Capital Holding Corp. v. Bailey

• Court: Supreme Court of Kentucky
• Writing for the Court: LEIBSON
• Citation: Capital Holding Corp. v. Bailey, 873 S.W.2d 187 (Ky. 1994)
• Decision Date: 24 March 1994
• Docket Number: 93-SC-428-DG,Nos. 93-SC-409-D,s. 93-SC-409-D
• Parties: CAPITAL HOLDING CORPORATION, Movant, v. Larry L. BAILEY and Linda Bailey, Respondents. Larry L. BAILEY and Linda Bailey, Movants, v. CAPITAL HOLDING CORPORATION, Respondent.

Page 187

873 S.W.2d 187

62 USLW 2640

CAPITAL HOLDING CORPORATION, Movant, v. Larry L. BAILEY and Linda Bailey, Respondents.

Larry L. BAILEY and Linda Bailey, Movants, v. CAPITAL HOLDING CORPORATION, Respondent.

Nos. 93-SC-409-DG, 93-SC-428-DG.

Supreme Court of Kentucky.

March 24, 1994.

Lively M. Wilson, Judith A. Villines, Stites and Harbison, Louisville, for Capital Holding.

J. Michael Poole, Bruce Garrett Anderson, J. Michael Poole & Associates, Louisville, for Baileys.

LEIBSON, Justice.

This case raises complex questions regarding when tort claims accrue for exposing the plaintiff to potentially harmful asbestos-related disease, and whether damages may be recovered when there is no present manifestation of a diseased condition.

The complaint alleged theories of liability based on negligence and outrageous conduct in exposing plaintiff to asbestos, causing increased risk of future injury or disease and severe emotional distress from the fear of developing cancer. It was dismissed with prejudice on summary judgment for the defendant, but the final order further provided that such dismissal "does not bar the Plaintiffs at any time hereinafter from filing any claim against Defendant for damages resulting from an injury or disease related to the asbestos exposure from which their Complaint herein arises." The effect of this order is to preserve plaintiffs' rights to further pursue tort litigation if and when a "disease related to the asbestos exposure" should manifest itself.

Our review of a summary judgment is limited to whether the facts alleged by the plaintiffs and the evidence of record supporting their claim at the time of dismissal, together with all reasonable inferences therefrom, fail to support a claim. See Paintsville Hosp. Co. v. Rose, Ky., 683 S.W.2d 255 (1985); Steelvest, Inc. v. Scansteel Service Ctr., Ky., 807 S.W.2d 476 (1991). Thus viewed, the evidence is as follows.

Between August and November of 1987, plaintiff, Larry Bailey, working for his wife's construction company, was engaged in removing pipes and ducts from the basement of the Commonwealth Building, in Louisville, Kentucky. The Commonwealth Building was owned by the defendant, Capital Holding Corporation. ¹ The defendant was aware of asbestos in the basement of their building, and, according to Bailey, either consciously aware of or recklessly indifferent to its dangerous propensities. Defendant had previously received a report of an analysis and inspection indicating asbestos contamination in the basement and engaged another company to attempt to remove or encapsulate areas that appeared to be "friable." Without telling Bailey of the asbestos, he was hired in August 1987 to remove certain unused sewer pipes from the basement, and he also removed certain steam pipes which he later found out were covered with molded asbestos insulation. According to Bailey, he went home each day covered with asbestos dust, albeit unknown to him, thus bringing his wife, Linda Bailey, into direct contact with the asbestos dust, and further contaminating their home with asbestos.

In March 1989 Bailey learned for the first time, from the former superintendent of the Commonwealth Building, that the area where Bailey had been working was contaminated with asbestos. Upon learning that he had been thus exposed to a potentially cancer-producing agent, he went immediately to Dr. William Anderson, a pulmonary specialist, for a physical examination, x-rays and testing. Dr. Anderson determined that Bailey had no present abnormality or manifestation of disease, but further concluded, and so testified, that Bailey has a slightly increased risk of developing asbestosis (a type of pneumoconiosis), and a significantly increased risk of developing mesothelioma (a painful and deadly form of cancer of the membranes surrounding the lungs). At the time of his deposition, Dr. Anderson could not quantify the enhanced risk of Bailey contracting mesothelioma.

After Dr. Anderson examined Bailey, but before his deposition, plaintiffs discovered the presence of two types of asbestos fibers in addition to the one involved in the medical history at the time of Bailey's medical examination. When Dr. Anderson was deposed he testified that one of these types had a higher risk of developing mesothelioma than the type upon which he based his testimony.

In the trial court the plaintiffs contended the inhalation of the asbestos fibers, standing alone, constituted physical contact sufficient to allow recovery of damages for (1) increased risk of future injury or disease, (2) present and future mental suffering and emotional distress from the fear of developing cancer, and (3) decontamination of their home. ²

The Baileys' complaint alleged two different theories of tort liability, negligence and outrageous conduct causing severe emotional distress. In paragraph 9 it seeks damages based on these theories, either collectively or alternatively, for "increased future risk in contracting various forms of cancer and an accompanying fear of contracting cancer in the future."

In the opinion rendered with the summary judgment, the trial court assumed certain "uncontested operative facts." They are:

"1) Plaintiffs were exposed to asbestos, while plaintiff, Larry L. Bailey, was in the employ of defendant, and they have credible evidence to show they have a risk of developing asbestosis or mesothelioma....

2) Neither plaintiff suffers from any present physical injury or illness caused by the conduct of defendant.

3) Plaintiff, Larry L. Bailey, worries that he has contracted a deadly asbestos-related disease; this worrying has drained him both physically and emotionally; and, the resulting stress has caused Mr. Bailey to develop a drinking problem he never had previously, which has caused him to seek professional care.

4) Plaintiff, Linda Bailey, through being in close proximity to her husband, has also been exposed to asbestos which has caused her extreme emotional distress because this exposure coincided in time with her pregnancy." ³

Based on these "operative facts" the trial court concluded summary judgment was appropriate because:

"In the case at bar, plaintiffs have neither an asbestos-related injury nor any x-ray manifestation of a disease."

The original opinion from the Court of Appeals, which was later modified as we will discuss, dealt first with the negligence concept and then with the tort of outrageous conduct causing severe emotional distress.

Turning first to the negligence issues, the Court of Appeals agreed with plaintiffs that the controlling case is Davis v. Graviss, Ky., 672 S.W.2d 928 (1984), but rejected their claim that Davis allowed a cause of action in present circumstances, stating:

"It is apparent from a reading of Davis that the [Supreme] Court recognized only the right to compensation for an increased likelihood of future complications arising from a realized injury other than a mere contact. The [Supreme] Court made this clear when it framed the issue as involving the plaintiff's 'right to compensation for an injury causing an increased risk of future harm.' Id. at 930.... In this jurisdiction a present physical injury is a prerequisite to recovery for an increased risk of future harm."

However, the Court of Appeals' opinion agreed with the plaintiffs' contention that the trial court had "improperly dismissed their claim for compensation for the emotional distress suffered by them as a result of the [defendant's] negligence in failing to warn of the presence of asbestos." The Court of Appeals based its decision on cases ("most recently" Deutsch v. Shein, Ky., 597 S.W.2d 141 (1980)) sustaining recovery for fright or mental pain and suffering "where there has been some negligent physical contact or impact with the body of the victim, even though no actual physical injury appears to have occurred." The Court of Appeals then stated:

"The theoretical basis for allowing recovery where there has been impact but no actual physical injury is not perfectly consistent, with the courts, at times, merely dispensing with any requirement of a physical injury while at other times seeming to consider the impact itself, however slight, a physical injury."

The Court of Appeals concluded:

"... the trial court erred in dismissing the [negligence] claims for mental anguish on the ground that no impairment of ability to function or manifestation of disease from exposure to asbestos could be shown. The contact with the asbestos itself is sufficient to support this claim provided, of course, that the other elements necessary to establish a tort in negligence are shown by each of the appellants."

It is from this ruling on the negligence theory that the defendant, Capital Holding, filed a Motion for Discretionary Review seeking relief in our Court.

Turning next to the "tort of outrageous conduct," the Court of Appeals cited our case of Craft v. Rice, Ky., 671 S.W.2d 247 (1984), recognizing this tort and adopting Sec. 46 of the Restatement (Second) of Torts (1965), and concluded that, without regard to whether there is any present evidence or manifestation of an asbestos-related disease, the operative facts, if proved, will sustain a cause of action.

The Court of Appeals stated:

"The elements of this tort as expressed in Sec. 46 of the Restatement are intentionally or recklessly causing severe emotional distress to another by extreme and outrageous conduct."

As to what conduct constitutes acting "recklessly" for purposes of this tort, the Court of Appeals cited Comment i. to Sec. 46 of the Restatement: a person "acts recklessly" when acting "in deliberate disregard of a high degree of probability that the emotional distress will follow."

The Court of Appeals then concluded:

"The parties do not appear to dispute that the [defendant] was under a duty to warn Mr. Bailey of the presence of asbestos. At the same time, as the record stands, it could be inferred that the [...