Vfm, LLC v. Psc Industries, Inc.

• Court: Court of Appeals of Kentucky
• Decided: February 14, 2024
• Docket: 2021 CA 000431
• Status: Unknown

Opinion

RENDERED: FEBRUARY 16, 2024; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

No. 2022-CA-1166-MR

PSC INDUSTRIES, INC.; PMC GLOBAL, INC.; PHILIP KAMINS; TRAVIS THOMAS; AND TAMMY FLOWERS APPELLANTS

APPEAL FROM NELSON CIRCUIT COURT v. HONORABLE JOE G. BALLARD, JUDGE ACTION NO. 18-CI-00680

GARY L. YOUNG; DEISERRE B. HAWKINS; VFM, LLC; AND VFM INTERNATIONAL HOLDINGS APPELLEES

AND NO. 2021-CA-0431-MR

VFM, LLC; VFM INTERNATIONAL, LLC; GARY YOUNG; AND DEISERRE HAWKINS CROSS-APPELLANTS

CROSS-APPEAL FROM NELSON CIRCUIT COURT v. HONORABLE JOE G. BALLARD, JUDGE ACTION NO. 18-CI-00680 PSC INDUSTRIES, INC.; PMC GLOBAL, INC.; PHILIP KAMINS; TRAVIS THOMAS; AND TAMMY FLOWERS CROSS-APPELLEES

OPINION AFFIRMING IN PART, VACATING IN PART, AND REMANDING ON APPEAL NO. 2022-CA-1166-MR AND AFFIRMING ON CROSS-APPEAL NO. 2021-CA-0431-MR

** ** ** ** **

BEFORE: THOMPSON, CHIEF JUDGE; CALDWELL AND EASTON, JUDGES.

EASTON, JUDGE: These appeals follow a jury verdict after an eight-day trial.

The appeal designated as the direct appeal (Case No. 2022-CA-1166-MR) involves

two claims. The Appellants in that case challenge the liability found and damages

awarded against them for abuse of process. These Appellants also argue their

opposing claim for breach of fiduciary duty was not time-barred and that the jury

should have awarded more damages to them. The Cross-Appeal (Case No. 2021-

CA-0431-MR) questions the circuit court’s pre-trial dismissal of three counts of

the counterclaim connected to the successful abuse of process claim. These

Appellants believe the judicial statements privilege should not have been applied

as the basis for the dismissal of those claims.

After an extensive review of the record, and for the detailed reasons

which follow, we partially affirm and partially vacate and remand on the direct

appeal and affirm on the cross-appeal. On the direct appeal, we affirm the circuit

-2- court regarding the statute of limitations ruling barring recovery of the damages

awarded on the breach of fiduciary duty claim. We also affirm the jury’s award of

other damages. We affirm the circuit court’s judgment on the abuse of process

claim arising from conduct relating to a falsified affidavit, but we vacate that

portion of the judgment for abuse of process based separately on the

commencement of the litigation. On the cross-appeal, we affirm the circuit court’s

grant of judgment for PSC on the counterclaims other than the abuse of process.

FACTUAL AND PROCEDURAL HISTORY

Appellant/Cross-Appellee, PSC Industries, Inc. (“PSC”), is a

Louisville-based corporation in the business of fabrication, manufacturing, and

industrial packaging of parts for many companies. The area of business

particularly relevant to this case involves non-metallic automotive parts.

Appellants/Cross-Appellees Travis Thomas (“Thomas”) and Tammy Flowers

(“Flowers”) are PSC’s President/CEO and Director of Human Resources,

respectively. Appellant/Cross-Appellee PMC Global, Inc. (“PMC”) is a privately

owned management company, and it owns PSC. Appellant/Cross-Appellee Phillip

Kamins (“Kamins”) is the CEO and principal owner of PMC.

Appellee/Cross-Appellant, Gary Young (“Young”), was employed

with PSC from 1995 until 2016. He held several positions with PSC throughout

his years of employment. When he left PSC in 2016, he was the Vice President of

-3- Global Sales and Marketing. Since 2010, Young had been responsible for most of

the sales activity for PSC.

Young founded Appellee/Cross-Appellant VFM, LLC (“VFM”) in

2003 with Deiserre Hawkins (“Hawkins”). VFM manufactures and supplies

various parts used in automobiles. Appellee/Cross-Appellant, VFM International

(“VFMI”), is a wholly owned subsidiary of VFM. The primary dispute between

the parties is whether VFM was a direct competitor of PSC while Young worked

for PSC. A disagreement also arose as to when PSC became aware of Young’s

activities with VFM.

PSC alleges that Young secretly used PSC’s existing customer

relationships, business leads, trade secrets, and employees to directly compete with

PSC while he was still employed with PSC. Young counters that VFM’s business

was different from PSC’s and that VFM only provided services and parts that PSC

did not. Young insists there was never any direct competition. PSC says Young

hid the existence of VFM and its business activities from PSC. Young claims he

fully disclosed everything in 2011 to PSC’s then-CEO and that nothing was ever

hidden or secret.

While Young was employed with PSC, he travelled domestically and

internationally on PSC’s behalf. PSC alleges Young undertook VFM business

-4- while on some of these business trips funded by PSC. Young claims he never did

any VFM business while travelling for PSC.

In August 2018, PSC filed a Complaint with a multitude of allegations

against Young, Hawkins, VFM, and VFMI (we will usually refer to Young or

VFM, the primary business entity). The claims in the Complaint relevant to this

appeal include breach of contract, breach of fiduciary duty, aiding and abetting

breach of fiduciary duty, unjust enrichment, and fraudulent concealment.

Discovery started with substantial disagreements as to what should be

protected and what should be disclosed. Eventually, discovery began, and many

depositions took place. Both sides filed motions for summary judgment and

motions to dismiss. PSC was granted leave to file two amended complaints. The

first amended complaint added new causes of action against Young, which

included tortious interference with contractual relations and aiding and abetting

breach of fiduciary duty. These later allegations pertained to another PSC

employee, Matthew Parr (“Parr”). PSC filed an affidavit signed by Parr (“Parr

Affidavit”) in support of these allegations and in support of a motion for injunctive

relief. The circumstances of this affidavit became a significant issue in the lawsuit.

In January 2020, Appellees requested leave to file a counterclaim,

which was granted. The counterclaim included four claims. The first claim was

soliciting perjury and false swearing against PSC, Thomas, and Flowers. The

-5- second count was bribing a witness, also against PSC, Thomas, and Flowers.

Count Three was soliciting perjury and false swearing against PMC and Kamins.

These allegations all stem from the Parr Affidavit. The final count was abuse of

process, which was filed against all the counterclaim defendants. Appellees

alleged that PSC, PMC, and its officers coerced, threatened, and bribed Parr to

make a false affidavit to gain an improper advantage in the case and to serve an

ulterior purpose.

In August 2020, PSC filed its motion for leave to file its Second

Amended Complaint, which was granted. This amended complaint added Charles

Damian Osbourne (“Osbourne”) as a Defendant. Osbourne was the CEO of PSC

in 2011 when Young claims he disclosed his activities with VFM. The relevant

claims against Osbourne included breach of fiduciary duty, breach of contract, and

fraud by omission. The basis of these allegations is that Osbourne assisted Young

in hiding his actions and the competing business of VFM.

Following several motions, the circuit court granted partial summary

judgment in favor of PSC on some of the claims in the counterclaim. The court

dismissed the two counts of soliciting perjury and false swearing as well as the

allegation of bribing a witness. The circuit court reasoned that the judicial

statements privilege applied, and PSC and the other related parties could not be

held liable on these allegations as a matter of law. The circuit court denied

-6- summary judgment regarding the claim of abuse of process. The court determined

a dispute of material fact existed as to that claim, which was not barred by the

judicial statements privilege.

The first Notice of Appeal (now considered the cross-appeal) was

filed in April 2021. This appeal addressed the circuit court’s dismissal of the three

counts of the counterclaim. The parties filed a mutual motion to hold that appeal

in abeyance pending the resolution of the remaining claims in the case, which was

granted. In November 2021, the circuit court granted summary judgment to

Hawkins on all claims against her, and thus, she was dismissed as a party. This

decision was not appealed.

A jury trial was held on all remaining claims, beginning on June 22,

2022. The testimony was very lengthy. For completeness, we will address the

substance of the evidence in detail, which we believe is necessary for a full

understanding of what the jury had to consider in this convoluted case. We choose

to summarize the evidence in the order it was presented to the jury.

PSC first called Young to testify. After many years of employment,

Young left PSC in May 2016. He developed relationships with several customers

of PSC over his years as a salesman. For example, Young was the salesman who

developed PSC’s relationship with Toyota Boshoku America (“TBA”), which

-7- became PSC’s largest automotive customer. The primary buyer Young worked

with at TBA was Atsuko Downes (“Downes”).

PSC previously supplied flame-laminate1 products to TBA but quit

doing so in approximately 2003. When PSC decided to get out of this business, it

had a contract with TBA to supply a specific flame-laminated product. Young said

he told management at PSC that stopping this line of business was a bad decision,

to no avail. The TBA purchaser then asked Young if he would be able to find

someone to provide those products to them. This was the impetus for Young to

create VFM.

Young first located a company to immediately supply the needed

product to TBA, then he formed VFM with the intention of directly supplying this

product to TBA in the future. VFM has conducted this business with TBA since.

Young admitted he did not make anyone at PSC aware of VFM when he first

started the business.

Young later approached Hawkins with the opportunity to become a

co-owner of VFM. Hawkins was herself a business owner. She had experience

with bookkeeping and other activities that would be useful for a new business.

1 As the name implies, flame lamination is a process of applying an open flame to certain flexible materials creating a tacky surface for attachment to another material. -8- Young testified that VFM’s core business is the distribution of non-

metallic parts for the automotive industry. He stated the only manufacturing VFM

does is for thermal molding,2 which began in approximately 2011. Young said that

PSC has not done this type of molding in many years, and he was told it was an

area of business they were not interested in.

Young hired and trained a salesman, Jim Schlotterbeck

(“Schlotterbeck”), for PSC who took over as salesman for PSC’s TBA account

after Young became sales manager. In August 2016, Woodbridge, a Toyota

supplier located in Canada, sent a request to Schlotterbeck for some fabric they

needed. Young told Schlotterbeck to inform Woodbridge that PSC did not do that

type of work, but that VFM did. Schlotterbeck told the Woodbridge buyer to reach

out to Young. This led to an eventual contract with VFM. While Young was no

longer working for PSC by this time, Schlotterbeck still was. Schlotterbeck was

familiar with Woodbridge because they purchased large amounts of die-cuts3 from

PSC.

In addition to training Schlotterbeck, Young also trained his

management replacement at PSC, Parr. Parr previously worked in PSC’s

2 Thermal molding uses a machine to apply heat to a usually plastic material to cause it to accept the shape of a mold. 3 A die-cut is a two-dimensional item produced by the use of sharpened blades pressed through a material such as plastic or metal. -9- engineering department. In mid-2016, Young asked Parr for some assistance with

layout designs, known as CAD4 drawings. Parr supplied this information to

Young. Young asked Parr for assistance because he did not have the requisite

CAD program, and he also lacked the engineering background Parr had. Young

did not believe asking Parr for assistance was improper, as it did not involve any

business in which PSC was involved.

In 2018, Parr sent text messages to Young saying he had been

questioned about him and VFM. Young didn’t think it was any of their business,

as he had left PSC several years prior. Young stated that Parr told him, “I said I

didn’t know.” Young didn’t care what Parr had told them, as several of PSC’s

upper management were aware of VFM.

In 2019, Young sent PSC and Kamins a letter and a box of samples

from VFM to show them that VFM was not a competitor of PSC. The letter

directed them to VFM’s website, which laid out the scope of the business. Young

testified no one from PSC or PMC ever reached out to him in response.

Young conceded that he took VFM phone calls while he was

travelling for PSC business or while working for PSC. He testified this did not

take anything away from his normal job duties for PSC and was not any different

than taking a personal phone call during work hours. He further explained that his

4 Computer-aided design. -10- job as a salesman for PSC was not a normal 40-hour work week with a set

schedule. He often worked evenings and weekends and other odd hours.

According to Young, in November 2011 he made a full disclosure of

VFM and its activities to Osbourne, who was PSC’s president at the time. Young

insists he specifically told Osbourne about the flame lamination and the

distribution business VFM was doing. He did not recall if the name of the

company was disclosed.

Young further stated that at a management dinner in January 2015,

Kamins acknowledged to Young that he was aware of his side business. Young

recalled a heated conversation, because, while there were several management

members who did not approve of Young’s other business, Kamins did not state an

objection.

Throughout his testimony, Young was adamant that VFM was not a

competitor of PSC. He stated he never quoted a piece of business that PSC did.

He testified that VFM’s areas of business were areas that PSC did not do.

Specifically, regarding flame lamination, Young testified that not only did PSC

stop doing that business, but they also sold all their equipment that could do that

line of work.

PSC’s second witness was Thomas, who has been president of PSC

since April 2018. He occasionally worked with Young during his last few years

-11- with PSC. Thomas testified Young came back onto his radar in mid-2018 when a

general manager informed him that Young may have a competing business.

Thomas then looked up VFM’s website, and was “shocked” by what it showed, as

all the equipment shown in the video looked like PSC’s equipment. He stated he

had no idea Young was doing that type of work. Thomas informed the rest of the

executive team, who were all also surprised.

Thomas explained that PSC does, in fact, do distribution business and

sewing. He also stated that PSC “could have” made some of the parts shown on

VFM’s website; it would just take some modification to some of the machinery.

But Thomas confirmed that PSC discontinued flame lamination in 2003.

Thomas stated PSC sent a cease-and-desist letter to Young in July

2018. He also testified he saw the box of samples Young had sent to PSC. He

agreed that no one reached out to Young, as he saw no reason to do so.

Thomas stated that PSC’s suppliers and materials are considered

confidential information. He disagreed with Young that it is common practice to

refer customers to other suppliers if PSC cannot provide a particular item. If PSC

decides not to supply a part, he does not make a referral to anyone else.

Thomas recalled the January 2015 management dinner quite

differently than portrayed by Young. According to Thomas, Young informed

those at the dinner that he was retiring due to his health and to spend more time

-12- with his family. He claims Young never mentioned anything about VFM or any

distribution business.

Thomas told the salespeople at PSC that there is no line of business

that PSC is not interested in. He claimed it was the job of sales employees to bring

new business to them. On cross-examination by Young’s counsel, Thomas

acknowledged that PSC discontinued flame lamination, and he was unaware if

PSC did any toll-cutting5 for any automotive customers. He additionally conceded

that PSC did not do any sewing for the automotive industry prior to its acquisition

of Buckley in 2019. Buckley is a company that does textile cutting and sewing.

Thomas agreed that TBA was PSC’s largest automotive customer. He

was aware of the lawsuit PSC has now filed against TBA, in which they alleged

TBA conspired with Young to harm PSC. Thomas said he was unaware if TBA

will continue to do business with PSC. He was also uncertain if their sales

requests from TBA have changed in any way since the litigation was filed.

PSC’s next witness was Luke Stewart, who is PSC’s general manager

of the machinery technology division. He testified that the current presses PSC has

are used for die-cutting, but they have the capability to be converted into molding

presses. He said there has been no move to convert any of the presses, and to his

5 A toll process indicates a situation where one company creates items for another company with material supplied by the customer. Later in this Opinion a witness will explain this process more fully. -13- knowledge, they have only been used for die-cutting. He agreed that PSC

Fabrication, the division that did work for the automotive industry, did not have

sewing machines prior to 2019.

Christopher Hart (“Hart”), PSC’s Chief Financial Officer, was called

as PSC’s next witness. He reports directly to Thomas. He explained the profit

margins on certain items, as well as the process for PSC to invest in new

machinery. He stated that competition is a factor that influences profits. If there

are several competitors for a product, they must quote a lower price to be

competitive. If no one else is providing a product, they can quote a higher price

and make more profit.

Hart explained that Young had nothing to do with PSC’s recent

decline in sales. Several of PSC’s larger customers made changes to their

accounts. For example, one customer was bought by a larger company in China,

who already had suppliers, so they lost that account. Another customer began

buying directly from the manufacturer.

He agreed with Thomas’s testimony that Young informed them he

was retiring because he wanted to spend more time with his family. He claims

Young made no mention of another business. He further agreed that TBA was one

of PSC’s largest automotive customers.

-14- PSC’s Vice President of Human Resources, Flowers, testified next.

She is the one who oversees employee policies. She said that all employees must

sign an employment agreement, which includes a confidentiality agreement, as

well as an acknowledgment that they have received and reviewed the employee

handbook. A code of ethics is outlined in the handbook. The handbook

specifically directs that employees are to avoid any conflicts of interest. As

Flowers understood it, if Young or another employee was selling anything to a

current PSC customer that was not a PSC product, it was a conflict of interest. It

did not matter if Young and VFM were selling different products. Anything

involving the same customers was an inherent conflict of interest.

Flowers testified that Young signed all the same documents that every

other employee did. She claimed she had no knowledge of VFM until Thomas told

her about it in 2018. Flowers recalled that when Young left PSC, he was one of

the highest paid employees they had.

Flowers believed that while Young was a successful salesman for

PSC, his actions with VFM violated his employment agreement. She insists he

should have asked permission from the management at PSC to start VFM, even if

his goal was to help an existing customer of PSC.

Following Flowers’ testimony, PSC played the video deposition of

Downes. She works in the purchasing department of TBA, where she has been

-15- employed since 2009. Her primary contact with PSC was Young, until he was

promoted. The PSC salesman handling TBA’s account after Young was

Schlotterbeck, who reported to Young.

Downes said that, after several years of her doing business with PSC,

TBA needed a three-dimensional molded part. Schlotterbeck told her that PSC

was unable to make this part. After having a conversation with Young, he

informed her he could get that part for TBA. VFM did subsequently supply what

TBA needed. Downes stated that, while she knew Young worked with both PSC

and VFM, she didn’t know at the time that Young was an owner of VFM.

Downes explained that die-cut parts were two-dimensional, and she

got that type of parts solely from PSC. She recalled that VFM did not have the

cutting capability to make the two-dimensional die-cut parts, whereas PSC did not

have the machines to make the molded three-dimensional parts that TBA needed.

So, as a purchaser for TBA, she made requests to both companies, through Young,

depending on the type of part that was needed. Downes occasionally sent a request

for quotes (“RFQ”) to both companies if she was unsure which company could

provide the part. She stated that despite this, she did not consider VFM and PSC to

be competitors, because they supplied different types of parts.

Following Downes’ deposition, PSC played a video deposition of

Schlotterbeck. He is a sales representative of PSC and has held that position since

-16- 2010. Schlotterbeck traveled extensively with Young. When Young was

promoted, Schlotterbeck became responsible for the TBA account, and it was his

largest customer.

Schlotterbeck recounted a conversation between himself and Young,

when he asked Young how he could own a company that also sold automotive

parts while still working for PSC. Young replied that his company supplied

products that PSC did not, but he also indicated that it was a “don’t ask, don’t tell”

situation. Schlotterbeck followed that approach, as Young was his boss at the

time. Schlotterbeck believed that some of the key management members were

aware of VFM.

Schlotterbeck gave his understanding of VFM which was that it

mostly did distribution. He approached PSC about distributing some goods that

were requested by a customer, and he was told by a manager that PSC did not do

distribution work. Schlotterbeck remembered there were sales calls where he,

Young, and Downes were all on the line, and Downes would become confused as

to which company she was dealing with. She would occasionally send

Schlotterbeck emails that were meant for Young, so Schlotterbeck would forward

them to Young. Schlotterbeck believes there were a few occasions where both

PSC and VFM submitted quotes for the same part.

-17- Schlotterbeck told of the business opportunity that arose with a

Canadian company by the name of Woodbridge. Susan Kenney emailed

Schlotterbeck to inquire about a particular part using molded felt. Schlotterbeck

responded that PSC does not do molded parts, but he had a friend who owned a

company that did. He passed Young’s information on to her. This later led to a

contract between VFM and Woodbridge.

Schlotterbeck further stated that this led to conversations between him

and Young about the possibility of him “moonlighting” for VFM. No actual

agreement was reached, and nothing was ever written down, but they discussed

Schlotterbeck earning 2-3% commission on business Schlotterbeck brought to

VFM. This was to occur while Schlotterbeck was still employed at PSC.

Schlotterbeck was never paid anything by Young or VFM.

Schlotterbeck said the situation with Woodbridge was the only time

this type of event occurred. There were no other customers in which he

represented both VFM and PSC. He did not actually want to do much work for

VFM, as he was busy enough with PSC business. He insists that he never

attempted to get business for VFM from a company that was an existing customer

of PSC. He further said he did not refer any business from PSC to VFM. Since he

was paid a commission by PSC, it would have been directly against his own

interests to do so.

-18- Schlotterbeck considers VFM to be a competitor of PSC. He learned

through this case that there are some processes and products provided by both

companies. But he is not aware of any business that PSC lost to VFM.

Schlotterbeck has been told by management that PSC will do molding

and distribution. To his knowledge, PSC has not done this before, other than the

molded foam they quit doing before he began his employment with them. He was

told that if VFM went under, PSC should be ready to take over its molding

business. While he never heard anyone say that they wanted to put Young or VFM

out of business, he believed such inferences were made. He does not believe PSC

has purchased any equipment to do molding.

PSC’s next witness was Kamins. Kamins is the CEO of PMC. He

and his family own 95% of the company. PMC owns PSC, and approximately 75-

80 other companies around the world. Kamins meets with the PSC management

about seven to eight times a year at the Louisville headquarters. PMC will supply

the capital PSC requires when it needs new equipment or to build a new factory.

Kamins further testified he has total control over the company, and that is how he

wants it. He stated the board of directors only exists for when he dies, but until

that happens, he controls. He was the one who made the decision to file this

lawsuit, and he was the one who decided to dismiss PSC’s prior legal team after

the preparation of the Parr Affidavit.

-19- Kamins does not know Young well. He does know Osbourne well,

and he felt that Osbourne was a very valuable employee of PSC. It was Osbourne

who recommended Young be promoted to the position he held. Kamins stated he

was very surprised when Young told them he was going to retire. He remembers

being told that Young was dying of throat cancer and wanted to spend more time

with his family. Kamins thought it must have been a very serious health situation

to walk away from his salary and benefits that PSC was giving to him.

While Kamins admits he was aware that Young had a few small side

businesses, he was unaware that he was selling products to one of PSC’s

customers. He believed the side businesses merely consisted of an inherited

warehouse and a gas station. He became aware of VFM in 2018, when Thomas

brought it to his attention.

Kamins became visibly angry during his testimony when discussing

Young and VFM. PSC “wasted a lot of money on him while he established his

own empire.” He felt that Young cheated those employees who relied on him to

bring business to PSC.

Kamins further believed that PSC could make “anything.” PSC has a

lot of competitors, and he is not worried about VFM being a competitor. He stated

the issue was that Young was supposed to be spending his time working for PSC

and PSC only. It did not matter if VFM was competing with PSC or not. When

-20- you’re an executive, “you should be working twenty-four hours a day, seven days a

week.” An executive of a company should be “totally devoted” to the company.

When shown the box of samples Young sent to PSC, Kamins was unaware if they

were parts PSC made or not. He stated: “I don’t know what the hell they make.”

He referred to Young as a “crook” and a “thief.” The jury heard

Kamins say: “we’re paying for his devotion to our products and to our business,

and if he has a rejection over here, he goes somewhere else . . . he doesn’t spend

his time picking up the scraps we don’t want and building his own business while

we’re paying him.” He went on to state that Young was not the person who gets to

decide if PSC does a job or not. “Everything he finds should be brought to PSC,

and if PSC doesn’t want to do it, then they don’t do it. He doesn’t set up a

machine to do it himself in his garage.”

As far as Osbourne is concerned, Kamins had no complaints against

him. Kamins testified he only added Osbourne to the lawsuit to get him into court

to testify as to what he knew. Apparently, a subpoena would not suffice for this

purpose.

PSC’s next witness was Zeta Bouligaraki. She is a chemist with

PMC. She was unaware of Young’s side business. She remembered when Young

announced he was retiring, and it was because of health reasons. She was

surprised he would retire, because she could see him running the company one day,

-21- as he was very successful. As she is not really involved with PSC, she was unable

to testify as to the type of parts they did or did not make.

PSC’s next witness was Gary Kamins, via video deposition. Gary

Kamins is Kamins’ son and the president of PMC. He is also an officer and on the

board of directors for PSC. When PSC changed its management structure, they

decided on a trilateral team structure. There were three individuals who would be

equal and have different functions. Young would oversee sales, Bill Leurman

(“Leurman”) would control factories and operations, and Chris Hartman would

lead the finance department. Young was considered a valuable member of PSC.

His issue with VFM was the timing of it. He believes Young should not have been

quoting work for VFM while he was still employed with PSC, regardless of

whether the parts being sold by the companies were different.

PSC called Thian Choy Cheong (“Cheong”) to testify. He has many

roles with PMC Global, where he has been employed for 39 years. He is

additionally the secretary, treasurer, and assistant CFO6 of PSC. He was present at

a meeting in January 2015 on Kamins’ yacht in which the new management

structure was discussed. It was at this meeting that Osbourne strongly

recommended a management position for Young. He recalled Osbourne

mentioning Young had a “warehouse business.” He stated there was no discussion

6 Chief Financial Officer. -22- about distribution or selling automotive parts. Neither the name, VFM, nor any

customers were mentioned. Osbourne had retired as PSC’s president at the time of

this meeting. Cheong also recalls several other individuals, including Kamins,

being involved in this conversation.

As assistant CFO of PSC, he receives their financial statements. He

testified sales have been trending downward since about 2016. He also stated

Young has never been mentioned in any of the financial statements. He

understood Young to have been a successful salesman for PSC.

PSC then called Hawkins. Hawkins is 51% owner of VFM. She

keeps the books for VFM. Prior to 2009, neither she nor Young made much

money with VFM because VFM was not initially very profitable. Most of the

profits were distributed as compensation. They did not have a set salary because

sales and profits were unpredictable. Hawkins started working full-time for VFM

in 2009. Some of the most profitable years for VFM were 2014-2017, because

they did not have many employees. As the years went on, they were able to hire

more employees and offer more employee benefits, so the profit margins of the

company were lower. VFM currently has 12 employees.

The next witness, Parr, testified via video deposition. He began

working at PSC in 2006, and he held many positions over the years. In

approximately 2015 or 2016, he became global sales manager. His employment

-23- with PSC ended in August 2019. When Parr started working in sales, he was

trained by Young. Once he became global sales manager, he traveled extensively

with Young, including internationally. He and Young became close.

In 2016, PSC’s upper management, including Leurman, Thomas, and

Hart, all began to question what Young was doing. They had heard he had another

business. In 2017, there were discussions about PSC’s sales declining. He began

to hear rumblings that sales were down because Young was taking business away

from PSC. In Parr’s opinion there were a variety of reasons why sales were

declining, including PSC’s inefficiency in getting orders to customers.

In July 2017, Parr and others received a letter from Flowers, asking if

anyone had any information regarding Young and his activities. The letter told

them to hold on to that information and be prepared to present it. He was asked if

he believed Young and VFM were competing with PSC. Parr stated he did not

believe Young would do anything to intentionally harm PSC.

Parr was asked about the box of samples Young sent to PSC and

about VFM’s website. He was asked if those were things PSC could do. He

responded that they had the capability to do them, but they do not actually make

those parts.

In July 2019, Parr was asked to meet with the attorneys PSC had

originally retained for this action. Flowers and Thomas were also present at these

-24- meetings. He attended four to five meetings, all of which lasted multiple hours.

The final meeting was when he was asked to sign the Parr Affidavit. Parr was

presented with an affidavit and asked to sign. He requested to change some

statements in the affidavit, as he did not believe everything was accurate. Some

things were changed, and some were not. He was not allowed to take the “red-

line” version of the affidavit with him, as the lawyers told him it belonged to them.

Prior to signing the Parr Affidavit, Parr said he was promised

“asylum” and would be granted a “life raft” if he cooperated with them. He

believed he would be fired and added to the lawsuit if he did not sign the affidavit.

Thomas told him at one point that the FBI was investigating Young. He does not

believe the affidavit was accurate in its final form.

There were several audio files played during Parr’s deposition, which

were recorded during the meetings with PSC’s prior counsel. There is a reference

to “immunity” made in one audio clip. Another clip mentions taking care of his

family. Parr explained that he was unaware these meetings were recorded. No one

informed him of this at the time or asked for his permission.

After he signed the Parr Affidavit, there was another meeting in the

PMC conference room. Kamins was present at this meeting. Kamins told Parr that

they needed to solve this case, and he knew Parr knew something because he

traveled with Young so often. Kamins stated that if Parr really did not know

-25- anything, then he was stupid, and if he was that stupid, maybe that is why their

sales are down, because he was too stupid to grow a business. Parr testified that

Kamins then threatened to come after him and his family. Parr was terminated by

PSC in August 2019, less than three weeks after he signed the Parr Affidavit,

despite the discussions of protection if he signed the affidavit.

Parr testified that both Osbourne and Mike Mattingly, also with PSC,

knew about VFM. He believed the type of work VFM was doing was different

than what PSC was doing, at least at that time. Parr said there was never any

agreement between him and Young regarding any type of employment or

arrangement with VFM. There was one instance where Parr received a finder’s fee

from someone and that was from Bill Yarbrough (“Yarbrough”) through his

company, not from Young or VFM.

In early 2016, Young requested Parr assist him with CAD drawings.

Parr stated he had the AutoCAD program on his computer from his time as an

engineer. He understood the information was for VFM, not PSC. He stated he did

not question the reason at the time, because Young was his boss when this request

was made. He was unable to discern from the drawings themselves whether the

final part would be two-dimensional or three-dimensional. If it was two-

dimensional, it would have been in competition with PSC. If it was three-

dimensional, it would not have been a part PSC would make.

-26- PSC’s next witness was Leurman. He worked for PSC for

approximately twenty years, with his highest rank being that of Chief Operating

Officer (“COO”). He became COO when Osbourne retired. He and Osbourne did

not really get along. According to Leurman, Osbourne never said anything about

Young having another business. Leurman said he first learned about VFM in

2018, but he recalled rumors prior to 2018 about Young having a competing

business.

Leurman did not really care for Young. He believed Young had an

ego problem. It was his understanding that he and Hart would be the management

team. He did not think Young was included in the management structure.

Osbourne was next to testify. He began working for PSC in 1971, and

he was president from 2010-2013. Afterwards, he acted as a consultant and

officially retired at the end of 2014.

In November 2011, Osbourne recalled he and Young having a

conversation at a “deer camp.” It was then that Young informed him of the

distribution business he was doing with TBA. He additionally informed him of the

flame lamination he was doing, as PSC had withdrawn from doing that business.

He testified he was not concerned with what Young was doing. Young told him

his business was not competing with PSC, and Osbourne believed him.

-27- Osbourne testified he informed Buck Thacker (“Thacker”) about

Young’s business. When he disclosed this to Thacker, he was president and

Thacker was the CEO of PSC; there was no one higher than him to report to. He

also stated that “everyone” knew about Young’s warehouse business.

Osbourne was unaware at the time that Young had a molding press.

Osbourne had testified in his prior deposition that, had he known this, he would

have fired Young. In his trial testimony, Osbourne relented and said that it would

have been a reason to fire Young, but he probably would not have because Young

was too valuable to PSC.

Additionally, Osbourne stated the molding VFM was doing was not

an area PSC would be interested in, because the molding takes too long to be

profitable. Osbourne insisted that, despite the allegations in the complaint against

him, he never received anything from VFM or Young.

PSC’s final witness was its financial expert, John Bone (“Bone”).

Bone is a forensic accountant and regularly testifies regarding financial damages.

He offered his opinion on Young’s unjust enrichment based on the claims of

misappropriation of trade secrets and breach of fiduciary duty. He testified that for

the sake of his analysis, he assumes the jury would find in favor of PSC and

against Young, but he was clear that those assumptions were made solely for his

-28- calculations. He gave no opinion on whether Young breached a duty or

misappropriated anything.

He determined that if there was a breach of fiduciary duty on the part

of Gary Young, then the unjust enrichment subject to disgorgement would be $4.8

million. If the jury were to find misappropriation of trade secrets, $1.6 million

would be the appropriate award of damages. Bone explained that if the jury found

Young liable for both claims, there would be some overlap in those numbers. It

would not be appropriate to add the figures together, as that would lead to double

damages. Bone calculated the total amount of damages if the jury found in favor

of PSC on both claims to be $4.95 million.

Bone testified under cross-examination that the damages amount

included income from VFM to Hawkins, who is not a party to the lawsuit. Some

of the damages also necessitated a finding that Osbourne breached his fiduciary

duty to PSC. He further stated if the jury only found Young liable on some of the

trade secret appropriation or breach of fiduciary duty claims, the full amount of

damages would not be accurate.

At the completion of Bone’s testimony, all Defendants made the

appropriate motions for direct verdict, which were denied. After a break, the

parties returned informing the circuit court that they had reached an agreement as

to Osbourne. Plaintiffs agreed to dismiss the case against him. After all, Kamins

-29- had stated that the only reason he was sued was to find out what he knew.

Apparently, his testimony satisfied Kamins.

Young then began calling his witnesses. His first witness was George

Heuser (“Heuser”). He is a retired materials manager of PSC, where he worked for

46 years. Heuser testified PSC’s fabricating department’s primary business was

die-cutting two-dimensional parts. PSC stopped doing flame laminate in the late

1990s. He stated that 90% of what PSC sold was fabricated in-house. The

remaining 10% were distribution items that were distributed for certain customers.

Heuser testified distribution items were usually for a customer that wanted to

consolidate suppliers, so they were willing to pay more for the convenience. He

further stated that PSC was less likely to do distribution with automotive goods

than other goods, because in the automotive industry, much of what they sell is

visible to the customer. It had to be clean and free of any defects. He explained

that when the product is not yours, you have less control over the quality. They

did not want to be in the middle if a customer had an issue with a part.

He talked about a certain part that had been discussed by several

previous witnesses, in which both VFM and PSC gave quotes to TBA. PSC

quoted the part with different material than requested; VFM was able to quote it

with the requested material. Heuser testified PSC had been unable to find adequate

quantities of the requested material domestically. He stated if PSC had been able

-30- to get enough of the material, they could have quoted and completed the job as

requested by TBA.

Heuser additionally explained the process of toll-cutting, and why

PSC did not engage in this business. This method was used when a customer

would send in their material. A company would die-cut it in the requested way,

and then it would be sent back to the customer. He stated the company does not

own the material and therefore cannot mark up the price of the material. This

process means the company can only charge for the labor, which is not profitable

enough for a large company such as PSC.

Heuser said PSC did not do sewing for automotive customers. He

believed there was a division that did sewing for some HVAC7 customers, but he is

unsure if the same machines could be used for automotive sewing. When asked

about molding, Heuser stated PSC could not be profitable doing molding, because

the process takes so much longer. He stated molding presses make about one part

per minute. PSC’s die-cutting machines cut 400-1000 pieces per minute.

Young next called Pat Lyvers (“Lyvers”) to testify. He previously

worked at PSC from 2015-2016 as the lead estimator. His job was to review

quotes and make sure they met the customer’s standards. He testified that PSC did

not give any quotes on molded parts while he was there. He further stated it was

7 Heating, ventilation, and air conditioning. -31- “frowned upon” to do distribution work at PSC. He clarified that PSC wanted to

have value added to a part, rather than simply have a part “pass through” PSC.

Lyvers stated multiple people at PSC told him that PSC was moving away from

distribution work and did not seek it out.

Lyvers left PSC to work at VFM. Young told him VFM did not

directly compete with PSC, as he did not want to work with them if they were a

competitor. After working for both companies, he does not believe that VFM is in

competition with PSC. VFM did not have a die-cutting press when he started at

VFM, which was in August 2016. VFM did later acquire one. Lyvers is no longer

employed with VFM.

Young’s next witness was David Johnson (“Johnson”). He worked in

sales at PSC for 45 years. When he began in 1973, PSC was a small company. He

was terminated at the end of 2017. Johnson believes Nissan was PSC’s first

automotive customer, which is business he obtained for PSC.

Johnson knows Young and has known him since Young started at

PSC. Johnson believes Young was a very effective salesman for PSC. He thinks

Young brought in Toyota as a customer. On several occasions, Johnson took

business opportunities to PSC, and PSC turned them down. Johnson stated that

when PSC stopped doing the flame lamination, it drastically impacted one of his

clients. This resulted in PSC losing that customer.

-32- Johnson recalled PSC doing distribution work for two customers.

One of these customers was Nissan, and PSC did distribution work for them as a

favor, because they did millions of dollars of business with PSC. PSC did

distribution work for only a short period of time for the second customer, but it

stopped doing so. PSC ended up losing this business, and Johnson believes this is

the reason. He further stated there was never any discussion of PSC expanding its

distribution business. Johnson said there was no sewing business while he was

there.

Joseph Evans (“Evans”) testified next. He is the general manager of

Seal Methods (“SMI”), which is a converter fabricator company in California. He

knows Young because they were on an advisory board together. SMI and PSC are

competitors. Even so, they attempted to partner together for a joint venture in

China, which was ultimately unsuccessful.

Evans became aware of VFM after Young left PSC when Young

reached out to him to buy some tape from SMI. SMI still supplies this tape to

VFM, but that is the only product. Evans has been to both PSC and VFM’s

facilities. He does not consider them to be competitors, as they supply different

products.

In addition to the tape VFM purchases from SMI, SMI was an initial

investor in VFM’s Mexico facility and owns an interest in it. He stated if VFM

-33- were to go out of business, SMI would lose its initial investment, but it would not

impact their business. PSC and SMI have never been customers of one another.

Young’s next witness was Yarbrough, who testified via video

deposition. Yarbrough is the founder of Yarbrough Technical Associates, Inc.

(“YTA”). YTA is a manufacturers’ representatives’ organization. Essentially,

YTA connects suppliers and customers. YTA did some business for PSC. He met

Young through his work with PSC, although he did not work directly with Young.

YTA has also worked with VFM, although not until after Young

retired from PSC. Yarbrough has seen both PSC and VFM factories, although he

conceded he only saw PSC’s Louisville facilities. As part of his work with YTA,

Yarbrough likes to be very familiar with what the core competencies are of the

businesses he represents. He did not believe VFM and PSC were direct

competitors.

Yarbrough worked with Parr on several occasions while Parr was with

PSC. He recalled one instance where he sent information to both PSC and VFM

regarding a lead, although he does not believe either company submitted a quote.

Parr received a finder’s fee from YTA on one instance where Parr assisted

Yarbrough in finding a supplier for a part for GE when PSC was unable to meet

the specifications of GE. This led to a contract between GE and the other supplier,

-34- which was not VFM. There was never any other agreement or payment between

Parr and YTA.

Young then testified again on his own behalf. Young stated he

attempted to pursue new lines of business for PSC while he was employed with

them. He encouraged PSC to do molding on several occasions, and he was told

that PSC was not going to do it.

Young had developed many business relationships over the years, but

he has never used those relationships to gain business for VFM. Other than TBA,

there is only one customer of PSC that VFM does business with, and that company

reached out to him several years ago.

Young stated the lawsuit has been incredibly stressful for him and

Hawkins. Instead of focusing on their business, they are focused on the lawsuit.

He testified that their legal fees are taking much of VFM’s profits, so he and

Hawkins are not getting paid much so they can continue to pay their employees.

He stated VFM has paid $798,000 in legal fees prior to the start of the trial.

PSC then recalled Flowers in rebuttal. She testified mostly regarding

the Parr Affidavit. She stated it was PSC’s prior counsel who drafted the affidavit.

She was present for the interviews with the employees. Many employees were

interviewed, not just Parr. Parr did have more and longer interviews because he

was not forthcoming at first, and he had traveled and been involved frequently with

-35- Young. She reviewed the Parr Affidavit after he signed it, and she believes it

accurately reflects what he stated in his interviews. She had no reason to believe

anything in the affidavit was false. She agreed that Parr asked for changes to the

affidavit, and she believed those edits were made.

On the last day of the trial, Young called Rich Norris (“Norris”) as his

final witness. He is the Vice President of Purchasing at TBA, where he has been

employed for 14 years. He was promoted to his current position three years ago.

PSC is TBA’s largest supplier of die-cuts. He does not recall an instance where

PSC has provided roll goods to TBA. VFM also supplies parts to TBA, mostly roll

goods and molded items. He testified that VFM has supplied TBA with some die-

cuts, mostly floor insulators. PSC has also supplied floor insulators to TBA. He

believes the floor insulators VFM supplies were distributor items, while PSC die-

cuts their own.

Norris is very familiar with Downes. He testified she was incredibly

loyal to PSC. She sent PSC all their die-cut business, even though she was

encouraged to send RFQs to other companies as well, as they like to have

competition between companies.

After this litigation commenced, there was a meeting between himself

and Thomas. There was a discussion about a potential lawsuit between the

-36- companies. Norris testified that Thomas requested that Downes be fired. Norris

said that, while it was considered, TBA ultimately decided not to fire Downes.

PSC has filed an arbitration suit against TBA. They have alleged

TBA assisted Young in breaching his fiduciary duties to PSC through the actions

of Downes. Norris testified the current relationship between the companies is “not

great.” In addition to PSC suing them, Norris stated PSC has unilaterally raised

prices in a way that is not consistent with their contract. He also stated their

delivery and quality has had some issues recently. He then testified TBA has a

good relationship with VFM.

PSC then called Thomas in rebuttal. He acknowledged the meeting

between him and Norris, but he denies requesting that Downes be fired. It was his

understanding from the meeting that TBA intended to fire her. He stated his

intention for the meeting was to make sure they were all operating on a “level

playing field.” Thomas also wanted to be sure TBA was aware of everything PSC

could do for them, as he believed Young had told several customers that PSC did

not provide goods or services that they do.

At the conclusion of all the evidence, the counterclaim defendants

made a proper motion for a directed verdict, which the circuit court denied. The

jury deliberated for approximately seven hours before returning with a verdict. As

to the direct claims PSC pursued against Young and VFM, the jury ruled in favor

-37- of Young as to all claims of misappropriation of a trade secret. It likewise found in

Young’s favor regarding the breach of employment agreement claim. The jury

ruled, however, that Young did engage in conduct that breached his fiduciary duty

of loyalty to PSC. They found VFM did not aid and abet Young’s breach of duty,

and therefore apportioned 100% of the awarded damages for the breach of duty

claim to Young. The jury awarded damages in the amount of $100,713.50 to PSC.

It found in favor of Young and VFM on the unjust enrichment claims. The jury

did find that VFMI had been unjustly enriched at PSC’s expense because of the

expenses PSC paid for Young for a trip used at least partially for other business

opportunities. The jury awarded PSC damages for this claim in the amount of

$3,400.00. The jury also found that Young engaged in fraudulent concealment, but

they found no damages on this claim.

Regarding the factual statute of limitations questions, the jury

determined that Young made a full disclosure to Osbourne in 2011. It also found

that no damages they awarded to PSC on its above claims were based on actions

taken after August 3, 2013. The jury also determined that PSC had not established

that Young or VFM acted in reckless disregard for the rights or property of PSC,

and therefore it awarded no punitive damages.

As to the counterclaims, the jury found that all counterclaim

defendants engaged in an abuse of process regarding the Parr Affidavit. It

-38- apportioned 70% of the fault to Kamins, and 7.5% to each of the remaining

counterclaim defendants. They further found that PSC, PMC, and Phil Kamins

engaged in abuse of process with respect to the initiation of the litigation. The jury

apportioned 80% of fault to Kamins, and 10% each to PSC and PMC. The jury

awarded Young and VFM $498,780.00 in damages. The jury determined that

PSC, PMC, and Phil Kamins acted with fraud, oppression, or malice, and therefore

awarded Young and VFM punitive damages in the amount of $653,636.38.

The circuit court entered judgment in accordance with the jury’s

verdict. Based on the jury’s finding that Young made a full disclosure in 2011, the

statute of limitations barred recovery of damages other than the $3,400 damages

awarded on the travel expenses related claim. As a result, the circuit court

judgment was entered in Young’s favor on the breach of fiduciary duty claim.

This appeal and cross-appeal follow.

ANALYSIS

2022-CA-1166-MR

Appellants contend the circuit court made multiple errors that entitle

them to relief. First, they claim the abuse of process judgment must be vacated as

a matter of law. They also argue the court erred in its conclusion that PSC’s claim

for breach of fiduciary duty was time-barred based on the finding of the jury.

Finally, they claim the damages the jury awarded to PSC are inadequate and were a

-39- product of prejudice against PSC. We will analyze these purported errors one at a

time.

I. Abuse of Process Claim

Appellants’ first claim of error is that the abuse of process of claim

must be vacated because Appellants’ actions cannot constitute abuse of process.

Appellees claim two actions of Appellants met the criteria for abuse of process, the

filing of the litigation and the filing of a false affidavit. Appellees claim

Appellants filed the suit for the improper purpose of destroying and bankrupting

both Young and VFM. They claim Appellants engaged in coercion and bribery to

solicit the perjured Parr Affidavit to influence testimony and not only gain an

advantage in the lawsuit but also as part of a process to destroy Young and VFM –

not just achieving appropriate compensation in the suit. The jury found in favor of

Appellees on both claims of abuse of process. We will analyze each allegedly

abusive action individually.

The Appellants made the same arguments in their motion for

summary judgment, their motion for directed verdict, and their motion for

judgment notwithstanding the verdict (“JNOV”). “In reviewing a trial court’s

denial of a motion for directed verdict, all ‘evidence which favors the prevailing

party must be taken as true and the reviewing court is not at liberty to determine

credibility or the weight which should be given to the evidence.’” McDonald’s

-40- Corp. v. Ogborn, 309 S.W.3d 274, 294 (Ky. App. 2009) (emphasis in original)

(citing Humana of Kentucky, Inc., v. McKee, 834 S.W.2d 711, 718 (Ky. App.

1992)). To justify presenting a claim to the jury, the circuit court must conclude,

as a matter of law, that the evidence was sufficient to support the elements of the

claim. Id. at 293.

“The essential elements of an action for abuse of process are (1) an

ulterior purpose and (2) a willful act in the use of the process not proper in the

regular conduct of the proceeding. Some definite act or threat not authorized by

the process, or aimed at an objective not legitimate in the use of the process is

required and there is no liability where the defendant has done nothing more than

carry out the process to its authorized conclusion even though with bad intentions.”

Simpson v. Laytart, 962 S.W.2d 392, 394-95 (Ky. 1998) (citations omitted). See

also Sprint Communication Co., LP v. Leggett, 307 S.W.3d 109 (Ky. 2010)

(summarizing the history of the abuse of process tort in Kentucky).

We agree with Appellants that the filing of a lawsuit on its own is not

enough to sustain a claim for abuse of process. Even assuming their motive was to

bankrupt and “destroy” Young and VFM, this fails to satisfy the second prong of

the claim. Young and VFM could not establish that PSC’s initial filing of the

lawsuit was a willful act not proper in the regular course of such a proceeding. We

-41- must remember that PSC had legitimate claims to be litigated against Young and

VFM.

“Kentucky courts have declined to find that a plaintiff has stated a

claim for abuse of process where the defendant has done nothing more than file a

lawsuit that lacked any legal basis for the purpose of retaliation.” Kinslow v. Fifth

Third Bank, Inc., 529 F. App’x 467, 473 (6th Cir. 2013). The abuse of process

claim was submitted to the jury with specific reference to the filing of the

Complaint. This error requires us to vacate the judgment of abuse of process based

on the filing of the suit by PSC. Because we find that action alone cannot meet the

requirements of an abuse of process claim, we need not evaluate the statute of

limitations question regarding the filing of the lawsuit.

By contrast, when we examine the Appellants’ actions regarding the

Parr Affidavit, a different picture emerges. Here, there is an action involving the

process of a suit which could be found to be wrongful, and in this case, the jury did

just that.

[T]he gist of [abuse of process] is not commencing an action or causing process to issue without justification, but misusing or misapplying process justified in itself for an end other than that which it was designed to accomplish. The purpose for which the process is used, once it is issued, is the only thing of importance . . . . The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a -42- threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the issuance or any formal use of the process itself, which constitutes the tort.

Flynn v. Songer, 399 S.W.2d 491, 494 (Ky. App. 1966) (quoting Prosser on Torts

(3d ed.) § 115, pp. 876-77). The jury in this instance found all counterclaim

defendants liable for abuse of process regarding the Parr Affidavit. We agree with

the circuit court that there was enough of a factual issue to allow that claim to go to

the jury.

The jury heard Parr’s testimony of the hours-long interrogations he

was subjected to by PSC’s previous lawyers along with Thomas and Flowers. Parr

spoke of the disturbing conversations taking place at the lawyers’ offices,

including promises of “immunity,” “asylum,” and a “life raft.” Parr testified the

final affidavit did not have all his requested changes and that it was not “accurate.”

Parr felt that if he did not sign the affidavit, he would be terminated

and sued. He was fired anyway. Parr said Kamins all but confirmed this after the

signing of the affidavit, when he told him he would come after him and his family

if he did not help them with the case. An audio clip from one of these interviews

was played for the jury, in which Thomas is heard saying “Mr. Kamins wants

anyone associated with this to be hung from the highest tree.” This testimony,

coupled with the testimony of Phil Kamins himself, was sufficient evidence of a

willful and wrongful act in the process of the suit. -43- At this juncture we reject the complaint about evidence of other

litigation tactics. Such evidence was inextricably intertwined with the course of

this suit and showed a contemporaneous and improper intent and motive for the

use of the Parr Affidavit.

This affidavit was presented to the circuit court to support

Appellants’ amended complaint to add more counts against Young. But it was also

to be used as evidence as to why the court should grant a motion for an injunction

to prevent Young from having any contact with employees of PSC and to stop

competing with PSC. The injunction request could have been seen by the jury as

part of an effort to shut down Young and VFM before any liability could be

established through this protracted litigation, an effort largely unsuccessful when

the jury’s ultimate verdict against Young and VFM is examined.

The record includes evidence that this use of the process in the suit

was part of an ulterior purpose far beyond simply seeking an amended complaint

and a proper temporary injunction. It was a step toward the expressed intention of

destroying Young and VFM regardless of establishing legal liability. Young and

VFM presented sufficient evidence to support the jury’s finding. “[T]his Court

will not usurp the prerogative of the jury to believe a witness or set of witnesses, as

opposed to another set of witnesses, and will not disturb the jury’s verdict.” Rojo,

Inc. v. Drifmeyer, 357 S.W.2d 33, 35 (Ky. 1962).

-44- Appellants’ next argument is that the abuse of process counterclaim is

barred by the Noerr-Pennington Doctrine. The Kentucky Supreme Court

explained this doctrine in Seiller Waterman, LLC v. Bardstown Capital

Corporation, 643 S.W.3d 68 (Ky. 2022). The doctrine arises from two cases in

which the United States Supreme Court held “there could be no violation of the

Sherman Act based on attempts to influence the passage or enforcement of certain

laws.” Id. at 75. Thus, there could be no liability under antitrust laws “for actions

taken when petitioning authorities to take official action, regardless of the motives

of the petitioners, even where the petitioning activity has the intent or effect of

depriving another of property interests.” Eaton v. Newport Bd. of Educ., 975 F.2d

292, 298 (6th Cir. 1992). As outlined in Seiller, Kentucky courts have also applied

the doctrine to zoning cases. See Grand Communities, Ltd. v. Stepner, 170 S.W.3d

411 (Ky. App. 2004). Whether this doctrine applies is a matter of law, and we

review “the application of the law to the facts and the appropriate legal standard de

novo.” Kimbler v. Arms, 102 S.W.3d 517, 522 (Ky. App. 2003).

All Kentucky cases citing the Noerr-Pennington doctrine had

government agency involvement in some way. Other jurisdictions have applied

the doctrine to private litigation, and “although originally developed in the antitrust

context, the doctrine has now universally been applied to business torts.” IGEN

Int’l, Inc. v. Roche Diagnostics GmbH, 335 F.3d 303, 310 (4th Cir. 2003). Despite

-45- this application, it would be illogical to claim that the doctrine applies to every

aspect of an abuse of process claim, as that would eviscerate the claim.

As we have already determined, the filing of the lawsuit in this

instance cannot be enough to sustain a claim for abuse of process, so we need not

analyze whether the Noerr-Pennington doctrine applies to that portion. We must

analyze only the doctrine’s application to the preparation and filing of the Parr

Affidavit seeking injunctive relief. We do not believe this type of action is the sort

of activity the doctrine was meant to protect.

While filing petitions in court to protect business interests is a

constitutionally protected activity, we do not believe the act of coercing a false

affidavit from a witness is or should be protected in purely private litigation

between companies. The Appellants have pointed to no precedent where this type

of behavior was protected outside the realm of antitrust suits, the area of law

originally covered by the Noerr-Pennington doctrine. We decline to extend the

doctrine to immunize this behavior in Kentucky.

Appellants further claim the circuit court erred in its jury instructions.

They argue the instructions given were inadequate because they did not define the

terms “ulterior and improper purpose” and “use of the process not proper in the

regular conduct of the proceedings.” They believe these terms are confusing and

not readily understood by lay jurors, and they therefore should have been defined

-46- further. “Alleged errors regarding jury instructions are considered questions of law

that we examine under a de novo standard of review.” Hamilton v. CSX Transp.,

Inc., 208 S.W.3d 272, 275 (Ky. App. 2006).

Kentucky has long followed the “bare bones” approach to jury

instructions. “Our approach to instructions is that they should provide only the

bare bones, which can be fleshed out by counsel in their closing arguments if they

so desire.” Cox v. Cooper, 510 S.W.2d 530, 535 (Ky. 1974). The terms at issue

here are not so confusing that a lay juror would have difficulty understanding

them. Appellants had the opportunity during closing arguments to add detail to

these instructions regarding the terms, and in fact, did just that. Defining terms

which can and should be reasonably understood by jurors would have been error.

See McKinney v. Heisel, 947 S.W.2d 32 (Ky. 1997). We do not believe the circuit

court erred in its instructions to the jury.

Appellants’ final contention of error is that the counterclaim award is

not supported by the evidence. Their argument is two-fold; first, they argue no

reasonable juror could conclude there was knowledge that the Parr Affidavit was

false, and second, they claim there was insufficient evidence to support the amount

of damages awarded.

The first issue is a factual finding by the jury. “The standard for

reversing jury verdicts is admittedly high,” and one should not be disturbed if

-47- supported by substantial evidence. Shreve v. Biggerstaff, 777 S.W.2d 616, 618

(Ky. App. 1989). “Substantial evidence is evidence that a reasonable mind would

accept as adequate to support a conclusion and evidence that, when taken alone or

in the light of all the evidence, has sufficient probative value to induce conviction

in the minds of reasonable men.” Moore v. Asente, 110 S.W.3d 336, 354 (Ky.

2003).

We believe there was substantial evidence for the jury to find that the

Appellants knew portions of the Parr Affidavit were false. While Flowers testified

that she believed Parr’s affidavit accurately reflected what he said in his lengthy

interrogation, Parr testified otherwise. Parr stated both Flowers and Thomas were

in those long meetings where he went back and forth with PSC’s prior counsel

about the statements within the affidavit. Parr testified both were present when he

was presented with and told to sign the affidavit.

Parr also testified that when he created his Statement of Facts prior to

signing the affidavit, he gave it to Thomas. When he attempted to make changes to

the affidavit, it was Thomas who told Parr that he was “just playing with the

words.” Additionally, Norris testified that Thomas told him “in a roundabout way”

that they wanted to put VFM out of business, which would not be just to seek

appropriate damages in the lawsuit.

-48- While Parr testified that Kamins did not make the threat to him until

after he had signed the affidavit, it is still a reasonable conclusion that Kamins was

aware of what was occurring before and during this time. Thomas told Parr that

“Mr. Kamins wants anyone associated with this to be hung from the highest tree.”

In Kamins’ own testimony, he stated he was the one who had complete control

over everything. He made the decision to file the lawsuit and the decision to hire

new legal counsel.

Again, while the testimony was conflicting, it is within the province

of the jury to decide who to believe and disbelieve. “As a court of judicial review,

this Court cannot substitute its judgment for that of a jury.” Humana, Inc. v.

Fairchild, 603 S.W.2d 918, 922 (Ky. App. 1980).

The second issue is the award of damages. Appellants claim there

was insufficient evidence to justify the award of damages. While the jury

instructions differentiated between the two activities that were claimed to

constitute abuse of process, it did not separate the damages. Because we have

vacated the judgment of abuse of process regarding the filing of the lawsuit as a

separate claim, we must vacate and remand the award of damages for the abuse of

process claim, because it cannot be determined what damages are applicable to the

abuse of process related to the Parr Affidavit. Upon remand, damages must be

determined anew.

-49- II. Statute of Limitations Bar on Breach of Fiduciary Duty Claim

Appellants argue the circuit court’s ruling that the breach of fiduciary

duty claim was time-barred was in error. First, they claim the jury’s finding that

Young made a full disclosure to Osbourne was not supported by the evidence.

Again, all the evidence in this action was testimonial and contradictory. “[W]here

there is a direct conflict in the evidence, then the weight of the evidence and the

credibility of the witnesses are functions peculiarly within the province of the jury,

and the jury’s determination will not be disturbed.” Jones v. Commonwealth, 281

S.W.2d 920, 922 (Ky. 1955).

Appellants claim that because the jury found that Young had breached

his fiduciary duty to PSC, their finding that he had made a full disclosure in 2011

was contradictory. This is not necessarily so. The jury instructions regarding

breach of fiduciary duty contained a list of actions that could have constituted a

breach, and the jury only had to find that Young had engaged in one of those

actions to have breached his duty. The instructions did not require the jury to say

which activity they believed Young had engaged in to breach his duty to PSC.

The Appellants’ argument assumes that the jury found Young and

VFM had competed with PSC, but we do not know if that was, in fact, the jury’s

finding. The Appellants continue to state Young directly competed with PSC and

that this was the reason for the lawsuit, but Kamins’ testimony indicated that he did

-50- not care if Young was competing with PSC. His testimony also made it clear that

he didn’t know what type of parts PSC produced. We decline to disturb the jury’s

finding that Young made a full disclosure in 2011.

Appellants’ next argument is that the circuit court erred in treating the

jury’s finding of full disclosure as fatal to their breach of fiduciary duty claim. The

ultimate issue of whether an action was timely filed is a question of law for the

court. Zapp v. CSX Transp., Inc., 300 S.W.3d 219, 221 (Ky. App. 2009).

Questions of law are reviewed de novo. Ford Motor Co. v. Jobe, 544 S.W.3d 628,

631 (Ky. 2018).

The statute of limitations for a breach of fiduciary duty claim is five

years. Middleton v. Sampey, 522 S.W.3d 875, 878 (Ky. App. 2017). KRS8

413.120(6). PSC filed its lawsuit on August 3, 2018, so any claims regarding a

breach of fiduciary duty would have had to occur after August 3, 2013, to award

PSC damages. PSC makes two arguments. First, they argue the tolling statute

applies because the jury determined Young engaged in fraudulent concealment.

Second, they argue the jury could have made the finding that some of Young’s

wrongful activities occurred after the August 2013 statute of limitations deadline.

Neither argument has merit.

8 Kentucky Revised Statutes. -51- PSC references Kentucky’s tolling statute to support their claim that

Young’s breach was not time-barred. KRS 413.190(2) states:

When a cause of action mentioned in KRS 413.090 to 413.160 accrues against a resident of this state, and he by absconding or concealing himself or by any other indirect means obstructs the prosecution of the action, the time of the continuance of the absence from the state or obstruction shall not be computed as any part of the period within which the action shall be commenced. But this saving shall not prevent the limitation from operating in favor of any other person not so acting, whether he is a necessary party to the action or not.

PSC argues that because Young had an affirmative duty to disclose

his actions as a fiduciary of PSC, the statute of limitations is tolled, and therefore

PSC is entitled to the damages the jury awarded them. But the jury instructions

specifically dealt with this issue. While the jury did find that Young engaged in

fraudulent concealment, they also found that he made a full disclosure about VFM

to Osbourne in 2011. The jury instructions did not require the jury to specify when

they believed the fraudulent concealment occurred. It naturally follows then, that

the jury found an act of fraudulent concealment on Young’s part occurred prior to

2011 or about something other than the existence of VFM, which was disclosed.

PSC laid out three specific actions on which the jury could base

damages which occurred after August 2013. These were reflected in their

proposed jury instructions and in the court’s final instructions which were

-52- presented to the jury. In the statute of limitations instruction, one of the questions

read:

If you found that PSC proved its claim for breach of fiduciary duty against Young and/or aiding and abetting fiduciary duty against VFM under Instructions 7 or 8, how much, if any, of the damages you awarded PSC for those claims was based on the Woodbridge opportunity, the HTNA die cut parts information, and/or travel expenses incurred by Young after August 3, 2013?

The jury answered “$0” in response to this instruction. Again, it

follows that the damages they awarded to PSC for breach of fiduciary duty were

for actions that occurred prior to August 2013 and are therefore time-barred. PSC

proposed the instructions that included these specific areas of possible recovery.

Counsel for the parties and the circuit court held a lengthy discussion about these

instructions. If they wanted to include other possibilities, the time to do so was

during the conversation on the jury instructions. Failure to raise an objection to the

circuit court regarding jury instructions waived any error. CR9 51(3); Gibson v.

Fuel Transport, Inc., 410 S.W.3d 56, 61-62 (Ky. 2013).

III. PSC’s Awarded Damages

PSC’s final contention of error is that the damages awarded by the

jury are inadequate and appear to have been the product of passion or prejudice

against them and in disregard of the evidence and/or the jury instructions. They

9 Kentucky Rules of Civil Procedure. -53- claim the circuit court erred in failing to grant them a new trial based on the

inadequate damages award. A jury verdict “will not be disturbed for inadequacy of

damages unless it is so small and disproportionate as to strike the mind at first

blush as being the result of passion, prejudice or mistake.” Simms v. Scott, 346

S.W.2d 18, 20 (Ky. 1961).

Whether to grant or deny a new trial for an allegedly excessive verdict lies within the discretion of the trial court. However, the amount of damages is a dispute left to the sound discretion of the jury, and its determination should not be set aside merely because the court would have reached a different conclusion. Instead, their decision should be disturbed only in the most egregious circumstances. Courts must refrain from disturbing the jury’s assessment of damages if the verdict bears any relationship to the evidence of loss suffered. And once the issue [of excessive damages] is squarely presented to the trial judge, who heard and considered the evidence, a reviewing court on appeal cannot substitute its judgment on excessiveness for [the trial judge’s] unless clearly erroneous.

Asbury Univ. v. Powell, 486 S.W.3d 246, 264 (Ky. 2016) (internal quotation marks

and citations omitted).

With these standards in mind, we decline to overturn the jury’s

verdict. While PSC asked for damages in the millions, the jury awarded them just

over $100,000. PSC claims the only explanation for this award is that the jury

must have disregarded the evidence and the jury instructions. Having reviewed the

-54- entirety of the evidence, PSC’s victory is not the foregone conclusion it seems to

believe it is.

PSC strenuously argues that disgorgement of profits is the proper

remedy here. While we do not disagree, PSC still had to prove that a breach of

fiduciary duty occurred, and that said breach caused the injury in order to award

those damages. Baptist Physicians Lexington, Inc. v. New Lexington Clinic,

P.S.C., 436 S.W.3d 189, 193 (Ky. 2013), as modified (Feb. 20, 2014). Even PSC’s

financial expert testified that if the jury did not find Young liable on all claims, the

full amount of damages he testified to would not be accurate.

Again, this was an eight-day trial, with many witnesses who gave

conflicting testimony. A common thread among many of the witnesses was that

the parts VFM was making and/or distributing were not the same type of parts that

PSC manufactured. Added to this fact, the CEO of PMC himself stated on the

witness stand about PSC, “I don’t know what the hell they make.” He also stated,

regarding Young, “he doesn’t spend his time picking up the scraps we don’t want

and building his own business while we’re paying him.” It was a perfectly

reasonable conclusion for the jury to decide that, for the most part, Young and

VFM were not competing with PSC. The jury only found for PSC on a few of the

claims it brought against Young and VFM.

-55- PSC additionally argues it was prejudiced by the circuit court’s

allowance of evidence of other lawsuits and general “litigiousness,” as well as the

counterclaim evidence regarding the abuse of process claim. As stated previously,

this evidence was inextricably intertwined with the other evidence presented. The

circuit court believed the lawsuit filed by PSC against TBA was relevant for

purposes other than showing PSC’s litigiousness, and we agree. There were other

lawsuits filed by PSC that the circuit court did not allow the jury to hear about.

We believe the circuit court properly balanced the evidence to avoid undue

prejudice to PSC.

Because we are affirming the allowance of the abuse of process claim

as to the Parr Affidavit, PSC’s arguments that this evidence being allowed to be

presented to the jury was error have no merit. PSC itself states that Parr would

have been called as a witness because of his involvement with Young, so the jury

would have heard his testimony regardless.

We do not believe the circuit court’s decision concerning the

damages award is clearly erroneous or an abuse of discretion.

2021-CA-0431-MR

Appellees/Cross-Appellants argue the circuit court erred in dismissing

three counts of their counterclaim prior to the trial. The counterclaim contained

two counts of Soliciting Perjury and False Swearing, the first against PSC,

-56- Thomas, and Flowers, and the second against PMC and Kamins. It also included

the claim of Bribing a Witness, which was filed against PSC, Thomas, and

Flowers. The circuit court determined that the judicial statements privilege

applied, and so it dismissed these claims.

Appellees’ first argument is that the judicial statements privilege does

not apply under these facts. The existence of a privilege is a question of law and is

subject to de novo review. New Albany Main St. Properties, LLC v. Stratton, 677

S.W.3d 345, 348 (Ky. 2023).

“A communication must fulfill two requirements in order to fall

within the ambit of the judicial statements privilege. First, the communication

must have been made ‘preliminary to a proposed judicial proceeding, or in the

institution of, or during the course and as part of a judicial proceeding.’” Id. at 349

(quoting General Elec. Co. v. Sargent & Lundy, 916 F.2d 1119, 1127 (6th Cir.

1990) (citing RESTATEMENT (SECOND) OF TORTS § 587 (1977))). “Second, the

communication must be material, pertinent, and relevant to the judicial

proceeding.” Id. Kentucky law is clear that “[t]he privilege is limited to

communications and does not cover conduct.” Id. See also Halle v. Banner Indus.

of N.E., Inc., 453 S.W.3d 179, 185 (Ky. App. 2014). We must recall that an abuse

of process claim properly went forward because of the conduct relating to the Parr

Affidavit.

-57- The facts of this case run along a very fine line. Appellants/Cross-

Appellees contend their statements that led to the Parr Affidavit are privileged as

they were made during a judicial proceeding and material and relevant to that

proceeding. Cross-Appellants allege it was Appellants’ conduct that is the basis of

their counterclaims.

“While the privilege does not outright bar an action, it renders it

unsustainable if based exclusively on statements privileged under the law. The

judicial statements privilege applies with equal force to statements in pleadings

filed in judicial proceedings.” Deal v. First & Farmers Nat’l Bank, Inc., 518

S.W.3d 159, 173 (Ky. App. 2017).

The judicial statements privilege traditionally applied to cases of

slander and perjury. There are few Kentucky cases that analyze the privilege

outside of these contexts. There are even fewer cases that analyze the privilege

when the person other than the one making the false statement is being sued.

The alleged false statements in this case come from the Parr Affidavit.

Yet, no one is pursuing a claim against Parr. No one has argued that his statements

would not be covered by the privilege. It is the actions of the people coercing Parr

to sign the affidavit and the subsequent misuse of that affidavit that are at issue.

-58- The circuit court relied on this Court’s unpublished opinion in Whitton

v. Weis, No. 2008-CA-001278-MR, 2009 WL 4882840 (Ky. App. 2009),10 in

making its ruling regarding the claims of soliciting perjury and false swearing.

Although unpublished and therefore nonbinding, we choose to comment on the

case, which the parties also spent a great deal of time analyzing. Some facts of that

case are very similar.

In both actions, a witness not a party to the case admitted to lying

under oath to keep their job. Both witnesses either believed or were told that they

would be terminated if they did not do what was asked of them. This Court had

also previously stated, “[i]t is the general rule that a civil action for damages will

not lie for perjury made during litigation either by a party or a witness.” Lawson v.

Hensley, 712 S.W.2d 369, 370 (Ky. App. 1986).

This rule governs only civil liability and does not prevent criminal

liability for such acts. This Court further explained in Whitton that the privilege

applied despite KRS 446.070, a statute which recognizes civil liability for violation

of standards established in statutes, including statutes establishing crimes. This

reasoning is further outlined in General Electric Company, supra, as well as

another case cited in Whitton: Heavrin v. Nelson, 384 F.3d 199 (6th Cir. 2004)

10 We cite this unpublished opinion for reference as persuasive, nonbinding authority. Kentucky Rules of Appellate Procedures (“RAP”) 41. -59- (applying Kentucky law). We therefore affirm the circuit court’s conclusion that

the counterclaims of soliciting perjury and false swearing should be dismissed.

The circuit court relied on Halle, supra, in dismissing the

counterclaim of bribery. The circuit court stated:

[t]he Court finds the claim of bribery in this case is akin to a claim of fraud in the inducement which the court in Halle found the judicial statements privilege applied to. However, unlike Halle, the actions by PSC, Thomas, and Flowers towards Parr were clearly done in the course of litigation as the affidavit signed by Parr was sworn on July 22, 2019, and the lawsuit was filed in August 3, 2018. Thus, the Court finds that the judicial statements privilege also applies to Count II of the Counterclaim and it is dismissed.[11]

Cross-Appellants argue that the circuit court erred because the actions

Appellants took were conduct, not statements which are protected. As indicated

previously, this distinction is a close one. Other jurisdictions have concluded

“[t]he distinction between communicative and noncommunicative conduct hinges

on the gravamen of the action. That is, the key in determining whether the

privilege applies is whether the injury allegedly resulted from an act that was

communicative in its essential nature.” Rusheen v. Cohen, 128 P.3d 713, 719 (Ca.

2006). The court noted several examples of acts deemed communicative and thus

protected by the privilege as well as noncommunicative actions which are

11 Order Granting Summary Judgment in Part and Denying in Part, entered March 19, 2021. -60- unprivileged. The court differentiated between the testimonial use of the contents

of an illegally overheard conversation (privileged) and the act of illegally recording

a confidential telephone conversation or eavesdropping on a telephone

conversation (unprivileged). Id.

The source of the counterclaim of bribery against the Appellants in

this action stem from their meetings with Parr, in which they either told or inferred

to him that he would lose his job and be added as a defendant to the lawsuit if he

did not sign the affidavit they presented to him. We conclude that the gravamen of

this action is communicative in nature. It was a conversation between parties and a

witness during a judicial proceeding about testimony. Even so, this still does not

impact the abuse of process claim, which is more about conduct, including the

improper use of a statement in the process.

The Cross-Appellants argue that affirming the dismissal of these other

claims would permit the privilege to be abused. This has been an issue since the

inception of the privilege. “The judicial statement privilege is one that has been

long adhered to in this jurisdiction and is rooted in public policy ‘which looks to

the free and unfettered administration of justice, though, as an incidental result, it

may, in some instances, afford an immunity to the evil-disposed and malignant

slanderer.’” Halle, supra, at 184 (citing Schmitt v. Mann, 163 S.W.2d 281, 284

(Ky. 1942)). While this type of behavior is certainly not to be condoned, we

-61- determine it is protected by the judicial statements privilege when applied to the

dismissed claims, and we therefore affirm the circuit court’s ruling as to the

counterclaim other than abuse of process.

CONCLUSION

On Appeal No. 2022-CA-1166-MR, we affirm the Nelson Circuit

Court’s orders on the statute of limitations conclusion, the damages awarded to

PSC for $3,400, and its judgment of liability on the abuse of process claim

regarding the Parr Affidavit, which includes the percentages of fault assessed for

that liability. But we must vacate the judgment of abuse of process regarding the

initial filing of the lawsuit, as that act alone cannot qualify as an abuse of process.

We remand for the limited purpose of proceeding to determine the damages,

compensatory and punitive, which a jury will determine anew, for the abuse of

process proven relating to the Parr Affidavit. It will be for the parties and the

circuit court to determine how best to present evidence about the whole picture of

the abuse of process in the context of the suit so that the jury may assess damages.

On Cross-Appeal No. 2021-CA-0431-MR, we affirm the Nelson Circuit Court’s

order dismissing the counts of the counterclaim other than abuse of process

because these other claims were prohibited by the judicial statements privilege as a

matter of law.

-62- ALL CONCUR.

BRIEFS FOR BRIEF FOR APPELLEES/CROSS- APPELLANTS/CROSS- APPELLANTS: APPELLEES: Brian M. Johnson Michael P. Abate Logan J. Mayfield David S. Kaplan Lexington, Kentucky Casey L. Hinkle Louisville, Kentucky ORAL ARGUMENTS FOR APPELLEES/CROSS- ORAL ARGUMENT FOR APPELLANTS: APPELLANTS/CROSS- APPELLEES: Brian M. Johnson Lexington, Kentucky Michael P. Abate Louisville, Kentucky

-63-