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Arbitration and Interlocutory Appeals in Kentucky

Earlier this week, we wrote about the recent Kentucky Court of Appeals case Kindred Healthcare, Inc. v. Cherolis, No. 2012-CA-002074-MR (Ky. Ct. App. Oct. 11, 2013).  In Cherolis, the Daviess Circuit Court denied a motion by Kindred to compel arbitration of the claims brought by Cherolis (as Executrix of her mother’s estate).  Immediately following the trial court’s ruling on the motion, Kindred appealed to the Kentucky Court of Appeals.

In general, a judgment is considered final and appealable only if that judgment disposes of all of the claims presented in a circuit court lawsuit. This is known as the “finality rule” in the legal field. A judgment or an order that does not dispose of all claims and that leaves some claims pending is considered “interlocutory” in nature and cannot be immediately appealed. However, there are certain exceptions to the finality rule, as demonstrated by the Cherolis case.

Some of the exceptions to the finality rule are established by statute, while others have been carved out by case law. All exceptions share one thing in common: if the appealable rights would be rendered moot if not immediately appealed, then the rights may be appealed before the case proceeds.  For example, in Cherolis, if Kindred’s right to enforce the arbitration agreement was not appealed before trial, the right would be lost once the case proceeded to trial; whether Kindred could enforce the arbitration agreement would have been rendered moot.  Thus, KRS 417.220(a) establishes that an order denying a motion to compel arbitration is immediately appealable.

Further, the enforcement and effect of an arbitration agreement is governed by the Kentucky Uniform Arbitration Act (“KUAA”) and the Federal Arbitration Act (“FAA”). Both signal a legislative policy favoring arbitration agreements.  Nonetheless, waiving the fundamental right to trial by jury is a significant act, and one that may only be accomplished by meaningful intent executed in clear terms.

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This article does not constitute legal advice.

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