Chappell v. Kuhlman Electric Corp.

304 S.W.3d 8, 2009 Ky. LEXIS 252, 2009 WL 3517678
CourtKentucky Supreme Court
DecidedOctober 29, 2009
Docket2006-SC-000140-DG, 2006-SC-000144-DG
StatusPublished
Cited by3 cases

This text of 304 S.W.3d 8 (Chappell v. Kuhlman Electric Corp.) 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
Chappell v. Kuhlman Electric Corp., 304 S.W.3d 8, 2009 Ky. LEXIS 252, 2009 WL 3517678 (Ky. 2009).

Opinions

Opinion of the Court by

Special Justice ROGER CRITTENDEN.

This is a consolidated appeal from a decision of the Court of Appeals in an attorney/malpractice action and an insurance company/bad faith action arising out of a workers compensation case. Both the successful litigant at the trial and appellate level, the Landrum & Shouse law firm, and the unsuccessful litigant, Kuhlman Electric Corporation, petitioned this Court for discretionary review. The Appellee insurance company, Amerisure (f/k/a Michigan Mutual), did not seek discretionary review.

The trial court in these actions determined that Landrum & Shouse owed no duty of care to its former client, Kuhlman Electric Corporation, in a workers compensation case after Kuhlman became self-insured. The trial court granted summary judgment for Landrum & Shouse and Am-erisure, finding that Landrum & Shouse did not violate the standards of care due Kuhlman Electric as insured by Amerisure and owed no duty of care to Kuhlman Electric as a self-insured entity. The trial court determined that Amerisure had no contractual liability to Kuhlman Electric as self-insured and was not liable for a claim of bad faith.

The Court of Appeals determined that summary judgment on the issue of the attorneys’ duty owed to Kuhlman Electric was inappropriate because the Appeals Court could not conclude there was not a violation as a matter of law. Still, the judgment of the trial court was upheld because the Court of Appeals determined that Kuhlman Electric was unable to show damages in connection with the violations of any duties owed to it by- Landrum & Shouse. The Court of Appeals upheld the judgment for Amerisure for the same reasons.

We affirm the decision of the Court of Appeals.

The facts of the workers’ compensation case which give rise to the instant case are detailed by the Court of Appeals in Kuhlman Electric Corporation v. Stephen R. Chappell, et al., No. 2003-CA-001232-MR and No. 2004-CA-000633-MR (Ky.App. December 2, 2005):

Kuhlman Electric purchased and maintained a workers’ compensation insurance policy through Amerisure covering work-related injuries sustained by its employees during at least the period of April 15, 1977, through October 1, 1988. Among other things, the insur-[10]*10anee policy provided that Amerisure would provide legal representation and a defense to Kuhlman Electric against any workers’ compensation claims brought against Kuhlman Electric arising from injuries sustained during the policy period.
On April 15, 1977, Kuhlman Electric employee, William Burgess, suffered a work-related back injury. Burgess subsequently filed a claim seeking workers’ compensation benefits. Amerisure retained Landrum & Shouse to represent Kuhlman Electric in the ensuing workers’ compensation litigation. On July 30, 1979, the Workers’ Compensation Board (Board) entered an order awarding Burgess workers’ compensation benefits for the April 15,1977, injury.
On April 6, 1988, Burgess filed a motion to reopen his workers’ compensation claim, asserting that there had been a worsening of his condition. Amerisure again retained Landrum & Shouse to defend Kuhlman Electric in the action. The motion to reopen was initially granted by the Administrative Law Judge (ALJ), but, upon appeal, that determination was reversed by this Court.
On October 1, 1988, Kuhlman Electric terminated it workers’ compensation insurance coverage with Amerisure, and became self-insured for workers’ compensation purposes. Amerisure, however, had a continuing obligation to Kuhl-man Electric for claims arising from events occurring within the policy period, including the Burgess injury.
On November 14, 1991, Burgess filed a second motion to reopen his 1977 case, and Amerisure again retained Landrum & Shouse to represent Kuhlman Electric. On behalf of Kuhlman Electric, Landrum & Shouse objected to Burgess’s motion to reopen. However, on February 26, 1992, the ALJ issued an order granting Burgess’s motion to reopen his previous workers’ compensation claim based upon a change in his condition and an increase in his occupational disability attributable to the April 15, 1977 work-related injury.
On August 24, 1992, Landrum & Shouse, on behalf of Kuhlman Electric as insured by Amerisure, filed a motion to join Kuhlman Electric in its capacity as a self-insurer as a party to the workers’ compensation action. The motion argued that Burgess had not, in August 1991, suffered a worsening of his 1977 injury (which would be subject to coverage by Amerisure) but, rather, had suffered a new injury (which, if so, would be subject to coverage by Kuhlman Electric in its self-insured capacity). Kuhlman Electric, in its capacity as self-insured, did not object to the joinder motion at that time. On November 20, 1992, the ALJ entered an order granting the motion to add Kuhlman Electric in its self-insured capacity as a party to the workers’ compensation action.
The case languished, and it was not until 1996 that Burgess filed a motion alleging that a new injury, rather than a worsening of the original 1977 injury, had occurred in August 1991. At this time Kuhlman Electric, as self-insured, objected to the new injury claim based upon lack of notice and expiration of the statute of limitations for bringing the new injury claim. These defenses were rejected, however, based upon the ALJ’s determination that Kuhlman Electric was estopped from raising the defenses because the company itself (in the August 24, 1992, motion filed by Landrum & Shouse) had originally suggested that the August 1991 injury was a new injury rather than a worsening of the 1977 injury.
[11]*11Ultimately, the ALJ determined that Burgess had incurred a new injury, and that he had suffered no increase in occupational disability from the 1977 injury. As a result, Kuhlman Electric, in its self-insured capacity, was required to pay workers’ compensation benefits to Burgess. The ALJ’s decision was upheld by the Workers’ Compensation Board, this Court, and the Supreme Court.
On August 22, 2001, Kuhlman Electric filed an action in Fayette Circuit Court against Landrum & Shouse and Ameri-sure. As amended, the complaint alleged causes of action against Landrum & Shouse based upon professional negligence, breach of contract, negligent and intentional breach of fiduciary duties, gross negligence, and breach of implied covenant of good faith and fair dealing. As amended, the complaint stated causes of action against Amerisure based upon the breach of contract, breach of fiduciary duties, aiding and abetting Landrum & Shouse in its breach of fiduciary duties, and bad faith.
On March 14, 2008, Landrum & Shouse filed a motion for summary judgment. On May 12, 2003, the circuit court entered an order granting the ap-pellees summary judgment on all claims against Landrum & Shouse. Kuhlman Electric filed a motion to alter, amend, or vacate, which was denied by order dated June 2, 2003. Kuhlman Electric subsequently filed its notice of appeal from these rulings (Case No. 2003-CA-001232-MR).
On July 8, 2003, Amerisure filed a motion for summary judgment. On March 1, 2004, the circuit court entered an order granting summary judgment to Amerisure. Kuhlman Electric subsequently filed its notice of appeal from that ruling (Case No. 2004-CA-000633-MR).

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Bluebook (online)
304 S.W.3d 8, 2009 Ky. LEXIS 252, 2009 WL 3517678, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chappell-v-kuhlman-electric-corp-ky-2009.