Goldsmith v. Allied Bldg. Components, Inc.

• Decision Date: 25 June 1992
• Docket Number: No. 91-SC-286-DG,91-SC-286-DG
• Citation: 833 S.W.2d 378
• Parties: Terry D. GOLDSMITH and Kimberly Goldsmith, Appellants, v. ALLIED BUILDING COMPONENTS, INC., Appellee.
• Court: United States State Supreme Court — District of Kentucky

Page 378

833 S.W.2d 378

Terry D. GOLDSMITH and Kimberly Goldsmith, Appellants, v. ALLIED BUILDING COMPONENTS, INC., Appellee.

No. 91-SC-286-DG.

Supreme Court of Kentucky.

June 25, 1992.

Kenneth H. Baker, James S. Scroghan, Louisville, for appellants.

Robert E. Stopher, Boehl, Stopher, Graves & Deindoerfer, Louisville, for appellee.

LAMBERT, Justice.

This Court granted discretionary review of an opinion of the Court of Appeals which affirmed the trial court's summary judgment. CR 56. Despite its acknowledgement of an issue of fact, the court below applied the clearly erroneous standard of CR 52.01 and held that the personal injury claim of appellant, Terry D. Goldsmith, and the loss of consortium claim of his wife were barred by the exclusive remedy provision of the Workers Compensation Act, KRS 342.690.

This case is confusing due to the similarity in the names of two corporations and a third intended corporate entity which never came into corporate existence. David Carney, as owner and general contractor of the Mallard Crossing project in Jefferson County, entered into a subcontract for labor with an entity known as Allied Building Company, Inc. ("Company"). By the terms of this agreement, Company was to furnish the rough carpentry labor required for the project and perform other tasks not relevant here. Thereafter, the owners of Company attempted to have it incorporated, but the Secretary of State of Kentucky rejected the attempted incorporation and shortly thereafter, they successfully incorporated as Allied Building, Inc. ("Building"). About the same time, Carney also entered into a contract with Allied Building Components, Inc. ("Components") which appears to have been exclusively for the purchase of building materials. Thereafter, Components entered into two subcontracts with Automated Building Systems, Inc. ("Automated") for rough carpentry field labor. Automated then subcontracted with C & H Construction Company, the employer of Goldsmith. Thus, from the contracts it appears that Building was the corporate successor to the abortive attempt to incorporate Company and was the proper entity to have furnished the rough carpentry labor to the owner, but Components, without any contractual right, undertook performance of the contract, and, in fact, furnished the labor through its subcontracts with Automated.

As if the foregoing was not sufficiently confusing, the parties contend that various drafting errors were made in the documents. Appellee contends that the original contract between Carney and Company was intended to be between Carney and Components. Likewise, Goldsmiths contend that the subcontract for rough carpentry labor between Components and Automated was intended to be between Building and Automated. In other words, both parties contend that but for drafting errors which appear in the contract documents, the facts would be as they wish they were.

While working on the project and in the employ of C & H Construction Company, Goldsmith was severely injured when a stack of plywood fell on him fracturing his right leg in five places. His injury was allegedly caused by the negligence of a fork lift operator who was employed by Components. Goldsmith made a claim for Workers' Compensation benefits and this resulted in a settlement based on a permanent partial disability of 99.99%. The Goldsmiths also brought the instant civil action against Components which defended, inter alia, on the grounds set forth in KRS 342.690 and KRS 342.610(2) asserting the so-called "up the ladder" defense. See United Engineers and Constructors, Inc. v. Branham, Ky., 550 S.W.2d 540 (1977); Bright v. Reynolds Metals Co., Ky., 490 S.W.2d 474 (1973). For the purpose of this discussion, and without consideration of whether Components should be deprived of this defense on grounds that the work being performed was not "regular and recurrent" (see Fireman's Fund Insurance Company v. Sherman and Fletcher, Ky., 705 S.W.2d 459 (1986)), we will assume that Components should prevail if it can establish its status as an "up the ladder" employer of Goldsmith.

In seeking reversal, the Goldsmiths, in effect, ask us to adjudge the inapplicability of the "up the ladder" defense and reverse the decisions of the courts below. For this contention, they rely upon the doctrine of judicial admissions and assert that certain admissions contained in deposition testimony and in pleadings in an entirely separate civil action brought by Building and Components against Carney are sufficient to remove the matter from any dispute. Predictably, Components responds that the statements made in the other case and relied upon by the Goldsmiths here were erroneous as illustrated by the plethora of errors and mistakes which appear throughout this record. They also contend that to be binding as a judicial admission, the admission must be in the same case or between the same parties in a subsequent case.

In a civil action brought several months after Goldsmith was injured, Building and Components joined in a lawsuit against David Carney claiming nonpayment of debt arising out of the Mallard Point project. Among other things, Building and Components alleged their separate existence and that Components held a contract with Carney denominated "material purchase order" and that Building held a subcontract agreement with Carney for rough framing labor. Building also alleged that it had entered into contracts with framing companies including Automated Building Systems, Inc. By deposition, Steven Brooks, who served as vice president of both Building and Components, testified that he and Steve Willis, president of Components, intended to have two separate organizations, "one to furnish the materials and one to supply the labor." He testified that he and Willis intended to form a distinct corporation to perform the labor. From the averments of the pleadings and the testimony of Brooks, Building and Components appear to be separate corporations and Goldsmith appears to be on the employment ladder with Building and not with Components.

The leading Kentucky decision on the law of judicial admissions is Sutherland v. Davis, 286 Ky. 743, 151 S.W.2d 1021 (1941), in which the Court distinguished between "quasi" admissions and judicial admissions. It pointed out that the former may be disproved by introduction of other evidence, while the latter conclusively establishes the fact in issue. A judicial admission was defined as "a formal act done in the course of judicial proceedings which waives or dispenses with the necessity of producing evidence by the opponent and bars the party himself from disputing it." Manifestly, the determination by a court that a party may not contradict an admission is strong medicine and should be sparingly administered. In Bell v. Harmon, Ky., 284 S.W.2d 812 (1955), we said that the judicial admission rule "should be applied with caution because of the variable nature of testimony and because of the ever present possibility of honest mistake." Sutherland v. Davis, supra, established the test for determining whether an admission should be treated as a judicial admission as follows: whether "the circumstances and conditions give rise to the probability of error in the party's own testimony?"

Our customary reticence to apply the doctrine of judicial admissions is heightened in this case due to the lack of identity of parties. Ordinarily, a judicial admission is argued to have resulted from some statement or act of a party in the pending litigation or by such a statement or act in other litigation between the same parties. McGuire v. Citizens Fidelity Bank & Trust Co., Ky., 805 S.W.2d 119 (1991). Here, the source of the claimed judicial admission is a separate lawsuit involving some, but not all, of the parties to this litigation. While a party's statement in one case was held to be conclusive against him in another case in Center v. Stamper, Ky., 318 S.W.2d 853 (1958), the parties and the underlying controversy were the same. Unless the circumstances and conditions virtually eliminate the possibility of error, "a judicial admission in one action is not conclusive in another action." Id. at 855-56.

Components has asserted that its admissions in the Carney litigation and the admissions in the testimony of Mr. Brooks were the result of mistake. As this case is rampant with alleged and demonstrable mistakes, inspiring little confidence in the accuracy of the parties' statements of fact, and as the case was terminated by summary judgment, we decline to hold the doctrine of judicial admissions applicable to the pleadings and statements as urged by the Goldsmiths. It should be clearly understood, however, that such pleadings and statements, along with...