HARDAWAY MANAGEMENT COMPANY, Appellant, v. Carole SOUTHERLAND, Appellee. and Carole SOUTHERLAND, Cross-Appellant, v. HARDAWAY MANAGEMENT COMPANY, Cross-Appellee.
Nos. 97-SC-168-DG, 97-SC-915-DG
Supreme Court of Kentucky
Oct. 15, 1998.
910 S.W.2d 910
Joy D. Denton, Amanda Anderson Young, Harned, Bachert & Denton, Bowling Green, for Appellee/Cross-Appellant Carole Southerland.
COOPER, Justice.
Appellant/Cross-Appellee Hardaway Management Company, Inc., (Hardaway) is headquartered in Tennessee and manages multi-unit apartment complexes in both Tennessee and Kentucky. Appellee/Cross-Appellant Carole J. Southerland had been employed by Hardaway аs manager of the Oak Hill Apartments in Morgantown, Kentucky, since December 1, 1984. On October 29, 1988, Southerland injured her back in a work-related accident. She continued to work until November 4, 1988 when her treating physician, Dr. Craig Beard, ordered her to stop. She was removed from payroll status effective November 7, 1988. The notation on the payroll action form placed in Southerland‘s personnel file reflects the reason for the action as “Leave of absence due to alleged work injury.” On December 7, 1988, Hardaway rehired a former maintenance employee, Sandra Carroll, as “assistant manager.”
On January 24, 1989, Dr. Beard released Southerland to return to work, but with restrictions against repetitive bending at the waist or lifting more than thirty pounds. However, when Southerland informed Hardaway vice-president Dean Carter by telephone on January 27, 1989 that she was ready to return to work subject to Dr. Beard‘s restrictions, Carter advised her that her employment was terminated. On that same date, a payroll action form was placed in Southerland‘s personnel file indicating the reason for her termination as “Lack of work-services not needеd;” and a letter was sent to Southerland giving her written notification of her termination and stating that she was being terminated for “lack of work.”1
Also on January 27, 1989, a payroll action form was placed in Sandra Carroll‘s personnel file promoting her from assistant manager to manager, effective January 30, 1989.
Because Southerland‘s injury was work-related, she was paid temporary total disability benefits under the Kentucky Workers’ Compensation Act of $146.66 per week for the periods November 4, 1988 through February 16, 1989, and March 19, 1989 through January 6, 1990. On September 28, 1990, she settled the remainder of her workers’ compensation claim for a lump sum payment of $15,000.00, representing a permanent partial disability rating of 28.5%.
On August 30, 1991, Southerland sued Hardaway in the United States District Court for the Western District of Kentucky, asserting three causes of action: (1) Wrongful termination in violation of the Rehabilitation Act of 1973,
Meanwhile, on January 7, 1994, Southerland filed this action for compensatory and punitive damages for violation of the KEOA. Following a jury trial in the Butler Circuit Court, she was awarded compensatory damages for “back pay or income lost” in the sum of $81,374.00 and punitive damages in the sum of $25,000.00. Pursuant to
I. CIRCUIT COURT JURISDICTION.
Southerland brought this action in the Butler Circuit Court pursuant to
207.230. Citizen suits.
Notwithstanding the provisions of
KRS 207.200 [procedures for enforcement by Department of Workplace Standards] andKRS 207.210 [administrative complaint procedures], citizen suits may be commenced under the following terms and conditions:(1) Any person deeming himself injured by any act in violation of the provisions of this chapter shall have a civil cause of action in Circuit Court to enjoin further violations, and to recover the actual damages sustained by him, and upon judicial finding of any violation of
KRS 207.150 to207.190 , shall recover the costs of the law suit, including a reasonable fee for his attorney of record, all of which shall be in addition to any other remedies contained inKRS 207.130 to207.240 . (Emphasis added.)
This provision was enacted along with
207.260. Right of action—Recovery for each violation.
(1) Any person aggrieved by a violation of
KRS 207.135 ,207.150 ,207.160 , or304.12-013 shall have a right of action in District Court and may recover for each violation:(a) Against any person who violates a provision of this section, liquidated damages of one thousand dollars ($1,000) or actual damages, whichever is greater.
(b) Against any person who intentionally or recklessly violates a provision of this section, liquidated damages of five thousand dollars ($5,000) or actual damages, whichever is greater.
(c) Reasonable attorney‘s fees.
(d) Such other relief, including an injunction, as thе court shall deem appropriate.
(2) Nothing in this section limits the right of the person aggrieved by a violation of this section to recover damages or other relief under any other applicable law. (Emphasis added.)
Hardaway cites Strader v. Commonwealth, 302 Ky. 330, 194 S.W.2d 368 (1946) for the proposition that in the event of a conflict between two statutes, the last statute enacted must prevail. However, it is also a maxim of statutory construction that “Repeal by implication is not favored and will not be upheld unless such an intention clearly appears or unless the repugnancy is so clear as to admit of no other reasonable construction.” City of Eddyville v. City of Kuttawa, Ky., 343 S.W.2d 404, 406 (1961); see also Demunbrun v. Browning, 311 Ky. 71, 223 S.W.2d 372 (1949). Hardaway‘s argument fails for two reasons. First,
The General Assembly finds the unique methods of transmission of this disease, and its inevitably fatal course, have raised public fears; changed the attitudes of employers, insurers, educators, law enforcement personnel, and health and medical providers about dealing with the disease; and could unexpectedly raise the medical costs of this stаte. The General Assembly intends to establish programs and requirements related to acquired immunodeficiency syndrome which carefully balance medical necessity, the right to privacy, and protection of the public from harm and which establish public programs for the care and treatment of persons with acquired immunodeficiency syndrome and related conditions.
Chapter 443 of the 1990 Kentucky Acts consisted of sixty-five (65) sections relating to acquired immunodeficiency syndrome (AIDS). Section 51 was codified as
II. NOTICE TO COMMISSIONER OF WORKPLACE STANDARDS.
Hardaway next asserts that Southerland was prеcluded from bringing this action because she did so without first notifying the commissioner of workplace standards of the alleged violation of
(2) Notice. No action may be commenced:
(a) Prior to thirty (30) days after the plaintiff has given notice of the violation to the commissioner of workplace standards.
(b) If the commissioner of workplace standards has commenced and is diligently prosecuting a civil action to require compliance with
KRS 207.130 to207.240 ; however, the aforementioned conditions do not prohibit citizen-initiated civil enforcement action contemporaneously with criminal enforcement efforts by the state.
This section of the statute must be read in conjunction with
III. LAW OF THE CASE.
In affirming the district court‘s dismissal of Southerland‘s claim of retaliatory discharge under
We agree with the district court that Ms. Southerland‘s documentary and deposition evidence do not establish the elements of a retaliation claim. There is no indication that any intent to pursue a
workers’ compensation claim existed at the time of the plaintiff‘s discharge, or that such a course of action was discussed. To the contrary, she was seeking an immediate return to her previous job as manager, claiming that she was able to perform all the required duties of the job. Only after she was denied reinstatement did the plaintiff turn to the Workers’ Compensation Act for relief. The fact remains that Ms. Southerland was injured while performing work that she later claimed was not required by her position. We believe the evidence supports the defendant‘s assertion that the plaintiff was discharged solely because of her inability to perform her job.
Southerland v. Hardaway Management Co., Inc., supra, 41 F.3d at 256 (emphasis added). Hardaway claims that the emphasized language in this paragraph is the “law of the case” and precludes us from affirming the judgment entered on Southerland‘s KEOA claim. The law of the case doctrine “is a rule under which an appellate court, on a subsequent appeal, is bound by a prior decision on a former appeal in the same court and applies to the determination of questions of law and not questions of fact.” Inman v. Inman, Ky., 648 S.W.2d 847, 849 (1982). It has no application here, since the Supreme Court of Kentucky and the Sixth Circuit Court of Appeals are not the same court.
The Court of Appeals (of Kentucky) assumed that Hardaway was actually claiming that Southerland‘s KEOA claim was barred by collateral estоppel or issue preclusion, a doubtful assumption since Hardaway did not plead either as an affirmative defense,
IV. SUFFICIENCY OF THE EVIDENCE.
The central issue in this case has always beеn whether Southerland was terminated by Hardaway in violation of the KEOA; for otherwise, she was terminable at will and had no cause of action for wrongful discharge. Production Oil Co. v. Johnson, Ky., 313 S.W.2d 411 (1958); Scroghan v. Kraftco Corp., Ky.App., 551 S.W.2d 811 (1977); cf. Firestone Textile Co. Div. v. Meadows, Ky., 666 S.W.2d 730, 731 (1983). The operative language of
Hardaway contends that Southerland‘s job required her to move equipment and furniture, including stoves and refrigerators, dig ditches, suction water out of flooded apartments, trim trees and bushes, plant flowers, sweep, mop and clean the laundry room, paint and wallpaper walls, install carpet, clean windows, remove storm windows, scrub tile floors on her hands and knees, and mow grass. Southerland acknowledged that she did, indeed, occasionally perform all of these functions on a voluntary basis prior to her injury. However, she steadfastly claimed and the jury obviously believed that these duties were not requirements of her job as apartment manager. In support of her claim, Southerland introduced into evidence a written job description prepared and furnished to her by Hardaway, which describes her duties as manager in great detail, but does not include any of the tasks described above. A fair reading of the job description indicates that the manager‘s job was to supervise and inspect others who actually performed those tasks. Southerland also produced two other former Hardaway apartment managers who testified that they were never required to and never did perform the tasks in question. In short, Southerland introduced evidence that although she performed the additional tasks on a volunteer
V. EVIDENCE OF HARDAWAY‘S FINANCIAL CONDITION.
It has been the law of this Commonwealth for almost one hundred years that in an action for punitive damages, the parties may not present evidence or otherwise advise the jury of the financial condition of either side of the litigation.2 Hensley v. Paul Miller Ford, Ky., 508 S.W.2d 759, 764 (1974); Givens v. Berkley, 108 Ky. 236, 56 S.W. 158 (1900). The same rule applies in cases where punitive damages are not sought.3 Dawson v. Shannon, 225 Ky. 635, 9 S.W.2d 998 (1928). Although Southerland attempted to introduce evidence of Hardaway‘s financial condition at trial, she was precluded from doing so when Hardaway‘s objection to the introduction of a financial statement was sustained and the witness professed to have no knowledge as to whether Hardaway had made a profit the previous year. The only evidence introduced along this line was that Hardaway managed over 8,000 apartment units. Although this information wаs only marginally relevant to the issues in this case, we agree with the Court of Appeals that the introduction of this evidence did not affect Hardaway‘s substantial rights.
VI. PUNITIVE DAMAGES.
The instruction on punitive damages was premised solely on Southerland‘s claim that Hardaway‘s notation on the January 27, 1989 payroll action form that her termination was due to “Lack of work-services not needed” and the property manager‘s letter to her on that date that she was being terminated due to “lack of work” amounted to clear and convincing evidence of fraud.4
Southerland received verbal notification of her termination during her telephone conversation with Dean Carter on January 27, 1989. The payroll action form and the letter were both dated that same day, but must have been prepared after the telephone conversation. Southerland posits that the false statements were intended to cover up Hardaway‘s actual and wrongful reason for terminating her employment, i.e., in violation of the KEOA. The Court of Appeals found that these bare statements, even though subsequently determined by the jury to be false, did not constitute clear and convincing evi
This type of fraudulent concealment is actionable only if the concealment itself caused damages independent of those flowing from the wrongful act attempted to be concealed. Simcuski v. Saeli, 44 N.Y.2d 442, 406 N.Y.S.2d 259, 377 N.E.2d 713 (1978); Owen v. Appelbaum, 205 A.D.2d 976, 613 N.Y.S.2d 504 (N.Y.App.Div.1994); Howe v. Ampil, 185 A.D.2d 520, 585 N.Y.S.2d 869 (N.Y.App.Div.1992). The cited cases were all actions for medical malpractice. In each case, the defendant physician was accused of attempting to conceal his negligence from the plaintiff patient. In each case the inquiry was whether the concealment resulted in damages separate and distinct from those flowing from the malpractice. If so, the fraud was actionable; but if not, there was no cause of action. Thus, in Simcuski, the fact that the fraudulent concealment prevented the patient from obtaining a cure of the condition caused by the alleged malpractice supported the separate cause of action for fraud. Likewise, in Howe, the doctor‘s failure to advise the patient of his false diagnosis of cancer resulted in additional emotional distress. But in Owen, there was no separate cause of action for fraud, because all of the patient‘s actual damages resulted from the malpractice and none resulted from the concealment. See also, Detwiler v. Bristol-Myers Squibb Co., 884 F.Supp. 117 (S.D.N.Y.1995); Otero v. Presbyterian Hospital, 240 A.D.2d 279, 658 N.Y.S.2d 624 (N.Y.App.Div.1997); Spinosa v. Weinstein, 168 A.D.2d 32, 571 N.Y.S.2d 747, 753 (N.Y.App.Div.1991); Coopersmith v. Gold, 172 A.D.2d 982, 568 N.Y.S.2d 250, 252 (N.Y.App.Div.1991); Harkin v. Culleton, 156 A.D.2d 19, 554 N.Y.S.2d 478, 481 (1990), appeal dismissed, 76 N.Y.2d 936, 563 N.Y.S.2d 64, 564 N.E.2d 674 (1990).
In Bierman v. Klapheke, Ky., 967 S.W.2d 16 (1998), we upheld a judgment for punitive damages based upon fraudulent concealment of legal malpractice because the concealment exacerbated the damages suffered by the client, thus establishing “a claim for punitive damages clearly independent from his acts of negligence.” Id. at 20.
These cases are consistent with the general rule that fraud is actionable only if it results in damage to the complainant, Graham v. John R. Watts & Son, 238 Ky. 96, 36 S.W.2d 859 (1931), 37 C.J.S. Fraud §§ 50, 51 (1997), and that there can be no recovery where the fraud fails of its intended effect. 37 C.J.S. Fraud § 51 (1997). Southerland did not sustain any separate and distinct damages as a result Hardaway‘s alleged attempt to conceal the real reason for her termination; and if the assertions contained in the January 27, 1989 payroll action form and letter were intended to prevent Southerland from recovering damages for her wrongful discharge, they failed in their intended effect. Thus, the Court of Appeals correctly set aside the award of punitive damages.
VII. WORKERS’ COMPENSATION ISSUES.
1. Exclusive remedy.
Hardaway claims this action is precluded by the exclusive remedy provision of the Workers’ Compensation Act.
[T]he workers’ compensation statute preempts only common law tort claims and does not preempt a statutory civil rights claim. This Court must presume that the General Assembly knew of the Workers’ Compensation Law preemption doctrine when it created a private cause of action for “actual damages” caused by discrimination in the Kentucky Civil Rights Act, and that it intended to create an independent cause of action notwithstanding that the two statutes might provide alternative sources of statutory relief in those cases where the mental emotional injury inflicted causes work-related occupational disability.
Id. at 819. We continue to adhere to that view and find it equally applicable to an action brought under the KEOA claiming emрloyment discrimination on the basis of disability.
Next, Hardaway claims it should be allowed a credit against the judgment for the amount of workers’ compensation benefits paid to Southerland. Southerland‘s expert, Steve Wheeler, calculated her lost income on the basis of the salary and benefits she would have received but for the wrongful termination of her employment. His calculations included the period November 4, 1988 through October 4, 1995, which totaled $81,374.00, the exact amount awarded by the jury. (Wheeler also submitted calculations of future lost earnings after October 4, 1995 through 2003, but the jury awarded Southerland nothing for that item of damages.) Wheeler calculated Southerland‘s income and benefits from her employment by Hardaway at $13,633.00 per year, or $262.17 per week. His calculations included fifty-seven (57) weeks during which Southerland was drawing temporary total disability workers’ compensation benefits, i.e., a period during which she admittedly could not have worked. Hardaway claims it is entitled to a credit against the judgment for the amount of workers’ compensation benefits paid during that period. The Court of Appeals misconstrued this issue as being akin to a subrogation claim under
There is a strong public policy in this Commonwealth against double recovery for the same elements of loss. Morrison v. Kentucky Central Ins. Co., Ky.App., 731 S.W.2d 822, 825 (1987). An exception, of course, is the collateral source rule that “damages recoverable for a wrong are not diminished by the fact that the injured party has been wholly or partly indemnified by insurance (to whose procurement the wrongdoer did not contribute).” Taylor v. Jennison, Ky., 335 S.W.2d 902, 903 (1960) (emphasis added); see also, Burke Enterprises, Inc. v. Mitchell, Ky., 700 S.W.2d 789 (1985). The logic behind this rule is that there is no reason why a wrongdoer should receive the benefit of insurance obtained by the injured party for his own protection. Taylor v. Jennison, supra, at 903. Of course, that logic does not apply here, where the wrongdoer, Hardaway, also obtained the insurance which paid the workers’ compensation benefits to Southerland.
Although this is an issue of first impression in this jurisdiction, it is one which has been fully litigated in the federal system. The two-pronged rule developed by the federal courts is that (1) the employer is not liable for back pay for periods during which the employee is unavailable for work due to disability, N.L.R.B. v. Louton, Inc., 822 F.2d 412, 415 (3d Cir.1987), citing Canova v. N.L.R.B., 708 F.2d 1498 (9th Cir.1983) and American Manufacturing Co., 167 N.L.R.B. 520 (1967); and (2) workers’ compensation benefits which represent compensation for lost wages may be deducted from a back pay award, but those which represent reparation for permanent physical injury are not deductible, Canova v. N.L.R.B., supra, at 1504, citing American Manufacturing Co., supra, at 523. See Aguinaga v. United Food and Comm‘l Workers Int‘l Union, 720 F.Supp. 862, 876 (D.Kan.1989), aff‘d in part and rev‘d and remanded in part on other grounds, 993 F.2d 1463 (10th Cir.1993), cert. denied, 510 U.S. 1072 (1994). We need not consider the first aspect of this rule, for that issue was not raised in this case. As for the second aspect, workers’ compensation benefits in Kentucky are not intended as damages for injuries, but as compensation for wages lost or anticipated to be lost in the future. Princess Coals, Inc. v. Stapleton, Ky., 435 S.W.2d 62 (1968); National Distillers Products Corp. v. Jones, 309 Ky. 394, 217 S.W.2d 813 (1949); Mary Helen Coal Corp. v. Dusina, 308 Ky. 658, 215 S.W.2d 563 (1948); Warner v. Lexington Roller Mills, 306 Ky. 142, 206 S.W.2d 471 (1947). We find the logic of the federal
However, the same reasoning does not apply to the lump sum settlement of Southerland‘s permanent partial disability claim. A worker can be entitled to permanent partial disability benefits even if he or she has sustained no immediate loss of earnings, but has sustained an impairment of future earning capacity. Armco Steel Corp. v. Mullins, Ky., 501 S.W.2d 261 (1973); Osborne v. Johnson, Ky., 432 S.W.2d 800 (1968). The jury did not award Southerland damages for future lost earnings. Furthermore, she would have been paid her lump sum settlement for permanent partial disability even if she had returned to work full time for Hardaway. Armco Steel Corp. v. Mullins, supra. Thus, there was no double recovery or duplication of benefits with respect to that aspect of her workers’ compensation claim.
Accordingly, the decision of the Court of Appeals is reversed insofar as it denied Hardaway credit for workers’ compensation benefits paid to Southerland for temporary total disability during the periods when she was unable to work, and this action is remanded to the Butler Circuit Court with directions to calculate the amount of workers’ compensation temporary total disability benefits paid to Southerland during the period 1988 through 1990 and deduct that amount from the judgment before awarding interest and penalty. In all othеr respects, the decision of the Court of Appeals is affirmed.
LAMBERT, C.J., GRAVES, JOHNSTONE, STEPHENS and WINTERSHEIMER, JJ., concur.
STUMBO, J., dissents by separate opinion.
STUMBO, Justice, dissenting.
Respectfully, I dissent from the majority treatment of the issue of punitive damages. A review of the evidence presented in support of the claim for punitive damages clearly shows that there was sufficient evidence to support the jury‘s award. The vice president of Hardaway Group, Inc., testified that, according to the personnel records, Southerland was actually terminated just ten days after her October 29, 1988, work-related injury because of that injury. However those same records also indicate that more than two months later, she was again terminated because of “lack of work-services not needed.” That record was completely at odds with the fact that the position Southerland held was filled only days later by the promotion of a co-worker. Yet another Hardaway witness testified in a pre-trial deposition that Southerland was discharged because of the medical restrictions placed upon her due to her injuries. The same witness testified at trial that Southerland was terminated for poor job performance. No attempt was made at trial to reconcile these four conflicting versions of the reasons for her discharge.
In my opinion, Southerland presented clear and convincing evidence that the various reasons set forth for her discharge were attempts by Hardaway to cover up the real reason for her discharge. “Fraud means an intentional misrepresentation, deceit, or concealment of material fact known to the defendant and made with the intention of causing injury to the plaintiff.”