attorney, Keeney, to represent her in obtaining reimbursement
from her homeowner’s insurance and in the civil case. She signed an engagement
letter/contract with Keeney that set forth the terms of the representation. Within
two weeks, Keeney arranged for a meeting with the insurance adjuster and secured
checks totaling $151,390.52. Eventually, Osborne received in excess of
$234,000.00 from her homeowner’s insurance coverage.
The original complaint in the underlying action (hereinafter “the
airplane case”) was filed on October 22, 2004, in Bell Circuit Court and on
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November 10, 2004, removed to the United States District Court of the Eastern
District of Kentucky. Besides the allegations of pilot negligence, the airplane case
complaint stated that Osborne’s damages had not become fixed and final until
October 20, 2004, thus tolling the statute of limitations, and that Osborne had been
incapacitated since the crash and, thus, requested that the case be held in abeyance.
Ultimately, the District Court entered an order on November 8, 2005, granting
Quesenberry’s summary judgment motion on the grounds that Osborne’s case was
barred by the statute of limitations. Additionally, the District Court stated that
Keeney’s failure to cooperate in discovery and comply with court orders warranted
independent dismissal of Osborne’s complaint. Costs were assessed against
Osborne.
Osborne filed this action against Keeney on February 24, 2006. In her
June 4, 2007 amended complaint, Osborne alleged legal malpractice, fraud, and
breach of contract. She contended that Keeney was grossly negligent in his
representation and, hence, she was deprived of compensation from the airplane
crash from which she incurred mental anguish, loss of enjoyment of life, lost
wages, lost income, and expenses including legal fees. Osborne requested
compensatory and punitive damages, plus interest. On May 30, 2007, Osborne
amended her complaint to add claims that Keeney had either negligently or
intentionally destroyed her file; had received unreasonable and unconscionable
compensation for services rendered on her behalf; and had acted fraudulently with
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regards to the contract for legal services, negotiation of insurance settlement
checks, and in the performance of his legal obligations.
Under a legal malpractice policy issued by Carolina, the company and
its administrator hired and paid independent counsel for Keeney’s defense. The
policy contains a $1 million limit of liability and provides for Keeney’s defense at
trial. Further, the policy states that Keeney’s coverage is reduced by the amount of
attorney fees and costs incurred by his counsel.
A jury trial was held. The jury determined that, as a result of
Keeney's failure to pursue the airplane case, he was found to have acted with both
ordinary and gross negligence in his representation of Osborne's claims in the
airplane case. Further, he breached his contract to represent Osborne's interests in
the airplane case, committed various acts of fraud during his representation of
Osborne, and caused Osborne to suffer losses associated with the airplane case.
The jury awarded Osborne approximately $5,000,000 in damages. The damages
awarded to Osborne were as follows:
$
54,924.04
500,000.00
750,000.00
53,025.39
250,000.00
$ 3,500,000.00
Property damage from the airplane crash
Mental pain and suffering; physical pain and suffering
Punitive damages from the airplane crash
Legal fees paid to Keeney
Emotional distress caused by Keeney
Punitive damages against Keeney
On August 30, 2007, judgment was entered for Osborne.
Following the verdict against him on September 10, 2007, Keeney
filed various posttrial motions, which included judgment not withstanding the
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verdict under Kentucky Rules of Civil Procedure (CR) 50.02; to alter, amend, or
vacate the judgment, or for a new trial under CR 59.05; and, for relief from the
judgment under CR 60.02. On September 18, 2007, the nineteenth day after entry
of the judgment, Osborne objected to Keeney's motions and also filed a motion to
amend her complaint to add Carolina as a defendant, and to add claims against
Carolina under Kentucky Revised Statutes (KRS) 304.12-230, the Unfair Claims
Settlement Practices Act; KRS 367.170; and Kentucky common law for bad faith
conduct in refusing to settle the case. The proposed amended complaint also
incorporated by reference all of the allegations made in the original complaint.
Then, Keeney filed additional motions and objections to the motion
for leave to amend the complaint. Keeney argued that the amended complaint
adding additional parties and claims would delay his appeal while Osborne argued
her bad faith claims against third parties. On October 10, 2007, the court granted
Osborne leave to file the second amended complaint and denied Keeney's various
motions.
On October 19, 2007, Keeney filed a notice of appeal and named
Carolina as an appellee. Carolina filed a notice of cross-appeal on October 29,
2007. Then, on December 8, 2007, Osborne filed a motion to dismiss Carolina’s
appeal on the grounds that Carolina is not a proper party to this appeal because it
was not a party at the trial. Furthermore, Osborne argued that Carolina could not
appeal the trial court’s order permitting Osborne to file her postjudgment amended
complaint because the order was interlocutory. Subsequently, on December 20,
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2007, Carolina filed a response to Osborne’s motion to dismiss and set forth its
legal basis for participating in Keeney’s appeal, and claimed that Carolina should
be allowed to appeal to protect its interests in the outcome of the appeal.
On March 18, 2008, we entered an order on Osborne’s motion to
dismiss Carolina’s cross-appeal and on appellees’/cross-appellants’ (Carolina’s)
motions in the alternative for leave to intervene and for leave to file a reply to
Osborne’s response and response to the motions. After we considered the motions,
we ordered that the motion for leave to file a reply be granted. And, we denied the
motions to dismiss the cross-appeal and to intervene in the direct appeal. We will
now address the issues in this appeal.
STANDARD OF REVIEW
Before reviewing the case, it is important to attend to the appellate
court standard of review for evidence in cases where a jury verdict has been
rendered. This standard is set forth in Lewis v. Bledsoe Surface Min. Co., 798
S.W.2d 459 (Ky. 1990). The Court stated:
Upon review of the evidence supporting a judgment
entered upon a jury verdict, the role of an appellate court
is limited to determining whether the trial court erred in
failing to grant the motion for directed verdict. All
evidence which favors the prevailing party must be taken
as true and the reviewing court is not at liberty to
determine credibility or the weight which should be
given to the evidence, these being functions reserved to
the trier of fact. The prevailing party is entitled to all
reasonable inferences which may be drawn from the
evidence. Upon completion of such an evidentiary
review, the appellate court must determine whether the
verdict rendered is “‘palpably or flagrantly’ against the
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evidence so as ‘to indicate that it was reached as a result
of passion or prejudice.’”
Id. at 461-62 (citations omitted). Now, we address the issues in the case.
ISSUES
Initially, Keeney contends that Osborne did not prove, and the jury
was not required to find, any liability in the airplane case. Further, Keeney argues
that Osborne was impermissibly allowed to recover over $5 million in damages,
including damages in the airplane case without any evidentiary support, emotional
distress damages where there had been no physical impact or inappropriate
touching, and punitive damages for the negligence of the airplane pilot. Osborne
was also awarded damages in the legal malpractice case for emotional distress
caused by Keeney and punitive damages. Finally, Keeney asserts that the total
damages exceeded her pretrial itemization by $2.8 million and are contrary to the
requisites of civil procedure law. Accordingly, Keeney asserts that the jury verdict
must be vacated and the judgment reversed.
Carolina appeals in this case and seeks to be named a party on appeal
or, alternatively, to intervene in the appeal in the event that Keeney settles or
otherwise does not prosecute the appeal. Moreover, Carolina appeals the Jefferson
Circuit Court’s order granting Osborne’s motion for leave to amend her complaint
and add a new cause of action (bad faith) and a new party (Carolina).
First, we will consider Keeney’s arguments and then Carolina’s
contentions. The issues will be discussed sequentially.
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KEENEY APPEAL
1. Elements of legal malpractice.
A plaintiff in a legal malpractice case has the burden of proving: “1)
that there was an employment relationship with the defendant/attorney; 2) that the
attorney neglected his duty to exercise the ordinary care of a reasonably competent
attorney acting in the same or similar circumstances; and 3) that the attorney's
negligence was the proximate cause of damage to the client.” Stephens v. Denison,
64 S.W.3d 297, 298-99 (Ky. App. 2001). With regard to the first element, it is
undisputed that Keeney and Osborne had an attorney/client relationship.
Assessing the second element, Keeney failed to meet the requisite statute of
limitations for Osborne’s airplane case and, thus, did not exercise the ordinary care
of an attorney. While in legal malpractice cases expert testimony is required to
establish the malpractice, we note the rule in this Commonwealth that expert
testimony is not essential in malpractice cases where the negligence is sufficiently
apparent that a layman using his own general knowledge would have no difficulty
recognizing it. Id. Clearly, Keeney’s failure to commence Osborne’s original suit
before the statute of limitations expired constitutes an obvious breach of duty and
one for which expert testimony is not required.
The third element necessary to prove legal malpractice, that the
attorney's negligence was the proximate cause of damage to the client, is the most
challenging to establish and the one at issue here. In other words, even though
Keeney’s failure to file the case before the statute of limitations had tolled was the
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proximate cause of the airplane case being dismissed, in order to prevail in a legal
malpractice action, Osborne must prove not only that Keeney’s negligence caused
the harm but also that she would have fared successfully in the underlying claim.
That is, but for Keeney’s negligence, Osborne would have been more likely
successful. Marrs v. Kelly, 95 S.W.3d 856 (Ky. 2003). Thus, for Osborne to fulfill
her burden, a “suit within a suit” is necessary. Id.; Restatement (Third) of the Law
Governing Lawyers § 53 (2000).
In order to establish that the attorney’s breach of duty caused the
injury, Osborne must prove she would have been successful in pursuing or
defending against the original lawsuit but for the defendant's negligence.
Moreover, it is at this point that Osborne has to establish the specific damages
proximately caused by the defendant's breach of duty. Thus, our focus on review
will be whether Keeney's failure to file Osborne's complaint in the airplane case
was the proximate cause of her damages and, but for this failure, Osborne would
have been successful in the airplane case.
On appeal, Keeney argues that Osborne should have been required to
prove the underlying “case within a case” (“suit within a suit”) in this legal
malpractice action. He maintains that Osborne has not established the negligence
of the pilot in the airplane case and, therefore, the judgment should be reversed
because Osborne failed to prove any liability in the underlying negligence case. In
fact, Keeney says that Osborne did not call any witnesses who could testify
firsthand about the negligence of the airplane pilot but only offered the testimony
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of two attorneys which, according to Keeney, did nothing to establish the pilot’s
negligence because neither attorney had investigated the underlying case. In
response, Osborne contends that Quesenberry's negligence speaks for itself and it
was, therefore, unnecessary to have a separate finding of negligence before proving
Keeney's liability for failing to timely file Osborne's complaint.
As noted above, in legal negligence cases, as in all negligence action,
proximate cause of the damages is an element of the legal action. But Keeney
provides no support for his position that every legal malpractice action requires a
complete and separate trial on the underlying action. It is important to remember
that in a legal malpractice action, the negligence at issue is the attorney’s actions in
handling the underlying case and that the negligence of the actor in the underlying
case is ancillary. The facts, here, are that an airplane landed on Osborne’s home
causing damages. Following this event, she hired Keeney to represent her in an
action against the airplane pilot. Subsequently, he missed the statute of limitations
in filing the action and the case was dismissed. Hence, in the present case,
Osborne was completely precluded from bringing any suit or recovering any
damages from Quesenberry. Furthermore, evidence was introduced that Keeney
not only failed to file the airplane case within the one-year statute of limitations but
also that he received reminders from third parties that the statute of limitations was
approaching. And, once Osborne’s airplane case was dismissed, Keeney failed to
inform her that the case had been dismissed and costs awarded against her. Even
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more significant, Osborne did not learn of the case’s dismissal until after such time
she would have been able to move for reconsideration or file an appeal.
Significantly, the facts in each legal malpractice case to demonstrate
the negligence of the original actor will necessitate different degrees and types of
support. Moreover, as Osborne maintains in her brief, evidence of Quesenberry’s
negligence was introduced to the jury. The passage below was taken from
Osborne’s brief, and is based on the National Transportation Safety Board (NTSB)
factual investigation and Keeney’s original lawsuit, which was dismissed on
statute-of-limitation grounds:
On October 22, 2002 prior to his departure from
the Bell County Airport, Quesenberry experienced
difficulty in getting his plane started. In an attempt to
start his plane, he sprayed fuel from a squirt bottle into
the air intake of the left engine. The engine started but
backfired and caught fire. After extinguishing the fire,
Quesenberry restarted the engine after again squirting
fuel from his squirt bottle into the left engine air intake.
In spite of the known dangerous condition of his plane,
he took off. Shortly after takeoff his engine quit and he
crashed into the home owned and occupied by Ms.
Osborne destroying the home and engulfing it in flames.
Weather was not a factor. (Footnotes omitted).
These facts were never disputed. In addition, Osborne provided testimony from
the attorney that represented Quesenberry in the airplane case, Brian Sullivan, and
an aviation expert witness, Steve Hixson (“Hixson”), supporting this version of the
events. Keeney maintains that the information from the NTSB’s report, which
supported the pilot’s negligence, was prohibited by law. Yet, in Aviation § 6A:10
the following discussion of the use of NTSB reports is found:
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Federal statutory and regulatory law governs the
use of the work product, including final reports, resulting
from the investigations by the NTSB. [FN1] While the
federal statute on its face seems to prohibit the use of any
"part of the report" released by the NTSB Board, [FN2]
most courts have found that the factual portions of a
NTSB investigative report are admissible. [FN3]
Further, the NTSB itself has affirmed it does not object to
the use of the factual reports in private civil litigation.
[FN4] However the use and release of any cockpit voice
recordings and transcripts are more restrictively
controlled and will require intervention in federal court
for access to any recording. [FN5]
[FN1] 49 U.S.C. § 1154; 49 C.F.R. § 835; See also Ch
28, supra.
[FN2] 49 U.S.C. § 1154 (b)
[FN3] See e.g., In re Air Crash at Charlotte, North
Carolina, 982 F. Supp. 1071 (D.S.C. 1996), but also see,
In re Air Crash at Sioux City, Iowa on July 19, 1989, 780
F. Supp. 1207 (N.D. Ill. 1991).
[FN4] 49 C.F.R. § 835.2
[FN5] 49 U.S.C. § 1154 (a)
1 Aviation Tort and Reg. Law § 6A:10. Surely, given the fact that Keeney filed
the original airplane case, it is somewhat disingenuous for him to suggest that the
pilot was not negligent. Besides, the purpose of the NTSB report was not to
establish the pilot’s negligence, but the purpose of its introduction was to bolster
the fact that Keeney did not properly investigate the accident. Furthermore, Hixon,
the expert witness, relied on the report. Clearly, information and evidence not
otherwise admissible can be relied upon by expert witnesses. Kentucky Rules of
Evidence (KRE) 703(a).
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Thus, in the airplane case, evidence was presented that Osborne had a
viable claim against Quesenberry and that she lost the opportunity to maintain this
case in her own name and prosecute her own interests. While it is true that
Osborne must demonstrate that, but for Keeney’s negligence, she would have
prevailed in the underlying case, we believe she presented adequate evidence to
establish the liability of the airplane pilot, particularly in light of the circumstances
of a legal malpractice action and its “case within a case” structure. We would be
remiss not to mention that Keeney’s own actions following the dismissal of the
airplane case created issues in establishing the pilot’s negligence, most obviously
when he allowed the insurance company in the original case to discard the airplane
wreckage. This factor alone precluded Osborne’s ability to have the wreckage
inspected.
Keeney also argues that the trial court erred by not instructing the jury
to specifically find liability on the part of the pilot in the airplane case. The
function of instructions is to tell the jury what it must believe from the evidence in
order to resolve each dispositive factual issue in favor of the party who has the
burden of proof on that issue. See Webster v. Com., 508 S.W.2d 33 (Ky. 1974),
cert. denied, Webster v. Kentucky, 419 U.S. 1070, 95 S.Ct. 657, 42 L.Ed.2d 666
(1974). In Kentucky, it is well recognized that there should not be an abundance of
detail but the jury instructions should provide only the "bare bones" of the question
for the jury. Hamby v. University of Kentucky Medical Center, 844 S.W.2d 431
(Ky. App. 1992). The instructions tendered in this complicated and somewhat
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convoluted case presented the issues in a clear and concise manner using
suggestions from both sides. Bolstering the efficacy of the jury instructions in this
case is the fact that they are based on instructions in Daugherty v. Runner, 581
S.W.2d 12, 18 (Ky. App. 1978), which were expressly approved in Equitania Ins.
Co. v. Slone & Garrett, P.S.C. 191 S.W.3d 552 (Ky. 2006).
Therefore, we find that Osborne raised a viable claim of legal
negligence against Keeney and that Osborne introduced evidence of the airplane
pilot’s action, allowing the jury to find both that Keeney breached his duty to
exercise reasonable care and skill in his legal representation of Osborne and that
Osborne, but for his negligence, would have prevailed in the airplane case. We
will not substitute our opinion regarding Keeney or Quesenberry’s negligence for
that of the jury. See Horton v. Union Light, Heat & Power Co., 690 S.W.2d 382,
385 (Ky. 1985).
2. Damages
Now that we have determined that Osborne sufficiently established
that the pilot in the airplane case was negligent, we turn to Osborne’s damages.
Quesenberry’s negligence is predicated on the existence of cognizable damages or
injury. And, as stated in Marrs v. Kelly, an element of a claim for legal
malpractice is that the client has suffered an injury proximately caused by the
attorney's negligent conduct. Marrs, 95 S.W.3d at 860. Thus, in the instant case,
the same damages from the airplane case are now asserted by Osborne against
Keeney. Osborne alleges that she was injured by Keeney’s acts and omissions,
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which rendered her case against Quesenberry without a remedy when the claims
were deemed time-barred. Osborne’s injury is the lost opportunity to pursue these
otherwise viable claims.
Notwithstanding the viability of Osborne’s claims for damages, these
damage claims must still be established under the requisite Kentucky law. When it
has been shown that wrongful conduct has been committed by an attorney against a
client, the plaintiff must still introduce credible evidence about the damages and
the calculation of the damages. Next, with this standard in mind, we will review
the jury’s award of damages in the airplane case, which included compensatory,
mental and physical pain and suffering, and punitive damages for the plane crash.
a. Airplane case – personal property damages
The jury in its verdict rendered $54,924.04 in compensatory damages
for personal property. This award was based on Osborne’s personal property that
the homeowner’s insurance policy had not paid her in the settlement with them.
Osborne’s loss of personal property inventory, which she prepared for the
insurance company, totaled $141,023.65, for which the insurance company paid
$83,127.36 for personal property. Obviously, a deficit exists between the
insurance company payment and the inventory. The amount of the deficit is
$57,896.29.
Keeney makes two arguments against the validity of the award for the
personal property damages. First, he explains that the measure of damages for loss
of personal property is the fair market value. Keeney alleges that Osborne relied
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upon an improper measure of damage to support her claim for loss of personal
property, that is, evidence of replacement cost rather than the fair market value of
the damaged property. The law in Kentucky is "that the proper measure of
damages for injury to personal property is the difference in the fair market value of
the property before and after the accident." McCarty v. Hall, 697 S.W.2d 955, 956
(Ky. App. 1985). Expert testimony, however, is not required to establish fair
market value. Id. While it is accurate to say that Osborne’s list on the value of her
destroyed property does not delineate between the fair-market or replacement-cost
value of the items, her Plaintiff’s Exhibit 16 is a meticulous and extensive list of
her personal property. In it she gives prices based on prices in stores, internet sites,
or suggestions of friends or family. Even though disputing the values of the items,
Keeney provides no evidence that the items were improperly valued or based only
on the fair market value. Many items are small household items in which the fairmarket value versus the replacement-cost value is somewhat meaningless. For
instance, the inventory contains items such as jeans, Christmas ornaments,
household cleaners, and towels. We find guidance for this issue in Columbia Gas
of Kentucky, Inc. v. Maynard, 532 S.W.2d 3, 6 (Ky. 1976), wherein the Court
stated:
However, this court has recognized that market value is
not a fair basis of compensation for the loss of
“household goods and wearing apparel,” the proper
measure being “the actual value in money . . . to the
owner for the purpose for which they were intended and
used . . . excluding sentimental or fanciful value which
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for any reason he (the owner) might place upon them.”
Davis v. Rhodes, 206 Ky. 340, 266 S.W. 1091 (1925).
Under this rule of damages we think that the
owner's estimate of what the items were worth to him,
unless so obviously preposterous as to be devoid of
probative value, is enough to support an award by a
properly instructed jury.
Second, Keeney complains that there was no competent proof on the
items previously paid for under the homeowner’s policy and appears to be
suggesting that Osborne was paid twice for some items. But Keeney’s allegation
that no competent proof was given regarding which items had previously been paid
for under the homeowner’s policy is merely an allegation. He never establishes
that Osborne was paid twice for any item. We find nothing unreasonable about the
method used to determine the value of the items not reimbursed under the
homeowner’s policy. The inventory total was initially reduced by an insurance
reimbursement. In this action, Osborne asked only for a value based on the
remaining inventory. And in fact, the jury did not award the full amount asked by
Osborne. Hence, in the case at hand we find nothing to indicate that the jury
incorrectly decided the value of the uninsured lost personal property or unfairly
determined the value of the remaining inventory. Needless to say, it is the
province of the jury to determine the amount of damages.
The amount of damages is a dispute left to the sound
discretion of the jury, and its determination should not be
set aside merely because we would have reached a
different conclusion. If the verdict bears any reasonable
relationship to the evidence of loss suffered, it is the duty
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of the trial court and this Court not to disturb the jury's
assessment of damages.
Humana of Kentucky, Inc. v. McKee, 834 S.W.2d 711, 725 (Ky. App. 1992). And,
we find no reason to substitute our opinion for the judgment of the jury.
b. Airplane case – damages for emotional and physical distress
The verdict included $500,000 denominated as “pain and suffering
both mental and physical” related to the airplane crash. The basis for this award
was testimony by Osborne and her medical providers. The distress consisted of
emotional distress and physical manifestations of stress reacting with her diabetes,
blood pressure, and depression. Osborne, however, consistently testified that she
had not been physically touched by anything after the crash or physically injured
by the crash.
Kentucky courts apply the “impact rule” in determining whether a
plaintiff may recover for negligent infliction of emotional distress. To recover
damages in such an action, the plaintiff must suffer a physical impact or injury.
The Kentucky Supreme Court recently reaffirmed our adherence to the impact rule
in Steel Technologies, Inc. v. Congleton, 234 S.W.3d 920, 928 (Ky. 2007), when it
cited Deutsch v. Shein, 597 S.W.2d 141, 145-46 (Ky. 1980) (quoting Morgan v.
Hightower's Adm'r, 291 Ky. 58, 59-60, 163 S.W.2d 21, 22 (1942)):
It is well established in this jurisdiction that “an action
will not lie for fright, shock or mental anguish which is
unaccompanied by physical contact or injury.”
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But Osborne suggests that Deutsch supports the finding of emotional
distress for her because the airplane’s landing on her house was a substantial factor
in her emotional distress. She alleges that the Deutsch case supports the notion
that, even though she was not physically touched in the airplane crash, because the
Court had “no difficulty” in finding the physical contact necessary to support that
plaintiff’s claim for mental pain and suffering when her body was negligently
subjected to x-ray diagnostic tests in Deutsch, this holding applies to her case
because the primary cause of her emotional distress was the crash. Deutsch, 597
S.W.2d at 145. Significantly, it is our understanding it was not that the Court
found no contact but rather that the x-rays were sufficient for contact.
We find no difficulty in concluding that the physical
contact necessary to support the claim for mental
suffering occurred when, through Dr. Shein's negligence,
Mrs. Deutsch's person was bombarded by x-rays.
Id. at 146.
In Deutsch, recovery was permitted to a pregnant plaintiff who had
been negligently exposed to x-rays by her doctor and chose to undergo an abortion
rather than risk an abnormal birth, although there was no proof that the x-rays were
actually harmful. The Court found that the negligence indirectly caused harm to
the plaintiff and supported her cause of action. Capital Holding v. Bailey, 873
S.W.2d 187 (Ky. 1994), addressed Deutsch in its analysis and noted that Deutsch’s
significance was the determination that an injury supported a claim regardless of
whether that injury was a direct or indirect consequence of the negligent activity.
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But the case does not stand for the proposition that damages for fear in the absence
of injury may be awarded. In Deutsch, “[t]he abortion and loss of the baby were
substantial injury.” Capital Holding at 193.
Therefore, under Kentucky jurisprudence, in order to recover for
emotional distress Osborne must have suffered some type of physical impact in the
airplane crash in order to recover damages for emotional suffering. As she herself
testified, nothing touched her and she was not physically injured. Thus, since
nothing touched her, she cannot recover. Hetrick v. Willis, 439 S.W.2d 942, 943
(Ky. 1969). Similarly, she cannot, as a matter of law, recover for emotional
distress, mental anguish, or any psychological stress. Morgan, 163 S.W.2d at 22.
Regardless of Osborne’s strenuous suggestion that Kentucky has
adhered to the “no impact” principle while other jurisdictions in negligence cases
have rejected the physical impact or injury requirement, it remains Kentucky law.
The trial court should not have allowed the jury to consider Osborne’s claim for
suffering, whether mental or physical, without any impact from the plane. Thus,
we hold that emotional distress and physical suffering damages in this case conflict
with the impact rule as it currently stands and vacate the $500,000 damage award
for these damages.
c. Airplane case – “punitive damages”
The question presented in this case is whether a plaintiff in a legal
malpractice case may recover punitive damages allegedly lost in the underlying
suit as a result of attorney malpractice. Keeney argues that the recovery of lost
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punitive damages is not permitted in a legal malpractice action and violates
Kentucky’s express purpose for punitive damages. According to Keeney, KRS
411.184 provides that the purpose of punitive damages is to punish a tortfeasor and
not to compensate the victim. In pertinent part, the statute says:
“Punitive damages” includes exemplary damages and
means damages, other than compensatory and nominal
damages, awarded against a person to punish and to
discourage him and others from similar conduct in the
future.
KRS 411.184(1)(f).
While Osborne, after noting that there are no Kentucky cases
specifically on point, contends that to refuse to allow plaintiffs to recover lost
punitive damages in legal malpractice cases is the same as rewarding a negligent
attorney for his or her wrongdoing. Moreover, in light of the nature of a legal
malpractice action, “case within a case,” we observe that not allowing a plaintiff to
recover lost punitive damages ignores the purpose of compensatory damages.
“The object of compensatory damages is to make the injured party whole to the
extent that it is possible to measure his injury in terms of money.” Kentucky Cent.
Ins. Co. v. Schneider, 15 S.W.3d 373, 374 (Ky. 2000). Therefore, using this
rationale, to allow an award for lost punitive damages in the underlying action
which, but for the attorney’s negligence, the plaintiff would receive, becomes a
compensatory function in a legal malpractice case.
Only a few jurisdictions have addressed this issue and they are split as
to whether or not a plaintiff in a legal malpractice action may recover “lost
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punitive damages” against an attorney defendant. And, as the parties to this action
have shown, it is certainly a question on which reasonable minds can disagree.
The dispute exists between the construct of whether to consider lost punitive
damages to be compensatory in the legal malpractice setting, or whether punitive
damages may only be assessed against the original tortfeasor as a deterrent for the
underlying bad action.
As noted by Keeney, punitive damages are not awarded as
compensation, but serve instead to punish the offender and to deter that party and
others from committing similar acts of wrongdoing in the future. Conversely, as
Osborne suggests, the issue is not based primarily on the purpose of punitive
damages but instead relies on the purpose of compensatory damages, that is, to
give the client what she lost because of the lawyer's negligence. In essence,
because the loss of the punitive damages is a result of the lawyer's negligence, “the
punitive damages recoverable from the original tortfeasor become compensatory
damages recoverable from the lawyer.” Jacobsen v. Oliver, 201 F. Supp. 2d 93,
101 (D.D.C. 2002), quoting Monroe H. Freedman, Caveat Lector: Conflicts of
Interest of ALI Members in Drafting the Restatements, 26 Hofstra L. Rev. 641, 653
(1998).
Recovery of lost punitive damages has only been addressed once in
Kentucky in an unpublished federal district court action, McMurtry v. Wiseman,
2006 WL 2375579 (W.D.Ky. 2006). Both parties discuss this case in their briefs.
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Keeney notes that this case held that lost punitive damages were not recoverable in
a legal malpractice case. He cites the following from the case:
Punitive, or exemplary, damages are not awarded as
compensation, but serve instead to punish the offender
and to deter that party and others from committing
similar acts of wrongdoing in the future . . . Allowing
Tri-G to recover its lost punitive damages from Burke
would not advance that policy in any way. To the
contrary, by holding the firm liable for the intentional or
willful and wanton misconduct of a third party, it tears
the concept of punitive damages from its doctrinal
moorings.
Id. at 1. Thus, Keeney contends, using this case as support to allow the recovery of
lost punitive damages would be extremely deleterious to the concept of punitive
damages. In fact, while McMurtry is the only Kentucky case to address the issue
of lost punitive damages directly, as an unreported slip opinion, it is not
controlling. Further, in McMurtry, the issue was whether lost punitive damages
should be recovered against an attorney who had committed mere negligence.
Notwithstanding McMurtry, in Kentucky, we have specific statutory direction
regarding legal malpractice damages in KRS 411.165, which states in pertinent
part:
If any attorney employed to attend to professional
business neglects to attend to the business, after being
paid anything for his services, or attends to the business
negligently, he shall be liable to the client for all damages
and costs sustained by reason thereof.
KRS 411.165(1). This statute was not addressed in McMurtry and, although
enacted in 1976, it has not been discussed in any Kentucky case.
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But, in the case at hand, we do not need to decide whether lost
punitive damages may be awarded in a legal malpractice action because there was
no evidence provided demonstrating the requisite level of conduct on the part of
the pilot for an award of punitive damages. Our decision rests on the statutory
language in KRS 411.184(2), which requires that an award of punitive damage
must be established by clear and convincing evidence that, here, the defendant
[Quesenberry] from whom such damages are sought, acted toward Osborne with
conduct allowing for the imposition of punitive damages.
Here, the jury decided the negligence of the pilot based on several
factors, including information from Keeney’s initial representation of Osborne; the
airplane crash itself; and the testimony of two attorneys – Sullivan, who
represented Quesenberry in the original action, and Hixon, an attorney and aviation
expert witness. In actions founded on negligence, the causal connection between
the defendant's negligence and the plaintiff's injury must be established by a
preponderance of the evidence. 65A C.J.S. Negligence § 812 (2009). We believe
that the jury’s findings in this case were not erroneous. But, notwithstanding that
negligence was established, Osborne must prove by clear and convincing evidence
that Quesenberry acted in such a manner as to warrant an award of punitive
damages. We find that no clear and convincing evidence was proffered by
Osborne regarding the necessary elements for an award of punitive damages
against the airplane pilot, and vacate the award of lost punitive damages in the
amount of $750,000.
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d. Legal malpractice case – Osborne’s emotional distress damages
As discussed above, Kentucky courts apply the “impact rule” in
determining whether a plaintiff may recover for negligent infliction of emotional
distress. To recover damages in such an action, the plaintiff must suffer a physical
impact or injury. Steel Technologies, Inc. v. Congleton, 234 S.W.3d at 928.
Osborne testified that Keeney never touched her and never made any inappropriate
contact. Likewise, we are not persuaded by Osborne’s reference to Sanders, Inc. v.
Chesmotel Lodge, Inc., 300 S.W.2d 239 (Ky. 1957), that mental anguish is an
element of damage for which monetary damages can be recovered in an action for
fraud. A fuller reading of the case states:
The fundamental rule in assessing damages for
fraud is that the victim of fraud is entitled to
compensation for every wrong which was the natural and
proximate result of the fraud. 24 Am.Jur., Fraud and
Deceit, Section 226, page 54. In Restatement of the Law
of Torts, Volume 3, Section 549, page 108, the rule is
stated as follows:
“The measure of damages which the recipient of a
fraudulent misrepresentation is entitled to recover from
its maker as damages * * * is the pecuniary loss which
results from the falsity of the matter misrepresented,
including
a) the difference between the value of the thing
bought, sold or exchanged and its purchase price
or the value of the thing exchanged for it, and
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(b) pecuniary loss suffered otherwise as a
consequence of the recipient's reliance upon the
truth of the representation.”
Sanders, 300 S.W.2d at 241. Clearly, this case does not support the proposition
that Osborne can receive damages for emotional distress based on Keeney’s fraud,
nor does she cite any other support for such a proposition. Consequently, under
Kentucky jurisprudence, Osborne may not recover $250,000 for emotional distress
and this portion of the jury award is vacated.
e.
Legal malpractice case – damages from fraud
Citing the Kentucky case, Long v. Howard, 260 Ky. 323, 75 S.W.2d
742, 743 (Ky. 1934), which states that “fraud without damage gives no rise to a
[legal] cause of action[,]” Keeney maintains that because Osborne suffered no
damages, the fraud verdict must be vacated. This contention is simply erroneous.
Osborne had damages for the loss of claim against Quesenberry for personal
property. Moreover, Osborne presented evidence that Keeney made fraudulent
promises that he would recover substantial sums of money from Quesenberry in
order to receive large payments of legal fees and costs. The jury awarded Osborne
$53,025.39 in legal fees and costs based on Keeney’s fraudulent conduct.
Therefore, Keeney’s argument that the jury’s determination that he committed
fraud must be vacated because Osborne did not suffer any damages is erroneous.
f.
Legal malpractice case – punitive damages
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Keeney argues that the jury’s award of $3.5 million in punitive
damages against Keeney should be vacated. Keeney bases this claim on the
following theories: (1) punitive damages are not recoverable unless damages are
available in connection with an underlying tort; (2) punitive damages are not
recoverable in a breach of contract claim; (3) punitive damages are not available
when the tortfeasor’s conduct does not rise to the level required by KRS 411.184.
We agree that punitive damages are not permitted for a breach of contract claim
unless the breach was accompanied by a separate tortious act. KRS 411.184(4);
Ford Motor Co. v. Mayes, 575 S.W.2d 480, 486 (Ky. App. 1978). But we disagree
with Keeney's contention that Osborne was not entitled to an instruction on
punitive damages for Keeney's alleged malpractice. Moreover, Keeney’s
contention that punitive damages cannot be awarded is based on the false
conclusion that Osborne did not sustain any damages as a result of his fraudulent
conduct.
It is accurate that to sustain a claim for punitive damages, more than
mere negligence on the part of an attorney is necessary. Punitive damages have
been awarded in cases where attorneys have failed to provide adequate
representation in a willful, wanton, fraudulent or malicious manner. In short, to
recover punitive damages in a legal malpractice case, it must be proven that “the
attorney acted with ‘fraud, ill will, recklessness, wantonness, oppressiveness, (or)
willful disregard of the (client's) rights’” (citation omitted). Hendry v. Pelland, 73
F.3d 397, 400, 315 U.S. App. D.C. 297, 300, 64 USLW 2543 (D.C. Cir.1996). A
-28-
determination of whether punitive damages are available is also governed by KRS
411.184 and KRS 411.186, the punitive damage statutes. See Bierman v.
Klapheke, 967 S.W.2d 16, 19 (Ky. 1998). In this case, fraudulent acts by an
attorney established a claim for punitive damages. Id. at 20. Additionally, in
Bierman, we upheld a judgment for punitive damages based upon fraudulent
concealment of legal malpractice because the concealment exacerbated the
damages suffered by the client, thus establishing "a claim for punitive damages
clearly independent from his acts of negligence." Id. at 20.
Additionally, in cases alleging gross negligence and requesting
punitive damages, “[a] party plaintiff is entitled to have (her) theory of the case
submitted to the jury if there is any evidence to sustain it.” Shortridge v. Rice, 929
S.W.2d 194, 197 (Ky. App. 1996) (quoting Clark v. Hauck Mfg. Co., 910 S.W.2d
247, 250 (Ky. 1995). If there was any evidence to support Osborne’s theory that
Keeney had acted with gross negligence in permitting the statute of limitations to
expire in her airplane case, Osborne had the right to an instruction on punitive
damages. Shortridge, 929 S.W.2d 194.
In the present case, the jury heard evidence that Keeney filed the
complaint in the airplane case a year after the statute of limitations had expired and
further failed to diligently prosecute that action. His failure to diligently prosecute
the action was commented on by the U.S. District Court in its order as an
independent justification for dismissal of that action notwithstanding his failure to
meet the statute-of-limitations deadline. Moreover, Osborne paid Keeney
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$53,025.39 in legal fees, as determined by the jury, based on his promises that he
would recover substantial money from Quesenberry from her homeowner’s
insurance proceeds prior to any suit being filed. Keeney’s failure to respond to
Quesenberry’s insurer about the damaged aircraft allowed it to be destroyed.
Keeney endorsed a check made out to Mr. and Mrs. Osborne from the
homeowner’s insurance and deposited it in his personal checking account without
informing them. When Osborne confronted him several months later, he said he
was retaining the majority of the check for unpaid hourly fees and expenses in
addition to his normal 20 percent contingency fee. Testimony was further elicited
that Keeney neglected to inform Osborne that the case had been dismissed for
approximately two months afterwards, which eliminated any possibility that
Osborne would have had to request reconsideration of the dismissal order or appeal
the court's decision. The authenticity of Keeney’s proffered contract was disputed.
In contrast, Keeney testified that he had informed Osborne that the
statute of limitations had already run in the airplane case before they filed their
complaint. He further testified that he had consistently advised Osborne that she
might not be able to recover for all her claims against Quesenberry. He also
testified that he did not file the complaint within the statute-of-limitations period
due to concerns he had, based on conversations with Osborne's physician, that
Osborne's health would be adversely affected by filing suit at that time. In other
words, Keeney disputed much of Osborne’s testimony, but the trier of fact heard
the evidence and ascertained that Keeney’s behavior reached the level required for
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an award of punitive damages. We, again, will not substitute our opinion for that
of the jury.
g.
Osborne’s damages exceeded her pretrial itemization
Keeney argues that Kentucky law limits Osborne’s monetary damage
recovery to the damages specified by her in pretrial discovery. Citing CR 8.01(2)
for support, he claims that damages are limited to the itemization of damages
provided in discovery or, if the court permits supplementation, the supplementation
may not cause prejudice to the defendant. He maintains that during pretrial
discovery, Osborne itemized her damages as follows: $1 million for the airplane
crash claim; $58,000 for legal fees and expenses; $500,000 for mental anguish; and
$1 million for punitive damages and, thus, is limited to that amount of damages.
Osborne counters that this assertion is in error because the $1 million
itemization refers specifically to the airplane case and was a response to Keeney’s
demand that damages for the underlying case be designated by Osborne. Osborne
further argues that the total amount of the jury’s award for the airplane case was
well within the $1 million itemization that had been claimed for damages in the
airplane case. Furthermore, Osborne maintains that Keeney’s argument that the
legal malpractice punitive damages award is limited to $1 million is without merit
because Keeney was well aware that Osborne was requesting that no limitation be
placed on the punitive damage award.
Besides these factors, Osborne also asserts that it is questionable
whether CR 8.01(2) even applies to punitive damages since the rule implicates
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unliquidated damages, which Osborne states are compensatory damages not
punitive damages. A jury determines compensatory damages based upon evidence
produced at the trial establishing a monetary amount for damages experienced by
the plaintiff on the basis of the defendant’s negligence. In contrast, Osborne
argues that punitive damages are intended to punish the defendant for his “bad”
conduct and prevent such conduct in the future.
It is important to review CR 8.01(2), which reads as follows:
In any action for unliquidated damages the prayer
for damages in any pleading shall not recite any sum as
alleged damages other than an allegation that damages
are in excess of any minimum dollar amount necessary to
establish the jurisdiction of the court; provided, however,
that all parties shall have the right to advise the trier of
fact as to what amounts are fair and reasonable as shown
by the evidence. When a claim is made against a party
for unliquidated damages, that party may obtain
information as to the amount claimed by interrogatories.
If this is done, the amount claimed shall not exceed the
last amount stated in answer to interrogatories . . . .
And Black's Law Dictionary, 419 (8th ed. 2004), defines unliquidated damages as
“[d]amages that cannot be determined by a fixed formula and must be established
by a judge or jury.” In response to Osborne’s suggestion that CR 8.01 does not
apply to unliquidated damages, we note that in Kentucky, we have two unreported
opinions, Pickett v. Shields, 2005 WL 3246838 (Ky. App. 2005), and Village
Campground, Inc. v. Liberty Bank, 2008 WL 4998478 (Ky. App. 2008), wherein
our Court has declared that punitive damages seem to fit within that definition for
unliquidated damages and, therefore, are subject to CR 8.01(2).
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We conclude, based on the plain meaning of CR 8.01(2) and caselaw,
that Osborne’s claim for unliquidated damages is effectively limited to $1 million
because that is the last amount she disclosed in her trial memorandum and she did
not make a motion to amend this amount. Indeed, in Fratzke v. Murphy, 12
S.W.3d 269, 273 (Ky. 1999), application of the CR 8.01(2) was held mandatory
and not discretionary. The Court explained the purpose of CR 8.01(2) by noting
that in that case, additional amounts of unliquidated damages could not be
recovered because "the purpose of the rule is to allow a party to discover the
amount an opposing party is seeking for unliquidated damage claims.” Id. See
also LaFleur v. Shoney's, Inc., 83 S.W.3d 474 (Ky. 2002).
CR 8.01(2) restricts a plaintiff’s recovery to the amount of damages
provided during discovery or any court-permitted supplementation if no prejudice
results to the defendant. Here, the last amount of damages specified by Osborne
was in her trial memorandum and she asked for $1 million in punitive damages for
Keeney’s legal malpractice. Thus, we hold that punitive damages herein are
limited to $1 million rather than the $3.5 million punitive damages awarded.
CAROLINA CASUALTY APPEAL
Next, we will address the issues presented by Carolina. First, a brief
synopsis of the facts will be given. Carolina issued Keeney’s legal malpractice
insurance policy. Under the provisions of the policy, the company and its
administrator hired and paid independent counsel for Keeney’s defense. As
previously mentioned the policy contains a $1 million limit of liability and allows
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for payment for Keeney’s defense at trial. The policy also provides that Keeney’s
coverage is reduced by the amount of attorney fees and costs incurred by his
defense counsel.
The procedural history of motions and cross-motions is elucidated
above under the “Background” section. In essence, two issues must be addressed.
First, we must consider the legal viability of Osborne’s motion to amend her
complaint nineteen days following the entry of the judgment. Then, we are
required to ascertain whether Carolina’s motion to intervene on appeal is valid.
1. Osborne’s Motion to Amend the Complaint
The longstanding rule in Kentucky is that a party may not move,
pursuant to CR 15.01, to amend or supplement a complaint after a judgment
becomes final under CR 58 without first moving to alter, amend, or vacate the final
judgment under CR 59.05 As the Kentucky Court of Appeals has already stated in
James v. Hillerich & Bradsby Co., 299 S.W.2d 92, 93 (Ky. 1956), “[u]nder CR
59.05, a motion to alter or amend a judgment must be served not later than 10 days
after entry of the judgment.” CR 15.01 supplies the authority to permit the
amended complaints to be filed. But the amendment of a complaint afforded by
CR 15.01 applies only to an amendment offered during the pendency of the action.
James at 94. The Court went on to say “[c]ertainly it was not intended to apply in
situations where, by the lapse of a period of 10 days after judgment, the court has
lost control of the judgment.” Id.
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In this case, the trial court entered a judgment on August 30, 2007,
that disposed of every issue presented in Osborne’s complaint. The judgment
concluded with the statement “[t]here being no just cause for delay, this judgment
is final and appealable.” Nothing in Osborne’s motion for leave to amend the
complaint or the trial court’s October 10, 2007 order granting the motion made any
mention of CR 59.05. Consequently, the CR 15 amendment and the order granting
permission to file an amended complaint are invalid without an order of
postjudgment relief vacating the original judgment.
Moreover, even without the trial court’s acting to vacate the original
judgment and permit an amendment to the complaint, Osborne moved to amend
her complaint on September 18, 2007, which was outside the time limits of CR 59.
That is, Osborne moved to amend or supplement her complaint nineteen days after
the trial court’s entry of judgment. A motion to alter, amend, or vacate a complaint
under CR 59.05 must be made no later than ten days after the judgment is entered.
Therefore, the trial court on September 18, 2007, no longer had any jurisdiction
over the case.
Additionally, the fact that Keeney’s motion for judgment
notwithstanding the verdict under CR 50.02, and motion to alter, amend, or vacate
under CR 59.05, were timely made does not change the timeline for Osborne.
Keeney served his motions on September 10, 2007, which was the final day to file
posttrial motions. Although Osborne’s motions were served within ten days of
Keeney’s posttrial motions, Osborne’s motion was not made within the ten days of
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entry of the judgment on August 30, 2007. Under Kentucky law, one party’s
motion for postjudgment relief under CR 50 or 59 does not toll the ten-day
limitation period for another party to file a CR 59 motion on different grounds.
Johnson v. Smith, 885 S.W.2d 944, 947 (Ky. 1994).
The timeline regarding this issue allows only one conclusion – the
trial court lacked jurisdiction to rule on Osborne’s motion when it granted the
motion to amend the complaint. We review questions as to the circuit court’s
jurisdiction de novo. Kentucky Employers Mut. Ins. v. Coleman, 236 S.W.3d 9, 13
(Ky. 2007). Therefore, the order is invalid. We vacate the order permitting the
amendment of Osborne’s complaint after the entry of the August 30, 2007
judgment.
2. Carolina’s motion to intervene in the direct appeal
By granting Carolina’s motion to dismiss the trial court’s grant
allowing Osborne to amend her complaint nineteen days after the entry of the
judgment, Carolina’s motion to intervene directly in the appeal is rendered moot.
CONCLUSION
After considering the arguments of the parties, we affirm in part and
vacate in part the Jefferson Circuit Court August 30, 2007 judgment, and October
10, 2007 opinion and order. First, we hold that Osborne raised a viable claim of
legal negligence against Keeney. Second, we determine that, with regard to
damages, the jury had sufficient evidence to establish damages for personal
property plus evidentiary support for the award for punitive damages in the
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malpractice case. But, we do not reach the issue of lost punitive damages in the
airplane case because clear and convincing evidence was not provided to
demonstrate the requisite actions on the pilot’s part warranting punitive damages.
With regard to the damages for emotional distress for both the underlying case and
the case itself, we find that Kentucky law does not allow an award of these
damages without physical impact and, thus, vacate the award for those damages.
We uphold the jury award of $53,025.39 in legal fees and costs to Keeney based on
sufficient evidence on the record for the jury to believe Keeney’s conduct was
fraudulent. Likewise, Keeney’s argument that his fraud damages must be vacated
because Osborne did not suffer any damages is erroneous. Finally, regarding the
itemization of damages pretrial, we believe, based on the requisites of CR 8.01(2),
that Osborne is limited to punitive damages in the amount of $1 million against
Keeney, based on her last itemization of such damages in her trial memorandum.
Additionally, we find that the trial court did not have jurisdiction to
allow Osborne to amend her complaint nineteen days following the entry of the
judgment and, thus, this order must be vacated. The vacation of the order allowing
her to amend her complaint renders moot any reason for Carolina to intervene
directly in the appeal.
In summary, for the foregoing reasons we affirm in part, vacate in
part, and remand to the Jefferson Circuit Court for further action in accordance
with this opinion.
MOORE, JUDGE, CONCURS.
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STUMBO, JUDGE, DISSENTS AND FILES SEPARATE OPINION.
STUMBO, JUDGE, DISSENTING. I agree with the majority’s well
written and scholarly opinion with one exception. I cannot agree with the
conclusion that there was insufficient evidence of gross negligence on the part of
the pilot. In addition to starting the engine by squirting aviation gasoline into the
air intake, the pilot ignored the fact that his engine had suffered pump failure three
times previously, investigation revealed a foreign object in the pump, the pump’s
previous repairs had been made with improper parts, and the repairs were
undocumented in violation of regulation. The pilot was the owner of the plane and
responsible for its being airworthy. Clearly, there was sufficient evidence to
support the award of punitive damages.
BRIEFS FOR APPELLANT/CROSSAPPELLEE STEVEN H. KEENEY:
Sheryl G. Snyder
Griffin Terry Sumner
Matthew W. Breetz
Andrew G. Beshear
Louisville, Kentucky
BRIEF AND ORAL ARGUMENT
FOR APPELLEE/CROSS APPELLEE
BRENDA C. OSBORNE:
Lee E. Sitlinger
Louisville, Kentucky
ORAL ARGUMENT FOR
APPELLANT/ CROSS-APPELLEE:
STEVEN H. KEENEY:
Sheryl G. Snyder
BRIEFS FOR APPELLEES/CROSSAPPELLANTS, CAROLINA
CASUALTY INSURANCE
CO. AND MONITOR LIABILITY
MANAGERS, INC.:
-38-
Douglas C. Ballantine
Amy Olive Wheeler
J. Kent Durning
Louisville, Kentucky
ORAL ARGUMENT FOR
APPELLEES/CROSSAPPELLANTS, CAROLINA
CASUALTY INSURANCE
CO. AND MONITOR LIABILITY
MANAGERS, INC.:
Douglas C. Ballantine
-39-
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