Arnold v. Commonwealth, ex rel. Chandler

62 S.W.3d 366, 2001 Ky. LEXIS 216, 2001 WL 1636802
CourtKentucky Supreme Court
DecidedDecember 20, 2001
DocketNo. 2001-SC-0288-TG
StatusPublished
Cited by6 cases

This text of 62 S.W.3d 366 (Arnold v. Commonwealth, ex rel. Chandler) is published on Counsel Stack Legal Research, covering Kentucky Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arnold v. Commonwealth, ex rel. Chandler, 62 S.W.3d 366, 2001 Ky. LEXIS 216, 2001 WL 1636802 (Ky. 2001).

Opinion

LAMBERT, Chief Justice.

Sixteen months after entry of a final judgment reflecting settlement of litigation brought by the Commonwealth against a number of tobacco companies, Appellants moved to intervene for the purpose of asserting claims to the settlement proceeds. The trial court denied intervention as untimely and Appellants appealed. The issue before this Court is whether the trial court abused its discretion in denying intervention.

To resolve threatened litigation, forty-six states, six other jurisdictions and several tobacco companies entered into a Master Settlement Agreement, (MSA). An element of the agreement provided that the Commonwealth of Kentucky would receive $3.45 billion over a period of twenty-five years. By the terms of the agreement, the Commonwealth of Kentucky was required to file suit naming [368]*368Phillip Morris, Inc., Brown & Williamson Tobacco Corp. (individually and as successor by merger to The American Tobacco Company), Lorillard Tobacco Company, R.J. Reynolds Tobacco Co., Liggett Group, Inc., and United States Tobacco Company, (Tobacco Companies), as defendants. The lawsuit was filed in the Franklin Circuit Court and was dismissed by agreement with prejudice three days later. The Circuit Court entered a Consent Decree and Final Judgment approving the M.S.A. and retaining jurisdiction over the case to ensure compliance.

Sixteen months after dismissal of the lawsuit, but before the effective date of the act of the General Assembly distributing the anticipated settlement proceeds, Appellants, claiming to be representatives of a group of persons suffering from tobacco related Finesses and claiming to be recipients of Medicaid benefits, filed a Motion to Intervene in the litigation. In their tendered intervening complaint, Appellants argued that the Commonwealth had already been reimbursed under the Medicaid program for Appellants’ smoking related illnesses and that Appellants should receive any sums paid by the Tobacco Companies in excess of actual Medicaid costs incurred by the Commonwealth. The Complaint also alleged due process violations and taking -without just compensation claims. The trial court denied the motion to intervene holding that it was untimely and that it failed to satisfy the requirements of CR 24.011 or CR 24.02.2 The court further held that even if the requirements for intervention were met, sovereign immunity would bar the claims. Appellants appealed to the Court of Appeals and this Court granted transfer. CR 74.02.

1. TIMELINESS OF MOTION TO INTERVENE

Appellants claim they should have been permitted to intervene in the suit between the Commonwealth and the Tobacco Companies since their rights would be affected by the settlement. They argue that they have met all requirements of CR 24.01 and CR 24.02 and that the trial court erred in denying their motion.

Pursuant to both provisions of CR 24, a threshold requirement for intervention is that the motion be timely. Appellants argue that their Motion to Intervene was timely, though they did not file the motion until long after the Consent Decree and Final Judgment became final. They claim they were not given notice of the suit filed by the Commonwealth and note that the case was dismissed only three days after it was commenced. Appellants further argue that their motion was timely because there is no definite time after which a motion to intervene is considered untimely. They reject the idea that the media coverage of the lawsuit and settlement is the type of notice permitted by due process, even though the complaint and the M.S.A. were made public before [369]*369they were filed. Therefore, according to Appellants, they had no notice comporting with due process of the litigation.

Appellants also claim that their cause of action did not accrue until after the Commonwealth determined its disbursement plan. Not until then, they argue, did they know they were left out of the disbursement of settlement funds. Appellants claim their motion was timely because it was filed before the disbursement bill was signed by the Governor.

The Supreme Court of Arizona addressed the issue presented here in State ex rel. Napolitano v. Brown & Williamson Tobacco Corp.,3 the Arizona tobacco settlement case. The motion to intervene was denied as untimely. There, the interve-nors were counties fearing that they would not get any of the settlement monies or be able to sue the tobacco companies. The lawsuit lasted two and a half years. Fifteen days after the judgment was final, the intervenors filed their motion. The Court held this to be untimely and prejudicial to both plaintiffs and defendants in the case. It was untimely because the counties did not seek to intervene until fifteen days after the final judgment. Moreover, the court held that the counties had received a copy of the M.S.A. twenty-eight days before they filed their motion. The counties should have been aware during the litigation that their interests were not adequately represented and the state would be prejudiced because it would not receive payment until all appeals were final, possibly creating a substantial delay in the receipt of settlement monies. The tobacco companies would be prejudiced because they would be kept in the lawsuit until the state and intervenors settled their dispute. The Court held that the intervenor counties should have been aware prior to the signing of the M.S.A. that the state was potentially not representing the counties’ interests. Their claim was foreclosed.

A party wishing to intervene after final judgment has a “special burden” to justify the untimeliness.4 “The rule requires ‘timely’ application, and the board has offered no excuse for waiting until 30 days after judgment before moving to intervene.” 5 While the rule does not forbid post judgment intervention, it is broadly within the discretion of the trial judge whether to allow a party to intervene at that stage.6 In the case at bar, the trial court conducted a hearing and concluded that the motion to intervene should be denied as untimely. There is no hint of abuse of discretion. Appellants have failed to satisfy their special burden or offer any sufficient explanation for waiting so long to seek participation in the case. It is difficult to overlook that significant media coverage occurred prior to and following the settlement. The terms were widely known and parties who believed themselves to be prejudiced thereby were under a duty to make timely application for relief. Accordingly, we affirm the trial court’s order of June 12, 2000 whereby it denied Appellants’ motion to intervene.

II. PRESERVATION OF CLAIMS

We are not unconcerned by Appellants’ contention that the effect of the settlement forecloses their individual claims for injuries and damages. They ague that the Commonwealth would not have a cause of action against the Tobacco Companies [370]*370but for them because it was they who were injured and it was for their medical expenses that the Commonwealth sought reimbursement.

The M.S.A. states:

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Bluebook (online)
62 S.W.3d 366, 2001 Ky. LEXIS 216, 2001 WL 1636802, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arnold-v-commonwealth-ex-rel-chandler-ky-2001.