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Auslander Properties LLC v. Nalley

Supreme Court of Kentucky

June 14, 2018

AUSLANDER PROPERTIES, LLC, APPELLANT
v.
JOSEPH HERMAN NALLEY; MARY NALLEY; STEPHANIE NALLEY; JEWISH HOSPITAL; ST. MARY'S HEALTHCARE INC., D/B/A FRAZIER REHAB INSTITUTE; AND UNIVERSITY MEDICAL CENTER, INC., D/B/A UNIVERSITY OF LOUISVILLE HOSPITAL, APPELLEES

          ON REVIEW FROM COURT OF APPEALS CASE NO. 2014-CA-000022 NELSON CIRCUIT COURT NO. 10-CI-00688

          COUNSEL FOR APPELLANT: John Douglas Hubbard Fulton, Hubbard 85 Hubbard James Wendell Taylor Taylor Law Group, PLLC . John Choate Roach Ransdell & Roach, PLLC, Ryan Richard Loghry Loghry Law, PLLC.

         COUNSEL FOR APPELLEES JOSEPH HERMAN NALLEY; MARY NALLEY; AND STEPHANIE NALLEY: Kevin Crosby Burke, Michelle Buckley Sparks Keith Allen Sparks \ McCoy & Sparks, PLLC.

         COUNSEL FOR APPELLEES JEWISH HOSPITAL AND ST. MARY'S HEALTHCARE INC., D/B/A FRAZIER REHAB INSTITUTE: Brian Scott Katz Law Office of Brian S. Katz.

         COUNSEL FOR APPELLEE UNIVERSITY MEDICAL CENTER, INC., D/B/A UNIVERSITY OF LOUISVILLE HOSPITAL: John Byron Moore . Jamie Kristin Neal Burke, Neal, PLLC.

          OPINION

          VENTERS, JUSTICE

         Appellant, Auslander Properties, LLC (the LLC), appeals from a Court of Appeals' decision affirming a judgment of the Nelson Circuit Court in favor of Appellee, Joseph Herman Nalley (Nalley).[1] Nalley was awarded compensatory damages for serious personal injuries he sustained while working on a roof at property owned by the LLC. Consistent with the rulings of the trial court, the Court of Appeals determined that the LLC was an "employer" and was, therefore, subject to certain employee safety regulations promulgated pursuant to KRS Chapter 338, the Kentucky Occupational Safety and Health Act (KOSHA), and the federal Occupational Safety and Health Act (OSHA); and that the LLC had violated duties owed to Nalley under KOSHA. Upon discretionary review, for reasons stated below, we reverse the Court of Appeals and remand the case to the Nelson Circuit Court for dismissal of Nalley's claim.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         At the time of Nalley's injury, the LLC owned three residential properties and a two-tenant commercial building in Bardstown, Kentucky, and one residential property in Louisville. Steve Auslander (Auslander), a retired dentist, and his wife were the sole members of the LLC and they had no employees. Auslander managed the business, performing the ordinary tasks of a landlord such as keeping the books, collecting rent, paying bills, communicating with tenants, and negotiating leases. He performed some basic maintenance and repair work on the LLC's properties, and he arranged for others to perform more demanding tasks.

         When one of the LLC's Bardstown tenants complained that tree limbs overhanging the building were causing a problem, Auslander contacted Nalley. Nalley was an experienced handyman who had occasionally performed maintenance and repair work for the LLC. His experience included trimming trees for other property owners, and he had done so while working from a rooftop. He had also built porches and additions on homes, including building a garage and porch on his own home. Additionally, he had painted houses working from ladders. So, Auslander hired Nalley to remove the offending branches from three trees.

         After viewing the job to be done, Nalley determined that the roof of the building provided the best approach to the branches he needed to cut. He brought his own ladder and his own tools. Nalley climbed to the roof with his saw. He tied a rope to the limb he intended to cut and dropped the end of the rope to the ground. As Nalley sawed the limb, Auslander assisted by pulling the rope to guide the limb's fall. No problem was encountered with the first tree. However, while working on the second tree, Nalley stepped from the roofs solid shingled surface onto a section of decorative wooden rafters that was not designed to support his weight. Consequently, he fell eleven feet onto a concrete surface and sustained severely disabling injuries, including fractures to his spine and traumatic brain injury.

         Nalley filed suit alleging the LLC was negligent in breaching the common law duties owed by a landowner to invitees on the property. He also alleged that the LLC was negligent per se because it failed to comply with KOSHA regulations requiring employers to provide safety equipment for employees working at heights above 10 feet.[2] The trial court overruled the parties' competing motions for summary judgment on the negligence per se claim. The case was ultimately submitted to the jury on both theories of liability.

         With respect to the common law negligence claim, the jury answered special interrogatory instructions determining that: 1) the cosmetic nature of the exposed decorative rafters was either obvious to, or was known by, Nalley; and 2) in the exercise of ordinary care, the LLC should not have anticipated that Nalley might rely upon the load-bearing capability of the decorative rafters and fall as a result thereof. Consequently, a judgment for the LLC was entered on that theory. Nalley does not challenge that verdict.

         The jury also determined by special interrogatory instructions the largely uncontested material facts pertaining to Nalley's KOSHA claim. Specifically, the jury found that Nalley was working at a height of more than 10 feet when he fell; that the LLC had not provided safety equipment that would have prevented his fall; and that the lack of such equipment was a substantial factor in causing Nalley's injuries. Consistent with those findings, the trial court entered judgment for Nalley under his theory of negligence per se based upon a KOSHA violation.[3]

         The Court of Appeals affirmed the trial court's conclusion that the LLC was an "employer" as defined by KOSHA, and was, therefore, subject to KOSHA regulations, and that Nalley was within the scope of persons protected by the KOSHA regulations applicable to the LLC. The Court of Appeals relied primarily upon Hargis v. Baize, 168 S.W.3d 36 (Ky. 2005), and Pennington v. MeadWestvaco Corp., 238 S.W.3d 667 (Ky. App. 2007).

         While the appeal was pending, this Court decided McCarty v. Covol Fuels No. 2, LLC, 476 S.W.3d 224 (Ky. 2015). In a footnote, the Court of Appeals factually distinguished McCarty from the instant case and noted that McCarty did not implicate KOSHA.

         Nalley, argued in the Court of Appeals that the LLC had not effectively preserved its argument against the applicability of the KOSHA regulations. Because that court decided and rejected the LLC's argument on the merits, it declined to address the preservation issue. On discretionary review, Nalley reasserts his preservation argument. Since it is potentially dispositive, we address it first.

         II. THE LLC PROPERLY APPEALED THE DENIAL OF SUMMARY JUDGMENT SEEKING REVERSAL OF THE TRIAL COURT JUDGMENT

         Nalley raises a number of procedural grounds upon which he contends this Court should dismiss the LLC's appeal. He notes that the LLC fails to specify whether its appeal was taken from the trial court's order denying summary judgment or the trial court's failure to grant its motion for a directed verdict. With respect to the former, Nalley argues that the order denying the LLC's motion for summary judgment is not appealable. With respect to the latter, Nalley argues that because the LLC failed to follow up its directed ...


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