Opinion
NO. 2017-CA-000288-MR
06-07-2019
ESTATE OF RALPH LAIRD, DECEASED; DEBORAH WIGGINS, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF RALPH LAIRD; AND CAROLYN GARGUS, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF RALPH LAIRD APPELLANTS v. MILLS HEALTH & REHAB CENTER, INC. APPELLEE
BRIEF FOR APPELLANT: Joe Harvey Kimmel, III Paducah, Kentucky Adam Futrell Paducah, Kentucky BRIEF FOR APPELLEE: Dennis Lee Null, Jr. Nicholas S. Thomas Mayfield, Kentucky Heidi A. Barcus Jennifer Pearson Taylor Carrie S. O'Rear Knoxville, Tennessee
NOT TO BE PUBLISHED APPEAL FROM GRAVES CIRCUIT COURT
HONORABLE CRAIG Z. CLYMER, SPECIAL JUDGE
ACTION NO. 15-CI-00125 OPINION
AFFIRMING
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BEFORE: CLAYTON, CHIEF JUDGE; JONES AND L. THOMPSON, JUDGES. CLAYTON, CHIEF JUDGE: This appeal stems from the entry of summary judgment on appellee Mills Health and Rehab Center's claim against the estate of a former resident for charges incurred during his stay at the facility. In addition to challenging the entry of summary judgment, the appellant estate and personal representatives (hereinafter collectively referred to as "the estate") allege that the circuit court erred in denying motions to amend their answer. We affirm.
On December 23, 2013, Ralph Laird was admitted to Mills Health and Rehab Center where he remained until his death on October 6, 2014. Appellants Deborah Wiggins and Carolyn Gargus were appointed co-executrixes of Laird's estate on January 27, 2015. Because the facility never received full payment for the long-term care services it provided Mr. Laird during his stay at the facility, it filed a proof of claim against his estate for the unpaid balance. After the estate objected to the claim on the ground that Medicaid would ultimately pay the facility for the services rendered to Mr. Laird, the facility filed an April 2015 declaratory judgment petition in Graves Circuit Court seeking to preserve its claim and to prevent the co-executrixes from distributing the estate while the case was pending. On April 22, 2015, the estate answered by again stating that Medicaid would ultimately pay the facility.
In May 2016, more than one year after the filing of its original answer and more than fifteen months after the appointment of the personal representative, the estate moved to amend its answer to assert counterclaims of negligence, medical negligence, wrongful death, intentional infliction of emotional distress, battery, negligent hiring and retention, and breach of contract. On July 14, 2016, the circuit court denied this first motion to amend the complaint on the basis that the asserted claims were asserted outside the one-year statute of limitations set out in Kentucky Revised Statute ("KRS") 413.180(1) and could not be construed to relate back to the date of filing its original answer as the asserted counterclaims did not fall within the same "conduct, transaction, or occurrence" as required for application of Civil Rule ("CR") 15.03. Because the circuit court found that the proposed counterclaims all sound in tort law and the underlying action was founded in contract law, it reasoned that "[t]he two causes of action would require completely different questions of law, fact, and evidentiary support."
On November 10, 2016, the estate filed a renewed motion to amend its answer again asserting the counterclaims set out in the May 2016 motion to amend, as well as adding additional claims for violation of the Kentucky Consumer Protection Act. In denying the renewed motion, the circuit court noted that it had been filed months after the denial of its first motion to amend and six weeks after the facility had filed a motion for summary judgment. As it had in the order denying the initial motion to amend, the circuit court concluded that the estate was attempting to circumvent the statute of limitations by calling its counterclaim a contract action rather than what is it, a tort action. The circuit court also noted that there was no evidence to support its current claim that the facility breached the contract when an employee of the facility appeared at the hearing on Mr. Laird's Medicaid claim and gave false and fraudulent testimony. By separate order, the circuit court granted the facility's motion for summary judgment on its proof of claim against the estate.
We start by considering the estate's contention that the circuit court erred in denying its motions to amend the answer it filed in April 2015. CR 15.03(1) provides:
Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.Thus, the primary issue to be resolved is whether the counterclaims sought to be asserted in the amended answer "arose out of the conduct, transaction, or occurrence" set forth in the estate's original answer. Like the circuit court, we are convinced that the counterclaims at issue in this appeal do not satisfy that standard.
In reaching that conclusion, we note that although CR 15.01 directs that leave to amend a pleading "shall be freely given when justice so requires," appellate courts will not disturb a trial court's decision regarding amendment absent abuse of discretion. M.A. Walker Co., Inc. v. PBK Bank, Inc., 95 S.W.3d 70 (Ky. App. 2002). In addition, our Supreme Court instructs that "[a]fter a motion for summary judgment has been made, a motion to amend a pleading rests in the sound discretion of the trial court, and its ruling will not be disturbed unless an abuse of discretion is clearly shown." Johnston v. Staples, 408 S.W.2d 206, 207 (Ky. 1966) (citing Bradford v. Billington, 299 S.W.2d 601 (Ky. 1957)). Applying these concepts to the motions to amend at issue in this appeal, we perceive no abuse of discretion in the denial of the motions.
In Underhill v. Stephenson, 756 S.W.2d 459, 460 (Ky. 1988), the Supreme Court emphasized that in order for an amendment of an original pleading to relate back to the date of the original pleading, "[t]he important consideration is not whether the amended pleading presents a new claim or defense, but whether the amendment relates to the general factual situation which is the basis of the original controversy." Although, quite clearly, the claims the estate seeks to assert arose out of Mr. Laird's stay at the facility, the circuit court correctly concluded that the facility's contractual claims and the estate's proposed tort claims "do not, in a general sense, share the same facts." The facts underlying the contract claim are merely the provision of services to Mr. Laird and proof that the facility did not receive full payment for the services rendered. The claims asserted in the proposed counterclaim (negligence, medical negligence, wrongful death, intentional infliction of emotional distress, battery, and negligent hiring and retention) require proof of totally distinct and unrelated facts and thus cannot be viewed as relating to the general factual situation which is the basis of the original controversy, a simple collection action.
More recently, however, our Supreme Court addressed the standard in slightly different terms, citing an opinion of the United States Supreme Court holding that for the relation back rule to apply, a proposed amendment must have arisen from the same conduct as the original claim:
CR 15.03(1) and (2) are identical to Federal Rule of Civil Procedure 15(c) except with respect to internal enumeration. The United States Supreme Court has summarized the federal rule as follows:
Schwindel v. Meade County, 113 S.W.3d 159, 169-70 (Ky. 2003) (citing Schiavone v. Fortune, 477 U.S. 21, 29-30, 106 S.Ct. 2379, 2384, 91 L.Ed.2d 18 (1986) (emphasis added). It is clear to us that the conduct giving rise to the facility's collection claim cannot be construed as the same conduct giving rise to the proposed tort claims. Accordingly, the trial court did not err in denying the estate's first motion to amend.Relation back is dependent upon four factors, all of which must be satisfied: (1) the basic claim must have arisen out of the conduct set forth in the original pleading; (2) the party to be brought in must have received such notice that it will not be prejudiced in maintaining its defense; (3) that party must or should have known that, but for a mistake concerning identity, the action would have been brought against it; and (4) the second and third requirements must have been fulfilled within the prescribed limitations period.
Concerning the renewed motion to amend, again we perceive no error in the denial of that motion. In addition to reasserting the claims pressed in the original motion to amend, the estate sought to add a claim for violation of the Kentucky Consumer Protection Act. While arguably that claim would relate back under the conduct analysis previously cited, we nevertheless find no abuse of the trial court's discretion in the refusal to permit amendment to assert that claim.
In Bennett v. Ford Motor Co., 2008 WL 920745, at *3 (W.D. Ky. Apr. 3, 2008), the United States District Court refused to apply the relate back rule to a claim under the Kentucky Consumer Protection Action and concluded that the claim was therefore barred by the statute of limitations. The district court concluded that because the original claims were products liability claims directed only at the allegedly defective product that caused a fire, the consumer protection claim alleging fraud could not be established by the same evidence as that alleged in the original complaint. Because it did not fall under the same "conduct, transaction or occurrence" as the initial complaint, it could not be construed as relating back to the filing of that pleading. Neither could the discovery rule be applied to escape application of the statute of limitations set out in KRS 367.220(5). Citing Cook v. State Farm Mutual Automobile Insurance Company, 2004 WL 2011375, at *3-4 (Ky. App. Sept. 10, 2004), the district court noted that the discovery rule does not apply to a consumer protection claim because it is a legislatively enacted cause of action. Under KRS 367.220(5), a consumer protection claim must be filed "within one (1) year after any action of the Attorney General has been terminated or within two (2) years after the violation of KRS 367.170, whichever is later." In this case, because the discovery rule does not apply, the estate's consumer protection claim had to be lodged within two years of Mr. Laird's entry into the facility on December 23, 2013. The estate alleges in its brief to this Court that Mr. Laird signed an agreement which provided that the facility would assist him in applying for Medicaid benefits to cover the cost of his stay. Thus, the statute of limitations on the estate's consumer protection claim expired on December 23, 2015, two years after Mr. Laird's admission and the time the alleged consumer protection violation occurred, and almost a full year prior to the filing of its renewed motion to amend on November 10, 2016. The trial court did not abuse its discretion in denying the renewed motion to amend.
We cite to an unpublished opinion of the United States District Court recognizing that the interpretation of state law by federal courts is not binding on state courts. We nevertheless adhere to the principle that a federal court's view of state law may certainly be viewed as persuasive. See U.S., ex rel. U.S. Attorneys ex rel. Eastern, Western Districts of Kentucky v. Kentucky Bar Association, 439 S.W.3d 136, 147 (Ky. 2014).
Finally, turning to the grant of summary judgment on the facility's collection claim, we perceive no error in the decision of the trial court to terminate the litigation. Viewing the evidence of record in the light most favorable to the estate, we concur in the trial court's assessment that it appears impossible the estate could have prevailed on its defense that Medicaid would ultimately pay the debt. The trial court noted that in the nearly two years since the facility filed its initial proof of claim, the estate failed to produce any evidence that Kentucky Medicaid would pay the estate's obligation to the facility. Although the estate maintained that it was engaged in an appeal of the initial determination that Medicaid would not pay any benefits because Mr. Laird had too many assets to qualify, the trial court properly concluded that the estate could "no longer maintain a good faith basis to believe" that Medicaid would pay its debt to the facility.
In Sparks v. Trustguard Insurance Company, 389 S.W.3d 121 (Ky. App. 2012), this Court reiterated that "'[b]elief' is not evidence and does not create an issue of material fact." Id. at 124 (quoting Humana of Kentucky, Inc. v. Seitz, 796 S.W.2d 1, 3 (Ky. 1990)). We concur in the trial court's assessment that the estate failed to adduce any proof indicating that Medicaid would ultimately pay its obligation. Thus, there was no error in the grant of summary judgment on the facility's claim for payment.
Accordingly, the judgment of the Graves Circuit Court is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: Joe Harvey Kimmel, III
Paducah, Kentucky Adam Futrell
Paducah, Kentucky BRIEF FOR APPELLEE: Dennis Lee Null, Jr.
Nicholas S. Thomas
Mayfield, Kentucky Heidi A. Barcus
Jennifer Pearson Taylor
Carrie S. O'Rear
Knoxville, Tennessee