Hamilton Mutual Insurance Company of Cincinnati, Ohio v. Hon Doughlas M. George Judge, Taylor Circuit Court ( 2006 )

IMPORTANT NOTICE
NOT TO BETUBL]Sf!ED-
OPINION
THIS OPINION IS DESIGNATED "NOT TO BE
PUBLISHED." PURSUANT TO THE RULES OF
CIVIL PR0CEDURE PR0IVIUL GA TED BY THE
SUPREME COURT, CR 76.28 (4) (c), THIS OPINION
IS NOT TO BE PUBLISHED AND SHALL NOT BE
CITED OR USED AS A UTHORITYINANY OTHER
CASE INANY COURT OF THIS STATE.
RENDERED : JUNE 15, 2006
NOT TO BE PUBLISHED
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2005-SC-000818-MR
10A7E 7-6-6& . . ,, ~ .C-.
HAMILTON MUTUAL INSURANCE
COMPANY OF CINCINNATI, OHIO APPELLANT
ON APPEAL FROM THE COURT OF APPEALS
V. NO . 2005-CA-001621
HON. DOUGLAS M . GEORGE (JUDGE,
TAYLOR CIRCUIT COURT), ET AL. APPELLEES
MEMORANDUM OPINION OF THE COURT
AFFIRMING
In this original action in the Court of Appeals, Appellant, Hamilton Mutual
Insurance, petitioned for a writ prohibiting the Taylor Circuit Court from allowing the
discovery of items in the personnel files of Hamilton employees who were connected
with the adjustment of a related claim. The Court of Appeals denied the writ holding
that the trial court had not abused its discretion . Appellant now seeks review of the
order of the Court of Appeals, as a matter of right.' For the reasons stated herein, we
affirm the denial of the writ.
On June 2, 1995, twenty-one year old Steven Barnett was killed instantly
in an automobile accident when a drunk driver, speeding on the wrong side of the road,
struck head-on the car in which Barnett was a passenger . At the time of the accident,
1 Ky . Const. § 115.
Steven's father, Harlon Barnett, held a policy of insurance with Appellant that included
stackable coverages of $900,000.00 in underinsured motorist benefits.
On May 20, 1996, Harlon Barnett, as administrator of the estate of Steven
Barnett, filed a wrongful death action in the Marion Circuit Court for recovery of
damages as a result of Steven's death . In that action, the Barnett Estate recovered a
total of $67,999.99 from the liability insurers of the two vehicles involved in the collision .
He also settled an underinsured motorist claim against Appellant for $587,500.00.
On January 4, 2000, Harlon Barnett, individually and as administrator of
the estate of Steven Barnett, brought an Unfair Claims Settlement Practices Act
(UCSPA) claim against Hamilton Mutual and Caulk and Eastridge Insurance Center,
Inc . In this complaint, Harlon Barnett alleged that Hamilton Mutual violated provisions of
the UCSPA and the Consumer Protection Act in connection with its handling of the
underinsured motorist claim. During discovery, Harlon Barnett made the following
Request for Production of Documents :
All personnel records, performance goals, job descriptions,
and objectives, whether in the form of personnel records,
unit goals, divisional goals, regional goals, or interoffice
memoranda, or any other papers or documents which
describe the goals, objectives, or any performance reviews,
for the following employees for the time period of January 1,
1985, through the present:
(1) Mike Loftus (7) Bill Eckard
(2) Greg Smith (8) Jill/Joe Ohradzansky
(3) Dick Goedde (9) Dick Hilgendorf
(4) Bill Rhoads (10) Terry Sullivan
(5) John Miller (11) Jeff Felts
(6) John Keller
In Hamilton Mutual's response, dated August 5, 2003, objection was made
to producing the requested records for anyone other than Michael Loftus, and stating
that it would only produce those records and documents with an appropriate
confidentiality order. Harlon Barnett then filed a motion to compel the production of the
personnel files for the other identified persons, and on March 10, 2005, the trial court
issued an order compelling discovery, stating in part the following:
2. Plaintiff's motion to compel is sustained based upon
Grange Mutual Insurance Company v. Trude, 151 S.W.3d
803 (Ky. 2004) . Subject to the provisions of paragraph 3
below, the Defendant shall produce within twenty (20) days
of the date of this order the following:
a . Personnel files of the following employees of the
Defendants: Mike Loftus, Greg Smith, Dick Goedde,
Bill Rhoads, John Miller, John Keller, Bill Eckard,
Joe/Jill Ohradzansky, Dick Hilgendorf, Terry Sullivan,
and Jeff Felts .
b. The Defendants may redact, pursuant to Trude,
personal items contained in the personnel file such as
marital information, tax and dependent data, medical
information, health insurance data, workers'
compensation claims, and retirement account data .
3. If Defendants believe any of the items ordered to be
produced herein contain matters that are privileged, then a
privilege log shall be produced and the items produced for
an in camera inspection within twenty (20) days of this
Order.
Thereafter, Hamilton Mutual produced the files of Keller and Loftus, but
filed discovery responses, stating in part as follows :
Personnel files of Greg Smith, Dick Goedde, John Miller,
John Keller, Bill Eckard, Joe Ohradzansky, Dick Hilgendorf,
Terry Sullivan and John Felts are not produced. HMIC
objects to producing personnel files of the above named
individuals because they have nothing to do with the claim
handling in this case and, pursuant to the authority of
Grange Mutual Insurance Company v. Trude , 151 S .W.3d
803 (Ky. 2004), discovery of these personnel files would be
irrelevant and not calculated to lead to the discovery of
relevant information.
Hamilton Mutual also moved the court for a protective order, requesting that it not be
required to produce the remaining personnel files of their employees . Thereafter, Judge
Doughlas George entered an order granting Hamilton Mutual's motion as to employees
John Miller, Bill Eckert and Jeff Felts. However, Hamilton Mutual was ordered to
produce the personnel files of Greg Smith, Joe Ohradzansky, Bill Hilgendorf and Terry
Sullivan . That same day, Hamilton Mutual sought reconsideration, and after a July 19,
2005 hearing, the trial court denied the motion and ordered the Defendant to produce
the personnel files.
On August 1, 2005, Hamilton Mutual filed a petition pursuant to CR 76.36
in the Court of Appeals, seeking an order prohibiting the discovery of the
aforementioned personnel files. Promptly thereafter, the Court of Appeals issued an
order denying the petition for a writ of prohibition, holding as follows :
The petitioner seeks to prevent enforcement of
discovery orders requiring petitioner to provide personnel
data on four employees . Petitioner argues that this material
is irrelevant and that great injury will result. However,
examination of the supporting exhibits submitted indicates
that these four employees were involved in internal
discussions of the insurance claim which is the subject of the
circuit court action. It also appears that those discussions
were conducted in furtherance of the petitioner's processing
of the claim . The allegations of irrelevance were presented
to the trial court and were rejected. We can find no abuse of
discretion in that ruling .
The petitioner's allegations of great injury are refuted
by the trial court's properly limiting the material to be
discovered under Granae Mutual Insurance Company v.
Trude, 151 S.W.3d 803 (Ky. 2004), and by ordering that the
discovered material be protected as confidential .
This Court may issue "all writs" by authority of Section 110(2)(a) of the
Constitution of Kentucky, and may review Court of Appeals orders granting or denying
writs pursuant to CR 76 .36. A writ "may be used by a court in a discretionary manner
and only when the situation is so exceptional that there is no other adequate remedy at
law to prevent a miscarriage of justice ."2 "This careful approach is necessary to prevent
short-circuiting normal appeal procedure and to limit so far as possible interference with
the proper and efficient operation of our circuit and other courts ."3
This Court has consistently divided writ cases into two classes, which are
distinguished based on whether the claim is that the lower court is: (1) acting without or
beyond its jurisdiction, or (2) acting erroneously within its jurisdiction.4 "In the second
class of cases relief ordinarily has not been granted unless the petitioner established, as
conditions precedent, that he (a) had no adequate remedy by appeal or otherwise, and
(b) would suffer great and irreparable injury (if error has been committed and relief
denied) ." 5 We "have consistently (apparently without exception) required the petitioner
to pass the first test; i. e., he must show he has no adequate remedy by appeal or
otherwise ." 6 A party would then have to satisfy the second prong of the test by showing
great and irreparable injury, alternately defined as "something of a ruinous nature,"
before a writ would issue .7 "Ordinarily if this cannot be shown, the petition will be
dismissed." s
2 Graham v. Mills, 694 S.W.2d 698, 700 (Ky. 1985) (citin Shumaker v. Paxson , 613
S .W .2d 130 (Ky. 1981) ; Warecke v. Richardson , 468 S .W .2d 795 (Ky. 1971) ; Pace v.
Wolfinbarger , 420 S.W .2d 561 (Ky. 1967)) .
3 Bender v. Eaton , 343 S.W.2d 799, 800 (Ky. 1961) .
4 _Id .
5 Id . at 801 (emphasis in original) .
6 _Id .
Grange Mutual Ins. Co. v. Trude , 151 S.W.3d 803, 808 (Ky. 2004) uotin Bender ,
343 S.W.2d at 801)) .
8 Bender , 343 S.W .2d at 801 .
In this case, neither party has asserted that the trial court is acting without
jurisdiction, and since circuit courts possess general jurisdiction, 9 this case must be
analyzed under the second class of cases .
"[W]hether to grant or deny a petition for a writ is within the appellate
court's discretion", 1° and when this Court reviews a Court of Appeals' decision to grant
or deny a writ we apply an abuse of discretion standard ." "[I]f the alleged error lies in
findings of fact of the Court of Appeals, 12 e .g ., the finding regarding irreparable harm,
then we would review for clear error under CR 52.01 ."13 "This is supported by the fact
that the petition for a writ is an original action in which the court that hears the petition,
in this case the Court of Appeals, acts as a trial court." 14 And findings of fact by a trial
court are reviewed using a clear error standard . 15
Appellant asserts that the discovery requested is irrelevant, because Greg
Smith, Joe Ohradzansky, Dick Hildgendorf and Terry Sullivan, were not substantially
involved in the handling or adjustment of Appellee's claim . However, the Circuit Court
and the Court of Appeals saw it otherwise, and our review of the. record is in accord with
the lower courts . Appellant concedes that Ohradzansky, Hildgendorf, and Sullivan all
participated "in a round-table discussion that occurred in May 1996 immediately after
9 Ky. Const. §112(5).
1°
Rehm v. Clayton, 132 S.W.3d 864, 866 (Ky. 2004) (quoting Peterson v. Shake , 120
S .W .3d 707, 711 (Ky. 2003) (Keller, J., concurring)) .
11 Newell Enterprises v. Bowling , 158 S .W .3d 750, 754 (Ky. 2005) (citin Ha~ght v.
Williamson , 833 S.W.2d 821, 823 (Ky. 1992)) ; Grange Mutual Ins. Co. , 151 S.W.3d at
809-10 .
12 Findings of fact are permitted by an appellate court when it has original jurisdiction
over the matter .
13
. at 755.
Id
14
Grange Mutual Ins. Co. , 151 S.W.3d at 810.
15 CR 52 .01 ; see also Grange Mutual Ins. Co ., 151 S.W.3d at 810.
receipt of the complaint filed by the Estate of Steven Barnett ." This was during the
timeframe in which Hamilton employee Smith wrote certain statements regarding the
claim, and the amount of monetary liability that could be incurred by Hamilton Mutual.
Additionally, as the Court of Appeals found in its review of the claim, all "four of these
employees were involved in internal discussions of the insurance claim . . . conducted in
furtherance of the petitioner's processing of the claim." And while the discovery sought
may be ultimately found to be irrelevant, we have held that a "showing of irrelevancy is
not a method of proving great and irreparable injury . Mere possession of irrelevant
information by an opposing party is not `something of a ruinous nature ."'16
The learned trial court complied fully with our decision in Grange Mutual
Ins . Co . v. Trude, l" and took every precaution it deemed appropriate to prevent
irrelevant or privileged information from being revealed to Appellee . The trial court
insured that privileged information not be furnished to Appellee by offering to conduct an
in camera review of the documents before they were ordered released to Appellee . The
Court of Appeals noted that there would be no great injury to Appellant, because of the
trial court's compliance with our ruling in Gran e, and based on the trial court's finding
that the information sought to be discovered was indeed relevant. Our review of the
record supports this conclusion .
As such, we affirm the denial of the writ by the Court of Appeals .
Lambert, C.J., and Cooper, Graves, Johnstone, Roach, Scott, and
Wintersheimer, JJ ., concur .
16
Grange Mutual Ins. Co. , 151 S.W.3d at 811 (_quoting Bender, 343 S.W.2d at 801) .
17 151 S .W.3d 803 (Ky. 2004) .
COUNSEL FOR HAMILTON MUTUAL
INSURANCE COMPANY OF CINCINNATI, OHIO :
David A. Nunery
105 East Main Street
Campbellsville, KY 42718
COUNSEL FOR HON. DOUGHLAS M . GEORGE
(JUDGE, TAYLOR CIRCUIT COURT)
Hon. Doughlas M. George
Judge, Taylor Circuit Court
P. O. Box 328
Springfield, KY 40069-0328
COUNSEL FOR HARLON BARNETT
(INDIVIDUALLY, REAL PARTY IN INTEREST)
AND HARLON BARNETT (ADMINISTRATOR OF
THE ESTATE OF STEVEN RAY BARNETT,
REAL PARTY I N INTEREST)
M . Austin Mehr
Timothy E . Geertz
AUSTIN MEHR LAW OFFICES, P .S.C .
145 West Main Street, Suite 300
Lexington, KY 40507
COUNSEL FOR CAULK & EASTRIDGE INSURANCE
COMPANY (REAL PARTY IN INTEREST) :
Benjamin D: Crocker
CROCKER LAW OFFICES, PLLC
558 East Tenth Street
P. O. Box 187
Bowling Green, KY 42102-0187