BATES (GIBSON) (BILLIE J.) VS. GIBSON (CHARLIE)
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RENDERED: NOVEMBER 13, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000086-MR
BILLIE BATES (GIBSON)
v.
APPELLANT
APPEAL FROM LETCHER CIRCUIT COURT
HONORABLE SAMUEL T. WRIGHT, III, JUDGE
ACTION NO. 00-CI-00079
CHARLIE GIBSON
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: ACREE AND DIXON, JUDGES; GRAVES,1 SENIOR JUDGE.
ACREE, JUDGE: Billie Bates appeals an order of the Letcher Circuit Court
relieving Charlie Gibson of a provision of a divorce decree requiring him to make
1
Senior Judge J. William Graves sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statute
21.580.
payments on a debt consolidation bill. Because the trial court did not provide
Bates the required hearing, we reverse.
Bates and Gibson were married on November 17, 1998. On March 6,
2000, they entered into a separation agreement, and on March 30, 2000, their
divorce decree, which incorporated the separation agreement, became final.
Paragraph 8 of the separation decree provides,
That the parties agree that the Respondent [Gibson] shall
be responsible for the indebtedness of the parties on the
debt consolidation bill to Community Trust Bank, N.A.,
and on the 1996 Norris Mobile Home to Greenpoint
Credit. That the parties agree that as of the date of
signing this agreement each shall be responsible for
indebtedness in their name along [sic].
On two occasions, after Gibson missed payments on the bill, the trial court held
him in contempt in orders issued on March 8 and September 2, 2005.
Gibson eventually learned that the bill required a balloon payment of
more than $20,000. This caused him to believe the debt he had been paying was
not marital debt, and that Bates had concealed that fact from him. According to the
bank, Gibson was not a party to the loan he was paying and denied him access to
information on the account. Gibson’s attorney eventually acquired the loan
documents by subpoena. After reviewing those documents, Gibson came to
believe the loan was used to pay for Bates’ non-marital property. Gibson returned
to the trial court, alleging that Bates fraudulently induced him to agree to repay the
loan by misrepresenting that the loan had a marital purpose.
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The trial judge ordered the parties to conduct an evidentiary hearing
before a Domestic Relations Commissioner, who in turn ordered the parties to take
depositions and to submit those depositions to the DRC, along with proposed
orders. Ultimately, the DRC found Bates had committed fraud, and recommended
the trial judge: (1) relieve Gibson of his obligation to repay the bill to Community
Trust Bank, and (2) set aside the orders finding Gibson in contempt. On January
11, 2007, the DRC prepared recommended Findings of Fact, Conclusions of Law,
and Order and tendered them to the circuit court.
On January 22, 2007, the circuit clerk sent to counsel of record a
Notice of Filing by the DRC of the proposed order.
On January 30, 2007, Bates served timely written objections to the
proposed order upon Gibson. In conformity with Kentucky Rules of Civil
Procedure (CR) 56.03(2), Bates moved for a hearing on the exceptions to be
conducted before the circuit court. The motion was to be heard on February 15,
2007. However, Bates passed the motion and re-noticed it to be heard before the
DRC and not before the circuit court.2
The DRC conducted a hearing on Bates’ exceptions on March 13,
2007. On July 1, 2007, the DRC prepared a recommended order overruling Bates’
exceptions and tendered that proposed order directly, and only, to the circuit judge.
2
Apparently it is a custom of local domestic practice to allow the DRC to address the exceptions
prior to their consideration under CR 53.06(2) by the circuit judge. However, we could find no
local rule to that effect.
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Because the circuit clerk was unaware of the DRC’s recommendation to overrule
Bates’ exceptions, Bates received no notice of it.
On August 1, 2007, the circuit court adopted the DRC’s
recommendation and entered an order overruling Bates’ exceptions.3 That order
was mailed to Bates’ attorney and was her first notice of the DRC’s
recommendation. However, the circuit court had yet to adopt the DRC’s January
11, 2007 recommendation to relieve Gibson of his obligation to pay the bill to
Community Trust Bank.
On August 8, 2007, Bates filed a motion to amend, alter or vacate the
August 1, 2007 order. The specific relief sought was that the August 1, 2007 order
be vacated and that a hearing be set for a hearing on Bates’ exceptions to the
DRC’s January 11, 2007 recommended order. The motion was heard on August
23, 2007. Significantly, there was no consideration of the exceptions themselves;
only the motion to vacate the August 1, 2007 order was addressed.
On October 12, 2007, the circuit court entered two conflicting orders.4
The first order found that the clerk failed to provide Bates with notice
of the DRC’s July 1, 2007 recommended order. That was just cause for her failure
to timely file objections to that recommended order. This first order allowed Bates
“ten (10) days from [October 12, 2007] to file Exceptions to the Findings of Fact,
3
The motion actually refers to the “Order of July 26, 2007” because that is the date the circuit
judge signed the order that was entered by the circuit clerk a few days later. Though the parties
refer to the dates orders were signed, we follow the rule that the date of an order or judgment is
the date of its entry on docket by clerk. See Arnett v. Kennard, 580 S.W.2d 495, 496 (Ky. 1979).
4
The parties refer to these orders as dated October 4, 2007. However, see footnote 3, supra.
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Conclusions of Law and Order of the Domestic Relations Commissioner to be
heard by the Circuit Court.”
The second order stated,
the Court having reviewed the record and in all things
being sufficiently advised, IT IS HEREBY ORDERED
that the Petitioner’s Motions are OVERRULED, and the
Findings of Fact, Conclusions of Law and Order filed by
the Domestic Relations Commissioner of this Court on
January [11], 20075 are hereby adopted.
On October 18, 2007, in compliance with the first October 12, 2007
order and disregarding the second, Bates filed exceptions to the DRC’s January 11,
2007 recommended order. She noticed her exceptions to be heard before the
circuit court on November 8, 2007, and the clerk placed the matter on the docket
for that date. Other than the docket entry itself, there is no indication in the record
that the circuit court conducted the scheduled hearing on Bates’ exceptions.
On October 19, 2007, Gibson filed a motion to vacate the October 12,
2007 motion that granted Bates’ motion to vacate the August 1, 2007 order that
overruled Bates’ exceptions. Gibson’s motion was noticed to be heard on
November 29, 2007. According to the video record, neither party made an
appearance on that motion.
On December 14, 2007, the trial judge granted Gibson’s October 19,
2007 motion, stating,
that the Order permitting [Bates] ten (10) days from the
date of said Order to file Exceptions to the Findings of
5
Gibson stated the date as January 22, 2007, but this was the date the circuit clerk sent notice to
counsel that the DRC had tendered the recommended order on January 11, 2007.
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Fact, Conclusions of Law and Order of the Domestic
Relations Commissioner, be and is hereby VACATED,
and the Findings of Fact, Conclusions of Law and order
filed by the Domestic Relations Commissioner of this
Court are adopted.
This order also implicitly, though effectively, denied Bates’ motion to alter, amend
or vacate the August 1, 2007 order overruling her exceptions. This appeal
followed.
Bates has raised several arguments on appeal to support her
contention that the trial judge’s order was improper. We must reverse because no
hearing was conducted in conformity with CR 53.06(2), despite Bates’ efforts to
obtain a hearing before the circuit court.
A trial court’s denial of a motion to alter, amend, or vacate an order
must be reviewed for abuse of discretion. Brenzel v. Brenzel, 244 S.W.3d 121,
125 (Ky.App. 2008).
We first address Bates’ assertion the doctrine of res judicata barred
the trial court from vacating the contempt orders and relieving Gibson of the
obligation to repay the loan. It clearly did not. Res judicata acts to preclude
parties from re-adjudicating matters already finally resolved in prior actions.
Hopkins v. Jones, 235 S.W. 754, 756 (Ky.App. 1921). Here, the trial court has not
attempted to re-address the matter in separate litigation, but has set aside orders
issued in the original action. Res judicata does not prevent this. Webb v.
Compton, 98 S.W.3d 513, 516 (Ky.App. 2002). Additionally, in the case of fraud,
a party may move to set aside orders provided the motion is made within a
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reasonable time. CR 60.02(d). It was proper for the trial court to reconsider the
orders holding Gibson in contempt.
Additionally, it was not improper for the DRC to address Gibson’s
claim that his agreement to be responsible for the Community Trust Bank
obligation was procured by a fraud perpetrated by Bates and not because of a
meeting of the minds. Whether there was a meeting of the minds is precisely the
question the circuit judge directed the DRC to determine. Provident Sav. Life
Assur. Soc. v. Whayne’s Adm’r, 29 Ky.L.Rptr. 160, 93 S.W. 1049, 1051 (Ky.
1906)(“fraud practiced by a successful party in the obtention of a contract will
vitiate it [for i]t was never intended that either party could be bound except by a
meeting of their minds upon matters material to the contract.”).
Bates also contested the trial judge’s December 14, 2007 order to the
extent it adopted the DRC’s recommended order relieving Gibson of an obligation
under the settlement agreement without granting Bates a hearing on the exceptions
she presented.
Without recounting the sequence of events delineated infra, we
conclude that Bates, through no fault of her own, was deprived of any hearing at all
before the circuit court. By local custom, Bates presented her exceptions to the
DRC. But that is merely an extra step in the process. The important point to note
is that no hearing before the DRC will satisfy the requirement of CR 53.06(2), as
interpreted in Kelley v. Fedde, 64 S.W.3d 812 (Ky. 2002), of the circuit court’s
requirements to conduct a hearing. She did not waive her right to present
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exceptions to the circuit court after the DRC overruled them because she did not
receive notice of that recommendation until after the circuit court adopted it as its
own.
Furthermore, the circuit court’s own October 12, 2007 order
authorized the filing of exceptions more than ten days after the DRC’s
recommended order relieving Gibson of his obligation under the settlement
agreement. See Eiland v. Ferrell, 937 S.W.2d 713, 717 (Ky. 1997)(trial court may
review untimely exceptions and conduct a hearing should circumstances so
warrant).
Given the circumstances of this case, we believe the Letcher Circuit
Court was clearly erroneous in entering its October 12, 2007 order denying Bates’
motion to vacate the August 1, 2007 order and conduct a hearing on her
exceptions.
Having said this, we alert the circuit court and the parties to the fact
that “while a full-blown evidentiary hearing is not contemplated by the rule, the
parties must be afforded an opportunity for oral argument.” Id. at 814, citing
Haley v. Haley, 573 S.W.2d 354 (Ky.App. 1978). Under the holding in Kelley, this
case must be reversed and remanded for a hearing. The scope of the hearing,
however, we leave to the discretion of the circuit court.
For the foregoing reasons, we vacate the order of the trial court and
remand for further proceedings consistent with this opinion.
ALL CONCUR.
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BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Charles Phillip Wheeler, Jr.
Pikeville, Kentucky
Alison C. Wells
Hazard, Kentucky
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