ROCKWELL INTERNATIONAL CORPORATION ON REMAND OF KENTUCKY v. VANCE WILHITE and 74 ADDITIONAL APPELLEES NAMED IN NOTICE OF APPEAL
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AUGUST 8, 2003; 10:00 a.m.
TO BE PUBLISHED
Commonwealth Of Kentucky
Court Of Appeals
NO. 1997-CA-000188-MR
ROCKWELL INTERNATIONAL CORPORATION
APPELLANT
ON REMAND FROM THE SUPREME COURT OF KENTUCKY
NO. 2000-SC-0142-DG
v.
APPEAL FROM LOGAN CIRCUIT COURT
HONORABLE TYLER L. GILL, JUDGE
CIVIL ACTION NO. 93-CI-000158
VANCE WILHITE and 74 ADDITIONAL
APPELLEES NAMED IN NOTICE OF APPEAL
APPELLEES
OPINION
REVERSING
** ** ** ** **
BEFORE: KNOPF and TACKETT, Judges; and HUDDLESTON, Senior Judge.1
HUDDLESTON, Senior Judge:
to
the
Kentucky,
appellee
as
polychlorinated
the
This case, involving alleged injury
landowners’
result
biphenyls
properties
of
(PCBs)
the
by
in
Logan
deposit
Rockwell
thereon
of
International
Corporation, is on remand from the Supreme Court.
1
County,
At trial,
Senior Judge Joseph R. Huddleston sitting as Special Judge
by assignment of the Chief Justice pursuant to Section 110(5)(b)
of the Kentucky Constitution and Ky. Rev. Stat. (KRS) 21.580.
there were 50 separate awards to the landowners of compensatory
damages totaling $7,566,118.00 for 54 tracts of land.
Punitive
damages in the amount of $210,000,000.00 were awarded to all
landowners jointly.
We initially reversed the judgment.
Although
decision2
that
the
the
Supreme
testimony
Court
of
the
affirmed
our
landowners’
initial
valuation
witness, Charles Snyder,3 was inadmissible, it went on to say
that:
There was other evidence, however, of permanent injury
to properties for which landowners may be entitled to
compensation, and the proper remedy is to remand to
the trial court for a new trial in accordance with the
views set forth herein.
Prior
other
issues
Appeals.
to
that
a
new
must
be
trial,
however,
decided
by
the
there
Court
are
of
On appeal from the final judgment, Rockwell
presented numerous issues, some of which asserted a
right to prevail on all claims, while others asserted
2
Rockwell International Corp. v. Wilhite, Ky. App., No. 1997CA-000188-MR (Jan. 14, 2000). Although the opinion was ordered
published by this Court, it was depublished by the Supreme Court
when it accepted discretionary review.
For the reader
interested in tracing the history of this case, the opinion may
be found on-line at 2000 Ky. App. LEXIS 2 and 2000 WL 95282.
3
Snyder testified that the deposit of any quantity of PCBs on
the landowners’ properties, no matter how minute, rendered the
properties worthless. The basis on which we held that Snyder’s
testimony was inadmissible is set forth in detail in our initial
opinion, id.
-2-
a
right
to
prevail
landowners.
As
on
the
the
Court
claims
of
of
particular
Appeals’
decision
rendered a ruling on these other issues unnecessary,
our disposition requires remand to consider the issues
raised by Rockwell but left unresolved by the Court of
Appeals.
Accordingly, this case is hereby remanded to the
Court
of
Appeals
for
consideration
of
the
issues
presented by Rockwell but not decided in its opinion
of
January
Appeals
14,
2000.
discovers
respects,
the
case
no
In
the
event
reversible
shall
be
the
error
returned
to
Court
of
in
other
the
trial
court for a new trial in conformity with this opinion
and the subsequent opinion of the Court of Appeals,
subject
to
the
right
of
either
party
to
move
for
discretionary review in this Court.4
To comply with the Supreme Court’s mandate that we
consider the issues raised by Rockwell in its initial appeal
which were not decided, we undertake to answer the following
questions:
I.
What is the applicable statute of limitations and
are the landowners’ claims barred by that statute?
4
Wilhite v. Rockwell International Corp., Ky., 83 S.W.3d 516,
522 (2002).
-3-
II.
Do the landowners have a valid claim for negligent
trespass?
III.
Do the landowners have a valid claim based on the
creation by Rockwell of a permanent nuisance?
IV.
Was the award of punitive damages the result of
passion and prejudice?5
I.
Statute of Limitations
The first question we must answer on remand is:
what
limitation period applies on the current facts and, further, how
does its application affect the recovery, if any, to which the
landowners are entitled?
Our analysis begins with a review of
the arguments set forth by both the landowners and Rockwell.
According to Rockwell, the landowners “cannot recover
because their own evidence showed that there was no decline in
the value of their properties within the period of limitations.”
Further, the landowners “concede that the applicable statute of
limitations bars them from recovering for damages occurring more
than five years before the action was filed” and, under the
landowners’ own theory of the case, their land became worthless
upon
the
discovery
of
a
detectable
5
PCB
presence
which
was
The parties have submitted supplemental briefs addressing
these issues, and we have had the benefit of an additional oral
argument.
-4-
established prior to 1988.6
not
have
suffered
any
This means that the landowners could
further
damage
within
the
limitation
period because “the proper measure of permanent damage to real
estate in Kentucky is the difference in the fair market value of
the real estate just before and after the injury.”7
Inasmuch as
the landowners offered no evidence to establish the value of
their
property
just
before
or
after
the
injury,
they
have,
Rockwell contends, “altogether failed to establish an element
essential to their claim.”
In
argument
response,
“ignores
the
[Kentucky
landowners
Revised
claim
that
Statutes]
Rockwell’s
KRS
413.190(2),
which tolls the limitations period during the pendency of any
concealment by a defendant which frustrates a claim.”
the
landowners
documented
such
contend,
“heard
concealment
mislead the public.”
and
considerable
affirmative
The jury,
testimony
acts
which
designed
to
The landowners also rely on the circuit
court’s determination that the discovery rule is applicable in
6
In a memorandum opinion and order entered on January 22,
1996, the circuit court denied Rockwell’s motion to dismiss on
the basis of the statute of limitations.
In so doing, the
circuit court found that persons in the floodplain area were
placed on notice regarding PCB contamination as of September
1988, when a final report prepared by Dr. W.J. Birge for the
University of Kentucky entitled “Occurrence, Transport and Fate
of Contaminants in Kentucky Freshwater Systems—Green River
Drainage” was released.
7
Central Kentucky Drying Co., Inc. v. Department of Housing,
Ky., 858 S.W.2d 165, 167 (1993).
-5-
property
damage
cases,
emphasizing
that
“the
claim
does
not
arise in matters such as this until the damage is apparent.”8
The landowners were unaware, they say, that “they had suffered
an actionable trespass to their land until sometime after 1988”
because, although “the trespass itself may have occurred, at
least in part, many years earlier, the occurrence of damage as a
result, an essential element of the claim, happened much later.”
Since PCBs are “invisible to the eye, odorless, and can only be
detected
problem,”
through
the
costly
testing”
landowners
also
and
present
contend
that
a
“progressive
“it
would
be
inappropriate to fault [them] for not racing to the courthouse
8
In support of this proposition, the landowners cite Arnett
v. Commonwealth, Dept. of Highways, Ky., 528 S.W.2d 678 (1975),
and Big Sandy & Cumberland R.R. Co. v. Thacker, Ky., 109 S.W.2d
820 (1937).
In
Arnett,
property
owners
alleged
that
a
bridge
constructed by the Commonwealth across a stream on their
property resulted in a diversion of water which ruined their
crops and constituted a taking without just compensation.
Kentucky’s highest court reversed the trial court’s dismissal of
the action based on the statute of limitations, finding that the
“controlling question is not when the bridge was built, but when
the damage occurred,” and the Arnetts’ purchase of the property
after construction of the bridge did not deprive them of
standing to sue as they would have been entitled to compensation
if the Commonwealth was creating a nuisance. 528 S.W.2d at 679.
In Big Sandy, the High Court emphasized that the “burden
was on the appellant to establish its plea of limitations, and
it has failed to show that the injuries here complained of were
such that they might reasonably have been anticipated at the
time when the structure was completed.”
The Court went on to
say that
“a party is not required to sue for damages to his
land until it is reasonably apparent that he has suffered
damages.” 109 S.W.2d at 821.
-6-
to
bring
claims
they
did
not
even
comprehend
existed”
and,
likewise, that their inability to “pick a magical, non-existent
date of injury” should not be fatal to the claims asserted.
In
its
brief
on
remand,
Rockwell
reiterates
its
contention that the landowners’ suit is governed by a five-year
limitations period, citing KRS 413.120 and Wimmer v. City of Ft.
Thomas9
as
landowners
authority.
According
characterize
the
to
injury
Rockwell,
to
their
because
the
property
as
“permanent,” the cause of action accrued on the date of the
first
9
injury
and
“everyone
agrees
that
[the
landowners’]
Ky. App., 733 S.W.2d 759, 760 (1987).
Rockwell also cites Fergerson v. Utilities Elkhorn Coal
Co., Ky., 313 S.W.2d 395 (1958), in support of its position. In
Fergerson, Kentucky’s highest court observed that an action for
trespass usually accrues when the trespass is committed, and the
statute of limitations begins to run at that time. “These cases
ordinarily
involve
a
sudden
invasion
which
is
quickly
terminated.
In other cases where the invasion does not cease
immediately and the trespass continues, one may recover damages
for the injury inflicted during the five-year period immediately
preceding the instigation of the action.”
Id. at 399.
Consistent with this reasoning, the Court adopted Dean Prosser’s
view on the subject:
The
ordinary
trespass
is
complete
when
it
is
committed; the cause of action accrues, and the
statute of limitations begins to run at that time,
although the consequence may be a permanent injury to
the land.
But in many cases, as where the defendant
erects a structure or dumps rubbish upon the land of
the plaintiff, the invasion is continued by a failure
to remove it.
In such a case, there is a continuing
wrong so long as the offending object remains.
Id.,
citing Prosser on Torts § 13.
See also Prosser and Keeton on The Law of Torts § 13, p. 83 (5th
ed. 1984).
-7-
properties were first exposed to PCBs many more than five years
prior to the initiation of this action.”
In the alternative,
Rockwell argues that even if the trespass in question is deemed
to
have
court,
been
the
continuous
statute
of
in
nature,
limitations
as
found
still
by
operates
the
to
circuit
bar
all
claims for damages occurring more than five years prior to the
date (March 26, 1993) on which the complaint was filed.
Thus,
the landowners would have to establish the difference in the
fair market value of the property “that was inflicted within the
limitations period.”
As the “minimal levels of PCBs” present on
their property have not actually adversely impacted its market
value,
Rockwell
asserts
that
the
landowners
cannot
make
the
required showing.
The
“Rockwell’s
landowners,
hidden
on
the
misconduct
other
from
hand,
before
argue
1988
that
should
be
considered by the jury when assessing punitive damage issues.”
In their view, although a cause of action “does not accrue until
there has been a manifestation of damage or injury,” the “entire
panoply of the wrongdoer’s conduct is admissible and considered”
for the purpose of establishing the elements of the cause of
action.
227,
According to the landowners, both District Union Local
Amalgamated
Meat
Cutters
&
Butcher
Workmen
of
North
America, AFL-CIO v. Fleischaker10 and the more recent case of
10
Ky.,
384
S.W.2d
68
(1964).
-8-
In
Fleischaker,
a
civil
Sand Hill Energy, Inc. v. Ford Motor Co.11 provide support for
this position.
Since the circuit court’s finding to that effect has
not
been
challenged,
the
landowners
are
charged
with
having
conspiracy case, the High Court said that:
“We believe that a
conspiracy which contemplates a series of overt acts is a
continuing conspiracy and the statute does not commence to run
until the last overt act performed in compliance with the
objective of the conspiracy has been accomplished.” Id. at 72.
Consistent with this view, the Court concluded that the claim
for damages at issue was not barred by KRS 413.140 (which
provides that actions for conspiracy shall be commenced within
one year after a cause of action accrues) since the last overt
act occurred within one year of the filing of the action.
Id.
According to the landowners, this case is analogous to the
instant case and “the critical point is that for purposes of
assessing punitive damages, the wrongdoer’s conduct all the way
back to its original onset [is] admissible.”
11
Ky., 83 S.W.3d 483 (2002). In Sand Hill, the Supreme Court
concluded that the degree of reprehensibility of Ford’s conduct
was “substantial” for purposes of reviewing the punitive damages
award, relying on the fact that there was “no doubt that for at
least seven years after Ford knew of the dangerous propensities
of the C-6 transmission, it continued producing and installing
it in its vehicles.” Id. at 494. As observed by the Court, the
vehicle in question “was a 1977 model manufactured five or more
years after Ford knew of the dangerous propensity of its
The landowners cite Sand Hill for the
transmission.”
Id.
proposition that conduct before the limitations period can be
considered in assessing punitive damages under Kentucky law,
emphasizing the quoted language as well as references by the
Court to documents dating back to 1970 in describing Ford’s
misconduct.
On May 19, 2003, the United States Supreme Court
vacated the decision in Sand Hill and remanded the action to the
Kentucky Supreme Court for further consideration in light of its
decision in State Farm Mut. Ins. Co. v. Campbell, 538 U.S. __,
123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003). State Farm further
clarifies the factors to be considered in assessing punitive
damage awards and, in effect, sets an upper limit on punitive
damage awards. Ford Motor Co. v. Estate of Smith, __ U.S. __,
123 S. Ct. 2027, 155 L. Ed. 2d 1056 (2003).
-9-
notice
regarding
PCB
contamination
as
of
September
1988.
Pursuant to KRS 413.120, their action against Rockwell had to be
“commenced within five years after the cause of action accrued,”
assuming
the
statute
applies.
Because
the
landowners
filed
their complaint on March 26, 1993, it is beyond dispute that
they initiated their action within the designated limitations
period.
The inquiry does not end there however.
Rather, the
becomes
accrued,
question
when
the
cause(s)
of
action
a
determination that necessarily hinges on whether the injury is
characterized
resolution
period
of
began
as
permanent
which
to
or
dictates
run
temporary
when
thereby
the
in
nature,
applicable
defining
the
and
the
limitations
extent
of
the
landowners’ injury for purposes of recovery.
In Wimmer,12 we observed that Kentucky’s highest court
had previously held that actions for damages to real property
caused by another’s negligence sound in trespass, and the fiveyear
statute
of
limitations
applies
to
them.
Because
Commonwealth, Dept. of Highways v. Ratliff13 involved a one-time
incident of damage to a highway bridge by a truck and driver,
the Supreme Court determined that suit had to be brought during
the
five-year
period
following
12
the
collision.
Since
the
Supra, n. 9, at 760, citing Commonwealth, Dept. of Highways
v. Ratliff, Ky., 392 S.W.2d 913 (1965), and KRS 413.120(4).
13
Id.
-10-
appellant in Wimmer alleged a continuing trespass as a result of
the city’s negligent failure to maintain its street adjacent to
his
property,
causing
however,
continuing
we
said
trespasses
that
and
“[o]ffending
recurring
structures
damages
are
not
susceptible to a simplistic application of the five-year limit.”
In so doing, we applied the following guidelines derived from
Honaker v. Chesapeake & Ohio Railroad Co.:14
(1)
If the offending structure is permanent and
non-negligent, suit must be brought within five years from
the date the cause of action accrued;
(2)
negligently
or
If the offending structure is permanent but
unlawfully
built
or
maintained,
recurring
recoveries may be had as the injuries occur;
(3)
If
the
offending
structure
is
temporary,
recurring recoveries may be had irrespective of negligence;
(4) If the offending structure is permanent but
unlawfully
built
or
negligent,
only
a
one-time
recovery
brought within five years from the date the cause of action
accrued is allowed if it be shown that the structure cannot
be remedied at an expense reasonable in relation to the
damage;
14
209 Ky. 576, 273 S.W. 81 (1925).
-11-
(5) If the evidence on the question of negligence
presents a genuine issue, it is for the jury to decide.15
In
summary,
we
reiterated
the
importance
of
determining whether a structure is permanent or temporary. A
“structure
is
removed
altered
meant
or
to
permanent
last
at
if
it
cannot
reasonable
indefinitely,”
be
expense,
readily
while
“if
or
the
is
remedied,
durable
structure
can
and
be
changed or repaired or remedied at reasonable expense, it is
temporary.”16
that
in
Citing Lynn Mining Co. v. Kelly,17 we determined
those
instances
where
the
five-year
statute
of
limitations does apply, the date the cause of action accrues is
the
“date
the
structure
was
completed
and
its
operations
commenced, or the date of the first injury, or the date it
15
Wimmer, supra, n. 9, at 760.
16
Id. at 761, citing Fergerson, supra, n. 9.
17
Ky., 394 S.W.2d 755 (1965). In Lynn Mining Co., as is the
case here, the parties assumed that KRS 413.120 was the
governing statute.
However, the Court distinguished between
permanent and temporary nuisances, observing that the statute
would bar the appellees’ claims “only if the condition created
by appellants constituted a permanent nuisance.” Alternatively,
“if the facts established a temporary nuisance, this was a
continuing trespass for which damages could be recovered for
each recurring injury (subject to the limitation that damages
could not be recovered for so much of the injury as occurred
more than five years before the commencement of the action).”
Id. at 757 (original emphasis). See also Judd v. Blakeman, 175
Ky. 848, 195 S.W. 119 (1917), and City of Princeton v. Pool, 171
Ky. 638, 188 S.W. 758 (1916).
-12-
became apparent that injury would occur.”18
Conversely, if the
trespass or invasion of the landowners’ property is a continuing
one,
damages
are
recoverable
for
the
five-year
period
immediately preceding the instigation of the action.19
Regardless of whether the injury to the landowners’
property is classified as a permanent or temporary nuisance,
West Kentucky Coal Co. v. Rudd20 provides further guidance.
That
suit was brought by a farm owner against eight coal companies to
enjoin the discharge of coal slack, copperas waters and other
deleterious substances which were carried into the river and
deposited on his farm during overflow periods causing damage to
the productivity and fertility of the land.
Similar to the
characterization of the landowners’ claim by Rockwell and its
implications, West Kentucky Coal alleged that the farmer had
asserted that the value of his farm was completely destroyed as
early as 1937 or 1940 and, therefore, any contamination that
resulted from its operations in more recent years could not have
damaged him further.21
Observing that this argument was “tied in
with a plea of limitations,” Kentucky’s highest court said that,
when
taken
as
a
whole,
the
farmer’s
pleadings
and
evidence
asserted a claim of continuing partial damage to his farm and
18
Wimmer, supra, n. 9, at 761.
19
Id. at 761, citing Fergerson, supra, n. 9, at 399.
20
Ky., 328 S.W.2d 156 (1959).
21
Id. at 159.
-13-
did not warrant the interpretation placed on them by the coal
company.22
The Court pointed out that it was the method of
operation that constituted the nuisance rather than the mines
themselves, which did not constitute permanent nuisances “in the
sense
of
an
expensive
structure.”23
permanent
Relevant
for
present purposes, the Court engaged in the following analysis of
the injury and its implications:
Nor is the injury to the plaintiff in the
category of permanent injury within the rule that the
cause
of
action
commences
injury first occurs.
involved
has
continuing
injunction
many
may
be
run
at
the
time
the
Injury of the character here
times
trespass,
to
been
for
obtained
held
which
at
any
to
constitute
damages
time,
or
the
a
an
only
limitation being that damages cannot be recovered for
so much of the injury as occurred more than five years
before commencement of the action.24
Although
this
reasoning
together
with
the
aforementioned principles would, at first blush, appear to be
dispositive as to the issue presented, the case law summarized
thus far must be interpreted in light of the “discovery rule,”
22
Id.
23
Id. at 160.
24
Id.
-14-
42 United States Code (U.S.C.) § 965825 in the context of actions
under state law for injury resulting from exposure to hazardous
substances.
In
Louisville
Trust
Co.
v.
Johns-Manville
Products
Corp.,26 the Supreme Court was confronted with the question of
25
In relevant part, 42 U.S.C. § 9658 (also known as Section
309 of the Comprehensive Environmental Response, Compensation,
and Liability Act or CERCLA) provides:
(a) State statutes of limitations for hazardous substance
cases.
(1) Exception to state statutes. In the case of any
action brought under State law for personal injury, or
property damages, which are caused or contributed to by
exposure to any hazardous substance, or pollutant or
contaminant, released into the environment from a facility,
if the applicable limitations period for such action (as
specified in the State statute of limitations or under
common law) provides a commencement date which is earlier
than the federally required commencement date, such period
shall commence at the federally required commencement date
in lieu of the date specified in such State statute.
(b) Definitions.
As used in this section—
(2) Applicable
limitations
period.
The
term
“applicable limitations period” means the period
specified in a statute of limitations during which a
civil action referred to in subsection (a)(1) may be
brought.
(3) Commencement date.
The term “commencement date”
means the date specified in a statute of limitations
as the beginning of the applicable limitations period.
(4)
Federally required commencement date.
(A)
In general.
Except as provided in
subparagraph
(B),
the
term
“federally
required
commencement date” means the date the plaintiff knew
(or reasonably should have known) that the personal
injury or property damages referred to in subsection
(a)(1) were caused or contributed to by the hazardous
substance or pollutant or contaminant concerned.
-15-
whether to extend the “discovery rule” of medical malpractice
cases to tort actions for injuries resulting from latent disease
caused by exposure to harmful substances.
It could find no
“compelling policy-based reason” for distinguishing between the
two types of actions for the purpose of determining when an
injured party must bring a lawsuit or be barred by limitations.
As
there
was
no
dispute
concerning
the
operative
facts,
the
Court concluded that an administrator’s suit seeking recovery
under a theory of products liability arising from an alleged
failure to adequately warn of known dangers associated with the
inhalation of asbestos dust was timely filed and not barred by
the one-year statute of limitations, although the action was
brought nearly five years after the decedent had voluntarily
terminated his employment with Johns-Manville.27
In extending the rule’s application, the Court relied
upon the rationale of Urie v. Thompson,28 in which the United
States
Supreme
involved
a
Court
locomotive
developed
the
“discovery
rule.”29
Urie
fireman
who
contracted
silicosis
from
inhaling silica dust over a thirty-year period.
The defendant
argued that the action was barred by the three-year statute of
limitations prescribed in the Federal Employers’ Liability Act
26
Ky., 580 S.W.2d 497 (1979).
27
Id. at 498, 501.
28
337 U.S. 163, 69 S. Ct. 1018, 93 L. Ed. 1282 (1949).
29
Louisville Trust Co., supra, n. 26, at 499.
-16-
(FELA).
Holding that the cause of action did not accrue until
the plaintiff either knew or had reason to know of the disease,
the Court said that the adoption of any other rule
would mean that at some past moment in time, unknown
and inherently unknowable even in retrospect, Urie was
charged
with
knowledge
of
the
slow
and
tragic
disintegration of the lungs; under this view Urie’s
failure to diagnose within the applicable statute of
limitations
obtruded
a
on
disease
his
whose
symptoms
consciousness
would
had
not
constitute
yet
a
waiver of his right to compensation at the ultimate
day of discovery and disability.
30
As observed by the Kentucky Supreme Court, the “thrust
of
Urie
is
immediately
that
the
when
cause
an
of
injury
action
does
should
not
manifest
accrue
not
itself
when
the
injury was initially inflicted, but when the plaintiff knew or
should have known that he had been injured by the conduct of the
tortfeasor.”31
Accordingly, an action accrues “only at the time
the plaintiff suffers an actionable wrong” or, said another way,
an action “does not exist until the conduct causes injury that
30
Id., quoting Urie, supra, n. 28, 337 U.S. at 169, 93 L. Ed.
at 1292.
31
Id. at 500.
-17-
produces
loss
or
damage.”32
However,
a
plaintiff’s
lack
of
knowledge as to the extent of his injury does not toll a statute
of
limitations
to
which
the
discovery
rule
is
applied.33
Recently, the Kentucky Supreme Court upheld the validity of the
“discovery rule” in the context of a FELA action, commenting
that it has been “further modified to hold that a cause of
action accrues when a plaintiff knows or, in the exercise of
reasonable diligence, should know of both the injury and its
34
cause.”
Although common sense, logic and policy considerations
weigh in favor of applying the “discovery rule” in the present
context, our research has not revealed nor have we been cited to
any Kentucky case applying the “discovery rule” in a property
damage action.
The United States District Court for the Western
District of Kentucky spoke directly to this issue in G & K Dairy
v. Princeton Electric Plant Board,35 in which a dairy alleged
that Princeton, a distributor of electricity, was negligent in
32
Id. (citation omitted).
This rationale was subsequently
followed in rejecting prior case law to apply the “discovery
rule” to medical malpractice actions.
“An action for medical
malpractice accrues, and begins the running of the limitations
period ‘on the date of the discovery of the injury, or from the
date it should, in light of ordinary care and diligence, have
been discovered.’” (Citation omitted.)
33
Id.
34
Lipsteuer v. CSX Transportation, Inc., Ky., 37 S.W.3d 732,
737 (2000).
35
781 F. Supp. 485 (W.D.Ky. 1991).
-18-
allowing stray voltage to injure its herd of dairy cattle.
The
dairy argued that its action was timely because it was filed
within one year of the discovery that the dairy herd’s injuries
were caused by stray voltage.36
The district court disagreed,
holding that the “discovery rule” was “not applicable to [the]
property damage action and that, even if it was applicable, it
would not change the Court’s decision.”37
According
to
the
district
court,
when
the
Kentucky
General Assembly has intended for the “discovery rule” to apply
in a specific context, it has enacted an applicable statute,
with
examples
including
KRS
342.316(3)
(workers’
compensation
actions), KRS 413.245 (professional service malpractice actions)
and KRS 413.130(3) (fraud actions).38
which
established
the
one-year
Further, “the same statute
limitation
for
an
action
for
injuries to cattle or livestock by a corporation codified the
“discovery rule” for medical malpractice actions and actions for
recovery
(5).”39
of
stolen
property.
KRS
413.140(1)(b),(2),(4)
and
Also, as explained by the district court, “in the
absence of a controlling Kentucky statute, no Kentucky court or
any
federal
court
construing
Kentucky
law
has
held
that
the
‘discovery rule’ applies to property damage actions,” although
36
Id. at 487.
37
Id.
38
Id. at 488.
39
Id.
-19-
the Sixth Circuit Court of Appeals, construing Kentucky law, has
applied the “discovery rule” in the context of a personal injury
action,
albeit
involved
dicta.”40
“[i]n
property
damage
rather
Because
than
the
action
personal
at
issue
injury,
the
district court deemed this precedent unpersuasive.41
As a final basis for its reasoning, the court noted
that Louisville Trust Co.42 stands for the proposition that when
an
injury
action
does
should
not
manifest
accrue
not
itself
when
immediately
the
injury
the
was
cause
of
initially
inflicted, but when the plaintiff knew or should have known that
he had been injured by the conduct of the tortfeasor because an
“injured party should be allowed to have his day in court when
his injury was of an inherently unknowable nature.”43
Because
the dairy had learned that stray voltage endangered its herd in
April 1987 and became aware of the herd’s injuries in the spring
40
Id. In Drake v. B.F. Goodrich Co., 782 F.2d 638 (6th Cir.
1986), the United States Court of Appeals for the Sixth Circuit
held that KRS 413.140(1) “begins to run from the date ‘the
plaintiff discovers or in the exercise of reasonable diligence
should have discovered not only that he has been injured but
also that his injury may have been caused by the defendant’s
conduct.’” Id. at 641, quoting Louisville Trust Co., supra, n.
26, at 501.
See also Kowalski v. Goodyear Tire & Rubber Co.,
841 F. Supp. 104 (W.D.N.Y. 1994), for another case applying the
federally required commencement date of 42 U.S.C. § 9658 in a
personal injury action.
41
Id.
42
Supra, n. 26.
43
Id. (Citation omitted.)
G & K Dairy, supra, n. 35, at 488.
-20-
of 1988,44 the court determined that the herd’s injuries were not
“latent.”
In
the
alternative,
the
dairy
asserted
that
its
complaint was filed timely “because the limitations time does
not begin to run or is tolled on a ‘continuing wrong,’ until the
wrong is ‘over and done with.’”45
Again, the district court was
Citing Lynn Mining Co.46
unpersuaded by the dairy’s argument.
and Fergerson,47 the court emphasized that when the discovery
rule is inapplicable, an action for an injury which occurred
outside the limitations period is time-barred and, even in the
case of a temporary nuisance, damages can not be recovered for
so much of the injury as occurred outside of the requisite time
frame preceding the commencement of the action as measured by
the applicable limitations period.48
Guided by these principles,
the district court engaged in the following analysis:
Lynn Mining Co. and Fergerson are analogous
to
this
action.
The
plaintiffs
allege
that
stray
voltage injured their dairy herd.
Essentially, this
is a “trespass” to the dairy herd.
So, even assuming
that the dairy herd’s exposure to stray voltage was
44
The plaintiffs filed their complaint on September 8, 1989.
45
G & K Dairy, supra, n. 35, at 488.
46
Supra, n. 17.
47
Supra, n. 9.
48
G & K Dairy, supra, n. 35, at 488.
-21-
continuous,
the
plaintiffs’
recovery
is
limited
to
damages for the injuries inflicted on the dairy herd
during the one-year period immediately preceding the
commencement
of
this
action
on
September
8,
1989.
Accordingly, the Court will grant summary judgment to
the defendant on the plaintiffs’ claims for injuries
inflicted on their dairy herd prior to September 8,
1988,
and
deny
summary
judgment
on
the
plaintiffs’
claims for injuries inflicted on their dairy herd on
or after September 8, 1988.49
In an analogous case, the Iowa Supreme Court adopted
the same approach, concluding that injuries resulting from stray
voltage are recurring and, therefore, permitted the plaintiff
dairy farm owners to recover for damages occurring within the
five-year
period
(the
applicable
statute
of
limitations)
immediately preceding the inception of their lawsuit against the
electric
company.50
“Iowa
courts
have
long
followed
the
principle that a cause of action based on negligence does not
accrue until the plaintiff has in fact discovered that he or she
has suffered injury or by the exercise of reasonable diligence
should have discovered it.”51
Noticeably absent from the Iowa
49
Id.
50
Hegg v. Hawkeye Tri-County REC, 512 N.W.2d 558 (Ia. 1994).
51
Id. at 559.
-22-
court’s opinion, however, is any discussion as to whether the
“discovery rule” should apply in the context of an action based
on injury to real property.
The Court makes no distinction on
this basis, instead applying the rule as it would in any other
negligence action without further explanation. Also noteworthy
is
the
Court’s
declaration
that
“where
the
wrongful
act
is
continuous or repeated, so that separate and successive actions
for damages arise, the statute of limitations runs as to these
latter actions at the date of their accrual, not from the date
of the first wrong in the series,” which implicitly emphasizes
the importance of the accrual date.52
Acknowledging that the
“case comes down to whether the Heggs complained of a continuing
wrong,”
the
actions
accruing
preceding
Court
the
limited
during
inception
the
plaintiffs’
the
statutory
of
the
recovery
period
current
of
action
to
those
five
years
for
damages
consistent with prior case law from its jurisdiction and the
outcome reached in G & K Dairy.53
In contrast, Wisconsin has held that “if any act of
negligence within the continuum falls within the period during
which the suit may be brought, the plaintiff . . . may bring
suit for the consequences of the entire course of conduct,”54 a
52
Id.
53
Id. at 560.
54
Id., quoting Koplin v. Pioneer Power & Light Co., 162 Wis.
2d 1, 469 N.W.2d 595, 605 (1991).
-23-
position which is both intuitive and particularly appropriate on
the current facts.
Further support for this viewpoint is found
in Tucker v. Southern Wood Piedmont Co.,55 in which the United
States Court of Appeals for the Eleventh Circuit addressed the
interplay between the Georgia statute of limitations and the
federally mandated “discovery rule.”
In Tucker, the plaintiffs
had asserted federal and state causes of action for negligence,
trespass
and
nuisance
against
the
defendant
wood
companies for exposure to hazardous substances.56
treatment
On appeal, the
Circuit Court upheld the decision of the United States District
Court for the Middle District of Georgia denying the defendants’
motion
to
restrict
the
state
law
claims
to
injuries
that
occurred during the four years immediately preceding the filing
of the action.57
Distinguishing
between
tort
claims
for
damage
to
property and actions to recover damages for personal injury, the
Court
began
its
analysis
by
noting
that
there
is
no
state
“discovery rule” in Georgia for torts involving property damage.
Rather,
“tort
claims
for
damage
to
property
accrue,
and
the
statute of limitations begins running, on the date the wrong is
55
28 F.3d 1089 (11th Cir. 1994).
56
Id. at 1090.
57
Id. at 1089.
Ordinarily, claims for negligence, trespass
and nuisance are governed by a four-year statute of limitations
pertaining to trespass and damage to realty under Georgia law.
Id. at 1090.
-24-
committed,
regardless
of
when
discovered the wrongdoing.”58
the
injured
party
should
have
Because operation of the wood-
treating facility ceased more than five years before the subject
action was filed, application of the Georgia accrual rule along
with the applicable statute of limitations would operate to bar
the plaintiffs’ cause of action.59
In the Court’s view, however,
two considerations complicated matters:
The first is the “continuing tort” doctrine.
Under
Georgia law, a cause of action for a tort that is
continuing
in
nature
—
for
example,
the
frequent
runoff of contaminated water across land, or (as in
the present case) the underground leakage of hazardous
waste onto adjoining property—accrues at the time of
continuance.
tort
suit
Therefore, the plaintiff in a continuing
can
recover
for
any
damages
that
were
suffered within four years prior to the filing of the
suit.
In the present posture of this case, it is
clear that, under Georgia’s continuing tort doctrine,
plaintiffs would be entitled to any damages that they
can prove to have been caused by leakage of hazardous
waste onto their property from and after September 6,
58
Id.
59
Id. at 1091.
-25-
1987 — four years prior to the date the instant action
was filed.
Defendants do not argue otherwise.
The second complicating factor involves the
development of federal law in the environmental tort
arena.
In 1986, Congress amended [CERCLA], in part to
address what was perceived as the inadequacy of the
laws
of
some
states
in
dealing
with
the
delayed
discovery of the effect of toxic substance pollution.60
After setting forth the relevant provisions of 42 U.S.C. § 9658,
the Eleventh Circuit Court of Appeals acknowledged the existence
of a federally mandated “discovery rule” for environmental tort
actions brought under state law, despite the fact that Georgia
(like
Kentucky),
generally
does
not
provide
such
a
rule
for
torts involving property damage.61
According to the defendants, however, 42 U.S.C. § 9658
had
no
application
to
the
action
at
issue
limitation have two independent functions:
as
statutes
of
(1) to define when
an action may be brought, and (2) to define the period for which
damages can be recovered.62
Since, in the defendants’ view, 42
U.S.C. § 309 applied only to the former function, Georgia law
regarding
continuing
torts
60
Id. (citations omitted).
61
Id.
62
was
Id.
-26-
unaffected
by
the
CERCLA
amendment relating to the commencement date of state statutes of
limitation.63
In rejecting this argument which parallels that
implicitly made by Rockwell, the Court engaged in the following
analysis, which is equally applicable here:
The
defendants’
argument
premise is unsound.
define,
which
as
an
fails
can
its
central
A statute of limitations does not
independent
damages
because
be
function,
recovered.
the
period
Rather,
in
for
the
context of a continuing tort, the limitation of the
time
period
for
which
damages
can
be
recovered
operates as part and parcel of limiting when an action
can be brought . . . .
damages
caused
by
the
Plaintiffs can recover for
tort
that
was
committed
on
September 6, 1987, because they filed suit within the
statute
of
limitations.
Without
a
discovery
rule,
plaintiffs could not recover for damages caused by the
tort that was committed on September 5, 1987, because
they
filed
suit
four
years
commission of that tort.
and
one
day
after
the
That is only true, however,
if the statute of limitations for the September 5,
1987,
tort
began
to
run
on
the
date
the
tort
was
committed, regardless of when plaintiffs discovered or
should have discovered the tort.
63
Id.
-27-
While the date of
the
wrong
is
the
date
the
statute
of
limitations
begins to run for property damage torts under Georgia
law,
the
analysis
is
fundamentally
altered
by
the
introduction of the federally mandated discovery rule.
As long as plaintiffs sued within four years of the
time
they
discovered
or
should
have
discovered
the
wrongs of which they complain, their recovery will not
be limited to the four years immediately preceding the
filing of the lawsuit.64
As
the
Eleventh
Circuit
Court
of
Appeals
observed,
none of the cases cited by the defendants supported their “dual
function”
argument
regarding
the
statute
of
limitations
but,
rather, applied the continuing tort doctrine without considering
the possible effect of a discovery rule, did not address the
impact
that
applied
the
such
rule
discovery
described above.65
construction
a
would
rule
have
in
the
on
continuing
torts
“common-sense”
or
manner
Although the defendants contended that the
adopted
by
the
Court
would
render
42
U.S.C.
§
9658(a)(2) meaningless, the Court found that the “dual function”
concept was “unsupported by both logic and case law,” citing the
legislative history of the amendment as further support for its
64
Id.
65
Id. at 1092.
-28-
conclusion.66
court’s
Finally,
rationale
that
the
Court
adoption
agreed
of
the
with
the
district
defendants’
argument
would run counter to the purpose of the relevant provisions of
CERCLA
and
its
amendments,
which
was
“to
deal
with
the
inadequacies of many state tort systems regarding the delayed
discovery of the effect of a release of a toxic substance.”67
In
dictated
concluding
rejection
of
that
the
“policy,
defendants’
precedent
argument,
and
the
logic”
Court
adopted the district court’s reasoning which we find persuasive:
To conclude that the statute of limitations is tolled
until the injury is discovered, but that plaintiffs
may only recover for damage done to their property
within the immediately preceding period of the statute
of limitations[,] is illogical.
No purpose is served
by tolling the statute of limitations but limiting the
damages
Such
a
that
may
result
be
recovered
would
still
from
result
the
in
tortfeasor.
depriving
plaintiffs of their day in court for the full extent
of their injury . . . .
If the court were to accept
defendants’ construction of [42 U.S.C.] § 9658, there
would be no effective preemption of state statutes of
66
Id.
According to the legislative history, the amendment
was meant to address “when the statute of limitations begins to
run rather than the number of years it runs.” (Citation
omitted.)
67
Id. at 1093.
-29-
limitation.
Quite the contrary, Defendants’ reading
of § 9658 would simply allow the commencement of an
action at any time but limit the period of recovery to
that of the statute of limitations.68
In
the
absence
of
binding
contrary
authority
and
consistent with the foregoing, we extend the application of the
federal “discovery rule” to property damage actions in Kentucky
with the necessary implication being that the landowners, if
they have a viable cause of action, are entitled to recover
damages
for
injuries
incurred
outside
of
the
five-year
limitation period preceding the filing of their complaint.
The remaining question is what effect, if any, this
determination has on the landowners’ right to recover punitive
damages.
the
The short answer is that wrongdoing occurring outside
limitations
period
is
properly
considered
opinion
we
when
assessing
punitive damages.69
II.
Negligent Trespass
In
landowners
could
had
initial
failed
determine
admissible
68
our
to
damages.
evidence
from
present
In
which
evidence
other
a
determined
jury
from
words,
could
that
which
there
assess
a
was
the
the
jury
no
fair
Id. at 1093.
69
Cf. Fisher v. Space of Pensacola, Inc., 483 So.2d 392 (Ala.
1986).
-30-
market
value
of
the
landowners’
properties
after
PCBs
were
Rockwell also argued although we
deposited on the properties.
did not decide the issue that the landowners had failed to
demonstrate an actual physical injury to their land.
In its
supplemental brief following remand by the Supreme Court to this
Court Rockwell argues that:
“Injury”
and
“damages”
are
two
entirely
separate
elements of a cause of action, each of which must be
established.
As
the
Indiana
Supreme
Court
has
explained:
There
is
a
material
distinction
damages and injury . . . .
between
The words are
sometimes used as synonymous terms, but they
are,
in
strictness,
words
different meaning . . . .
cause
of
action
two
of
widely
In every valid
elements
must
present, the injury and the damages.
one
is
the
legal
harm
which
is
be
The
to
be
redressed (the injury); the other the scale
or measure of recovery.70
The Kentucky Supreme Court addressed both the injury
and the damage components of the landowners’ claims:
70
Rockwell’s Supplemental Brief, citing City of North Vernon
v. Voegler, 2 N.E. 821, 824 (Ind. 1885).
-31-
[The
landowners]
presented
evidence
that
PCBs
were
designated by Congress as hazardous in 1976 and that
the
EPA
[the
United
States
Environmental
Protection
Agency] has determined that concentrations in excess
of 50 parts per million[71] present[] an “unreasonable
risk of injury to health within the United States.”[]
There was evidence that under Kentucky law PCBs are
classified
as
a
“hazardous
Kentucky
Natural
substance”
Resources
and
and
that
the
Environmental
Protection Cabinet prevailed in litigation to require
Rockwell
to
remediate
along Town Branch.[72]
property
subject
to
flooding
Evidence was presented that PCBs
were present on the landowners’ properties, that PCBs
were dangerous and carcinogenic, that the properties
should
be
tested
and
that
the
presence
of
PCB
contamination affects the fair market value of real
property and impairs its value as collateral.73
71
There was no evidence that the PCB level on any landowner’s
property was anywhere near the federal standard; in fact, no
property revealed a concentration greater than 2.0 parts per
million.
72
See Rockwell International Corp. v. Commonwealth, Natural
Resources and Environmental Protection Cabinet, Ky. App., 16
S.W.3d 316 (1999), discretionary review denied (2000).
73
Wilhite, supra, n. 4, at 520-521.
-32-
In its discussion of damages, the Supreme Court was
referring to the testimony of Trent Spurlock, a Logan County
bank officer who testified that before his bank would loan money
against a property possibly contaminated with PCBs, it would
require that the property be tested at the owner’s expense in
order to determine the precise amount of contamination, if any.
He testified that the presence of any amount of PCBs was not in
and of itself fatal to the ability of the landowner to secure a
loan; rather, he stated that if the test revealed a quantity of
PCBs in excess of an acceptable maximum amount, then the land
would have to be remediated before the bank would lend against
the property.
The
support
attorney
a
other
testimony
calculation
of
Steve
Hixson
offered
damages
who
opined
by
came
the
from
that
liability could be imposed on the landowners.
landowners
Bowling
future
to
Green
remediation
The admissibility
of his testimony was challenged by Rockwell which argued that it
amounted to an improper expert opinion on a question of law.
According to Rockwell, such a question was one for the circuit
court to decide, not the jury.
The landowners insist that the Supreme Court’s opinion
in this case stands for the proposition that once any detectible
quantity of PCBs, no matter how minute, is discovered on a piece
of land, that mere presence provides proof of injury to the land
-33-
required to support a claim for damages.
This interpretation is
noteworthy because prior to this decision, the question of what
amount of contamination would give rise to an actual injury in a
negligent
trespass
Kentucky law.74
District
of
case
such
as
this
remained
undecided
in
The United States District Court for the Western
Kentucky
attempted
to
predict
how
the
Kentucky
Supreme Court would rule when faced with the issue; however, its
prediction was different from what the landowners would have us
believe.
The case of Mercer v. Rockwell International Corp.75 is
similar to the present case in that it was an action filed by a
group of landowners farther downstream from Rockwell’s facility
than
those
presently
before
this
Court
who
alleged
that
Rockwell’s negligent discharge of PCBs contaminated their land.
The District Court was faced with the issue of what must be
74
There has been ample discussion of Chapman v. Beaver Dam
Coal Company, Ky., 327 S.W.2d 397 (1959); however, that case is
not instructive.
In Chapman, no damage of any kind could be
proved to have been visited upon the downstream landowners as a
result of rainwater runoff leaving upstream mining operations.
This case would be analogous to Chapman if Pydraul-contaminated
water had run across the landowners’ property without depositing
PCBs on the floodplain, which no one alleges happened.
Likewise, Ellison v. R & B Contracting, Inc., Ky., 32 S.W.3d 66
(2000), is of no assistance because although the Supreme Court
did not explicitly so state, the trespass involved was of an
intentional nature, not negligent.
As explained more fully in
our discussion infra, the Supreme Court relied on Ellison in
this case in its discussion of damages evidence; the Court did
not cite Ellison in reference to the elements of a trespass
case.
75
24 F. Supp.2d 735 (W.D. Ky. 1998).
-34-
proved under Kentucky law in order for a plaintiff to prevail in
a trespass case.
The Court began its analysis by noting that:
Kentucky law allows recovery under trespass in either
of three instances:
(1) the defendant was engaged in an extra-
hazardous activity, (2) the defendant committed an intentional
trespass or (3) the defendant committed a negligent trespass.[76]
The
Court
has
not
discovered
any
Kentucky
“elements” of a negligent trespass theory.
would
follow
the
(Second)
Restatement
of
case
stating
the
However, Kentucky
Torts
§
165
as
do
numerous other jurisdictions.[77]
The
Restatement
(Second)
of
Torts
§
165
[says that]:
One who recklessly or negligently, or as a
result of an abnormally dangerous activity,
enters land in the possession of another or
causes a thing or third person so to enter
is subject to liability to the possessor if,
but only if, his presence or the presence of
the thing or the third person upon the land
causes harm to the land, to the possessor,
or to a thing or a third person in whose
76
See Randall v. Shelton, Ky., 293 S.W.2d 559 (1956).
77
See, e.g., Karpiak v. Russo, 450 Pa. Super. 471, 676 A.2d
270 (1996); Watson v. Brazos Electric Power Coop., Inc., 918
S.W.2d 639 (Tx. App. 1996); Fortier v. Flambeau Plastics Co.,
164 Wis.2d 639, 476 N.W.2d 593 (Wis. App. 1991).
-35-
security
the
possessor
has
a
legally
protected interest.
The
trespasses
Restatement
and
distinguishes
negligent
trespasses
“harm” for negligent trespass.[78]
intentional
by
requiring
Liability is imposed
for intentional trespasses when there is an intrusion,
even when it is harmless, and liability is imposed for
negligent trespasses only when there has been harm to
the property.[79]
Indeed,
the
plain
language
of
the
Restatement and its comments would allow this Court to
conclude,
without
negligent
trespass
any
additional
requires
explanation,
actual
harm
to
that
the
property.80
According
to
the
district
court,
the
Restatement
requires three basic elements for negligent trespass:
(1) the
defendant must have breached its duty of due care (negligence);
(2)
the
defendant
plaintiff,
land.81
and
(3)
caused
the
a
thing
thing’s
to
enter
presence
the
land
of
the
causes
harm
to
the
Because the court had already found Rockwell negligent
78
See Restatement (Second) of Torts § 165 cmt. b.
79
Id.
80
Mercer, supra, n. 75, at 740.
81
Id.
-36-
as a matter of law, it then turned its analysis to whether the
landowners
had
demonstrated
an
entry
onto
their
land
which
caused harm.
The court provided an excellent analysis of the law of
negligent trespass as it has developed in several jurisdictions
across the country.
entirety,
although
first
two
We need not reproduce that analysis in its
of
it
is
relevant
certainly
conclusions
instructive;
appear
in
rather,
the
its
following
paragraph:
Trespass
is
designed
to
protect
against
interference with exclusive possession, and not just
mere entry.
When an object can be seen or sensed in
some manner, one may even assume that a landowner’s
right
to
exclusively
infringed.
When
the
plaintiff’s
property
is
possess
his
property
“thing”
that
has
entered
to
ordinary
imperceptible
is
human senses, it does not so obviously infringe upon a
landowner’s right to exclusive possession.
In such
cases, only when the substance actually damages the
property does it intrude upon the landowner’s right to
exclusive possession.
of
[the
Therefore, an essential element
landowners’]
-37-
claim
is
that
the
PCB’s
interfere with their right to exclusive possession by
causing actual harm to the property.82
Once
property
is
the
an
court
determined
essential
element
that
of
actual
recovery
harm
for
to
negligent
trespass resulting from the deposit of a toxic substance under
Kentucky law, it went on to analyze what kind of proof might
demonstrate “actual harm.”
As it had with its earlier analysis,
the court drew from cases throughout the country to hold that
actual harm refers to a physical injury to the property.
In a
case of PCB contamination of land, the contamination had to be
in a sufficient concentration to pose a health hazard in order
to cause a permanent physical injury to the property.83
The Kentucky Supreme Court said that in this case, the
landowners
presented
property.
However,
demonstrated
was
the
some
the
evidence
only
mere
actual
presence
of
an
injury
“injury”
of
PCBs,
the
not
to
their
landowners
any
hazard
resulting therefrom.
There was scientific evidence presented by
the
landowners
that
PCBs
concentrations,
but
none
present
a
health
demonstrating
hazard
that
a
at
higher
hazard
is
presented by PCBs in the concentrations found on the land in
82
Mercer, supra, n. 75, at 743.
One can draw a further
distinction from Ellison, supra, n. 74, in that the materials
deposited in Ellison were large amounts of construction debris
easily noticed by unaided human senses.
83
Id. at 743-745.
-38-
question.
Finally, “[d]ecreased fair market value is not harm
to the property, it is only a means of measuring the harm.”84
We did not decide in our initial opinion whether the
minimal presence of PCBs amounts to “actual harm” for purposes
of Kentucky law regarding negligent trespass.
Likewise, the
Supreme Court’s opinion only pointed to the existence of the
landowners’ evidence, not its significance or relationship to an
undecided
element
of
the
law
of
trespass.
Therefore,
our
present task is to decide if evidence of a minimal presence of
PCBs,
in
an
amount
insufficient
to
present
a
health
hazard,
amounts to an actual injury justifying an award of damages.
Were we to accept the landowners’ argument that such
evidence is sufficient, the implication for future cases would
be that in any negligent trespass case, the mere deposit of a
potentially
toxic
substance
on
property
in
an
amount
not
detectible by unassisted human senses would satisfy the element
of actual injury to the property.
the
proverbial
proceed
any
minute,
of
floodgates
time
a
concentrations.
a
of
landowner
substance
Such a decision would open
litigation,
can
known
show
to
be
allowing
the
a
presence,
harmful
in
suit
to
however
greater
Given that there was testimony presented that
PCBs are present in miniscule amounts on nearly every piece of
property wherever located, and that after a century and a half
84
Id. at 743.
-39-
of
industrialization
there
is
most
likely
no
land
in
the
continental United States that is completely free from one or
more
potentially
would
have
us
toxic
or
harmful
a
authorize
substances,
by
suit
any
the
landowners
landowner
in
the
Commonwealth against any individual or enterprise which has ever
emitted a potentially harmful substance that can be detected on
real property in any amount.
We do not think the Supreme Court intended to make
such a sweeping decision.
The Court points in its opinion only
to
landowners’
the
existence
directs
us
to
of
the
analyze
it
under
proffered
the
evidence,
challenge
and
originally
presented by Rockwell, but not reached in our initial opinion.
Further,
the
Court’s
reliance
on
Ellison,
after
quoting
our
earlier language regarding the necessity for the landowners to
prove
actual
harm,
was
directed
solely
whether the landowners proved damages.
Court
recently
Ellison
v.
R
confronted
&
B
real
at
the
The Court said:
property
damages
Inc.”85
Such
Contracting,
question
“This
issues
an
of
in
analysis
presupposes satisfaction of the actual harm element of negligent
trespass.
As the Supreme Court explained in Wood v. Wyeth-Ayerst
Laboratories,86 it would be unrealistic for us to assume that the
85
Wilhite, supra, n. 4, at 521 (footnote renumbered).
86
Ky., 82 S.W.3d 849, 855 (2002).
-40-
Court
intended
to
depart
from
the
view
espoused
by
the
Restatement and the courts of nearly every state to pass on this
issue without mentioning such an intention.
logic
to
suppose
that
the
Court
would
Likewise, it defies
make
such
a
sweeping
change to Kentucky tort law without any suggestion that it was
so doing.87
Had the Supreme Court intended in this case to make
such a dramatic and sweeping change to Kentucky tort law, it
would
have
explicitly
said
so
and
provided
a
thorough
explanation of its reasoning.
Indeed, the Supreme Court has
recently
clarify
taken
great
pains
to
areas
of
the
law
it
considered in need thereof.88
Furthermore,
a
review
of
Wood provides
considerable
insight into how the Supreme Court would have us analyze the
evidence in this case.
In that case, Ms. Wood was seeking
compensation for her exposure to the drug fenfluramine after
having
opted
Agreement
out
entered
of
the
into
Nationwide
between
Class
American
Action
Home
Settlement
Products
Corporation (AHPC), of which Wyeth-Ayerst is a division, and
87
Id.
88
See, e.g., Yanero v. Davis, Ky., 65 S.W.3d 510 (2001)
(clarifying
the
interrelationships
between
sovereign,
governmental and official immunities); Fraser v. Commonwealth,
Ky., 59 S.W.3d 448 (2001) (standards for relief pursuant to Ky.
R. Crim. P. (RCr) 11.42); and Thompson v. Commonwealth, Ky., 56
S.W.3d 406 (2001) (dealing with when a circuit court is required
to have a hearing to determine a defendant’s competency to stand
trial).
-41-
users of its diet drugs Pondimin and Redux.
In describing the
attempted class action litigation, the Court said:
In
her
complaint,
class,
seeks
supervised
the
notice
[Wood],
on
following
and
behalf
of
relief:
medical
a
proposed
(1)
court-
to
enable
monitoring
people who have ingested Fen-Phen to be monitored for
the
existence
of
potentially
dangerous
side
effects
caused by the drugs, including, but not limited to,
valvular
heart
hypertension,
associated
and
disease,
for
primary
altered
cognitive
serotonin
and/or
pulmonary
levels
and
neurophysiological
manifestations of impairment or injury; (2) a fund to
pay
for
such
monitoring
and
also
medical
research
concerning the effects of the drugs; (3) reimbursement
of the costs of the drugs and/or previously incurred
examination costs; and (4) punitive damages.
* * *
The trial court dismissed [Wood’s] complaint
for failure to state a claim upon which relief can be
granted,
pursuant
to
procedure (CR)] 12.02.
[Kentucky
[]
Rules
of
Civil
The trial court concluded
that Kentucky law requires a plaintiff to prove some
present physical injury to support a tort claim, and
[Wood]
had
proven
no
-42-
such
injury.
The
Court
of
Appeals upheld the trial court’s decision dismissing
the case, also finding that [Wood] did not allege in
her complaint any “present physical harm as a result
of her ingestion of Fen-Phen.”
[Wood] then petitioned
[the Supreme Court] for review.
There being recent
developments in toxic tort litigation in other states,
we
granted
discretionary
important
issues
review
raised
to
by
address
[Wood]
the
regarding
prospective relief for past exposure.
[Wood’s] complaint specifies as her injury,
and
that
of
the
“significantly
disease.”
class
increased
she
risk
seeks
of
to
serious
represent,
injury
and
She further claims that she and others will
“probably . . . be required to pay sums to ascertain
the existence, nature and extent of their injuries in
the future.”
In support of her claim, [Wood] cites to
many articles from various medical journals in which
experts
for
have
people
recommended
who
took
ongoing
diagnostic
fenfluramine.
testing
Notwithstanding
these expert opinions, recovery on a theory of tort,
like negligence or strict liability as sought here,
requires
injury
a
to
plaintiff
support
a
to
show
cause
of
some
present
action.
physical
[Wood]
has
offered no proof that she suffers from any injury at
-43-
the present time resulting from her contact with or
ingestion of fenfluramine.
As such, [Wood] has failed
to state a claim upon which relief can be granted and
her cause of action has not accrued.
affirm
the
Court
of
Appeals
in
We therefore
dismissing
the
complaint.89
While it is true that Wood differs from this case in
that
it
involved
property,
this
alleged
injury
distinction
applicability to this case.
plaintiff
sustain
rather
than
before
it
mere
would
an
allow
a
person
actually
rather
than
strengthens
to
its
In Wood, the Court required that a
actual
exposure
to
physical
to
a
recovery.
injury
potentially
In
the
to
her
toxic
present
person,
substance,
case,
the
presence of PCBs currently on the land can be likened to Wood’s
already-ingested
fenfluramine;
although
the
land
has
been
exposed to a substance, PCBs, no present injury to the land has
been
shown.
In
contrast,
the
landowners’
theory
that
the
presence of PCBs in itself should be recognized as an injury is
analogous to Wood’s position regarding her having ingested a
potentially harmful or toxic substance (i.e., its mere presence
in her body), a theory rejected by the Supreme Court.
to
adopt
the
landowners’
argument,
89
it
would
result
Were we
in
an
Wood, supra, n. 86, at 851-852.
See also Capital Holding
Corp. v. Bailey, Ky., 873 S.W.2d 187, 195 (1994).
-44-
allowance
of
recovery
instances
in
which
for
alleged
individuals
who
injury
have
to
property
ingested
a
in
toxic
substance may not recover. We are unwilling to conclude, absent
express direction, that the Supreme Court intends to provide a
right to recover damages for the deposit of any amount of a
toxic substance on the lands of the Commonwealth while denying
its citizens who ingest or are exposed to a toxic substance a
similar right.
Indeed,
expressed
grave
in
a
policy
lengthy
analysis,
concerns
awards for medical monitoring.
about
the
Supreme
allowing
Court
prospective
Unfortunate as it may be, the
harsh reality of life in the present day is that thousands, if
not millions of people, have been exposed to and/or ingested
potentially
harmful
or
toxic
substances.
The
Court
was
concerned about the seemingly limitless litigation that would
ensue if it allowed such recovery, concluding that it “is not
prepared to part ways with the system of remedies in favor of
cash advances as proposed by [Wood].”90
Likewise, given the
widespread potential contamination of land in the Commonwealth
and throughout the nation, we are similarly unwilling to abandon
the established system of remedies in favor of cash advances as
proposed by the landowners.
90
Id. at 855.
-45-
Further supporting our conclusion is the fact that the
testimony offered by the landowners’ proffered expert, attorney
Stephen
Hixson,
regarding
potential
future
remediation of their land, was inadmissible.
liability
for
Hixson testified
that under Kentucky and federal law, the presence of PCBs on the
land creates future liability for the landowners.
testimony
witnesses
regarding
whether
a
of
legal
a
conclusion
lay
or
expert
is
However, this
improper,
variety,
qualified to express opinions as to matters of law.”91
“are
for
not
It is not
the province of witnesses to inform the jury regarding questions
of law; that is the function of the judge.92
Accordingly, it was
improper for the trial court to permit the jury to consider any
possible liability as testified to by Hixson.
Aside from its inadmissibility, Hixson’s testimony was
incorrect as a matter of law.
Under KRS 224.01-400(25),
[d]efenses to liability, limitations to liability, and
rights
to
contribution
shall
be
determined
in
accordance with Sections 107(a) to (d) and 113(f) of
[CERCLA], as amended, and the Federal Clean Water Act,
as amended.
91
Robert G. Lawson, The Kentucky Evidence Handbook, § 6.15 at
291 (3d Ed., 2002 supp.).
92
See, e.g., Nieves-Villanueva v. Soto-Riviera, 133 F.3d 92
(1st Cir. 1997).
-46-
Under
CERCLA,
contaminated
any
party
site
may
found
bring
another responsible party.93
landowners
were
to
properties,
they
would
action
against
be
a
for
remediation
contribution
action
of
a
against
Thus, in the unlikely event the
found
have
Rockwell
liable
a
liable
for
remediating
and/or
recover
to
state
any
federal
their
cause
remediation
of
costs
assessed against them.
It
liability
is
undisputed
based
on
PCB
that
no
landowner
contamination
of
has
his
or
incurred
her
land.
Indeed, in administrative proceedings Rockwell has been ordered
to
remediate
any
of
the
landowners’
properties
found,
after
testing, to contain PCBs in excess of the limit imposed by the
Commonwealth.94
In the event such remediation is ordered, an
aggrieved landowner would then have a cause of action against
Rockwell for the loss of use and enjoyment of the land during
its remediation.
However, such cause of action has not yet
accrued, and is far too speculative at this point to form a
basis for the recovery of damages.
Finally,
landowners’
much
was
responsibility
made
for
at
future
oral
argument
testing
of
about
their
the
land.
However, the attempt to use testing as a basis for relief fails
93
42 U.S.C. § 9613(f).
U.S.C. § 9606 and 9607.
Responsible parties are listed in 42
94
See
Rockwell
v.
Commonwealth,
Natural
Environmental Protection Cabinet, supra, n. 72.
-47-
Resources
and
for two reasons.
First, Rockwell has paid for testing on all
but three of the affected properties and, as noted above, has
been held responsible for remediating the properties.
Secondly,
the Supreme Court addressed this allegation in Wood:
We are mindful of the predicament in which
our decision places [Ms. Wood] and others [in this
case, the landowners] in similar situations.
Those
who have ingested fenfluramine [or whose land has been
exposed to PCB contamination], but in whom no disease
is yet manifest [or whose land presents no present
health risk], will be forced to either forego medical
evaluations [or testing of their land other than as
ordered
by
the
Natural
Resources
and
Environmental
Resources Cabinet] or proceed with them at their own
cost.
Nevertheless, any other outcome would result in
inordinate burdens for both the potential victim and
the alleged negligent party.
*
*
[]
find
*
For those who pay for their own testing but never
disease
[or
health
risk
presented
by
PCB
contamination of their land], we regret the economic
expense but suggest that they have paid for a service
and received the benefit thereof – in this case, a
-48-
clean bill of health and the accompanying peace of
mind.
From
should
act
as
a
a
policy
standpoint,
sufficient
this
deterrent
to
outcome
those
who
would negligently produce and distribute [or, in this
case, negligently discharge] harmful substances, for
they shall still have to compensate victims for any
injury
caused.
supported
potential
by
Likewise,
physical
flood
unsubstantiated
of
or
recognizing
injury
will
litigation
fabricated
only
claims
prevent
stemming
prospective
the
from
harms,
thereby preserving judicial and corporate resources to
compensate actual victims who develop injuries in the
future.95
Although the landowners have established that Rockwell
negligently trespassed on their properties when it allowed PCBs
originating at its Russellville plant to flow into a stream and
thus be deposited as a result of flooding on their properties,
and although PCBs are a known carcinogen, the landowners have
nevertheless
suffered
any
failed
injury
to
as
establish
a
that
consequence
their
of
the
properties
have
trespass.
No
persons who have come upon the land have been harmed, no farm
95
Wood, supra, n. 86, at 859.
-49-
animals or pets have been sickened, nor have any crops been
lost.
The land and the buildings thereon continue to be used as
they were before the presence of PCBs was discovered.
landowners
cannot
recover
damages
under
a
Thus, the
negligent
trespass
theory.
III.
Permanent Nuisance
In
trespass,
the
addition
landowners
to
sought
claims
based
recovery
on
on
the
negligent
ground
that
Rockwell, by depositing PCBs on their properties, had created a
permanent
nuisance.
KRS
411.520(1)
provides
that
nuisance
actions arising at common law are governed statutorily by KRS
411.500 to 411.570.
shall
However, those statutes
not
be
construed
as
repealing
any
of
the
statutes or common law of the Commonwealth relating to
nuisance, nor shall be construed to abridge any other
rights or remedies available for personal or property
damage, but shall be held and construed as ancillary
and supplemental thereto.96
A private nuisance can be of a permanent or temporary
nature, but may not be both.97
private
nuisance
that
96
KRS 411.570.
97
cannot
KRS 411.520(2).
-50-
A permanent nuisance is any
be
corrected
or
abated
at
reasonable expense to the owner and is relatively enduring and
not likely to be abated voluntarily or by court order.98
A
permanent
defendant’s
substantial
claimant’s
nuisance
use
of
shall
exist
property
annoyance
property
to
or
if
causes
the
and
only
if
unreasonable
occupants
unreasonably
a
and
of
the
interferes
with
the use and enjoyment of such property, and thereby
causes
the
fair
market
value
of
the
claimant’s
property to be materially reduced.99
In this case, the landowners’ claims are based upon
the
creation
by
Rockwell
of
a
permanent
nuisance.
Their
position, that the conditions created by Rockwell’s discharge of
PCBs cannot be abated except at an expense greater than the
total market value of the land, is directly on point with the
requirement of KRS 411.530(1)(a).
longer
engages
in
the
Likewise, because Rockwell no
activities
which
gave
rise
to
the
discharge of PCBs, the landowners’ grievance is not one which
may be remedied by some voluntary or court-ordered action to
restrain Rockwell’s activities.100
98
KRS 411.530(1)(a) and (b).
99
KRS 411.530(2).
100
See KRS 411.530(1)(b).
-51-
In contrast, “[a]ny private nuisance that is not a
permanent
nuisance
shall
be
a
temporary
nuisance.”101
“A
temporary nuisance shall exist if and only if a defendant’s use
of property causes unreasonable and substantial annoyance to the
occupants of the claimant’s property or unreasonably interferes
with the use and enjoyment of such property, and thereby causes
the value of use or the rental value of the claimant’s property
to be reduced.”102
the
injury
to
In this case, the landowners characterized
their
property
as
permanent,
thereby
making
a
temporary nuisance analysis unnecessary.
The determination of a private nuisance is to be done
using
several
factors.
However,
there
is
some
discrepancy
between the statutes and the common law regarding the precise
elements to be employed.
According to Louisville Refining Co.
v. Mudd,103
the existence of a nuisance must be ascertained on the
basis of two broad factors, neither of which may in
any case be the sole test to the exclusion of the
other: (1) the reasonableness of the defendant’s use
of his property, and (2) the gravity of harm to the
101
KRS 411.540(1).
102
KRS 411.550(2).
103
Ky., 339 S.W.2d 181, 186 (1960). See also Kentland-Elkhorn
Coal Co. v. Charles, Ky., 514 S.W.2d 659, 662 (1974).
Model
jury instructions detailing these factors can be found in George
v. Standard Slag Co., Ky., 431 S.W.2d 711, 715 (1968).
-52-
complainant.
Both are to be considered in the light
of all the circumstances of the case, including [1]
the
lawful
business[;]
nature
[2]
and
the
location
manner
of
of
the
its
defendant’s
operation[;]
[3]
such importance to the community as it may have[;][104]
[4]
the
kind,
volume,
time
and
duration
of
the
particular annoyance[;] [5] the respective situations
of
the
parties[;]
and
[6]
the
character
(including
applicable zoning) of the locality.
KRS 411.550 presents the illustrative factors to be
considered in determining the existence of a private nuisance:
(1)
In
determining
whether
a
defendant’s
use
of
property constitutes a private nuisance, the . . .
trier of fact shall consider all relevant facts and
circumstances including the following:
(a)
The lawful nature of the defendant’s use of
the property;
(b)
The manner in which the defendant has used
the property;
(c)
The importance of the defendant’s use of the
property to the community;
104
Kentland-Elkhorn, id., lists this factor as “its importance
on the growth and prosperity of the community.”
-53-
(d)
The
property
influence
to
the
of
growth
the
use
of
prosperity
of
the
duration
and
defendant’s
of
the
use
and
community;
(e)
The
annoyance
enjoyment
kind,
volume,
or
interference
of
claimant’s
and
with
property
the
caused
by
the
defendant’s use of property;
(f)
The respective situations of the defendant
and claimant;
(g)
The
character
of
the
area
in
which
the
defendant’s property is located, including, but
not limited to, all applicable statutes, laws, or
regulations.
(2)
A defendant’s use of property shall be considered
as a substantial annoyance or interference with the
use and enjoyment of a claimant’s property if it would
substantially
annoy
or
interfere
with
the
use
and
enjoyment of property by a person of ordinary health
and normal sensitivities.
Based on these considerations, it is apparent that, in
Kentucky,
nuisance
is
primarily
concerned
with
some
use
of
property by a defendant which causes sufficient annoyance to an
adjacent property possessor that interferes with the use of the
adjacent land to such a degree that its value is materially
-54-
reduced.
Borrowing from our analysis of negligent trespass,105
in a nuisance case the annoyance and interference with the use
of property are the injury, and the reduced market value is the
measure of damages.
In this case, there is no rational basis for a finding
that
the
discharge
of
minute
quantities
of
PCBs
onto
the
landowners’ properties resulted in any interference with their
use and enjoyment of the properties.
While it is true that the
presence of PCBs on land may cause a reasonable person to stop
using that land because of health risks PCBs pose, it is only
the case when a significantly higher concentration of PCBs is
present.
At
the
concentrations
present
on
the
lands
in
question, a person of ordinary health and sensitivities would
experience no interference with his or her use of the property.
There is no scientific basis for concluding that these lands
should not be used for their ordinary agrarian purposes.106
Any
annoyance or interference sustained by the landowners here is
105
Section II, supra.
106
This is not to suggest that all nuisance cases require a
scientifically demonstrable health or safety hazard before the
alleged nuisance can be said to interfere with the use of a
piece of property. Our analysis is limited to those instances,
as here, where the substance is imperceptible to ordinary
persons.
If PCBs created an unpleasant odor or sound, or were
otherwise offensive to human senses, such sensory offensiveness
could generate the annoyance and interference necessary for a
nuisance. See, e.g., Wilhite, supra, n. 4.
-55-
the result of an irrational fear of PCBs.
The law does not
allow relief on the basis of an unsubstantiated phobia.107
IV.
Punitive Damages – Passion and Prejudice
As has been noted, the jury awarded the landowners
compensatory damages in the approximate sum of $7.56 million for
the total destruction of their properties and almost 28 times
that amount, $210 million, as punitive damages.
Rockwell claims
that the award must be set aside because it is excessive108 and
was
given
engendered
under
by
the
the
influence
landowners,
arguments to the jury.109
The
record
repeatedly
Rockwell
by
of
passion
particularly
in
and
prejudice
their
closing
landowners’]
counsel
According to Rockwell:
reflects
that
attempted
to
reminding
[the
prejudice
the
jurors
the
that
jury
against
Rockwell
had
sold the Russellville facility and by harping on the
fact that Rockwell is headquartered in California and
on the assertedly lavish lifestyles of its employees
(as to which, apart from its manifest irrelevance for
any proper purpose, there was not a whit of evidence
in the record).
107
See Mercer v. Rockwell, supra, n. 75, at 744 ff. for a
comprehensive discussion of why so-called “stigma damages” may
not be recovered in a case involving the same defendant,
Rockwell, and similarly-situated landowners.
108
See State Farm Mut. Ins. Co. v. Campbell, supra, n. 11.
109
See Ky. R. Civ. Proc. (CR) 59.01(d).
-56-
Further,
referred
three
to
times
Rockwell’s
the
Rockwell’s
during
.
mythical
landowners’
location
.
.
in
counsel
‘Seal
summation
‘golfing
buddies’
“gratuitously
Beach,
and
once
who
California’
referred
supposedly
downstream from its facility in Columbus, Ohio.”
to
live
In this same
vein, the landowners’ other counsel then “took this tactic to a
whole new level,” referring to Seal Beach six times in less than
an hour and unfairly distorting Rockwell’s position regarding
the significance of the risk posed by the levels of PCBs on the
landowners’ properties as follows:
“We’re not worried out in
Seal Beach, California, where everybody has got a tan and a
$60.00 haircut and life is good.”
of
those
references
was
According to Rockwell, “each
calculated
to
generate
maximum
prejudice.”
In
“classically
what
is
characterized
inflammatory
by
Rockwell
‘send-a-message’
as
speech,”
the
the
landowners’ counsel then “played on the fact that Rockwell had
sold its local operations” with the following plea to the jury:
Rockwell
came
to
Logan
County,
took
advantage of the attractive wage scale, as they call
it, fouled its nest, fouled its neighbors, and they
pulled out.
If they were driving a car, it would be a
hit and run.
-57-
Logan
Rockwell.
County
is
yesterday’s
They [sic] won’t be back.
news
to
They just plain
don’t care.
The plaintiffs [landowners] respectfully ask
you to make them care, to render a verdict that will
get
their
people
attention,
of
Kentucky
to
make
a
statement
that
they
will
hear
from
the
loudly
and
clearly in Seal Beach, California.
Counsel
went
on
to
assert
that
Rockwell
would
“be
popping
champagne corks in Seal Beach, California,” in the event that
the
jury
did
not
impose
punitive
damages.
Continuing
this
theme, counsel argued that:
The great American statesman and Christian,
William Jennings Bryan, has instructed us on some of
the differences between people and corporations.
First, he said there’s a difference in the
purpose of creation.
God made man and placed him upon
his footstool to carry out a divine purpose.
Man made
the corporation as a money-making machine only.
When God made man, he set a limit to his
existence, so that if he was a bad man he wouldn’t be
bad too long.
this
limit
on
But when the corporation was created,
age
was
abolished,
and
now
corporations live for generation after generation.
-58-
these
When God made man, he gave him a soul and he
warned him that in the next world he would be held
accountable for deeds done in the flesh.
created
the
corporation,
he
couldn’t
When man
endow
that
corporation with a soul, so if it escapes punishment
here, it need not fear the hereafter.
In
conclusion,
counsel
advised
requested
$210,000,000.00110
landowners
would
serve
Seal
Beach,
clearly
in
inflammatory
tactics
their summations,
as
the
in
a
jury
punitive
“statement
California.”
employed”
that
by
awarding
damages
that
Based
they
on
landowners’
the
to
the
will
hear
“the
grossly
counsel
during
Rockwell argues that the jury’s verdict was
“animated by passion and prejudice” and, therefore, the punitive
damages award must be set aside.
In
Kentucky,
it
is
well
established
that
a
jury
verdict on a disputed question of fact “may be reviewed and
upset where, as in the present case, the amount at first sight
appears
excessive
and
to
passion or prejudice.”111
have
been
rendered
as
a
result
of
More recently, we have employed this
guideline in reviewing an award of punitive damages, declining
110
This sum equals the alleged cost of remediating the
landowners’ property.
The trial court properly declined to
permit recovery for compensatory damages in excess of the fair
market value of the properties.
111
Commonwealth, Dept. of Highways v. Riley, Ky., 414 S.W.2d
885, 887 (1967)(citation omitted).
-59-
to reverse an allegedly “excessive” award absent proof that the
verdict
was
prejudice.”112
“reached
as
a
result
of
extreme
passion
and
In so doing, we acknowledged the unique nature of
punitive damage awards which are “the product of numerous and
sometimes intangible factors” and, therefore, require the jury
to make a “qualitative assessment based on a host of facts and
circumstances unique to the particular case before it.”113
Clarifying our function on review, we observed that
reasonable
persons
will
differ
in
determining
the
amount
of
exemplary damages, “but so long as the jury’s decision is based
on competent evidence, is free of passion or prejudice, and is
appropriately reviewed by the trial judge, the reviewing court
has no basis for substituting its opinion in place of the jury’s
opinion.”114
Put another way, our reluctance to set aside a
verdict as being excessive does not preclude us from doing so
“where the amount seems disproportionate to the actual damages
suffered and it appears the jury may probably have been actuated
by
sympathy
or
by
improper motive.”115
bias,
prejudice
or
like
unjudicial
and
The common thread among these cases is a
112
Simpson County Steeplechase
App., 898 S.W.2d 523, 528 (1995).
Ass’n,
Inc.
v.
Roberts,
Ky.
113
Id., citing T X O Production Corp. v. Alliance Resources
Corp., 509 U.S. 443, 125 L. Ed.2d 366, 113 S. Ct. 2711 (1993).
114
115
Id. (emphasis supplied).
Field
(1961).
Packing
Co.
v.
Denham,
-60-
Ky.,
342
S.W.2d
524,
527
determination
that
the
verdict
was
the
result
of
passion
or
prejudice as indicated by the excessiveness of the award and/or,
as is the case here, the inflammatory nature of the closing
arguments in question.
Appeals
to
bias
against
out-of-state
residents
and
corporations have historically been condemned by the courts of
In Clement Brothers Co. v. Everett,116 this
this Commonwealth.
state’s
highest
court
was
confronted
with
this
issue
and
conclusively resolved any question regarding the impropriety of
the type of language at issue:
The award strikes us as being so high as to
suggest
the
influence
of
passion
and
prejudice.
Probably the suggestion is not so strong as by itself
alone to warrant setting aside the award, but it is
strong enough to induce us to look to the record for
sources of prejudice.
We find them in the closing
arguments of appellees’ two counsel.
The arguments appear to have been designed
specifically to appeal to and arouse the passions and
prejudice
pictured
running
of
as
the
a
jury.
rich,
ruthlessly
The
appellant
grasping,
roughshod
over
foreign
the
company
was
corporation
poor,
honest,
long-suffering citizens of Barren County; its attorney
116
Ky., 414 S.W.2d 576, 577 (1967).
-61-
as
a
rich
man
who
would
be
upset
if
it
“mansion” that suffered the blasting damage.
were
his
Repeated
references were made to the appellant’s four-milliondollar contract.
The jury was asked whether it would
let “these people from North Carolina come in here and
destroy a good woman’s property?”
The appellant was
compared to a wolf devouring a lamb . . . .
The
jurors
the
were
told
that
if
they
did
not
give
requested damages the appellees “will have to look at
your faces then in their memory.”117
Identifying
the
argument
as
an
“obvious
source
of
passion and prejudice” that apparently influenced the jury in
fixing damages, the Court emphasized that such arguments had
“repeatedly been condemned,” citing a string of authority to
that effect.118
Among the cases cited by the Court was Southern-Harlan
Coal Co. v. Gallaier,119 in which both the “rich and powerful
corporation”
and
its
counsel
were
characterized
counsel as “cold-blooded” and “mercenary.”
corporation’s
objection
to
these
by
opposing
Concluding that the
derogatory
references
should
have been sustained, the Court found that counsel had committed
117
Id.
118
Id. at 578.
119
240 Ky. 106, 41 S.W.2d 661, 663 (1931).
-62-
“gross misconduct” in relying upon the fact that the defendant
was a rich and powerful corporation.120
By way of explanation,
the Court engaged in the following reasoning which is equally
relevant here:
The
law.
rich
and
poor
stand
alike
before
the
The corporation is entitled to have its cases
tried just as the cases of individuals are tried, and
there should be no effort to create prejudice against
the defendant by the fact that it is a corporation.
*
*
*
No
effort
should
be
made
to
enlist
the
sympathies of the jury for the plaintiff because he is
poor.
The case should be tried on its merits without
reference to the wealth or poverty of the parties.
It
was manifestly improper to urge the jury to so find
their verdict as not to throw the plaintiff “on the
hands of charity.”121
Further
Murphy
v.
support
Cordle,122
in
for
this
which
the
position
Court
can
be
determined
found
in
that
the
appeal by plaintiff’s counsel to the jury “to make the rich
defendants pay” was “an unwarranted reference to the financial
120
Id.
121
Id.
122
303 Ky. 229, 197 S.W.2d 242 (1946).
-63-
condition of one of the parties intended to inflame the minds of
the
jury,
and
was
an
appeal
universally condemned.”123
Court
has
acknowledged
admission
of
such
to
class
prejudice
which
is
Similarly, the United States Supreme
the
inherent
evidence,
danger
particularly
in
allowing
with
the
respect
to
danger
of
punitive damage awards:
Punitive
damages
pose
an
arbitrary deprivation of property.
typically
leave
the
jury
with
acute
Jury instructions
wide
discretion
in
choosing amounts, and the presentation of evidence of
a
defendant’s
juries
will
against
big
net
use
worth
their
businesses,
creates
the
potential
verdicts
to
express
biases
those
without
particularly
that
strong local presences.124
123
Id. See also City of Cleveland v. Peter Kiewit Sons’ Co.,
624 F.2d 749, 757 (6th Cir. 1980).
In T X O Production Corp., the United States Supreme Court
declined to address the issue of whether the financial position
of the defendant can properly be considered as a factor to be
taken into account in assessing punitive damages as TXO had not
challenged that aspect of the jury instructions below. However,
the Court did agree with TXO that the emphasis on the wealth of
the wrongdoer increased the risk that the award may have been
influenced by prejudice against large corporations, “a risk that
is of special concern when the defendant is a nonresident.”
Supra, n. 113, 509 U.S. at 464, 125 L. Ed. 2d at 383.
124
Honda Motor Co. v. Oberg, 512 U.S. 415, 432, 129 L. Ed.2d
336, 349, 114 S. Ct. 2331, 2340 (1994).
In Oberg, the Court
held that Oregon’s denial of judicial review of the size of
punitive damage awards violated the Due Process Clause of the
Fourteenth Amendment.
Although the Court was not forced to
reach
the
question
of
what
standard
of
review
is
-64-
The
instant
case
vividly
illustrates
the
validity
of
this
concern.
Even if an argument is improper, however, the question
remains whether the probability of real prejudice is sufficient
to warrant a reversal.
In making this determination, each case
must be judged on its unique facts.125
An isolated instance of
improper argument, for example, is seldom deemed prejudicial.126
But, “when it is repeated in colorful variety by an accomplished
orator its deadly effect cannot be ignored.”127
Such is the case
here.128
The quoted language which generated the current debate
was specifically designed to appeal to and arouse the passion
and prejudice of the jury, and it is obvious that the arguments
achieved their desired effect as this is not a case involving a
single, isolated, or inadvertent comment.
To the contrary, the
constitutionally required, it did observe that “there may not be
much practical difference” between review that focuses on
“passion and prejudice,” “gross excessiveness,” or whether the
verdict “was against the weight of the evidence.” Id., 512 U.S.
at 433, 129 L. Ed.2d at 350.
125
Stanley v. Ellegood, Ky., 382 S.W.2d 572, 575 (1964); City
of Cleveland, supra, n. 123, at 756.
126
Id.; Murphy, supra, n. 122, at 244.
127
Id.
128
In Louisville & N. R. Co. v. Smith, 27 Ky. L. Rptr. 257, 84
S.W. 755 (1905), counsel for Smith referred to the “great wealth
of this soulless corporation” during closing argument.
The
Court deemed such language improper and reversed the judgment on
that basis; because the same type of argument was employed here,
the same result necessarily follows.
-65-
closing
arguments
at
issue
epitomize
conduct
that
has
been
explicitly and consistently condemned by both the courts of this
Commonwealth and their federal counterparts as evidenced by even
a cursory review of the relevant case law.
In short, we are of the opinion that “the statements
of
counsel
[were]
were
calculated
outside
to
the
record,
inflame
the
and
otherwise
passions
and
improper,
excite
the
prejudices of the [jurors], and thereby induce them to disregard
the evidence, and go to an extreme and unjustifiable length in
arriving at a verdict.”129
Because counsel should not introduce
extraneous matters before a jury, or by questions or comments,
endeavor
to
discuss
unrelated
subjects,
where
there
is
a
reasonable probability that the verdict of the jury has been
influenced by such conduct, it must be set aside.130
Thus,
Rockwell would be entitled to have the punitive damages award
set aside on this basis even if our resolution of the issues
previously
addressed
did
not
independently
necessitate
reversal.131
129
Id. at 758.
130
City of Cleveland, supra, n. 123, at 756.
131
The United States Supreme Court has recently addressed the
role of appellate courts in reviewing punitive damage awards and
the
criteria
for
assessing
whether
such
awards
are
unconstitutionally excessive.
In State Farm Mutual Insurance
Co. v. Campbell, supra, n. 11, the Court determined that the
award was neither reasonable nor proportionate to the wrong
committed and, therefore, constituted an arbitrary deprivation
of property. Relevant for present purposes, the Court declined
-66-
V.
Landowners’ Cross-appeal
We will not consider issues initially raised in the
landowners’
cross-appeal
and
in
an
appeal
filed
by
certain
landowners whose claims were dismissed prior to trial because
our dismissal of the landowners’ cross-appeal and the appeal by
landowners whose claims were dismissed prior to trial was not
challenged in the Supreme Court; thus the dismissal is final.
Secondly, we were directed by the Supreme Court only to review
the issues raised by Rockwell in its initial appeal but left
undecided when we reversed the judgment on the ground that the
testimony of the landowners’ appraisal witness, Charles Snyder,
was inadmissible.
VI.
Conclusion
For the foregoing reasons, the judgment in favor of
the
landowners
against
Rockwell
International
Corporation
is
reversed.
ALL CONCUR.
to impose a bright-line ratio which a punitive damage award
cannot exceed, but did conclude that “single-digit multipliers
are more likely to comport with due process, while still
achieving the State’s goals of deterrence and retribution . . . .”
Thus, even if we had not resolved the punitive damage issue in
favor of Rockwell, the award in question would necessarily be
reduced consistent with the dictates of State Farm.
-67-
BRIEFS AND ORAL ARGUMENT
FOR APPELLANT ROCKWELL
INTERNATIONAL CORPORATION:
BRIEFS AND ORAL ARGUMENT FOR
APPELLEES:
Charles L. Cunningham, Jr.
Louisville, Kentucky
M. Stephen Pitt
WYATT, TARRANT & COMBS
Louisville, Kentucky
ON BRIEFS:
Charles E. Fell, Jr.
Michael McDonald
Louisville, Kentucky
ON BRIEFS:
Andrew L. Frey
Evan M. Tager
Charles A. Rothfeld
MAYER, BROWN & PLATT
Washington, D.C.
John W. ADon@ Barrett
Lexington, Massachusetts
W. Patrick Murray
Steven C. Bechtel
MURRAY & MURRAY
Sandusky, Ohio
Virginia H. Snell
J. Anthony Goebel
Donald J. Kelly
WYATT, TARRANT & COMBS
Louisville, Kentucky
*
*
Thomas M. Jessee
JESSEE & JESSEE
Johnson City, Tennessee
*
Gary E. Brewer
Leslie A. Muse
Morristown, Tennessee
BRIEF FOR AMICI CURIAE
LOGAN COUNTY ECONOMIC
DEVELOPMENT COMMISSION, INC.,
ASSOCIATED INDUSTRIES OF
KENTUCKY AND KENTUCKY COAL
ASSOCIAION:
Thomas A. Noe, III
Russellville, Kentucky
William Gordon Ball
Knoxville, Tennessee
James R. Cox
John S. Reed
REED WEITKAMP SCHELL
COX & VICE
Louisville, Kentucky
BRIEF FOR AMICI CURIAE
WASHINGTON LEGAL FOUNDATION
AND ALLIED EDUCATIONAL
FOUNDATION:
Kent Masterson Brown
Danville, Kentucky
Daniel J. Popeo
Paul D. Kamenar
WASHINGTON LEGAL FOUNDATION
Washington, D.C.
-68-
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