RENDERED: MAY 29, 2015; 10:00 A.M. NOT TO BE PUBLISHED Commonwealth of Kentucky Court of Appeals NO. 2013-CA-001363-MR DARRELL STRODE AND DONNA STRODE APPELLANTS APPEAL FROM WARREN CIRCUIT COURT v. HONORABLE STEVE ALAN WILSON, JUDGE ACTION NO. 07-CI-01191 JULIE BARLOW TURNER; PATRICIA ANN BARLOW; AND FRANKLIN BANK & TRUST APPELLEES OPINION AFFIRMING ** ** ** ** ** BEFORE: COMBS, NICKELL, AND TAYLOR, JUDGES. TAYLOR, JUDGE: Darrell Strode and Donna Strode bring this appeal from a June 11, 2013, Order Granting Default/Summary Judgment by the Warren Circuit Court in favor of Julie Barlow Turner and Patricia Ann Barlow as concerns certain claims set out in an amended complaint seeking a judgment of adverse possession
for a driveway across the appellants property. The driveway was depicted in a survey attached to the earlier circuit court s order entered January 31, 2013, which was incorporated by reference into the final order now on appeal. For the reasons stated, we affirm. I. BACKGROUND This case began on July 27, 2007, when appellees filed a complaint seeking declaratory relief in the Warren Circuit Court, alleging a controversy regarding a boundary line dispute affecting the adjoining properties of appellants and appellees. Appellants property consists of approximately 0.29 acres and appellees property totals approximately 0.76 acres. Appellees complaint sought to establish ownership rights and the boundary location of the adjoining properties pursuant to Kentucky Revised Statutes (KRS) 418.040. During the course of this litigation appellees alleged that structures owned by appellants, specifically a modular home and a storage building, were encroaching upon appellees property. This case has now labored in our court system for over seven years, and is a classic family feud. The record reflects that Patricia Barlow and Darrell Strode are siblings, being the children of the late Georgia Strode, who was a predecessor in title to both tracts of property from which this boundary dispute emanates. All of the parties are related by blood or marriage. The circuit court judge is to be commended for extraordinary patience in herding this case through what can easily be described as a procedural nightmare for both the parties and the court. -2-
For almost five years after the filing of the complaint, the parties filed numerous motions, engaged in limited discovery, and were further ordered to mediate the dispute that subsequently failed. On May 10, 2012, the circuit court entered an order that effectively granted appellants a judgment on their claims of adverse possession as concerns the location of the boundary line in conjunction with appellants modular home and storage building that had been encroaching upon appellees property. 1 The circuit court ordered that the boundary lines were to be redrawn for appellants to receive the property upon which the modular home and storage building were located and further, that said property lines would be redrawn in accordance with applicable zoning ordinances. Thereafter, both parties submitted survey plats by licensed engineers to the court in support of the redrawing of the boundary lines for the parties respective properties. By order entered January 31, 2013, the circuit court adopted the survey submitted by appellees surveyor, DDS Engineering as setting forth the most accurate depiction of the boundary lines for the properties as contemplated in the court s May 10, 2012, order. Neither the May 10, 2012, order nor the January 31, 2013, order which redrew the property lines in accordance with the adverse possession arguments set forth by appellants, addressed appellees driveway, which necessarily crossed appellants property for access to appellees property as shown on the survey plat adopted by the court. It is worthy to note that the redrawn 1 Upon review of the record, this Court could not locate a counterclaim upon which this ruling was premised. Presumably, the court treated appellants affirmative defense of adverse possession as a counterclaim pursuant to Kentucky Rules of Civil Procedure (CR) 8.03. -3-
boundary lines as set out in the court s orders are not issues before this court on appeal. After the redrawing of the boundary lines by the circuit court, on February 18, 2013, appellees filed a motion to amend the complaint regarding the issues pertaining to their driveway access across appellants property based upon alternative theories of adverse possession and prescriptive easement. Following a hearing on March 4, 2013, the circuit court entered an order on March 8, 2013, granting the filing of the amended complaint effective as of that date. The circuit court explicitly stated in its order that appellants had twenty days in which to file a responsive pleading to the amended complaint. 2 Appellants failed to timely file an answer or other responsive pleading to the amended complaint. On June 4, 2013, 68 days after the court s deadline for appellants to file an answer or responsive pleading to the amended complaint, appellees moved for default judgment as concerned their claim for adverse possession or prescriptive easement for the use of their driveway across appellants property. On June 7, 2013, appellants filed an answer to appellees amended complaint; however, the record clearly reflects that this answer was filed late without leave of court in accordance with Kentucky Rules of Civil Procedure (CR) 6.02. On June 11, 2013, without conducting a hearing on the motion, the circuit court granted a default judgment in favor of appellees. In the judgment, the court declared as a matter of law that the driveway across appellants property as depicted in the boundary survey previously adopted 2 Customarily, absent the court directing otherwise, a party has ten days from service of the amended complaint to file an answer or responsive pleading pursuant to CR 15.01. -4-
by the court was the property of appellees based upon adverse possession as set forth and alleged in the amended complaint. This appeal follows. II. STANDARD OF REVIEW Generally, default judgments are disfavored in this Commonwealth and the circuit court is vested with broad discretion to set aside such judgments. Asset Acceptance, LLC v. Moberly, 241 S.W.3d 329 (Ky. 2007). To set aside a default judgment a party must show good cause, which includes: 1) [A] valid excuse for the default; (2) a meritorious defense to the claim; and (3) absence of prejudice to the non-defaulting party. PNC Bank, N.A. v. Citizens Bank of Northern Kentucky, Inc., 139 S.W.3d 527, 531 (Ky. App. 2003) (quoting Sunrise Turquoise, Inc. v. Chemical Design Co., Inc., 899 S.W.2d 856, 859 (Ky. App. 1995)). Accordingly, our review of the default judgment in this case will look to whether the circuit court abused its discretion in refusing to set aside the judgment. Additionally, appellants argue that the circuit court erred in its March 8, 2013, order allowing appellees to file an amended complaint which became the basis for the entry of the default judgment in this action. Appellants had timely objected to the motion to amend the complaint. The review of a trial court s denial of a motion to amend a complaint also looks to the abuse of discretion by the trial judge. See Kenney v. Hanger Prosthetics and Orthotics, Inc., 269 S.W.3d 866 (Ky. App. 2007). In reviewing the issues raised by appellants in this appeal, the test for abuse of discretion is whether the trial judge s decision was arbitrary, -5-
unreasonable, unfair or unsupported by sound legal principles. Goodyear Tire & Rubber Co. v. Thompson, 11 S.W.3d 575 (Ky. 2000). Our review proceeds accordingly. III. ANALYSIS (i) Amended Complaint Appellants argue on appeal that the circuit court erred in allowing appellees to amend the complaint as set forth in the court s order on March 8, 2013. Appellants argue that the circuit court s order was clearly erroneous and otherwise an abuse of the court s discretion in permitting the complaint to be amended at that time. Appellants primarily rely on the doctrine of res judicata as the basis for the circuit court s error, arguing that the order entered by the court on May 10, 2012, was a final judgment in the case and resolved all issues raised between the parties in the original complaint. We do not reach appellants res judicata argument as this Court, upon thorough review of the record, does not believe that the order entered May 10, 2012, constituted a final judgment pursuant to CR 54.01. The May 10, 2012, order on its face is not final as it did not adjudicate all of the rights of all of the parties at that stage of the proceeding. The May 10 order clearly concludes that appellants had satisfied the elements of adverse possession by operation of law as concerns the location of appellants modular home and storage building; however, the order also states that genuine issues of material fact remain between the parties as concerns the adverse possession of septic lines running across the respective -6-
properties which was an ongoing issue in dispute in the case. The court further noted in its May 10 order that the property lines with regard to the respective properties would still have to be redrawn in accordance with applicable zoning laws, specifically complying with a five-foot setback requirement as concerns the location of the structures on the respective properties. While the order did contain the magic words provided for under CR 54.02 where there are multiple parties and multiple claims involved, these magic words did not make the order final and appealable under CR 54.01. See Tax Ease Lien Investments 1, LLC v. Brown, 340 S.W.3d 99 (Ky. App. 2011). The order on its face clearly did not fully adjudicate the claims between the parties which is further reflected by two additional orders being entered by the circuit court on June 20, 2012, and January 31, 2013, order clarifying the May 10, 2012, order. The May 10, 2012, order was thus interlocutory, not appealable, and has no res judicata effect in this case. Upon entry of the circuit court s order of January 31, 2013, clarifying its previous orders, including the May 10, 2012, order, the court adopted the survey of DDS Engineering in regards to the specific location of the boundary lines. At that time, upon establishment of the boundary line, the survey adopted by the circuit court reflected that appellees driveway crossed property of appellants to reach appellees residence and an outbuilding. Conceivably, the circuit court could have redrawn the lines in such a fashion that the driveway did not cross appellants property however, that did not occur and appellees were clearly placed in a position of necessity to amend their complaint to address the issue of adverse -7-
possession or prescriptive easement regarding the use of appellees driveway across appellants property. Under CR 15.01, circuit courts have wide discretion when ruling on motions to amend a complaint, which will not be interfered with by this Court absent an abuse of discretion. Johnston v. Staples, 408 S.W.2d 206 (Ky. 1966). Given these circumstances and upon a thorough review of the record, we cannot find that the circuit court abused its discretion in permitting appellees to file an amended complaint to adjudicate their driveway claim. (ii) Default Judgment Appellants also argue on appeal that the circuit court erred and otherwise abused its discretion in entering a default judgment in favor of appellees on the issue of adverse possession of their driveway across appellants property, without conducting a hearing pursuant to CR 55.01. As noted, by order entered March 8, 2013, appellants were given twenty days in which to file a responsive pleading. There is no dispute that appellants failed to timely file an answer or responsive pleading to the amended complaint. A motion for default judgment was filed in the circuit clerk s office on June 4, 2013, 68 days after the deadline for filing an answer or responsive pleading to the amended complaint. Since appellants had made an appearance in the case through counsel, the rule requires service of the motion prior to the hearing. Had the motion for default judgment not been served on appellants counsel, then clearly a violation of CR 55.01 would have occurred and the default judgment would have been set aside. See Kearns v. Ayer, 746 S.W.2d 94 (Ky. App. 1988). -8-
However, the motion for default judgment was served by U.S. Mail upon counsel for appellants on June 4, 2013. This fact is not disputed. Under this circumstance and given that appellees were not seeking damages against appellants for previously established liability, this Court can find no substantive authority that would require a hearing to be scheduled by the circuit court prior to entry of default judgment, when notice was properly served. Under the facts of this case, CR 55.01 does not require a hearing before entry of default judgment. Upon receipt of appellees motion for default judgment, appellants immediately filed on June 7, 2013, an answer to appellees amended complaint, notwithstanding they were in default. 3 Being in default, the proper response for appellants was to immediately seek leave of the circuit court to file an answer to the amended complaint pursuant to CR 6.02. Upon filing this motion, appellants could have scheduled a hearing for the court to consider the filing of the late answer, which likely could have precluded the entry of the default judgment by the circuit court until after the hearing on appellants motion. However, appellants failed to seek leave to file a late answer and thus remained in default. Upon the circuit court s granting of a default judgment in accordance with applicable law on June 11, 2013, appellants did timely move to vacate the default judgment on June 18, 2013. However, the motion to vacate is predicated solely upon the failure of appellees to schedule a hearing on their motion for 3 Appellants answer was served by U.S. mail on appellees counsel on June 5, 2013, which confirms that the motion for default judgment, served on June 4, was received by appellants counsel on June 5, 2013. -9-
default judgment as opposed to addressing the legal reasons for setting aside the default judgment. In other words, appellants were required by Kentucky law to show good cause why the default judgment should be set aside. CR 55.02. 4 The motion does not set forth any valid excuse why appellants failed to timely answer the amended complaint, nor does it set forth any meritorious defense other than the lack of hearing argument previously addressed. Most importantly, the motion did not address the prejudice that would accrue to appellees if the default judgment were set aside. See Asset Acceptance, LLC v. Moberly, 241 S.W.3d 329 (Ky. 2007). Because appellants failed to show good cause or otherwise set forth any ground permissible under Kentucky law to justify setting aside a default judgment, the circuit court did not abuse its discretion in denying the motions. 5 Finally, we would note that upon the filing of the motion to vacate the default judgment, the circuit court conducted a hearing on July 5, 2013, and thoroughly addressed the reasons why the circuit court felt compelled to not set aside the default judgment in favor of appellees as concerns the adverse possession of their driveway across appellants property. This Court takes note of the circuit court s involvement in this case for over six years, its knowledge of the property which included a personal inspection of both properties at the request of the parties, and the necessity recognized by the circuit court to reach some finality in a 4 CR 55.02 provides that for good cause shown, the court may set aside a judgment by default in accordance with CR 60.02. 5 Appellants motion to vacate default judgment did not set forth any grounds under CR 60.02 to support setting aside the judgment. -10-
dispute between the respective family members that had been ongoing for over six years. For the foregoing reasons the Order of the Warren Circuit Court granting appellees a default judgment is affirmed. ALL CONCUR. BRIEF FOR APPELLANTS: D. Bailey Walton Bowling Green, Kentucky BRIEF FOR APPELLEES JULIE BARLOW TURNER AND PATRICIA ANN BARLOW: Matthew J. Baker Bowling Green, Kentucky -11-