MAYNARD (WILLIAM) VS. GROOME (WILLIAM E.)
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RENDERED: MAY 28, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-000835-MR
WILLIAM MAYNARD
v.
APPELLANT
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE EDDY COLEMAN, JUDGE
ACTION NO. 07-CI-01074
WILLIAM E. GROOME
APPELLEE
OPINION
AFFIRMING
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BEFORE: NICKELL AND STUMBO, JUDGES; WHITE,1 SENIOR JUDGE.
WHITE, SENIOR JUDGE: William Maynard appeals from a Pike Circuit Court
summary judgment in favor of William Groome, the holder of the certificates of
delinquency for Maynard’s unpaid natural gas taxes. The sole issue presented by
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Senior Judge Edwin M. White sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
this appeal is whether KRS Chapter 134 permitted Groome to charge the
delinquent taxpayers certain fees. KRS 134.420 allows holders of certificates of
delinquency to charge fees in conjunction with collection. Therefore, we affirm
the Pike Circuit Court’s summary judgment.
In 2006, Groome purchased all the delinquent natural gas certificates
sold at the Pike County Sheriff’s tax sale. Groome recorded a real property lien
against the taxpayers in the Pike County Clerk’s Office. Then he mailed each
delinquent tax payer a notice of sale of the certificate, which stated, “This
Certificate of Delinquency will continue to bear interest at the rate of twelve
percent (12%) per annum until paid. Furthermore, the amount set out above DOES
NOT INCLUDE INTEREST, PENALTIES, COSTS, OR FEES.” Among the
expenses for which Groome sought reimbursement was a $50 fee for recording the
lien, a $50 fee for release of certificate, and a $100 processing fee.
On August 20, 2007, Maynard filed a class action complaint, on
behalf of himself, Joyce Fields, Janet Strikeleather, and “similarly situated
individuals,” against Groome. In the complaint, Maynard claimed,
[Groome] by his actions has unlawfully, fraudulently,
and willfully attempted to collect interest at a rate greater
than 12% annum; attempted to collect a sum for filing a
tax lien, attempted to collect processing fees; and filing
of a release, none of which is permitted or provided by
statute.
Claiming that no genuine issue of material fact existed, Groome filed
a motion for summary judgment. On November 21, 2008, the trial court held a
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hearing on Groome’s motion. On February 17, 2009, the trial court granted
summary judgment in favor of Groome. This appeal follows.
Under current Kentucky law, third-party purchases of certificates of
delinquency and their enforcement are governed under KRS 134.452. Groome
purchased the certificates, however, before this statute was enacted. As KRS
134.452 is not a retroactive law, our analysis shall focus on the portions of KRS
Chapter 134 which were in effect at the time of purchase.
KRS 134.450 permits the purchase of delinquent tax certificates
through county sheriff’s sales. In 2006, KRS 134.490 allowed certificate holders
to charge an interest rate of 12% per annum. Further, KRS 134.420(1) allows
certificate holders to collect certain fees. The statute provides that all liens shall
include:
. . . . all interest, penalties, fees, commissions, charges,
costs, reasonable attorney fees, and other expenses as
provided by this chapter that have been incurred by
reason of delinquency in payment of the tax bill or
certificate of delinquency or in the process of collecting
either, and shall have priority over any other obligation
of liability for which the property is liable.
In Flag Drilling Co., Inc. v. Erco, Inc., 156 S.W.3d 762 (Ky. App.
2005), our Court questioned whether a certificate holder was entitled to
reimbursement of attorney fees. We concluded that:
[G]iving a private purchaser of a delinquent tax claim a
means to enforce the lien, KRS 134.490(2)(b) allows that
purchaser to stand in the shoes of the state, county, city,
or taxing district in whose name the lien has been
imposed. By doing so, the statute gives the private
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owner of a certificate of delinquency a feasible means of
recovering its tax claims.
Id. at 767. KRS 134.420(1) clearly provides for the reimbursement of attorney
fees and other fees that have been incurred as a result of the certificate
enforcement. Therefore, Groome was entitled to assess fees as long as those fees
were reasonable.
Maynard claims that only $26 in filing fees were actually incurred by
Groome as filing fees. Instead, he claims that Groome made a $74 profit from the
filing fees that he assessed the tax payers. Groome is entitled to be reimbursed for
all expenses incurred during the enforcement of the delinquent certificate. Those
expenses are not limited to reimbursement for filing fees themselves but also can
include postage, supplies, transportation costs, preparation costs, personnel costs,
and any other expense incurred as long as the cost was reasonable.
The processing fee was vaguely described by Groome as a
reimbursement of pre-litigation attorney fees. Maynard argues that the fee was
unreasonable because it was assessed prior to any court action. Attorneys certainly
perform legal services and provide legal advice prior to litigation. The fee
amounts were not exorbitant, and KRS Chapter 134 does not require a full
accounting of expenses. Therefore, we find no error in the trial court’s judgment.
Accordingly, the Pike Circuit Court’s summary judgment is affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Darrell E. Sammons
Pikeville, Kentucky
Bradley A. Sears
Pikeville, Kentucky
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