Opinion
NO. 2013-CA-001308-MR
03-13-2015
US BANK AS CUSTODIAN FOR SASS MUNI V DTR, AS SUCCESSOR IN INTEREST TO WACHOVIA AS CUSTODIAN FOR SASS MUNI V DTR APPELLANT v. CI REALTY, LLC; JOHN AND JANE DOE, UNKNOWN OCCUPANT OF THE PREMISES; PNC BANK; KEYBANK; NATIONAL ASSOCIATION; AND MARSHALL COUNTY, KENTUCKY APPELLEES
BRIEF FOR APPELLANT: Jamie D. Reiter Nolensville, Tennessee BRIEF FOR APPELLEE, CI REALTY, LLC: Cathy S. Pike Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM MARSHALL CIRCUIT COURT
HONORABLE DENNIS FOUST, JUDGE
ACTION NO. 13-CI-00013
OPINION
VACATING AND REMANDING
BEFORE: CLAYTON, JONES, AND D. LAMBERT, JUDGES. D. LAMBERT, JUDGE: Appellant, US Bank ("US Bank") as Custodian for Sass Muni V DTR, as successor in interest to Wachovia as Custodian for Sass Muni V DTR, appeals an order of the Marshall Circuit Court awarding attorneys' fees and costs to Appellee, CI Realty, LLC ("CI Realty"), pursuant to Kentucky Rules of Civil Procedure ("CR") 11.
In 2006, US Bank purchased a Marshall County property tax delinquency that purportedly encumbered real property owned by Carbide Industries, LLC ("Carbide"). Carbide did not own the property at the time of the delinquency but acquired it following the delinquent entity's bankruptcy. The property was among the assets of the bankruptcy estate and the Federal Bankruptcy Court authorized its sale to Carbide in 2002. Carbide transferred its interest in the property to CI Realty in 2008.
In 2011, US Bank contacted CI Realty to exercise its rights to recover the amount of the tax delinquency plus interest and fees. CI Realty responded that its predecessor in interest, Carbide, received title to the property free of encumbrances pursuant to an order of the Federal Bankruptcy Court. CI Realty also provided US Bank with a copy of the bankruptcy order and sent emails to US Bank's counsel to dissuade further legal action.
Despite CI Realty's efforts, US Bank filed a complaint to foreclose on the property in January 2013. CI Realty countered with a motion to dismiss this complaint, and a hearing on that motion occurred on February 27, 2013.
During this hearing, the Marshall Circuit Court announced it would grant CI Realty's motion to dismiss and stated it would consider a potential motion for attorneys' fees justified. The Court then entered a final and appealable order granting the motion to dismiss. The final order did not address attorneys' fees or costs.
Four months later, on June 24, 2013, CI Realty filed a motion for attorneys' fees and costs pursuant to CR 11. The court found in CI Realty's favor on this motion and sanctioned both US Bank and US Bank's counsel in the amount of $17,183.06 on June 28, 2013. The judgment on its face left nothing further to be addressed. US Bank has cited in its brief a lack of time to file a written response under the local rules but US Bank's counsel did not appear at the motion to dismiss.
After a review of the record, the issue is actually whether the trial court retained jurisdiction to award attorneys' fees on June 28, 2013. We hold that it did not as the motion was not timely filed under CR 59.05.
Under Kentucky law, "[a] trial court loses control of a judgment ten (10) days after the entry of the judgment, except to the extent an authorized, timely motion under CR 59 is made." Kentucky Farm Bureau Ins. Co. v. Gearhart, 853 S.W.2d 907, 910 (Ky. App. 1993). Specifically CR 59.05 provides, "[a] motion to alter or amend a judgment, or to vacate a judgment and enter a new one, shall be served not later than 10 days after entry of the final judgment." CR 59.05. A timely filed motion under CR 59 tolls the time to file a notice of appeal until a final decision is made on the motion. See CR 73.02(1)(e); University of Louisville v. Isert, 742 S.W.2d 571 (Ky. Ct. App. 1987). However, absent such a motion, a party has thirty days from the entry of a final judgment to file its notice of appeal, and the failure to file a timely notice of appeal is fatal to the appeal. See CR 73.02(1)(a), (2); see also Marrs Elec. Co., Inc. v. Rubloff Bashford, LLC, 190 S.W.3d 363 (Ky. Ct. App. 2006).
Here, the Marshall Circuit Court granted US Bank's motion to dismiss on February 28, 2013. The entire body of the order states as follows:
ORDER GRANTING MOTION TO DISMISS
This matter having come before the Court on Defendant's, CI Realty, LLC's, Motion to Dismiss the Complaint filed herein, the Court having heard arguments of counsel and being otherwise sufficiently advised,
IT IS HEREBY ORDERED AND ADJUGED THAT the above-style Complaint be and it is hereby dismissed, with prejudice.
This is a final and appealable Order, there being no just cause for delay [emphasis added].
Had the Court included language in the judgment which reserved a ruling on attorneys' fees and costs, then the judgment would have been interlocutory in nature and the trial court would have retained jurisdiction. See Francis v. Crounse Corp., 98 S.W.3d 62 (Ky. Ct. App. 2002). However, the Court did not include such a reservation in its judgment and designated its order final and appealable. As such, CI Realty had ten days following February 28, 2013, to seek any additional relief from the trial court with respect to this matter. Because the only motion CI Realty filed was its motion for attorneys' fees and costs and that motion was filed well beyond the required ten-day period, the Court acted outside of its jurisdiction when it granted the motion on June 28, 2013. Accordingly, the Court was without jurisdiction to impose sanctions and order either US Bank or US Bank's counsel to pay attorneys' fees or costs.
Therefore, it is ORDERED that the judgment of the Marshall Circuit Court imposing sanctions and awarding attorneys' fees and costs is VACATED and REMANDED for the court to enter an order consistent with this opinion.
CLAYTON, JUDGE, CONCURS.
JONES, JUDGE, DISSENTS AND FILES SEPARATE OPINION.
JONES, JUDGE, DISSENTING: Respectfully, I dissent from the majority's decision. I believe that the majority's opinion is in direct contradiction of Kentucky Rules of Civil Procedure 11. I would consider the appeal on the merits because I believe that the trial court acted appropriately and consistent with the language of Rule 11 in addressing the attorneys' fees issue following entry of the final judgment.
The majority opinion indicates that following entry of the final judgment, the sanctions issue could have only been addressed by filing a motion to alter, vacate, or amend the final judgment. Had such a motion been filed and the trial court granted it, then presumably the sanctions issue would have become a part of the final judgment. This is in direct contravention of our Civil Rules. Rule 11 plainly and unambiguously instructs that Rule 11 sanctions are only to be ruled upon following entry of a final judgment. Specifically, Rule 11 provides: "The Court shall postpone ruling on any Rule 11 motions filed in the litigation until after entry of a final judgment." I believe that Rule 11 makes clear that a trial court retains jurisdiction to make orders regarding sanctions following entry of a final judgment without the necessity of a motion to alter, vacate, or amend and without a ten-day time constraint.
In an unpublished opinion another panel of our Court concluded that a trial court retains jurisdiction over matters like attorneys' fees beyond ten days of the entry of a final judgment. Louisville-Jefferson County Metro Government v. Brooks, No. 2012-CA-001141-MR, 2013 WL 4512649, *2 (Ky. App. Aug. 23, 2013).
As the parties are well aware, a final judgment is a final order adjudicating all of the rights of the parties to an action. CR 54.01. "A motion to alter or amend a judgment, or to vacate a judgment and enter a new one, shall be served not later than 10 days after entry of the final judgment." CR 59.05. This rule mirrors CR 50.02, which limits to 10 days after the judgment the time during which a party may move for a new trial, and CR 59.04 which similarly limits to 10 days the window for sua sponte new trial orders. These rules derive from the broader common law recognition that a court loses jurisdiction after the final judgment. Mullins v. Hess, 131 S.W.3d 769, 774 (Ky.App.2004).
However, there are limited exceptions to this rule which allow the trial court to award costs and fees more than 10 days after the Judgment. The Kentucky Supreme Court has ruled, for example, that the civil rule depriving the trial court of jurisdiction to amend its final judgment more than 10 days after the judgment did not deprive it of jurisdiction to render a supplemental judgment awarding costs. Brett v. Isaac, 2009 WL 2707092 (Ky.2009). "CR 52.02 is not to be read to deprive a trial court of all jurisdiction." Id. at 2. Some three years later, a panel of the Court of Appeals applied Brett to conclude that "awarding attorneys' fees and costs ... more than 10 days after the entry of the judgment is permissible, and the
trial judge did have jurisdiction to enter the order awarding costs and attorneys' fees in the instant case." Nationwide Ins. Co. v. Madison, 2012 WL 6213794 (Ky.App.2012). While Madison centered on the application of CR 37.03 (failure to make admissions), it supports the proposition that a trial court has limited jurisdiction to render an award of attorney fees more than 10 days after the judgment . Conversely, a panel of this Court has also determined that a trial court did not abuse its discretion in denying an award of attorney fees after the judgment. Scott v. Campbell County Bd. of Ed., 618 S.W.2d 589 (Ky.App.1981).Id. (Emphasis added).
I agree with the logic and rationale articulated by the Brooks panel and would adopt their reasoning to the issue of sanctions under Rule 11. I believe the trial court retained jurisdiction over the sanctions issue following entry of the final judgment. See also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 396, 110 S.Ct. 2447, 2456, 110 L .Ed.2d 359 (1990) (trial court retains jurisdiction to determine Fed. R. Civ. P. 11 sanctions after the principal suit has been terminated); State ex rel. Corn v. Russo, 740 N.E.2d 265, 270 (Ohio 2001) ("We agree with these federal authorities and find that a court may consider the collateral issue of criminal contempt even after the underlying action is no longer pending."); Bryson v. Sullivan, 412 S.E.2d 327, 331 (N.C. 1992) ("Dismissal does not deprive the court of jurisdiction to consider collateral issues such as sanctions that require consideration after the action has been terminated.").
Additionally, I do not see that the issue relied on by the majority was raised either before the trial court or as part of this appeal. This issue is not one of subject-matter jurisdiction, but rather one of case-specific jurisdiction. As such, I believe the parties waived any argument in this regard by not timely asserting it before the trial court and as part of the appeal of this matter. I believe the majority has exceeded its authority by sua sponte injecting this issue into the appeal of this matter. See Commonwealth v. Steadman, 411 S.W.3d 717, 721 (Ky. 2013).
For these reasons, I dissent. I would not vacate the order awarding sanctions without conducting a full review of the merits underlying the award. BRIEF FOR APPELLANT: Jamie D. Reiter
Nolensville, Tennessee
BRIEF FOR APPELLEE, CI
REALTY, LLC:
Cathy S. Pike
Louisville, Kentucky