JOHN E. STEPHENS; AND EVERREADY RAILROAD CONTRACTING, INC. v. FIRST COMMONWEALTH BANK OF PRESTONSBURG, KENTUCKY; C. DOUGLAS TURNER; TERRY GIESE; AND RIVERFRONT CORPORATION
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RENDERED:
September 13, 2002; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-001806-MR
JOHN E. STEPHENS; AND
EVERREADY RAILROAD CONTRACTING, INC.
APPELLANTS
APPEAL FROM FLOYD CIRCUIT COURT
HONORABLE DANNY P. CAUDILL, JUDGE
ACTION NO. 92-CI-00262
v.
FIRST COMMONWEALTH BANK OF PRESTONSBURG,
KENTUCKY; C. DOUGLAS TURNER; TERRY GIESE;
AND RIVERFRONT CORPORATION
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUDGEL, JOHNSON AND McANULTY, JUDGES.
JOHNSON, JUDGE:
John E. Stephens and Everready Railroad
Contracting, Incorporated1 have appealed from an order entered by
the Floyd Circuit Court on April 5, 2000, which dismissed their
1
The names of Stephens and his corporation, Everready, will
be used interchangeably in this Opinion.
claim pursuant to CR2 77.02 for want of prosecution.3
On August
1, 2000, Stephens filed a motion pursuant to CR 60.03 seeking
“entry of an Order Setting Aside the June 19, 2000[,] Order of
the Court, reinstating this case on the active docket, and
setting the same for a trial or a pretrial conference on a date
certain.”
Stephens’s CR 60.03 motion was denied by an order
entered on December 7, 2000.
Having concluded that the trial
court did not abuse its discretion by dismissing this action for
want of prosecution and by denying relief on the CR 60.03 motion,
we affirm.
In 1988, Stephens and his brother formed a partnership,
Everready Railroad Contracting, for the purpose of constructing
railroad tracks.
At the time, C. Douglas Turner was employed as
a vice-president and loan officer at First Commonwealth Bank of
Prestonsburg (the bank).
Allegedly, Turner promised to help
Everready obtain construction contracts and bank loans in
exchange for a one-third interest in the partnership’s profits.
Turner was terminated by the bank in March 1989, and he
was indicted on criminal charges in regard to matters arising out
of his employment.
partnership.
Meanwhile, Stephens’s brother left the
In December 1989, Turner and Stephens incorporated
Everready, but in the summer of 1991, they reached an impasse
regarding the corporation’s management.
2
The corporation was
Kentucky Rules of Civil Procedure.
3
Stephens filed a motion to set aside the April 5, 2000,
order on April 14, 2000. The motion to set aside was denied by
an order dated July 19, 2000, and entered on July 21, 2000.
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dissolved in November 1993.4
On April 8, 1992, the bank commenced the present action
by filing a complaint against Stephens and obtaining the issuance
of a summons.
The bank sought to enforce the terms of three
unpaid promissory notes, which were secured by various personal
property and equipment, and to obtain a judgment against
Stephens.
This case has a long and convoluted procedural
history, which we will attempt to summarize in chronological
order.
In response to the original complaint, Stephens entered
into a loan modification agreement with the bank on May 12, 1992.
The modification agreement essentially consolidated the three
unpaid promissory notes referenced in the original complaint.
After Stephens defaulted on the modified loan agreement, the bank
filed an amended complaint on July 8, 1993.
On October 14, 1993,
the bank filed a motion for a default judgment.
On November 3,
1993, the bank’s motion for a default judgment was denied, and
Stephens was granted an extension of time of 20 days in which to
file an answer.
Finally, on December 6, 1993, Stephens responded to the
bank’s complaint.
Along with his answer, Stephens filed a
counterclaim against the bank, wherein he alleged that one of its
agents, Turner, had fraudulently induced him to enter into
various transactions with the bank.
4
Stephens also filed a third-
The preceding facts were from an earlier non-published
opinion of this Court in John E. Stephens & Everready Railroad
Contracting, Inc. v. C. Douglas Turner, 1997-CA-001220-MR.
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party complaint against Terry Giese and Riverfront Corporation,5
alleging that the proceeds from the defaulted loans were used to
meet obligations arising from a contract between Giese and
Stephens and that Giese had breached his contract with Stephens
by failing to pay the agreed-upon price for work performed by
Stephens’s company.
Stephens claimed that Giese’s breach of his
contract with Stephens had caused Stephens to default on the
loans with the bank.
On May 9, 1994, Stephens made his first discovery
request, a request for production of documents from the bank.6
On August 19, 1994, without any of the parties having conducted
any further discovery, Stephens moved the trial court for a trial
date.
The trial court denied Stephens’s motion by an order
entered on September 20, 1994, on the grounds that discovery had
not been completed.
The trial court stated “that all Parties
have 120 days from the date of this Order in which to complete
their discovery and all other proof that they intend to take by
deposition and at that time any Party may request a new Pre-Trial
Conference.”
On November 28, 1994, Giese moved for either a
dismissal of Stephens’s third-party complaint or, in the
alternative, a summary judgment against Stephens.
On that same
5
As with Stephens and Everready, we well use Giese and
Riverfront interchangeably in this Opinion.
6
The request was for one document--“Copy of settlement
agreement as between 1st Commonwealth, Terry Geise [sic] and
Riverfront Corporation.”
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day, Giese moved the trial court for leave to file a fourth-party
complaint against Turner, alleging fraud.7
On November 30, 1994,
Stephens filed a second motion seeking a trial date.
On December
1, 1994, Stephens filed a response to Giese’s motion for summary
judgment and his own motion for summary judgment against Giese.
While the above-mentioned motions were pending, Giese
filed a notice on March 2, 1995, to take Stephens’s deposition on
April 6, 1995.
On May 31, 1995, Turner filed a motion to dismiss
the fourth-party complaint for failure to state a claim upon
which relief can be granted.8
On September 26, 1995, Turner
filed a motion for summary judgment on the fourth-party
complaint.
On December 4, 1995, Stephens filed his third motion
for a trial date.
On April 2, 1996, the trial court granted Turner’s
motion for summary judgment and dismissed Giese’s fourth-party
complaint against him.
order.
On May 2, 1996, Giese appealed from this
Turner filed a motion to dismiss the appeal, and on
September 24, 1996, this Court granted Turner’s motion to dismiss
the appeal since it was not from a final and appealable order.9
On October 9, 1996, Stephens filed a request for production of
documents requesting that the bank produce copies of various
cancelled checks involving businesses owned by him.
Also, on
7
CR 13.08 and 14.01; see also Penker Construction Co. v.
Finley, Ky., 485 S.W.2d 244 (1972).
8
CR 12.02(f).
9
The Order Dismissing Appeal was entered on September 24,
1996, in case no. 1996-CA-001277-MR.
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October 9, 1996, Stephens filed his fourth motion to set trial.
Almost eight months later, on May 30, 1997, Stephens filed his
fifth motion to set trial.10
From the filing of this action in April 1992, to its
dismissal for want of prosecution in April 2000, over a period of
eight years, only minimal discovery was conducted.
Other than
procedural posturing, the parties have taken few steps to
actually litigate the dispute.
In fact, May 30, 1997, marked the
last action by Stephens and an October 9, 1997,11 order marked
the last action by the trial court prior to the notice to dismiss
for lack of prosecution filed on May 3, 1999,12 pursuant to CR
77.02(2).13
After more than one year had passed following the CR
77.02(2) notice and with the trial court having received no
10
Stephens’s fifth motion to set a trial date is erroneously
titled “Sixth Renewed Motion to Set for Trial.”
11
The trial court’s order was dated October 9, 1997, and
entered on October 13, 1997. The order denied Giese’s motion for
partial summary judgment.
12
The notice stated that the action would be dismissed
unless the parties responded on or before June 4, 1999.
13
CR 77.02(2) states:
At least once each year trial courts
shall review all pending actions on their
dockets. Notice shall be given to each
attorney of record of every case in which no
pretrial step has been taken within the last
year, that the case will be dismissed in
thirty days for want of prosecution except
for good cause shown. The court shall enter
an order dismissing without prejudice each
case in which no answer or an insufficient
answer to the notice is made.
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response from any of the parties, the trial court entered an
order dismissing the action for want of prosecution on April 5,
2000.
Stephens responded on April 14, 2000, with a motion to set
aside the order and for a pre-trial conference.
On July 21,
2000, the Floyd Circuit Court denied Stephens’s motion to set
aside the order.
On August 1, 2000, Stephens filed a motion to
reconsider pursuant to CR 60.03.
motion on December 7, 2000.
The trial court denied this
This appeal followed.
“The purpose of CR 77.02(2) is to afford trial judges a
means by which they may periodically review their dockets and
purge them of cases which have lapsed into inactivity.”14
By the
terms of CR 77.02(2), such dismissals are without prejudice.
In
Sublett v. Hall,15 our Supreme Court set forth six factors to
consider prior to entering an order dismissing an action without
prejudice:
1.
2.
3.
4.
5.
6.
What preparation has [sic] the opposing
parties and their counsel made for
trial?
What was the lapse of time between the
filing of the complaint and the date of
the motion to dismiss?
Will a dismissal without prejudice be
prejudicial to the opposing parties?
Will the dismissal without prejudice act
as an adjudication of the issues made by
the pleadings?
Should the order of dismissal contain
terms and conditions?
Would any term or condition attached to
the order prejudice the movant?
The Court went on to state that emphasis should be placed on the
14
Bohannon v. Rutland, Ky., 616 S.W.2d 46, 47 (1981).
15
Ky., 589 S.W.2d 888, 893 (1979).
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third factor--“whether the opposing party will suffer some
substantial injustice or be substantially prejudiced.”16
Applying the above factors to the case sub judice, we
find that the trial court did not abuse its discretion in
dismissing the action pursuant to CR 77.02(2).
Despite his
repeated requests for the setting of a trial date, Stephens has
taken few steps to prosecute his counterclaim.
He has conducted
very limited discovery, and he has filed few substantive motions
with the trial court.
The original complaint was filed over
eight years prior to the dismissal, and there have been
significant time lapses throughout the litigation when no
activity occurred.
While Stephens claims he would be severely prejudiced
by a dismissal, he has failed to convincingly argue this claim.
Stephens was listed as the original defendant in the action,
having defaulted on three promissory notes, and a dismissal would
apparently absolve him of the bank’s claims.17
Stephens was idle
in prosecuting his claims from May 30, 1997, to April 14, 2000,
and he took nearly a year to respond to the trial court’s notice
of dismissal.
Such long periods of inactivity and delay easily
justify the trial judge’s decision.18
16
Id.
17
The bank alleges in its brief that it “has forfeited
collection of the sum of $55,836.84” plus interest due from
Stephens.
18
See Jenkins v. City of Lexington, Ky., 528 S.W.2d 729, 730
(1975)(holding that a two-year period of inactivity was
(continued...)
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We also hold that the trial court properly denied
Stephens’s motion to reconsider pursuant to CR 60.03.
Stephens’s
CR 60.03 motion was filed in response to the trial court’s April
5, 2000, dismissal of the action for failure to prosecute; it
alleged mistake and lack of notice as grounds for Stephens’s
failure to respond to the April 1999 notice of dismissal.
However, we note that the record indicates that Stephens was sent
notice to his last known address contained in the record.
Throughout the litigation, Stephens had listed this address as
his address of record and there was no reason for the trial court
to know whether Stephens had a change of address.
Additionally,
the notice was sent to Stephens’s counsel at his address of
record.
While counsel denied receiving the notice of dismissal
at this address; he acknowledged that he received the order of
dismissal at this same address.
The onus would have been on
Stephens or his counsel to notify the trial court of an address
change of either or them and to supplement the record
accordingly.
Thus, we cannot say that the trial court abused its
discretion by denying Stephens relief on his CR 60.03 motion
based on a claim of mistake and lack of notice.
For the foregoing reasons, the orders of the Floyd
Circuit Court are affirmed.
ALL CONCUR.
18
(...continued)
sufficient grounds under CR 41.02(1) for a dismissal for failure
to prosecute).
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BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE, FIRST
COMMONWEALTH BANK:
E. Martin McGuire
Prestonsburg, Kentucky
Larry D. Brown
Prestonsburg, Kentucky
BRIEF FOR APPELLEES, TERRY
GIESE AND RIVERFRONT
CORPORATION:
Denise H. McClelland
Lexington, Kentucky
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