KENTUCKY RIVER COMMUNITY CARE, INC. VS. CREEDA STALLARD , ET AL.Annotate this Case
RENDERED: DECEMBER 19, 2008; 2:00 P.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
KENTUCKY RIVER COMMUNITY CARE, INC.
APPEAL FROM BREATHITT CIRCUIT COURT
HONORABLE SAMUEL T. WRIGHT, III, JUDGE
ACTION NO. 04-CI-00092
CREEDA STALLARD; COMMONWEALTH OF
KENTUCKY, HON. SAMUEL T. WRIGHT, III,
SPECIAL JUDGE, REAL PARTY IN INTEREST
VACATING AND REMANDING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; KELLER, JUDGE; HENRY,1 SENIOR
COMBS, CHIEF JUDGE: Kentucky River Community Care (KRCC) appeals
from an order of the Breathitt Circuit Court imposing upon it a fine of $40,500 plus
Senior Judge Michael L. Henry sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
the costs of mediation and attorney fees. After our review, we vacate and remand
this matter to the Breathitt Circuit Court.
Appellee Creeda Stallard (Stallard), who had been treated as a patient
at KRCC, was sexually assaulted by another patient during her stay in the Bailey
Center location. She later filed suit against KRCC. On November 16, 2006, the
Breathitt Circuit Court entered a mediation order that included the following
The parties or their authorized representatives and the
adjustor shall have full authority to settle at the mediation
conference. . . . The full authority of any representative
of an insurer shall be documented in writing prior to the
commencement of the mediation and shall be filed with
the Clerk of the Court.
KRCC mailed copies of the order to its insurer, Kentucky Association of Counties
All Lines Fund (KACo), on November 20, 2006, and March 6, 2007. Although the
letter of full authority had not been filed, the mediation took place on March 15,
2007. The parties failed to reach a settlement, and on April 12, 2007, Stallard filed
a motion to compel and requested sanctions against KRCC for failure to file the
certification of authority.
On May 1, 2007, the trial court issued a second order and rescheduled a second mediation for the month of July. One week later, on May 8,
2007, the court entered an order imposing sanctions on KRCC, including total
costs of the March mediation, attorney fees, and a fine of $500 per day “until the
parties return to mediation.” On May 18, 2007, KRCC filed a motion to vacate the
order, which the court denied on September 6, 2007. This appeal followed.
KRCC contends that the trial court did not have authority to require or
to enforce the directives of the certification letter as it exceeded the bounds of the
Model Mediation Rules. It is true that the Supreme Court of Kentucky has adopted
the Model Mediation Rules, which do not require the letter of full authority;
Kentucky Farm Bureau Mut. Ins. Co. v. Wright, 136 S.W.3d 455, 459 (Ky. 2004).
KRCC claims that Wright precluded the trial court from adding extra elements to
the requirements of the Model Mediation Rules. However, Wright is
distinguishable because it involved sanctions imposed by the court for failure to
achieve a settlement. Our Supreme Court has endorsed the full authority
requirement as conforming with the rules, citing long-standing precedent in
support of a fluid concept of mediation:
. . . as an aid in the orderly dispatch of litigation, courts
are vested with the right to adopt and promulgate
reasonable rules for the guidance of litigants and their
counsel and which they are as much under duty to
observe as if the rules had been created by statutory
enactment in the form of a Code of Practice.
Warfield Natural Gas Co. v. Allen, 33 S.W.2d 34, 35 (Ky. 1930).
Though the Model Mediation Rules do not literally require
certification of authority to be filed with the court, Rule 8 mandates that any
insurer involved must be represented at mediation by a representative with full
settlement authority. We are persuaded that the order of the court was a reasonable
means of ensuring compliance with this Rule and that it was reasonably tailored to
avoid protracting the litigation because of improper mediation. The trial court did
not exceed its authority with this requirement. The issue becomes a question of
who bore responsibility for filing the letter of certification. However, we need not
address or attempt to resolve that ultimate issue of whether KRCC or KACo bore
the responsibility to comply with the mediation order. The fact is that the court
imposed hefty sanctions on KRCC, and the propriety of those sanctions is the real
issue before us on appeal.
KRCC contends that even if it should have assumed responsibility for
filing the certification of authority, the fine imposed amounted to an abuse of
discretion as it should have had the opportunity for a jury trial prior to having
sanctions imposed. We agree.
In its order of August 30, 2007, overruling KRCC’s motion to vacate,
the trial court noted that the sanctions imposed on KRCC were punitive. In effect,
this amounted to a citation for contempt. Contempt is defined as “the willful
disobedience toward or open disrespect for, the rules or orders of a court.”
Commonwealth v. Burge, 947 S.W.2d 805, 808 (Ky. 1996). Courts have nearly
unfettered discretion in issuing contempt citations. Smith v. City of Loyall, 702
S.W.2d 838, 839 (Ky. App. 1986). Therefore, we are governed by the high
standard of review as to whether the trial court abused its discretion. Myers v.
Petrie, 233 S.W.3d 212, 215 (Ky. App. 2007). Our Supreme Court has defined
abuse of discretion as conduct by a court in acting arbitrarily, unreasonably,
unfairly, or in a manner “unsupported by sound legal principles.” Commonwealth
v. English, 993 S.W.2d 941, 945 (Ky. 1999).
Contempt can be civil or criminal in nature. Civil contempt is “the
failure . . . to do something under order of court, generally for the benefit of a party
litigant.” Burge, supra. The U.S. Supreme Court has held that because those cited
with contempt “carry ‘the keys of their prison in their own pockets,’” the offense is
civil rather than criminal contempt. Shillitani v. United States, 384 U.S. 364, 368,
86 S.Ct. 1531, 16 L.Ed.2d 622 (1966), quoting In re Nevitt, 117 F. 448, 461 (8th
Cir. 1902). The purpose of holding one in civil contempt is to compel some
action. Crook v. Schumann, 167 S.W.2d 836, 840 (Ky. 1942).
By contrast, criminal contempt is conduct that demonstrates disrespect
toward the court, obstructs justice, or brings the court into disrepute. Myers, supra.
“If the court’s purpose is to punish, the sanction is criminal contempt.”
(Emphasis added.) Burge, supra. Criminal contempt may be direct or indirect.
Direct contempt involves an act committed in the presence of the court; indirect
contempt is a violation that “is committed outside the presence of the court and
requires a hearing and the presentation of evidence to establish a violation of the
court’s order.” Id. In the case of criminal contempt, all elements, including willful
disobedience, must be proven beyond a reasonable doubt, and the accused has the
right to a jury trial if the fine is “serious.” Brockman v. Commonwealth, 185
S.W.3d 205, 208 (Ky. App. 2005).
In the case before us, the sanctions were imposed to punish for
conduct already committed rather than to compel future action. The trial court
issued an order for a second mediation one week before it issued the order
imposing the fine. The fine was calculated on a daily basis up to the date of the
second mediation. It was not contingent upon the filing of a certificate of
authority but rather as a reprisal for the failure to file it after the fact. The
contempt of court was, therefore, criminal rather than civil as it involved
punishment for a past act or omission rather than an attempt to compel a future act.
Additionally, the failure to file the certification of authority occurred outside the
presence of the court. Thus, the order was equivalent to a citation for indirect
criminal contempt. In Brockman, a fine of $825 satisfied the threshold of
seriousness required to merit a jury trial. In this case, the fine totalled $40,500,
plus costs and attorney’s fees. Accordingly, due process compelled that KRCC be
entitled to a jury trial. See Philip Morris USA v. Williams, 529 U.S. 346, 127 S.Ct.
1057, 1063, 166 L.Ed.2d 940 (2007).
We vacate the order of the Breathitt Circuit Court denying KRCC’s
motion to vacate, and we remand for a trial to determine whether KRCC was guilty
of contempt. Any arguments relating to the proper role or arguable liability of
KACo presumably can be raised by KRCC at that trial.
BRIEF FOR APPELLANT:
Michael J. Schmitt
BRIEF FOR APPELLEE CREEDA
Daniel F. Dotson