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THE ACTION. 
 RENDERED: MARCH 14, 2024

NOT TO BE PUBLISHED

Supreme Court of Kentucky

2023-SC-0044-DG

MARK HANDY APPELLANT

ON REVIEW FROM COURT OF APPEALS

V. NO. 2021-CA-0664

JEFFERSON CIRCUIT COURT NO. 20-CI-004304

LOUISVILLE/JEFFERSON 

COUNTY METRO GOVERNMENT 

APPELLEE

MEMORANDUM OPINION OF THE COURT

REVERSING AND REINSTATING

Subject to certain exceptions, the Claims Against Local Governments 

Act1 (CALGA) mandates that a local government provide for the defense of its 

employees in any tort action arising out of an act or omission that occurs 

within the scope of that employee’s employment, and further mandates that the 

local government must pay any judgment or settlement arising therefrom. KRS 

65.2005(1). However, a local government may seek indemnification from an

employee for those expenses under CALGA if “[t]he employee acted or failed to 

act because of fraud, malice, or corruption[.]” KRS 65.2005(3)(a). In Kentucky, 

those indemnity claims are subject to a five-year statute of limitations 

1 Kentucky Revised Statutes (KRS) 65.200 to KRS 65.2006.
2

pursuant to KRS 413.120. Norohna v. Zolkiewicz, 583 S.W.3d 42, 46 (Ky. App. 

2018) (citing Affholder, Inc. v. Preston Carroll Co., Inc., 27 F.3d 232, 234 (6th

Cir. 1994)). 

In this case, Louisville/Jefferson County Metro Government (Metro) filed 

a CALGA indemnity claim against Mark Handy (Handy), a former Louisville 

Metro Police Department (LMPD) detective. Handy’s numerous acts of 

misconduct during the course of his employment led to Edwin Chandler 

(Chandler) being convicted and sentenced to thirty years’ imprisonment for 

crimes he did not commit. After Chandler was exonerated, he filed a 42 

U.S.C.A. § 1983 claim against Metro, Handy, and others alleging numerous 

violations of his civil rights. Metro paid Handy’s legal fees, and it reached an 

8.5-million-dollar settlement with Chandler on Handy’s behalf which it paid. 

Six years after the Chandler settlement agreement was reached, Handy 

was indicted for perjury in relation to Chandler’s case. Two years after that, 

Handy pled guilty to the charge. One month later, Metro filed a CALGA 

indemnity claim against Handy on the basis that he acted or failed to act 

because of fraud, malice, or corruption during the Chandler investigation and 

trial. Handy filed a motion to dismiss the claim and asserted that the statute 

of limitations on Metro’s indemnity claim began running when Chandler filed 

his § 1983 claim or, at the latest, it began when Metro agreed to pay Chandler 

an 8.5-million-dollar settlement. Metro argued in response that it had 

absolutely no knowledge of Handy’s “malice, fraud, or corruption” until he pled 
3

guilty or, at the earliest, until he was indicted, and its claim was therefore 

timely.

The Jefferson Circuit Court found that the statute of limitations began to 

run on Metro’s indemnity claim, at the latest, when it reached its settlement 

agreement with Chandler, and it dismissed the claim as untimely. The Court 

of Appeals reversed the circuit court because it did not make a finding as to 

when Metro knew or reasonably should have known of Handy’s malice, fraud, 

or corruption. Louisville/Jefferson Cnty. Metro Gov’t v. Handy, 2021-CA-0664-

MR, 2022 WL 12138037, at *3 (Ky. App. Oct. 21, 2022). It remanded to the 

circuit court for it to make that finding and proceed accordingly. Id. After 

review, we reverse the Court of Appeals and reinstate the circuit court’s order 

dismissing Metro’s indemnity claim against Handy as untimely.

I. FACTS AND PROCEDURAL BACKGROUND

Chandler filed his § 1983 complaint in July 2010. The complaint listed 

several LMPD police officers as defendants, but in February 2012 Chandler 

voluntarily dismissed his claims against all individually named officers save for 

Handy and Sargent Jay Pierce (Pierce). 

Chandler’s complaint alleged the following facts. On September 28, 

1993, Percy Phillips (Phillips) murdered Brenda Whitfield (Whitfield) while she 

was working as a clerk at a Chevron gas station in Louisville. Phillips entered 

the gas station at approximately 10:15 pm and waited for the only other 

individual in the store to leave. Phillips then went to the cooler, grabbed a 

bottle of malt liquor, and placed it on the checkout counter. When Whitfield 
4

opened the cash register to give Phillips change, he shot her in the face and 

stole the paltry amount of money in the register. When Phillips fled the scene,

he left the malt liquor bottle, which had his fingerprint on it, and his hat 

containing a least one hair in it. In addition, the station’s video surveillance 

captured the entire incident, and two eyewitnesses saw Phillips at the scene: 

the individual who left the store just before the shooting and an individual who 

saw Phillips flee the scene while pumping gas. 

Handy was assigned as the lead detective in Whitfield’s murder case and 

was responsible for the investigation. Handy committed unconscionable and 

egregious misconduct during the investigation which ultimately led to 

Chandler’s wrongful conviction. That misconduct included: recording over the 

surveillance footage depicting the robbery and murder; mischaracterizing

and/or omitting information provided by witnesses; disregarding the fact that a 

fingerprint analyst determined that none of the latent fingerprints found on the 

bottle of malt liquor matched Chandler’s fingerprints; disregarding the fact that 

a forensic examiner determined Chandler’s hair did not match the hair found 

in the cap left by the shooter at the scene; coercing Chandler’s alibi witnesses 

into changing their statements; and using improper photographic lineups. 

Handy also improperly coerced Chandler into providing a false 

confession. Chandler discovered he was wanted by police after seeing his 

photograph on the news several days after the shooting and voluntarily went to 

the police station without counsel to clear his name. Chandler was subjected 

to an improper polygraph examination after his initial interrogation and was 
5

falsely told he had failed it. He was then subjected to an “aggressive” two-hour 

interrogation by Handy and Pierce during which they confronted him with 

several pieces of “evidence” they had proving his guilt, each of which were lies. 

This false evidence included: that he failed his polygraph; that a customer of 

the Chevron station had identified him as the shooter; that his neighbors had 

identified the hat left at the scene as belonging to him; and that his fingerprints 

were found on the bottle of malt liquor left by the shooter. They also 

threatened to prosecute the family members Chandler had been living with for 

harboring a fugitive if he did not confess. Additionally, Handy provided 

Chandler with several details about the crime that had been withheld from the 

public so that Chandler could regurgitate them in his “confession.” In 

particular, that the last customer to leave the Chevron station before the 

shooting had been wearing a Chicago White Sox cap. 

During Chandler’s trial in February 1995, the Commonwealth’s case 

relied almost solely on Chandler’s “confession.” Significantly, Handy falsely 

testified that he learned one fact about the case for the first time from 

Chandler: that the last customer to leave the Chevron station before the 

shooting was wearing a Chicago White Sox cap. This was represented to the 

jury as a fact that only the perpetrator could have known. Chandler was 

ultimately convicted of first-degree robbery and second-degree manslaughter 

and was sentenced to thirty years’ imprisonment. Chandler was paroled in 

2002 after serving seven years of his sentence. He then began a tireless 

campaign to exonerate himself and successfully lobbied LMPD’s cold case unit 
6

to have the fingerprints found on the malt liquor bottle entered into AFIS.2 In 

October 2009, one of the prints on the bottle was matched to Phillips and he 

was shortly thereafter indicted for Whitfield’s murder. In the same month, the 

Jefferson County Commonwealth’s Attorney filed a joint motion with Chandler 

to vacate and set aside his conviction and sentence. 

As previously mentioned, Metro appointed and paid for Handy’s legal 

representation in defending Chandler’s § 1983 suit in accordance with CALGA. 

KRS 65.2005(1). On October 9, 2012, two years after the claim was filed,

Metro entered into a settlement agreement with Chandler for 8.5 million

dollars. Metro paid the entire settlement sum pursuant to CALGA. Id. Metro 

asserts to this Court that the settlement agreement did not involve any 

admissions of liability or wrongdoing, but the agreement itself is not in the 

record now before us. 

On September 26, 2018, six years after Metro entered into the settlement 

agreement with Chandler, Handy was indicted by a Jefferson County grand 

jury for one count of perjury in relation to Chandler’s case and one count of 

tampering with physical evidence concerning a different case. Nearly two years 

later in June 2020, Handy pled guilty to one count of perjury pursuant to a 

plea deal. Under the terms of that deal, the Commonwealth dismissed the 

tampering charge, and Handy acknowledged the following facts:

On or about February 7, 1995, in Jefferson County, Kentucky, the 

defendant was the lead officer in the matter of Commonwealth v. 

Edwin Chandler, 93CR3293. The defendant testified in trial that 

2 Automated Fingerprint Identification System.
7

Mr. Chandler told him in an interview that an individual was in the 

store prior to the homicide and was wearing a Chicago White Sox 

hat. This fact was material to the proceedings against Mr. 

Chandler as the individual who committed the murder would have 

been the only person aware of this fact which had not been 

released to the public. This testimony given by the defendant was 

untruthful and led to the wrongful conviction of Edwin Chandler. 

Handy subsequently withdrew his guilty plea in August 2020.

On July 23, 2020, roughly two years after Handy’s indictment and one 

month after he pled guilty, Metro filed its CALGA indemnity claim against 

Handy seeking reimbursement for legal fees and the settlement amount. 

Metro’s claim alleged that Handy gave Chandler non-public information about 

the crime and subsequently perjured himself. But, notably, the claim also 

alleged that Handy erased the Chevron station video surveillance footage and 

that he mischaracterized and/or omitted information provided by witnesses

during the Chandler investigation. In other words, Handy’s conduct as alleged 

by Metro went beyond the perjury which Metro now claims formed the basis for 

its belief that Handy acted with fraud, malice, or corruption. 

Three months after Metro filed its claim, Handy filed a motion to dismiss 

pursuant to CR3 12.02(f) for failure to state a claim upon which relief could be 

granted. Handy primarily argued, citing Affholder, Inc. v. Preston Carroll Co., 

Inc., 27 F.3d 232 (6th Cir. 1994), and Norohna v. Zolkiewicz, 583 S.W.3d 42 

(Ky. App. 2018), that the statute of limitations began running on Metro’s 

indemnity claim in 2010 when Chandler filed his § 1983 claim. Affholder and 

3 Kentucky Rule of Civil Procedure. 
8

Norohna each involved a common law indemnity claim and held that a claim 

accrues, and therefore the statute of limitations is triggered, when the party 

seeking indemnity is provided with “sufficient notice of [its] potential liability.” 

Affholder, 27 F.3d at *6-7; Norohna, 583 S.W.3d at 47-48. In the alternative, 

Handy asserted that Metro was certainly on notice that it had an indemnity 

claim against Handy when it settled the Chandler suit in 2012. Citing 

Queensway Financial Holdings Ltd. v. Cotton & Allen, P.S.C., 237 S.W.3d 141, 

151 (Ky. 2007), Handy argued that Metro had an affirmative duty to exercise 

reasonable diligence and investigate him for potential malice, fraud, or 

corruption and it did not do so. Accordingly, the discovery rule could not save 

its claim. 

Metro countered that Affholder and Norohna do not apply because its 

claim was a statutory indemnity claim under CALGA, not a common law 

indemnity claim. Accordingly, the issue was not when Metro knew of its 

“potential liability,” but rather when it knew that Handy had acted with malice, 

fraud, or corruption. Metro argued that it had no knowledge of Handy’s 

misconduct until he was indicted and pled guilty to perjury, and that it could 

not have reasonably known of said misconduct because Handy actively 

concealed it. Metro claimed that Handy denied any wrongdoing in relation to 

Chandler’s case and had lied under oath regarding said wrongdoing during the 

§ 1983 litigation. Therefore, it asserted, its claim was still viable under the 

discovery rule, or in the alternative, the statute of limitations had been tolled 

by Handy’s active concealment. 
9

The circuit court initially denied Handy’s motion to dismiss with a 

barebones ruling that simply found that “the Plaintiff’s complaint is sufficient 

to state a cause of action against the Defendant.” Later, upon Handy’s motion 

for reconsideration and clarification, the circuit court dismissed Metro’s claim. 

Its order read:

Louisville/Jefferson County Metro Government (“Louisville Metro”) 

brings this indemnification action against Handy in connection 

with amounts it paid Edwin Chandler (“Chandler”) to resolve a 

2010 lawsuit. Handy contends the indemnification action is 

untimely as it was filed outside of the applicable five-year statute of 

limitations. Citing Affholder, Inc. v. Preston Carroll Co., Inc., 27 

F.3d 232 (6th Cir. 1994), and Norohna v. Zolkiewicz, 583 S.W.3d 

42 (Ky. App. 2018), Handy emphasizes that knowledge of potential 

liability triggers the start of the applicable five-year statute of 

limitations in this matter and Louisville Metro had knowledge of 

any potential indemnification claim when Chandler filed suit 

against him in 2010 or at the time Louisville Metro settled 

Chandler’s claims in 2012. 

Louisville Metro contends it did not have knowledge of its 

indemnification claim until Handy was indicted for perjury in 

2018. Louisville Metro alternatively contends it did not have 

knowledge of its indemnification claim until Handy entered a 

subsequently withdrawn guilty plea to perjury in 2020. Under the 

latter rationale, the five-year statute of limitations has not begun to 

run. The court finds Louisville Metro’s positions to be without 

merit. At the latest, the applicable five-year statute of limitations 

began to run in 2012 when Louisville Metro settled Mr. Chandler’s 

claims. That is when Louisville Metro had knowledge of Handy’s 

potential liability. The indemnification claim is untimely. The 

motion to reconsider will be granted. Louisville Metro’s complaint 

against Handy will be dismissed. 

The circuit court did not address Metro’s argument that the statute of 

limitations had been tolled by Handy’s alleged concealment. Metro appealed 

the circuit court’s ruling to the Court of Appeals. 
10

The Court of Appeals reversed and held that the circuit court erred by 

dismissing Metro’s claim based on “knowledge of Handy’s potential liability.” 

Handy, 2022 WL 12138037, at *3. The court noted that the “discovery rule 

operates to save claims for injuries that were not immediately discoverable 

when those injuries occurred,” and that to trigger the statute of limitations 

under the discovery rule one must know: (1) that he has been wronged, and (2) 

by whom the wrong was committed. Id. at *2. It held that 

Metro only has an indemnification claim against Handy for his 

known acts of fraud, malice, or corruption. In the circuit court's 

written order, there is no finding when Metro had knowledge of 

Handy's fraud, malice, or corruption – there is only a finding of 

when Metro knew of Handy's potential liability, which took the 

form of the mere claim of liability Chandler brought suit to prove 

but never did, and which Metro denied and defended against. 

Handy's liability was merely alleged at that point and KRS 65.2005 

did not authorize Metro to initiate a claim for Handy's potential 

liability.

Id. The court remanded to the circuit court for further proceedings “beginning 

with a finding of when Metro knew or reasonably should have known of 

Handy's fraud, malice, or corruption[.]” Id. In doing so, the Court of Appeals 

acknowledged that if “Metro knew or reasonably should have known of Handy's 

wrongdoing in 2012, then Metro's claim would be time barred under the 

applicable statute of limitations.” Id. Handy now appeals the Court of Appeals’ 

ruling to this Court. 
11

II. ANALYSIS 

When reviewing a circuit court’s ruling dismissing a case for failure to 

state a claim, we assume that all the facts asserted in the plaintiff’s complaint 

are true. See, e.g., Lawrence v. Bingham, Greenebaum, Doll, L.L.P., 567 S.W.3d 

133, 137 (Ky. 2018). We then ask whether the plaintiff is entitled to relief

based on those facts. Id. As this is purely a question of law, our review of a 

circuit court’s order dismissing for failure to state a claim is reviewed de novo. 

Id.

Before this Court, the parties’ arguments remain largely the same. 

Handy asserts that Affholder and Norohna apply, and that the statute of 

limitations on Metro’s claim therefore began running in 2010 when Chandler 

filed his § 1983 claim. In the alternative, he asserts that the statute of 

limitations began running when Metro settled the Chandler claim. Handy 

contends that the allegations contained in the Chandler complaint were more 

than sufficient to put Metro on notice that it had a potential indemnity claim 

against him. Accordingly, he argues, the Court of Appeals’ application of the 

discovery rule directly conflicts with Queensway, as that precedent is clear that 

a claimant has a duty to promptly investigate further when a claimant has 

reasonable notice that it may have a claim. 

In response, Metro asserts that Affholder and Norohna are inapplicable, 

and it continues to claim that it had “zero knowledge” of Handy’s fraud, malice, 

or corruption until Handy pled guilty to perjury. It therefore asserts that the 

Court of Appeals was correct in applying the discovery rule to its claim against 
12

Handy. It argues in the alternative that the statute of limitations should have 

been tolled because Handy actively attempted to conceal his wrongdoing by 

lying under oath during the § 1983 litigation. 

We agree with Metro that Affholder and Norohna are inapplicable, and 

therefore the statute of limitations did not begin running when Chandler filed 

his § 1983 claim. Nevertheless, we disagree with the Court of Appeals’ 

application of the discovery rule in this case. “[T]he discovery rule is available 

only in cases where the fact of injury or offending instrumentality is not 

immediately evident or discoverable with the exercise of reasonable diligence[.]” 

Fluke Corp. v. LeMaster, 306 S.W.3d 55, 61 (Ky. 2010) (emphasis added). The 

circumstances leading up to the § 1983 litigation, the facts alleged by Chandler 

during that litigation, and the settlement that resulted were more than 

sufficient to put Metro on notice that it should have investigated Handy for 

fraud, malice, or corruption. See Queensway, 237 S.W.3d at 151. By its own 

admission, Metro allowed Handy to continue his employment as an LMPD 

detective after the Chandler settlement. Metro now tries to benefit from its own 

claimed inaction, asserting that it did not know of Handy’s misconduct until he 

pled guilty to perjury. 

Metro’s cause of action for indemnity against Handy accrued in 2012 

when it entered into and paid the Chandler settlement agreement. The 

discovery rule does not save its claim, and the statute of limitations was not 

tolled.
13

We begin with an explanation of why Affholder and Noronha are 

inapplicable in this case. Nearly three decades ago in Affholder, this Court was 

asked by the Sixth Circuit to certify the law of Kentucky regarding when the 

statute of limitations began to run on a common law indemnity claim. 27 F.3d 

at 233. The case concerned a wastewater treatment project for the 

Metropolitan Sewer District of Louisville (MSD). Id. A subcontractor on the 

project sued its general contractors for additional costs incurred due to alleged 

defects in the project’s design and soil conditions. Id. at 234. The general 

contractors in turn filed a third-party indemnity claim in the case against MSD 

and the engineering companies that worked on the project. Id. The third-party 

defendants filed a motion for summary judgment based on their argument that 

the indemnity claim was untimely, and the Sixth Circuit sought certification of 

Kentucky law regarding, inter alia, when the statute of limitations began to run 

on the claim. Id. at 233. 

The certification of law issued by this Court in response held that the 

statute of limitations began running on the general contractors’ indemnity 

claim against the third-party defendants when the subcontractor filed its claim 

against the general contractors. Id. at 235. The Court noted that “[a] party is 

responsible to know the date on which a cause of action is or reasonably 

should have been discovered. It is that knowledge, whether actual or imputed, 

that triggers the start of any applicable statute of limitations.” Id. It went on 

to reason that “the damage or wrong” that occurred in the case was “the 

potential liability claimed by [the subcontractor] against the [general 
14

contractors,]” and that “[t]he date of the filing of the claim was the first moment 

in time that the [general contractors] could have possibly known that they were 

facing potential liability.” Id. 

In Norohna, Nirmala Norohna (Norohna) the co-owner of a company 

sought indemnity against, inter alia, her investors. 583 S.W.3d at 43. 

Norohna alleged that her investors fraudulently diverted the company’s 

accounts receivable to themselves, leaving the company unable to pay its 

federal withholding taxes in the second and third quarters of 2000. Id. at 43-

44. This led to the IRS assessing Norohna for the company’s unpaid taxes with 

interest and penalties in 2001. Id. at 44. After unsuccessfully fighting the 

IRS’s assessment for several years, Norohna began paying the assessment in 

2011 and paid it off in 2015. Id. In 2016, Norohna filed an indemnity claim 

against the investors and others for repayment of the tax assessment. Id. The 

circuit court granted the defendants’ motion to dismiss the claim as untimely. 

Id. at 45.

The Court of Appeals affirmed. Id. The court rejected Norohna’s 

argument that the statute of limitations was not triggered until 2011 when she 

began to pay the assessment, and instead held that it began running in 2001 

when the IRS initially assessed the company’s unpaid taxes against her. Id. at 

47. Applying Affholder, the court reasoned that was the point in time at which 

she “had actual knowledge of possible liability.” Id. 

Although we are somewhat wary of the holding in Affholder and the 

reinforcement of that holding in Norohna—how can a cause of action for 
15

indemnity accrue before the party seeking indemnity has paid anything for 

which he or she could be indemnified? —we have not been asked to revisit or 

overturn those opinions and, at any rate, they have no application here. Unlike 

those cases, which concerned common law indemnity claims, the cause of 

action for indemnity in this case is derived from statute. Specifically, CALGA 

directs that 

(3) A local government may refuse to pay a judgment or settlement 

in any action against an employee, or if a local government pays 

any claim or judgment against any employee pursuant to 

subsection (1) of this section, it may recover from such 

employee the amount of such payment and the costs to defend 

if:

(a) The employee acted or failed to act because of 

fraud, malice, or corruption[.]

KRS 65.2005(3)(a) (emphasis added). Consequently, a cause of action for an 

indemnity claim under this provision of CALGA requires: (1) that a local 

government has paid a claim or judgment on behalf of an employee; and (2) 

that the employee acted or failed to act due to fraud, malice, or corruption. If 

we were to apply the holdings in Affholder and Norohna in this case, we would 

be bound to hold that the statute of limitations on Metro’s indemnity claim 

began running in 2010 when Chandler filed his § 1983 claim, as that was the 

date Metro had knowledge of its “potential liability.” But, at that point, Metro 

had not paid “any claim or judgment” assessed against Handy. Its cause of 

action under CALGA for indemnity had therefore not accrued, and the statute 

of limitations could not have yet been triggered.
16

As the statute of limitations did not begin running upon the filing of 

Chandler’s § 1983 suit, the question becomes: when did it begin to run? A 

basic tenet of the law concerning statutes of limitations is that, generally, a 

statute of limitations begins to run when the underlying cause of action 

accrues, i.e., a harmful act and a resulting injury have occurred. The discovery 

rule, on the other hand, “presumes that a cause of action has accrued . . . but 

that it has accrued in circumstances where the cause of action is not 

reasonably discoverable, and it tolls the running of the statute of limitations 

until the claimant knows, or reasonably should know, that injury has 

occurred.” Michels v. Sklavos, 869 S.W.2d 728, 732 (Ky. 1994) (emphasis 

added). In other words, the discovery rule has no application in cases where 

the cause of action is reasonably discoverable by the plaintiff.4 Queensway is

demonstrative. 

In Queensway, Queensway Financial Holdings, Ltd. (Queensway) agreed 

to buy Paradigm Insurance Company (Paradigm). 237 S.W.3d at 143. Under 

the purchase agreement, Paradigm was to produce an audited financial 

statement as of September 30, 1997, to set the purchase price. The audit was 

performed by Cotton & Allen, P.S.C. (Cotton & Allen), which had been 

performing Paradigm’s audits for several years. Id. Cotton & Allen delivered 

the audit on December 16, 1997, and Queensway purchased and took over 

4 Indeed, the discovery rule is most often applied in cases where a cause of 

action is not reasonably discoverable through due diligence such as medical 

malpractice where the rule finds its origin. See Tomlinson v. Siehl, 459 S.W.2d 166 

(Ky. 1970).
17

Paradigm’s operations on December 31. Id. at 144. On the day of the 

purchase, sometime after it was completed, Greg Bubalo (Bubalo), Paradigm’s 

general counsel and head of claims, informed Queensway that its reserves were 

being increased by $ 3.3 million. Id. Prior to the purchase, on December 5, 

Bubalo had informed Queensway’s actuary that he was changing the way the 

reserves were to be calculated, and that Paradigm’s method for setting reserves 

“was in need of systematic revision.” Id. at 143. In October 1998, the Indiana 

Department of Insurance reviewed Paradigm’s books and questioned the 

adequacy of its reserves. Id. at 145. And, on February 15, 1999, the 

Department of Insurance ordered that Paradigm’s reserves be adjusted upward 

by approximately 6 million dollars. Id. 

In February 2000, Queensway filed suit against Cotton & Allen for 

breach of contract and professional malpractice in auditing Paradigm’s 

financial statements. Id. at 147. Cotton & Allen filed a motion to dismiss, 

claiming the suit was filed outside the one-year statute of limitations for 

professional malpractice. Id. The circuit court granted the motion, and the 

Court of Appeals affirmed. Id. 

Before this Court, Queensway argued that the statute of limitations 

should have been tolled until at least February 1999 when the Department of 

Insurance ordered Paradigm’s reserves be adjusted. Id. Queensway argued 

this was the point at which its cause of action accrued because its damages 

had become fixed and non-speculative. Id. at 148. The Queensway Court 

rejected this argument, as it did not focus on the “correct injury and damages.” 
18

Id. at 149. The Court explained that any damages Queensway suffered 

stemmed from its overpayment for Paradigm, and therefore its damages 

became fixed and non-speculative at the time of the purchase in December 

1997. Id. In other words, “[i]f the reserves were set too low, then the price paid 

for the company was too high[,]” and “the reserve adjustment did not require 

Queensway or Paradigm to pay out any money; rather, it required only that 

cash from surplus be shifted to reserves[.]” Id. The Court accordingly 

concluded that “Queensway’s cause of action accrued well more than a year 

prior to its filing suit[,]” and the survival of its claim depended on “whether it 

enjoy[ed] the benefit of the discovery rule.” Id. at 150.

With regard to the discovery rule, Queensway argued—as Metro does 

here—that there was “a material issue of fact as to when it knew or reasonably 

should have known of its cause of action[.]” Id. This Court rejected this 

argument outright and held that “Queensway should have known of its cause 

of action beginning in December 1997 when it completed its purchase.” Id. It 

held that the “controlling factor” was that Queensway was informed by Bubalo 

that the reserves were being increased by $3.3 million on the day it purchased 

Paradigm. Id. at 151. The Court explained:

At that time, Queensway had knowledge of a reduction in the value 

of Paradigm and should have known that something was amiss 

with the way reserves were being calculated. When combined with 

the fact that the reserves had previously been adjusted upward as 

part of a plan to “attain adequacy” of reserves, the significant, 

postpurchase adjustment should have been especially troubling.

The response to this is that the obvious problems with Paradigm's 

reserve setting system did not by themselves mean Queensway 
19

should have known of Cotton & Allen's alleged negligence. 

However, that Queensway had to make a significant 

adjustment, and in essence suffered losses after having had 

the benefit of Cotton & Allen's audit report, should have put 

them on notice that something was wrong with the report. 

Cotton & Allen's report showed no problem with the reserves, 

yet within weeks of its delivery, Paradigm had to make 

significant adjustments to those reserves. The disconnect 

between these two facts is striking and would lead a 

reasonable owner to investigate why the report had failed to 

show the inadequacy of reserves that had to be adjusted 

upward only a short time later. Assuming Cotton & Allen was 

responsible for assessing the reserves (rather than relying on 

actuarial certifications), such an investigation would have revealed 

one of two things as of December 31, 1997: either Paradigm's 

claims had taken significant unpredictable turns in the fourth 

quarter, or Cotton & Allen had been negligent in auditing the 

reserves.

Regardless of which option (or combination of the two) was true, it 

was clear that Queensway knew it had suffered damages at 

that time by the amount of the decrease in Paradigm's true 

value as a result of the reserves adjustment. The fact that the 

cause of the injury may not have been obvious does not mean 

Queensway could avoid the effects of the discovery rule 

statute of limitations at that point. “[T]he discovery rule does 

not operate to toll the statute of limitations to allow an injured 

plaintiff to discover the identity of the wrongdoer unless there is 

fraudulent concealment or a misrepresentation by the defendant of 

his role in causing the plaintiff's injuries.” McLain v. Dana Corp., 

16 S.W.3d 320, 326 (Ky. App. 1999). “A person who knows he has 

been injured has a duty to investigate and discover the identity of 

the tortfeasor within the statutory time constraints.” Combs v. 

Albert Kahn Associates, Inc., 183 S.W.3d 190, 199 (Ky. App. 2006). 

Had Queensway exercised reasonable diligence, it would have 

taken some steps, upon notice of the $3.3 million reserves 

adjustment, to discover the source of the injury.

Id. (emphasis added). This Court accordingly upheld the circuit court’s 

dismissal of Queensway’s claim, as it ‘“had numerous opportunities to discover 

any issues regarding the mishandling of the insurance reserves’ and should 
20

have known of its injury as early as December 1997 and no later than October 

1998.” Id. at 152.

Applying Queensway to the facts of this case, it is clear that Metro’s 

cause of action against Handy accrued in 2012. Metro paid an 8.5 million 

dollar settlement to Chandler and was therefore clearly injured as of that year. 

And the cause of Metro’s injury was Handy’s fraud, malice, or corruption: At 

the time Chandler filed his suit, it was an undeniable, objective fact that 

Chandler had been convicted and sentenced because of an investigation for 

which Handy was responsible, and that he had later been exonerated based on

evidence that Handy had in his possession from the outset of the investigation. 

This should have put Metro on notice that something was very badly amiss 

with Handy and his conduct. Had Metro exercised due diligence or, indeed, 

performed any follow up investigation of Handy at all, it could have easily 

discovered that his investigation was absolutely wrought with malice, fraud, 

and corruption. After all, Metro was a party to the § 1983 suit. As a practical 

matter, that litigation consisted of a plaintiff-led investigation into Handy’s 

fraud. Consequently, in accordance with Queensway, Metro does not now get 

to avail itself of the discovery rule. 

For similar reasons, we are likewise unpersuaded by Metro’s argument 

that the statute of limitations should be tolled. There are two necessary 

prerequisites for the application of equitable tolling: “a litigant must show ‘“(1) 

that he has been pursuing his rights diligently, and (2) that some extraordinary 

circumstance stood in his way and prevented timely filing,” with those 
21

circumstances being beyond the litigant's control.’” See, e.g., MGG Inv. Group 

LP v. Bemak N.V., Ltd., 671 S.W.3d 76, 88 (Ky. 2023) (quoting Williams v. 

Hawkins, 594 S.W.3d 189 (Ky. 2020)). Even if this Court were to conclude that 

Handy’s efforts to conceal his misconduct by lying under oath constituted an 

“extraordinary circumstance,” Metro has not proven that it has been diligently 

pursuing its rights, as it sat on this indemnity claim for eight years and did 

nothing to further investigate Handy’s misconduct. 

III. CONCLUSION

Based on the foregoing, we conclude that Metro’s cause of action for 

indemnity under CALGA accrued in 2012. Accordingly, the statute of 

limitations on that claim began running in 2012, rendering Metro’s 2020 

complaint well-outside the five-year statute of limitations. Metro does not 

receive the benefit of the discovery rule because it was placed on notice in 2012 

that it should have further investigated Handy’s conduct surrounding the 

Chandler investigation, and now asserts it did not. The statute of limitations is 

not tolled for the same reason. The Court of Appeals is hereby reversed and 

the circuit court order dismissing its claim is hereby reinstated, based on 

different reasoning. 

All sitting. VanMeter, C.J.; Conley, Keller, Lambert, and Nickell, JJ., 

concur. Thompson, J., dissents by separate opinion, in which Bisig, J., joins. 

THOMPSON, J., DISSENTING. Respectfully, I dissent and would affirm 

the well-reasoned Court of Appeals opinion. The majority allows an admittedly 

dishonest police officer, Mark Handy, to escape all financial responsibility for 
22

the actions he took that led to the wrongful imprisonment of an innocent man, 

Edwin Chandler. The majority does so on the basis that the Louisville/

Jefferson County Metro Government (Metro), should have been able to 

determine sooner that Handy “acted or failed to act because of fraud, malice, or 

corruption[.]” Kentucky Revised Statutes (KRS) 65.2005(3)(a). This decision 

leaves Metro and taxpayers responsible for shouldering the cost of Handy’s 

defense and the subsequent substantial settlement provided to Chandler, even 

though the first conclusive evidence of Handy’s fraud was not produced until 

2020, when Handy admitted to the perjury in conjunction with a criminal case 

brought against him relating to his actions vis-a-vis Chandler’s criminal 

prosecution. Metro acted properly in then immediately seeking indemnification. 

The Claims Against Local Governments Act (CALGA) requires local 

governments to defend their employees and pay judgments arising from acts or 

omissions that occur within the scope of their employees’ employment. KRS 

65.2005(3). This obligation “is absolute in the absence of a statutory 

exception.” Louisville/Jefferson Cnty. Metro Gov’t v. Braden, 519 S.W.3d 386, 

395 (Ky. App. 2017). However, CALGA contains only very narrow grounds for 

either refusing to defend and pay any judgment or settlement, or for seeking

recovery of the cost to defend and the repayment of any judgment or 

settlement. KRS 65.2005(3). Due to such restrictions, Metro was obligated to 

provide Handy with a defense and be financially responsible for the ultimate 

resolution of Chandler’s claim, until and unless it had conclusive proof that 

one of the five exemptions in KRS 65.2005(3)(a)-(e) was present. Additionally, 
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there can be no proper action for indemnification until after a local government 

has actual knowledge that an exemption applies. In this sense, CALGA recovery 

claims are distinguishable from ordinary cases, because local governments’ 

statutory duty puts them in a different position relative to their employees than 

ordinarily occurs in civil complaints.

The circuit court in granting a dismissal of Metro’s indemnification in 

Handy’s favor ruled: “At the latest, the applicable five-year statute of limitations 

began to run in 2012 when Louisville Metro settled Mr. Chandler’s claims. That 

is when Louisville Metro had knowledge of Handy’s potential liability.” 

(Emphasis added).

The majority agrees, explaining that at that time Metro knew that 

Chandler had been convicted and sentenced because of a botched investigation 

for which Handy was responsible and had later been exonerated based on 

evidence Handy had in his possession, which should have put Metro on notice 

that something was badly amiss. The majority opines: “Had Metro exercised 

due diligence or, indeed, performed any follow up investigation of Handy at all, 

it could have easily discovered that his investigation was absolutely wrought 

with malice, fraud, and corruption.” For this reason, the majority believes that 

the five-year statute of limitations for indemnification had lapsed and had not 

been tolled. I disagree.

I instead agree with the Court of Appeals that the circuit court’s finding 

that Metro had knowledge in 2012 of “Handy’s potential liability, which took the 

form of a mere claim of liability Chandler brought suit to prove but never did[,]” 
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could not authorize Metro to initiate a claim pursuant to KRS 65.2005(3)(a). 

Louisville/Jefferson Cnty. Metro Gov’t v. Handy, 2021-CA-0664-MR, 2022 WL 

12138037, at *3 (Ky. App. Oct. 21, 2022). While Metro knew at the time it 

entered into the settlement agreement that Handy was negligent in his 

handling of the murder investigation (and thus civil liability was established), 

nothing in the record below suggests to me that Metro knew or reasonably 

should have known at that time, that Handy had acted fraudulently. 

The facts as I am aware of them, militate against Metro having such 

awareness in 2012. Chandler’s allegations were just allegations and while it 

was evident that Handy had badly erred in conducting the murder 

investigation, Metro could not easily resolve whether Handy’s missteps were 

the result of carelessness, ignorance, a faulty memory, or incompetence or were 

the result of deliberate and fraudulent actions on his part.

In conjunction with the civil trial, Handy admitted at his March 7, 2012, 

deposition that the videotape of the murder did get erased, but denied that he 

deliberately allowed for its erasure, explaining that he should have removed a 

tab from the video to prevent it from being taped over and the failure to do so 

was a violation of procedure. However, besides that error, Handy denied doing 

anything inappropriate or improper which led to Chandler’s conviction, denied 

any dishonesty in his handling of the murder investigation, denied attempting 

to mislead the prosecutor, denied providing any details to Chandler about the 

crime, and repeatedly stated that Chandler lied that Handy had provided him 

with details about the crime. 
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The settlement was entered prior to there being any resolution of where 

the truth lay as the basis for Handy’s errors was as yet unclear. Based on 

Handy’s sworn deposition testimony and Chandler’s allegations, Metro could 

have reasonably believed: (1) Handy’s account that his missteps in connection 

with preserving the videotape were accidental, and Chandler was lying about 

his other allegations relating to Handy perjuring himself; (2) Handy may have 

accidentally given Chandler information about the crime but did not realize he 

had done so and testified honestly, but erroneously, that such information 

originated with Chandler; (3) it was impossible to resolve Handy’s motivations; 

or (4) Handy possibly may have acted deceptively or dishonestly in part, but 

Metro could not conclude that this rose to the level of fraud, malice or 

corruption with the information reasonably available to it. Simply put, only 

Handy knew why he took the actions that he took. Metro could have prudently 

decided to settle the lawsuit based on its calculation of the risks of proceeding 

to trial on the negligence of Handy, rather than based on a belief that any 

wrongdoing which occurred on Handy’s part was fraudulent. 

It is not appropriate to use Metro’s good-faith effort to comply with 

CALGA, in providing for Handy’s defense, against Metro. See generally Braden, 

519 S.W.3d at 395 (discussing that a local government providing an employee a 

defense does not function as an acknowledgment that such employee was 

acting within the scope of employment and decrying the chilling effect such a 

holding would have which “would place municipal employees in greater 

individual and financial peril . . . in direct conflict with the spirit and intent of 
26

CALGA”). Yet, that is just what the majority does in requiring Metro to 

promptly act against its employee in the absence of proof or lose such

opportunity. 

It does not further the purposes of CALGA if every time a local 

government suspects that an employee is being less than honest and 

forthcoming but could also possibly simply be in error, that it is obligated to 

treat its employee in an adversarial manner. I do not believe that as a matter of 

policy we want to encourage a local government to have to essentially work to 

aid a civil plaintiff’s case, so that the local government could be positioned to 

immediately seek recovery from such employee. Instead, it is far more 

reasonable to allow local governments to wait for outside information to emerge 

which will resolve the matter. The majority opinion incentivizes local 

governments to act improvidently in suing their employees to preserve claims 

which may not be valid or lose the privilege of seeking reimbursement later.

This imperils employees from realizing the benefits of CALGA.

In 2018, Handy was indicted for perjury and tampering with physical 

evidence in conjunction with Chandler’s conviction. Commonwealth v. Handy, 

No. 18-CR-002871 (Jefferson Cir. Ct. filed Sept. 26, 2018).5 At that junction, 

Metro could perhaps resolve that if there was evidence sufficient for an 

5 A review of CourtNet has confirmed Metro’s account of what took place 

regarding the Commonwealth’s criminal case against Handy and provided clarification 

of what occurred in it since Metro’s indemnification case has been on appeal. 
27

indictment, it could properly pursue its claim for indemnification, which would 

be timely for five years. 

However, a more definitive event took place in 2020, when Handy pled 

guilty to perjury in the first degree in conjunction with a plea agreement, in 

exchange for dismissal of the tampering charge with five years probated. The 

trial court rejected the recommended sentence of five years probated as being 

too lenient and Handy withdrew his plea. However, this event certainly 

provided Metro with definitive evidence that Handy acted in a fraudulent 

manner. Indeed, Metro recognized that by filing its complaint for 

indemnification promptly after this occurred.

Ultimately, in 2021, Handy pled guilty to perjury in the first degree and 

tampering with physical evidence in exchange for concurrent one-year 

sentences with the agreement that he would not seek probation and he was 

sentenced in accordance with this agreement. This provided further evidence 

that Handy acted in a fraudulent manner.

I agree with the Court of Appeals that it is up to the circuit court to 

determine when Metro knew or reasonably should have known of Handy’s 

wrongdoing, such that its claim accrued. Unfortunately, the record below was 

simply insufficiently developed to resolve this issue. Therefore, it would be 

appropriate to reverse and remand for the further development of the record so 

that the circuit court could resolve when Metro first knew or reasonably should 

have known of Handy’s fraud: whether this was in 2012 (when Metro entered 

into a settlement agreement with Chandler), in 2018 (when Handy was indicted 
28

for perjury and tampering with evidence), or in 2020 (when Handy entered a 

plea to perjury).

I note that Metro may have had additional obligations to defend Handy.

In addition to KRS 65.2005, there is a policy and procedures manual outlining 

Metro’s responsibilities to its employees, and the Fraternal Order of Police 

contract likely had additional provisions that are pertinent. 

These matters would best be addressed by remanding for an extensive 

evidentiary hearing to be followed by appropriate factual findings. Among the 

issues to consider would be whether, based on Handy’s own actions of false 

representation and concealment, equitable estoppel would preclude him from 

using the statute of limitations as a defense. See Williams v. Hawkins, 594 

S.W.3d 189, 193-94 (Ky. 2020) (discussing and comparing equitable estoppel 

and equitable tolling). 

Accordingly, because I conclude that the majority errs in determining 

that Metro’s cause of action of indemnity under CALGA accrued in 2012, I 

dissent.

Bisig, J., joins.
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COUNSEL FOR APPELLANT:

Michael M. Denbow 

Michael D. Risley

Jennifer Henry Jackson 

Stites & Harbison, PLLC

COUNSEL FOR APPELLEE:

Jan Michele West

Jonathan David Goldberg

Goldberg Simpson, LLC