author: Justice GRANT (Retired).

text:
    Jack PIERCE, Appellant, v. John T. (Jake) HOLIDAY, Appellee.
    No. 06-03-00153-CV.
    Court of Appeals of Texas, Texarkana.
    Submitted June 9, 2004.
    Decided Jan. 25, 2005.

      Robert D. Bennett, Robert D. Bennett & Associates, PC, Gilmer, for appellant.
    Reid Wm. Martin, Sammons & Parker, PC, Tyler, for appellee.
    Before ROSS, CARTER, and GRANT, JJ.

       Ben Z. Grant, Justice, Retired, Sitting by Assignment.

   OPINION

Opinion by

Justice GRANT (Retired).

Jack Pierce sued John T. (Jake) Holiday for injuries Pierce allegedly sustained while cutting hay on Holiday’s farm. The trial court granted Holiday’s Motion for Partial Summary Judgment and later granted Holiday’s full summary judgment motion. Pierce appeals the trial court’s granting of summary judgment.

Pierce contends on appeal the trial court erred in granting summary judgment because he was not, as Holiday had claimed, a dual capacity employee. (Holiday had argued before the trial court that Pierce’s status as a dual capacity employee made him ineligible for worker’s compensation benefits under the Texas Workers’ Compensation Act.) Pierce further contends on appeal that a question of fact remains as to whether Holiday was negligent, and thus the trial court erred by granting summary judgment.

Before we address the trial court’s granting of summary judgment, we must address two other issues raised by the parties’ briefs on appeal. The parties have misconstrued this case as one involving workers’ compensation and the theory of a dual capacity employee. This case concerns neither issue. Pierce did not seek worker’s compensation benefits under the Texas Workers’ Compensation Act, Tex. Lab.Code Ann. § 406.091(a)(3) (Vernon 1996), nor did he seek recovery through the Workers’ Compensation Board; and Pierce’s original petition (and each amended petition thereafter) clearly sought damages for injuries in negligence.

The dual capacity issue’s only relevance might go to whether certain defenses could be raised.

As to whether Holiday was a nonsubscriber, the pleading and burden of proof in establishing whether an employer has subscribed to workers’ compensation insurance is on the employer. An employer who carries workers’ compensation insurance may assert, as an affirmative defense, the fact that an employee’s work-related injuries are solely compensable under the Act. See, e.g., Montemayor v. Chapa, 61 S.W.3d 758 (Tex.App.-Corpus Christi 2001, no pet.) (affirming an award of summary judgment for temporary employment agency under “borrowed servant” doctrine because the plaintiff had obtained workers’ compensation benefits from the employer for which the plaintiff worked at the time of the accident). Because an employer’s status as a subscriber to workers’ compensation is an affirmative defense, the duty is on the employ er/defendant — not the employee/plaintiff — to plead and prove such facts. Tex.R. Civ. P. 94. The wisdom behind this pleading rule is that the employer/defendant is in the best position to know such a fact and is best able to marshal the necessary evidence in support thereof. Furthermore, the record in this case shows Pierce did offer evidence Holiday was a nonsubscriber. In his deposition, Pierce stated Holiday had admitted he did not carry insurance.

We now turn to the real issue on appeal: whether the trial court erred by granting Holiday’s motion for summary judgment. There are two types of summary judgment: traditional and no-evidence. Tex.R. Civ. P. 166a(c), (i). Holiday sought summary judgment on both grounds. The trial court’s order did not explain why it granted summary judgment, nor did it specify whether it granted a traditional or a no-evidence summary judgment. Therefore, we will analyze each type of summary judgment to determine if the trial court was correct under either theory. See Alaniz v. Hoyt, 105 S.W.3d 330, 344 (Tex.App.-Corpus Christi 2003, no pet.); McKillip v. Employers Fire Ins. Co., 932 S.W.2d 268, 270 (Tex.App.-Texarkana 1996, no writ).

A. Traditional Summary Judgment

In a traditional motion for summary judgment, “the moving party must establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.” Youngblood v. U.S. Silica Co., 130 S.W.3d 461, 464 (Tex.App.-Texarkana 2004, pet. filed). “Summary judgment for a defendant is proper when the defendant negates at least one element of each of the plaintiffs theories of recovery or pleads and conclusively establishes each element of an affirmative defense.” McGowen v. Huang, 120 S.W.3d 452, 457 (Tex.App.-Texarkana 2003, pet. denied). On appeal, we must review the trial court’s judgment by examining the evidence in the light most favorable to the nonmovant, disregarding any contrary evidence or inferences. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

Pierce’s original petition claimed Holiday was hable for damages under six different theories of negligence: (a) Holiday failed to properly train Pierce to use the farm equipment; (b) Holiday failed to provide proper equipment; (c) Holiday failed to keep his premises in such condition as to provide a safe working environment; (d) Holiday failed to warn Pierce of a dangerous condition on the premises; and, alternatively, (e) Holiday failed to inspect the premises, and (f) Holiday failed to warn Pierce, as an invitee, of a dangerous condition. We collectively discuss Pierce’s final four causes of action as premises liability claims.

Holiday’s motion for traditional summary judgment contended the evidence conclusively disproved an element of Pierce’s premises liability claims. The motion did not, however, attack Pierce’s claim for receiving inadequate training or his claim that he was provided inadequate equipment. Thus, to the extent Holiday did not attack all of Pierce’s causes of action, the trial court should not have granted summary judgment as to all of Pierce’s claims.

We now turn to Holiday’s motion for summary judgment regarding Pierce’s premises liability claims. An invitee must prove a premises liability claim by showing (1) that the defendant had actual or constructive knowledge of some condition on the premises, (2) that the condition posed an unreasonable risk of harm, (3) that the defendant failed to exercise reasonable care to eliminate or reduce the risk of that harm, and (4) that the defendant’s failure to use such care proximately caused the invitee’s injury. Brookshire Grocery Co. v. Taylor, 102 S.W.3d 816, 820 (Tex.App.-Texarkana 2003, pet. filed). According to Holiday, the testimony of Darwin Gunby and Dwayne Brown conclusively show that Holiday had no actual or constructive knowledge whether there were any “holes or washouts” in the field.

Gunby, however, testified he could not remember whether he had bailed any hay during the season when Pierce was allegedly injured. Nor did he specifically testify — -and his testimony does not otherwise suggest — he had specific knowledge that no holes or washouts existed in the field on the date of Pierce’s alleged injury. Instead, Gunby testified he did not remember coming across any large hole on Holiday’s property, but no time frame was attached to this claim. And Gunby conceded that Holiday owned equipment which he could have used to fill in any hole that might have existed. Further, Gunby’s testimony reflects only his personal knowledge; his testimony says nothing of what Holiday did or did not know regarding the field’s condition before Pierce’s alleged injury.

Brown also testified he had not ever had any problems with washouts in the field and had never noticed any holes in the field. But he acknowledged that if there had been a big hole on the property somewhere, Holiday had the capability of filling in the hole. Brown did not specifically state whether Holiday had actual or constructive notice of any dangerous condition in the field on the date of Pierce’s alleged injury.

Viewing the evidence in the light most favorable to Pierce, we cannot say the evidence before the trial court conclusively disproved the foreknowledge element of Pierce’s premises liability claims. Further, Holiday’s motion for traditional summary judgment did not address Pierce’s other causes of action regarding inadequate training and equipment (claims a and b). See McGowen, 120 S.W.3d at 457 (summary judgment is proper only if the defendant conclusively disproves an element of each of the plaintiffs causes of action). Accordingly, the trial court should not have granted a full and final summary judgment in Holiday’s favor based on his motion for traditional summary judgment.

B. No-Evidence Summary Judgment

“A no-evidence motion for summary judgment asserts that there is no evidence of one or more essential elements of a claim on which the adverse party will bear the burden of proof at trial.” Alaniz, 105 S.W.3d at 344 (citing Tex.R. Civ. P. 166a(i); Scripps Tex. Newspapers, L.P. v. Belalcazar, 99 S.W.3d 829, 840 (Tex.App.-Corpus Christi 2003, pet. denied)). In reviewing a no-evidence summary judgment, “the initial question is whether there is some evidence to support each element of the cause of action.” Taylor v. Wood County, 133 S.W.3d 811, 815 (Tex.App.-Texarkana 2004, no pet.).

In his deposition, Pierce testified that he did not know whether Holiday had any foreknowledge of any holes or washouts in the field. He also admitted that the hole in question might have been difficult to see because the hay had grown so tall. A reasonable conclusion from this testimony might be that even if Holiday had tried to find a hole in the field, the hay might have obscured the hole from view. Pierce testified a recent rain might have caused the washout. Brown admitted in his testimony he knew there were often gopher holes in the field. However, there was no summary judgment proof support that Holiday knew or should have known of the hole Pierce was alleged to have hit. There also was no showing that Holiday drove the tractor into a gopher hole, and there was no showing that Holiday knew of any gopher holes. Pierce’s testimony suggests the hole may have been caused by a recent rain, but this testimony does not impute any knowledge of the hole’s existence to Holiday and does not raise any evidence that Holiday should have known of its existence. Therefore, because the summary judgment proof does not raise some evidentiary support for this necessary element of the plaintiffs premises liability cause of action, the tidal court’s granting of the no-evidence summary judgment on the premises liability portion of this case should be upheld.

Holiday’s motion for no-evidence summary judgment, however, contended only that there was no evidence about the element of Holiday’s foreknowledge of the alleged dangerous condition that caused Pierce’s injury. Pierce’s no-evidence motion for summary judgment did not attack Pierce’s causes of action regarding inadequate training and equipment. Thus, the trial court should not have granted a no-evidence summary judgment in favor of Holiday on all of Pierce’s claims when Holiday’s no-evidence motion for summary judgment did not attack all of Pierce’s causes of action.

For the foregoing reasons, we affirm the trial court’s granting of no-evidence summary judgment on the premises liability theory, and we reverse and remand the case for further proceedings on the other alleged liability theories.

      . Gunby and Brown are Holiday's grandsons.


source: Caselaw Access Project

author: /s/ Joseph E. Lambert Chief Justice

license: Public Domain

text:
    John R. HANSEN (KBA Member No. 82821), Movant v. KENTUCKY BAR ASSOCIATION, Respondent.
    No. 2004-SC-1102-KB.
    Supreme Court of Kentucky.
    Feb. 17, 2005.
   OPINION AND ORDER

The Kentucky Bar Association (KBA) brought this action against Movant, John R. Hansen, of Hazard, Kentucky, for violations of SCR 3.130-1.4(b), SCR 3.130-1.16(d), and SCR 3.130-1.1. Movant admits the violations set forth in the Kentucky Bar Association’s charge and moves for a public reprimand. As the KBA has no objection to the motion, the discipline proposed by Movant is hereby adopted.

The foregoing ethical violations arose when Movant began representing Bruce and Malissa Combs in a personal injury action arising out of an automobile accident that occurred in Tennessee in March 2000. Movant was not licensed to practice law in Tennessee but did send letters to insurance companies, doctors, and hospitals, requesting medical records and other information. On November 7, 2000, Mov-ant was elected Commonwealth’s Attorney for Perry County. Because of his election, Movant could no longer maintain a private law practice. Therefore, in December 2000, he began closing his law practice, and he mailed letters to some of his clients informing them that he could no longer represent them. Mr. and Mrs. Combs claim that they did not receive a letter.

In January 2001, after taking office as the Perry County Commonwealth’s Attorney, Movant was contacted by Mr. Combs to discuss the personal injury case. Mov-ant referred Mr. Combs to Jeanne Chan-nell, an attorney in Hazard, and provided her with the client file. Channell refused to take the case, however, because she was not licensed in Tennessee. Channell did advise the Combses that the one-year statute of limitations on their personal injury case would expire on March 13, 2001. Movant had not advised the Combses of that fact and agrees that it was his responsibility to do so — even though the Combses had acquired actual knowledge of that fact before the period of limitations expired. Following her meeting with the Combses, Channell notified Movant that she had not accepted the case and returned the file to Movant.

In March or April 2001, Mr. Combs contacted Movant and inquired about his case. Movant contacted Channell and learned that the statute of limitations had expired on the case. Movant did not advise Mr. Combs of that fact but instead contacted another attorney, Jeffrey Morgan, who agreed to examine the file. Morgan determined that the statute of limitations had indeed expired and informed the Combses of that fact. At no time had Movant advised Mr. and Mrs. Combs that the statute of limitations on their personal injury claim would expire on March 13, 2001.

Movant admits that he violated SCR 3.130-1.16(d) when he failed to inform Mr. and Mrs. Combs that he could no longer represent them because of his election as Commonwealth’s Attorney. Movant admits that he violated SCR 3.130-1.4(b) (“[a] lawyer should explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation”) by failing to personally inform the Combses of the date the statute of limitations would expire on their case, and of the fact that he was not licensed to practice law in Tennessee. Movant also admits that he violated SCR 3.130-1.1 (“[a] lawyer shall provide competent representation to a client”) when he failed to ascertain when the statute of limitations would expire on his clients’ personal injury case at the commencement of, or at any time during, the representation.

Movant requests that he be publicly reprimanded. As noted, the KBA does not object to the proposed disposition. Accordingly, IT IS HEREBY ORDERED that:

1. Movant is publicly reprimanded.

2. In accordance with SCR 3.450, Movant is directed to pay all costs associated with these disciplinary proceedings against him, said sum being $8.15, and for which execution may issue from this Court upon finality of this Opinion and Order.

All concur.

ENTERED: February 17, 2005.

/s/ Joseph E. Lambert Chief Justice


author: /s/ Joseph E. Lambert CHIEF JUSTICE

text:
    Donna K. MCNEW, Movant, v. KENTUCKY BAR ASSOCIATION, Respondent,
    No. 2004-SC-1122-KB.
    Supreme Court of Kentucky.
    Feb. 17, 2005.

      Harry P. Hellings, Jr., Hellings & Pisa-cano, Covington, Counsel for Movant.
    Jay R. Garrett, Kentucky Bar Association, Bruce K. Davis, Executive Director, Kentucky Bar Association, Frankfort, Counsel for Respondent.
   OPINION AND ORDER

The Movant, Donna K. McNew, KBA Member No. 82102, petitions this Court to enter an order permanently disbarring her from the practice of law in the Commonwealth. The Movant, whose last known address is 624 Madison Avenue, Coving-ton, Kentucky 41011, requests permanent disbarment for the numerous charged and uncharged violations of The Kentucky Rules of Professional Conduct as follows:

(a) three counts of violating SCR 3.130-1.3 (diligence);
(b) five counts of violating SCR 3.130-1.4(a) (communication);
(c) two counts of violating SCR 3.130-1.4(b) (communication);
(d) three counts of violating SCR 3.130-1.15(b) (failure to provide funds to a client);
(e) four counts of violating SCR 3.130-8.1(b) (failure to comply with request from disciplinary authority); and
(f)seven counts of violating SCR 3.130-8.3(c) (dishonesty, fraud, deceit or misrepresentation).

In addition to permanent disbarment, Movant also agrees to pay the costs of the investigation and disciplinary action.

Wal-Mart cases

Movant represented Dorothy Young in an action against Wal-Mart. Without Young’s knowledge or consent, Movant signed an agreed order dismissing the case with prejudice and signed a general release of all claims. Movant failed to inform Young of the settlement, kept the $10,000.00 settlement check, and failed to respond to the Inquiry Commission’s complaint. Movant admits that she violated SCR 3.130-1.4(a) and (b), 1.15(b), 8.1(b), and 8.3(c).

Movant also represented Juanita Talley in her action against Wal-Mart. The case was dismissed with prejudice for Movant’s failure to prosecute; however, Movant did not inform Talley of the dismissal and continued to maintain that she was negotiating a settlement in the case. Movant admits that she violated SCR 3.130-1.4(a) and 8.3(c) in her representation of Talley.

Disability/workers’ compensation cases

Movant undertook representation of Terri L. Combs to obtain disability benefits from Combs’s employer’s insurance carrier. Movant did not pursue Combs’s claim, yet maintained to Combs that the case was underway. Movant ignored Combs’s various requests for information and failed to respond to Combs’s bar complaint. Movant admits that she violated SCR 3.130-1.3,1.4(a), and 8.1(b).

Movant agreed to represent Vickie Woo-dall in a workers’ compensation claim. Movant did not file a claim on Woodall’s behalf or take any steps to pursue the claim; yet she told Woodall that she was awaiting a court date for the claim she had filed. Movant also failed to respond to Woodall’s bar complaint. Movant admits that these acts violated SCR 3.130-1.3, 8.1(b), and 8.3(c).

E. Myron R.H. Rader sought Movant’s legal services for a workers’ compensation claim and a civil lawsuit he wished to file. Movant failed to take any action on behalf of Rader and misled Rader on several occasions by stating that she was waiting on a summary judgment ruling, had obtained summary judgment, or was waiting for news on the workers’ compensation claim. Eventually Movant stopped responding to Rader’s phone calls. Movant admits that her actions violated SCR 3.130-1.3,1.4(a), and 8.3(c).

Personal injury case

Movant represented John Santini in his personal injury action. Movant settled the case and signed a release of all claims on behalf of Santini without his knowledge. When she received the $11,000.00 settlement check, she forged Santini’s name and kept the money for herself. She also failed to respond to Santini’s bar complaint. Movant admits that she violated SCR 3.130-1.4(a) and (b), 1.15(b),, 8.1(b), and 8.3(c).

Estate case

Movant represented the Estate of Robert Clifford and was appointed administra-trix. She did not file the estate inventory or any other documents with the probate court. The sole beneficiary received two checks as settlement of the estate amounting to approximately $200,000.00. The larger check in the amount of $159,136.40 was returned for insufficient funds. When estate documents were forwarded to the local judge because Movant had moved without leaving a forwarding address, it was discovered that over $120,000.00 was unaccounted for and that Movant had cashed several of the Estate’s certificates of deposits and had sold the real property without depositing the money into the Estate account. Movant used Estate money to purchase a car and various other items for herself. Movant admits that her actions violated SCR 3.130-1.15(b) and 8.3(c).

Conservator case

Movant was appointed conservator of a fund for a minor with cancer. The fund was generated from contributions and fund raising events. Movant used $5,000.00 of the fund for her personal use, although she did return the money. Movant also did not provide updates on the fund to the minor’s parents. She admits that these actions violated SCR 3.130-8.3(c).

The Bar Association has no objection to Movant’s “Motion to Resign under Terms of Permanent Disbarment.”

ACCORDINGLY, IT IS HEREBY ORDERED:

(1) Movant, Donna K. McNew, is permanently disbarred from the practice of law in the Commonwealth of Kentucky for multiple violations of SCR 3.130-1.3, 1.4(a) and (b), 1.15(b), 8.1(b), and 8.3(c).

(2) Pursuant to SCR 3.390, Movant shall, within ten (10) days from the entry of this Opinion and Order, notify in writing all courts in which she may have matters pending and all clients, of her inability to provide further legal services, and furnish the Director of the Kentucky Bar Association with a copy of all' such letters.

(3) In accordance with SCR 3.450, Mov-ant shall pay all costs associated with these disciplinary proceedings against her, including the amount of $113.75 assessed against her as of December 21, 2004, and for which execution may issue from this Court upon finality of this Opinion and Order.

All concur.

Entered: February 17, 2005.

/s/ Joseph E. Lambert CHIEF JUSTICE


text:
    Michael E. CAUDILL, Movant, v. KENTUCKY BAR ASSOCIATION, Respondent.
    No. 2004-SC-1111-KB.
    Supreme Court of Kentucky.
    Feb. 17, 2005.
   OPINION AND ORDER

Movant, Michael E. Caudill, has acknowledged that the Inquiry Commission has grounds to issue a charge against him, and therefore Movant has chosen to resign under terms of permanent disbarment before a charge can be authorized against him. Pursuant to SCR 3.480(3), Caudill, moves this Court to enter an order permanently disbarring him from the practice of law in the Commonwealth of Kentucky. The Kentucky Bar Association has filed a response indicating it has no objection to the motion.

Caudill was admitted to the practice of law in the Commonwealth of Kentucky on April 1, 1974, Membership Number 13325, and his bar roster address is 1001 Center Street, Suite 206, Bowling Green, Kentucky 42101.

On or about November 24, 2004, Caudill entered into a guilty plea agreement, with the United States Attorney’s Office for the Middle District of Tennessee, to one count of Embezzlement of Money Belonging to the United States or Under a Program Conducted by the United States, in violation of Title 18 U.S.C. § 641.

He also entered into a second guilty plea agreement with the Commonwealth of Kentucky in Warren County, Kentucky, to two counts of theft by Failure to Make Required Disposition of Property over $300. On December 8, 2004, he filed a Motion to Enter a Guilty Plea consistent with this guilty plea agreement. Further proceedings are scheduled for February 10, 2005.

By verified motion, Caudill has admitted that his conduct violated SCR 3.130-8.3(b), which provides, “It is professional misconduct for a lawyer to commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness and lawyer in other respects.” Also, he has acknowledged that his conduct has constituted unethical conduct in violation of the Kentucky Rules of Professional Conduct.

Caudill seeks to terminate these proceedings by resigning under terms of permanent disbarment. He has acknowledged that he cannot be reinstated to practice from permanent disbarment, and that the .provisions of SCR 3.480(3)(a) and SCR 3.510 do not apply.

Caudill has agreed that upon entry of an order of this Court sustaining his Motion to Resign Under Terms of Permanent Disbarment, he will never again engage in the practice of law in the Commonwealth of Kentucky.

Based upon Caudill’s motion to resign under terms of permanent disbarment from the practice of law, it is ordered the motion is sustained.

Therefore, it is ORDERED that:

1. Michael E. Caudill is hereby permanently disbarred from' the practice of law in Kentucky. This disbarment shall commence on the date of entry of this order.

2. There being no costs associated with these disciplinary proceedings, the provisions of SCR 3.450 do not apply.

3. Pursuant to SCR 3.390, Michael E. Caudill shall, within ten (10) days from the entry of this Opinion and Order, notify all clients in writing of his inability to represent them, and notify all courts in which he has matters pending' of his disbarment from the practice of law, and furnish copies of said letters of notice to the Director of the Kentucky Bar Association.

4. Michael E. Caudill is also ordered to immediately cancel any and all advertising in which he may be engaged to the extent possible.

All concur.

ENTERED: February 17th, 2005.

/s/ Joseph E. Lambert Chief Justice


text:
    Roscoe C. BRYANT, III, Movant, v. KENTUCKY BAR ASSOCIATION, Respondent.
    No. 2004-SC-000918-KB.
    Supreme Court of Kentucky.
    Feb. 17, 2005.
    Roscoe C. Bryant III, Indian Head, MD, for Movant.
    Bruce K. Davis, Executive Director, Kentucky Bar Association, Frankfort, for Respondent.
   OPINION AND ORDER

By order' entered February 7, 2002, this Court ordered that Movant, Roscoe C. Bryant, III, be suspended from the practice of law in Kentucky for nonpayment of bar dues. Movant filed his application for Restoration on November 1, 2004 under the provisions of SCR 3.500.

. The record reveals that Movant has been suspended for less than five years. He has completed all necessary forms and has tendered the $250.00 fee as well as all back dues. Further, he has been certified by the Director of CLE Commission as having completed sufficient CLE credit through the end of the current educational year ending June 30, 2005. As such, the Board of Governors, by a vote of 14 to 2, recommended approval of his application for Restoration. The two dissenting votes resulted from an apparent mistake in the Notary Statement on Movant’s Application, wherein the Notary failed to properly notarize Applicant’s signature. Therefore, Bar Counsel requested that Movant correct this mistake in the Notary Statement on the Application. On January 14, 2005, the Kentucky Bar Association filed the amended certification of costs in the amount of $102.15.

Based on the foregoing facts and recommendations, it is THEREFORE ORDERED that Movant is readmitted to the practice of law in the state of Kentucky, subject to his correction of said notary mistake and subject to the payment of all costs incurred by the Kentucky Bar Association associated with this proceeding, said sum being $ 102.15.

All concur.

ENTERED: February 17, 2005.

/s/ Joseph E. Lambert Chief Justice


author: KNOPF, Judge.

text:
    Donald Sid BOONE, Appellant, v. COMMONWEALTH of Kentucky, Appellee.
    No. 2003-CA-000042-MR.
    Court of Appeals of Kentucky.
    Sept. 3, 2004.
    Discretionary Review Denied March 9, 2005.

      Richard Hoffman, Assistant Appellate Advocate Department of Public Advocacy, Frankfort, KY, for appellant.
    Gregory D. Stumbo, Attorney General of Kentucky, Samuel J. Floyd, Jr., Assistant Attorney General, Frankfort, KY, for ap-pellee.
    Before JOHNSON, KNOPF, and SCHRODER, Judges.
   OPINION

KNOPF, Judge.

Donald Sid Boone appeals from a judgment of conviction confirming a jury verdict finding him guilty of first-degree sexual abuse. He argues that the trial court erred by failing to grant a mistrial after a police officer commented on his invocation of his right to remain silent. Boone also contends that the trial court erred by failing to grant his motions for a directed verdict and for probation of his sentence. Finding no error, we affirm.

On July 20, 2001, a Mason County Grand Jury returned an indictment charging Boone with one count of first-degree sexual abuse. Subsequently, the grand jury returned another indictment charging Boone with three counts of second-degree sexual abuse, two counts of second-degree sodomy, and one count each of first-degree sodomy, and criminal attempt to commit second-degree sodomy. One of the second-degree sodomy charges was dismissed prior to trial. Following a trial, the jury acquitted Boone on the first-degree sodomy charge, but found him guilty of one count of first-degree sexual abuse. The jury was unable to reach a verdict on the remaining charges and the trial court granted a mistrial on those counts. The jury fixed Boone’s sentence at five years’ imprisonment, which the trial court imposed. Boone now appeals.

The charges in this case were brought after J.H., then twelve years old, accused Boone of having sexual contact with him and sodomizing him. Boone met J.H.’s family during the summer of 2000 when Boone was assigned to provide transportation to a Cincinnati hospital for J.H.’s sister. Boone developed a friendship with J.H., inviting J.H. to come to church with him. At first, Boone picked up J.H. on Sundays and took him to church and then to eat. Subsequently, they began spending more time together. Eventually, J.H. began to spend Saturday nights at Boone’s house, where Boone lived with his parents. On several of these overnight visits, J.H. slept with Boone in Boone’s bed.

Their relationship ended abruptly in early 2001, when J.H. reported that Boone had fondled his genitals and sodomized him on several occasions. Following this report, Detective Sherman Royce of the Kentucky State Police interviewed Boone about J.H.’s accusations. Boone strongly denied the sodomy charges. However, according to Detective Royce, Boone admitted that he had touched J.H.’s penis once because he was “curious”. Boone denies having said this, but admits that he once accidentally touched J.H.’s crotch, although J.H. was clothed at the time.

At trial, Detective Royce related his account of this interview. Detective Royce also mentioned that Boone declined to allow this interview to be tape-recorded. Boone’s counsel immediately objected, arguing that Detective Royce’s reference amounted to an improper comment on Boone’s right to remain silent. The trial court agreed, sustaining the objection and admonishing the jury to disregard the statement about Boone declining to put his statement on tape. In this appeal however, Boone argues that the trial court should have granted a mistrial sua sponte.

We disagree. The trial court admonished the jury on that issue and defense counsel sought no further relief. The failure to move for a mistrial following an objection and admonition indicates satisfactory relief. Stated otherwise, if Boone felt that the admonition was inadequate, it was incumbent on him to move the trial court for a further admonition or to move for a mistrial. Consequently, this issue is not preserved for review.

Furthermore, we find no palpable error from the trial court’s failure to grant a mistrial. A jury is presumed to follow an admonition to disregard evidence, and the admonition thus cures any error. There are only two circumstances in which the presumptive efficacy of an admonition falters: (1) when there is an overwhelming probability that the jury will be unable to follow the court’s admonition and there is a strong likelihood that the effect of the inadmissible evidence would be devastating to the defendant; or (2) when the question was asked without a factual basis and was “inflammatory” or “highly prejudicial.” Neither exception applies here.

Boone primarily argues that the trial court erred by failing to grant a directed verdict on the charge of first-degree sexual abuse. As Boone correctly notes, the Commonwealth bears the burden of proving each element of the charged offense beyond a reasonable doubt. On a motion for directed verdict, the trial court must draw all reasonable inferences from the evidence in favor of the Commonwealth. Only if it would be clearly unreasonable for a jury to find guilt can an appellate court disturb a jury’s guilty verdict.

KRS 510.110 provides that a person is guilty of first-degree sexual abuse when: (a) he subjects another person to sexual contact by forcible compulsion; or (b) he subjects another person to sexual contact who is incapable of consent because he is physically helpless, less than twelve years old, or mentally handicapped. KRS 510.010(7) defines “sexual contact” to mean “any touching of the sexual or other intimate parts of a person done for the purpose of gratifying the sexual desire of either party[.]” -

Boone first argues that the Commonwealth failed to prove that any touching which occurred was for the purpose of sexual gratification. He relies heavily on his own testimony in which he admitted that he brushed his hand against J.H.’s crotch once, but only inadvertently. However, J.H. gave a substantially different account of these events, and Detective Royce testified that Boone admitted that the contact was intentional. Although the evidence .on this point was conflicting, there clearly was sufficient evidence for the jury to conclude that the contact was for the purpose of sexual gratification.

Boone next argues that the Commonwealth failed to prove that J.H. was physically helpless when any sexual contact occurred. The Commonwealth did not argue that Boone subjected J.H. to sexual contact by forcible compulsion. Furthermore, J.H. was not mentally incapacitated, and J.H. was not “less than twelve years old” — he was twelve years old at the time of the alleged offense. Thus, the Commonwealth was required to prove that J.H. was incapable of giving consent because he was physically helpless.

KRS 510.010(6) defines “physically helpless” to mean “that a person is unconscious or for any other reason is physically unable to communicate unwillingness to an act.” The statute goes on to add that “ ‘[p]hysically helpless’ also includes a person who has been rendered unconscious or for any other reason is physically unable to communicate an unwillingness to an act as a result of the influence of a controlled substance or legend drug[.]” The commentary to this statute notes that this definition “would include the situation where a person is in a deep sleep as a result of barbiturates, unconscious because of excessive alcohol consumption, or a total paralytic.”

Boone points out that J.H. was not restrained, incapacitated, intoxicated, or drugged at the time of the alleged contact. Rather, during the incident in question, J.H. was merely sleeping, and J.H. testified that he woke up when the contact began. Consequently, Boone contends that J.H. was not “physically helpless” within the meaning of the statute. The Commonwealth responds that a normally sleeping person is “unconscious” and therefore incapable of giving consent to sexual contact.

We find no Kentucky cases which directly address this question. Furthermore, we note that some comparable statutes from other states expressly include a sleeping victim in their definition of “physically helpless.” The omission from Kentucky’s version of the definition might suggest a legislative intention to exclude a victim who is normally sleeping from the definition of physically helpless.

However, a number of statutes from different states also do not include sleep as part of the definition of “physically helpless.” Nevertheless, those jurisdictions have consistently concluded that the statutory definition of “physically helpless” is broadly worded to encompass a person who is sleeping, since such a person is temporarily unconscious or is otherwise physically unable to communicate unwillingness to act. We find the reasoning in these cases to be persuasive.

The definition of “physically helpless” is primarily concerned with the victim’s physical inability to flee or to consent to sexual contact. Although sleep may not always be a fully unconscious condition, “[i]t is axiomatic that sleep is the antithesis of awareness. It is that periodic state of rest in which consciousness is suspended. Whether induced by drug, or achieved by normal processes, being in the state of sleep renders one unable of making a conscious choice.” Given the evidence in the present case, the jury could reasonably find that J.H. was asleep at the time the sexual contact began and therefore incapable of giving any consent to it. Therefore, the trial court did not err in denying Boone’s motion for a directed verdict on the charge of first-degree sexual abuse.

Lastly, Boone argues that the trial court abused its discretion when it refused to probate his sentence. Prior to final sentencing, a sexual offender risk assessment report was prepared. The report concluded that Boone was amenable to sexual offender treatment, that he did not pose a high risk of offending again, and that he did not appear to pose an immediate threat to public safety. Boone asserted that he would probably have to serve out his sentence if he were incarcerated, due to the length of time it would take to enroll in and then complete the two-year program. Boone also pointed out that he had never before been convicted of a crime other than a few minor traffic violations, he had been honorably discharged from the military and has a good record of community service, and that 190 people from the community had vouched for his good character. Boone also noted that he still lives with his aged parents and they rely on him for many household tasks. Lastly, Boone contended that the jury verdict was inconsistent — an acquittal on the most serious and specific felony and a conviction on the least serious and most general felony. Under the circumstances, Boone asserted that he was a good candidate for probation.

The trial court noted all of these factors, but nonetheless denied Boone’s request for probation. Based on several comments.by the trial judge during the sentencing hearing, Boone asserts that the trial court erroneously concluded that it lacked discretion to grant probation. We disagree. Of course, a trial court has substantial discretion to grant probation based on the statutory criteria set out in KRS 533.010(2). When the trial judge’s statements are considered in context, it is clear that the trial court did not improperly circumscribe its discretion regarding probation. The trial court obviously struggled with the question of probation, but ultimately found that granting probation to Boone would unduly depreciate the seriousness of the crime of which he had been, convicted. This conclusion was supported by substantial evidence and did not constitute an abuse of discretion.

Accordingly, the judgment of conviction by the Mason Circuit Court is affirmed.

ALL CONCUR.

      . KRS510.110.

      . KRS 510.120.

      . KRS 510.080.

      . KRS 510.070.

      . KRS 506.010.

      . Derossett v. Commonwealth, Ky., 867 S.W.2d 195, 197 (1993).

      . Lewis v. Charolais Corp., Ky.App., 19 S.W.3d 671, 676 (1999).

      . See RCr 10.26.

      . Mills v. Commonwealth, Ky., 996 S.W.2d 473, 485 (1999).

      . Johnson v. Commonwealth, Ky., 105 S.W.3d 430, 441 (2003).

      . KRS 500.070.

      . Commonwealth v. Benham, Ky., 816 S.W.2d 186 (1991).

      . Id. at 187.

      . See also Johnson v. Commonwealth, Ky., 864 S.W.2d 266 (1993) (victim unconscious due to alcohol consumption).

      . At trial, J.H. testified that Boone sometimes gave him "vitamin pills”, and after taking those pills he felt drowsy. The Commonwealth suggests that these pills were some kind of sedative. However, there was no evidence concerning the nature of these pills. Furthermore, the Commonwealth concedes that the trial court’s instruction to the jury defining the term "physically helpless” did not include the latter portion of the definition.

      . See, e.g., Colo.Rev.Stat. § 18-3-401(3); Mich. Comp. Laws § 750.520a(k); Fla. Stat. § 794.011(1)(e); R.I. Gen. Laws § 11-37-1(6); Tenn.Code Ann. § 39-13-501(5).

      . See State v. Stevens, 311 Mont. 52, 53 P.3d 356, 361-63 (2002); People v. Copp, 169 Misc.2d 757, 758-59, 648 N.Y.S.2d 492 (N.Y.City Ct., 1996); State v. Rush, 278 N.J.Super. 44, 650 A.2d 373, 374-75 (N.J.Super.Ct.App.Div., 1994); Woodward v. Commonwealth, 12 Va.App. 118, 402 S.E.2d 244, 245-46 (1991); State v. Puapuaga, 54 Wash.App. 857, 776 P.2d 170 (1989); and State v. Moorman, 320 N.C. 387, 358 S.E.2d 502 (1987).

      . People v. Copp, 648 N.Y.S.2d at 493.

      . Turner v. Commonwealth, Ky., 914 S.W.2d 343, 347-48 (1996).

      . Near the conclusion of sentencing hearing, the court stated:
      I am going to say to you, however, that as difficult as I find it, I don’t think I have any choice but to rely on what the jury decided because it is in fact their province to do that, and that has been a part of the system of government in the United States since day one, and in England years before that. I feel like that the offense with which you were charged and now have been found guilty is so serious that I cannot — in spite of the fact that I might want to, I cannot send the message to this community that it is in any way acceptable to molest a child, and therefore I — I cannot probate you at .this time, .all right. I wish it could be otherwise. I don’t think I can do my job properly and grant probation.
      Transcript of Sentencing, January 3, 2003, pp. 26-27.

        .See KRS 533.010(2)(c).


author: EMBERTON, Senior Judge.

text:
    William BIBER and Information Technologies Consulting, Inc., Appellants, v. DUPLICATOR SALES & SERVICE, INC. d/b/a Derby City Lithographing; Jerry Nash and Debra Dedoming, Appellees.
    No. 2003-CA-001994-MR.
    Court of Appeals of Kentucky.
    Dec. 3, 2004.
    Rehearing Denied Jan. 19, 2005.

      John H. Ruby, Louisville, KY, for Appellants.
    R. Douglas Burchett, Angela D. Luc-chese, Blackburn, Hundley & Domeñe, PLLC, Louisville, KY, for Appellees.
    Before DYGHE and McANULTY, Judges; EMBERTON, Senior Judge.

      . Senior Judge Thomas D. Emberton sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.

   OPINION

EMBERTON, Senior Judge.

In December 2001, Information Technologies Consulting, Inc. owned by William Biber, and Duplicator Sales & Service Inc., d/b/a Derby City Lithographing, entered into a written contract under which Information Technologies agreed to perform consulting services for the design and implementation of computer network information technology and information systems. In exchange,' Duplicator Sales agreed to pay Information Technologies $70,000 for a period of one" year. Duplicator Sales terminated the agreement on January 15, 2002. Biber commenced this action alleging that Duplicator Sales failed to give propér notice when it terminated the contract and that Duplicator’s president, Jerry Nash, and its human resources manager, Debra deDoming, defamed him in making slanderous statements to other Duplicator Sales employees. The circuit court held that as a matter of law both claims failed and granted summary judgment. We agree.

The contract contained the following termination provision:

It is further understood and agreed that Client [DSS] may terminate this Agreement, -without cause, on 30-day written notice, and that upon the giving of such notice, Client [DSS] may, at its discretion, pay to Consultant [appellants] an amount equal to 30 days compensation under the Agreement, in lieu of requiring additional work under this Agreement. Following termination of this Agreement, regardless of reason, Client [DSS] shall have no further monetary obligation hereunder.

In January 2002, Duplicator Sales became aware that Biber was filling out purchase orders for an inflated price to a company owned by his wife but was actually obtaining the equipment through another company at a lower price. On January 15, 2002, Duplicator Sales terminated the agreement by giving a thirty-day written notice and paying Information Technologies $5,753.42.

Biber alleges that because Duplicator Sales terminated the contract for cause, it was required to give it notice of the breach of contract and five days to cure the deficient performance. The thirty-day notice and payment of one month’s fee, it contends, was not an effective termination. The construction, meaning, and legal effect of a written contract are matters of law for the court to decide. Absent ambiguity, a written contract is enforced according to its terms, with words being given their ordinary meaning.

Biber argues that the only viable interpretation of the termination provision is that if Duplicator Sales had cause to terminate the contract, it was required to give notice of the breach and five days to cure any deficient performance. Duplicator Sales points out that it does not allege that the contract was breached. Although it was dissatisfied with Biber’s deceptive buying practices and taking of profits, there was nothing in the contract to prohibit him from making a profit in addition to his contract fee. Biber admits that Duplicator Sales never informed him that the terms of the contract had been violated and nothing in the contract prohibited him from earning a profit from the computer transactions. By Biber’s own admission, the first clause of the termination agreement was not triggered.

The second clause of the termination provision, invoked by Duplicator Sales, would apply only when Duplicator Sales chose to terminate the contract and was obviously bargained for as an advantage to Duplicator Sales. A contract containing a termination without cause provision is not transformed into a “for cause only” provision because the party terminating the contract notifies the other party that the contract is being terminated for cause. The ordinary meaning of a without cause provision is that it includes cause, no cause, or even a reason morally indefensible. Biber contends that if Duplicator Sales had a reason to terminate the contract, it was precluded from terminating it on thirty days notice and payment of one month’s fee. Such interpretation defies the wording of the contract, common sense, and intent of the parties. As a matter of law, Biber’s breach of contract action fails.

Biber has also pursued a slander action against Nash and deDoming based on alleged statements made to other Duplicator Sales employees. The circuit court held that, as a matter of law, Biber could not succeed because the alleged statements were made between Duplicator Sales employees in the scope and course of their employment.

To establish an action for defamation four elements are necessary: (1) defamatory language; (2) about the plaintiff; (3) which is published; and (4)' which causes injury to reputation. In the context of statements made within the employment relationship, Kentucky courts have recognized a qualified privilege. In Columbia Sussex, the court held that statements made in the course of a robbery investigation regarding the culpability of an employee were privileged to the extent the statements were not made with malice and were not over-publicized. The determination of the existence of privilege is a matter of law, but whether it has been abused is a question of fact. The circuit court in the case before us did not reach the question of whether the privilege had been abused, but held, as a matter of law, that there was no publication because the words were not communicated and heard by an understanding third party. Because of the circuit court’s ruling, we are compelled to discuss the soundness of its reasoning.

The intra-corporate immunity rule, adopted in some jurisdictions, provides that there is no publication of statements between agents or employees of a corporation within the scope of employment and relative to duties performed for that corporation. In Nelson v. Lapeyrouse Grain Corporation, the court found the corporate structure sufficient to justify the rule.

A corporation can act only through its servants, agents or employees, and when officers and employees of a corporation act within the scope of their employment and within the line of their duties, they are not third persons vis-a-vis the corporation. (Citations omitted.)

The view has also been expressed that there is a practical need for a corporation to inform itself of the activities of its employees and to solve personnel-problems. To conduct its daily business, the employees and officers of a corporation must be able to freely discuss internal matters without fear of a civil lawsuit.

But not every jurisdiction has been willing to accept the intra-corporate immunity rule. There is the persuasive argument that such a rule opens the door to abuses permitting a person’s reputation to be defamed within the corporation without means of redress.

These jurisdictions consider damage to one’s reputation within a corporate community to be just as devastating as that effected by defamation spread to the outside. Although corporate officers might be the embodiment of the corporation ... they remain individuals with distinct personalities and opinions which might be affected just as surely as those of other employees by the spread of injurious falsehoods.

We can find no case where Kentucky has either expressly accepted or rejected the intra-corporate immunity rule. In Wyant v. SCM Corp., the plaintiffs defamation charge was based on a corporate internal personnel report. The court held that there was no evidence that the statement was ever published to a third person and that the qualified privilege was not defeated because the record disclosed no hint of malice. From the facts disclosed in the opinion, it is unclear whether the internal report was given to anyone else inside or outside the corporation or whether the court was adopting the intra-corpo-rate immunity rule. We find little guidance offered by the Wyant case and can find no case, including Columbia Sussex, where the rule is discussed. We view this as a case of first impression.

We believe the better view is that expressed in the Restatement and in those jurisdictions that decline to accept the rule. The right to recover for injuries to reputation is embodied in Section 14 of the Kentucky Constitution. We agree with our sister state, Indiana, where the court concluded that to hold that intra-corporate communications are communications with only the corporation and not a third person, creates an unacceptable legal fiction depriving court access to an employee who suffers real and significant damage from defamatory remarks.

We can see no reason to insulate a corporation, its officers, or employees from liability for defamation simply because the statements were made exclusively to corporate officers or employees. Our rejection of the rule is consistent with the interpretation of Kentucky law in Brewer v. American National Insurance where the court, faced with an absence of direct case law on the issue, concluded that Kentucky has recognized only a qualified privilege and would reject the intra-corporate immunity rule. We now expressly reject the intra-corporate immunity rule as it applies to defamation actions.

Although we disagree with the circuit court that intra-corporate communications are absolutely privileged, we affirm on the basis that the alleged statements were based on truth and pure opinion. Biber complains that Nash told other corporate employees that Biber’s profit taking and transactions through his wife’s company “was throwing up red flags” and appeared unethical. He allegedly stated he “felt like he had been conned by the world’s greatest con man.” The problems with the company, he allegedly said, would be straightened out “as soon as we get rid of all these Bill Bibers.” Even if motivated by malice or ill will, truth is an absolute defense to a defamation action. And an expression of opinion, as opposed to a defamatory statement of fact, is entitled to an absolute privilege. Quoting the Restatement (Second) of Torts, Section 566 (1977), in Yancey v. Hamilton the court adopted the following approach to the fact-opinion distinction:

“A defamatory communication may consist of a statement in the form of an opinion, but a statement of this nature is actionable only if it implies the allegation of undisclosed defamatory fact as the basis for the opinion.”

Alleged defamatory statements must be construed in the context of the entire communication.

Biber admits that he authored false purchase orders listing his wife’s company as the computer supplier and at prices higher than he actually paid. And he pocketed the profit from the transaction without informing Duplicator Sales of the actual price. The statements that these transactions threw up red flags, that they were causing Duplicator Sales financial difficulty, and that they appeared unethical are based on truthful facts. The reference to Biber as a “con man” is likewise an opinion based on the facts admitted. In Yancey, after being charged with murder, Yancey was the subject of a newspaper article in which it was reported that a family friend told the newspaper that Yancey was a con artist. The court held that while the statement was not one of pure opinion, the truth of the facts underlying the statement had to be determined by a jury. In this case, Biber admits that he was dishonest in his dealings with Duplicator Sales. Although the label offends him, it is based on truthful facts and is not actionable.

We disagree with the circuit court’s opinion that communications between corporate employees is not a publication for the purpose of establishing a defamation action. We affirm the summary judgment, however, because the words allegedly uttered were absolutely privileged as expressions of opinion based on truthful facts.

ALL CONCUR.

        . Morganfield Nat. Bank v. Damien Elder & Sons, Ky., 836 S.W.2d 893 (1992).

      . O’Bryan v. Massey-Ferguson, Inc., Ky., 413 S.W.2d 891 (1966).

      . Hunt Enterprises, Inc. v. John Deere Industrial Equipment Co., 18 F.Supp.2d 697 (1997)(holding that although a reason was provided in the termination letter, the "without cause” termination provision was applicable).

      . Firestone Textile Co., Div. v. Meadows, Ky., 666 S.W.2d 730 (1983).

      . Scifres v. Kraft, Ky.App., 916 S.W.2d 779, 781 (1996).

      . Columbia Sussex Corp., Inc. v. Hay, Ky.App., 627 S.W.2d 270 (1981).

      . Id. at 275.

      . Id. at 276.

      . Id. at 274.

      . 50 Am Jur.2d., Libel and Slander § 247.

      . 534 So.2d 1085, 1093 (Ala.1988).

      . Blake v. May Dept. Stores Co., 882 S.W.2d 688, 691 (Mo.App.E.D.1994).

      . Bals v. Verduzco, 600 N.E.2d 1353, 1355 (Ind.1992).

      . Ky.App., 692 S.W.2d 814 (1985).

      . Id. at 816.

      . Bals, supra, at 1355-56.

      . 636 F.2d 150, 153-154 (1980).

      . Bell v. Courier-Journal & Louisville Times Co., Ky., 402 S.W.2d 84 (1966).

      . Ky., 786 S.W.2d 854, 857 (1989).

      . Id.

      . Id. at 859.


author: DYCHE, Judge.

text:
    KENTUCKY NATIONAL INSURANCE COMPANY, Appellant/Cross-Appellee, v. Shirley SHAFFER, Appellee/Cross-Appellant.
    Nos. 2003-CA-001390-MR, 2003-CA-001424-MR.
    Court of Appeals of Kentucky.
    Dec. 3, 2004.
    As Modified Feb. 4, 2005.
    Case Ordered Published by Court of Appeals Feb. 4, 2005.

      Galen L. Clark, Ricketts & Travis, Louisville, KY, for Appellant/Cross-Appel-lee.
    Charles E. Fell, Jr., Randall Wright, Louisville, KY, for Appellee/ Cross-Appellant.
    Before DYCHE and McANULTY, Judges; EMBERTON, Senior Judge.

      . Senior Judge Thomas D. Emberton sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.

   OPINION

DYCHE, Judge.

This case involves allegations of bad faith for failure to settle a claim stemming from an automobile accident under common law principles and the Kentucky Unfair Claims Settlement Practices Act, KRS 304.12-230. A jury trial was held, and the jury returned a verdict finding no common law bad faith, but nonetheless finding a statutory violation, for which the jury awarded $10,000. The jury declined to award any punitive damages. Upon our review, we conclude that, as a matter of law, there can be no claim for bad faith in the present matter. Therefore, we reverse the judgment. The appellee’s cross-appeal is hereby denied as moot.

The facts and proceedings of the underlying case involving the automobile accident include that on May 5, 1995, appellee, Shirley Shaffer, was injured in an automobile accident when Jesse Coe ran a red light, hitting the automobile in which Mrs. Shaffer was riding. Coe openly admitted liability in the accident, and his insurer, Farm Bureau, offered its $25,000 in coverage before suit was filed.

On May 6, 1996, Mrs. Shaffer filed suit in the underlying case in Jefferson Circuit Court originally naming only Jesse Coe and her underinsured motorist carrier, State Farm Mutual Automobile Insurance Company, as defendants. (“Shaffer v. Coe,” Case No. 96-CI-02663, 1998 WL 34111359 (1998)). It was not until after discovery in the Shaffer v. Coe case had commenced that Mrs. Shaffer learned that Coe was in the scope of his employment at the time of the accident. Coe was involved in the cleaning business and was en route to clean a restaurant on behalf of Reliable Cleaning Services.

Larry Casper owned and operated Reliable Cleaning Services and had a Commercial General Liability Policy issued by appellant, Kentucky National Insurance Company, with policy limits of $50,000. On November 10, 1997, Kentucky National received notice that Casper had been named as a third party defendant by State Farm in the Shaffer v. Coe matter. There is no dispute, however, that an exclusion in Casper’s policy applied, and there was, in fact, no liability coverage under the policy. In spite of the clearly worded exclusion, its relevance was unfortunately not discovered until after the trial in Shaffer v. Coe. Thus, Kentucky National never relied upon it to deny coverage.

Instead, upon notice of the suit, Kentucky National turned the matter of Shaffer v. Coe over to attorney Walter L. Porter and later to Matthew Troutman to offer a defense to Casper, as Kentucky National’s insured. At the time Kentucky National became involved in the Shaffer v. Coe matter, discovery had already started, and trial had already been set to commence within a few months.

The parties were not able to reach a settlement in Shaffer v. Coe prior to the commencement of trial, with each party placing blame on the other parties for failure to reach a settlement. However, in the middle of the trial, State Farm entered into a settlement with Mrs. Shaffer, in which Mrs. Shaffer was to receive a total of $125,000 from State Farm and State Farm, in turn, would collect Coe’s $25,000 policy limits and Kentucky National’s policy limits of $50,000. Although Kentucky-National offered its policy limits to Mrs. Shaffer’s attorney prior to closing arguments, the testimony in this matter clearly shows that neither she nor her husband were ever made aware of the offer. Apparently, Mrs. Shaffer’s attorney rejected the offer, and thereafter the jury returned with a verdict for $200,000. Following the jury’s verdict, Kentucky National again offered its policy limits.

Mrs. Shaffer thereafter brought the present action under an assignment of rights for both first party and third party common law bad faith and statutory bad faith, pursuant to KRS 304.12-230. A jury trial was held in the present matter, wherein the jury returned a verdict finding no common law bad faith, but nonetheless finding a statutory violation, for which the jury awarded $10,000. The jury declined to award any punitive damages.

Without further belaboring the facts, negotiations, and proceedings in both matters, there are several points which are readily settled. We pause to point out that the first three of these points are not dispositive of our conclusion in this case, but are, nonetheless, important to note for a full grasp of the nature of this matter.

First, there can be no real debate that there is very little in Kentucky National’s file regarding an investigation by a claims agent of Mrs. Shaffer’s claims. . Nor were ordinary insurance procedures followed in this matter. Nonetheless, at the point in which Kentucky National was notified of the claim, a lawsuit, with a nearing trial date, was already pending. Kentucky National’s attorney was directing the case, participating in discovery, and keeping Kentucky National informed of the status of the claims.

Second, the medical evidence regarding Mrs. Shaffer’s injuries was highly debatable. She had suffered from polio as a child and had some resultant complications from that. Furthermore, the record contains evidence that even her attorney believed her value of the case was exaggerated. She was seeking $2.1 million in damage's but was awarded only $200,000 from the jury.

Third, Kentucky National only offered its policy limits after the trial in Shaffer v. Coe had started. However, the record in the matter does not show any evidence that Mrs. Shaffer was willing to accept the policy limits from Kentucky National. In Mr. Shaffer’s deposition, he stated in no uncertain terms that Mrs. Shaffer “always wanted to go to trial ... [and didn’t] care if they award[ed][her] nothing.” When asked in his deposition if Mrs. Shaffer planned to go to trial, he stated, “Oh, absolutely. There was never any suggestion otherwise.”

Fourth, and most important for our disposition of this matter on an issue of law, all parties and experts in this matter agree that an exclusion applied in Kentucky National’s insurance policy with' Casper. Hence, there was never any actual coverage under the policy for Coe’s accident with Mrs. Shaffer. However, this exclusion was not discovered until after the jury verdict in Shaffer v. Coe. Notwithstanding the clear exclusion, Kentucky National still offered its policy limits of $50,000 to Mrs. Shaffer.

Kentucky National concedes that pursuant to Cincinnati Ins. Co. v. Vance, Ky., 730 S.W.2d 521 (1987), it was estopped from later withdrawing its legal representation in Shaffer v. Coe and paying under the policy. However, it maintains that payment of its policy limits is as far as its liability extends where there was no actual contractual obligation under the insurance policy. In other words, there can be no claim for bad faith where a contractual obligation for coverage is lacking.

In reviewing a bad faith claim, this Court must first look to Wittmer v. Jones, Ky., 864 S.W.2d 885 (1993). In Davidson v. American Freightways, Inc., Ky., 25 S.W.3d 94, 100 (2000), the Court noted that, “[w]riting for a unanimous Court in Wittmer, Justice Leibson gathered all of the bad faith liability theories under one roof and established a test applicable to all bad faith actions, whether brought by a first-party claimant or a third-party claimant, and whether premised upon common law theory or a statutory violation.”

Pursuant to Wittmer, 864 S.W.2d at 890 (citation omitted), the three required elements for a cause of action for bad faith are as follows:

(1)The insurer must be obligated to pay the claim under the terms of the policy; (2) the insurer must lack a reasonable basis in law or fact for denying the claim; and (3) it must be shown that the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed.

We have found no published Kentucky cases applying Wittmer under facts similar to those at hand. Texas courts have held, however, that as a general rule where there is no coverage there can be no claim for bad faith. See Republic Insurance Co. v. Stoker, 903 S.W.2d 338, 341 (Tex.1995); Meridian Oil Production, Inc. v. Hartford Accident and Indemnity Co., 27 F.3d 150, 152-53 (5th Cir.1994). However, while these cases are similar to the case at hand, they do lack the element of waiver and estoppel.

Notwithstanding this, upon consideration of the matter, we believe it is sound principle that, in absence of a contractual obligation in an insurance policy for coverage, there can be no claim for bad faith. This is particularly so when we consider that in Stoker, 903 S.W.2d at 341, the Court held that an insurer would not be liable for bad faith even though it gave an incorrect reason for the denial of the claim, where proper grounds existed for denial.

Our conclusion is buttressed by a review of how Kentucky courts have interpreted the elements under Wittmer. Our attention is drawn to Davidson, 25 S.W.3d 94, wherein the Court reviewed whether a bad faith claim could be brought against a self-insurer. In no uncertain terms, the Court held as follows:

The gravamen of the UCSPA is that an insurance company is required to deal in good faith with a claimant, whether an insured or a third-party, with respect to a claim which the insurance company is contractually obligated to pay. Absent a contractual obligation, there simply is no bad faith cause of action, either at common law or by statute ....

Davidson, 25 S.W.3d at 100 (emphasis in original).

We are aware that Davidson dealt with a separate coverage issue. Nonetheless, we find compelling the Court’s unequivocally firm holding that, in the absence of a contractual obligation to pay, there can be no action for bad faith. Therefore, we apply this principle to the present matter.

Accordingly, there being no contractual obligation to pay under the present policy, we conclude as a matter of law that Mrs. Shaffer could not maintain an action for bad faith against Kentucky National. Hence, the judgment of the Jefferson Circuit Court is hereby reversed. Based upon the disposition of this matter, Mrs. Shaffer’s cross-appeal is hereby denied as moot.

ALL CONCUR.

      . In the matter of Shaffer v. Coe, there was a substantial issue regarding whether Coe's status was that of an independent contractor or employee. The circuit court held, as a matter of law, that Coe was an employee.

      .At times through the Shaffer v. Coe matter, it was erroneously stated that Kentucky National’s policy limit was $100,000.

      . To the extent any arguments regarding bad faith relate to Coe, we find such to have no merit. Coe was defended by his own attorney throughout the Shaffer v. Coe proceedings and thus suffered no prejudice by the actions of Kentucky National. See Davis v. Home Indemnity Co., Ky., 659 S.W.2d 185, 189 (1983).

      . In its reply brief, Kentucky National relies on our recent opinion in Knotts v. Zurich Ins. Co., — S.W.3d —, 2002-CA-001846-MR, 2004 WL 221213 (Feb. 6, 2004), which held Kentucky's UCSPA only applies to pre-litigation claims and conduct. According to Knotts, once litigation has commenced, the UCSPA no longer plays a role, but instead the Rules of Civil Procedure provide "redress for improper conduct of litigants.” However, Kentucky National cannot rely on Knotts as it failed to preserve this issue at the trial court level. Furthermore, although the Knotts opinion was designated for publication, it is not final due to pending motion for discretionary review in the Supreme Court. It is impermissible to cite Knotts as authority. See CR 76.28(4)(c) (unpublished opinions "shall not be cited or used as authority in any other case in any court of this state”); Kohler v. Commonwealth, Transp. Cab., Ky.App., 944 S.W.2d 146, 147 (1997) (trial court cannot rely on nonfinal opinion of appellate court).

      . The trial date was ultimately moved several times. It was finally held in March of 1999.

      . State Farm had advanced this amount to Mrs. Shaffer to protect its subrogation and indemnity rights against Coe pursuant to Coots v. Allstate Co., Ky., 853 S.W.2d 895 (1993).

      . Casper entered into a settlement agreement assigning any bad faith claims he had against Kentucky National to Mrs. Shaffer.

      . This is not necessarily such a broad rule. There are instances where the insured has not been prejudiced wherein estoppel would not apply. See Vance, 730 S.W.2d 521.

      . We did, however, locate the unpublished case of Williams v. Frontier Ins. Co., 1999 WL 33603134 (W.D.Ky. May 27, 1999). The federal district court applied Kentucky law and cited to Wittmer, holding that "[t]he fact that the insurer defended Plaintiff in the prior action and was involved in settlement negotiations does not establish a cause of action for bad faith, since Plaintiff must first establish that the insurer had an obligation to pay under the policy.”


author: BUCKINGHAM, Judge.

text:
    John CROSSFIELD, Appellant, v. Keni Lynn CROSSFIELD (now Wendt), Appellee.
    No. 2003-CA-001561-MR.
    Court of Appeals of Kentucky.
    Jan. 21, 2005.
    John E. Reynolds, Nicholasville, KY, for appellant.
    Mark T. Miller, Nicholasville, KY, for appellee.
    Before BUCKINGHAM, DYCHE, and GUIDUGLI, Judges.
   OPINION

BUCKINGHAM, Judge.

John David Crossfield appeals from an order of the Garrard Circuit Court substituting his ex-wife, Keni Lynn Crossfield (now Wendt), in his place as the primary residential custodian of the three minor children of their marriage. Keni argued to the court that the change amounted to only a change in visitation, while John argued that the change was one of custody and that the circuit court was without jurisdiction to consider Keni’s motion since she had not complied with KRS 403.340-.350. Because we agree with John, we reverse and remand.

John and Keni were married on November 19, 1993. They had three children during their marriage, a boy and two girls. John and Keni separated .in February 2002, and they filed a joint petition for dissolution of marriage in the Garrard Circuit Court in April 2002.

At the time the couple filed their petition, they also submitted an agreement as to property rights, maintenance, custody, and support of the children. Under this agreement John and Keni agreed to share joint custody of the children, with Keni designated as the primary residential custodian. The agreement included provisions setting out John’s child support obligation.

The couple submitted an amended settlement agreement the following month. Under the amended agreement John was designated as the primary residential custodian and Keni agreed to pay child support. As with the first agreement, the couple shared joint custody. On June 11, 2002, the Garrard Circuit Court entered a decree of dissolution adopting the amended settlement agreement.

Less than nine months later, on Márch 8, 2003, Keni filed a Motion to Modify Time Sharing Schedule. Therein, she moved the court “to modify the time sharing schedule enjoyed [by] the parties hereto, within the confines of the existing joint custody decree.” No affidavits were attached to the motion.

During the first hearing on the motion, Keni acknowledged that she wanted the court to modify the original decree so that she would become the children’s primary residential custodian and John would assume the child support obligation. John immediately objected, arguing that her motion failed to comply with the requirements of KRS 403.340-.350.

The domestic relations commissioner (DRC) conducted a hearing over John’s objection and determined that “the best interests of the children will be served by granting mom’s motion and returning the children to her care.” The DRC also recommended that the time-sharing arrangement in effect should be reversed and that John should be ordered to pay child support in accordance with the schedule. John filed exceptions to the DRC’s report, but the trial judge rejected the exceptions and confirmed the report. This appeal by John followed.

KRS 403.320(3) provides that “[t]he court may modify an order granting or denying visitation rights whenever modification would serve the best interests of the child[.]” KRS 403.340(2) concerns the modification of a custody decree earlier than two years after its .entry. That statute provides as follows:

(2) No motion to modify a custody decree shall be made earlier than two (2) years after its date, unless the court permits it to be made on the basis of affidavits that there is reason to believe that:
(a) The child’s present environment may endanger seriously his physical, mental, moral, or emotional health; or
(b) The custodian appointed under the prior decree has placed the child with a de facto custodian.

Id. KRS 403.350 requires an affidavit to be submitted together with a motion for modification of a custody decree. When KRS 403.340(2) and KRS 403.350 are read together, they “require that a motion to modify a prior custody decree must be accompanied by at least one affidavit; and if the motion is made earlier than two years after its date, it must be accompanied by at least two affidavits.” Petrey v. Cain, 987 S.W.2d 786, 788 (Ky.1999), citing Copas v. Copas, 699 S.W.2d 758 (Ky.App.1985). KRS 403.350 also provides that the court should deny the motion for modification unless it finds that adequate cause for hearing is established by the affidavits. Id.

The specific issue to be addressed in this case is whether the change in the primary residential custodian from one parent to the other in the joint custody arrangement is subject to, the statutes relating to modification of custody or subject only to the statute concerning visitation modification. Citing Fenwick v. Fenwick, 114 S.W.3d 767 (Ky.2003), John argues that such a change amounts to a change in custody subject to KRS 403.340-.350. On the other hand, Keni argues that the change amounts to only a visitation modification to which KRS 403.320(3) applies. Further, she argues that the Fenwick case is limited to its facts, which involved the relocation of the residence of the primary residential custodian.

Concerning this issue, the DRC stated as follows:

The child spends the majority of time with the father, under a joint custodial arrangement, and the mother seeks to reverse the current arrangement. This court has previously ruled that a change of time without a change in form of custody, joint or sole, does not fall within the purviews of KRS 403.340.

As we will explain below, we conclude that the change in this case amounted to a modification of custody rather than a modification of visitation.

As the Kentucky Supreme Court noted in the Fenwick case, the term “primary residential custodian” is not defined in the Kentucky statutes. Id. at 779. The court noted, however, that the term is generally used by courts to refer to the party with whom the child or children will primarily reside. Id. In such joint custody situations, the other parent is awarded “visitation,” “time-sharing,” or “parenting time” with the child or children. Id. The court further noted that a designation of primary residential custodian normally confers on the party the primary role in minor day-to-day decisions concerning the child or children, the responsibility for providing a residence, and routine care and control. Id.

Until the Kentucky Supreme Court rendered its opinion in the Fenwick case, the issue of a modification of a joint custody arrangement had not been resolved by the Kentucky Supreme Court. In Fenwick the supreme court agreed with this court’s holding in Scheer v. Zeigler, 21 S.W.3d 807 (Ky.App.2000), that “joint custody is itself a custody award and thus any modification must come within the purview of KRS 403.340 and .350.” Fenwick, 114 S.W.3d at 783. Furthermore, the court in Fenwick noted that KRS 403.340 now specifically encompasses joint custody modifications. Id. at 784; see KRS 403.340(1).

While John argues that the change in the primary residential custodian from him to Keni amounted to a change of custody, Keni argues that the change merely amounts to a modification of visitation. As we have noted, if the modification is one of custody, then the provisions of KRS 403.340-.350 apply. However, if the modification is one of visitation, then KRS 403.320 applies.

The difference is significant since a motion to modify custody made within two years after the date of the custody decree must be made on the basis of affidavits that the child’s or children’s present environment may endanger seriously his physical, mental, moral, or emotional health, or that the custodian under the prior decree has placed the child with a de facto custodian. KRS 403.340(2). Where the modification is one of visitation only, however, the court may grant an order modifying visitation rights if it would serve the best interests of the child. KRS 403.320(3).

We hold that the change in the primary residential custodian amounts to a modification of the joint custody arrangement. As the circuit court’s order noted, the granting of Keni’s motion resulted in “returning the children to her care.” Under the new arrangement, Keni would assume the primary role in the minor day-to-day decisions concerning the children, would be primarily responsible for providing a residence for the children, and would assume their normal routine care and control. See Fenwick, 114 S.W.3d at 779. Additionally, the court’s order noted that the “parenting time” would be “reversed” as would the child support obligation. Under these circumstances and the principles of the Fenwick case, we conclude that the modification was one of custody rather than visitation. Furthermore, because KRS 403.340(2) was applicable and the motion was not supported by at least two affidavits, the circuit court was without jurisdiction to consider it. See Petrey, 987 S.W.2d at 788.

The order of the Garrard Circuit Court is reversed, and this case is remanded for the entry of an order denying Keni’s motion and returning John as the children’s primary residential custodian.

ALL CONCUR.

      . Kentucky Revised Statutes.