AND BELL COUNTY COAL CORPORATION v. CUMBERLAND VALLEY CONTRACTORS, INC.
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RENDERED: JULY 7, 2000; 10:00 a.m.
NOT TO BE PUBLISHED
MODIFIED: September 22, 2000; 2:00 p.m.
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-001564-MR (Direct)
AND
NO. 1998-CA-001601-MR (Cross)
BELL COUNTY COAL CORPORATION
and DARRELL HUFF
v.
APPELLANTS/CROSS-APPELLEES
APPEAL FROM BELL CIRCUIT COURT
HONORABLE FARMER HELTON, JUDGE
ACTION NO. 94-CI-00122
CUMBERLAND VALLEY CONTRACTORS, INC.
and DEL RIO, INC.
APPELLEES/CROSS-APPELLANTS
OPINION
AFFIRMING IN PART AND REVERSING IN PART ON APPEAL
AND
AFFIRMING ON CROSS-APPEAL
** ** ** ** **
BEFORE:
GUDGEL, Chief Judge; COMBS and MILLER, Judges.
COMBS, JUDGE: The appellants, Bell County Coal Corporation and
Darrell Huff, appeal from the judgment of the Bell Circuit Court
awarding damages to the appellees, Del Rio, Inc., and Cumberland
Valley Contractors, Inc.
of punitive damages.
The appellees cross-appeal on the issue
Having carefully reviewed the record, we
affirm the judgment of the court in part and reverse in part on
appeal and affirm on the cross-appeal.
This appeal arises out of an action originally filed by
Cumberland Valley Contractors, Inc., and Del Rio, Inc. (the
appellees), against Bell Coal Corporation and Darrell Huff, its
managing engineer (the appellants), in which they sought to
recover damages associated with their operation of the #5 Mine,
an underground coal mine, on Bell's leasehold.
In October 1989,
Bell and Cumberland entered into a mining contract whereby
Cumberland was to mine coal reserves located on the left and
right side of Hignite Creek on Bell’s leasehold from J. M. Huber
Corporation.1
clause.
The contract contained a 60-day cancellation
Cumberland operated the #5 Mine for approximately three
years until December 1992, when it assigned all of its rights and
interests under the mining contract to Del Rio.
Del Rio
continued operating the #5 Mine until the spring of 1993, when it
closed the mine. The mine was subsequently sealed by Bell.
In March 1994, the appellees (the plaintiffs below)
filed an action against the appellants alleging negligence,
breach of contract, and misrepresentation.
The appellees sought
punitive damages in addition to compensatory damages for lost
equipment and lost profits as a result of the appellants’ failure
to prepare accurate mine projection maps.
Under the mining
contract, Bell undertook to provide all engineering services and
to prepare the mining plans and projections, which Cumberland
1
The appellees’ complaint also named Huber as a defendant
with Bell and Huff. However, the court granted a directed
verdict in favor of Huber and dismissed all the claims against
it. The omission of Huber’s dismissal in the February 24 order
was a peripheral issue raised as a factor impairing the finality
of the order.
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agreed to follow “diligently.”
In their original complaint and
amended complaint, the appellees stated four incidents in which
the inaccuracy of the projection maps prepared by Bell and Huff
prevented them from accessing the coal reserves on the right side
of Hignite Creek -- ultimately causing the closure of the mine.
Bell filed a "counterclaim" against Del Rio for indemnification
in the event that Bell be adjudged liable to Cumberland.
The first incident occurred in January 1991, when
Cumberland cut into unmapped core holes while attempting to
access the coal reserve on the right side of Hignite Creek.
A
sediment pond had been constructed above the core holes, and
water from that pond poured into the mine.
Cumberland tried
unsuccessfully to plug the core holes but was forced to abandon
this section of the mine due to the impossible mining conditions
created by the water from the sediment pond above.
Subsequently,
in May 1991, as Cumberland was mining in a new submain, it again
encountered difficult mining conditions.
Cumberland abandoned
this section without being able to access the coal reserve.
Thereafter, Cumberland learned that the mine projection map had
failed to identify accurately Cumberland’s geographic location
with respect to its attempted mining operation.
Cumberland
believed that it was closer to the coal reserves than it was in
reality -- again as a result of bad mapping.
The third incident occurred in April 1993.
By this
time, Cumberland had assigned its mining operation to Del Rio.
Del Rio as assignee began mining; it cut into old mine works, and
once again water flooded into the mining section.
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Although no
miners were injured, Del Rio lost all of the mining equipment,
materials, and supplies in that section.2
Finally, in January
1994, Del Rio cut into its own old mine works.
The section was
inundated with water, and Del Rio lost supplies and materials.
Del Rio claimed that it lost confidence in the appellants'
engineering services and had no choice but to close the #5 Mine.
Filed originally in Bell Circuit Court, the case was
removed to the United States District Court; three years later it
was remanded back the Bell Circuit Court.
Upon remand to the
circuit court, the case proceeded to trial.
The court submitted
the case to the jury solely on the issue of compensatory damages
-- having declined to submit as to punitive damages.
At the
close of a five-week trial, the jury awarded compensatory damages
to the appellees totaling $5,852,106.00, which it allocated as
follows: $795,000.00 on the claims for loss of equipment and
$5,057,106.00 for lost profits.
On February 24, 1998, the court
entered an order setting out the jury’s award.
Although the
order indicated that it was a final and appealable judgment, it
nonetheless failed to dispose of Bell’s counterclaim.
Subsequently, the parties filed post-trial motions.
1998, the court entered an amended judgment.
On April 13,
The appellants
filed a motion to alter, amend or vacate the judgment, which the
court denied.
This appeal and cross-appeal followed.
Procedural Propriety as to Timeliness of the Appeal
2
Del Rio was using equipment furnished to it by Cumberland.
-4-
As a preliminary procedural matter, we will first
address the appellees’ contention that the appellants’ appeal is
untimely.
The appellees previously moved this Court to dismiss
the appellants’ appeal on the ground that it was untimely and,
therefore, that we lacked jurisdiction.
A three-judge motion
panel of this Court denied that motion to dismiss, and Cumberland
and Del Rio have asked us to revisit this issue.
The record shows that the court had specifically stated
that the February 24 order was not meant to be final and
appealable; the judge intended it to be an interlocutory order
entered in order to allow the damages to accrue interest while
the court disposed of Bell’s counterclaim.
The February 24 order
also failed to reflect that the trial court had granted a
directed verdict in favor of J.M. Huber Corporation and had
dismissed all claims against it at the close of the evidence.
Moreover, the February 24 order did not dispose of all the issues
or claims of the parties (essentially, Bell’s counterclaim and
Huber’s dismissal) and thus was not substantively a "final order"
within the meaning of Civil Rule (CR) 54.01 and CR 54.02 -despite its recitation of finality as a matter of form. On April
13, the court entered another "final order" ultimately disposing
of all remaining issues.
Another CR 59.05 motion to alter,
amend, or vacate was filed and was denied.
This appeal and
cross-appeal ensued.
After carefully reviewing both the trial record and the
appellate record, we find that the motion panel properly denied
the motion to dismiss this action based on the amended order of
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April 13.
This appeal is properly premised on the final order of
April 13 ultimately adjudicating all remaining issues.
That
amended order of April 13 (incorporating by reference the
interlocutory order of February 24) is the only final judgment
entered by the trial court.
The CR 59.05 motion challenging the
February 24 order was essentially futile and inchoate as an
attack on a non-final order.
The CR 59.05 motion challenging the
April 13 order thus was not successive. Additionally, a motion to
pursuant to CR 59.05 must be served not later than ten days after
entry of "final judgment."
requirement.
Appellants complied with this ten-day
We hold that the appeal was timely filed.
The Exculpatory Clause
The appellants first argue on appeal that the
appellees’ action against them was barred by the clear terms of
the parties’ mining contract.
Paragraph 30 of the contract
provided in pertinent part:
Owner [Bell] shall in no event assume or be
liable for any loss incurred by Contractor
under this Agreement. Owner does not assume
any responsibility or liability for the
present or future condition of the Premises
and Owner shall not be liable to Contractor
for any damage to or destruction of the
Premises or Contractor’s property or the
property of [sic] other person due to fires,
floods, or any other accident or natural
catastrophe which occurs on or within the
Premises.
The appellants contend that this exculpatory clause is
enforceable and, therefore, that they cannot be held responsible
for any loss that Cumberland or Del Rio may have sustained.
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In general, the case law in this jurisdiction
discourages reliance on exculpatory clauses designed to insulate
a party against his own negligence or liability.
Meiman v.
Rehabilitation Center, Inc., Ky., 444 S.W.2d 78 (1969).
Such
releases must be interpreted narrowly and construed strictly with
respect to the "protected party."
An exculpatory clause is
“generally void and unenforceable if it is violative of the law
or contrary to some rule of public policy.”
City of Hazard
Municipal Housing Commission v. Hinch, Ky., 411 S.W.2d 686, 689
(1967).
However, “one may contract away future negligence if
such is not wilful and wanton and not resultant in personal
injury.”
Jones v. Hanna, Ky. App., 814 S.W.2d 287, 289 (1991).
An important factor in assessing the validity of an exculpatory
clause is whether the parties to an agreement were on equal
footing with one another; i.e., whether the release constituted a
volitional agreement by one party to assume and bear all the
risks as opposed to an attempt or artifice by the other party to
insure against its own negligence. Meiman, supra at 80.
In the case before us, Bell promised in the mining
contract to provide all engineering services and to prepare the
mining plans and projections:
11. Engineering Services. Owner [Bell] will
provide engineering services at its sole
expense.
12. Mining Plans. (a) it is understood that
the Premises to be mined by Contractor
hereunder may be adjacent to other areas
which are presently being mine or will in the
future be mined by other contractors or by
Owner and, as such, the Premises may
constitute only a portion of the total area
of operations. Therefore, in order to allow
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Owner overall coordination of operations on
its lands, Owner will prepare mining plans
and projections and review the same with
Contractor prior to Contractor’s commencing
operations hereunder, and thereafter
Contractor shall diligently follow the same
in its operations hereunder . . . .
(Emphasis added).
Thus, Bell voluntarily assumed all the engineering services and
accordingly had a duty to perform these functions with reasonable
care.
Bell also exacted a promise from Cumberland that it would
"diligently follow" the mining plan.
The manner in which Bell
performed its duty directly affected the ability of the appellees
to perform the mining operation -- as well as having an impact on
the lives, safety, and property of others.
Case law is clear
that public policy is violated when a party undertakes such a
responsibility and then -- through an exculpatory clause -attempts to circumvent the burden of its concomitant duty of
care: "to secure in advance indemnity against the result of your
own negligence is clearly against public policy.”
Jones, supra
at 289.
Cumberland and Del Rio testified that Huff was in
possession of logs and maps which properly identified the
existence and location of the core holes and of the old mine
works.
However, Huff failed to indicate their location on the
projection maps.
This omission, Cumberland and Del Rio contend,
supports a finding of negligence that Bell and Huff breached
their statutory duties pursuant to the mining regulations set
forth in Kentucky Revised Statutes (KRS) Chapter 352.
with both contentions.
-8-
We agree
KRS 352.450 requires the "operator or superintendent"
of an underground mine to make a "map of the workings of the mine
which is accurate and of professional quality" to be filed with
the commissioner of the Department of Mine and Minerals.
The
statute sets forth a list of conditions that the map must show,
including in relevant part: (1) "All pillared, worked-out, and
abandoned areas;" (1)(b); (2)"Water pools above;" (1)(i); (3)
"All known drill holes that penetrate the coal bed being mined;"
(1)(o).
KRS 352.450(1)(b),(i),(o).
An "operator" means the
"licensee, owner, lessee, or other person who operates or
controls a coal mine."
KRS 352.450(1)(y).
After reviewing these statutes and the pertinent case
law, we agree that appellants breached their duty of care in such
a manner as to nullify their reliance on the exculpatory clause.
Bell and Huff possessed the information required to avoid the
catastrophes in the mining operation that occurred in this case.
Their negligence in providing that information as required by
their contract resulted in the injury to Cumberland and Del Rio.
That negligence was sufficient to form the necessary predicate
for invalidating the exculpatory clause.
We therefore are of the
opinion that Bell and Huff were not entitled to invoke the
exculpatory clause in the contract in order to insulate
themselves from the consequences of their own negligence under
the facts of this case.
We find no error in the proceedings
below on this issue.
Lost Profits
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Bell next challenges Del Rio’s recovery of damages for
lost profits on several grounds.3
We need only address one.
Bell asserts that Del Rio did not have an exclusive right to mine
the premises and, therefore, that any claim for lost profits was
speculative.
We are compelled to agree as to the speculative
nature of the lost profits.
In Pauline’s Chicken Villa, Inc. v. KFC Corp., Ky., 701
S.W.2d 399 (1985), the Kentucky Supreme Court addressed the issue
of lost profits, holding as follows:
The rule in this state is that which is set
out in Restatement (Second) Contracts, Sec.
352: “Damages are not recoverable for loss
beyond an amount that the evidence permits to
be established with reasonable certainty.”
Thus, the test is not whether the business is
a new or unestablished one, without a history
of past profits, but whether the damages in
the nature of lost profits may be established
with reasonable certainty.
Id. at 401.
The record substantiates that although Del Rio
attempted to establish its claim for lost profits with expert
testimony, lost profits in this case are too speculative.
The
mining of coal involves uncertain variables which may affect the
production and profitability of a particular coal mine.
Based on
the facts and circumstances of this case, Del Rio cannot overcome
or eliminate these unidentifiable factors and prove with
"reasonable certainty" damages in the nature of lost profits.
Id.
The authorities cited by Del Rio are neither persuasive nor
controlling as to the issue of lost profits.
3
The facts of this
Del Rio alone asserted a damage claim for lost profits.
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case dictate that conclusion compellingly.
Therefore, we must
vacate that portion of the judgment allowing for lost profits.
Professional Malpractice and Limitation of Action
Huff next argues that Del Rio’s claims based upon the
incidents of January 1991 and May 1991 are barred by KRS 413.245.
This statute of limitations provides:
Actions for professional service malpractice.
. . . a civil action whether brought in tort
or in contract, arising out of any act or
omission in rendering, or failing to render,
professional services for others shall be
brought within one (1) year from the date of
the occurrence or from the date when the
cause of action was, or reasonably should
have been, discovered by the party injured.
Time shall not commence against a party under
legal disability until removal of the
disability. (Emphasis added).
Del Rio did not file its complaint until April of 1994 -- three
years after the 1991 mining incidents.
Huff argues that these
claims were not filed within the one-year period mandated in KRS
413.245 and that they were clearly barred by this time
limitation.
However, Del Rio argues that the 1991 claims were not
barred because its cause of action did not accrue until the
incident of April 1993 when it failed in its final attempt in a
series of efforts to access the coal reserve on the right side of
Hignite Creek.
It
contends that the 1991 incidents were only
the first attempts in a continuing, ongoing endeavor to reach
these reserves and that its damages did not become fixed,
apparent, and non-speculative until it had exhausted all of its
opportunities to continue mining in April 1993.
-11-
Del Rio in essence urges this court to adopt and apply
the theory of continuing negligence to the facts of this case,
arguing that its 1991 claims are part of a continuing injury
leading up to and culminating in the 1993 incident.
Del Rio also
argues in the alternative that the "discovery rule" would have
entitled it to file its claim in 1994 for the injury that had
commenced in 1991 but which it did not discover until 1993.
KRS 413.245 provides for two periods of limitation: the
“first being one year from the date of the occurrence and the
second being one year from the date of discovery if it is later
in time.”
Alagia, Day, Trautwein & Smith v. Broadbent, Ky., 882
S.W.2d 121 (1994).
The discovery rule in this jurisdiction
provides that a cause of action accrues when the injury is, or
should have been, discovered.
Under the occurrence rule, there
can be no occurrence for purposes of accrual of a cause of action
until the damages arising out of the negligent act become fixed
and non-speculative.
Meade County Bank v. Wheatley, Ky., 910
S.W.2d 233 (1995).
Del Rio maintains that it did not discover Huff’s
negligence regarding the projection maps of 1991 until after the
original complaint had been filed and the parties had engaged in
discovery.
Upon learning during discovery that Huff possessed
logs and maps indicating the existence and location of the core
holes, Del Rio quickly filed an amended complaint.
Until this
revelation, Del Rio could not have known that the 1991 projection
maps had been negligently prepared.
We need not reach the issue
of continuing negligence as we are satisfied that Del Rio filed
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its action in timely fashion within one year of its discovery of
the negligence.
We hold that its claim is not barred by KRS
413.245.
Real Party in Interest — The Loan Receipt
Bell next contends Cumberland was not the real party in
interest with respect to its claim for lost mining equipment and
that, therefore, pursuant to CR 17.01, the trial court erred in
allowing Cumberland to prosecute this claim.
Bell maintains that
Royal Indemnity Company (Royal) was the real party in interest as
to the lost equipment based upon a Proof of Loss, Bill of Sale,
and “loan receipt” executed by Cumberland and Royal.
Cumberland had obtained an insurance policy from Royal
insuring its equipment against property damage.
Cumberland filed
a claim under this policy based upon the April 1993 incident in
which it lost equipment due to flooding.
Royal and Cumberland
executed a document entitled "Proof of Loss" in which Cumberland
claimed property damages in the amount of $795,000.00; it granted
Royal the subrogation rights to its right, title, and interest in
and to the property for which the claim had been made.
Royal
also obtained a “loan receipt” from Cumberland, which stated that
the $795,000.00 insurance payment was a loan which was
recoverable only in the event that Cumberland should make a net
recovery from any party that caused or would be found liable for
the damage to the insured property.
Additionally, Royal and
Cumberland executed a "Bill of Sale" under which Cumberland
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granted, sold, transferred, and delivered to Royal the equipment
for which it had claimed damages under the insurance policy.
A “loan receipt” is a legal fiction created by the
parties to a transaction for the purpose of allowing an
insurance company to file a subrogation action in the name of its
insured in order to avoid any possible prejudice that juries
might harbor against insurance companies.
Ky., 298 S.W.2d 18 (1957).
Ratcliff v. Smith,
Traditionally, Kentucky courts have
permitted and upheld this rather curious type of loan agreement.
In Aetna Freight Lines, Inc. v. R.C. Tway Co., Ky., 298 S.W.2d
293, 296 (1956), the Supreme Court of Kentucky held:
While it is clear that the difference between
a loan of the type under consideration and an
absolute payment is mere fiction, that ground
alone is insufficient to declare the
transaction a nullity. Rather we will look
to the purpose of the fiction created by the
parties to the transaction. It is clear the
purpose of the loan agreement was to insulate
[the insurer] from a prejudice which juries
frequently apply against insurance companies.
Our courts have long been award of this
prejudice, as exemplified by our decisions in
personal injury cases where the element of
insurance has been improperly injected.
The Court further stated that it could not say that “an agreement
which is intended to avoid the operation of an undue prejudice is
against public policy.”
Id. at 919.
Moreover, where the insured
and the insurer have executed a loan receipt, the insured is the
real party in interest and is entitled to sue for the entire
amount of damage.
R.C. Tway is still good law in Kentucky -- despite the
fact that the concept is somewhat antiquated in Kentucky due to
the development of insurance law since the loan receipt was used
-14-
as a subterfuge to mask the existence of insurance.
A loan
receipt remains a valid device for pursuing a "subrogation
claim."
We hold, therefore, that the court did not err in
allowing Cumberland to prosecute the claim for damages regarding
its lost equipment and that Royal was neither the real party in
interest nor an indispensable party.
Additionally, we agree
with Cumberland that the bill of sale was not an assignment of
its right to recover; Cumberland did not assign or waive its
right to maintain this action.
Limitation of Discovery
The appellants argue that the trial court erroneously
limited discovery and that they were not allowed to fully crossexamine the appellees’ expert/accountant.
Specifically, the
appellants allege that Cumberland and Del Rio transferred or
diverted
millions of dollars in expenses to other mining
operations and entities -- thereby improperly reducing expenses
and increasing profits, resulting in inflating the amount of
their claim for lost profits.
They unsuccessfully sought to
compel discovery of the financial statements and records of the
appellees’ other mines/businesses.
Pursuant to Cr 26.02, the parties may obtain discovery
of any matter that is not privileged but which is relevant to the
subject matter in the pending action.
However, the trial court
retains power to control discovery and to prevent abuse.
Stone, Ky. App., 952 S.W.2d 220(1997).
Ray v.
Moreover, “[i]t is the
duty of the court to keep the inquiry within reasonable bounds
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and to restrict questions to those having substantial relevancy
to a sensible investigation.”
Carpenter v. Wells, Ky., 358
S.W.2d 524, 526 (1962), quoting Foremost Promotions v. Pabst
Brewing Co., D.C., 15 F.R.D. 128.
In this case, we cannot say that the trial court erred
in failing to compel the appellees to provide the financial
records and statements of their other mines and businesses.
The
appellants had full access to all of the appellees’ financial
records, statements, and other related materials with respect to
the #5 Mine.
As this action is based solely upon the operation
of the #5 Mine, we cannot conclude that the appellees records
from other operations were so relevant as to imply or constitute
reversible error.
Another issue raised by the appellants is whether the
court erred in failing to allow any evidence on the issue of
mitigation of damages.
They argue in circuitous fashion that
they should have been allowed to introduce evidence that after
Del Rio abandoned the #5 Mine, it began operations at other mines
that were
more successful and profitable.
In other words, the
flooding of the #5 Mine -- which ultimately led to Del Rio’s
decision to close it down -- redounded to its financial advantage
because it enabled Del Rio to pursue more lucrative mining
operations.
We find this contention wholly lacking in logic as
well as in merit.
The Indemnity Clause
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The appellants also contend that under the indemnity
clause in the mining contract, they are entitled to a judgment
against Del Rio in the amount of $795,000.00.
Paragraph 23 (a)
states that the contractor agrees:
to indemnify and save harmless Owner [Bell]
from and against any and all liabilities,
obligations, damages, penalties, claims . . .
incurred or suffered by, or asserted against
Owner by third parties or governmental
authorities arising out of Contractor’s use,
occupancy or operation of the Premises.
The appellants maintain that Cumberland was a third party under
the terms of paragraph 23(a) because it was no longer a party to
the contract after having assigned its interest to Del Rio.
The
equipment lost in flooding incidents was owned by Cumberland.
All the mining equipment and supplies used in the mining of the
#5 Mine was owned by Cumberland.
Following the same rationale
that guided our examination of the mining contract’s exculpatory
clause, we find that Bell cannot seek indemnity against its own
actions which evidence a reckless or wanton disregard for the
lives, safety, and property of others.
Bell’s own negligence was
the cause of the loss -- not any action taken by Cumberland or
Del Rio -- regardless of the argument attempting to characterize
one as contractor by virtue of assignment and the other as a
third party -- rendering the contractor liable for
indemnification.
We can find no legal precedent capable of
sustaining this reasoning.
Jury Instructions
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The appellants challenge the court’s instructions to
the jury as improper on several grounds.
The argue that the jury
instructions: (1) erroneously imposed strict liability on them,
(2)
generally referred to state and federal law without
identifying specific duties, (3) cited to inapplicable MSHA laws,
and (3) failed to allow the jury to determine whether specific
breaches of duties resulted in actual damages.
In this jurisdiction, the “general rule for the content
of jury instructions is that they should be couched in terms of
duty.”
Rogers v. Kasdan, Ky., 612 S.W.2d 133, 136 (1986).
Instructions provide only the bare bones guidelines to a jury,
and this skeleton may then be fleshed out by counsel during
closing argument.
Cox v. Cooper, Ky., 510 S.W.2d 530 (1974).
After reviewing the elements of the claims asserted in light of
the evidence presented at trial, we find that the instructions
were essentially correct and that they adequately instructed the
jury on the elements of the claims alleged.
As to the remaining
evidentiary issues raised by the appellant, we have examined the
record and find no reversible error.
Separation of Items of Damages
Appellants allege error as to the failure of the court
to separate or allocate the damages awarded as to Cumberland and
Del Rio, respectively.
We find no error on this issue as
Cumberland and Del Rio have operated as effective alter egos and
legal counterparts for one another.
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The Supersedeas Bond
The final issue raised by the appellants on appeal is
whether the court erred in requiring them to execute a
supersedeas bond sufficient to include a penalty of $286,455.00
in order to stay execution of the judgment pending appeal.
We
again find no error.
KRS 26A.300 provides as follows:
(1) When collection of a judgment for the
payment of money has been stayed as provided
in the Rules of Civil Procedure, there shall
be no damages assessed on the first appeal as
a matter of right contemplated by Section
1115 of the Constitution of Kentucky.
(2) When collection of a judgment for the
payment of money has been stayed as provided
in the Rules of Civil Procedure pending any
other appeal, damages of ten percent (10%) on
the amount stayed shall be imposed against
the appellant in the event the judgment is
affirmed or the appeal is dismissed after
having been docketed in an appellate court.
(Emphasis added).
The statute is clear in forbidding assessment of a penalty in a
first appeal — which is the situation in this case.
However, the
damages allowed by section two for a second appeal are
contemplated and provided for by CR 73.04(2):
(2) When the judgment is for the recovery of
money not otherwise secured, the amount of
the bond shall be fixed at such sum as will
cover the whole amount of the judgment
remaining unsatisfied, cost on the appeal,
interest, and damages for delay, unless the
trial court after notice and hearing and for
good cause shown fixes a different amount or
orders security other than the bond.
While collection of the penalty is forbidden if only
one matter of right appeal is involved, CR 73.04(2) clearly
contemplates that the supersedeas bond should cover the ultimate
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assessment of a penalty if later appeals ensue.
That damage
assessment does not become ripe for collection until a second
appeal occurs.
However, we do not read the statute and the rule
as forbidding the assessment of a potential penalty upon the
initial setting of a supersedeas bond.
Consequently, we find no
error on this issue.
The Cross Appeal — Punitive Damages
On cross-appeal, the sole issue raised by the appellees
is whether the court erred in denying its motion and failing to
submit on the issue of punitive damages.
The question as to
whether to instruct on punitive damages is solely within the
discretion of the trial court, which is in the very best position
to evaluate whether the evidence presented compels such an
instruction. Davis v. Graviss, Ky., 672 S.W.2d 928 (1984).
Although, the appellees argue alternative theories of
punitive damages based on the state of flux existing in the law
at the time of trial (tendering alternate sets of instructions
accordingly), we find no error based on an abuse of discretion in
the trial court’s refusal to instruct on this issue.
Therefore,
we affirm as to the cross-appeal.
Based upon the foregoing reasons, we affirm the
judgment of the circuit court except as to that portion of the
judgment relating to lost profits.
On cross-appeal, we affirm
the judgment of the circuit court denying punitive damages.
ALL CONCUR.
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BRIEFS FOR APPELLANTS/CROSSAPPELLEES:
BRIEFS AND ORAL ARGUMENT FOR
APPELLEES/CROSS-APPELLANTS:
J. Peter Cassidy, Jr.
Perry M. Bentley
Palmer G. Vance, II
Todd S. Page
Lexington, KY
J.P. Cline III
Middlesboro, KY
Elizabeth Ullmer Mendel
Louisville, KY
ORAL ARGUMENT FOR
APPELLANTS/CROSS-APPELLEES:
J. Peter Cassidy, Jr.
Lexington, KY
-21-
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