Turner v. Andrew
2013 Ky. LEXIS 580
| Ky. | 2013Background
- On April 16, 2007, Coy Turner (driving for M & W Milling) struck a dump truck owned by Billy Andrew, damaging the vehicle used in a trucking business operated by "Billy Andrew, Jr. Trucking, LLC" (Andrew was sole member). Andrew sued Turner and M & W in his individual capacity for property damage and lost business income; the LLC was not named.
- M & W served discovery seeking tax, financial, and customer records tied to the lost-income claim; Andrew repeatedly failed to respond and did not produce the requested records or tax returns for 2002–2007.
- The trial court granted motions to compel but Andrew did not comply; M & W moved to exclude damage evidence, sought summary judgment on lost-income grounds, and later moved for judgment on the pleadings after an in limine order barred Andrew from presenting any damage evidence.
- The trial court ultimately entered judgment for M & W (effectively dismissing Andrew’s claims) based on Andrew’s discovery noncompliance and exclusion of damage evidence.
- The Court of Appeals reversed, holding Andrew (as sole LLC member) could pursue the lost-income claim in his own name and that exclusion of damage evidence was erroneous; the Kentucky Supreme Court granted discretionary review.
Issues
| Issue | Plaintiff's Argument (Andrew) | Defendant's Argument (M & W) | Held |
|---|---|---|---|
| Whether Andrew could bring the LLC’s lost-business-income claim in his individual name | As sole owner, Andrew argued he was the real party in interest and could pursue lost profits personally | M & W argued the claim belonged to the LLC (distinct legal entity) and Andrew lacked standing | Court: LLC is a separate legal entity; lost-business claim belongs to the LLC, not Andrew individually; Court of Appeals erred |
| Whether the trial court erred in excluding all damage evidence and dismissing the case | Andrew argued he could prove damages via his testimony, his wife, and other exhibits/witnesses | M & W argued exclusion was warranted because Andrew failed to produce discovery, leaving no admissible proof of damages | Court: Exclusion of all damage evidence was a discovery sanction that functionally dismissed the claims; trial court erred by failing to enter findings of fact and conclusions of law supporting that severe sanction |
| Whether the trial court’s sanctioning/dismissal was reviewable without findings | Andrew implicitly argued procedures were followed; no specific findings were required | M & W relied on trial court discretion to sanction for discovery abuse | Court: Severe discovery sanctions require explicit findings under Greathouse to permit meaningful appellate review; remand required for findings and reconsideration of sanctions |
| Whether veil-piercing or “reverse piercing” could allow Andrew to proceed personally | Andrew urged disregarding the LLC form because he was sole member and business operated from his residence | M & W contended veil-piercing doctrines do not apply absent equitable grounds; facts don’t support reverse piercing | Court: Reverse/insider-piercing is rare and not supported here; LLC’s separateness stands absent strong equitable grounds |
Key Cases Cited
- Patmon v. Hobbs, 280 S.W.3d 589 (Ky.App.2009) (describing LLC as hybrid entity and statutory controls)
- Spurlock v. Begley, 308 S.W.3d 657 (Ky.2010) (LLCs are creatures of statute and distinct from members)
- Miller v. Paducah Airport Corp., 551 S.W.2d 241 (Ky.1977) (sole ownership of a corporate entity does not make the owner the real party in interest)
- Greathouse v. American Nat. Bank and Trust Co., 796 S.W.2d 868 (Ky.App.1990) (trial court must enter findings of fact when imposing severe discovery sanctions)
- Wilson v. Commonwealth, 381 S.W.3d 180 (Ky.2012) (trial court has broad discretion on discovery sanctions; appellate review is for abuse of that discretion)
- Howell Contractors, Inc. v. Berling, 383 S.W.3d 465 (Ky.App.2012) (discussing veil-piercing standards as applied to LLCs)