SWINFORD TRUCKING CO., INC. VS. PADUCAH BANK AND TRUST CO.
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RENDERED: MAY 21, 2010; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-001748-MR
SWINFORD TRUCKING CO., INC.
v.
APPELLANT
APPEAL FROM MCCRACKEN CIRCUIT COURT
HONORABLE R. JEFFREY HINES, JUDGE
ACTION NO. 03-CI-01185
PADUCAH BANK AND TRUST CO.
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: CAPERTON, CLAYTON AND THOMPSON, JUDGES.
THOMPSON, JUDGE: Swinford Trucking Co., Inc., appeals from an order
dismissing its complaint against Paducah Bank and Trust Co., on the basis that
Swinford had been fully compensated by the satisfaction of a criminal restitution
order. Because we conclude that the circuit court erred as a matter of law, we
reverse and remand.
Swinford’s office manager, Debbie Crowley, embezzled funds from
Swinford’s bank accounts at Paducah Bank and Trust and pled guilty to one count
of theft by failure to make a required disposition over $300 and seven counts of
fraudulent use of a credit card over $100. A restitution hearing was conducted at
which Swinford provided evidence regarding the specific amount that was
unlawfully withdrawn from its accounts. Following the hearing, a restitution order
was entered requiring Crowley to pay restitution in the amount of $343,726.50,
plus a five percent restitution fee. Ultimately, Crowley made full restitution.
The present action was filed by Swinford against Paducah Bank and
Trust alleging that because of Paducah Bank and Trust’s negligence, Crowley was
able to unlawfully withdraw the funds from its accounts and, as a result, Swinford
incurred economic losses. In addition to compensatory damages, Swinford sought
punitive damages and reasonable attorney fees.
After discovery had commenced, Paducah Bank and Trust moved for
summary judgment alleging that the full payment of restitution by Crowley
precluded Swinford’s action. The circuit court agreed and granted the motion.
Paducah Bank and Trust argues that pursuant to the doctrine of
collateral estoppel, the payment of full restitution by a criminal defendant
precludes any further recovery by the victim, even against third parties. Collateral
estoppel is a doctrine that evolved to promote judicial economy and finality. The
essential elements of collateral estoppel are: (1) identity of issues; (2) a final
decision or judgment on the merits; (3) a necessary issue with the estopped party
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given a full and fair opportunity to litigate; and (4) a prior losing litigant. Moore v.
Commonwealth, Cabinet for Human Resources, 954 S.W.2d 317, 319 (Ky. 1997).
The elements necessary to apply collateral estoppel cannot be
established where, as here, the issues are entirely distinct from those in the prior
litigation. The criminal litigation was prosecuted by the Commonwealth on behalf
of its citizens, not by Swinford. Although Swinford participated in the restitution
hearing, it was not represented by counsel to protect its interests and was not
entitled to a jury trial. Finally, Swinford’s cause of action is civil in nature and its
success is dependent upon Paducah Bank and Trust’s negligence in permitting
Crowley to unlawfully withdraw the funds from its accounts.
Our decision is consistent with KRS 533.030(3)(d) that provides: “An
order of restitution shall not preclude the owner of property or the victim who
suffered . . . out-of-pocket loss of earnings or . . . other damages from proceeding
in a civil action to recover damages from the defendant. A civil verdict shall be
reduced by the amount paid under the criminal restitution order.” Likewise, a civil
action is not precluded against a third party who permitted the unlawful act to
occur.
Paducah Bank and Trust asserts alternative reasons why this Court
should affirm the circuit court’s summary judgment, specifically, that Swinford
cannot establish a loss of business opportunity or recover interest or attorney fees.
Although the circuit court’s order did not state the specific basis of its decision, the
sole issue presented by Paducah Bank and Trust in its motion for summary
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judgment was collateral estoppel. As a result, we will not address the issues not
presented to the circuit court. Regional Jail Authority v. Tackett, 770 S.W.2d 225,
228 (Ky. 1989).
We conclude by emphasizing that we are not dictating a result in this
litigation nor does our decision foreclose a subsequent summary judgment motion
based on grounds other than collateral estoppel. However, Swinford is not
precluded from pursuing a civil action against Paducah Bank and Trust merely
because it received restitution from Crowley.
The summary judgment is reversed and the case remanded for further
proceedings consistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Richard D. Null
Mayfield, Kentucky
Thomas J. Keuler
Paducah, Kentucky
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