Court Opinion

ID: 4702410
Source: CourtListenerOpinion
Date Created: 2021-07-09 14:08:18.662016+00
Date Added: 2024-06-11T08:06:24.742055
License: Public Domain

RENDERED: JULY 2, 2021; 10:00 A.M.
                            NOT TO BE PUBLISHED

                   Commonwealth of Kentucky
                              Court of Appeals
                                  NO. 2019-CA-1479-MR

JAY RAILTON MORGAN                                                             APPELLANT

                   APPEAL FROM JEFFERSON CIRCUIT COURT
v.                    HONORABLE MITCH PERRY, JUDGE
                           ACTION NO. 17-CI-005772

FORD MOTOR COMPANY; JAMES
CARROLL; JAMES T. YOUNG;
MARY CULLER; AND ZIAD OJAKLI                                                    APPELLEES

                                         OPINION
                                        AFFIRMING

                                       ** ** ** ** **

BEFORE: DIXON, GOODWINE, AND TAYLOR, JUDGES.

DIXON, JUDGE: Jay Railton Morgan appeals from the order dismissing his

claims against Ford Motor Company (“Ford”), James Carroll, James T. Young,

Mary Culler, and Ziad Ojakli,1 entered by the Jefferson Circuit Court on August

28, 2019. Following a careful review of the record, briefs, and law, we affirm.

1
  Carroll, Young, Culler, and Ojakli were employees and agents of Ford at all times relevant
herein.
                   FACTS AND PROCEDURAL BACKGROUND

                Morgan was employed by Ford for 23 years. In 2008, Morgan

reported that Carroll and Young engaged in insider trading. In 2011, purportedly

in retaliation for his report, Morgan was transferred from his position in

Washington, D.C., to another one in Louisville, Kentucky. On December 17,

2012, Morgan was advised that Greg Fischer—mayor of Louisville, Kentucky—

made “‘very serious’ derogatory accusations about . . . Morgan’s work and conduct

in Louisville as the Ford representative.” Morgan was given a three-month notice

of termination and an offer of early retirement. On March 28, 2013, Morgan’s

employment with Ford was terminated.

                On June 14, 2013, Morgan brought a whistleblower action under the

Sarbanes-Oxley Act of 20022 against Ford with the U.S. Department of Labor,

Occupational Safety and Health Administration (OSHA), asserting he suffered

adverse employment actions at Ford in retaliation for reporting insider trading.3

Mediation was held in Washington, D.C. Ford asserted it had legitimate, non-

retaliatory grounds to terminate Morgan because it had statements from Fischer

and Dr. Kevin Cosby—President of Simmons College—that Morgan had

2
    18 United States Code (U.S.C.) § 1514A.
3
    Case No. 4-1510-13-043.

                                              -2-
committed Ford funds to build a worker training facility in Louisville. Pursuant to

Ford policies, unauthorized commitment of Ford funds is grounds for termination.

Despite claims he did not authorize such funds, Morgan entered into a confidential

settlement agreement with Ford on August 6, 2013, for less than he felt entitled.

The settlement was approved by OSHA on August 29, 2013, and the case was

closed.

                Morgan later filed an action against Fischer and Dr. Cosby4 alleging

they made false statements to Ford—the substance of which was that Morgan

committed Ford funds without authorization—to get him fired. Ford intervened in

the action, claiming Morgan improperly used confidential mediation

communications—in breach of the settlement agreement—as the principal basis for

his lawsuit. Both Fischer and Dr. Cosby stated in their respective affidavits that

they did not make the statements, or similar statements, alleged by Morgan.

Morgan did not provide any affirmative evidence to rebut the affidavits, nor did he

provide evidence that, even if the statements were made, they were made with

malice. Consequently, the trial court granted summary judgment against Morgan,

which was subsequently affirmed on appeal by another panel of our Court on

March 24, 2017.

4
    Jefferson Circuit Court, Case No. 13-CI-06576.

                                               -3-
               Meanwhile, on November 10, 2015, Morgan requested his original

whistleblower claim be reopened, alleging Ford misrepresented its possession of

statements from Fischer and Dr. Cosby concerning the unauthorized commitment

of Ford funds that provided a legitimate, non-retaliatory reason for termination.

On January 4, 2016, OSHA dismissed Morgan’s complaint for lack of jurisdiction.5

Morgan appealed to the Office of Administrative Law Judges. On June 9, 2017,

that appeal was also dismissed for lack of jurisdiction.6

               On October 31, 2017, Morgan filed his complaint in the case herein7

seeking to undo his settlement with Ford, which he claimed was procured by fraud.

Morgan asserts he was forced to accept a reduced settlement because “Ford” told

him—at mediation—that Fischer and Dr. Cosby made statements to Ford that

would constitute grounds for the termination of Morgan’s employment. Appellees

moved the trial court to dismiss this action for lack of personal jurisdiction or, in

the alternative, for failure to state a claim upon which relief may be granted. After

the motion was briefed and arguments heard, the trial court entered its opinion and

5
    Case No. 4-1221-16-001.
6
    Case No. 2016-SOX-00019.
7
  In his complaint, Morgan describes Culler as one of his supervisors at Ford who took adverse
employment actions against him and Ojakli as one of his superiors at Ford who was very angry
with him for reporting Ojakli’s friend, Young, for insider trading.

                                              -4-
order granting the motion to dismiss the complaint with prejudice. This appeal

followed.

                                STANDARD OF REVIEW

                Appellees moved the trial court to dismiss this action for lack of

personal jurisdiction. “Jurisdiction is a question of law, and our review is de

novo.” Commonwealth v. B.H., 548 S.W.3d 238, 242 (Ky. 2018) (citations

omitted). “Furthermore, ‘[s]tatutory interpretation raises pure questions of law, so

our review is [de] novo, meaning we afford no deference to the decisions below.’”

Id.

                In the alternative, Appellees moved the trial court to dismiss the

complaint under CR8 12.02(f) for failure to state a claim upon which relief may be

granted. Kentucky’s highest court has interpreted this standard, observing:

                A motion to dismiss for failure to state a claim upon
                which relief may be granted “admits as true the material
                facts of the complaint.” So a court should not grant such
                a motion “unless it appears the pleading party would not
                be entitled to relief under any set of facts which could be
                proved. . . .” Accordingly, “the pleadings should be
                liberally construed in the light most favorable to the
                plaintiff, all allegations being taken as true.” This
                exacting standard of review eliminates any need by the
                trial court to make findings of fact; “rather, the question
                is purely a matter of law. Stated another way, the court
                must ask if the facts alleged in the complaint can be
                proved, would the plaintiff be entitled to relief?” Since a
                motion to dismiss for failure to state a claim upon which

8
    Kentucky Rules of Civil Procedure.

                                            -5-
                relief may be granted is a pure question of law, a
                reviewing court owes no deference to a trial court’s
                determination; instead, an appellate court reviews the
                issue de novo.

Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (footnotes omitted).

                                    JURISDICTION

                Courts recognize three categories of jurisdiction: (1) subject matter

jurisdiction involving authority over the nature of a case and the general type of

controversy, (2) jurisdiction over a particular case involving authority to decide a

specific case, and (3) personal jurisdiction involving authority over specific

persons. Hisle v. Lexington-Fayette Urban Cty. Gov’t, 258 S.W.3d 422, 429 (Ky.

App. 2008). Here, the trial court found it did not have personal jurisdiction over

the Appellees—who are neither Kentucky citizens nor a Kentucky corporation—

under Kentucky’s long-arm statute.

                In relevant part, Kentucky’s long-arm statute, KRS9 454.210,

provides:

                (1) As used in this section, “person” includes an
                individual, his executor, administrator, or other personal
                representative, or a corporation, partnership, association,
                or any other legal or commercial entity, who is a
                nonresident of this Commonwealth.

                (2) (a) A court may exercise personal jurisdiction over a
                person who acts directly or by an agent, as to a claim
                arising from the person’s:

9
    Kentucky Revised Statutes.

                                            -6-
                      1. Transacting any business in this
                      Commonwealth;

                      2. Contracting to supply services or goods in this
                      Commonwealth;

                      3. Causing tortious injury by an act or omission in
                      this Commonwealth;

                      4. Causing tortious injury in this Commonwealth
                      by an act or omission outside this Commonwealth
                      if he regularly does or solicits business, or engages
                      in any other persistent course of conduct, or
                      derives substantial revenue from goods used or
                      consumed or services rendered in this
                      Commonwealth, provided that the tortious injury
                      occurring in this Commonwealth arises out of the
                      doing or soliciting of business or a persistent
                      course of conduct or derivation of substantial
                      revenue within the Commonwealth;

                ...

               (b) When jurisdiction over a person is based solely upon
               this section, only a claim arising from acts enumerated in
               this section may be asserted against him.

(Emphasis added.) Despite the lengthy factual allegations detailed in the

complaint, this is a suit which hinges upon fraud, which Morgan alleges occurred

at the mediation held in Washington, D.C.10 Morgan does not allege that any

tortious conduct at issue in this suit occurred in Kentucky, nor does he allege his

10
    Morgan’s complaint consists of more than 35 pages of factual allegations, but the fraud claim
is pled in less than three pages.

                                               -7-
claims arise from the Appellees’ performance of any of the acts listed under KRS

454.210, in Kentucky, which would confer the court jurisdiction over them.

             Even so, Morgan asserts—for the first time on appeal—that KRS

452.450 and Section 112 of the Kentucky Constitution provide the trial court

jurisdiction. However, only issues fairly brought to the attention of the circuit

court are adequately preserved for appellate review. Elery v. Commonwealth, 368

S.W.3d 78, 97 (Ky. 2012) (citing Richardson v. Commonwealth, 483 S.W.2d 105,

106 (Ky. 1972); Springer v. Commonwealth, 998 S.W.2d 439, 446 (Ky. 1999); and

Young v. Commonwealth, 50 S.W.3d 148, 168 (Ky. 2001)). Accordingly, Morgan

waived his ability to raise arguments concerning jurisdiction under KRS 452.450

and the Kentucky Constitution by failing to raise them before the trial court.

                         SETTLEMENT AGREEMENT

             The trial court further found that, even if it had jurisdiction over all

the parties in the case herein, Morgan’s claims are barred by the terms of the

settlement agreement. Settlement agreements are a type of contract governed by

contract law. See Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 105 (Ky. 2003). “A

fundamental rule of contract law holds that, absent fraud in the inducement, a

written agreement duly executed by the party to be held, who had an opportunity to

read it, will be enforced according to its terms.” Conseco Fin. Servicing Corp. v.

Wilder, 47 S.W.3d 335, 341 (Ky. App. 2001). “‘[I]n the absence of ambiguity a

                                          -8-
written instrument will be enforced strictly according to its terms,’ and a court will

interpret the contract’s terms by assigning language its ordinary meaning and

without resort to extrinsic evidence.” Frear, 103 S.W.3d at 106 (citations

omitted). It is also well-settled that “[t]he construction and interpretation of a

contract, including questions regarding ambiguity, are questions of law to be

decided by the court.” First Commonwealth Bank of Prestonsburg v. West, 55

S.W.3d 829, 835 (Ky. App. 2000). Because the construction and interpretation of

a contract is a matter of law, it is reviewed under the de novo standard. Nelson v.

Ecklar, 588 S.W.3d 872, 878 (Ky. App. 2019), review denied (Dec. 13, 2019).

                Here, the terms of the contract were clear and unambiguous. The

agreement provided a release of Morgan’s claims against Ford and its agents and

employees. It specifically stated this release included, but was not limited to,

Morgan’s claims against Young, Culler, and Ojakli. This release also covered any

and all of Morgan’s claims against Ford and its agents and employees, whether

known or unknown, “from the beginning of the world through the Effective

Date[.]”11 The agreement noted it “is intended to be broadly construed to release

all claims arising up to the Effective Date[.]” It further recited that Morgan’s

decision to sign the agreement “is knowing and voluntary and not induced by the

Company [(Ford)] or any Associated Persons, or any agent or employee of the

11
     The “Effective Date” is the eighth calendar day after Morgan executed the agreement.

                                                -9-
Company or any Associated Persons, through fraud, misrepresentation or a threat

to withdraw or alter the Company’s offer to provide the consideration described in

Section 2[.]” The agreement further stated, “No party has been or is being

influenced to any extent or is relying upon any representation, covenant or

statement by any other person unless set forth in this Agreement.” These

provisions foreclose Morgan’s claims concerning fraudulent inducement to enter

the agreement. All other claims contained in Morgan’s complaint in the case

herein predate the effective date of the agreement. Thus, they are barred by the

terms of the agreement.

                                      FRAUD

             Nevertheless, the trial court opined that even if it had jurisdiction over

the Appellees, and Morgan’s claims were not otherwise barred by the terms of the

settlement agreement, Morgan still failed to meet the heightened pleading standard

in setting forth his fraud claims against the Appellees. In United Parcel Service

Company v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999), Kentucky’s highest court

set forth the elements of a fraud claim:

             the party claiming harm must establish six elements of
             fraud by clear and convincing evidence as follows: a)
             material representation b) which is false c) known to be
             false or made recklessly d) made with inducement to be
             acted upon e) acted in reliance thereon and f) causing
             injury. Wahba v. Don Corlett Motors, Inc., [573 S.W.2d
             357, 359 (Ky. App. 1978)].

                                           -10-
It is enough to plead the time, place, the substance of the false representations, the

facts misrepresented, and the identification of what was obtained by the fraud.

Scott v. Farmers State Bank, 410 S.W.2d 717 (Ky. 1966). This “does not require

textbook pleading of all elements of fraud but requires merely that plaintiff set

forth facts with sufficient particularity to apprise defendant fairly of charges

against him.” Id. at 722.

             Yet, review of Morgan’s complaint—which he has neither amended

nor moved to amend—reveals fatal flaws in his failure to specifically plead his

fraud claims against the Appellees. CR 9.02 provides, “[i]n all averments of fraud

or mistake, the circumstances constituting fraud or mistake shall be stated with

particularity. Malice, intent, knowledge, and other condition of mind of a person

may be averred generally.” “[A]t a minimum, Rule 9(b) requires that the plaintiff

specify the who, what, when, where, and how of the alleged fraud.” Sanderson v.

HCA-The Healthcare Co., 447 F.3d 873, 877 (6th Cir. 2006) (internal quotation

marks and citation omitted) (discussing federal counterpart to CR 9.02). Morgan’s

complaint does not identify who made the alleged misrepresentations he claims to

have relied upon during mediation. Absent this requirement, it is impossible to

establish the elements from which a cause of action for fraud might arise.

                                         -11-
                                   CONFIDENTIALITY

                The trial court found the alleged misrepresentations are inadmissible

because they occurred at mediation and are protected from disclosure by the

Uniform Mediation Act (UMA) adopted in Washington, D.C. The trial court

further pointed out that, although the UMA has not been formally adopted in

Kentucky, Jefferson Circuit Court Rules of Civil Procedure, Local Rule 1312

mandates that mediation shall be considered as settlement negotiations for

purposes of KRE12 408. However, we need not look beyond the agreement itself to

determine that every allegation concerning the parties’ conduct prior to the

effective date of the agreement was to be kept confidential. The agreement states

Morgan “agrees to keep strictly confidential the existence of this Agreement, the

allegations raised in or related to the Asserted Claims, and the existence or

substance of the negotiations and mediation leading up to this Agreement.” To the

extent Morgan’s claims concern any actions by the Appellees prior to mediation,

they are still barred under the settlement agreement, for the reasons previously

discussed.

                                      DAMAGES

                The trial court further found that Morgan’s damages are not

cognizable. Morgan failed to challenge this ruling. His failure to raise an

12
     Kentucky Rules of Evidence.

                                           -12-
argument concerning this issue constitutes waiver. Johnson v. Commonwealth,

450 S.W.3d 707, 713 (Ky. 2014).

                                CONCLUSION

            Therefore, and for the foregoing reasons, the order of the Jefferson

Circuit Court is AFFIRMED.

            ALL CONCUR.

BRIEF FOR APPELLANT:                     BRIEF FOR APPELLEES:

Thomas A. McAdam, III                    R. Thad Keal
Louisville, Kentucky                     Prospect, Kentucky

                                         Katherine V.A. Smith
                                         Los Angeles, California

                                         Amanda C. Machin
                                         Jacob T. Spencer
                                         Washington, D.C.

                                       -13-