John Byrnes v. Nationwide Mutual Insurance Company ( 2023 )

RENDERED: SEPTEMBER 1, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2021-CA-1346-MR
JOHN BYRNES APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE ANGELA MCCORMICK BISIG, JUDGE
ACTION NO. 19-CI-006323
NATIONWIDE MUTUAL
INSURANCE COMPANY APPELLEE
AND
NO. 2021-CA-1369-MR
NATIONWIDE MUTUAL
INSURANCE COMPANY CROSS-APPELLANT
CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE ANGELA MCCORMICK BISIG, JUDGE
ACTION NO. 19-CI-006323
JOHN W. BYRNES CROSS-APPELLEE
OPINION
AFFIRMING APPEAL NO. 2021-CA-1346-MR
AND AFFIRMING CROSS-APPEAL NO. 2021-CA-1369-MR
** ** ** ** **
BEFORE: EASTON, GOODWINE, AND TAYLOR, JUDGES.
TAYLOR, JUDGE: John Byrnes brings Appeal No. 2021-CA-1346-MR from
Findings of Fact & Conclusions of Law entered October 27, 2021, by the Jefferson
Circuit Court and Nationwide Mutual Insurance Company (Nationwide) brings
Cross-Appeal No. 2021-CA-1369-MR from the same order.
This case involves a claim made by attorney John W. Byrnes for
attorney’s fees allegedly owed to him by Nationwide pursuant to Kentucky
Revised Statute (KRS) 304.39-070(5), as relates to Byrnes’ representation of two
of Nationwide’s insureds, Guillermo Lopez and Maria Berrios. The Jefferson
Circuit Court granted Byrnes a portion of the attorney’s fees he requested. In
Appeal No. 2021-CA-1346-MR, Byrnes appeals the circuit court’s determination
that only 4.8 hours out of the total 15.3 hours he billed for representation of Lopez
and Berrios were compensable pursuant to the statute.1 Byrnes also appeals the
court’s determination that his additional claims against Nationwide for
1
In his complaint and at the evidentiary hearing, John W. Byrnes, asserted that he was entitled to
a contingent fee of one-third of Nationwide Mutual Insurance Company’s (Nationwide) recovery
from Liberty Mutual Insurance Company for Personal Injury Protection (PIP) benefits paid. On
appeal, Byrnes makes no reference in his brief to the contingent fee claim nor will we consider
the same given that there exists no legal authority under Kentucky Revised Statutes (KRS)
304.39-070 to award a contingent fee.
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compensatory and punitive damages were not legally recoverable.2 For the reasons
stated, we affirm this direct appeal. In Cross-Appeal No. 2021-CA-1369-MR,
Nationwide contests the circuit court’s determination that KRS 304.39-070(5)
obligated the company to compensate Byrnes for $1,200 in attorney’s fees for his
alleged representation of its insureds. Upon review, we also affirm the circuit
court’s ruling in the cross-appeal.
I. BACKGROUND
Lopez and Berrios were Nationwide’s insureds at all relevant times.
They were involved in an automobile collision on December 11, 2015, with
another individual, Isaac Kelley, at the intersection of Third Street and Kingston
Avenue in Louisville. An officer of the Louisville Metro Police Department
responded to the scene and ultimately cited Kelley; according to the police report,
a witness had confirmed that Kelley caused the collision by running a red light.
Byrnes is an attorney whose work includes representing clients
involved in automobile collisions, for which he typically charges a contingency
2
The Jefferson Circuit Court made this ruling by interlocutory order entered July 20, 2020. This
order was made final by the court’s ruling on October 27, 2021. While the circuit court’s July
20, 2020, order included the finality recitations of Kentucky Rules of Civil Procedure (CR)
54.02(1), it only addressed part of Byrnes’ claim relating to KRS 304.39-070(5) – specifically, it
only held that Byrnes could not legally claim compensatory and punitive damages for
Nationwide’s purported “negligent violation” of that provision. However, “a determination that
adjudicates only part of a claim cannot be made final.” Tax Ease Lien Investments 1, LLC v.
Brown, 340 S.W.3d 99 (Ky. App. 2011) (citations omitted). Accordingly, for purposes of our
review, the entirety of Byrnes’ claim stemming from KRS 304.39-070(5) is properly before this
Court on appeal.
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fee. Lopez and Berrios hired Byrnes to represent them in connection with their
collision with Kelley. Byrnes had Spanish speaking employees who assisted
Lopez and Berrios in completing their application for no-fault Personal Injury
Protection (PIP) payments from Nationwide.
On May 16, 2016, Nationwide made PIP payments totaling $20,000
on behalf of Lopez and Berrios to a chiropractor who treated them for alleged soft-
tissue injuries resulting from the collision. On November 15, 2016, Lopez and
Berrios entered into a settlement and general release of any claims they may have
had against Kelley; they never filed suit against him. On February 13, 2017,
Nationwide initiated arbitration proceedings against Kelley’s insurer, Liberty
Mutual, for reimbursement of its PIP payments to its insureds. In Nationwide’s
arbitration application, the company sought full reimbursement of the $20,000 PIP
payments; and in the “contentions” section of its application, Nationwide
represented that “[l]iability is not an issue as Liberty Mutual has accepted
liability.” On May 8, 2017, the arbitration resulted in an award in favor of
Nationwide and against Liberty Mutual for $19,000, representing Nationwide’s
claimed reimbursement of $20,000 for its PIP payments, less a $1,000 “inter-
company offset.” The arbitration award specified a “0” offset for “comparative
negligence.”
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In 2019, Byrnes filed suit against Nationwide in Jefferson Circuit
Court.3 In sum, Byrnes believed Nationwide owed him an attorney’s fee stemming
from his representation of Lopez and Berrios because those two individuals
undisputedly qualified as “secured person(s)” pursuant to KRS 304.39-070(1); he
had provided them legal representation in an action that had been settled, but
potentially could have been filed under KRS 304.39-060; Nationwide qualified as
Lopez and Berrios’ primary “reparations obligor,” and had been reimbursed for its
PIP payments by Kelley’s insurance carrier, Liberty Mutual; and as a result of that
reimbursement, KRS 304.39-070(5) provided for Byrnes to receive a reasonable
attorney’s fee from Nationwide.
In his complaint, Byrnes alleged that he had requested what he
believed was a “reasonable” attorney’s fee from Nationwide pursuant to KRS
304.39-070(5) (a contingent fee of one-third of what Liberty Mutual had
reimbursed Nationwide for PIP benefits); that Nationwide had refused his request;
and that Nationwide was therefore liable to him for damages for “violating” KRS
304.39-070(5) through its refusal to pay him what he believed he was owed. Due
to this “violation,” Byrnes asserted Nationwide was negligent per se and owed him
3
Byrnes initially filed his action against Nationwide in Oldham Circuit Court. Thereafter, it was
removed and refiled in federal court, and subsequently refiled in Jefferson Circuit Court.
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not only a “reasonable attorneys’ fee,” but also compensatory and punitive
damages.4
Nationwide answered the complaint, denying liability. Following a
period of discovery, Nationwide then moved for partial summary judgment,
arguing that a “violation” of KRS 304.39-070(5) does not provide legal grounds
for compensatory or punitive damages. On July 20, 2020, the circuit court granted
Nationwide’s motion. The parties then proceeded with discovery regarding the
remainder of Byrnes’ attorney’s fee claim. Byrnes was subsequently deposed by
Nationwide. Upon denying Nationwide’s motion for summary judgment, the case
proceeded to an evidentiary hearing on August 19, 2021, whereupon the case was
taken under submission by the circuit court.
On October 27, 2021, the circuit court rendered findings of fact and
conclusions of law. The circuit court determined that Byrnes was entitled to be
compensated by Nationwide for 4.8 hours out of the total 15.3 hours Byrnes had
claimed to have spent representing Lopez and Berrios. The circuit court reasoned
that the remaining “10.7 hours” of the work performed by Byrnes was, in
furtherance of his efforts to secure PIP payments from Nationwide and was
4
In his complaint, Byrnes also claimed Nationwide was liable for what he characterized as
Nationwide’s “bad faith” refusal to pay him what he believed he was owed, and he asserted
Nationwide had therefore acted in violation of the Kentucky Unfair Claims Settlement Practices
Act (KUCSPA), KRS 304.12-230 and 235. The circuit court dismissed Byrnes’ KUCSPA claim
in the interlocutory order entered on July 20, 2020. Byrnes does not take issue with the circuit
court’s disposition of his KUCSPA claim in this appeal nor have we addressed same.
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therefore noncompensable.5 Upon determining that $250 per hour was a
“reasonable” rate consistent with KRS 304.39-070(5), the circuit court awarded
Byrnes an attorney’s fee from Nationwide in the amount of $1,200 for 4.8 hours of
work in establishing the tortfeasor’s liability which benefitted Nationwide in its
efforts to recover its PIP payments from Liberty Mutual.
This appeal and cross-appeal followed. Additional facts will be
discussed as necessary in the Opinion.
II. ANALYSIS
1. Byrnes v. Nationwide – Appeal No. 2021-CA-1346-MR
In his direct appeal, Byrnes effectively presents two arguments. First,
he argues that the circuit court erred by failing to award Byrnes a reasonable
attorney fee. The court found that only 4.8 hours of his work on the case conferred
a benefit for Nationwide in its efforts to recover PIP benefits from Liberty Mutual
under KRS 304.39-070(5), which Byrnes asserts was not a reasonable fee. Byrnes’
second argument looks to the circuit court’s denial of his claim for compensatory
5
At the evidentiary hearing, Byrnes attempted to introduce an exhibit detailing his billable hours
of service in this case from December of 2015 through May of 2016. He had testified previously
at his deposition that he had not kept hourly time for this case. The circuit court denied the
admission of the exhibit but allowed Byrnes to testify regarding the hours of legal service he had
performed in the case. Notwithstanding, the exhibit is in the Record at page 261-262. Byrnes
testified he had worked 15.3 hours on the case although the hours on the exhibit actually totaled
15.5 hours.
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and punitive damages in enforcing his alleged statutory right to the attorney fee
provided for in KRS 304.39-070(5).
We begin our analysis by setting forth KRS 304.39-070(5):
An attorney representing a secured person in any action
filed under KRS 304.39-060 shall be entitled to a
reasonable attorneys’ fee in the event that reparation
benefits paid to said secured person by that secured
person’s reparation’s obligor are reimbursed by any
insurance carrier on behalf of a tortfeasor who is the
defendant in any such action filed by the said secured
person or in the event such potential “action” is settled by
said potential tortfeasor’s insurance carrier on his behalf
prior to the filing of any such suit.
The leading case interpreting KRS 304.39-070(5) is the Kentucky
Supreme Court’s Opinion in Baker v. Motorist Insurance Companies, 695 S.W.2d
415 (Ky. 1985). In Baker, an attorney represented a victim of a motor vehicle
accident. The victim was insured by Motorist Insurance Companies (Motorists),
and Motorists paid its insured PIP benefits after the accident. The attorney did not
represent Motorists. As liability was not at issue, the attorney settled the case with
the tortfeasor’s insurance carrier, and Motorists recovered the PIP payment from
the tortfeasor’s insurance carrier. Thereafter, the victim’s attorney sought payment
of attorney’s fees from Motorists under KRS 304.39-070. Motorists refused to pay
the fees and the attorney filed a lawsuit. In concluding that attorney’s fees were
not mandated under its facts, the Supreme Court reasoned:
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This is a statutory attorney’s fee. It
is not dependent upon the reparation obligor employing
the insured’s attorney to represent its subrogation
interest. Morris and McGlincy v. Nationwide Mutual Ins.
Co., Ky. App., 657 S.W.2d 248 (1983); Meridian Mutual
Ins. Co. v. Walker, Ky. App., 602 S.W.2d 181 (1980). It
is not dependent upon the reparation obligor joining in
the personal injury action filed by the attorney filed on
behalf of the reparation obligor’s insured. Subsection
Five (5) also applies “in the event such potential ‘action’
is settled by said potential tortfeasor’s insurance carrier
on his behalf prior to the filing of any such suit.”
Indeed, if the facts show that the attorney’s
representation of the insured conferred a benefit on the
reparation obligor, Subsection Five (5) establishes the
attorney’s right to collect a reasonable fee from the
reparation obligor for the benefit conferred which cannot
be evaded or avoided. Meridian Mutual Ins. Co. v.
Walker, supra at 182. Such a benefit results from
establishing liability, from establishing the right to
payment of disputed medical expenses or wages, or by
other proof of benefit conferred. In a disputed case a
reparation obligor which does not pursue arbitration
cannot avoid a fee to the injured person’s attorney by
claiming it intended to later go to arbitration when the
proof shows that liability was established by the
attorney’s efforts. It cannot notify the tortfeasor’s
insurance carrier of its subrogation and thereafter remain
passive, leaving reimbursement subject to the outcome of
the client’s personal injury claim.
It is not necessary that the reparations obligor
employ the services of the injured party’s attorney, either
directly or impliedly, for the statutory fee to apply. If the
attorney confers a benefit on the reparations obligor the
reparations obligor cannot avoid the statutory fee by
contingency agreement with the tortfeasor’s carrier to
abide by the results in the injured party’s case, or
otherwise. Nor is the statutory fee dependent upon proof
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that the attorney intended by his services to confer a
benefit on the reparations obligor in addition to his client,
if the proof shows that the result of his services did in
fact confer such a benefit.
Baker, 695 S.W.2d at 416-17.
The Supreme Court held in Baker that the attorney was only entitled
to the statutory fee if the attorney provided a benefit to the reparations obligor
(insurance company). Id. The Court particularly stated “[s]uch a benefit results
from establishing liability, from establishing the right to payment of disputed
medical expenses or wages, or by other proof of benefit conferred.” Id. at 417
(emphasis added). Relying upon the particular facts therein, the Supreme Court in
Baker determined that the attorney failed to demonstrate any benefit conferred,
either directly or indirectly, upon Motorists. Id.
In this case, the circuit court followed the dictates of Baker, 695
S.W.2d at 417, and conducted an evidentiary hearing to determine whether Byrnes
conferred a benefit upon Nationwide. Thereafter, the circuit court rendered
findings of fact and conclusions of law, ultimately awarding Byrnes $1,200 in legal
fees under the statute.
The evidentiary hearing effectively constituted a bench trial
whereupon our standard of review is governed by Kentucky Rules of Civil
Procedure (CR) 52.01. Under CR 52.01 the trial court is required to make specific
findings of fact and state separately its conclusions of law relied upon to render the
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court’s judgment. Further, those “[f]indings of fact, shall not be set aside unless
clearly erroneous, and due regard shall be given to the opportunity of the trial court
to judge the credibility of the witnesses.” CR 52.01. A trial court’s decision is not
clearly erroneous if it is supported by substantial evidence. Owens-Corning
Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998). “[S]ubstantial
evidence” is “evidence of substance and relevant consequence having the fitness to
induce conviction in the minds of reasonable men.” Id. (citations omitted). While
giving deference to the lower court’s factual findings, this Court’s review of legal
conclusions from a bench trial is de novo. Sawyers v. Beller, 384 S.W.3d 107, 110
(Ky. 2012).
At the evidentiary hearing, Byrnes was the only witness to testify.
Based on his testimony, the circuit court found that only 4.8 hours of his time spent
on the case was compensable. On appeal, Byrnes fails to explain how this finding
was in error, or how a fee of $1,200 was unreasonable. Similarly, he does not
explain what other billable hours he performed were compensable other than his
bare assertion of entitlement to a “reasonable fee.” The court heard the testimony,
judged the credibility of the only witness, Byrnes, and concluded that 4.8 hours of
billable time was compensable under the statute. The findings of the circuit court
are not clearly erroneous nor do we find any legal error in the circuit court’s
conclusions of law. The determination of a reasonable attorney’s fee for Byrnes
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under the statute clearly rests within the sound discretion of the circuit court, which
we will not disturb nor substitute our judgment for. Woodall v. Grange Mut. Cas.
Co., 648 S.W.2d 871, 873 (Ky. 1983).
Byrnes, in arguing that Baker was improvidently decided by our
Supreme Court, invites this Court to harmonize KRS 304.39-070(5) with what he
asserts are conflicting Kentucky Supreme Court opinions on the statutory
attorney’s fee issue. We decline the invitation. We believe Baker is controlling in
the interpretation of KRS 304.39-070(5) and as an intermediate appellate court, we
are duty bound to follow the applicable precedents set out in opinions of the
Kentucky Supreme Court. Kentucky Supreme Court Rule 1.030(8)(a). And, we
note that the circuit court below correctly followed Baker in rendering its findings
of fact and conclusions of law.
Byrnes’ final issue raised in his direct appeal looks to the circuit
court’s denial of his claim for compensatory and punitive damages. Again, we find
no error in the circuit court’s ruling. Byrnes alleges that Nationwide’s “intentional
violation” of KRS 304.39-070(5) warrants an award of compensatory and punitive
damages under the statute. We find no legal authority to support this argument.
The exclusive remedy for Byrnes’ claim is the “reasonable attorneys’ fee” stated in
KRS 304.39-070(5). It is well established Kentucky law that “where a statute both
declares the unlawful act and specifies the civil remedy available, the aggrieved
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party is limited to the remedy provided by the statute.” Foster v. Ky. Farm Bureau
Mut. Ins. Co., 189 S.W.3d 553, 557 (Ky. 2006) (citation omitted). The Kentucky
Motor Vehicle Reparation Act (MVRA), KRS 304.39 et seq. is a comprehensive
law that limits an attorney’s remedy for obtaining reimbursement of basic
reparation benefits payments to his or her reasonable fees. Byrnes therefore may
not legally recover any damages beyond the reasonable attorney’s fees identified in
KRS 304.39-070(5). Additionally, based upon our review of the record, including
the evidentiary hearing, there is not one shred of evidence to support Byrnes’ claim
that Nationwide intentionally violated KRS 304.39-070(5) in this case.
Based on the foregoing analysis, we affirm the circuit court’s ruling
and its findings of fact and conclusions of law as concerns Byrnes direct appeal in
Appeal No. 2021-CA-1346-MR.
2. Nationwide v. Byrnes – Cross-Appeal No. 2021-CA-1369-MR
In Nationwide’s cross-appeal, Nationwide argues that Byrnes failed to
confer any benefit upon Nationwide as concerns the establishment of liability by
the tortfeasor and Liberty Mutual. However, Nationwide did not call any
witnesses at the evidentiary hearing or submit any documentary evidence to
support its position. The circuit court heard the testimony of Byrnes at the hearing,
including his cross-examination by counsel for Nationwide.
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As previously discussed regarding Byrnes’ direct appeal, our standard
of review in this cross-appeal is set forth in CR 52.01. The circuit court’s findings
of fact will not be set aside unless clearly erroneous. A reversible error arises
when there is no substantial evidence in the record to support the findings of the
trial court. M.P.S. v. Cabinet for Human Res., 979 S.W.2d 114 (Ky. App. 1998).
In this case, the bulk of the evidence submitted at the hearing was
through the testimony of Byrnes. We acknowledge Nationwide’s concern
regarding Byrnes’ testimony about his billable hours which conflicted with his
earlier deposition testimony. However, the circuit court was the fact-finder and
also charged with judging the credibility of Byrnes’ testimony. See CR 52.01. In
this regard, the circuit court believed that 4.8 hours of Byrnes’ time benefited
Nationwide in recovering PIP benefits paid to its insureds. To the extent the
evidence relied upon by the circuit court was conflicting, this court may not
substitute its decision in place of the judgment of the circuit court, as the finder of
fact, even if we might have viewed the evidence differently. See Truman v.
Lillard, 404 S.W.3d 863, 868-69 (Ky. App. 2012). Nationwide has simply failed
to establish on cross-appeal how the circuit court’s findings are clearly erroneous
and its conclusions of law in error. Accordingly, we have no alternative but to
affirm the circuit court’s ruling on the cross-appeal.
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III. CONCLUSION
In summation, we affirm the circuit court’s findings of fact and
conclusions of law in both Appeal No. 2021-CA-1346-MR and Cross-Appeal No.
2021-CA-1369-MR.
ALL CONCUR.
BRIEF FOR APPELLANT/CROSS- BRIEF FOR APPELLEE/CROSS-
APPELLEE: APPELLANT:
Jeffrey A. Sexton Joshua J. Leckrone
Louisville, Kentucky Ryan M. Glass
Louisville, Kentucky
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