author: KNOX, Judge:

text:
    Cynthia DAVIS-JOHNSON (on behalf of son Ryan B. DAVIS), Appellant, v. Charles W. PARMELEE, III, Appellee.
    No. 1998-CA-000644-DG.
    Court of Appeals of Kentucky.
    Aug. 27, 1999.
    As Modified Oct. 1, 1999.
    Discretionary Review Denied by Court of Appeals June 7, 2000.

      Rocco J. Celebrezze, Jeffery L. Parrish, Louisville, for Appellant.
    Joseph Michael Kelly, Louisville, for Ap-pellee.
    Before: COMBS, KNOX, and MILLER, Judges.
   OPINION

KNOX, Judge:

This Court accepted discretionary review of the decision of the Jefferson Circuit Court affirming the Jefferson Family Court’s dismissal of a paternity action Cynthia Davis-Johnson (Cynthia) instituted on behalf of her minor son, Ryan Davis, for want of personal jurisdiction over ap-pellee, Charles Parmelee, III. Having reviewed the record, applicable law and briefs of counsel, we reverse and remand.

The record discloses that both Cynthia and appellee were domiciled in Kentucky throughout some period of 1983, during which time, Cynthia alleges, the parties’ relationship resulted in the conception and subsequent birth of a child. Apparently, appellee departed Kentucky on or about June 1, 1983. Cynthia remained within the state and gave birth to a child on December 14, 1983, in Louisville, Kentucky. At some undisclosed time following the child’s birth, she removed herself and the child from this Commonwealth.

On December 18, 1995, Cynthia, now a Michigan resident, filed a complaint in the Jefferson Family Court seeking to adjudicate the paternity of her son. The complaint alleged, inter alia, that appellee, now a resident of Texas, was the putative father. The complaint was filed pursuant to KRS 406.021(1), the Uniform Act on Paternity, and further cited KRS 454.210(2)(a)(8)(a) and (b) as the basis for the court’s exercise of long-arm personal jurisdiction over appellee.

Notice of the filiation action was served upon appellee in accordance with KRS 454.210(3); however, process was returned to the Secretary of State with a notation on the envelope providing the appellee’s forwarding address. The returned envelope, containing the pleadings, was then filed of record.

Subsequently, in March 1996, Cynthia moved for a default judgment of paternity, giving appellee notice of the hearing thereon to appear on April 1, 1996 at 12:00 noon. Notice was again sent to an inaccurate address; however, in that it was not mailed “restricted delivery,” the notice was delivered to the forwarding address in the normal course of business. Upon receipt of same, appellee contacted his attorney who, upon arriving for the hearing, discovered it had been moved to the 8:30 a.m. paternity docket, during which an order granting the default judgment was entered. Ultimately, the default judgment was set aside and appellee filed a CR 12 motion to dismiss, alleging, inter alia, lack of personal jurisdiction.

The Jefferson Family Court entertained appellee’s argument that the court did not have personal jurisdiction over a Texas resident. Appellee argued that KRS 454.220, governing actions for support, as opposed to KRS 454.210, controlled since an action under the Uniform Paternity Act provides for a determination of the proper amount of support upon establishing paternity. He further contended, pursuant to KRS 454.220, an action must be brought within one year of the nonresident’s departure from the state. Lastly, appellee argued the rules of statutory construction required application of KRS 454.220 as it is a “later enacted, more specific statute.” The family court dismissed the action.

In subsequent motions to reconsider and on appeal to the circuit court, Cynthia briefed the issues and requested the court consider the scope of jurisdiction provided by KRS 454.210. Ultimately, on October 8, 1997, the circuit court entered its opinion and order affirming the Jefferson Family Court’s dismissal of the action. We accepted discretionary review.

Here, Cynthia argues the Jefferson Family Court erred in dismissing her cause of action for want of jurisdiction pursuant to the one (1) year statute of limitations provision contained in KRS 454.220. She contends KRS 454.210(2)(a)(8) is the operative long-arm statute authorizing the court to exercise jurisdiction over a non-resident putative father for the purposes of establishing paternity and support.

Conversely, appellee posits the Jefferson Family Court and the circuit court correctly applied KRS 454.220 in declining to exercise jurisdiction over the matter. He specifically relies upon language originally stated in Sumner v. Roark, Ky.App., 886 S.W.2d 434 (1992), wherein this Court commented:

The paternity action gives the mother, child, person or agency substantially contributing to the support of the child a remedy to compel support for the illegitimate child. This is a support statute, not a custody statute, and if the parties do not agree to custody or visitation in the paternity action, it must be resolved in circuit court.

Sumner, 836 S.W.2d at 438. (Citation omitted).

By virtue of the above-quoted language, appellee successfully persuaded both the Jefferson Family and Circuit Courts that filiation actions are “support” actions, hence governed by KRS 454.220. We are not so persuaded.

A reading of Sumner reveals the Court’s opinion was rendered in the context of a custody dispute. Apparently, appellants therein argued the Jefferson Family Court was without jurisdiction to determine paternity when, in actuality, there was never a question of paternity before the court. As this Court observed:

Even though the appellants tried to manipulate the different courts, they were unsuccessful because the courts involved realized that even though the Uniform Paternity Act (KRS 406.021) vests district court with exclusive jurisdiction to determine paternity, circuit court is vested with exclusive jurisdiction to determine custody matters (KRS 403.280). These statutes are not conflicting, but address different needs.

Sumner, 836 S.W.2d at 437-38. The Court continued by describing the nature of the differing “needs” addressed by the two (2) statutes as the language seized upon by appellee delineates.

We do not believe this Court intended, either explicitly or implicitly, to designate filiation suits as solely “support” actions. Rather, the Court was merely distinguishing the nature of the paternity statute from that of the custody statute for purposes of assessing jurisdiction between district and circuit court. See also Basham v. Wilkins, Ky.App., 851 S.W.2d 491, 493 (1993)(“district court does not have jurisdiction to make a custody determination in a paternity action. A paternity action is for support, while visitation and custody disputes must be resolved in circuit court.” (Citing, inter alia, Sumner v. Roark, Ky. App., 836 S.W.2d 434 (1992))).

In other words, paternity actions are independent proceedings which may result in a remedy of support. However, aside from support, there exist additional motivations behind, and available remedies arising from, a paternity suit. For example, the right to inherit from either the putative father or the out-of-wedlock child, as the case may be, arises once paternity has been established. Ellis v. Ellis, Ky., 752 S.W.2d 781 (1988). More significantly, children born out of wedlock retain all of the same rights as those born in wedlock, as they are entitled to the guarantees afforded under the Equal Protection Clause of the 14 th Amendment to the United States Constitution. Alexander v. Commonwealth, Ky.App., 708 S.W.2d 102 (1986).

In Alexander this Court declared KRS 406.031, which at the time provided a four-year statute of limitations in paternity actions, unconstitutional as it failed to comport with federally grounded constitutional guarantees. This Court adopted the opinion of the lower court which provided, in part:

In our changing society, the number of children being born out of wedlock is growing at an alarming rate. These children are entitled to the same right of support and sustenance from their fathers as are the children born in wedlock, and this right cannot be diminished by the argument that with the passage of time the putative father may be unable to properly defend himself. This is particularly so with the advance of science to the point where blood tests at the present time can establish paternity with an accuracy up to 99.4%. This Court recognizes that difficulties of proof are valid and important considerations, and it is not the intent of the Court to belittle these considerations, but the Court feels that these arguments do not rise to the level where the possible difficulties of proof would overcome the concrete human rights of illegitimate children as guaranteed by the Equal Protection Clause.

Alexander, 708 S.W.2d at 103-04.

Unquestionably, KRS 454.220 requires a party seeking support from a non-resident to bring the cause of action within one (1) year of the date respondent/defendant departed the state. Failure to comply with this statute of limitations divests the court of authority to exercise personal jurisdiction over the purported obligor. Application of KRS 454.220 to filiation cases would necessarily create a class of children against whom a one (1) year statute of limitations would operate, i.e. those whose putative parent departed the state in excess of one (1) year prior to the paternity suit being filed. Accordingly, were appel-lee’s interpretation of Sumner correct, i.e. a filiation suit is strictly a “support” action, the net effect would be to render KRS 454.220, as applied to paternity matters, unconstitutional. See Alexander, 708 S.W.2d at 103.

We do not believe the legislature intended to usurp the revised version of KRS 406.031 which provides an eighteen (18) year statute of limitations for filing a paternity action under KRS 406.021 through the enactment of KRS 454.220. Rather, it is our opinion the legislative intent remains that KRS 454.210(2)(a)(8) controls the exercise of long-arm jurisdiction respecting paternity matters.

In its opinion and order the circuit court correctly concluded:

A court adjudicating paternity must have personal jurisdiction over the defendant. OAG 77-229 (Paternity judgment is a personal action; defendant must be served under CR 4.04 or enter a voluntary appearance). KRS 454.210(2)(a)[ (]8[) ] provides for personal jurisdiction over some nonresidents. A nonresident may be subject to a paternity action in Kentucky if two conditions are met. First, the child must have been conceived in Kentucky. Second, the act of intercourse causing conception must meet one of three subcon-ditions: (1) it must have occurred while either party was a Kentucky domiciliary; (2) there must have been a repeated pattern of intercourse between the parties in Kentucky; or (3) the intercourse must have been a tort or crime. Graham <& Keller, Kentucky Domestic Relations Law, at T23.03, p. 447.
Kentucky’s long-arm statute, however, only permits Kentucky to base paternity on the respondent’s sexual activity within the state. In two kinds of cases, KRS 454.210 provides no grounds for the assertion of long-arm jurisdiction when the child has been conceived outside Kentucky, or when paternity has been established but a support obligation is missing or inadequate under Kentucky’s rules.

We áre perplexed as to the reason the lower court identified the two (2) instances in which KRS 454.210 does not confer jurisdiction, as neither is applicable to the case sub judice (the child was conceived in Kentucky and there has not been a determination of paternity, hence neither a missing nor inadequate support order). Rather, under the facts of this case, Cynthia’s filiation action fits squarely within the terms and conditions contained in KRS 454.210(2)(a)(8). For the purpose of the court’s determination of the personal jurisdiction question, appellee conceded as true the allegations set forth in Cynthia’s complaint. Therefore, it is undisputed that at the time of the child’s conception, Cynthia and appellee were co-habitating/engaging in sexual relations within this Commonwealth. As such, appellee engaged in sexual intercourse which caused the birth of a child during the period of time both he and Cynthia were domiciled in Kentucky. These facts authorize a Kentucky court to extend the long-arm of the law and hale an alleged putative father into this jurisdiction for an adjudication of paternity.

We are mindful that while Kentucky’s long-arm statute is designed to allow the exercise of personal jurisdiction over nonresident defendants, such action must still comport with federal constitutional requirements of due process. We further recognize that KRS 454.210 permits the courts “to reach to the full constitutional limits of due process in entertaining jurisdiction over non-resident defendants.” Friction Materials Co., Inc. v. Stinson, Ky.App., 833 S.W.2d 388, 390 (1992) (quoting Mohler v. Dorado Wings, Inc., Ky.App., 675 S.W.2d 404, 405 (1984)). The determination of the outer limits of personal jurisdiction turns on application of a three (3) part test, to wit:

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant’s activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.

Stinson, 833 S.W.2d at 390. (Quoting Southern Machine Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir.1968)). See also Perry v. Central Bank & Trust Co., Ky.App., 812 S.W.2d 166, 168 (1991).

We believe the test for due process is easily satisfied. Undeniably, appellee purposefully conducted himself within this state such as to result in the conception of a child. The matter sub judice is the direct result of the child’s conception and subsequent birth in this Commonwealth. Finally, Kentucky’s exercise of jurisdiction is reasonable in that our laws specifically contemplate that a non-resident putative parent be held answerable where the product of a party’s conduct in this state is a child whose legal status is in dispute. It matters not that one or both of the parties no longer reside within our borders. The child, who is at the heart of this matter, is entitled to an adjudication of his biological parentage where the parties engaged in the enunciated statutory conduct and such conduct resulted in the child’s conception and birth within this Commonwealth.

Although we believe KRS 454.210(2)(a)(8) amply confers personal jurisdiction regarding a filiation action, it is our opinion, under the specific facts of this case, that paternity, absent support, is all the statute permits to be adjudicated. Should paternity be affirmatively established, then Cynthia is entitled to move the court for an award of support. However, this action would be governed by KRS 454.220 as it is undeniably a “family court proceeding involving a demand for support ... [and] shall be filed within one (1) year of the date the respondent or defendant became a nonresident of, or moved his domicile from, this state.” KRS 454.220. As Cynthia failed to meet the requisite statute of limitations, she is foreclosed from pursuing a claim for support in Kentucky’s courts. In this vein, should Cynthia prevail in the filiation matter, we believe she can readily pursue a support action in another forum vis á vis the Uniform Interstate Family Support Act.

In accordance with the foregoing, the decision of the Jefferson Circuit Court is reversed and remanded with instructions to enter an order permitting the exercise of personal jurisdiction over appellee for the sole purpose of conducting a paternity determination. Personal jurisdiction is authorized pursuant to KRS 464.210(2)(a)(8)(a) or (b).

ALL CONCUR.

      . Appellee has never denied that he, in fact: (1) engaged in sexual relations with Cynthia in 1983; (2) was domiciled in Kentucky during this period of time; nor (3) that he is the biological father of Cynthia's son.

      . KRS 454.210 provides, in pertinent part: (2)(a) A court may exercise personal jurisdiction over a person who acts directly ... as to a claim arising from the person’s: 8. Committing sexual intercourse in this state which intercourse causes the birth of a child when:
      a. The father or mother or both are domiciled in this state;
      b. There is a repeated pattern of intercourse between the father and mother in this state[.]

      . KRS 454.220 provides, in pertinent part:
      A court in any matrimonial action or family court proceeding involving a demand for support ... may exercise personal jurisdiction over the respondent or defendant notwithstanding the fact that he or she no longer is a resident or domiciliary of this state ... if the ... claim for support ... accrued under the laws of this state. The action shall be filed within one (1) year of the date the respondent or defendant became a nonresident of, or moved his domicile from, this state.

      . We note the 1996 amendments to KRS 406.051(2), which are totally inapplicable to this case, permit the district court to exercise jurisdiction, concurrently with the circuit court, over matters of child custody and visitation where paternity has been established under KRS Chapter 406.

      . In response to the Alexander decision, KRS 406.031 was revised in 1986 to provide an eighteen (18) year statute of limitations for the determination of paternity.

      . KRS 454.220 was enacted in 1992.

      . We note the current version of Graham & Keller on domestic relations law in Kentucky provides:
      A Kentucky court may determine paternity if it has jurisdiction under KRS 454.210(2)(a)(8).... In addition, KRS 454.220 may also permit paternity determinations, although that statute’s language is less clear. The general long-arm statute, KRS 454.210(2)(a)(8), permits this state to determine paternity if the parties had sexual intercourse in this state and either was a Kentucky domiciliary, or there was a repeated ,pattern of sexual intercourse in this state, or the sexual intercourse in this state was a tort or a crime.
      Louise E. Graham & James E. Keller, 15 Kentucky Practice, Domestic Relations Law § 14.63 (2 "ded. 1997).

      .Since both parties were domiciled in Kentucky during the period of the child’s conception, KRS 454.210(2)(a)(8)(a) is sufficient to trigger application of the long-arm statute. We decline to address application of KRS 454.210(2)(a)(8)(b) as appellee has conceded to the nature of his relationship with Cynthia during the, course of their co-habitation and any discussion, with regard thereto, would be superfluous as subsection (a) provides an adequate ground upon which the court may act.

      . On appeal, appellee further argues there is no proper venue as KRS 406.151 provides, "An action under this chapter may be brought in the county where the alleged father is present or has property or in the county where the mother resides.” However, KRS 454.210(4) directs that "[w]hen the exercise of personal jurisdiction is authorized by this section, any action or suit may be brought in the county wherein the plaintiff resides or where the ’ cause of action or any part thereof arose.” Since jurisdiction is conveyed through KRS 454.210, appellee's argument is without merit. Rather, in accordance with the statute, Jefferson County is the proper venue for this matter.


source: Caselaw Access Project

author: BUCKINGHAM, Judge.

license: Public Domain

text:
    Shirley MORTON, Individually, and as Executrix of the Estate of James Anthony Morton, Appellant, v. BANK OF THE BLUEGRASS AND TRUST COMPANY; Standard Life Insurance Company; Investors Life Insurance Company of North America; Charles H. Jett Insurance Agency, Inc; and Southern Financial Insurance, Appellees. Standard Life Insurance Company and Investors Life Insurance Company of North America, Cross-Appellants, v. Shirley Morton, Individually and as Executrix of the Estate of James Anthony Morton, Cross-Appellee. Bank of the Bluegrass and Trust Company; and Charles H. Jett Insurance Agency, Inc., Cross-Appellants, v. Shirley Morton, Individually, and as Executrix of the Estate of James Anthony Morton, Cross-Appellee.
    Nos. 1998-CA-000018-MR, 1998-CA-000120-MR and 1998-CA-000128-MR.
    Court of Appeals of Kentucky.
    Sept. 3, 1999.
    Rehearing Denied Dec. 3, 1999.
    Discretionary Review Denied by Supreme Court June 7, 2000.

      M. Austin Mehr, Edward A. Baylous, II, Lexington, for Shirley Morton.

      Palmer G. Vanee, II, Todd S. Page, Lexington, for Southern Financial.
    Michael R. Moloney (on brief), John G. Rice (argued), Lexington, for Bank of the Bluegrass and Charles Jett Insurance.
    John G. Irvin, Jr., Lexington, for Standard Life Ins. and Investors Life Ins.
    Before: BUCKINGHAM, HUDDLESTON, and KNOPF, Judges.
   OPINION

BUCKINGHAM, Judge.

This case involves an appeal and two cross-appeals from a judgment and orders of the Fayette Circuit Court which awarded the appellant/cross-appellee, Shirley Morton (Shirley), individually and as executrix of the estate of James Anthony Morton (James), life insurance proceeds but dismissed her claims against the appel-lees/cross-appellants, Bank of the Bluegrass and Trust Co. (the Bank), Standard Life Insurance Co. (Standard), Investors Life Insurance Co. (Investors), Charles H. Jett Insurance Agency, Inc. (Jett Insurance), and Southern Financial Insurance (Southern) , for misrepresentation, bad faith, breach of fiduciary duty, and violation of the Kentucky Consumer Protection Act. After considering the arguments of counsel and reviewing the record and the applicable law, we affirm in part, reverse in part, and remand.

In 1986, Shirley and her husband, James, received a loan from the Bank which was secured by a mortgage on their home. The Mortons obtained a group credit life insurance policy issued by Standard in the amount of the loan from the Bank. James was the insured under the policy, and upon his death, the policy would pay the Bank the remaining amount due on the mortgage with any remaining money to go to Shirley. The mortgage, note, and insurance certificate were issued for the duration of one year and were subsequently reestablished each November.

Southern is the Kentucky general agent for Standard. Southern recruited the Bank and Jett Insurance to serve as soliciting agents for Standard. In 1986, Standard entered into a contract with the Bank whereby the Bank would sell Standard’s group credit life insurance to its debtors. Southern trained Bank employees, who were also agents of Jett Insurance, to sell insurance for Standard. Charles Jett III was the owner and president of Jett Insurance as well as chairman of the board for the Bank.

The application which the Bank filled out in order to become a policyholder of group credit life insurance from Standard expressly stated that the policy limited its coverage to insured debtors between the ages of eighteen and sixty-five with a $40,-000 maximum level of coverage. The group certificate issued to James from 1986 to 1992 and to Shirley in 1993 included the following language: “ELIGIBILITY: Coverage is limited to eligible debtors of the Creditor who: (1) request the insurance; (2) pay the required premium; and (3) are within the age and amount limits shown in the Policy.” Neither the policy nor the group certificate excluded persons with preexisting health conditions, but the group certificate provided for the following condition (the policy contained a similar provision):

DEATH RESULTING FROM PREEXISTING CONDITION — If You or the Joint Insured Debtor die within 6 months (12 months on contracts of more than 3 years) of the Effective Date shown above as a result of a pre-existing illness, disease, or physical condition for which You or the Joint Insured Debtor received medical advice, consultation or treatment during the 12 month period immediately preceding the Effective Date of Your coverage. Our liability shall be limited to the premiums paid for the coverage.

Standard alleged that it had a rule, communicated through Southern to the Bank and Jett Insurance, that policies should only be issued to debtors who “appeared to be of sound health.” The only written documentation of this rule was in the agency agreement between Standard and Jett which stated that “[t]he Agent shall solicit Life Insurance from debtors appearing to be in sound health.... ”

During the spring of 1993, James Morton was diagnosed with cancer. When a new note and mortgage were put in place in November of that year, the Bank refused to issue another group credit life insurance certificate in James’s name due to his illness. Rather, the Bank issued the certifícate in Shirley’s name after the Mor-tons paid the premium. James died in June 1994, approximately seven months after the certificate was issued, and no death benefits were paid by Standard. Shirley thereafter filed suit individually and as executrix of the estate of James, and the complaint and amended complaint alleged misrepresentation, bad faith, breach of fiduciary duty, violation of the Kentucky Consumer Protection Act, and violation of the Kentucky Insurance Fraud Act, by the Bank, Standard, Investors, Jett Insurance, and Southern.

Summary judgment motions were filed by all parties, and the trial court granted summary judgment in favor of Shirley based on “the Plaintiffs [Morton’s] lack of notice that ill health was a ground for denying issuance of the policy.” The trial court issued a second order which reformed, on equitable grounds, the group life insurance certificate to name James as the insured debtor. The order directed that the insurance proceeds be paid to the Bank to the extent necessary to pay the balance of the Mortons’ note, with any remaining funds to be paid to Shirley. The trial court’s orders also dismissed Shirley’s claims of misrepresentation, bad faith, breach of fiduciary duty, violation of the Kentucky Consumer Protection Act, and violation of the Kentucky Insurance Fraud Act. After all orders and judgments became final and appealable, Shirley appealed and the Bank, Jett Insurance, and Standard cross-appealed.

The parties disagree concerning which subtitle of the Kentucky Insurance Code (KRS Chapter 304) governs the group credit life insurance policy issued by Standard to the Bank in this case. Shirley contends that both Subtitle 16 and Subtitle 19 apply, and the appellees/cross-appellants contend that only Subtitle 19 is applicable. Subtitle 16 relates to group life insurance, whereas Subtitle 19 relates to credit life insurance and credit health insurance. It is clear that Subtitle 19 applies, as KRS 304.19-010 provides that “[a]ll life insurance and all health insurance in connection with loans or other credit transactions shall be subject to the provisions of this subtitle-” Since Subtitle 19 clearly applies to this case, Standard, Jett Insurance, and the Bank rely upon KRS 304.19-080(3)(b)(2) which states that credit life insurance “shall be offered” to debtors who meet the applicable age limits “provided that each company’s right to underwrite risks on an individual basis shall not be restricted by this subpara-graph.” Thus, they argue that they were not required to issue James a policy because of their right to underwrite risks on an individual basis.

Shirley agrees that Subtitle 19 is applicable to the policy. However, she asserts that Subtitle 16 (Group Life Insurance) is also applicable. KRS 304.16-040 provides in relevant part that

[t]he lives of a group of individuals may be insured under a policy issued to a creditor, ... which creditors ... shall be deemed the policyholder[s], to insure debtors of the creditor subject to the following requirements:
(1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors whose indebtedness is repayable either (a) in installments or (b) in one (1) sum at the end of a period not in excess of eighteen (18) months from the initial date of death.... ”

Shirley then relies on KRS 304.16-150 which provides “[tjhere shall be a provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.” See also KRS 304.16-110. It is undisputed that neither the application for insurance made available by the Bank to its eligible debtors nor the group credit life insurance policy itself contained a provision specifying that insurance could be denied for medical reasons. Therefore, Shirley argues that under KRS 304.16-150, the Bank had no right to deny James the insurance.

The trial court found that Subtitle 16 was not applicable to the policy. The basis of the trial court’s holding was its belief that Subtitle 19 applied as it “specifically relates to credit life insurance, and the Court is obligated to rely on the specific rather than the general.” We conclude that both Subtitle 16 and Subtitle 19 apply in this case by virtue of KRS 304.5-010, a statute which was not mentioned by either the parties or the trial court, which provides as follows:

It is intended that certain insurance coverages may come within the definitions of two (2) or more kinds of insurance as defined in this chapter, and the inclusion of such coverage within one (1) definition shall not exclude it as to any other kind of insurance within the definition of which such coverage is likewise reasonably includable.

“Credit life insurance” is defined in KRS 304.19-020(1) as “insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction[.j” Obviously, the insurance in the case sub judice falls within this definition. However, the insurance is also “reasonably in-cludable” within the aforementioned definition of debtor group life insurance found in KRS 304.16-040.

The appellees/cross-appellants argue that the trial court was correct in concluding that Subtitle 19 and not Subtitle 16 was applicable based on its determination that “the specific rather than the general” controls. The appellees/cross-appellants rely on KRS 304.1-130 which states that “[pjrovisions of this code relative to a particular kind of insurance or a particular type of insurer or to a particular matter shall prevail over provisions relating to insurance in general or insurers in general or to such matter in general.” Having examined and compared the provisions of Subtitle 19 and Subtitle 16, we see no ambiguity. Subtitle 19 provides that an insurer issuing credit life insurance to debtors may underwrite risks on an individual basis. KRS 304.19-080(3)(b)(2). Subtitle 16 provides that an insurer issuing group life insurance to debtors may likewise underwrite risks on an individual basis if the insurer reserves that right by setting forth the conditions in the policy. KRS 304.16-150. In fact, the provisions of Subtitle 16 appear to be more specific than those of Subtitle 19.

Therefore, we conclude that James' was wrongfully denied coverage, as both Subtitle 19 and Subtitle 16 were applicable and as there was no provision in either the insurance policy or the application which indicated that insurance could be denied for medical reasons. The cross-appeals are without merit, and the trial court is affirmed on this issue.

Although Shirley received the insurance proceeds as compensatory damages, she contends that the trial court erred in granting summary judgment to the appel-lees/eross-appellant's and in dismissing her additional causes of action of misrepresentation, bad faith, breach of fiduciary duty, and violation of the Kentucky Consumer Protection Act. The standard for summary judgment is as follows:

A movant should not succeed in a motion for summary judgment unless the right to judgment is shown with such clarity that there is no room left for controversy and it appears impossible for a non-moving party to produce evidence at trial warranting judgment in his favor .... The motion for summary judgment must convince the circuit court from evidence in the record of the nonexistence of a genuine issue of material fact.

Hubble v. Johnson, Ky., 841 S.W.2d 169, 171 (1992). An appellate court’s task when a trial court has granted summary judgment is to determine “whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law.” Scifres v. Kraft, Ky.App., 916 S.W.2d 779, 781 (1996). As factual findings are not at issue, the trial court’s ruling is entitled to no deference. Id.

The basis of the trial court’s orders granting summary judgment in favor of the appellees/cross-appellants on Shirley’s claims for damages for misrepresentation, bad faith, breach of fiduciary duty, and violation of the Kentucky Consumer Protection Act was the trial court’s opinion that the “insurers are permitted under KRS 304.19-080(3)(b)(2) to underwrite on an individual basis” and, therefore, that the insurers were acting legally in refusing to issue a group life insurance certificate to James, even though a judgment for the proceeds was granted on equitable grounds. As this relates to Shirley’s claim of misrepresentation, the trial court stated that it “does not believe that any facts exist indicating a misrepresentation by any of the Defendants.” However, as we have stated above, the appellees/cross-appel-lants had no legal right to deny James coverage under the policy due to the applicability of the provisions of KRS 304.16-160.

Shirley’s complaint alleged negligent or intentional misrepresentation (i.e., fraud) for which she claims entitlement to both compensatory and punitive damages. To the extent that the complaint asserts a cause of action for negligent misrepresentation, summary judgment in favor of the appellees/cross-appellants was appropriate, as only compensatory damages are allowed for this claim. See KRS 411.184 (permitting punitive damages to be awarded only for intentional actions such as fraud, oppression, or malice).

We conclude, however, that the trial court erred in dismissing Shirley’s intentional misrepresentation (fraud) claim. Viewing the evidence in a light most favorable to Shirley, there is evidence of the following: (1) that James was eligible for and entitled to coverage under the group credit life insurance policy; (2) that the loan officer, on behalf of Standard, Jett Insurance, and the Bank, represented to James and Shirley that James was no longer eligible under the policy; (3) that this representation was false and was known to be false by Standard, Jett Insurance, and the Bank; (4) that the misrepresentation was made for the purpose of inducing James and Shirley to forego coverage for James; (5) that James and Shirley acted in reliance on the misrepresentation; and (6) that the misrepresentation caused James and Shirley to suffer damages by not having death benefit coverage for James in effect at his death. See Investors Heritage Life Ins. Co. v. Colson, Ky.App., 717 S.W.2d 840, 842 (1986), for a recitation of the factors necessary to sustain a fraud action. In short, the trial court erred in granting summary judgment on Shirley’s intentional misrepresentation claim against Standard, Jett Insurance, and the Bank, as there were genuine issues of material fact and the appel-lees/cross-appellants were not entitled to judgment as a matter of law.

We likewise conclude that the trial court erred in granting summary judgment to the Bank on Shirley’s claim of breach of fiduciary duty. A fiduciary relationship “is one founded on trust or confidence reposed by one person in the integrity and fidelity of another and which also necessarily involves an undertaking in which a duty is created in one person to act primarily for another’s benefit in matters connected with such undertaking.” Steelvest, Inc. v. Scansteel Service Ctr., Inc., Ky., 807 S.W.2d 476, 485 (1991). Although a bank is not traditionally held to be in a fiduciary relationship with its depositors, “services to borrowers and pled-gors may support a finding that a bank, in taking a borrower’s note and collateral, falls under a fiduciary duty to disclose material facts affecting the loan transaction.” Id.

We hold that (1) the bank’s loan officer, who was also an employee of Jett Insurance, had a fiduciary duty to disclose “material facts affecting the loan transaction” such as eligibility for credit life insurance to the Mortons; and (2) that genuine issues of material fact exist relative to whether the loan officer breached that fiduciary duty in advising the Mortons concerning James’s eligibility for coverage. While summary judgment in favor of Southern, Jett Insurance, and Standard was appropriate on Shirley’s breach of fiduciary duty claim, it was not appropriate as to the Bank.

Shirley also asserts that the trial court erred in granting summary judgment against her on her bad faith claim. This court set forth the elements of a bad faith claim in Empire Fire & Marine Ins. Co. v. Simpsonville Wrecker Service, Inc., Ky.App., 880 S.W.2d 886 (1994), as follows:

In order to maintain a private cause of action for tortious misconduct justifying a claim of bad faith, an insured must prove (1) that the insurer was obligated to pay, (2) that the insurer lacked “a reasonable basis in law or fact for denying the claim,” and (3) 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.”

Id. at 888, quoting Wittmer v. Jones, Ky., 864 S.W.2d 885, 890 (1993). Shirley’s allegation of bad faith is a result of James being denied insurance and not a result of the denial of a claim. We thus conclude that the trial court correctly granted summary judgment on this issue.

Shirley next asserts that the trial court erred in dismissing her claim for violation of the Kentucky Consumer Protection Act. KRS 367.220(1) provides that a person may bring an action for violation of the Kentucky Consumer Protection Act if the person “purchases or leases goods or services primarily for personal, family or household purposesIt has been held that purchasing an insurance policy is a service within the meaning of the Act. Stevens v. Motorists Mut. Ins. Co., Ky., 759 S.W.2d 819, 820 (1988) (holding that “[t]he Kentucky Consumer Protection Act ... does provide a homeowner with a remedy for the conduct of their own insurance company in denying such a claim because the act has provided a ‘statutory’ bad faith cause of action”).

As the Kentucky Consumer Protection Act “has the broadest application in order to give Kentucky consumers the broadest possible protection for allegedly illegal acts[,]” and as “KRS 446.080 requires that the statutes of this Commonwealth are to be liberally construed[,]” id. at 821, we hold that the Act is applicable to the case sub judice. Furthermore, there are fact issues regarding whether the appel-lees/cross-appellants committed false, misleading, or deceptive acts in violation of KRS 367.170(1) in representing to the Mortons that James was not eligible for or entitled to coverage. The trial court erred in dismissing this cause of action.

Shirley next contends that the trial court erred in not imposing sanctions on Southern for destroying documents on the day of a deposition in which those documents were requested and which were subsequently ordered to be produced. Sanctions of this type are governed by Kentucky Rule of Civil Procedure (CR) 37.02 and are within the trial court’s discretion. See e.g. M.P.S. v. Cabinet for Human Resources, Ky.App., 979 S.W.2d 114, 118 (1998). The trial court was in the best position to determine if Southern’s conduct warranted the imposition of sanctions. We conclude that the trial court did not abuse its discretion in not sanctioning Southern and affirm the trial court on this issue.

Shirley also argues that the trial court erred in not allowing Shirley to depose Standard’s current in-house general counsel and its former assistant in-house counsel. Standard objected to the taking of the depositions of those attorneys on the ground of the attorney-client privilege of Kentucky Rule of Evidence (KRE) 503, and the trial court entered a protective order prohibiting the taking of depositions. Shirley asserts that she sought to take the depositions in question to further her fraud claim.

Citing Cummings v. Commonwealth, 221 Ky. 301, 298 S.W. 943 (1927), the Kentucky Supreme Court held in Steelvest, supra, that “[t]he [attorney-client] privilege is generally considered to be absolute as to communications made by or to a person advising with an attorney as to past transactions and offenses. [Citation Omitted.] However, the rule does not apply to future transactions when the person seeking the advice is contemplating the committing of a crime or the perpetration of a fraud.” Steelvest, supra, at 487. As “[t]he privilege of the [attorney-client] relationship is an obstacle to the fact finding process and is to be strictly confined within the narrowest possible limits consistent with the logic of its principle^]” see Futrell v. Shadoan, Ky., 828 S.W.2d 649, 651 (1992), we conclude that the trial court erred in denying Shirley the right to depose the attorneys for Standard. She has the right to depose the attorneys concerning their knowledge as to any underwriting rule, their knowledge of any plan by Standard to perpetrate a fraud on the Mortons, and any other similar and relevant matter not subject to the attorney-client privilege.

Shirley next asserts that the trial court erred in denying her motion to file a second amended complaint to allow additional theories of liability, including tortious interference with prospective contractual relations. This motion to file a second amended complaint was filed over two years after the original complaint was filed and over one year after the amended complaint was filed. The trial court had previously entered an order denying Shirley’s motion to file a second amended complaint asserting a cause of action for spoliation of evidence, but there is no indication that the trial court ever ruled on Shirley’s motion to amend her complaint to assert a cause of action based upon tortious interference with contractual relations. Thus, this court is without the authority to rule on this issue. Regional Jail Auth. v. Tackett, Ky., 770 S.W.2d 225, 228 (1989).

Finally, Shirley argues that the trial court improperly resolved her request for prejudgment interest. The trial court awarded her “the amount of interest paid by ... [Shirley] to the Bank of the Bluegrass on the mortgage note secured by the Linwall Road residence from June 10, 1997[sic], the date of the death of Mr. James Anthony Morton, to the date of entry of this judgment.” She contends that the trial court improperly awarded her interest at eight percent per annum rather than the twelve percent rate found in 806 KAR 12:092, § 3(4). However, as noted by Standard, Shirley may not utilize that regulation as its “sole purpose ... is to provide guidance to the commissioner [of the Kentucky Department of Insurance] and his designees in their investigations, examinations, and administrative adjudications and appeals therefrom.” 806 KAR 12:092, § 2(2). Furthermore, that regulation is meant to provide a penalty for insurers who deny a good faith attempt to settle a claim.

In the case sub judice, no claim for insurance was filed. Also, Shirley’s reliance on KRS 304.12-235 is misplaced, as that statute also deals only with payment of claims. In short, Shirley cites no authority which would entitle her to prejudgment interest at the higher rate.

The judgment and orders of the Fayette Circuit Court are affirmed in part and are reversed in part and remanded for further proceedings consistent with this opinion.

ALL CONCUR.

      . Southern did not file a cross-appeal, but we will nevertheless refer to all appellees as "ap-pellees/cross-appellants” for the sake of simplicity.

      . Standard was acquired by Investors by merger, and Standard and Investors are treated as one entity for purposes of this case.

      .Both the trial court and Shirley state that the insurance certificate was "renewed” each year, but a new policy was actually issued each year. The same procedure was used for the note and mortgage.

      .The trial court reformed the insurance group certificate to list James as an insured on equitable grounds. However, because this issue can be resolved on legal grounds, equitable principles are inapplicable as equity follows the law. See e.g. Kaufman v. Kaufman’s Adm’r, 292 Ky. 351, 166 S.W.2d 860, 867 (1942).

      . As Shirley’s brief does not raise the issue of the trial court’s dismissal of her claim of violation of the Kentucky Insurance Fraud Act, we assume that she does not appeal from that portion of the trial court's orders.

      . Shirley's judgment for the insurance proceeds constitutes an award of compensatory damages.

      . The appellees/cross-appellants contend that they were allowed to underwrite on an individual basis pursuant to KRS 304.19-080(3)(b)(2), but we have previously herein rejected that argument. The appellees/cross-appellants also claim that they were acting pursuant to company underwriting rules, but there is no written evidence of any such rules. There is a fact issue as to whether such rules existed. Even if such rules existed, they were contrary to law because the policy did not contain a provision whereby the insurer was reserving the right to require evidence of individual insurability. KRS 304.16-150. There is a fact issue as to whether the appel-lees/cross-appellants knew that such rules, if they existed, were contrary to law and whether the appellees/cross-appellants nevertheless made representations to the Mortons which they knew were false.

      . As the undisputed evidence was that Southern merely followed the directions of Standard in advising the Bank and Jett Insurance relative to underwriting on an individual basis based on health, we conclude that Southern was entitled to summary judgment on Shirley’s intentional misrepresentation claim.

      . Summary judgment in favor of Southern was appropriate as to this cause of action but was not appropriate as to Standard, Jett Insurance, and the Bank.


author: JOHNSON, Judge:

text:
    WHITAKER COAL COMPANY, Appellant, v. George S. MELTON; Hon. Robert Whittaker, Director, Special Fund; Hon. Richard H. Campbell, Jr., Administrative Law Judge; and Workers’ Compensation Board, Appellees.
    No. 1998-CA-002861-WC.
    Court of Appeals of Kentucky.
    Feb. 25, 2000.
    Case Ordered Published by Court of Appeals April 21, 2000.

      Charles W. Berger, Harlan, for Appellant.
    Donald Wayne Taylor, Jr., Prestons-burg, for Appellee, George Melton.
    Joel D. Zakem, Louisville, for Appellee, Special Fund.
    Before: BUCKINGHAM, COMBS and JOHNSON, Judge.
   OPINION

JOHNSON, Judge:

Whitaker Coal Company appeals from an opinion of the Kentucky Workers’ Compensation Board rendered on November 6, 1998, which affirmed the opinion, award and order of the Administrative Law Judge, which awarded retraining incentive benefits (RIB) to George S. Melton. Since we reject Whitaker Coal’s arguments (1) that it was improper for Melton’s award to be made under the provisions of KRS 342.732(l)(a) as it read prior to its amendment on December 12, 1996; and (2) that Melton’s claim should have been barred on the grounds that he failed to give timely notice, we affirm.

Melton was employed by Whitaker Coal as a coal miner and was last injuriously exposed to coal dust on March 30, 1995. He filed a RIB claim on February 10, 1997. In an opinion, award and order dated June 15, 1998, the ALJ ruled that Melton had given timely notice and awarded Melton RIB according to the 1994 version of KRS 342.730(l)(a). Whitaker Coal appealed to the Board arguing, as it does to this Court, that the 1996 amendment to KRS 342.730(l)(a) was remedial in nature, and therefore, should have been applied retroactively to Melton’s claim; and that the claim was untimely. We believe the Board’s unanimous opinion by Chairman Abell contains very thorough and correct discussions of the law on the issues of retroactivity and timeliness, and thus, we adopt those portions of the Board’s opinion as our own.

As to the applicability of the 1996 amendment, the Board affirmed the ALJ stating as follows:

On appeal, Whitaker contends that enrollment in a retraining program is a prerequisite to receiving RIB, referring us to KRS S42.732(l)(a) as amended by the 1996 Extraordinary Session of the General Assembly. The amended version clearly provides that RIB is to be paid only while “the employee is enrolled and actively and successfully participating as a full-time student taking twenty-four (24) or more instruction hours per week in a bona fide training or education program.” Prior to the 1996 amendment, such benefits could be paid to a claimant, although not participating in a retraining program, if that claimant was no longer working in the mining industry in the severance or processing of coal.
Although Melton filed his claim after the effective date of the 1996 amendment, the date of his last exposure to the hazards of the disease was [March] 30,1995. The issue, therefore, is whether the 1996 amendment can be applied retroactively to a claim that arose prior to the effective date of the amendment. KRS 446.080(3) states that: “No statute shall be construed to be retroactive, unless expressly so declared.” However, the Courts have consistently held that remedial statutes do not come within the legal conception of a retrospective law or the general rule against the retrospective operation of statutes. Peabody Coal Co. v. Gossett, Ky., 819 S.W.2d 33 (1991).

The question, then, is whether the 1996 amendment to KRS 342.732(l)(a) is merely remedial, or is it a retrospective law. In 73 AmJur2d Statutes § 354 (1974), it is stated:

A retrospective law, in a legal sense, is one which takes away or impairs vested rights acquired under existing laws, or which creates a new obligation and imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past.
Remedial statutes are statutes which relate to remedies or modes of procedures not creating new or taking away vested rights but only operating in furtherance of a remedy or confirmation of such rights.
In Thornsbury v. Aero Energy, Ky., 908 S.W.2d 109 (1995), the Kentucky Supreme Court determined that a 1994 amendment to KRS 342.732(l)(a) was remedial and could be applied retroactively to claims that arose before the effective date of the amendment. In 1994, the Legislature amended that section so that RIB could be paid directly to a claimant only so long as the claimant was no longer working in the mining industry. If the claimant continued to work in the mining industry, the benefits could only be paid directly to an institution providing approved training or education to the claimant while he was actively enrolled and participating in such a program.
In determining that the statute was remedial, the Court noted that it had previously stated in Eastern Coal Corp. v. Blankenship, Ky., 813 S.W.2d 808 (1991), that despite the apparent goal that RIB serve[][as] an incentive for retraining, it could find no indication that the Legislature intended to require their use for that purpose in that the statute in effect at the time of that decision, prior to the 1994 amendment, awarded such benefits whether or not the claimant sought retraining or employment outside the mining industry. In Blankenship, supra, the Court noted that such a scheme was incomprehensible to it and that if the Legislature truly intended to encourage workers to seek other employment, it should enact legislation that would more effectively accomplish that purpose. In Aero, supra, the Court determined that the Legislature clearly intended to reform the statute to live up to its name and actually provide RIB, concluding that the 1994 amendment to KRS 342.732(l)(a) was to provide a remedy that more effectively accomplished the purpose of the RIB statute.
The 1996 amendment to KRS 342.732(l)(a) does more than limit the payment of benefits to claimants only while they are actively enrolled in and participating in an approved training program. It reduces the payment period of the benefits from 208 weeks to 104 weeks and restricts the award of such benefits to claimants having radiographic classifications of Category ⅜ or ½ and respiratory impairment as evidenced by spirometric test values of between 55 and 80 percent of predicted normal values. In our opinion, the 1996 amendment to KRS 342.732(l)(a), unlike the 1994 amendment, affects vested rights of claimants and cannot therefore be applied retrospectively without a specific expression by the Legislature of its intent for the provisions to be so applied.
Melton, as of the date of his last exposure, had a vested right to a RIB award of 208 weeks duration if it were found that he had a radiographic classification of Category 1/0, ¼, 0⅛ pneumoconiosis without evidence of breathing impairment so long as he either left the mining industry or undertook an approved training program while still working in the mining industry, either of which would have fulfilled the purpose of the RIB statute. Applying the 1996 version of the statute to his claim would have resulted in no award in that (1) he did not have evidence of the requisite radio-graphic classification nor degree of breathing impairment and (2) he was not actively enrolled in an approved training program notwithstanding the fact that he had left the mining industry, thereby fulfilling one of the purposes of the RIB statute. Therefore, in our opinion, the ALJ did not err in declining to apply the 1996 version of KRS 342.732(l)(a) to Melton’s claim in that it would have impaired his vested rights to the benefits to which he was entitled on the date of his last exposure.

As to the second issue raised by Whitaker Coal concerning whether Melton failed to give timely notice of his claim, the Board affirmed and stated as follows:

Whitaker next contends the ALJ erred in determining Melton gave adequate notice. It contends the ALJ’s reliance on Coal-Mac Inc. v. Wheeler Blankenship, Ky.App., 863 S.W.2d 333 (1993), is misplaced in that more on point is the Kentucky Supreme Court opinion in Newberg v. Slone, Ky., 846 S.W.2d 694 (1992). As noted above, Melton, although acknowledging having experienced shortness of breath over a number of years which he suspected was related to his work, was not diagnosed with the disease until November 1996, two weeks prior to Whitaker’s having been given notice of that fact. In our opinion, the Court of Appeals’ decision in Coal-Mac, Inc., supra, was properly relied upon by the ALJ in determining that Melton gave due and timely notice in this claim.
In Coalr-Mac, Inc., supra, the claimant had terminated his employment in 1986 because he was having breathing problems. He was subsequently told by a physician treating him for a stroke that he may have black lung. The ALJ dismissed the claim after concluding that the termination of claimant’s employment due to breathing difficulties alone was not sufficient to require the giving of notice but that the breathing difficulties coupled with his discussion with a physician that he might have pneumoco-niosis was sufficient to apprise him of the disease requiring him to give notice. The Court of Appeals, in affirming the Board’s reversal of that dismissal, noted that KRS 342.316(2)(a) required that an employer be given notice of an occupational disease claim as soon as practicable after the employee first experiences a distinct manifestation of the disease in the form of symptoms reasonably sufficient to apprise him that he has contracted the disease or the diagnosis of the disease is first communicated to him, whichever first occurs. The Court noted that it did not believe the evidence supported a finding that the claimant had experienced such a distinct manifestation of the disease, referring to Blue Diamond Coal Co. v. Stepp, Ky., 445 S.W.2d 866 (1969), where the Supreme Court stated that:
[T]he work[er] should be deemed to be disabled from silicosis, for the purpose of notice requirements, when circumstances exist from which the workman realizes or reasonably should realize that his capacity to perform his work is impaired by reason of silicosis.
Id. at 868.
In Melton’s testimony, there is no indication that he knew or should have known that his capacity to perform work was impaired by his breathing impairment. In Newberg v. Slone, supra, the claimant was diagnosed with the disease on October 9, 1996 with the physician making the diagnosis concluding that the claimant was permanently disabled from working in the mining industry. Some six months after that diagnosis, the claimant notified his employer that he had been advised that he was suffering from an occupational disease. The Supreme Court, in reversing the Court of Appeals and reinstating the ALJ’s dismissal of the claim, based that reversal on its determination that the burden was on the claimant to provide evidence justifying the delay in giving notice and that he had failed to do so.
In Slone, supra, the notice was not given until six months after the diagnosis. In the instant claim, notice was given within two weeks of the diagnosis, and contrary to Whitaker’s assertion, there is not evidence that would compel a finding that Melton had experienced a distinct manifestation of the disease in the form of symptoms reasonably sufficient to apprise him that he had the disease.

It is well-established that notice is an issue of fact for determination by the fact-finder; that a factual finding cannot be disturbed on appeal if there is any substantial evidence to support it; and that when more than one reasonable inference can be drawn from the evidence, it is for the fact-finder to decide. The finding by the ALJ that timely notice had been given was supported by substantial evidence consisting of Melton not having learned of the diagnosis of an occupationally related pulmonary disease until November 1996.

Accordingly, the decision of the Board is affirmed.

All concur.

      . Kentucky Revised Statutes.

        . The 1996 amendment requires a RIB claimant to be enrolled in a training or education program and to have radiographic classifications of Category ½ ort and respiratory impairment to qualify for benefits. It is conceded that Melton was not enrolled in such a retraining program and did not have the required radiographic classification nor degree of breathing impairment.

      . Jackson v. General Refractories Co., Ky., 581 S.W.2d 10 (1979).