Court Opinion

ID: 6324630
Source: CourtListenerOpinion
Date Created: 2022-03-18 14:06:30.19985+00
Date Added: 2024-06-11T09:21:53.876781
License: Public Domain

RENDERED: MARCH 11, 2022; 10:00 A.M.
                           TO BE PUBLISHED

                 Commonwealth of Kentucky
                            Court of Appeals

                               NO. 2021-CA-0706-MR

JOHN BYRNES                                                              APPELLANT

                 APPEAL FROM JEFFERSON CIRCUIT COURT
v.                  HONORABLE MITCH PERRY, JUDGE
                         ACTION NO. 19-CI-006726

NATIONWIDE MUTUAL
INSURANCE COMPANY                                                          APPELLEE

                                      OPINION
                                     AFFIRMING

                                    ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; CETRULO AND GOODWINE,
JUDGES.

CETRULO, JUDGE: This is an appeal from a decision of the Jefferson Circuit

Court which granted summary judgment to the Appellee insurer on a claim by an

attorney for fees under Kentucky Revised Statute (“KRS”) 304.39-070. For

reasons that will be set forth below, we affirm the trial court in this case.
                        PROCEDURAL BACKGROUND

             This case arose out of an automobile accident that occurred in

November of 2015. Appellant John Byrnes (“Byrnes”) represented a client by the

name of Jeevan Poudel (“Mr. Poudel”) in a claim for injuries from that accident.

Mr. Poudel was insured with Appellee, Nationwide, who paid basic reparation

benefits to Mr. Poudel pursuant to his policy and Kentucky’s Motor Vehicle

Reparations Act (“MVRA”), specifically KRS 304.39-060. The at-fault party to

that accident was insured with Canal Insurance (“Canal”). The record reflects that

Canal assumed liability upon its driver for Mr. Poudel’s damages within six

months of the 2015 accident. They paid the full amount of property damage to Mr.

Poudel’s vehicle and made an offer of settlement to Byrnes for his client’s bodily

injury claim which was rejected. Suit was filed by Byrnes on behalf of his client

against Canal’s insured and resolved by settlement within nine months.

             As part of the settlement, Canal then separately reimbursed

Nationwide for basic reparation benefits it had paid to its insured, Mr. Poudel.

Byrnes then filed this lawsuit asserting that he is entitled to a statutory attorney’s

fee from Nationwide under KRS 304.39-070(5). That section provides:

             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[] obligor are reimbursed by any
             insurance carrier on behalf of a tortfeasor who is the

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             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.

KRS 304.39-070(5).

             After filing this suit, Byrnes moved for a hearing on the sole issue of

his entitlement to attorney’s fees from Nationwide. Byrnes asserted that the statute

is clear and mandatory in that it uses the term “shall.” Nationwide contended that

Byrnes’ work did not “confer any benefit” upon it and relied upon case law

interpreting that statute, specifically Baker v. Motorists Insurance Companies, 695

S.W.2d 415 (Ky. 1985). The trial court conducted a full hearing and considered

briefs of both parties before ruling in favor of Nationwide on June 2, 2021.

                            STANDARD OF REVIEW

             The trial court considered both parties’ briefs and arguments and

conducted a hearing on the matter before ruling that Byrnes was not entitled to a

fee in this case. In so holding, the trial judge held that Byrnes was correct that he

was entitled to a “reasonable fee” pursuant to KRS 304.39-070(5). However, the

court concluded that the evidence in this case demonstrated that zero was a

reasonable fee. Obviously, the court below found the evidence of any benefit

Byrnes provided to Nationwide to be lacking.

             As the proper interpretation of statutes is an issue of law, the Court of

Appeals’ review is generally de novo. Clark Cty. Att’y v. Thompson, 617 S.W.3d

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427, 431 (Ky. App. 2021). Moreover, the court below, in essence, granted a

summary judgment in favor of the Appellee, after considering briefs and

conducting a hearing. An appellate court employs a de novo standard of review on

questions concerning the propriety of a trial court’s ruling on a motion for

summary judgment. Cmty. Fin. Servs. Bank v. Stamper, 586 S.W.3d 737, 741 (Ky.

2019). Here, we look at the trial court’s application of the law and statute to these

facts to determine whether there was any abuse of discretion because

“[d]etermination of the amount of the fee lies within the sound discretion of the

trial court.” Morris v. Nationwide Mut. Ins. Co., 657 S.W.2d 248, 249-50 (Ky.

App. 1983) (citing Woodall v. Grange Mut. Cas. Co., 648 S.W.2d 871 (Ky. 1983)).

                                     ANALYSIS

             The leading case on the interpretation of KRS 304.39-070(5) is Baker

v. Motorists Insurance Companies, the decision relied upon by Nationwide. In

Baker, as here, the attorney filed suit against his own client’s insurer, Motorists,

demanding a fee after Motorists received reimbursement from the tortfeasor’s

insurer. Baker, 695 S.W.2d. at 415-16. The Kentucky Supreme Court took

discretionary review after this Court, and the trial court therein, had both

concluded that the “reasonable fee” was zero, stating:

                    The question is whether the mandatory language of
             KRS 304.39-070(5) stating that the “attorney . . . shall be
             entitled to a reasonable attorneys’ fee in the event that
             reparations benefits . . . are reimbursed by any insurance

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             carrier on behalf of a tortfeasor,” means that Motorist is
             required to pay Baker an attorney’s fee.

Id. at 416 (citing KRS 304.39-070(5)).

             In Baker, our Supreme Court specifically held that the statute does not

mandate an attorney’s fee, in contravention of the very argument made herein by

Byrnes. Id. To the contrary, the Court noted that all of the subsections of the

statute must be read as a whole, suggesting that although the attorney’s fee

language of Subsection Five (5) is mandatory, “whether it applies depends on the

circumstances.” Id.

             As Nationwide points out in the case at bar, Byrnes’ claim below for

his client was against Mr. Poudel. He did not pursue a claim for reparation

benefits and did not claim to represent Nationwide for its subrogation rights. In

fact, Nationwide sent letters to Byrnes and to Canal, notifying of its intention to

pursue its own subrogation claim. Nationwide did not intervene nor agree in any

way to employ Byrnes to obtain its basic reparation benefits reimbursement from

Canal. Rather, the record confirms that Nationwide dealt directly with Canal to

obtain reimbursement without any intervention or assistance from Byrnes.

             In MFA Insurance Company v. Carroll, this Court held that where no

benefit is conferred upon the reparation obligor by the attorney representing the

secured person, either directly or indirectly, a “reasonable attorney’s fee” may be

zero. 687 S.W.2d 553, 554-55 (Ky. App. 1985).

                                         -5-
              The trial court in this case noted that Byrnes failed to present any

evidence of such benefit being conferred upon Nationwide, other than a self-

serving affidavit. We have reviewed the deposition testimony and hearing, as well

as the briefs below and affidavit, and must agree with the trial court. Nationwide

clearly notified Byrnes that it was pursuing subrogation for the benefits it had paid

to Byrnes’ client. Similarly, Nationwide clearly advised Byrnes that it would

handle and seek personal injury protection (“PIP”) subrogation on its own from

Canal. Finally, Canal conceded liability upon its insured even prior to the filing of

the suit by Byrnes. When Canal was ultimately able to reach an agreement to

settle with Byrnes, on behalf of his client, it promptly paid Nationwide its

subrogation claim as provided for by KRS 304.39-070(3) of the statute.1

               Our Supreme Court in Baker did note that “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.” Baker, 695 S.W.2d. at 417 (citing Meridian Mut. Ins. Co. v. Walker, 602

1
  Subsection Three (3) provides that a reparation obligor, having paid basic reparation benefits,
may pursue reimbursement for such payment either by joining in an action that may be
commenced by the person suffering the injury or by demanding reimbursement directly from the
tortfeasor’s liability insurance carrier followed by arbitration under KRS 304.39-290 if such
reimbursement is not made.

                                               -6-
S.W.2d 181 (Ky. App. 1980)). “It is not dependent upon the reparation obligor

employing the insured’s attorney to represent its subrogation interest.” Id. at 416-

17 (citing Meridian, 602 S.W.2d at 182; Morris, 657 S.W.2d 248). Examples

given of proof of such a benefit included establishing liability, establishing the

right to payment of disputed medical expenses or wages, or other proof of some

benefit conferred. The Court in Baker 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. In

this case, we agree with the court below that there simply was no evidence of any

benefit being conferred by Byrnes upon Nationwide to warrant the fee sought.

             Finally, Byrnes argues that the ethical rules of professional conduct do

not contemplate that an attorney would owe any benefit or duty to non-parties,

such as Nationwide in this case. Byrnes further argues that the stated purpose of

the “No-Fault” Act was to provide prompt payment to victims of motor vehicle

accidents without regard to liability, and that the entire legislative purpose was to

benefit those victims and not the insurance companies. He further suggests that

Baker essentially mandates a conflict of interest by requiring an attorney

representing his or her injured client to confer a benefit simultaneously upon the

insurance carrier. In the proper case, and before our Supreme Court, these might

be valid arguments that should be addressed. However, as mandated by our

                                          -7-
Supreme Court in Baker, if there is no proof that Byrnes’ work conferred any

benefit on Nationwide, directly or indirectly, then an award of the statutory fees

will not be allowed. 695 S.W.2d at 417. The trial court found no such proof in

this case, and we cannot therefore consider those arguments in this matter.

                                  CONCLUSION

             For the reasons set forth herein, we AFFIRM the order of the

Jefferson Circuit Court.

             ALL CONCUR.

BRIEF FOR APPELLANT:                       BRIEF FOR APPELLEE:

Jeffrey A. Sexton                          Joshua J. Leckrone
Louisville, Kentucky                       Ryan M. Glass
                                           Louisville, Kentucky

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