Court Opinion

ID: 9630984
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:26:17.773086+00
Date Added: 2024-06-11T12:06:50.470636
License: Public Domain

Dissenting Opinion by
Justice CUNNINGHAM.
I fear that the majority has held today that the trial court abused its discretion by simply following the law. Therefore, I respectfully dissent.
In upholding the decision of the Court of Appeals, I also fear that we have once again reached down into the trenches of the trial court and have imposed our own judgment by injecting ourselves into a role best left to the trial court, as long as that discretion is not abused.
We have held today that the trial court abused its discretion when it awarded Elk Horn Coal Corporation pre-judgment interest at the rate of 8% from June 9, 2005 instead of March 16, 2001. It would behoove us to remind ourselves that a trial court does not “abuse its discretion” simply by making a decision with which the appellate courts disagree.
Abuse of discretion means “arbitrary action or capricious disposition under the circumstances, at least an unreasonable and unfair decision.” Kuprion v. Fitzgerald, 888 S.W.2d 679, 684 (Ky.1994). Or, as more eloquently stated in the decision of City of Louisville v. Allen, 385 S.W.2d 179 (Ky.1964), there is no abuse of discretion when it is “governed by rule, and not by humor. It must not be arbitrary, vague, and fanciful, but legal and regular. It may not be granted or refused at the mere will or pleasure of the judge, but he is to exercise a sound judicial judgment, in the interest of justice and prudence.” 385 S.W.2d at 182.
When we look to the totality of the circumstances in this case, I find it impossible to decree that the judge abused his discretion in determining the time period for the pre-judgment interest to run. A quick review of some of the salient points of this case, as well as the case law, is necessary to understand why there was no abuse of discretion.
In October of 1998, a jury in Floyd County, Kentucky found that Elk Horn Coal Corporation committed various acts of fraud and breach of contract and awarded Cheyenne Resources, Inc. $9,500,000.00 as compensation. After the Court of Appeals affirmed the judgment and this Court denied discretionary review, the trial court awarded Cheyenne a 10% superse-deas penalty pursuant to KRS 26A.300. Elk Horn paid the judgment, including the 10% penalty, in March of 2001, but appealed on the penalty issue.
As the trial court noted in its order and judgment, KRS 26A.300 had been applied for many years in the Commonwealth of Kentucky, and when the 10% penalty was imposed it was the valid law of this state. In fact, it was not until June 9, 2005, that this Court held that the statute requiring the 10% penalty was unconstitutional. Significantly, up until that time Cheyenne was, and continues to be, the innocent party. This litigation has extended over a period of almost ten years. Elk Horn has again brought Cheyenne — the innocent party — to the attention of this Court.
*189The case cited by both parties of Alexander Hamilton Life Ins. Co. of Am. v. Lewis, 550 S.W.2d 558 (Ky.1977) is the guiding light for trial judges in determining the starting date for calculating the amount of pre-judgment interest. This case emphasizes the concept of fairness and fault. Chief Justice John Palmore puts it this way, “When an innocent party uses the money or property of another in reliance upon a final unappealed judgment that says it is his, it can hardly be said that he is at fault unless and until he is put on notice of circumstances that justify or call for setting the judgment aside.” 550 S.W.2d at 560. The trial court in this case precisely followed this formula when it awarded 8% interest on the penalty amount from June 9, 2005, the date that Cheyenne was put on notice regarding the unconstitutionality of KRS 26A.800. Therefore, the trial court followed the law both in assessing a 10% penalty under KRS 26A.300, and in determining the date that interest should begin accruing on that penalty.
The majority opinion speaks a great deal about the concept of restitution, and that Elk Horn was deprived of the use of their money from March of 2001, the date that the 10% penalty was paid to Cheyenne, until June of 2005, at which time this Court found KRS 26A.300 to be unconstitutional. In doing so, however, it presumes a duty upon Cheyenne — the innocent party — to generate income upon Elk Horn’s money. In other words, if Cheyenne had earned only 6% interest upon the penalty amount during this approximately four year period, but now has to reimburse Elk Horn at the rate of 8%, a deficit would result for Cheyenne. This penalizes the totally innocent party and rewards the party that was originally found to have acted fraudulently.
It seems to me that if there is any windfall in all of this, it would be more equitable to fall upon the innocent party, and not the party who comes out of this lawsuit with dirty hands. This exact sentiment is expressed in the ancient case of Bridges v. McAlister, 106 Ky. 791, 51 S.W. 603 (1899), which was given new life in Alexander Hamilton, supra. In Bridges, the Court concluded that “[w]hen a judgment is reversed, restitution must be made of all that has been received under it, but no further liability should in any case be imposed.” 51 S.W. at 605 (emphasis added).
There are also other factors to consider, including: (1) the lengthy time and cost of litigation that the winning party, Cheyenne, has been exposed to; (2) the law of this state at the time the 10% penalty was paid; and (3) the reluctance of the trial court to impose upon Cheyenne, the winning party, a duty to make Elk Horn, the offending party, money. All of these factors certainly put fairness in a different light than that which is done by the majority here today. The trial court was in the best position to weigh all these various factors, and it was not capricious or arbitrary in its decision.
My able and distinguished colleagues on this Court should extend deserving deference to the trial court and find that it did not abuse its discretion. I would reverse the Court of Appeals and reinstate the trial order and judgment of the trial court.
MICHAEL O. McDonald, Special Justice, joins this dissenting opinion.