CYRUS M. TALAI v. JAMES B. TENNILL, SR.
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RENDERED:
DECEMBER 15, 2006; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2005-CA-001290-MR
CYRUS M. TALAI
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE STEPHEN K. MERSHON, JUDGE
ACTION NO. 04-CI-003573
v.
JAMES B. TENNILL, SR.
APPELLEE
OPINION
AFFIRMING IN PART,
VACATING IN PART, AND REMANDING
** ** ** ** **
BEFORE:
JOHNSON AND TAYLOR, JUDGES; HUDDLESTON,1 SENIOR JUDGE.
JOHNSON, JUDGE:
Cyrus M. Talai has appealed from an order of
the Jefferson Circuit Court entered on April 6, 2005, in favor
of James B. Tennill which awarded Tennill $45,076.00 in damages.
Having concluded that the trial court did not abuse its
discretion in entering the default judgment, we affirm as to
that issue.
However, having further concluded that Tennill was
not entitled to any amount of damages, because of his failure to
1
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 Kentucky Revised Statutes (KRS) 21.580.
answer interrogatories propounded upon him, we vacate the
judgment and remand.
On May 2, 2002, Tennill was leaving a gas station on
Shelbyville Road in Louisville, Jefferson County, Kentucky, when
his vehicle was struck by a vehicle being driven by Talai.
Tennill suffered injuries to his head, neck and back, and his
vehicle was heavily damaged.
Talai’s insurer, Safe Auto
Insurance Company, repeatedly failed to respond to Tennill’s
requests to settle the claim for the minimum liability coverage
limits of $25,000.00,2 and he filed a complaint against Talai in
the Jefferson Circuit Court on April 28, 2004.
The complaint
alleged that Tennill suffered serious and permanent physical
injury as a result of the automobile accident.
Tennill
attempted to serve the complaint on Talai by certified mail, but
was unsuccessful.
Subsequently, the complaint was personally
served on Talai by a special bailiff on July 19, 2004.
Talai
did not file a response to the complaint.
On August 23, 2004, Tennill filed a motion for
judgment pro confesso, along with an affidavit, stating that
although Talai had been served with the complaint he had failed
to respond.
A default judgment was entered against Talai by the
2
The only objection Safe Auto voiced to the proposed resolution was its
concern about a potential “Medicare lien,” which apparently does not exist.
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trial court on August 25, 2004, and a hearing was set to
determine the damages owed to Tennill.
On August 30, 2004, Talai, by counsel, filed a motion
for relief from the default judgment.
He attached thereto an
answer to the complaint, but such answer was stricken by the
trial court’s order entered on December 20, 2004.
In a
memorandum, Talai requested that the default judgment be set
aside and that the trial court grant him leave to file an answer
to the complaint.
Talai’s counsel claimed that he had not filed
an answer to the complaint on Talai’s behalf because he was
unaware that Talai had ever been served.
the motion on October 11, 2004.
motion on the same date.
Tennill responded to
The trial court denied the
The trial court also rescheduled the
hearing to determine the amount of damages owed to Tennill.
Talai propounded interrogatories to Tennill on October
19, 2004, in an attempt to determine medical expenses, pain and
suffering, and lost wages.
The interrogatories and requests for
production of documents went unanswered by Tennill.
Following the taking of both parties’ depositions3 and
the filing of trial memoranda by both parties, the trial court
held the hearing on damages on March 7, 2005, at which time
Tennill was permitted to introduce evidence of unliquidated
3
Tennill’s discovery deposition was taken on November 8, 2004, and Talai’s
discovery deposition was taken on February 8, 2005.
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damages.4
On April 6, 2005, the trial court entered its findings
of fact, conclusions of law, and judgment.
The trial court
concluded as follows:
The Court concludes that Mr. Talai was
at fault in causing the May, 2002, motor
vehicle accident. The Court further
concludes that it would have been
extraordinary for an 83-year-old man not to
have suffered injuries as a result of the
collision. It is not uncommon for injuries
to manifest several days after such an
accident. It was more than reasonable for
Mr. Tennill to seek medical attention to
address his injuries following the accident.
. . .
The Court concludes that Mr. Tennill
has more than met the $1,000.00 medical
expense threshold to maintain this action
under KRS 304.390-060. The listing of Mr.
Tennill’s medical expenses admitted into
evidence exceeded $8,000.00. Mr. Tennill
acknowledged that one of the expenses listed
to the Family Allergy and Asthma Center in
the amount of $1,002.00 was not directly
related to the accident. Still, the
remaining expenses exceeded $7,000.00. And
these expenses did not include a January 6th,
2003, CT scan performed at Baptist Hospital
East or a statement for services by Mr.
Tennill’s neurologist, Dr. Bangash.
Therefore, the Court concludes that Mr.
Tennill easily exceeded the $1,000.00
threshold.
It appears that Mr. Tennill has
continued to work actively even at his age.
4
Tennill was allowed to introduce previously unproduced and unknown evidence,
including evidence of his past income. The trial court agreed with Tennill’s
argument that the Kentucky Rules of Civil Procedure (CR) did not apply to
Talai because he was in default and that Talai had neither a right to compel
discovery, nor a right to notice of the damage assessment hearing.
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His real estate business has been both his
love and his hobby. The Court concludes
that Mr. Tennill suffered a loss of income
in 2002 as a result of the injuries he
received from the accident. Exactly how
much he lost is more difficult to quantify.
His Schedule Cs reflect the following total
gross receipts for the past four years:
YEAR
2000
2001
2002
2003
GROSS RECEIPTS
$53,365.00
$15,642.00
$42,827.00
$66,096.00
Given this earning history, it appears
that 2001 was an aberration. When the Court
averages Mr. Tennill’s earnings for 2000,
2002 and 2003, it appears that his average
gross receipts for those three years were
$54,096.00. Thus, his 2002 earnings were
$11,269.00 below that average.
It appears that there was no reason
other than the automobile accident
attributable to this decline. Because of
this, the Court will award him $11,269.00 in
lost income for 2002.
It is also apparent that Mr. Tennill
has suffered pain and suffering and
continues to suffer as a result of this
accident. A multiple of three times his
special damages appears to be an appropriate
amount for pain and suffering. Because of
this, the Court will award him $33,807.00 in
pain and suffering and a total judgment of
$45,076.00 (11,269.00 + $33,807.00).
Talai filed a motion on April 15, 2005, pursuant to CR5
59.05, asking the trial court to alter, amend, or vacate its
judgment, claiming that he was entitled to relief from the
5
Kentucky Rules of Civil Procedure.
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default judgment because there was no evidence that he was
served with the complaint.
Tennill responded on April 19, 2005.
Talai then filed a reply memorandum.
motion on May 23, 2005.
The trial court denied the
This appeal followed.
Talai has raised several claims of error in this
appeal.
First, Talai has argued that the trial court abused its
discretion in denying his motion to set aside the default
judgment.
He states that his “failure to file an answer within
the requisite time period was a result of [counsel’s] mistake,
inadvertence, surprise, or excusable neglect.”6
We reject this
argument.
Generally, when a party is seeking relief from a
default judgment, it “must show good cause; . . . i.e., . . .
‘(1) a valid excuse for the default; (2) a meritorious defense
to the claim; and (3) absence of prejudice to the non-defaulting
party.’”7
“Good cause is most commonly defined as a timely
showing of the circumstances under which the default judgment
was procured.”8
“Absent a showing of all three elements, the
6
Talai’s motion was filed in accordance with CR 55.02, which states that
“[f]or good cause shown the court may set aside a judgment by default in
accordance with Rule 60.02.”
7
PNC Bank, N.A. v. Citizens Bank of Northern Kentucky, 139 S.W.3d 527, 531
(Ky.App. 2003) (citing Sunrise Turquoise, Inc. v. Chemical Design Co., Inc.,
899 S.W.2d 856, 859 (Ky.App. 1995)).
8
Green Seed Co. Inc. v. Harrison Tobacco Storage Warehouse, Inc., 663 S.W.2d
755, 757 (Ky.App. 1984).
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default judgment will not be set aside.”9
“Although default
judgments are not favored, a trial court is vested with broad
discretion when considering motions to set them aside, and an
appellate court will not overturn the trial court’s decision
absent a showing that the trial court abused its discretion.”10
In this case, while there may have been little or no
prejudice in setting aside the default judgment and while there
may have been a defense to the claims, we conclude that the
trial court did not abuse its discretion by finding that Talai
has not provided any good cause to show why his answer was not
filed in a timely manner.
Talai’s counsel states that he
continually checked with the Jefferson Circuit Clerk’s office
concerning service of the complaint upon Talai and was
consistently told that service had not been perfected.
Counsel
went so far as to procure an affidavit from a deputy clerk which
states that “according to the Jefferson County Clerk’s computer
database no service of summons was perfected upon the defendant,
Cyrus Talai, as of 4-15-05” [emphasis added].
However, what
counsel fails to discuss is the existence in the record of a
summons showing that Talai was personally served with Tennill’s
9
Sunrise Turquoise, 899 S.W.2d at 859.
PNC Bank, 139 S.W.3d at 530 (citing Howard v. Fountain, 749 S.W.2d 690, 692
(Ky.App. 1988)). (In Howard, a motion to set aside a default judgment was
denied where the “good cause” shown was mere inattention on the part of the
defendant and his attorney. The basis for the late filing of a responsive
pleading was that the complaint had been filed on November 13, 1985, but the
attorney was not contacted regarding the summons and complaint until December
5, 1985.)
10
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complaint by special bailiff on July 19, 2004.
Talai’s
signature appears on the summons.
While we understand that Talai’s counsel was employed
for him by his insurance company, Safe Auto, “negligence of an
attorney is imputable to the client and is not a ground for
relief under CR 59.01(c) or CR 60.02(a) or (f)” [citations
omitted].11
Counsel’s ignorance of the fact that Talai had been
personally served with the complaint does not compel a finding
of good cause by the trial court.
The trial court did not abuse
its discretion in this instance.
Next, Talai claims that the trial court should not
have allowed Tennill to introduce evidence of unliquidated
damages12 at the damages hearing, because Tennill failed to
respond or to object to Talai’s written discovery requests
served on Tennill on October 19, 2004.
Tennill contends, and
the trial court agreed, that because Talai was adjudged in
default, he was not entitled to a response to his
interrogatories, nor was he entitled to participate at the
11
See Vanhook v. Standford-Lincoln County Rescue Squad, Inc., 678 S.W.2d 797,
799 (Ky.App. 1984).
12
See Simons v. Douglas’ Ex’r, 189 Ky. 644, 225 S.W. 721, 724 (1920)(stating
that “[u]nliquidated damages are . . . only such damages as exist in opinion
and require ascertainment by a [fact finder], and which cannot be ascertained
or fixed by calculation”). See also Nucor Corp. v. General Elec. Co., 812
S.W.2d 136, 141 (Ky. 1991) (citing Black’s Law Dictionary 930 (6th ed. 1990)
(stating that “in general ‘liquidated’ means ‘[m]ade certain or fixed by
agreement of parties or by operation of law’”).
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damages hearing.13
Because we agree with Talai, we must vacate
the trial court’s award of unliquidated damages to Tennill.
In Howard, this Court stated that “[a]s a general
rule, in an action for unliquidated damages, a defaulting party
admits liability but not the amount of damages” [citations
omitted].14
CR 55.01 authorizes the trial court to conduct a
hearing for determination of damages before it enters its
judgment.
CR 55.01 states, in part, as follows:
When a party against whom a judgment
for affirmative relief is sought has failed
to plead or otherwise defend as provided by
these rules, the party entitled to a
judgment by default shall apply to the court
therefor. If the party against whom
judgment by default is sought has appeared
in the action, he, or if appearing by
representative, his representative shall be
served with written notice of the
application for judgment at least three days
prior to the hearing on such application. .
. . If, in order to enable the court to
enter judgment or to carry it into effect,
it is necessary to take an account or to
determine the amount of damages or to
establish the truth of any averment by
evidence or to make an investigation of any
other matter, the court, without a jury,
shall conduct such hearings[.]
13
On page nine of Tennill’s brief, he states that he never actually received
the discovery requests allegedly propounded by Talai. On that same page of
his brief, he asserts that all answers to the discovery requests were given
during Tennill’s discovery deposition. However, this Court sees no evidence
in the record, including this deposition, where Tennill revealed his claim
for unliquidated damages. Tennill goes on to argue that, regardless, the
“purpose in providing CR 8.01 information is not present in a default
proceeding.” However, Tennill provides this Court with no authority to
support this contention.
14
Howard, 749 S.W.2d at 693.
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Thus, “[s]ince a defaulting party does not admit
unliquidated damages, he should be permitted to participate in
the damage assessment hearing” [citations omitted].15
Howard
further recognizes the right of the defaulting party to be given
notice of the damage assessment hearing if he has entered an
appearance in the action prior to the hearing.16
In Smith v.
Gadd,17 the Court stated that “[i]n construing the word
‘appeared’ in CR 55.01, we are of the opinion that it means the
defendant has voluntarily taken a step in the main action that
shows or from which it may be inferred that he has the intention
of making some defense.”
CR 8.01(2) provides that “[w]hen a claim is made
against a party for unliquidated damages, that party may obtain
information as to the amount claimed by interrogatories[.]”
The
rule further states that “if this is done, the amount claimed
shall not exceed the last amount stated in answer to
interrogatories.”
CR 8.01 has been interpreted to require a
plaintiff to specify the amount of unliquidated damages sought
in response to an interrogatory in order to recover those
damages.18
The language of the rule is mandatory and gives a
15
Howard, 749 S.W.2d at 693.
16
Id.
17
280 S.W.2d 495, 498 (Ky. 1955).
18
Fratzke v. Murphy, 12 S.W.3d 269, 271 (Ky. 1999); LaFleur v. Shoney’s Inc.,
83 S.W.3d 474, 477 (Ky. 2002).
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trial court no discretion as to its application.19
Our Supreme
Court has stated as follows:
The purpose of the rule is to put a party on
notice as to the amount of unliquidated
damages at stake to allow that party to make
economically rational decisions concerning
trial preparation and trial strategy. Its
purpose is not to put a party on notice as
to the type of damages at stake.20
In Fratzke, the defendant propounded an interrogatory
which requested Fratzke to identify “‘each item of damage,
including pain and suffering, which you claim arises out of this
action. . . .’”21
The Supreme Court held that this interrogatory
“clearly encompassed Fratzke’s claims of damages for pain and
suffering, future medicals, lost wages, and impairment of
earning power as these claims were stated in the complaint.”22
The Court noted that because Fratzke did not provide a full
answer to the interrogatory on damages, nor object to the
interrogatory, other than her medical expenses, she effectively
stated that her claim for unliquidated damages was zero.23
In the case before us, Talai filed his motion to set
aside the default judgment five days after the judgment was
19
See Fratzke, 12 S.W.3d at 273.
20
LaFleur, 83 S.W.3d at 481.
21
Fratzke, 12 S.W.3d at 270.
22
Id. at 271.
23
Id.
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entered.
Although his motion was denied, the trial court
allowed Talai to file a trial memorandum prior to the damages
hearing.
Furthermore, the depositions of both parties were
taken prior to the hearing.
Thus, it is clear from the record
that Talai “appeared” in the case for the purpose of CR 55.01;24
and therefore, he was entitled to participate in the damages
hearing and to contest the amount of damages.
Furthermore, Talai was entitled to propound
interrogatories upon Tennill to discover the amount of damages
he was claiming.
Interrogatory question number 20 stated, “[i]f
you are making a lost wage claim or claim for lost income,
profit or compensation, please state the name and address of
your employer, the dates and hours of work missed and the amount
of lost wages claimed.”
Interrogatory question number 21 stated
as follows:
Pursuant to Civil Rule 8.01, please identify
each element of general and special damages
that you are claiming and identify the
manner in which each amount was computed:
medical and hospital expenses – itemized by
date, name of health care provider and
amount; past and further physical, mental
and emotional pain and suffering; permanent
impairment of power to labor and earn money;
funeral or burial expenses; and, any other
element of damages claimed. Please attach
any documents supporting the damages claimed
herein to these answers.
24
See Howard, 749 S.W.2d at 693 (noting that where the answer to the
complaint was untimely filed, the mere filing of the document constituted
appearance in the case.)
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Tennill failed to answer or to object to the discovery
requests in any manner prior to the damages hearing.
Subsequently, Talai moved pursuant to CR 8.01, 26.05, and 37.02
to preclude Tennill from introducing evidence of unliquidated
damages at the damages hearing.
Tennill failed to move for
leave to answer such requests, but rather argued that he was not
obligated to comply with discovery because Talai was in default.
The trial court agreed, as set out in its April 6, 2005, order.
However, the strict standards in CR 8.01, which under Fratzke
included lost wages and pain and suffering,25 required Tennill to
specify those damages, and he should have done so by responding
to Talai’s interrogatories seeking that information.
It was an
abuse of discretion for the trial court to allow Tennill to
introduce any evidence of unliquidated damages where the damages
had not been previously disclosed; and therefore, we vacate the
trial court’s award of $45,076.00 for lost wages and pain and
suffering.
Because we are vacating on the damages issue, there is
no need to address Talai’s remaining three claims, including (1)
that the trial court rendered a judgment wholly inconsistent
with the evidence presented by Tennill at the damages hearing;
(2) that Tennill failed to meet the $1,000.00 economic threshold
25
Fratzke, 12 S.W.3d at 271.
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requirement under KRS 304.39-060(2)(b),26 before claiming medical
expenses, and (3) that the trial court erred by not reducing its
award to Tennill based upon personal injury protection benefits
(PIP).27
For the foregoing reasons, the order of the Jefferson
Circuit Court is affirmed in part and vacated in part, and this
matter is remanded for further proceedings consistent with this
Opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
James M. Cawood III
Cincinatti, Ohio
BRIEF AND ORAL ARGUMENT FOR
APPELLEE:
Lee Sitlinger
Louisville, Kentucky
ORAL ARGUMENT FOR APPELLANT:
David A. Shearer, Jr.
Cincinnati, Ohio
26
The Kentucky Motor Vehicle Reparations Act requires a plaintiff to prove he
has incurred “medical expenses” in excess of $1,000.00 to recover in tort.
27
According to KRS 304.39-060(2)(a), to the extent that PIP is payable for
damages because of bodily injury, tort liability for those claims is
“abolished”.
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