Nucor Corp. v. General Electric Co.

adversely rights persons protect

affected. CORPORATION, Appellant, NUCOR v. departed from Clearly majority has It has established a new that standard. CO.; Arkwright GENERAL ELECTRIC standard review and weakened Co.; Boston Manufacturers Mutual Ins. arbitrary under Section 2 of the Insurers; Industrial Risk Garst-Recev Constitution. Company; eur and Har Construction Conway, Inc., Appellees. man & legitimate concern of reasonable insist that malcontents will school board CONWAY, INC., HARMAN & juries become hoc school boards” “ad Cross-Appellant, encourage meritless teachers with v. challenge de- every administrative claims CORPORATION; Elec NUCOR Here in court is an cision overreaction. Co.; Arkwright-Boston tric Manufac there considerable evidence Co.; Industri turers Mutual Insurance legit- unjustly were treated and no teachers Insurers; al Risk and Garst-Receveur given. reasons for the transfers were imate Co., Inc., Cross-Appellees. Construction is one of fact of arbitrariness particularly resolu- which is suited CO.; Arkwright- GENERAL ELECTRIC proof The burden of to demonstrate tion. Insur Boston Manufacturers Mutual employee and remains on the arbitrariness Insurers, Co.; and Industrial Risk ance authority is intact discretionary the board’s Cross-Appellants, legitimately its sound it exercises when judgment. jus- professional The burden CORPORATION; Garst-Recev NUCOR only when the tification shifts board Co., Harman Inc. and eur Construction employee an affirma- complaining makes Inc., Conway, Cross-Appellees. showing nonjustification. tive 89-SC-802-DG, Nos. 90-SC- keys to serious education One 208-DG, 90-SC-209-DG. integrity that the of individual reform is Kentucky. Supreme Court of fundamental decision on the classroom pass totally free question of fail shall be 9,May 1991. power. arbitrary 13, 1991. May As Modified of the Court I would affirm decision Rehearing Aug. Denied or- and the verdict which for- to their dered the teachers reinstated positions.

mer

COMBS, J., joins in this dissent. appliances warehouse and numerous August,

stored in the warehouse. less than later, partial a month another roof collapse occurred to the same warehouse resulting damage. in further Both failures joist girders, occurred because the or truss- es, manufactured Corporation Nucor roof, and to support intended failed to Through do so. an error in the manufac- turing process, the trusses were fabricated design to only strength one half the re- quired specifications. by the employed General Electric had Garst-Re- Company ceveur principal Construction contractor construct warehouse. purchase Garst-Receveur into a entered or- Inc., der Conway, contract with & Harman representative manufacturer’s for Nu- area, cor in required the Louisville which Conway Harman & to furnish “all steel joint girders” joist support and for the roof system. Conway Harman & then entered a purchase standard order with Nucor. February Electric suit in General filed Nucor, Garst-Receveur, naming Conway Harman & as defendants. The Complaint alleged theories negligence, warranty breach of and strict product. for a All liability in tort defective these alternative theories were based on a Blackburn, Jr., Winfrey Kennedy P. W. single premise: General Electric con- had Whitaker, Simpson, Michael G. Stites & tracted for the construction of the ware- Louisville, Harbison, Corp. for Nucor house de- with Garst-Receveur who used Snell, Virginia Sheryl Snyder, H. G. joist girders by manufactured Nu- fective Barrazotto, Turner, Mary E. Ann Michelle supplied by Conway. cor & Harman Combs, Louisville, Wyatt, Tarrant & proof, At Nucor the close moved G.E., Arkwright and Industrial Risk. to dismiss General Electric’s breach of war- Ewen, Morris, Ewen, Campbell Ray A. & ranty the Uniform Com- claim barred Mooney, H. Thomas G. Edward Barten- limitations, Code statute of KRS mercial P.S.C., stein, Peden, MacKenzie & Louis- 355.2-725, requires suit “commenced ville, for Garst-Receveur. (4) years within four after the cause of Guild, Courtney A. L. Schoen- Edward 355.2-725(2) action has KRS accrued.” baechler, Smith, Stephen Goldberg E. specifies further the “cause action ac- P.S.C., Louisville, Simpson, for Harman & occurs, regardless crues breach when Conway. knowledge aggrieved party’s of the lack of of the This meant limitations had breach.” LEIBSON, Justice. run on General Electric’s breach warran- ty comple- the time complex This is a case an even more claim at of substantial with structure, 13,1977, a tion than complex history. July On ware- of the which was more years Company’s five before suit was filed. Nucor house roof at General Electric Louisville, according to Ky., partially perform had the writ- Appliance Park in failed causing damage specifications joist ten for the collapsed substantial contract girders personal structure, and this property” contract and its breach within the part were “immediately immediately evidence. before and after failures,” $505,438 subject two roof joist girders admittedly failed $285,775.86 collapse roof first specifications defective; meet and were collapse, the second roof a total of responsible who was for the loss and the $791,213.86. This was amount of dispute amount of until were judgment final Electric and its January conclusion of the trial in of 1987. insurers under the breach of contract theo- At the close of the trial court: evidence the ry. judgment The final for General Elec- (1) dismissed the warranty breach of claims tric products and its insurers on the liabili- because the statute of limitations had run ty claim was reduced share of 20% filed, permitted before suit then fault for collapse appor- the second roof General Electric to amend to a breach tioned to jury, General Electric so evidence; contract based on the same judgment that the final products on the (2) directed a verdict for General Elec- liability theory $734,058.69, $57,- against Nucor, tric Garst-Receveur and 155.17 less than the award for breach of Conway products Harman & on the liability Paragraph contract. Under Three of the (3) theory and also entered a directed ver- Judgment plaintiffs Final cannot recov- against dict Garst-Receveur for breach er for both tort and contract since both Later, judgment provid- contract. the final subject relate to the same matter. Pre- ed that Garst-Receveur and Harman & sumably if the breach of contract award Conway each indemnity were entitled to appeal were to be set aside on and the against products liability Nucor for the re- products sustained, plain- award but, covery, discuss, as will it is not we tiffs then recover the lesser amount as- provided clear it indemnity signed products liability recovery. to the separate judgment awarded for breach principal issue at level concerns of contract. $1,526,084.73 jury a in prejudg- award The trial court decided there was a factu- interest, presented an issue al issue as to whether and to what extent jury stage in the second of a bifurcated General Electric was at fault and should procedure. To understand this issue we responsibility share damages for the occa- history. must previously review some As by collapse. sioned the second roof This stated, General Electric’s cause of action issue was submitted to jury to decide July August accrued in and of 1977. Gen- findings based on knowledge of “actual February eral Electric filed suit in 1979 and dangerous to the extent of the condition of requested August date in trial 1981. The 8, the truss August that failed on 1977” April first available trial date was of 1983. and whether General Electric unrea- “acted 1983, 1, April On Third Amended Com- sonably failing danger- in to remedy such plaint, prejudgment General Electric added ous jury condition.” The was instructed to interest to its claim for Trial apply comparative principle, to was then rescheduled and before the new “consider the nature both of the conduct of date, 1983, trial November the trial court parties and the extent of the causal products liability dismissed the hold- claim relationship, any, if between the conduct ing theory that this was barred KRS damages and the claimed.” these Under 413.135, providing then “no statute jury Instructions the found the defendants brought expira- action” could be after the at fault and General Electric at 80% 20% tion years following of five substantial fault. completion any improvement to real covering compensato- Under instructions property against persons engaged in its ry damages longer disputed, are which no “design, planning, supervision, inspection damages awarded General Electric injury or construction” for repair for “cost of for the struc- by any deficiency. warehouse caused Trial of this ture,” “difference postponed during appeal and between the fair case appliances summary judgment granted market and other is- value on this 140 “You appeal This have awarded Plaintiffs the sum of

sue. was consolidated with $734,058.69. involving issue, not, may another case the same and You now appeal finally dis- your discretion, the consolidated you from believe posed report- an of this opinion equitable just, the evidence is award Wallace, Ky., ed as Tabler S.W.2d $2,539,653.47,the interest not to exceed 413.135, (1986), “no holding KRS amount claimed.” statute, in viola- action” unconstitutional The jury instructions further advised that 59(5), pro- Ky. tion of the Const. § awarded, it reason- interest is must “be enacting Assembly from hibits compound- able rate” “should be legislation protection of a special awarding ed.” in- It then stated single group to the exclusion individual or following jury “may terest consider the similarly of others situated. factors”: This case was remanded the trial “(a) injuries; The date of the again once court and trial was rescheduled (b) filing action The date of of this month January one before 1987. About 1979; February dismissed the the trial date the trial court (c) The date of notice to defendants claim an Order demand; the prejudgment interest stating unliquidated “the are for claims ... (d) The extent to which the amount damages,” “the property reasonably or were not were is a mat- allowance ascertainable.” to “the Court its sound ter addressed present justified cir- discretion” Pursuant to these instructions later, A days forestall cumstances. few prejudgment of interest returned an award again, this to delay of the trial once time dollars, 1 million less of some 1.5 million appeal prejudgment inter- decide an But the final than the amount claimed. the court further ordered question, est trial order judgment, pretrial in accord with the ruling notwithstanding prejudg- its on holding an issue prejudgment interest was interest, relating pre- issues to “all inter- the decide and that such for court to thereon, interest, including proof judgment the facts est should not be awarded under in a jury bifurcat- shall be submitted to the case, pre- claim for in this dismissed the its jury fashion after has returned ed the judgment interest. case, the if to all issues in verdict as other to judgment All the appealed sides final money of an award that verdict includes of Appeals. of Three Kentucky the Court Utilizing damages plaintiffs.” to ... the them, Corporation, Electric Nucor arrangement, jury verdict for after the Inc., by Conway, Company, Harman & per- compensatory damages, the trial court discretionary review, grant of have further expert to introduce mitted the defendants rulings the appealed adverse in certain in support from testimony two economists issues to our Appeals Court of Court. theory of com- jury of their that the award are as follows: now before us damage pensatory property damages for 1) inter- subject prejudgment On of compensate for fully sufficient to est, Appeals the trial of reversed Court experts General Electric’s loss. court, facts holding that “under based on presented interest calculations pre- claim for presented in this compensatory for jury’s award jury to de- judgment was for the interest in interest which the additional amount Appeals of remanded cide.” The Court compensate for should be awarded to judgment a reinstat- the trial to enter court money.” of The trial court “time value million ing the of some 1.5 jury award jury instruction to the then submitted an discretionary On re- interest, prejudgment interest. stating in prejudgment permitting argues prejudg- view Nucor award part as follows: pertinent (Second) proper. But this was otherwise even Restatement We note that under (l)(b) address. germane the issues need to 913 comment subsection is not we § Torts (1977), compound inappropriate interest was that, justified, legislature clearly this intent ment interest was not evidences event, 446.080(3)”; finding under the facts this case KRS that General to award Electric at fault for the roof col- was 20% decide, a matter for the trial court to bar, lapse proportionate was a rather than not for the bar, assess. complete right recovery. a to its discretionary argues On review Nucor 2) Appeals The Court of held “the trial Appeals “misinterpreted” Court of has our allowing its Gen- court abused discretion Hays. decision Hilen v. complaint eral Electric to amend its to as- The ef- sert a breach of contract claim.” 4)The permitted court trial Garst-Re- is to Appeals’ fect of the Court of decision Conway judgment ceveur and Harman & $791,212.86 made un- strike out the award against indemnity over Nucor for as to theory of contract and to der breach money judgment compensatory dam- compensatory dam- restrict the award ages against them in of General Elec- favor products due under the ages to the amount Company, tric court denied trial theory. The made under award indemnity attorneys fees and other liti- products liability theory would be a gation expenses. The Court of reduced amount found because affirmed, parties, and one of these Harman against contributory fault General Electric. Conway, seeks to reverse the complete a This would be bar to award Appeals. collapse, for the second roof bar, partial depending on whether the I. PREJUDGMENT INTEREST comparative negligence principle an- Hays, Ky., nounced Hilen v. 673 S.W.2d We elect to discuss first the (1984), applies to this case. interest, consider Because we significant presented. this the most issue 3) jury finding Nucor contends that the contributory against General Elec- surprisingly There is little law tric in connection with the second roof col- vintage discussing recent lapse complete should be a bar to whether, prejudgment inter when and how compensatory damages assigned proper est should awarded in claims for be collapse, only the second roof rather than questions ty To answer these comparative princi- bar under the 20% go we must back to basics. When the ple Hays, supra. established in Hilen v. damages “liquidated,” prejudgment are in Co., TRW, Pump Reda a Div. Inc. v. of a matter Pre terest follows as of course. Finch, Ky., (1986), 713 S.W.2d 818 held cisely qualifies when the amount involved apply prod- Hays Hilen v. did not clear, “liquidated” always is not ucts the Prod- actions covered general “liquidated” means certain “[m]ade 1978, Liability uct Act of KRS 411.300 et by agreement parties of or or fixed 411.320(3), seq., of a because KRS subsec- operation of law.” Black’s Law Dictio negli- specifying plaintiff tion that if the is (6th ed.1990). examples Common nary 930 gent product, “in such his use of the and due, past note an amount due are a bill or failure was a cause of the oc- substantial account, open unpaid fixed on an or an damage currence injury that caused or price. present contract In the all plaintiff, the the shall not be defendant parties agree the amount due Elec or was at liable whether not said defendant property damage qualifies as tric for its product fault or the was defective.” “unliquidated,” defined in Black’s as (1) Appeals Court of held that because: “[djamages which have not been deter negli- Hays “adopted comparative Hilen v. calculated, yet reduced to mined or ... not gence for all cases after the tried or retried respect to amount.” Black’s rendered”; (2) certainty a opinion in that case was (1) 1977, supra questions at 1537. The here are: here the cause of action accrued in a unliquidated due on an year when is interest before the effective date of the Prod- amount, and, Act; (3) specifically, is it Liability more when ucts and a statute “can- (2) ques- given damages; and the not be retroactive effect unless the due as where 142 value, “If damages dispute, recovery was

tion interest as limited compensation he would receive no issue, jury? for the judge who resolves the or deprivation of the use between the time stated, previously judg the final As trial, injury and the or the date he ment reflected the trial decision court’s possession if was restored to the use and trial, that an interest was happened award and the before court, decide, and jury, recovery for the not the adequate not be recom- would justified. pense it not here was Court for the loss.” Id. at 943. allow reversed with directions to by the interest as awarded “And, damages sought where are for the position jury, taking the “the award injury property, dam- done the as well as unliquidated interest on claims within ages use, deprivation for of its inter- case,” “trying discretion of” whoever is allowable, est is not as the for exception judge jury. With the place the use of interest. In takes cases, of two v. & old Schulte Louisville words, party may sue other a (1908), 627, Co., Ky. 108 941 N.R. 128 S.W. injury personal property, and the done Schuester, 183 may & N.R. v. Louisville Co. in their discretion allow him 504, (1919), Kentucky found, Ky. 542 209 S.W. on the sum should be instructed, Opinion he for Appeals’ in the so sue cases cited also injury occasioned for support its result. Other do use, loss of the but he cannot recover Appeals’ Opin in the Court of cases cited loss interest as well ion, Mfg. Cotton Co. v. Lowell Henderson at use.” Id. 668, 142 Ky. 86 7 Machine-Shops, S.W. (1888); Inc. M. Liv Congoleum-Nairn, v. Schuester, a another case Co.,

ingston Ky. S.W.2d personal plaintiff's over railroad train ran (1935), Mut. Ins. and State Farm Auto. affirmed an instruction property, our Court (1988), Reeder, Ky., v. 763 S.W.2d 116 Co. permitting award for “reason- contract all dealt with breach of situations a motor truck net rental value” of able due was fixed and defi or, where the amount repairs, during period necessary refused, payment so nite at the time was during beyond repairs, if the truck a matter course replace that interest followed as necessary to the truck with period was, substance, unpaid Although an debt. capacity. for what of like another quoted at was cited and case Schulte Co., supra, N.R. Schulte v. Louisville & was not in- length, an award Schuester, & I.R. Co. Louisville citing The reason Schulte volved. factually they point in that supra, are explain opinion this “most recent property damages, involve claims for tort rule, which limit- has so relaxed the ancient not so much as but we view Schulte personal recovery for ed the destruction beginning interest case as at time to its market value the property development concept of stage in of the the place injury, the of the that of allowing for loss use of busi- value, include, may in addition to the such necessary during period property ness the re- consequential proximately as it, as repair replace and Schuester to or susceptible estima- and are of accurate sult nothing more than a discussion of Schulte. tion_” 545. The court 209 S.W. at on: goes should have been jury holds “the Schulte that, plaintiff, rule, compensation for they found instructed the if the “So correct him in their allow the they might nearly adequate discretion to be as circum- is as course, it, of permit, sum as of interest on the found the value stances as will destroyed be, consequential the of the dam- properly from date is to allow the should in- and, ages they accurately can esti- injury, as to the horse that was when be mated, them, too fully reject as remote owner but to jured up to the time the ascertainment, speculative judicial 108 possession.” or to his use and restored incapable of accurate explains: they are whenever court S.W. at 942.

143 ap- See, Campbell, Ky., Curtis general example, estimation. This is the rule plicable damages, Beckman v. Time long (1960); to all in applied 355 S.W.2d Co., Fin. this injury state and elsewhere for to Ky., (1960); S.W.2d 898 O’Daniel, personal property, Avritt v. as as real and for well Ky.App., 689 S.W.2d 36 contract, good breach of and there is no (1985). C.J.S., In 47 Usury,” “Interest and why apply reason to it should not also (1982), the underlying principles are § personal property.” the of destruction explained: thus Id. charged only “Interest is because of Schuester, Schulte cases, These two the to the money, value one who uses but stage development are but a in the of the compensation also as the to one who has general rule, accepted of as a matter now deprived been of money. the use of In- course, consequential damages are re- according terest is not recovered to a in contract, coverable in as well a tort rigid theory compensation of for money appropriate circumstances. On occasion withheld, given response but is in to con- appropriate of may part interest an con- be fairness; of it siderations is denied when sequential damages, but this does not mean inequitable its exaction would be .... here, appropriate interest nor does this tendency charge is to courts of answer whether an award allow interest in accordance with the of interest should be decided principles equity, accomplish of justice to the court as a matter of or equity, particular in each case.” jury question? as a fact With Next, bearing considerations Schulte single exception we when is appropriate an award interest as know of no suggesting case part consequential damages are not dis- permitted should prejudg- be to award puted issues appropriate fact for a interest its discretion as addi- an decide, equitable weighing con- damages, tional element compensatory province which are siderations within albeit there are several cases to us cited judge. wherein there is a casual reference made jury” “court or explanation. without accept premise We interest significant why There are reasons appropriate consequential as dam be decision whether award interest should contract, ages provided tort as well as rest with the trial court. (Second) for in the Restatement Torts First, “equity” the issue is a matter of Restatement states in § § Mullins, Dalton v. explains part: pertinent Ky., (1956), involving 293 S.W.2d 470 a case “(1) Except plaintiff when the can and an award judge of interest the trial elect does the restitutional measure of pay failure to accord- for deliveries of coal recovery, upon he is to interest entitled ing to contract: found the amount due “We are not much as to so disturbed (a) taking land, or detention of whether liquidated unliq- claim or other subjects property, chattels are, uidated as we accordance with legally protected the destruction of justice as popular trend, them, equity demand an allowance when valuation can injured party. from be ascertained established market It is with prices, adopted from the time for their mind promulgated that there has been judgment, of valuation to the time or the rule unliquidated that even on claims discretionary allowance of interest is (b) except (2), as stated in Subsection Id. at 477. with the [Emphasis court.” pecuniary for other harms to interests added.] from time of the of the cause the accrual judgment, A to the number of other ex- of action time of the cases plain required that the of of payment award interest is within interest is to avoid judicial of injustice.” the discretion the trial court. an court, But of the award one for the our review Comment on Sub- interest was not (1) (Comment a), jury. the suggests of 913 section § the to award interest un- decision whether noted, previously underlying As the equitable der this section is an matter: theory of here involved both tort warranty, or of contract. The

“Ordinarily, sufficiently if the sum due is breach interest, prejudgment award of as it definite, would so that the has rea- tortfeasor apply case, theory to the in this contract is pay the amount he or son to know should (Second) covered in the Restatement amount, it un- approximate its would be of 354, Damages,” as Contracts “Interest § just not to interest from the time allow as follows: payment. made On when he should have hand, unliqui- “(1) if the If of a the other amount is the consists failure breach dated, require pay- pay money or justice may not the definite sum render a fixed or ment, injured performance with as- particularly person if the value, monetary certainable interest making discouraged settlement has perform- the time for recoverable from delayed or has exorbitant demands ance on the due less all amount deduc- filing suit.” party tions to in breach which the judge present case the trial did not the entitled. an award of interest. refuse to consider (2) case, In any such interest other that, contrary, On he made a decision justice requires be allowed as equitable principles, interest was applying just amount have been com- that would He rea- simply appropriate. not stated his pensation paid perform- had it been when sons as follows: ance was due.” Court, discretion, having in its “[T]he Thus, subject matter of where the prejudgment interest is determined that of falls under breach contract claim subsec- considering appropriate all of the not (1) above, due as a matter tion interest is of case, in- circumstances this facts and course, where, it falls plaintiffs cluding fact that have con- above, (2) “may under subsection unliquidated is an claim that this ceded Both justice requires.” allowed as be sub- damage, that the amount of property for fact, judge trier of presuppose sections reasonably claim was not ascertain- question jury, has both the decided verdict, jury rendered its able until the amount due breach of contract and the complaint, the first that neither reaching question the breach before complaint, nor the second amended damages. Neither subsection complaint prayer contained a amended jury should specifies judge whether interest, plaintiffs that of interest as decide not assert a claim did explains: But Comment d to § 1, April 1983. That defen- interest until cases, “In such of interest is the award offers made substantial settlement dants discretion, judicial left to under rule $500,000) 1983, (in excess (2), light in the stated all Subsection pay company plaintiffs did not insurance circumstances, any including defi- 1980, January claims until any policy injured performance ciencies 10-year portions that substantial party unreasonableness delay in this case were attributable [Emphasis him.” demands made add- defendants, that the issue of Gen- ed.] negligence issue Electric’s was an eral Thus, we the decision whether conclude plaintiffs’ jury, and the fact that to award interest under the Restatement limita- the statute of claim was barred 913, parallel (Second) or the Torts § the statute was held unconsti- tions until decision that must be made under Restate- 27, February effective 1986.” tutional (Second) both Contracts § discretion,” not “judicial issues of the trial court that the involve agree with We note for a to decide. We deciding fact responsibility for contract, theory the trial court decided not to award of breach of which was before interest, $791,213.86, Electric stat- must be affirmed.2 ed in a brief to the court on this trial 15.02, Rule Our Civil Amendments subject: Evidence, is the same as Conform “Since General Electric’s claim this 15(b) Rule of the Federal Rules of Civil unliquidated, action and will not be- provides Procedure. It that “amendments liquidated judgment come until Gener- necessary pleadings to cause the to con- obtained, al Electric’s favor is this court form to the evidence and to raise issues required grant pre-judgment is not actually by express implied tried or consent interest, if, may but do so in its discre- time, may permitted be on motion at tion it under the facts and cir- believes judgment.” after even Bertelsman and equity cumstances of this case Prac., Ed, Philipps, Ky. 4th Civil Rule 15.- justice requires such an award.” strategy 02. Here the defendants elected a We decide now accord with what they bring did up wherein not the time-bar General Electric stated The decision then. warranty theory defense to the breach of whether to award interest here rested with evidence, until the close of the and this the trial court. The trial court balanced strategy permitted proof of breach of con- undisputed equities facts and and decid judge permitted tract. When the trial appropri ed evidence, amendment to conform to the ate. This discretion was not abused. strategy defense backfired. Philipps explains Bertelsman & II. AMENDMENT TO CONFORM of the reasons” for the rule “is to “[o]ne TO THE PROOF cognizance take of the issues that were At the close of the evidence trial actually tried.” Id. court dismissing sustained a motion Gener- goes authorizing “The Rule further than warranty al Electric’s breach of claim as amendments to conform to the evidence. by the barred statute of limitations for provides if It issues not raised such claims as found in the Uniform Com- pleadings by express are tried Code, mercial KRS 355.2-725. Because the consent, implied they shall be treated as written contract between General Electric they had been so raised. specifica- and Garst-Receveur included the joist girders tions and was evi- dence, proof regarding as well as the its The decision whether an issue has been

breach, permitted the trial court express implied tried consent is amendment pleadings to include a within the trial court’s discretion and will 15-year breach of contract claim with a except showing not be on a reversed (KRS 413.090(2)), statute of limitations clear abuse. utilizing thus the same to substi- evidence tute breach of contract for breach of war- stage It seems clear that at trial ranty obviating and thus the statute of only way party may objec- raise the problem. limitations pleading by objecting tion of deficient

The issue is whether trial to the introduction of evidence on an permitting unpleaded court its abused discretion issue. Otherwise he will be not, pleadings impliedly to be amended. If held to have consented to the judgment against final issue.” Garst-Receveur trial such Id. at 318-19. a) b) theory Seemingly, judgment Under the breach of Gener- the final in- contract includes contributory al demnity Electric’s have been a for both contract and tort mitigate reason to See Restate- Paragraphs curiously, under 3 and "not (Second.) 350, “Avoidability Contracts § $734,058.69,” exceed a total of the final which is Damages.” as a Limitation on But this issue has $57,- theory sum under the tort when reduced Thus, pursued. not been tributory General Electric’s con- comparative 000 for General Electric’s fault in partial fault is not even a bar to recov- collapse. the second roof ery of the award for breach of contract. 146 States, adopt quotes fair In Mains 508 F.2d

We these as a state- v. United (6th Cir.1975), apply, 1251, ment of how the rule should 1260 the court stated: applied by judge, in how it was trial no event we “In would want hold upon this Electric had relied case. General valid an otherwise claim refund beginning its contract with Garst-Receveur by merely be denied a should be- original complaint in 1979. Wheth- with its may the claimant have also relied cause styled warranty er or breach of breach of inapplicable on subsections of a section contract, the factual basis claim of the Internal Revenue Code.” later, years after was the same. Nine Co., Empire In Haas v. de Petroleum proof the time bar for this was (10th 1223, Cir.1970), 435 1229 F.2d warranty in the breach of Uniform Com- court stated: Code, always a that was mercial defense allowing “The test for an amendment available, brought to was the trial court’s 15(b) pleadings Rule under to conform agree with attention. We General Electric impliedly op- tried is issues whether the anticipated defendants should have that the posing party prejudiced by be ‘would warranty of the breach of dismissal amendment, i.e., implied whether he had stage as claim at this time-barred would opportunity a fair to defend and whether nothing repleading yield more than any if he could offer additional evidence as a The same claim breach contract. the case were to be retried on a different proof necessary to establish the breach of ” theory.’ [Authorities cited.] evidence, already presented was contract “Applying the above test to the circum- claim, warranty support of the breach of case,” stances of the instant the U.S. Court objection. present all The circum- without concluded, “there no was qualify stances under the terms CR granting the amend- abuse of discretion plead- by 15.02 as “issues not raised “question al- ment” because the ... had implied ings” “tried ... consent” of but ways large plaintiff’s part constituted a parties, which “shall be treated in all of action” and the issues con- cause “basic respects so raised” in they had been with the First Claim” were essen- nected pleadings. Phillips, as Bertelsman & theory. on the Id. tially the same as new quoted supra. rejected that Rule 15.02 court view reversing court on the trial consent to new apply should not because point, Appeals took the the Court of view implied cannot same issues be where implied no that “there could be consent already other issues be- evidence relates to party not opposing where the could even ing tried. have an issue extraneous been aware that position agree Electric’s We with General presented.” pleadings being given 15 the courts to that Rule is a tool Elec disagree. We cited General Cases having cases on their facilitate decided tric, Co., including Inc. v. D. New Federico game rather as “a of skill merits than (1st Auth., 122 Redev. 723 F.2d Bedford misstep by may counsel be deci- which one Cir.1983), Estates, Doralee Inc. Gibson, Conley v. sive to the outcome.” (2nd Co., 716 Oil 569 F.2d Cities Serv. 41, 103, 99, 2 355 78 S.Ct. L.Ed.2d U.S. Cir.1977), theory take the view that the (1957). implied consent not on actual does turn This accords with our decision prejudice. consent but actual con Fulmer, Ky., 695 S.W.2d Williams v. cept prejudice actual related to holding that, regardless (1985), of the dif- winning losing, being unable to pled in a be ferent theories present a defense which have would been action, products liability at time trial At no available. time did Garst- otherwise supports question is proof suggest po Receveur defendant particular theory. tential defense to the breach contract appropriately 15.02 used theory permitting CR was foreclosed present circumstances. amendment to conform the evidence. Harman & expenses, and to award such

III. CONTRIBUTORY FAULT of appealed the denial Conway has further affirming the trial court in decision Our this award. to permitting General Electric to amend contract, duly fur- Conway’s breach of makes the Brief include As Harman & question contributory fault on ther whether notes: part of General Electric as to the sec- addressing this parties “[E]ach collapse partial or a ond roof should be a matter, including Appeals, the Court of occur-

complete recovery to a for this bar generally acknowledges the same basic significance. rence of doubtful first, gener- indemnity law: tenets Kentucky party is that each is al rule However, practical effect fees and ex- responsible for its own deciding presented has been nei issues and, second, recog- penses; Court, argued this ther nor before briefed general rule.... exceptions nizes to the hesitate to leave unanswered so we exception such [is]: [0]ne regarding application of the question raised obliged person is to defend ‘Where litigation principle. This contributory fault another, against against the act of long far gone has on far too and become over, may, if remedy he has a he whom complex already. say, It suffices to too such other has notice of the suit and opinion only, that we view purposes of this defend, him lia- opportunity to hold an comparative of the fault is the resolution damages for the amount of recov- ble Appeals, sue in the which we have Court against he is ered himself and which Opinion, proper as a set out earlier this compelled pay, together with inter- application principles of the The involved. thereon, est and also all reasonable Appeals Court of affirmed the trial court’s necessary expenses costs in- and applying comparative decision defense, including attor- curred in such principle respective liability to the of Gen ” ney’s fees.’ Middlesboro Home Tel. eral Electric and the defendants for the v. Louisville and Nashville R.R. Co. collapse, second roof and we affirm the 104, Co., 822, Ky. 284 S.W. 108 Appeals respect. this (1926). Further, Conway concedes Harman & IV. INDEMNITY FOR ATTORNEY rule, exception general which FEES AND EXPENSES cases, indemnity “de- applies sometimes presented The last issue is Harman leading The pends equitable factors.” Conway’s indemnity & claim for for attor Abell, subject is case on this Chittum v. ney litigation expenses fees and incurred in 231, (1972), stating: Ky., 485 S.W.2d defending judgment this action. The final of such fees is not auto- allowance “[T]he in the trial court awarded Garst-Receveur judgment, indemnity matic in an Conway judgments and Harman of in depends upon equities rather of the demnity against any portion Nucor for situation, upon particularly judgment satisfy, they may adequate provide indemnitor failed to $734,058.69, to exceed the final award un damages.” the claim for defense of products liability theory.3 der the acknowledged Chittum, claim for from is whether was a against right indemnity recovery a motor collision both for the tort vehicle employer. Both de- indemnity should have included for attor driver and the driver’s ney litigation against the claim the driver expenses. fees and fended at trial employer negligent, and the further Court of held that “the circuit was defended, unsuccessfully, by denying the failing court did not its abuse discretion” tution, concerning why seq. 3. We are unaware of et No issue § the reason the final $57,000 judgment indemnity should not have right indemnified Garst- for the difference Conway Receveur and Harman & for breach recovery the breach of contract and the between prod- contract in the same manner as under the preserved tort for review. liability theory. ucts See Restatement Resti- position there employee company Conway the Harman & was on business at the Restatement clarify from to further the law this Applying time. law need Restitution, Indeed, respect. grant- employ- our Court held the had the trial court attorney its ed indemnity agent er from indemnification for fees was entitled but not awarded, litigation expenses in legal the circumstances here, it as expenses, explaining presented we would have viewed fees follows: an abuse of discretion. are two duties on “[Tjhere part agent a situation such as here involved V. CONCLUSION presented. duty negli- The first is not the reasons stated in this For above expose gent principal to the conduct to a Opinion, affirm the trial all of we court on damages. second, claim The which for us: presently prejudg- the issues before violated, arises the first has is after been interest, to to amendment conform against the to claim for defend evidence, application compa- the the of the agent In case employed the instant rule, denying indemnity rative and vigorously counsel and defended attorney legal expenses. fees and We re- damages, sug- there is claim for and no verse the Court of where it dif- gestion any that there was dereliction of from the those fered trial court two of duty regard. in that There was no an- permit- interest and issues: corporation tagonism of The defenses. ting to conform to the evi- amendment required employ to was not counsel dence. claim, damage far con- defend the as as liability cerned the of Mrs. Chittum to judgment final as entered Millett from which the and Abells trial is court affirmed. corporation’s principal as would STEPHENS, LAMBERT, C.J., and corporation may that arise. It is true REYNOLDS, LEIBSON, SPAIN and required employ have counsel to been JJ., WINTERSHEIMER, concur. make the defense that Mrs. Chittum was agent corporation not an at the COMBS, J., except as stated concurs accident, duty time of the Dissenting Opinion. separate his make defense was on the that never Chit- [Emphasis original.] COMBS, Justice, dissenting. tum estate.” Chittum, present respectfully Like circumstances I from so much dissent Conway opinion prejudg- disallows majority Garst-Receveur and Harman as required employ majority that Supposing “not counsel to ment interest. were damage claim,” concluding as defend the insofar liabil- is that the issue was correct as ity properly turned on the defective condition of the one the trial court addressed Nucor, primary joist girders. equity, I that the denial which bore a matter of believe case responsibility any prejudgment condition these joist girders “employed vigor- inequitable, amounting to an patently counsel damages, and ously judicial defended the claim for abuse of discretion. suggestion is there no that there was (Second) 913(1) Torts Restatement § Chit- duty regard.” dereliction of (ante, 144) p. damages as a treats Comment tum, quoted as above. issues contradistinction) liquidated essentially (by which Garst-Receveur and Harman & Con- definite, sufficiently “if so the sum due charges they way needed counsel involved tortfeasor has reason to know the personal responsible their were because of its approximate pay amount he should amount_” fault, separate independent of entirely added.) (Emphasis Even dereliction, duty to Nucor’s make “but liquidated in the though a claim is not that defense never was on” Nucor. Chit- being sense of ascertainable traditional tum, quoted above. (which precision con- with absolute G.E. here), Thus, plaintiff consider Chittum squarely cedes to be the case we nonetheless, disagree ordinarily appeal. entitled to point on this We with instructions, damages if the amount of can be deter- Under court’s cal- values, approximation. damages upon mined to a fair culated based i.e., “immediately values imme- before and it is While true that G.E.’s were diately subject after the two roof failures.” not reduced to a sum certain until the effect, period years almost verdict, returned its the losses were from from the time of the harm until the date of susceptible reasonably the outset accu- judgment, plaintiffs wrongfully were rate estimation. The measure of of, deprived wrong- while the defendants adopted by the trial court was the cost of fully $734,058.69. enjoyed, the use of Rea- warehouse, repair plus the differ- appropriate sonable interest is an measure ence in the fair the dam- market value of use, my the value of this and is in view aged personal immediately property before remedy justice equity which demand. immediately collapse. after each roof calculus, appropriate long- This is no challenged,

er readily available

1977, and, then, applied had it been would yielded

have a reliable estimate of harm. parties

The fact is that all had or should fairly plain-

have had a accurate idea of the damages. tiffs’ actual The real bone of WHIZ, THE WHITLEY INC. d/b/a contention extent to which the Whitley Republican, Movant, defendants were liable for the resulting collapse, from the second roof considering alleged contributory G.E.’s COUNTY, Kentucky, By WHITLEY negligence. Of course the outcome of a Through the WHITLEY COUNTY FIS dispute liability over affects the COURT, consisting Jerry CAL F. But is the existence such Taylor, County Judge/Executive, Lon dispute germane to the evaluation of Anderson, Magistrate, Ashley, nie Don damages? is, Even if in equity it there Magistrate Hamblin, Mag and William was here no serious issue as to full (Ken Newspapers, istrate and Thomson for the first collapse, roof and no serious Inc., tucky), The Times d/b/a Tribune difficulty estimating damages sep- those , Respondents. arately. No. 90-SC-156-DG. event,

In any like the court which decid- Mullins, ed Dalton v. Ky., 293 S.W.2d 470 Supreme Kentucky. Court of (1956) (ante, 143), p. I am less disturbed 9,May 1991. about liquidated whether the claim is unliquidated Rehearing justice Aug. than Denied about whether and equity demand an allowance of interest injured party. present

of the trial deny- court’s stated reasons for

ing prejudgment (ante, 144), p. wholly

most are unconvincing, and none of support others adjust- more than an amount of interest awarded. plaintiffs did not discourage settlement

by making demands, exorbitant nor unrea-

sonably delay filing prosecution

this action. hand,

On the other the record makes

clear that a prejudg- substantial award of

ment interest is necessary if G.E. is to have complete relief to which it is entitled.

Case Details

Case Name: Nucor Corp. v. General Electric Co.

Court Name: Kentucky Supreme Court

Date Published: May 13, 1991

Citation: 812 S.W.2d 136

Docket Number: 89-SC-802-DG, 90-SC-208-DG, 90-SC-209-DG

Court Abbreviation: Ky.