Kentucky Court Report - SCOKY & COAKY

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.

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

Referring to inadmissible evidence in opening statement of criminal trial results in reversal: PARKER V. COM (SC 12/20/2007)

PARKER V. COM
CRIMINAL:  Opening Statement
2005-SC-000343-MR.pdf
PUBLISHED: REVERSING
OPINION: NOBLE; SCOTT CONCURS IN PART AND DISSENTS IN PART BY SEP. OP; ABRAMSON NOT SITTING
DATE RENDERED: 12/20/2007

SC found Parker to be entitled to a new trial following conviction for murder because the trial court erred in allowing the playing of a rap CD in opening statement, with commentary by the Commonwealth, when the CD could not later be properly admitted, and the error could not be cured by admonition. Further, TC committed reversible error by denying Parker an instruction on second-degree manslaughter.

Before trial, Louisville police officers came into possession of a rap CD allegedly made by Parker, his brother Kenneth, and "Two Tom" Taylor. The three charged an officer five dollars for the CD. The trial court allowed the CD to be played during the Commonwealth's opening statement over objection but warned the Commonwealth that if the CD was not admitted during trial that Parker would be entitled to a mistrial. The Commonwealth Attorney asserted a "good faith belief" that statements on the CD would constitute "adoptive admissions" by Parker, and during opening, commented that the Crips rapped about a violent act they committed on July 31, 2000 . After playing the CD, the Commonwealth commented further that the lyrics said "shot the bitch at close range" and "remember the 31St ." Later during the trial when the Commonwealth offered the CD into evidence, the trial court excluded it because it could not be properly authenticated or construed as adoptive admissions. Parker moved for a mistrial, and the TC denied the motion despite its previous statement.

In playing the CD during opening statement and in telling the jury what it purported to say, the Commonwealth placed unauthenticated evidence before the jury. As the trial developed it became apparent that the Commonwealth could not establish the meaning of the words, or even what they were, through witnesses, nor could the Commonwealth prove who made the CD, or whether Parker was actually connected to it. In short, the Commonwealth was able to tell the jury that the CD referred to Parker having committed the murder of which he was accused, and that he was bragging about it through the CD recording (which was clearly prejudicial) even though the CD could not be sufficiently authenticated to be admitted into evidence. Obviously Parker had no ability to cross-examine regarding this information or to otherwise properly defend against it. By using unauthenticated materials in opening statement the Commonwealth unfairly exposed the jury to inflammatory information of such a nature that no admonition could reasonably be believed to cure it.

TC usurped the role of the jury in determining that the evidence did not support a manslaughter second degree instruction. Even though the jury did find a wanton state of mind under the instructions given, they were not given the opportunity to consider a lesser state of wanton culpability. It is possible the jury would have found wanton murder anyway; however, it is also possible for a finding of lesser wanton behavior, even though unlikely.

SUMMARY:
SC found Parker to be entitled to a new trial following conviction for murder because the trial court erred in allowing the playing of a rap CD in opening statement, with commentary by the Commonwealth, when the CD could not later be properly admitted, and the error could not be cured by admonition.

Scott C. Byrd
Olgin and Byrd

VOIR DIRE; EXPERTS: DAWSON V. JEWISH HOSPITAL (COA 9/28/2007)

DAWSON V. JEWISH HOSPITAL
CIVIL: EXPERT WITNESSES, DISCLOSURES, VOIR DIRE
TORTS: LOSS OF CHANCE
2006-CA-001241
PUBLISHED: AFFIRMING
PANEL:  THOMPSON PRESIDING; MOORE, GRAVES CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 09/28/2007

This medical negligence claim arose from alleged negligent post-surgery care by the hospital's nursing staff. A jury returned a verdict in favor of Jewish Hospital and this appeal followed in which the appellant alleges the trial court: (1) erroneously excluded relevant and competent evidence concerning Mr. Dawson's bedsores; (2) denied the Dawsons' counsel an adequate opportunity to voir dire the jury; and (3) failed to tender a loss-of-chance instruction to the jury. The Dawsons also appeal from a post-verdict order requiring them to pay Jewish Hospital's expert witness fees. The appeals were consolidated. Finding no reversible error, affirmed'

Dawsons contend that Mr. Dawson experienced pain in his side. He went to Tri-County Baptist Hospital where a CT scan was performed which revealed a 6cm aortic aneurysm in his chest. Mr. Dawson was referred to Dr. Matthew Jung who reviewed the CT films and recommended surgery. He discussed with Mr. Dawson the potential complications from the surgery including paraplegia (paralysis) and death.

Twenty-one months after his initial diagnosis, Mr. Dawson again saw Dr. Lawson but refused a CT scan. Two days after seeing Dr. Lawson, Mr. Dawson's pain became so severe that he returned to Tri-County Hospital. While on the gurney, the aneurysm, which was by then 7.5cm, ruptured. He survived the rupture but was still in need of surgery. After he again refused, he was admitted to the hospital as a terminal patient.

Aware of the risk, Mr. Dawson elected to have the surgery.

Although vital signs were to be recorded every two hours, at 6:00 p.m., the flow sheet does not indicate any recorded vital signs for Mr. Dawson. However, shortly after 6:00 p.m., a nursing assistant drew blood for a glucose test and Mr. Dawson did not indicate that he had any problems. His blood pressure was continuously monitored at the nursing station.

Dr. Ganzel testified that even if the paralysis had been treated earlier, there was no chance of a reversal and success would be “highly unusual.” Dr. Bouvette also testified that the “late onset of paralysis has been known and accepted as a complication well into the second week following surgery.”

Dr. Luis Mispereta testified that although there have been a “few anecdotal reports” of reversal of paralysis caused by “compartment syndrome,” there has not been one instance when paralysis caused by a blood clot such as in Mr. Dawson's case has been reversed. Jewish Hospital also produced the testimony of Dr. Henry Garreston, a neurosurgeon, who testified that once Mr. Dawson was paralyzed, it was irreversible.

With regard to pretrial discovery and expert witnesses, the pretrial order clearly stated -  "There must be a literal compliance with the requirements of CR 26.02(4)(a)(i). A party must identify each person whom the party expects to call as an expert witness at trial, and state the substance of the fact and opinions to which the expert is expected to testify and a summary of the grounds of each opinion. . . . Failure to comply with the letter and spirit of the aforesaid civil rule may result in the suppression of the expert's testimony."

Despite the direct order of the court, outside the disclosure deadline, on December 5, 2005, the Dawsons attempted to supplement their expert disclosures to include expert opinions from Dr. Cowles and Nurse Batezel concerning bedsores and itemized medical expenses which included 53 providers different from those previously disclosed.

On December 20, 2005, the trial court sustained Jewish Hospital's motion to exclude any reference during the trial to bedsores.

Thus, if the bedsores were a natural consequence of the paralysis, Jewish Hospital cannot be liable for any damages incurred as a result of the bedsores; any error, therefore, was not prejudicial.

With regard to voir dire, the court permitted each party's counsel to question the jury and, at the close of Jewish Hospital's voir dire, counsel asked, without objection, two questions:

Defense Counsel: Does anybody here think lawsuits are driving up the costs of health care?

Defense Counsel: Does anyone here think that Kentucky is losing doctors as result of lawsuits?

The Dawsons contend that “approximately 50% of the jury panel raised their hands" in response to these questions; and Dawson'sr counsel's request to re-voir dire the jury panel was denied. Thus, they surmise, they “were left with a panel, 50% of which clearly indicated that they personally felt that the Dawsons' lawsuit would drive-up their health care costs and result in physicians leaving the state.”

The Dawsons did not object to a single voir dire question; did not challenge a juror for cause on the basis of bias, and, when asked if they accepted the jury, their counsel responded affirmatively. Any contention that the trial court abused its discretion when it denied the Dawsons the opportunity to have the last word in the jury selection process was waived.

The evidence in this case did not warrant (a loss of chance)...instruction ...under the loss-of-chance doctrine, the plaintiff must still prove that the defendant breached the applicable standard of care and the breach was a substantial factor in causing a diminished chance of recovery or survival from the underlying disease or injury.

Digested by Michael Stevens

DAUBERT, BUILDING CODES, PEREMPTORY CHALLENGES: DAVIS V. FISCHER SINGLE FAMILY HOMES, LTD. (COA 8/10/2007)

DAVIS V. FISCHER SINGLE FAMILY HOMES, LTD.
CIVIL PROCEDURE:  JUROR PEREMPTORY CHALLENGES; DEPOSITIONS BY VIDEO
EVIDENCE:  SCIENTIFIC "DAUBERT"; PRIOR ACTS
TORTS: NEGLIGENCE PER SE AND BUILDING CODES
2006-CA-000005
PUBLISHED: AFFIRMING
PANEL: NICKELL PRESIDING; KNOPF CONCURS; ABRAMSON CONCURS WRITING SEPARATE OPINION
COUNTY: KENTON
DATE RENDERED: 8/10/2007

The case involves a family suing its contractor and a subcontractor brick layer after the home developed a mold problem.  The jury apportioned 100% fault to the plaintiff, who argued a hill of issues on appeal.  Some highlights:

CR 47.03(1): coparties having antagonistic defenses get three peremptory challenges each in jury selection.  Sommerkamp v. Linton, 114 S.W.3d 811 (Ky., 2003), has three elements to be considered in this determination: (1) whether the coparties are charged with separate acts of negligence; (2) whether they share a common theory of the case; and (3) whether they've filed crossclaims.  Appellate court will not overturn trial court's determination in this regard absent an abuse of discretion.  Court must weigh all factors in balance with each other.  Also, inherent in law of apportionment, KRS 411.182, is that the interests of codefendants are considered antagonistic.

KRE 407: subsequent remedial measures.  In absence of controversy, the feasability exception to this rule does not apply.

Evidence of prior negligent acts or customary practices offered solely in an attempt to prove negligence on a different occasion is inadmissible, as it offers very little probative value and present the potential for confusion of issues.  Dowell v. Bivins, 586 S.W.2d 297 (Ky. App., 1979).  No testimony of the builder's other homes was admitted because it had no bearing on the facts of the issues in this case.

The CA refused to recognize a preference for live testimony as opposed to videotaped deposition and said that even if it expressed such a preference, it is within the trial courts' sound discretion to determine both admissibility of evidence and how it is admitted.

After a Daubert hearing, the trial court excluded future health effects of mold exposure tsetimony.  The CA gives the trial court's decision on the admissibility of expert witness testimony deference, as it is in the best position to judge the credibility of evidence presented.  Miller v. Eldridge, 146 S.W.3d 909 (Ky., 2004).

Party must mitigate damages.  Howard v. Adams, 246 S.W.2d 1002 (Ky., 1952).  CA held the plaintiff failed to mitigate, and trial court was correct to exclude evidence of exaggerated damages.

KY does not allow for recovery for damages to reputation of real estate.  Morgan v. Hightower's Adm'r, 291 Ky 58, 163 S.W.2d 21, 22 (Ky., 1942)

Digested by Cherry Henault

PRESERVING OBJECTION DURING OPENING: POLK V. GREER (COA 4/27/2007)

POLK V. GREER
CIVIL PROCEDURE:  TRIALS - Opening statements and contemporaneous objections
2006-CA-000340
PUBLISHED: REVERSING; LAMBERT
DATE RENDERED: 4/27/2007

The COA reversed the trial court's denial of the plaintiff/appellant's motion for a new trial arising from statements made by counsel during opening.  The defense counsel referred to the plaintiff as a "two time convicted persistent felon" [as opposed to simply a felon and which goes to credibility].  Plaintiff objected 45 seconds later at the conclusion of the opening statement and moved for a mistrial.  The judge denied the objection and mistrial. 

The case proceeded to trial over a disputed traffic light in which the jury later found against Polk [the plaintiff and party referred to as the felon during opening] and in favor of defendant Greer.

The judge also overruled plaintiff Polk's post-trial motion for a new trial. 

The purpose of opening statements is to allow each party to summarize for the jury what its likely proof will be during the trial. And while the parties are given reasonable latitude during opening statements, their statement should not contain references to plainly inadmissible matters or to anything that may tend to unduly prejudice the opposing party. See Mills v. Commonwealth,  220 S.W.2d 376, 378 (Ky. 1949).

Under Kentucky Rules of Evidence (KRE) 609, a party may impeach the credibility of an opposing party on cross-examination by inquiring whether he is a convicted felon.  If the examined party answers affirmatively, the impeaching party may not inquire further about the matter or introduce extrinsic evidence regarding the nature of the conviction or convictions. See Blair v. Commonwealth, 144 S.W.3d 801, 808 (Ky. 2004).

COA held, however, that an objection voiced less than one minute after the claimed error and before any other material phase of the trial had begun meets the “contemporaneous objection” requirement of CR 46. Indeed, the purpose of the contemporaneous-objection rule is to afford the trial court an opportunity to prevent or cure any error in a timely fashion.  See Olden v. Commonwealth, 203 S.W.3d 672, 675 (Ky. 2006) (purpose of criminal analog of  contemporaneous-objection rule).

And here, because Polk voiced his objection a mere 45 seconds after the error occurred and before the trial had actually moved on past its opening-statement phase, Polk's delay in no way impinged upon the trial court's opportunity to attempt curative measures. Consequently, we reject Greer's contention that Polk's mistrial claim is not preserved for  review.

COA also held the trial court abused its discretion by rejecting Polk's objection. The prejudice imposed upon Polk by Greer's opening statement necessitates a new trial here as the trial court precluded any opportunity for a curative admonition by passing Polk's motion for a new trial until after trial. 

Digested by Michael Stevens