Bowlin Grp., LLC v. Rebennack

• Decision Date: 20 November 2020
• Docket Number: NO. 2018-CA-1494-MR, NO. 2019-CA-0078-MR,2018-CA-1494-MR
• Citation: 626 S.W.3d 177
• Court: Kentucky Court of Appeals
• Parties: BOWLIN GROUP, LLC, Appellant v. Christina REBENNACK, Individually, as Personal Representative of the Estate of Joel Rebennack, and as Mother and Next Friend of Elijah Rebennack; Melanie Rebennack; and Arianna Rebennack, Appellees Christina Rebennack, Individually, as Administratrix of the Estate of Joel Rebennack, and as Mother and Next Friend of Elijah Rebennack; Melanie Rebennack; and Arianna Rebennack, Appellants v. Westchester Fire Insurance Company, Appellee

626 S.W.3d 177

BOWLIN GROUP, LLC, Appellant

v.Christina REBENNACK, Individually, as Personal Representative of the Estate of Joel Rebennack, and as Mother and Next Friend of Elijah Rebennack; Melanie Rebennack; and Arianna Rebennack, Appellees

Christina Rebennack, Individually, as Administratrix of the Estate of Joel Rebennack, and as Mother and Next Friend of Elijah Rebennack; Melanie Rebennack; and Arianna Rebennack, Appellants

v.Westchester Fire Insurance Company, Appellee

NO. 2018-CA-1494-MR

NO. 2019-CA-0078-MR

Court of Appeals of Kentucky.

NOVEMBER 20, 2020; 10:00 A.M.

Discretionary Review Denied by Supreme Court August 18, 2021

BRIEFS FOR APPELLANT BOWLIN GROUP, LLC: David D. Black, Jeremy S. Rogers, Louisville, Kentucky.

BRIEF FOR APPELLEES CHRISTINA REBENNACK, INDIVIDUALLY, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF JOEL REBENNACK, AND AS MOTHER AND NEXT FRIEND OF ELIJAH REBENNACK; MELANIE REBENNACK; AND ARIANNA REBENNACK: Charles L. Hinegardner, Sarah M. Houseman, Cincinnati, Ohio.

BRIEFS FOR APPELLANTS CHRISTINA REBENNACK, INDIVIDUALLY, AS ADMINISTRATRIX OF THE ESTATE OF JOEL REBENNACK, AND AS MOTHER AND NEXT FRIEND OF ELIJAH REBENNACK; MELANIE REBENNACK; AND ARIANNA REBENNACK: Charles L. Hinegardner, Sarah M. Houseman, Cincinnati, Ohio.

BRIEF FOR APPELLEE WESTCHESTER FIRE INSURANCE COMPANY: Steven T. Usdin, New Orleans, Louisiana, Griffin Terry Sumner, Allison W. Weyand, Louisville, Kentucky.

BEFORE: GOODWINE, TAYLOR, AND K. THOMPSON, JUDGES.

OPINION

THOMPSON, K., JUDGE:

In February 2015, Joel Rebennack died after being struck by a vehicle driven by an intoxicated Brenda Amerson. Because Joel was working when he was struck, Bowlin Group, LLC paid workers’ compensation to his estate and, pursuant to a settlement, is obligated to pay substantial future benefits. Joel Rebennack's widow, Christina Rebennack (on behalf of herself, Joel's estate, and their three minor children—collectively "Christina"), sued Amerson, an Elks Lodge where Amerson drank alcohol prior to the tragic accident, and some individuals associated with the lodge (collectively the "Elks defendants"). Bowlin Group intervened to assert its subrogation rights.

Christina eventually settled with the Elks defendants. The trial court denied Bowlin Group's request to use that settlement to receive a credit against its future obligations, instead granting summary judgment to Christina. Bowlin Group then filed appeal 2018-CA-1494-MR.

Meanwhile, Christina also filed bad-faith claims against Westchester Fire Insurance Company, the Elks defendants’ excess insurance provider. However, without affording Christina an opportunity to engage in discovery on her bad-faith claims, the trial court granted summary judgment to Westchester. Christina then filed appeal 2019-CA-0078-MR. Since the appeals spring from the same facts and circuit court case, we will resolve both in this combined Opinion. Having considered the parties’ arguments and applicable law, we affirm the decision to grant summary judgment to Christina in Bowlin Group's appeal and vacate the decision to grant summary judgment to Westchester without affording Christina a chance to engage in discovery.

I. Sealing the Briefs

Before we analyze the issues, we must address a procedural matter left open by a previous procedural order of this Court. Specifically, the parties seek to seal the briefs in both appeals, essentially because they contain discussion of matters ordered sealed by the trial court—principally, the settlement(s) and offers of settlement. The previous order provisionally granted the motion but noted the decision would be revisited by the merits panel. "This Court retains authority to review decisions on motion panel that do not finally dispose of the case when the case is considered by a full-judge panel to which it is assigned." Commonwealth Bank & Tr. Co. v. Young , 361 S.W.3d 344, 350 (Ky. App. 2012).

Kentucky Rule of Civil Procedure (CR) 7.03(4) provides in relevant part that "[f]or good cause, the court may by order in a case ... limit or prohibit a nonparty's access to a document filed with the court." The question before us is not whether the trial court erred by permitting documents to be filed under seal. No one has challenged that decision, so we will not address it. Maclean v. Middleton , 419 S.W.3d 755, 761 (Ky. App. 2014) ("We certainly agree that court records should not be sealed as a matter of routine practice simply at the request of the parties. But in the absence of any challenge to the order, the issue is not before this Court and we have no authority to disturb the trial court's decision to seal the record."). Instead, the question is whether the appellate briefs should be sealed.

Generally, there is a presumption in favor of public disclosure of court records. Id. Here, however, the briefs contain discussion of settlement amounts and offers, which is unsurprising given Christina's bad-faith claims and Bowlin Group's request for a credit against its future obligations. There is authority holding that public disclosure of the offers and counteroffers endemic to any settlement effort is generally inappropriate. See , e.g. , Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc. , 332 F.3d 976, 980 (6th Cir. 2003) (citation omitted) ("There exists a strong public interest in favor of secrecy of matters discussed by parties during settlement negotiations.... Moreover, confidential settlement communications are a tradition in this country."). To help preserve the sanctity of the settlement process, we will not disturb the decision to seal the briefs.

II. Bowlin Group's Appeal (2018-CA-1494-MR)

Bowlin Group's appeal requires us to determine whether Kentucky Revised Statute (KRS) 342.700(1) entitles it to an offset for future benefits owed Christina. We review the "substance of a trial court's summary judgment ruling de novo , i.e. , to determine whether the record reflects a genuine issue of material fact...." Blankenship v. Collier , 302 S.W.3d 665, 668 (Ky. 2010).

In relevant part, the applicable version of KRS 342.700(1) provided:

Whenever an injury for which compensation is payable under this chapter has been sustained under circumstances creating in some other person than the employer a legal liability to pay damages, the injured employee may either claim compensation or proceed at law by civil action against the other person to recover damages, or proceed both against the employer for compensation and the other person to recover damages, but he shall not collect from both.... If compensation is awarded under this chapter, the employer, ... having paid the compensation or having become liable therefor, may recover in his or its own name or that of the injured employee from the other person in whom legal liability for damages exists, not to exceed the indemnity paid and payable to the injured employee, less the employee's legal fees and expense.^{[1 ]}

KRS 342.700(1) "permits injured workers to seek full recovery for their injuries by allowing such workers to receive compensation from both the employer and a third-party tortfeasor so long as the injured worker does not receive double recovery for the injuries." AIK Selective Self-Insurance Fund v. Minton , 192 S.W.3d 415, 419 n.2 (Ky. 2006) (citation omitted). But determining what is a double recovery is not always simple.

It is uncontested that the settlement Christina reached with the Elks defendants is for an amount which dwarfs the maximum possible benefits the Bowlin Group may owe.² It is also uncontested that Christina's attorney fees exceed the maximum possible benefits the Bowlin Group may owe. Bowlin Group stresses that not allowing it to receive a credit against its future obligations due to Christina's substantial tort recovery would allow her to receive an impermissible double recovery.³ On the other hand, Christina stresses language in KRS 342.700(1) which states that an employer's subrogation recovery must be reduced by an injured employee's legal fees. Since her legal fees exceed Bowlin Group's maximum liability, she argues Bowlin Group's ability to receive subrogation credits has been eliminated. Though the parties argue to the contrary, we have found no precedent with similar facts which directly resolves this issue.

Bowlin Group chiefly relies upon AIK Selective Self Insurance Fund v. Bush , 74 S.W.3d 251 (Ky. 2002), to support its contention that it is entitled to an offset of its future obligations. In Bush , an injured worker settled with his employer's workers’ compensation carrier and then sued the alleged tortfeasor; the compensation carrier filed a complaint against the tortfeasor "to recoup the workers’ compensation benefits it had paid and would pay to Bush because of his injury." Id. at 252. A jury apportioned 25% of the fault to the tortfeasor and 75% to the worker's employer. The question on appeal was whether the employer's insurer was entitled to recoup past and future amounts owed to the worker. Our Supreme Court held that the employer was entitled to recover 25% of its past and future workers’ compensation payments (since the employer was found 75% at fault) to avoid the worker receiving an impermissible double recovery. Id. at 255 (citation omitted) ("AIK can recover no more than 25% of its total subrogation claim and ... its recovery can be applied only against those elements of damages awarded in the judgment that correspond to the workers’ compensation benefits that it paid, i.e. , past and future lost wages and medical expenses.").

We agree with the Bowlin Group that the Court in Bush held that the employer was entitled to a credit for future medical expenses, which are roughly akin to the future compensation payments owed to Christina here.⁴ But even if we were to conclude that Bush means that an employer is generally entitled to a credit for its future obligations, Bush does not address a situation where an injured employee's legal fees exceed the employer's liability. Indeed, in Bush ...