Jay Railton Morgan v. Ford Motor Company ( 2021 )

RENDERED: JULY 2, 2021; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-1479-MR
JAY RAILTON MORGAN APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE MITCH PERRY, JUDGE
ACTION NO. 17-CI-005772
FORD MOTOR COMPANY; JAMES
CARROLL; JAMES T. YOUNG;
MARY CULLER; AND ZIAD OJAKLI APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: DIXON, GOODWINE, AND TAYLOR, JUDGES.
DIXON, JUDGE: Jay Railton Morgan appeals from the order dismissing his
claims against Ford Motor Company (“Ford”), James Carroll, James T. Young,
Mary Culler, and Ziad Ojakli,1 entered by the Jefferson Circuit Court on August
28, 2019. Following a careful review of the record, briefs, and law, we affirm.
1
Carroll, Young, Culler, and Ojakli were employees and agents of Ford at all times relevant
herein.
FACTS AND PROCEDURAL BACKGROUND
Morgan was employed by Ford for 23 years. In 2008, Morgan
reported that Carroll and Young engaged in insider trading. In 2011, purportedly
in retaliation for his report, Morgan was transferred from his position in
Washington, D.C., to another one in Louisville, Kentucky. On December 17,
2012, Morgan was advised that Greg Fischer—mayor of Louisville, Kentucky—
made “‘very serious’ derogatory accusations about . . . Morgan’s work and conduct
in Louisville as the Ford representative.” Morgan was given a three-month notice
of termination and an offer of early retirement. On March 28, 2013, Morgan’s
employment with Ford was terminated.
On June 14, 2013, Morgan brought a whistleblower action under the
Sarbanes-Oxley Act of 20022 against Ford with the U.S. Department of Labor,
Occupational Safety and Health Administration (OSHA), asserting he suffered
adverse employment actions at Ford in retaliation for reporting insider trading.3
Mediation was held in Washington, D.C. Ford asserted it had legitimate, non-
retaliatory grounds to terminate Morgan because it had statements from Fischer
and Dr. Kevin Cosby—President of Simmons College—that Morgan had
2
18 United States Code (U.S.C.) § 1514A.
3
Case No. 4-1510-13-043.
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committed Ford funds to build a worker training facility in Louisville. Pursuant to
Ford policies, unauthorized commitment of Ford funds is grounds for termination.
Despite claims he did not authorize such funds, Morgan entered into a confidential
settlement agreement with Ford on August 6, 2013, for less than he felt entitled.
The settlement was approved by OSHA on August 29, 2013, and the case was
closed.
Morgan later filed an action against Fischer and Dr. Cosby4 alleging
they made false statements to Ford—the substance of which was that Morgan
committed Ford funds without authorization—to get him fired. Ford intervened in
the action, claiming Morgan improperly used confidential mediation
communications—in breach of the settlement agreement—as the principal basis for
his lawsuit. Both Fischer and Dr. Cosby stated in their respective affidavits that
they did not make the statements, or similar statements, alleged by Morgan.
Morgan did not provide any affirmative evidence to rebut the affidavits, nor did he
provide evidence that, even if the statements were made, they were made with
malice. Consequently, the trial court granted summary judgment against Morgan,
which was subsequently affirmed on appeal by another panel of our Court on
March 24, 2017.
4
Jefferson Circuit Court, Case No. 13-CI-06576.
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Meanwhile, on November 10, 2015, Morgan requested his original
whistleblower claim be reopened, alleging Ford misrepresented its possession of
statements from Fischer and Dr. Cosby concerning the unauthorized commitment
of Ford funds that provided a legitimate, non-retaliatory reason for termination.
On January 4, 2016, OSHA dismissed Morgan’s complaint for lack of jurisdiction.5
Morgan appealed to the Office of Administrative Law Judges. On June 9, 2017,
that appeal was also dismissed for lack of jurisdiction.6
On October 31, 2017, Morgan filed his complaint in the case herein7
seeking to undo his settlement with Ford, which he claimed was procured by fraud.
Morgan asserts he was forced to accept a reduced settlement because “Ford” told
him—at mediation—that Fischer and Dr. Cosby made statements to Ford that
would constitute grounds for the termination of Morgan’s employment. Appellees
moved the trial court to dismiss this action for lack of personal jurisdiction or, in
the alternative, for failure to state a claim upon which relief may be granted. After
the motion was briefed and arguments heard, the trial court entered its opinion and
5
Case No. 4-1221-16-001.
6
Case No. 2016-SOX-00019.
7
In his complaint, Morgan describes Culler as one of his supervisors at Ford who took adverse
employment actions against him and Ojakli as one of his superiors at Ford who was very angry
with him for reporting Ojakli’s friend, Young, for insider trading.
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order granting the motion to dismiss the complaint with prejudice. This appeal
followed.
STANDARD OF REVIEW
Appellees moved the trial court to dismiss this action for lack of
personal jurisdiction. “Jurisdiction is a question of law, and our review is de
novo.” Commonwealth v. B.H., 548 S.W.3d 238, 242 (Ky. 2018) (citations
omitted). “Furthermore, ‘[s]tatutory interpretation raises pure questions of law, so
our review is [de] novo, meaning we afford no deference to the decisions below.’”
Id.In the alternative, Appellees moved the trial court to dismiss the
complaint under CR8 12.02(f) for failure to state a claim upon which relief may be
granted. Kentucky’s highest court has interpreted this standard, observing:
A motion to dismiss for failure to state a claim upon
which relief may be granted “admits as true the material
facts of the complaint.” So a court should not grant such
a motion “unless it appears the pleading party would not
be entitled to relief under any set of facts which could be
proved. . . .” Accordingly, “the pleadings should be
liberally construed in the light most favorable to the
plaintiff, all allegations being taken as true.” This
exacting standard of review eliminates any need by the
trial court to make findings of fact; “rather, the question
is purely a matter of law. Stated another way, the court
must ask if the facts alleged in the complaint can be
proved, would the plaintiff be entitled to relief?” Since a
motion to dismiss for failure to state a claim upon which
8
Kentucky Rules of Civil Procedure.
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relief may be granted is a pure question of law, a
reviewing court owes no deference to a trial court’s
determination; instead, an appellate court reviews the
issue de novo.
Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (footnotes omitted).
JURISDICTION
Courts recognize three categories of jurisdiction: (1) subject matter
jurisdiction involving authority over the nature of a case and the general type of
controversy, (2) jurisdiction over a particular case involving authority to decide a
specific case, and (3) personal jurisdiction involving authority over specific
persons. Hisle v. Lexington-Fayette Urban Cty. Gov’t, 258 S.W.3d 422, 429 (Ky.
App. 2008). Here, the trial court found it did not have personal jurisdiction over
the Appellees—who are neither Kentucky citizens nor a Kentucky corporation—
under Kentucky’s long-arm statute.
In relevant part, Kentucky’s long-arm statute, KRS9 454.210,
provides:
(1) As used in this section, “person” includes an
individual, his executor, administrator, or other personal
representative, or a corporation, partnership, association,
or any other legal or commercial entity, who is a
nonresident of this Commonwealth.
(2) (a) A court may exercise personal jurisdiction over a
person who acts directly or by an agent, as to a claim
arising from the person’s:
9
Kentucky Revised Statutes.
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1. Transacting any business in this
Commonwealth;
2. Contracting to supply services or goods in this
Commonwealth;
3. Causing tortious injury by an act or omission in
this Commonwealth;
4. Causing tortious injury in this Commonwealth
by an act or omission outside this Commonwealth
if he regularly does or solicits business, or engages
in any other persistent course of conduct, or
derives substantial revenue from goods used or
consumed or services rendered in this
Commonwealth, provided that the tortious injury
occurring in this Commonwealth arises out of the
doing or soliciting of business or a persistent
course of conduct or derivation of substantial
revenue within the Commonwealth;
...
(b) When jurisdiction over a person is based solely upon
this section, only a claim arising from acts enumerated in
this section may be asserted against him.
(Emphasis added.) Despite the lengthy factual allegations detailed in the
complaint, this is a suit which hinges upon fraud, which Morgan alleges occurred
at the mediation held in Washington, D.C.10 Morgan does not allege that any
tortious conduct at issue in this suit occurred in Kentucky, nor does he allege his
10
Morgan’s complaint consists of more than 35 pages of factual allegations, but the fraud claim
is pled in less than three pages.
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claims arise from the Appellees’ performance of any of the acts listed under KRS
454.210, in Kentucky, which would confer the court jurisdiction over them.
Even so, Morgan asserts—for the first time on appeal—that KRS
452.450 and Section 112 of the Kentucky Constitution provide the trial court
jurisdiction. However, only issues fairly brought to the attention of the circuit
court are adequately preserved for appellate review. Elery v. Commonwealth, 368
S.W.3d 78, 97 (Ky. 2012) (citing Richardson v. Commonwealth, 483 S.W.2d 105,
106 (Ky. 1972); Springer v. Commonwealth, 998 S.W.2d 439, 446 (Ky. 1999); and
Young v. Commonwealth, 50 S.W.3d 148, 168 (Ky. 2001)). Accordingly, Morgan
waived his ability to raise arguments concerning jurisdiction under KRS 452.450
and the Kentucky Constitution by failing to raise them before the trial court.
SETTLEMENT AGREEMENT
The trial court further found that, even if it had jurisdiction over all
the parties in the case herein, Morgan’s claims are barred by the terms of the
settlement agreement. Settlement agreements are a type of contract governed by
contract law. See Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 105 (Ky. 2003). “A
fundamental rule of contract law holds that, absent fraud in the inducement, a
written agreement duly executed by the party to be held, who had an opportunity to
read it, will be enforced according to its terms.” Conseco Fin. Servicing Corp. v.
Wilder, 47 S.W.3d 335, 341 (Ky. App. 2001). “‘[I]n the absence of ambiguity a
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written instrument will be enforced strictly according to its terms,’ and a court will
interpret the contract’s terms by assigning language its ordinary meaning and
without resort to extrinsic evidence.” Frear, 103 S.W.3d at 106 (citations
omitted). It is also well-settled that “[t]he construction and interpretation of a
contract, including questions regarding ambiguity, are questions of law to be
decided by the court.” First Commonwealth Bank of Prestonsburg v. West, 55
S.W.3d 829, 835 (Ky. App. 2000). Because the construction and interpretation of
a contract is a matter of law, it is reviewed under the de novo standard. Nelson v.
Ecklar, 588 S.W.3d 872, 878 (Ky. App. 2019), review denied (Dec. 13, 2019).
Here, the terms of the contract were clear and unambiguous. The
agreement provided a release of Morgan’s claims against Ford and its agents and
employees. It specifically stated this release included, but was not limited to,
Morgan’s claims against Young, Culler, and Ojakli. This release also covered any
and all of Morgan’s claims against Ford and its agents and employees, whether
known or unknown, “from the beginning of the world through the Effective
Date[.]”11 The agreement noted it “is intended to be broadly construed to release
all claims arising up to the Effective Date[.]” It further recited that Morgan’s
decision to sign the agreement “is knowing and voluntary and not induced by the
Company [(Ford)] or any Associated Persons, or any agent or employee of the
11
The “Effective Date” is the eighth calendar day after Morgan executed the agreement.
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Company or any Associated Persons, through fraud, misrepresentation or a threat
to withdraw or alter the Company’s offer to provide the consideration described in
Section 2[.]” The agreement further stated, “No party has been or is being
influenced to any extent or is relying upon any representation, covenant or
statement by any other person unless set forth in this Agreement.” These
provisions foreclose Morgan’s claims concerning fraudulent inducement to enter
the agreement. All other claims contained in Morgan’s complaint in the case
herein predate the effective date of the agreement. Thus, they are barred by the
terms of the agreement.
FRAUD
Nevertheless, the trial court opined that even if it had jurisdiction over
the Appellees, and Morgan’s claims were not otherwise barred by the terms of the
settlement agreement, Morgan still failed to meet the heightened pleading standard
in setting forth his fraud claims against the Appellees. In United Parcel Service
Company v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999), Kentucky’s highest court
set forth the elements of a fraud claim:
the party claiming harm must establish six elements of
fraud by clear and convincing evidence as follows: a)
material representation b) which is false c) known to be
false or made recklessly d) made with inducement to be
acted upon e) acted in reliance thereon and f) causing
injury. Wahba v. Don Corlett Motors, Inc., [573 S.W.2d
357, 359 (Ky. App. 1978)].
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It is enough to plead the time, place, the substance of the false representations, the
facts misrepresented, and the identification of what was obtained by the fraud.
Scott v. Farmers State Bank, 410 S.W.2d 717 (Ky. 1966). This “does not require
textbook pleading of all elements of fraud but requires merely that plaintiff set
forth facts with sufficient particularity to apprise defendant fairly of charges
against him.” Id. at 722.
Yet, review of Morgan’s complaint—which he has neither amended
nor moved to amend—reveals fatal flaws in his failure to specifically plead his
fraud claims against the Appellees. CR 9.02 provides, “[i]n all averments of fraud
or mistake, the circumstances constituting fraud or mistake shall be stated with
particularity. Malice, intent, knowledge, and other condition of mind of a person
may be averred generally.” “[A]t a minimum, Rule 9(b) requires that the plaintiff
specify the who, what, when, where, and how of the alleged fraud.” Sanderson v.
HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006) (internal quotation
marks and citation omitted) (discussing federal counterpart to CR 9.02). Morgan’s
complaint does not identify who made the alleged misrepresentations he claims to
have relied upon during mediation. Absent this requirement, it is impossible to
establish the elements from which a cause of action for fraud might arise.
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CONFIDENTIALITY
The trial court found the alleged misrepresentations are inadmissible
because they occurred at mediation and are protected from disclosure by the
Uniform Mediation Act (UMA) adopted in Washington, D.C. The trial court
further pointed out that, although the UMA has not been formally adopted in
Kentucky, Jefferson Circuit Court Rules of Civil Procedure, Local Rule 1312
mandates that mediation shall be considered as settlement negotiations for
purposes of KRE12 408. However, we need not look beyond the agreement itself to
determine that every allegation concerning the parties’ conduct prior to the
effective date of the agreement was to be kept confidential. The agreement states
Morgan “agrees to keep strictly confidential the existence of this Agreement, the
allegations raised in or related to the Asserted Claims, and the existence or
substance of the negotiations and mediation leading up to this Agreement.” To the
extent Morgan’s claims concern any actions by the Appellees prior to mediation,
they are still barred under the settlement agreement, for the reasons previously
discussed.
DAMAGES
The trial court further found that Morgan’s damages are not
cognizable. Morgan failed to challenge this ruling. His failure to raise an
12
Kentucky Rules of Evidence.
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argument concerning this issue constitutes waiver. Johnson v. Commonwealth,
450 S.W.3d 707, 713 (Ky. 2014).
CONCLUSION
Therefore, and for the foregoing reasons, the order of the Jefferson
Circuit Court is AFFIRMED.
ALL CONCUR.
BRIEF FOR APPELLANT: BRIEF FOR APPELLEES:
Thomas A. McAdam, III R. Thad Keal
Louisville, Kentucky Prospect, Kentucky
Katherine V.A. Smith
Los Angeles, California
Amanda C. Machin
Jacob T. Spencer
Washington, D.C.
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