Opinion
NO. 2014-CA-000120-MR
05-22-2015
LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT APPELLANT v. DAVID WHITLOCK AND WAL-MART STORES EAST LIMITED PARTNERSHIP APPELLEES
BRIEFS FOR APPELLANT: Sarah J. Martin William P. O'Brien Assistant Jefferson County Attorneys Louisville, Kentucky BRIEF FOR APPELLEE DAVID WHITLOCK: Chris J. Gadansky Robert T. Watson Brandon K. Johnson Louisville, Kentucky BRIEF FOR APPELLEE WAL- MART STORES EAST LIMITED PARTNERSHIP: Jennifer Kincaid Adams Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JAMES M. SHAKE, JUDGE
ACTION NO. 12-CI-005813
OPINION
AFFIRMING
BEFORE: CLAYTON, J. LAMBERT, AND THOMPSON, JUDGES. CLAYTON, JUDGE: The Louisville/Jefferson County Metro Government (Metro) appeals from an order of the Jefferson Circuit Court declaring that Metro has a duty to defend David Whitlock in a civil action filed against him. Metro maintains it has no duty to defend under Kentucky Revised Statutes (KRS) 62.2005, the Claims Against Local Government Act (CALGA) because Whitlock was acting outside his scope of employment as a constable at the time of the alleged assault on the plaintiff in the underlying civil action. After a review of the record and consideration of the arguments of counsel, we affirm the ruling of the trial court.
The underlying case was filed after Whitlock shot Tammy Ortiz on the premises of a Wal-Mart store in Jefferson County. Whitlock was charged with criminal assault. Pursuant to North Carolina v. Alford, 400 U.S. 25, 91 S.Ct. 160, 27 L.Ed.2d 162 (1970), Whitlock entered guilty pleas to two Class D felonies, assault under extreme emotional disturbance, KRS 508.040, and wanton endangerment in the first degree, KRS 508.060. Whitlock was sentenced to five years' imprisonment conditionally discharged upon successful completion of one year in the pretrial diversion program.
On November 1, 2012, Ortiz filed a complaint against Whitlock and Wal-Mart and its associated entities. Whitlock is named "in his individual and official capacity."
In the body of the complaint, the facts are alleged as follows: On November 2, 2011, Ortiz was at a Wal-Mart in Jefferson County when she was stopped by unidentified Wal-Mart agents who accused her of shoplifting. She gave her bags to the Wal-Mart agents, left the store, and entered her vehicle.
At the time, Whitlock was a Jefferson County constable. Whitlock was on the Wal-Mart premises when he received a call on his personal cell phone from a Wal-Mart agent, servant, employee or ostensible agent of Wal-Mart requesting assistance in detaining Ortiz. A Wal-Mart agent, servant, employee or ostensible agent rode with Whitlock in Whitlock's vehicle through the Wal-Mart parking lot toward Ortiz's car. When Ortiz attempted to leave the parking lot, Whitlock exited his vehicle, ran toward Ortiz's vehicle and shot her in the arm and face. The complaint further alleges that Wal-Mart directed the method, manner, and details of Whitlock's work when at Wal-Mart.
Based on the facts asserted, the complaint alleges battery against Whitlock for "intentionally, maliciously, wantonly, and/or recklessly" making harmful and offensive contact with Ortiz. It further alleges Whitlock's actions constituted an unreasonable search and seizure, general negligence, and unlawful imprisonment.
On November 28, 2012, Whitlock notified Metro of the action and asserted Metro has a duty to provide a legal defense under the CALGA. On December 10, 2012, Metro denied Whitlock's demand for a legal defense.
Whitlock filed a third-party complaint against Metro seeking a declaratory judgment ordering Metro to provide him a legal defense in Ortiz's action and indemnify him under the CALGA. Metro filed an answer again denying its duty to defend. Wal-Mart was permitted to intervene in the declaratory judgment action so that it could dispute Metro's assertion that Whitlock was acting as Wal-Mart's agent. After Whitlock filed a motion for declaratory judgment, Metro responded and filed a cross-motion for summary judgment/declaratory judgment.
The circuit court issued an order declaring that based on the allegations in Ortiz's complaint, Metro had a duty to defend. It further held that after the case is disposed of by either the court or jury, Metro may recover the costs of that defense and the party responsible for any judgment may be determined. Metro appealed.
This appeal involves an interpretation and application of KRS 65.200 et seq. and, therefore, subject to de novo review. Lexington-Fayette Urban County Health Dept. v. Lloyd, 115 S.W.3d 343, 347 (Ky.App. 2003). When interpreting a statute "[t]he cardinal rule .... is to ascertain and give effect to the intent of the legislature." Kentucky Ins. Guar. Ass'n v. Jeffers ex rel. Jeffers, 13 S.W.3d 606, 610 (Ky. 2000). The remaining rules of construction are as follows: (1) legislative intent is to be determined by first looking at the statutory language giving the words their plain and ordinary meaning; (2) the statute must be read as a whole; (3) if a statute is unambiguous, extrinsic evidence of legislative intent and public policy is not considered; (4) a statute will not be construed to reach a manifestly unjust result; and (5) statutes are to be liberally construed to promote its purpose and effectuate the legislative intent. Richardson v. Louisville/Jefferson County Metro Government, 260 S.W.3d 777, 779 (Ky. 2008).
Among the provisions of the CALGA is KRS 65.2005 which states:
(1) A local government shall provide for the defense of any employee by an attorney chosen by the local government in any action in tort arising out of an act or omission occurring within the scope of his employment of which it has been given notice pursuant to subsection (2) of this section. The local government shall pay any judgment based thereon or any compromise or settlement of the action except as provided in subsection (3) of this section and except that a local government's responsibility under this section to indemnify an employee shall be subject to the limitations contained in KRS 65.2002.
(2) Upon receiving service of a summons and complaint in any action in tort brought against him, an employee shall, within ten (10) days of receipt of service, give written notice of such action in tort to the executive authority of the local government.
(3) A local government may refuse to pay a judgment or settlement in any action against an employee, or if a local government pays any claim or judgment against any employee pursuant to subsection (1) of this section, it may recover from such employee the amount of such payment and the costs to defend if:
(a) The employee acted or failed to act because of fraud, malice, or corruption;
(b) The action was outside the actual or apparent scope of his employment;
(c) The employee willfully failed or refused to assist the defense of the cause of action, including the failure to give notice to the executive authority of the local government pursuant to subsection (2) of this section;
(d) The employee compromised or settled the claim without the approval of the governing body of the local government; or
(e) The employee obtained private counsel without the consent of the local government, in which case, the local government may also refuse to pay any legal fees incurred by the employee.
For purposes of the statute, employee is defined as "any elected or appointed officer of a local government, or any paid or unpaid employee or agent of a local government, provided that no independent contractor nor employee nor agent of an independent contractor shall be deemed to be an employee of a local government." KRS 65.200. KRS 65.2005 applies to "[e]very action in tort against any local government in this Commonwealth for death, personal injury or property damages proximately caused by... [a]ny act or omission of any employee, while acting within the scope of his employment or duties[.]" KRS 65.2001. (Emphasis added).
In Richardson, the Court addressed the purpose and scope of the duty to defend under KRS 65.2005. Richardson, 260 S.W.3d at 780. It held that the "language clearly evidences the General Assembly's intent to provide a defense to employees—both current and former—in civil litigation, so long as the claims arise from public duties." Id. The Court concluded the purpose of the CALGA's duty to defend was likewise clear: it was "enacted to allow public employees to diligently and faithfully serve the Commonwealth without worrying about the financial burdens and other adverse consequences of civil litigation, which may stem from their civil service." Id. at 781. Carrying out the intent of the General Assembly and the statute's purpose, the Court concluded "KRS 65. 2005(1) applies to both current and former employees sued in tort, so long as the claims arise from acts or omissions occurring within, and during, the scope of employment." Id.
The requirement that the claims must arise from acts or omissions and must arise out of employment is not one fortuitously added to the statute. Section 3 of the Kentucky Constitution provides in part: "[N]o grant of exclusive, separate public emoluments or privileges shall be made to any man or set of men, except in consideration of public services[.]" In other words, the payment from public funds without a public service being rendered is prohibited. Thus, the payment of attorney fees and other costs of defense in an action against an employee based on actions outside the scope of employment would violate that constitutional provision. Richardson, 260 S.W.3d at 780 n. 1.
Whitlock was an elected officer under Section 99 of the Kentucky Constitution and, therefore, an employee as the term is used in KRS 65.2005. By the enactment of KRS 67C.121(2), the "existing powers and duties" of all Section 99 offices were assigned to Metro upon the consolidation of Jefferson County and the City of Louisville and, therefore, Whitlock was a Metro employee. The fact that he resigned after the shooting does not alleviate Metro's duty to defend. Id. at 781.
Nevertheless, Metro advances numerous arguments why it did not have a duty to defend Whitlock based on the underlying facts including: (1) he had no authority to shoot a misdemeanant; (2) he pled guilty to felonies arising from the shooting; (3) he violated an ordinance and statutory law by placing blue lights on his personal vehicle; and (4) he was an agent of Wal-Mart. Whitlock contends that the duty to defend must be determined by the complaint alone without regard to the underlying facts. He analogizes Metro's duty to defend to that of an insurance company's duty to its insured.
The duty to defend commonly finds its source in insurance contracts. Under insurance law, the duty is broader than the duty to indemnify and is separate and distinct from the duty to pay a claim. Wolford v. Wolford, 662 S.W.2d 835, 838 (Ky. 1984). "The insurer has a duty to defend if there is an allegation which potentially, possibly or might come within the coverage of the policy." James Graham Brown Foundation, Inc. v. St. Paul Fire & Marine, Ins. Co., 814 S.W.2d 273, 279 (Ky. 1991). The duty arises from the "outset of litigation" and continues to the point of establishing that liability upon which plaintiff was relying was in fact not covered by the policy and not merely that it might not be." Id.
These same principles are applicable to a local government's duty to defend under KRS 65.2005. The duty to defend arises if the complaint's allegations may be reasonably construed to allege that the employee might have been acting within the scope of employment when the act or omission giving rise to the action occurred. Once triggered, the duty to defend continues until it is shown that the employee was not acting within the scope of his employment. Our conclusion is bolstered by the express language of the statute which permits a local government to recover from an employee the costs to defend under certain circumstances, including that the employee acted "outside the actual or apparent scope of his employment[.]" KRS 65.2005(3)(b).
However, despite similarities between an insurance company's duty to defend and that of a local government to defend its employee, there are fundamental differences. An insurer's duty to defend arises from the contractual obligations of the insurer and its insured. Thompson v. West American Ins. Co., 839 S.W.2d 579, 581 (Ky.App. 1992). It is the contract, not the complaint, that triggers the duty to defend. Id. Because of its contractual obligations, an insurer has a plethora of duties to its insured and third parties even prior to the filing of a complaint. See The Unfair Claims Settlement Practices Act, KRS 304.12-230.
In contrast to an insurance company, prior to the filing of a complaint against an employee alleging a tort committed while acting within the scope of employment, a local government has no duty to fend off litigation against its employee or offer compensation to a potential plaintiff. Under KRS 65.2005, the local government's duty to provide a defense is triggered by the filing of a complaint alleging facts that could possibly subject the employee to liability for acts or omissions that occurred while in the scope of employment with that local government. Absent an allegation that the employee acted or failed to act within his or her scope of employment, the payment of defense costs would be an unconstitutional expenditure of public funds. Richardson, 260 S.W.3d at 780. However, pursuant to KRS 65.2005, if facts later prove that he was not acting in his official capacity, then Metro Government is entitled to recover any attorney's fees and costs expended on his behalf.
The section of the complaint identified as "Facts" states at paragraph seventeen (17), that Whitlock was contacted by agents, servants, employees etc., of Wal-Mart who requested that he work with them in detaining Ortiz. As the trial court noted, paragraph twenty-three (23) of the complaint stated that Whitlock frequented the Wal-Mart, and when he did he would inform store security that he was on the premises and available should they need his services. The Wal-Mart employees began seeking his services whether Whitlock was "on-duty" or "off-duty".
It is in Count VI of the complaint under "Vicarious Liability" that the plaintiff alleges Whitlock was an agent of Wal-Mart. This is an additional allegation. It is ultimately a question as to whether Whitlock was an agent of Wal-Mart or an independent contractor. There is sufficient identification of Whitlock acting as a constable, however, to conclude that Metro Government must defend him.
Finally, given the position of the laws of this Commonwealth regarding notice pleadings, it is reasonable to find that Whitlock was sued in his official capacity. Throughout this litigation, Metro Government has acknowledged that Whitlock was sued in his official capacity as constable. In Blackburn v. Blackburn, 810 S.W.2d 55, 56 (Ky. 1991), the Kentucky Supreme Court addressed CR 73.03. While this rule is not a factor in the case at bar, the Blackburn court also discussed the concept of notice pleadings. The Supreme Court held:
While this Court recognizes the requirement for compliance with CR 73.03, the purpose of this Rule must be explored in its application. The plain reading of the Rule demonstrates the notice concept which is fundamental to modern pleading under the Civil Rules. This Court stated its position in Lee v. Stamper, Ky., 300 S.W.2d 251, 253 (1957), in determining that the principal objective of a pleading was to give the opposing party fair notice. The conduct of the parties throughout this case, as reflected by the record, leaves no doubt that the Appellees, as did the Appellants, fully understood the identity of all of the parties to the appeal throughout the course of the appeal; ... The principal objective of pleadings is to give the opposing party fair notice, and where the conduct of the parties['] leaves no doubt that this objective has been met, this Court has upheld the intent of the "notice" nature of the Civil Rules. Roberts v. Conley, Ky., 626 S.W. 2d 634,639 (1982).
The conduct of the parties in this action leaves no doubt that they understood the identity of all the parties. Based on the forgoing, the order of the Jefferson Circuit Court is affirmed.
LAMBERT, J., JUDGE, CONCURS.
THOMPSON, JUDGE, DISSENTS AND WILL NOT FILE SEPARATE OPINION. BRIEFS FOR APPELLANT: Sarah J. Martin
William P. O'Brien
Assistant Jefferson County Attorneys
Louisville, Kentucky
BRIEF FOR APPELLEE DAVID
WHITLOCK:
Chris J. Gadansky
Robert T. Watson
Brandon K. Johnson
Louisville, Kentucky
BRIEF FOR APPELLEE WAL-
MART STORES EAST LIMITED
PARTNERSHIP:
Jennifer Kincaid Adams
Louisville, Kentucky