River City Fraternal Order of Police Lodge 614, Inc. et al v. Kentucky Retirement Systems by and through its Board of Trustees

Filing 66

MEMORANDUM OPINION & ORDER: Plaintiffs' request 56 for damages is GRANTED IN PART. A. Plaintiff Arnold is awarded $3,090.48 to reimburse him for health insurance premiums he should not have had to pay. Plaintiff Arnold is DIRECTED to s ubmit proof of what it would have cost him to obtain substitute health insurance had he mitigated his damages and purchased health insurance through the Jefferson County Sheriff's Office from January 1, 2017, through July 17, 2019. B. Plaintiff Simkin is DIRECTED to submit proof of what it would have cost him to obtain comparable health insurance on the open market from December 3, 2015, to July 17, 2019. C. Plaintiff Larkin is awarded $6,181.92 to reimburse him for health insurance p remiums he paid after Defendant canceled his health insurance. D. Plaintiff Wood is awarded $4,033.61 to reimburse him for health insurance premiums he paid after Defendant canceled his health insurance. The requested proof should be filed withi n THIRTY DAYS of the date of this order. After Plaintiffs submit the requested proof, Defendant will have TWENTY DAYS from the date of Plaintiffs filing to respond with objections and Plaintiffs will then have TEN days from the filing of any objections to file a reply. The Court will enter a judgment following the submission of the additional proof and briefing. Signed by Judge William O. Bertelsman on 2/18/2020.(CBD)cc: COR

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION AT FRANKFORT

CIVIL ACTION NO. 3:17-cv-102 (WOB)
RIVER CITY FRATERNAL ORDER OF POLICE
LODGE 614, INC., ET AL.  

PLAINTIFFS 

VS.

MEMORANDUM OPINION AND ORDER 

KENTUCKY RETIREMENT SYSTEMS

DEFENDANT

On July 17, 2019, this Court granted Plaintiffs’ request for
a

permanent

injunction

after

finding

that

Defendant

wrongly

canceled or threatened to cancel Plaintiffs’ health insurance and
had thereby breached an inviolable contract to provide Plaintiffs
with insurance. (Docs. 30, 43, 44). Plaintiffs’ motion for summary
judgment awarding damages is now before the Court. (Doc. 56). For
the reasons below, Plaintiffs’ request for damages is GRANTED IN
PART and due to be modified in accordance with the directives found
herein.
I.

Arguments and Analysis

The measure of damages for breach of contract is that sum
which will put the injured party into the same position he would
have been in had the contract been performed. Hogan v. Long, 922
S.W.2d 368, 371 (Ky. 1995). Accordingly, Plaintiffs seek damages
for the premiums they had to pay in order to obtain substitute
healthcare coverage as well as lost wages because some Plaintiffs

were “forced to leave employment or take part-time status in order
for Defendant to continue providing health coverage.” (Doc. 56, at
5).
Defendant first attempts to relitigate issues that the Court
addressed in earlier opinions by arguing that the Court cannot
award monetary damages due to principles of sovereign immunity and
federal law. (Doc. 64, at 2-10). The Court declines to readdress
these issues here and instead incorporates its earlier findings
that neither sovereign immunity nor federal law prevent Plaintiff
from recovering monetary relief. (See Docs. 30, 43).
Defendant also argues that the damages for lost wages are
speculative
remained
attempted

and

maintains

employed
to

find

in

that

their

Plaintiffs

current

comparable

could

positions

employment

or

or

have

either

could

comparable

have

health

insurance more quickly, which in Defendant’s view, means that
Plaintiffs failed to mitigate their damages. (Doc. 64, at 10-19).
A. Plaintiff John Arnold’s Damages
John Arnold claims damages for both payment of premiums and
loss of pay. When Arnold retired from the Jefferson County Police
Department,

he

began

relying

upon

health

insurance

coverage

provided through the Kentucky Retirement Systems. In 2002, Arnold
took a job with the Jefferson County Coroner’s Office as a deputy
coroner. Problems began in 2016, when Defendant sent Arnold a

River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-2-

letter stating that if he continued his employment with the
Coroner’s Office, he would lose his health insurance.
Defendant in fact canceled Arnold’s health insurance coverage
for a brief period, which forced him to purchase insurance through
the Coroner’s Office while he appealed the cancelation. Arnold
eventually won his appeal, and his coverage was reinstated. But
Defendant’s actions did not stop there. Defendant threatened to
terminate Arnold’s health insurance for a second time in March
2017, but it appears he left the Coroner’s Office before Defendant
terminated coverage.
In November 2017, Arnold went to work as a full-time employee
in

the

Jefferson

County

Sheriff’s

Office.

While

Defendant

initially maintained his coverage, it took only a few weeks for
Defendant to send Arnold a letter stating that it again planned to
terminate his coverage. In response to this threat, Arnold left
his position with the Sheriff’s Office out of fear of potential
unknown consequences caused by changing insurance. Arnold claims
that he incurred $80,721.57 in lost wages because Defendant forced
him to leave his job with the Sheriff’s office. The question now
is whether he is entitled to recover those lost wages.
Under Kentucky law, the measure of damages for breach of
contract is that sum which will put the injured party into the
same

position

he

would

have

been

in

had

the

contract

been

performed. Hogan, 922 S.W.2d at 371. Though Defendant did not
River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-3-

actually

cancel

Arnold’s

insurance

in

January

2018,

it

unequivocally expressed its intent to repudiate the contract,
which under Kentucky law amounts to a breach. Brownsboro Rd. Rest.,
Inc. v. Jerrico, Inc., 674 S.W.2d 40, 42 (Ky. Ct. App. 1984).
Arnold

is

therefore

entitled

to

all

non-speculative

damages

flowing from the repudiation. Curry v. Bennett, 301 S.W.3d 502,
506 (Ky. App. 2009).
Defendant

argues

that

Arnold’s

damages

are

speculative

because he only worked at the Sheriff’s office for one month before
leaving. While the duration of Arnold’s employment was brief,
evidence shows that he left the position only because Defendant
threatened

to

cancel

his

insurance,

and

it

also

shows

with

reasonable certainty the amount that he would have made had he
remained employed. So, the problem with Arnold’s request for lost
wages is not that it is unreasonably speculative but that it
reflects a failure to mitigate his losses.
A party claiming damages for breach of contract is obligated
to use reasonable efforts to mitigate his damages. Deskins v.
Estep, 314 S.W.3d 300, 305 (Ky. App. 2010). While there is evidence
showing that Arnold sought comparable employment after he left his
position with the Jefferson County Sheriff’s Office, the decision
to leave that position rather than purchase insurance through the
Sheriff’s Office was unreasonable.

River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-4-

Damages are not recoverable for a loss that the injured party
could have avoided without undue risk, burden, or humiliation.
Restatement (Second) of Contracts § 350. Arnold insists that the
Sheriff’s health insurance was inferior to Defendant’s and that he
had to quit to avoid losing his good insurance. But Arnold admitted
that he did not actually compare the two plans and did not speak
with the Sheriff’s human resources department about the cost of
obtaining coverage if Defendant terminated his health insurance.
While there are difficulties associated with changing insurance,
they are not significant enough to constitute undue risks or
burdens. Other Plaintiffs in this matter chose to pay to obtain
coverage, whereas Arnold chose to quit his job.
When a plaintiff fails to mitigate damages, courts may reduce
the award by the amount which could have been saved by appropriate
action to minimize the loss. See Sidney Coal Co. v. Thrift Bit
Serv., Inc., No. 2005-CA-000628-MR, 2006 WL 2578305, at *2 (Ky.
Ct. App. Sept. 8, 2006). Here, Arnold could have remained employed
and paid the premiums to acquire insurance from the Sheriff’s
office. Accordingly, a better measure of his damages would have
been the amount he would have paid in premiums had he remained
employed and purchased insurance through the Coroner’s Office. But
there is no evidence in the record showing what it would have cost
Arnold to obtain replacement insurance, so the Court will allow
him to submit evidence that shows how much it would have cost him
River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-5-

to obtain replacement coverage from January 1, 2017, through July
17, 2019.
Arnold also paid $3,090.48 to cover premiums he paid while he
appealed Defendant’s first termination of his health insurance,
and he should therefore be awarded compensatory damages in that
amount.
B. Plaintiff Gary Simkins’s Damages
After retiring from the Louisville Police Department, Simkins
decided to return to full-time employment and was hired as a deputy
by the Jefferson County Sheriff’s Office. At the time the Sheriff’s
office

hired

him,

Defendant

was

providing

him

free

health

insurance. But soon after he was hired, Defendant informed him
that it planned to terminate his insurance because his employer
also offered him health insurance coverage.
Defendant was mistaken. The Sheriff’s Office had employed
Simkins

under

a

one-year

renewable

contract.

This

one-year

contract was provided for by a Kentucky statutory scheme which
states that persons employed under its terms are to continue to
receive the benefits to which they are entitled and that they are
not

eligible

for

health

insurance

coverage

through

the

new

employer. Ky. Rev. Stat. § 70.293. Simkins dropped down to parttime status at the end of 2015 in order to maintain his coverage
under Defendant’s health insurance policy. He now claims that
Defendant owes him $83,168.98 in lost wages.
River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-6-

Like Arnold, Simkins also failed to mitigate his damages.
Instead of purchasing private insurance or looking for full-time
employment that would provide comparable earnings and allow him to
purchase insurance through his employer, Simkins dropped down to
part-time work and took a roughly $23,000 per-year pay cut.
Accordingly, the more appropriate measure of damages would be the
cost of acquiring comparable health insurance from December 3,
2015 (date he dropped to half-time employment) to July 17, 2019
(the date the Court issued the permanent injunction). Since the
record contains no evidence of what it would have cost Simkins to
purchase comparable health insurance on the open market, the Court
will allow him to submit such evidence.
C. Plaintiff James Wood’s Damages
Wood has paid $4033.61 in premiums from the time Defendant
canceled his health insurance to the time this Court issued an
injunction directing Defendant to reinstate coverage. Defendant
does not address Wood’s damages beyond the general arguments it
makes concerning sovereign immunity and federal law.
Wood states that he has continued to purchase insurance even
after the Court issued the injunction because he was afraid of
switching back to Defendant’s health coverage, and he asks that he
be compensated for the premiums he continues to pay. Continuing to
pay premiums after the Court’s injunction constitutes a failure to

River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-7-

mitigate damages. Thus, Wood should only be compensated for the
$4033.61 he paid before the Court issued a permanent injunction.
D. Plaintiff James Larkin’s Damages
Larkin claims damages for the payment of insurance premiums
that he paid after Defendant canceled his insurance. Defendant
does not address Larkin’s damages beyond the general arguments it
makes concerning sovereign immunity and federal law. Accordingly,
Larkin should be awarded $6,181.92 to reimburse him for the
premiums he paid after Defendant canceled his health insurance.
E. Plaintiff William Kerrick’s Damages
Plaintiff William Kerrick has not submitted a request for
compensatory damages.
II.

Conclusions

Therefore, having reviewed this matter, IT IS ORDERED that
Plaintiffs’ request for damages (Doc. 56) is GRANTED IN PART and
such damages may be adjusted in accordance with the directives
below:
A. Plaintiff Arnold is awarded $3,090.48 to reimburse him for
health insurance premiums he should not have had to pay.
Plaintiff Arnold is DIRECTED to submit proof of what it would
have cost him to obtain substitute health insurance had he
mitigated his damages and purchased health insurance through
the Jefferson County Sheriff’s Office from January 1, 2017,
through July 17, 2019.
River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-8-

B. Plaintiff Simkin is DIRECTED to submit proof of what it would
have cost him to obtain comparable health insurance on the
open market from December 3, 2015, to July 17, 2019.
C. Plaintiff Larkin is awarded $6,181.92 to reimburse him for
health insurance premiums he paid after Defendant canceled
his health insurance.
D. Plaintiff Wood is awarded $4,033.61 to reimburse him for
health insurance premiums he paid after Defendant canceled
his health insurance.
The requested proof should be filed within THIRTY DAYS of the
date of this order. After Plaintiffs submit the requested proof,
Defendant will have TWENTY DAYS from the date of Plaintiffs’ filing
to respond with objections and Plaintiffs will then have TEN days
from the filing of any objections to file a reply.
The Court will enter a judgment following the submission of
the additional proof and briefing.
So ordered, this 18th day of February 2020.

River City Fraternal Order of Police Lodge 614, Inc. et al.
v. Ky. Retirement Sys.
-9-