Louisville/Jefferson Cnty. Metro Gov't v. Braden, 2015–CA–001238–MR

• Decision Date: 27 January 2017
• Docket Number: NO. 2015–CA–001238–MR,2015–CA–001238–MR
• Citation: 519 S.W.3d 386
• Court: Kentucky Court of Appeals
• Parties: LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT, Appellant v. Betty BRADEN, Individually and as Administratrix of the Estate of Don W. Braden; John W. Lewis; and Hartford Accident & Indemnity Company, Appellees

519 S.W.3d 386

LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT, Appellant

v.Betty BRADEN, Individually and as Administratrix of the Estate of Don W. Braden; John W. Lewis; and Hartford Accident & Indemnity Company, Appellees

NO. 2015–CA–001238–MR

Court of Appeals of Kentucky.

JANUARY 27, 2017; 10:00 A.M. Discretionary Review Denied by Supreme Court June 8, 2017

BRIEF FOR APPELLANT: Edward H. Bartenstein, Patricia C. Le Meur, Louisville, Kentucky

ORAL ARGUMENT FOR APPELLANT: William B. Oberson, Louisville, Kentucky

BRIEF FOR APPELLEE, BETTY BRADEN, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF DON W. BRADEN: Jamie K. Neal, Kevin C. Burke, Louisville, Kentucky

BRIEF FOR APPELLEE, JOHN W. LEWIS, Alison Messex, Don Meade, Louisville, Kentucky

ORAL ARGUMENT FOR APPELLEE, BETTY BRADEN, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF DON W. BRADEN: Kevin C. Burke, Louisville, Kentucky

ORAL ARGUMENT FOR APPELLEE, JOHN W. LEWIS: Don Meade, Louisville, Kentucky

BEFORE: CLAYTON, COMBS, AND MAZE, JUDGES.

OPINION

MAZE, JUDGE:

Louisville/Jefferson County Metro Government (hereinafter "Louisville Metro") appeals from an order of the Jefferson Circuit Court denying Louisville Metro's motion for declaratory judgment and granting declaratory judgment in favor of Appellees, John Lewis and the Estate of Don W. Braden (hereinafter "the Estate").

We hold that the trial court's exclusive reliance upon Lewis's compliance with Louisville Metro Police Department (LMPD) Standard Operating Procedures (SOPs) was misplaced. We further hold that, at the time of the accident, Lewis was not operating within the scope of his employment for purposes of triggering Louisville Metro's statutory obligation to defend and indemnify him under CALGA. Therefore, we vacate the trial court's order granting summary judgment in favor of the Estate; and we remand to the trial court for entry of an order granting summary judgment in favor of Louisville Metro.

Background

In 2011, John Lewis was an officer with LMPD. Beginning at or around that time, Lewis's departmental vehicle, an unmarked van, also served as his take-home vehicle. LMPD owned this vehicle but permitted Lewis to use it for official and personal tasks pursuant to a voluntary departmental program. As a condition of this privilege, Lewis signed a personal use agreement which read, in part,

I understand that if I am assigned a Louisville–Jefferson County Metro Government Vehicle (either owned or leased) authorized for Personal Use that I agree that in consideration for being provided this vehicle, that the Metro will provide Liability protection to me free of charge for up to $100,000 per Accident for any damages for Bodily Injury or Property Damage caused by my negligent operation of the assigned Metro vehicle while on Personal Use, unless and until my employment with the Metro is terminated or Metro employees are otherwise notified.

The Fraternal Order of Police negotiated this liability coverage under the applicable Collective Bargaining Agreement (CBA). The relevant provision of this CBA stated that as long as Louisville Metro provided "liability protection for up to $100,000 per accident while on personal use," Louisville Metro would not have to reimburse the member-officer for liability insurance incurred for use of the same vehicle. In the personal use agreement, Lewis also stated that he understood that he "will may be responsible for any claim which exceeds $100,000" and that he could obtain supplemental, private insurance.¹ Lewis did not do so.

On June 17, 2011, Lewis departed work at LMPD, collected his children from school and visited a drug store before heading home. On his way home, Lewis's vehicle crossed the center line of Smyrna Road in Jefferson County and struck Betty Braden's vehicle in which her husband, Don, was a passenger. Don Braden died as a result of this accident. Betty Braden brought claims against Lewis in her individual capacity and as Administratrix of her husband's estate. Louisville Metro intervened to provide a defense for Lewis. However, Louisville Metro also filed a motion for declaratory judgment on the question of its liability for Lewis's liability beyond $100,000 pursuant to the personal use agreement and the CBA. Lewis and the Estate each filed motions for declaratory judgment opposing Louisville Metro's position and asking the court to hold that Louisville Metro must indemnify Lewis for damages beyond $100,000 because Lewis was acting within the scope of his employment at the time of the accident.

On September 8, 2014, the trial court granted Braden's and Lewis's motions for declaratory judgment, reasoning that, at the time of the accident, Lewis was operating his vehicle in compliance with LMPD's standard operating procedures (SOPs) regarding its take-home vehicle policy. For this reason, the trial court concluded that Lewis "was acting within the scope of his employment at the time of the accident" for purposes of the Claims Against Local Governments Act (CALGA). KRS 65.200, et seq . The trial court subsequently overruled Louisville Metro's motion to alter, amend, or vacate; and this appeal follows. We shall relate additional facts as they become necessary to our analysis.

Standard of Review

The present controversy can be reasonably reduced to the following issues: whether Lewis was acting within the scope of his employment at the time of the accident and whether compliance with LMPD's SOPs is dispositive of that question under Kentucky law. While they rely upon certain facts contained in the record, these are largely questions of law which require our interpretation and application of Kentucky statutes, specifically, CALGA. Hence, we review the trial court's legal conclusion de novo . See Richardson v. Louisville/Jefferson Cnty. Metro Gov't , 260 S.W.3d 777, 779 (Ky. 2008), citing Osborne v. Commonwealth , 185 S.W.3d 645, 648 (Ky. 2006).

Analysis

As a preliminary matter, we note that, on October 8, 2015, Louisville Metro filed a motion to dismiss this appeal as to John Lewis, arguing that Lewis's settlement with, and assignment of claims to, the Estate, divested him of his status as a "real party in interest" pursuant to CR ² 17.01. A Motion Panel of this Court passed disposition of the motion to this panel, and we address it now.

CR 17.01 requires that "[e]very action shall be prosecuted in the name of the real party in interest ...." One Kentucky Court has defined "the real party in interest" as the "one entitled to the benefits of action upon the successful prosecution thereof[,]" and required that any such party have "some right to protect which is not being protected." Stuart v. Richardson , 407 S.W.2d 716, 717 (Ky. 1966). This right "must be of a direct and immediate character so that the intervener will either gain or lose by the direct legal operation of the judgment." Id ., quoting 67 C.J.S. Parties § 57. Where a party completely assigns his rights and claims in a cause of action to another party or parties, the assignee becomes the owner of the cause of action and is the "real party in interest." See Louisville & N. R. Co. v. Mack Mfg. Corp ., 269 S.W.2d 707 (Ky. 1954), citing Works v. Winkle , 314 Ky. 91, 234 S.W.2d 312 (1950).

Lewis assigned the entirety of his claims and rights to the Estate upon settlement, thereby surrendering his status as a "real party in interest." In consideration for Lewis's settlement with the Estate, Lewis agreed to the "[a]ssignment to [the Estate] of Lewis'[s] rights and claims to full indemnification by and from Louisville Metro and against Louisville Metro as asserted in the Coverage Dispute and coverage from Louisville Metro...." It follows that the result of this appeal and any subsequent rulings in this case could have no effect on Lewis's rights and obligations. He has nothing to "gain or lose." Louisville & N.R. Co. at 707. Therefore, Lewis is no longer a "real party in interest." That he or his brethren might have a "rooting" interest in the outcome of this appeal, or that Lewis attempted to reserve his continuing interest in the case in the Settlement Agreement, is insufficient to overcome this fundamental function of law.

For this reason, we grant Louisville Metro's Motion to Dismiss as to Lewis.

However, in the interest of maintaining a well-developed record, we elect against striking Lewis's brief, and will instead limit our review to those arguments the Estate presents on appeal.

I. CALGA

In 1988, the General Assembly passed CALGA, which sought to protect current and former civil servants from the financial burden of litigation arising from their work for local governments. KRS 65.2001(2) ; see also Richardson v. Louisville/Jefferson Cnty. Metro Gov't , 260 S.W.3d 777, 781 (Ky. 2008). To that end, CALGA requires local governments to "provide for the defense of any employee ... in any action in tort arising out of an act or omission occurring within the scope of his employment ...." KRS 65.2005(1). "The local government shall pay any judgment based thereon or any compromise or settlement of the action ...." Id . However, a local government's obligation to indemnify its employee is limited under CALGA:

(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 ... ;

(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

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