Kentucky Court Report - SCOKY & COAKY

No time limitations for appealing open records denial to attorney general: WYRICK V. DEPARTMENT OF REVENUE, FINANCE, AND ADMINISTRATION CABINET (COA 5/30/2008)

WYRICK V. DEPARTMENT OF REVENUE, FINANCE, AND ADMINISTRATION CABINET
GOVERNMENT:  Open Records Request
2007-CA-000089
PUBLISHED: REVERSING IN PART, VACATING IN PART, AND REMANDING
PANEL: KELLER PRESIDING; THOMPSON, GRAVES CONCUR
FRANKLIN COUNTY
DATE RENDERED: 5/30/2008

In this open records request case, the Department of Revenue sought review of the Attorney General's decision, requiring disclosure of certain records requested by taxpayer's attorney, Mitzi D. Wyrick, who appealed the circuit court order which barred her from inspecting the documents.

COA held there was no time limitation to appeal open records denial to the attorney general and declined the DOR’s request there be a 30-day time limitation for seeking review before the Attorney General and hold that pursuant to the plain language of the statute, Wyrick’s appeal to the Attorney General would have been timely whenever she chose to file it.

With regard to the records requested, the DOR cannot on the one hand argue, successfully, that the material sought in the tax appeal case is irrelevant to that litigation to defeat the discovery request, and then on the other hand argue in the Open Records proceeding that it is pertaining to that litigation and therefore subject to the limitation. The DOR is not “permitted to feed one can of worms” to the Board of Tax Appeals and another to the circuit court in the Open Records action.  COA then rejected the DOR’s argument that just because a record requested in discovery is deemed irrelevant, does not mean that it is not related to that litigation. The public agency bears the burden of establishing that a requested record is exempt from release. When ruling on party litigation defense to Open Records Act request, trial court was required to first determine whether a listed exemption applied.  However, the party litigation limitation was inapplicable because underlying litigation  in this was case was a tax appeal and was administrative, not civil.

Digested by Michael Stevens

 

Whether mortgagee waived its right to compel arbitration through litigation-conduct waiver was an issue for the courts rather than the arbitrators: AMERICAN GENERAL HOME EQUITY, INC. V. KESTEL (SC 5/22/2008)

AMERICAN GENERAL HOME EQUITY, INC. v. KESTEL
ARBITRATION:   Litigation conduct and waiver of arbitration
2006-SC-000830-DG.pdf
PUBLISHED: REVERSING AND REMANDING
OPINION BY MINTON; NOBLE NOT SITTING
FROM MERCER COUNTY
DATE RENDERED: 5/22/2008

American General Home Equity, Inc., filed a mortgage foreclosure action in circuit court against Teresa Kestel. Kestel counterclaimed, asserting fraud and federal and state statutory claims under the Truth in Lending Act and the Kentucky Consumer Protection Act. The trial court denied American General's motion to compel arbitration on Kestel's counterclaims, finding that no arbitration agreement existed between American General and Kestel. A majority of the Court of Appeals panel hearing the case on appeal disagreed with the trial court about the absence of an arbitration agreement; but the panel upheld the denial of American General's motion to compel arbitration anyway, holding, instead, that American General had waived its arbitration rights through its “nine-month delay in moving for arbitration” following the filing of Kestel's counterclaims.

SCOKY granted discretionary review in order to provide guidance to courts and counsel concerning when a party's litigation conduct amounts to an implied waiver of its rights to enforce a contractual right to arbitration. The Court concluded that the mortgagee's litigation conduct was not clearly inconsistent with asserting contractual arbitration rights and did not waive its right to arbitrate the mortgagor Kestel's counter-claim; and the Court of Appeals erred in determining that American General waived its arbitration rights.  Case was reversed and remanded to the trial court for proceedings consistent with this opinion. This ruling leaves open on remand the possibility that Kestel may, by proper motion, raise her contention that application of the arbitration provisions could, by cost or otherwise, deprive her of an adequate opportunity to present her claims and defenses.  Issue of whether mortgagee waived its right to compel arbitration through litigation-conduct waiver was an issue for the courts rather than the arbitrators.

Mike Stevens, ed.

Exceptions to administrative ruling must be timely filed and substantial compliance offers no relief in licensing of child placement facility: COM. V.COPPER CARE, INC.

COM. V. COPPER CARE, INC.
ADMINISTRATIVE APPEAL:  Sustantial compliance not apply and exceptions not timely
2007-CA-000676 521
PUBLISHED: REVERSING
PANEL: THOMPSON PRESIDING; CAPTERTON, LAMBERT CONCUR
MADISON COUNTY
DATE RENDERED: 5/25/2008

The Cabinet for Health and Family Services (the Cabinet) appeals circuit court order denying its motion for summary judgment against Copper Care, Inc. (Copper Care). The issue raised is whether the circuit court properly held that the Stapletons’ exceptions to the hearing officer’s findings of fact, conclusions of law, and recommended order were timely filed.  COA reversed.

The Cabinet issued a “Notice of Revocation and Preliminary Order to Close” seeking to revoke Copper Care’s license based on its alleged failure to meet the standards in the administrative regulations promulgated pursuant to KRS 199.640 for a child-placement agency. Following an administrative hearing Copper Care filed exceptions 18 days later, and not 15 days.  The Cabinet accepted the hearing officer’s recommended order, and Copper Care filed a complaint in the Madison Circuit Court seeking review of the Cabinet’s order. In addition to its answer, the Cabinet filed a motion for summary judgment arguing that, as a matter of law, the exceptions were untimely filed

To reconcile judicial decisions with the recently amended CR 73.02(2), the Court held that dismissal of an appeal is not an appropriate remedy “so long as the judgment appealed from can be ascertained within reasonable certainty from a complete review of the record on appeal and no substantial harm or prejudice has resulted to the opponent.”

The issue in this case does not concern CR 73.02. The time for filing exceptions in an administrative proceeding is governed by statute and is a step in the administrative review process.  The language contained in KRS 13B.110(4) is unequivocal and requires that exceptions be filed within fifteen days from the date the recommended order is mailed. Absent legislative authority to the contrary, the substantial compliance doctrine is not applicable.

The trial court erroneously concluded that the substantial compliance doctrine saved Copper Care from the consequences of the untimely filing of its exceptions. Although not a jurisdictional defect, the filing of exceptions is, in this case, fatal.

Since Copper Care’s exceptions were untimely filed, there was no issue properly preserved for review. As a consequence, the circuit court erred when it denied
the Cabinet’s motion for summary judgment. The summary judgment entered in favor of Copper Care is reversed and the case remanded for the entry of an order granting the Cabinet summary judgment.

By Michael Stevens

In issue of first impression COA holds Notice of voluntary dismissal without prejudice denies court of further jurisdiction unless answer or motion for summary judgment filed: WHALEY v. WHITAKER BANK, INC. (COA 5/2/2008)

WHALEY V. WHITAKER BANK, INC.
CIVIL PROCEDURE:  Notice of voluntary dismissal without prejudice denies court of further jurisdiction unless answer or motion for summary judgment filed
2007-CA-001451 534
PUBLISHED: VACATING AND REMANDING
PANEL: WINE PRESIDING; ACREE, KNOPF CONCUR
SCOTT COUNTY
DATE RENDERED: 5/2/2008

CA vacates and remands order granting motion to dismiss under CR 12.02.

Appellants filed a notice of voluntary dismissal without prejudice under CR 41.01(1) while appellee's CR 12.02 motion to dismiss (with prejudice) was pending. CR 41.01 allows a plaintiff to voluntarily dismiss "before service by the adverse party of an answer or of a motion for summary judgment...." Appellee's CR 12.02 motion presented matters outside the pleadings to be considered, so the TC considered this motion as a motion for SJ (at a hearing conducted after appellants' CR 41.01 notice was filed) and granted dismissal with prejudice.

In an issue of first impression, COA holds that the TC erred by granting the CR 12.02 motion because the TC lost jurisdiction immediately upon filing of the CR 41.01 notice. "Once the plaintiff gives his notice, the lawsuit is no more."

Digested by John E. Hamlet

Judge's indeterminate stay of a cause of action not allowed without reasons on record: EST. OF LAKEESHA CLINE V. HON. JAMES G. WEDDLE (SC 4/24/2008)

EST. OF LAKEESHA CLINE V. HON. JAMES G. WEDDLE
CIVIL PROCEDURE:  Sua sponte order to stay an action
2007-SC-000742-MR.pdf
PUBLISHED: AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
OPINION BY MINTON; ABRAMSON NOT SITTING
ADAIR COUNTY
DATE RENDERED: 4/24/2008 -80

The Supreme Court affirms in part and reverses and remands in part this wrongful death case involving a sua sponte order to stay an action.

Cline was a teenaged patient who fled a residential psychiatric treatment facility and was struck and killed in traffic. Her estate sued the facility and, after some discovery, filed a second wrongful death action with additional claims against the facility and other defendants. The estate then sought to consolidate the two actions, which motion was denied. The estate then filed a motion for leave to file an amended complaint to add additional parties to the second complaint; the trial court, sua sponte, order discovery halted in the second action "until completion" of the first action. Four months later the estate filed an action in the CA seeking a writ of mandamus to compel the consolidation and amendment and lift the stay order.

CA held that the estate was not entitled to the writ, stating that the stay was of limited duration. CA also noted that the estate's procedural entanglements were self-inflicted by filing two separate actions and waiting 4 months to petition for a writ.

S. Ct. holds that CA erred in not issuing the writ to compel the stay order to be vacated b/c it was of indeterminate duration with no articulated pressing need. S.Ct. upheld the CA, however, in declining the writ on consolidation and amendment.

Digested by John E. Hamlet

Sheriff entitled to county's sovereign immunity which is waived per KRS 70.040 for actions or omissions of his deputies: JONES V. CROSS (SC 4/24/08)

JONES V. CROSS
TORTS:  Sheriff entitled to county's sovereign immunity which is waived per KRS 70.040 for actions or omissions of his deputies
2005-SC-000854-DG
PUBLISHED: AFFIRMING
OPINION BY SCHRODER; ABRAMSON CONCURRING BY SEPARATE OPINION
DATE: 4/24/2008
BARREN COUNTY

The split between the majority opinion and the concurring opinion is more interesting than either the facts or the holding of the opinion itself. The opinion itself is limited to two questions. The first is whether a County Sheriff is entitled to the county’s sovereign immunity? The majority opinion holds yes. The concurring opinion says, “No.”

The second is the rather narrow question of whether KRS 70.040 waives a County Sheriff’s sovereign immunity. Again, the majority holds that it does and the concurring opinion says, “No.”

 

KRS 70.040 provides in pertinent part:

The sheriff shall be liable for the acts or omissions of his deputies; except that, the office of sheriff, and not the individual holder thereof, shall be liable under this section.

The majority finds that the “literal or plain reading of the statute clearly imposes liability” on the sheriff, which leads the Court to conclude “that the legislative waiver of immunity is very clear, and that the plain language of KRS 70.040 leaves no room for any other reasonable construction than a waiver of the sheriff’s official immunity (the office of sheriff) for the tortious acts or omissions of his deputies.”

In her concurring opinion, Justice Abramson argues that the majority’s holding is contrary to Grayson County Board of Education v. Casey, 157 S.W.3d 201 (Ky.2005). As you may recall, Casey holds that a statute “authorizing boards of education to insure against the negligence of school bus drivers” does not constitute a waiver of the school board’s sovereign immunity despite language “expressly requiring that insurance policies issued pursuant to the statute ‘shall bind the company to pay any final judgment rendered against the insured.’”

Being biased against immunity, I certainly favor the majority opinion. But I should note that the stark differences between the holdings in Jones and Casey could lie in the fact that Jones concerns a waiver of a County’s sovereign immunity whereas Casey concerns a waiver of the Commonwealth’s sovereign immunity. That is, Casey implicates payments out of the State Treasury, and, hence, Section 230 of the Kentucky Constitution, and Jones does not. In other words, Jones could stand for the proposition that waiver of County sovereign immunity is subject to a lesser test than waiver of the State’s sovereign immunity. 

 

By Hays Lawson at www.PedlyLaw.com

Consumer Protection Act applied to attempted used car sale even tho not yet "purchasers": CRAIG & BISHOP, INC. V. PILES (SC 3/20/2008)

CRAIG & BISHOP, INC. V. PILES
TORTS:  CONSUMER PROTECTION ACT applied to attempted used car sale even tho not yet "purchasers"
2005-SC-000999-DG.pdf
PUBLISHED: AFFIRMING IN PART, REVERSING IN PART
OPINION BY MINTON
JEFFERSON COUNTY
DATE RENDERED: 3/20/2008

In this case, the Kentucky Supreme Court addresses the scope of the Kentucky Consumer Protection Act (KCPA) and the legislative intent behind it in order to determine whether Appellees Piles and Warner presented sufficient evidence to recover damages from Appellant stemming from an attempted used car sale. The factual background of the case is as follows: Piles and Warner (who were dating) went to Appellant in response to a used car ad (1997 Mustang for $5,000) that apparently sounded too good to be true. Once at the car lot, Appellees were first told the car was still available before later being informed it had been sold after traveling to a separate car lot. But as luck would have it, Appellant had a 2000 Camaro available for a mere three times the price of the Mustang. Even though Appellees expressed concern about the higher price and the ability to afford it, Appellant's salesman guaranteed he could get them financing for it. Appellees ultimately agreed to the deal in kind, and signed over the title to Warner's Nissan sedan valued at $1,000 before leaving the dealership that evening in the Camaro. Over the next two days, Appellant tried unsuccessfully to find financing for the entire purchase amount and tried to pursuade Appellees to make up the difference in cash, which they explained they could not afford to do. At this point, Appellees decided they wanted out of the deal, first refusing Appellant's offer to finance the remaining portion through it directly and later refusing Appellant's offer to simply knock the remaining portion off the $14,000 purchase price. Over the next several days, Appellees tried to return the Camaro and take back Warner's Nissan with no success, Appellant giving different excuses each time on why the Nissan wasn't immediately available. The manager finally informed Appellees that the Nissan had been sold AND that payment for the full $14,000 Camaro purchase price had to be made that day or the Camaro would be repossessed. Appellees immediately returned the Camaro to the dealership, and in response their attorney was notified in writing that Appellant considered the Camaro repossessed and would be sold at auction. Appellees then filed suit alleging KCPA violations, common law fraud, conversion and breach of contract, and Appellant counterclaimed for breach of contract and reimbursement for the cost to store the Camaro. The case proceeded to trial where the jury found in Appellees' favor on the KCPA violations, fraud and conversion, and awarded them $8,600 in compensatory damages and $50,000 in punitive damages. Appellant appealed and the COA affirmed the decision with the exception of vacating the fraud finding and the award of inconvenience damages as duplicative of the loss of use damages also awarded. The Appellant again appealed and the SC granted review.

The SC began by declining to weigh in on the COA's reversal of the fraud finding (which was on the basis that the alleged misrepresentations concerned predictions of future events) since it was unnecessary to the case's resolution in light of their decision on the KCPA violations under which the same awarded damages could be sustained. Concerning those KCPA claims, Appellant had argued that since the sales transaction was never completed Appellees were not "purchasers" and therefore ineligible to bring an action for KCPA violations under KRS 367.220(1). The SC noted the purpose of the KCPA was to provide broad protection to consumers victimized by unlawful and deceptive trade practices, and concluded that under the facts of this case Appellees qualified as purchasers since they took possession of the Camaro after a period of negotiation and after giving value by signing over the Nissan title. The SC also rejected Appellant's contention that they could not be purchasers since there was no valid contract executed, noting that nowhere in the KCPA is a binding contract explicitly required before a purchaser has a private right of action for unlawful trade practices. The SC also refused to address Appellant's argument that the COA erred by finding that liability for future promises (such as financing guarantees) is possible under the KCPA, noting that this argument was not preserved for review in the TC and therefore was not properly before the COA. The SC did offer some dicta on this particluar issue by stating the argument that sellers could never be held liable for future predictions is suspect given the KCPA's broad range of protection and especially where the future predictions might relate to the seller's own conduct or other events under seller's control. The SC did point out that the Appellees alleged a number of other deceptive acts by Appellant that did not involve future events or predictions on which the jury could reasonably base its award for the KCPA violations.

Next, the SC addresses Appellant's argument that the punitive damages instruction was improper since there was no way to tell whether the award was based solely on the conversion or was based, at least in part, on the fraud and KCPA violations claims. The SC again held that this issue had not been properly preserved since the record failed to show that Appellant requested the TC to instruct the jury to indicate on which specific claim it was basing its punitives award. At any rate, the SC noted that the KCPA expressly provides that punitive damages may be awarded in appropriate cases, and that they may also be awarded for conversion if the defendant's conduct is especially reprehensible. Turning to the amount of punitives awarded, the SC rejected Appellant's argument that the $50K award was grossly excessive. The TC had determined that the award did not appear excessive "at first blush," and the SC expanded that ruling by holding that the award passes muster under the US Supreme Court's constitutional factors (categorizing the 6.0 compensatory to punitives ratio as significant but not ridiculous) and that the "degree of reprehensibility of the conduct at issue was significant." By reference to the Kentucky AG's Office discussion on this topic contained in its amicus brief, the SC also implies that a higher than average damages ratio may likely be more acceptable in consumer protection cases where the deterrent effect of punitive damages is more crucial since the economic harm actually suffered by the claimant will generally be small.

To conclude, the SC agreed with Appellees' cross appeal argument that the COA erred by vacating the jury award ($3,000 to Warner and $1,500 to Piles) for inconvenience damages as duplicative of the $2,100 award to Warner for loss of use of the Nissan (that he solely owned) from the time the Camaro was returned to when he purchased another vehicle (6 months later).  No loss of use was awarded to Piles so without the inconvenience award she would not recover any compensatory damages at all, a result the SC clearly found erroneous in light of the alleged conduct of Appellant. The SC pointed to the trouble Piles encountered trying to return Camaro several times, the numerous telephone calls between the parties affecting her work, being deprived of transportation, etc. as evidence of "real injuries with significant monetary ramifications" for which the inconvenience damages award to both Appellees was proper and not duplicative of the loss of use award, which was only for the period after the Camaro was returned.

By Chad Kessinger, Schiller Osbourn Barnes & Maloney

Overreaching indemnity agreement held unenforceable: LACK V. MAN O'WAR LLC (SC 3/20/2008)

LACH V. MAN O'WAR, LLC
INDEMNIFICATION AGREEMENT:  Unenforceable under certain circumstances
2005-SC-001014-DG.pdf
PUBLISHED: REVERSING AND REMANDING
OPINION BY SCOTT
ABRAMSON DISSENTS BY SEP. OPINION WITH MINTON JOINING DISSENT; NOBLE NOT SITTING
FAYETTE COUNTY
DATE RENDERED: 3/20/2008

The contract involved in the Court of Appeals case Speedway SuperAmerica, LLC v. Erwin, 2007-CA-000451-MR (March 21, 2008)(to be published) was drafted by Speedway and designed to have Sebert Erwin be an independent contractor for Speedway. It also provided that Sebert would indemnify and hold harmless Speedway for any damages arising out of any breach of the contract. Further, Speedway expected Sebert to get $300,000 in insurance that also insured Speedway plus his own workers’ compensation insurance. The contract was for five (5) years, but Speedway could cancel it any time they wanted for any reason whatsoever, but Sebert could not do the same. He also was restricted from assigning the contract to someone else. Basically, the contract mainly benefited Speedway and provided no protection for Sebert.

Sebert had considerably less sophistication regarding contracts; the Court pointed out that he had an eighth (8th) grade education. One day, Sebert was directed to help move a different station to move a walk-in freezer. While assisting in that task, Sebert fell and was injured so he sued Speedway. Speedway counter-sued to enforce the indemnification clause of the contract.

The trial court dismissed Speedway’s counterclaim because it found that the indemnification clause was not clear and understandable enough for an ordinary person to understand what he or she was contracting away basing its decision on Hargis v. Baize, 168 S.W.3d 36 (Ky. 2005). Speedway appealed and argued that rule only applied to pre-injury releases and, instead, this was an indemnity provisions. They cited case law of Fosson v. Ashland Oil & Refining Co., 309 S.W.2d 176 (Ky. 1958) that found such a provision valid. [If you have a greater interest in the process and reasoning of the court, please read the decision.} The Court agreed that the provision Sebert signed more closely resembled the provision in Fosson, but also agreed with the trial court that it did not meet the requirements set forth in Hargis.

The Court decided that it did not matter which case law was applied to this particular contract because the guiding principal fit both pre-injury releases and indemnification clauses. The holding of the Court is that when a contract that is used to defend against the indemnitee’s own negligence is “agreed to by a party in a clearly inferior bargaining position” (Id. at 9) then it is against public policy and not enforceable. In other words, by taking advantage the less sophisticated Sebert and trying to have all the protection and none of the risk, Speedway made their contract unenforceable.

This is a narrow holding by the Court is that such indemnification provisions are generally enforceable. Even if the specific holding narrowly rests on the differential bargaining power, the court highlighted other issues:

1) The contract allowed for one-sided termination of the contract.

2) The contract allowed for termination for any reason.

3) The contract denied assignability for any reason.

4) The contract tried to make the worker an Independent Contractor but in actuality the business still controlled how the worker performed their tasks.

5) The contract required the other party to waive a lien or other mechanism for insuring they get paid.

G. A. Napier

Collection of judgement from medical practice: MICKLER V. MICKLER (COA 1/25/2008)

MICKLER V. MICKLER
FAMILY LAW:  COLLECTION OF JUDGMENT FROM MEDICAL PRACTICE
2006-CA-001313
PUBLISHED: AFFIRMING
PANEL: ACREE PRESIDING; CLAYTON, WINE CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 1/25/2008

Husband appealed an order denying his challenge to a garnishment served by his former Wife on several insurance providers who owed money to Husband’s medical practice. Husband argued that the accounts receivable were monies owed for professional services he performed. Therefore, he asserted the funds constituted wages meaning, pursuant to KRS 427.010(2)(a), 75% of those funds were exempt from garnishment.

CA opined that his argument was more appropriately based on KRS 427.005, which defines earnings. The CA held that accounts receivable that are owed due to personal services and labor of the debtor do constitute wages and are 75% exempt from garnishment. However, the CA further reasoned that the TC was correct in its holding that the funds due Husband were not only for his services but were also due for the services of his staff. Further, it was not the TC’s function, as Husband had asserted, to develop a formula for segregating the funds owed to Husband for his services from those owed due to the efforts of his staff. Instead, the burden of proof was on Husband to prove what portion of the accounts receivable were owed solely due to his personal services. Husband failed to meet this burden. Therefore, the TC correctly denied his motion challenging the garnishment.

Digested by Linda Dixon Bullock, Diana L. Skaggs + Associates

Judicial disqualification learned after the case: KESSLER HOMES, IC. V. PETZOLD (COA 1/18/2008)

KESSLER HOMES, IC. V. PETZOLD
JUDGES:  Disqualification
2006-CA-001127
PUBLISHED: VACATING AND REMANDING
PANEL: LAMBERT PRESIDING; DIXON, ROSENBLUM CONCUR
COUNTY: FAYETTE
DATE RENDERED: 01/18/2008

This action began when Kessler Homes sued the Petzolds for the outstanding balance on a house construction contract. The Petzolds denied liability and counter claimed, seeking compensatory damages for substandard workmanship. The circuit court conducted a bench trial on the parties' claims, ruling nearly uniformly in favor of the Petzolds in which the judge awarded the Petzolds, the customers, over $30,000.00 in compensatory damages and over $100,000.00 in litigation costs.

Following the entry of judgment, Kessler Homes learned that the Petzolds's daughter was the trial judge's personal tax accountant, and during the pendency of the litigation, also served as treasurer of the judge's reelection campaign. Kessler then petitioned to vacate the judgment on the ground that the trial judge had a conflict of interest in this case.

A judge is disqualified from presiding over a case “whenever the judge's impartiality might reasonably be questioned."  Recusal is mandatory when a judge's impartiality might reasonably be questioned.  Neither the court nor counsel dispute that had the trial judge's relationship to the Petzolds come to light prior to the entry of judgment, the trial judge should have, and would have, recused herself to avoid any appearance of impartiality.

The trial judge's ignorance of his conflict of interest during the pendency of the litigation was irrelevant because the legal standard is whether “a reasonable person, knowing all the circumstances, would expect that the judge would have actual knowledge.”

Where a judge lacks actual knowledge of facts indicating an appearance of partiality during litigation, but gains it postjudgment in circumstances in which a reasonable observer would have expected the judge to have been aware of the relationship, he must “take the steps necessary to maintain public confidence in the impartiality of the judiciary” by disqualifying himself and vacating his judgment. Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 860-61, 108 S.Ct. 2194, 2203, 100 L.Ed.2d 855 (1988).

The overriding policy concern here is not judicial veracity but rather public confidence in the impartiality of the judicial system. The typical, objective observer might well find it somewhat implausible that a judge running for reelection would be unaware that her campaign treasurer's parents were litigants in her court. Moreover, because this case was not tried by jury, but was rather conducted as a bench trial in which virtually all claims were resolved in the Petzolds's favor, including the award of litigation costs trebling the compensatory damages award, the same observer might well question the judge's impartiality.

While the COA did NOT find actual partiality, it did find there can be no question that the rule against appearance of impartiality has been violated and held that the extraordinary remedy of vacating the judgment is also appropriate here.  The verdict was vacated and remanded with directions to the trial court that the trial judge recuse and a new trial be granted.

Michael Stevens