HUMANA, INC. V. COLLEEN BLOSE
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2006-SC-000783-DG
V.
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2005-CA-001546
JEFFERSON CIRCUIT COURT NO. 04-CI-008296
COLLEEN BLOSE
APPELLEE
OPINION OF THE COURT BY JUSTICE SCOTT
REVERSING
We granted,limited discretionary review of the opinion of the Court of
Appeals, which, on remand, directed the trial court to follow the guidelines set out
in Curtis v. Belden Electronic Wire and Cable, a Div. of Cooper Industries, Inc.,
760 S .W.2d 97, 98 (Ky. App. 1988), to the effect that the remedy for a breach of
a release and waiver of a statutory right is "an original action or counterclaim for
recovery of damages incurred as a result of the breach," rather than the
dismissal of the statutory action . Id . We granted the review on grounds that this
holding appeared to contradict this Court's holdings in Frear v. P.T.A. Industries,
103 S.W.3d 99 (Ky. 2003) (a release agreement is enforceable to extinguish a
cause of action) and American General Life & Acc. Ins. Co. v. Hall, 74 S .W .3d
688 (Ky. 2002) (citizens may waive statutory civil rights claims) . Having held that
such a statutory right may be waived in American General, we now reverse the
contrary opinion of the Court of Appeals and Curtis , to the extent it holds
otherwise .'
Facts
Appellee, Ms. Blose, suffers physically and emotionally from cerebralpalsy. The disease restricts her physical movement ; thus she has always been
required to use crutches to walk and maintain her balance . She was employed
by Appellant, Humana, from January 3, 1995, to January 5, 2001 . Her
employment, however, was terminated on January 5, 2001, due to an alleged
overall department reduction in force . As a result, she was given twelve (12)
weeks severance pay and twelve (12) weeks continuation of health and dental
insurance benefits . In return, she executed a release and agreement hereinafter,
(agreement) which provided, in part:
[t]hat the above [severance pay and payment for insurance] is
accepted in full and final release in settlement of any and all claims
of any type related to your employment or separation from
employment which you may have against Humana or any of its
officers, agents, employees or affiants . You agree to bring no
lawsuits, claims, demands, or charges of any kind, whether in tort
or contract, or pursuant to any Federal, State or local ordinance or
statute, relating to your employment or to your separation from
employment .
Several years later, on September 30, 2004, Ms. Blose filed an action
against Appellant in the Jefferson Circuit Court, alleging (1) disability
discrimination, (2) violation of KRS Chapter 344, and (3) outrageous conduct. In
her complaint, Ms. Blose alleges that she was constantly harassed, intimidated,
' For reasons that this was a limited grant of discretionary review affecting
only that part of the opinion of the Court of Appeals discussed herein, the
remaining portions of the Court of Appeals opinion remain valid and are binding
as the law of the case between these parties . Buckley v. Wilson, 177 S.W.3d
778, 781 (Ky. 2005).
2
and otherwise treated outrageously . The harassment included, but was not
limited to, being pushed down the hallway, and having her crutches kicked out
from under her, or stolen while on the job. She further alleged she was denied
work and forced into tears by her supervisors and co-workers' harassment; that
she had paperwork removed from her desk such that she was forced to cross the
room to retrieve the work, and at times, was required to kick her work across the
room to turn it in to her supervisor or be denied credit for completing the work.
She alleged that she constantly reported this mistreatment to her supervisor and
Appellant's human resources department, but Appellant failed and refused to
take any action to correct the harassment and/or discrimination. She also
alleged that when Appellant closed the distribution department, it made positions
available to the department's employees in other areas of the company, but
refused to interview and/or hire her for any other position, telling her that she
"should just go ahead and leave the building ."
In response to Appellant's motion to dismiss or, in the alternative, motion
for summary judgment on grounds of the executed agreement, she further
alleged that the agreement was presented to her by Appellant's supervisor on the
day of her termination, at a time when she was standing by her supervisor's
desk, supporting herself on her crutches . Her supervisor flipped the document to
the signature page and told her to sign it. She was instructed that she had to
sign the paper immediately, notwithstanding that she was standing there
balancing on crutches and did not have the time, or opportunity, to read the
document before being forced to sign it. She was told by the supervisor that the
document that she was signing was a "confidentiality agreement ." She was not
allowed to keep the document .
According to Ms. Blose, she signed the document; however, she was not
provided a copy, or given the original for further review. Consequently, she did
not realize what she had signed until her current attorney received a copy of it
from Appellant . It was not until this time that she became aware that the
document was titled "Release and Agreement," as nothing about a "release" was
ever mentioned to her. She was specifically told that if she did not sign the
paper, she would not receive her last paycheck, or any payment from Appellant .
At this point in time, she alleged she was under extreme duress and specifically
relied upon the representations of Appellant that she would not get her final
paycheck or benefits owed to her, if she did not sign. Moreover, other issues
existed involving the opportunity to conduct discovery of the facts surrounding
her execution of the "agreement" prior to the trial court's entry of the judgment
granting Appellant's motions dismissing her action .
On appeal, the Court of Appeals, in its July 28, 2006 opinion, vacated the
order and judgment, dismissing the action, and remanded it back to the circuit
court for further proceeding, including the allowance of a sufficient time for
Appellee to conduct discovery regarding the issues pending on Appellant's
motions to dismiss and for summary judgment. This part of the Court of Appeals'
opinion is not before us, nor is it affected by this opinion .
The opinion of the Court of Appeals further asserted, under the rationale
of Curtis, that although a release may be binding, one could not waive a statutory
right. The appropriate remedy was thus concluded to be one for breach of the
agreement through an additional original action, or counterclaim, and for
recovery of any damages incurred as a result of the breach. We granted
discretionary review on this remedy question only.
Analvsis
In its opinion, the Court of Appeals stated, "[i]n the present case, since the
circuit court prematurely granted summary judgment, the validity of the Release
and Agreement remains at issue . If, however, on remand the fact finder
determines that the Release and Agreement is valid and enforceable, the circuit
court must still apply the law as declared in Curtis. ,2
"Settlement agreements are a type of contract and therefore are governed
by contract law." Frear, 103 S .W.3d at 105 . Thus, as with other contracts, a
release and agreement, or compromise settlement, is subject to impeachment if
procured by fraud, bad faith, or false and fraudulent representations. 15A C.J .S .
Compromise & Settlement ยง 53, at 142 (2002). Relief from such an agreement
may also be had if the agreement was procured by duress. Id. at 141 . Having
recognized the issues still to come at the trial level, we now address and resolve
the discrepancy between Curtis, American General , and Frear.
In American General, supra , this Court held that the litigant's selection of
the Workers' Compensation administrative process, and subsequent acceptance
of benefits thereunder, precluded her from bringing suit for the same injuries and
disabilities under the Kentucky Civil Rights Act (KCRA), KRS 344 et. seq . On
appeal, the litigant asserted that for public policy reasons her pursuit and receipt
2 Referring to the Court's holding in Curtis, 760 S.W.2d 97, declaring that a
valid waiver is an enforceable contract and thus precludes subsequent suit which
would constitute breach.
5
of Workers' Compensation benefits should not preclude a statutory civil rights
claim.
This Court disagreed in American General, to the effect that a court can
terminate an employee's Federal Civil Rights lawsuit upon a finding that the
employee is subject to a mandatory arbitration agreement which includes a
provision waiving the right to sue in court. 74 S .W .3d at 693 (citing Gilmer v.
Interstate/Johnson Lane Corp . , 500 U.S . 20, 111 S .Ct. 1647, 114 L.Ed.2d 26
(1991)). We then pointed out that the federal courts have subsequently extended
Gilmer to Title VII claims, "specifically holding that sexual harassment claims can
be precluded by a knowing waiver by the offended employee . E .g . Haskins v.
Prudential Ins . Co. of America . 230 F.3d 231, 236 (6th Cir. 2000), Prudential Ins.
Co. of America v. Lai, 42 F .3d 1299 (9th Cir.1994)." Id. (internal citations
omitted) . We also noted that "both constitutional and statutory rights inuring to
the benefit of a criminal defendant are subject to a knowing and voluntary
waiver." Id. Thus, we concluded that, "[w]e know of no reason why the same
principle should not apply to the statutory right of an employee to sue his/her
employer for a civil rights violation ." Id.
Even before American General , we had held, "a release is a discharge of
a claim or obligation and surrender of a claimant's right to prosecute a cause of
action ."' Frear, 103 S.W.3d at 107 . Thus, a "`release' extinguishes a claim or
cause of action ." Id.
Here, although the litigant's waiver in American General occurred because
of the "taking of benefits," while Ms. Blose signed a release, the basic principle is
the same, if the release is determined to be valid and enforceable . Thus, a
release without duress, fraud, or bad faith, is effective to waive a plaintiff's right to
bring a claim, whether statutory or otherwise . Cf. American General , 74 S.W.3d
at 693 ; see also Kirkwood v. Courier-Journal , 858 S.W.2d 194, 197 (Ky. App .
1993) ("[I]t is clear that an informed individual may waive a statutory civil right.")
(citing Gilmer v. Interstate/Johnson Lane Corp . , 500 U .S . 20, 111 S.Ct. 1647, 114
L.Ed .2d 26 (1991)). The release and waiver can be asserted as a defense,
rather than a counterclaim .
Having concluded that Curtis is in conflict with American General , in
regards to the effect of a valid release of a statutory right, Curtis is hereby
overruled to such extent . Thus, the opinion of the Court of Appeals, to the extent
it directs the trial court on remand to comply with the aforesaid directives of
Curtis , is in error. For this reason, the opinion of the Court of Appeals, to such
extent, is hereby reversed and this matter is hereby remanded to the trial court
with directions to comply with this opinion and the remaining portions of the
opinion of the Court of Appeals not inconsistent herewith .
All sitting . All concur.
3 We have reviewed the other issues raised by Appellee, such as "Lack of
Preservation" and the "Raising of New Issues," as well as other issues raised,
and find no merit to them . We do not consider Appellee's argument that this
Court should adopt the federal courts' "totality of the circumstances" test, as no
cross-motion for discretionary review was filed by Appellee . CR 76.21 .
7
COUNSEL FOR APPELLANT :
Brent R. Baughman
Greenebaum Doll & McDonald, PLLC
3500 National City Tower
101 South Fifth Street
Louisville, KY 40202-3197
Craig Peter Siegenthaler
Greenebaum Doll & McDonald, PLLC
3500 National City Tower
101 South Fifth Street
Louisville, KY 40202-3197
COUNSEL FOR APPELLEE:
Callie E Walton
Helmer, Demuth & Walton, PLC
429 West Muhammad Ali Blvd .
Ste 200, Republic Building
Louisville, KY 40202-2344
COUNSEL FOR AMICUS CURIAE:
Barbara B . Edelman
Dinsmore, Shohl, LLP
Lexington Financial Center
250 West Main Street
Suite 1400
Lexington, KY 40507
Alexander J . Moeser
Dinsmore, Shohl, LLP
Lexington Financial Center
250 West Main Street
Suite 1400
Lexington, KY 40507
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