GILBERT (CHUCK) VS. BOWLING GREEN MARINE, INC., ET AL.
Annotate this Case
Download PDF
RENDERED: MARCH 25, 2011; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-002403-MR
CHUCK GILBERT
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE CHARLES L. CUNNINGHAM, JR., JUDGE
ACTION NO. 07-CI-004055
BOWLING GREEN MARINE, INC.; AND
THOMAS EDDIE PAYNE
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CAPERTON, COMBS, AND KELLER, JUDGES.
KELLER, JUDGE: Chuck Gilbert (Gilbert) appeals from the trial court's order
modifying an agreed judgment. On appeal, Gilbert argues that the court lacked
jurisdiction to modify the judgment and that Bowling Green Marine, Inc. and
Thomas Eddie Payne (collectively referred to as Payne) had "unclean hands" and
were not entitled to any equitable relief. Payne argues that the court's order was
correct because the judgment was unconscionably punitive and his hands were
"clean." Having reviewed the record, the parties' briefs, and the arguments of
counsel, we affirm.
FACTS
The facts are not in dispute. On June 16, 2004, Payne entered into a
five-year lease with Gilbert for a piece of commercial real estate in Bowling
Green, Kentucky. The lease called for Payne to pay rent in the amount of
$53,100.00 the first year and approximately 3% more per year in each successive
year. In addition to the rental payments, the lease required Payne to pay real estate
taxes, utilities, and for liability and casualty insurance. The lease provided that
Payne would use the premises for boat and ATV sales and service and that Payne
could renew the lease for an additional five years.
In August 2006, Payne defaulted on the lease and vacated the
premises, leaving behind some personal property. Thereafter, Gilbert filed a
complaint seeking payment for past due and future amounts due under the lease.
Gilbert also filed a motion for summary judgment. In his motion, Gilbert noted
that he had re-let the premises temporarily to the Tennessee Valley Authority
(TVA). Taking the amount paid by the TVA from the amount Payne owed in past
due rent, late fees, taxes, court costs, and attorney fees, Gilbert calculated damages
of $49,193.65. The court granted Gilbert's motion and awarded him the amount he
sought.
-2-
Following entry of summary judgment, which did not address
Gilbert's claims to future rent under the lease, the parties entered into an "agreed
judgment." That document provided as follows:
1. The [sic] CHUCK GILBERT is granted judgment
against the Defendants BOWLING GREEN MARINE,
INC. and THOMAS EDDIE PAYNE the compromise
amount of $100,000.000[sic] with interest at the legal
rate of 12.00% per annum from the date of entry of the
judgment until paid in full with the gross taxable costs of
this action. This compromise includes all future claims
subject of the lease between the parties and with the entry
of this judgment that lease is terminated, settled and
superseded by the terms of this judgment.
2. That in consideration and exchange for this agreed
judgment terminating this litigation and the Plaintiff,
CHUCK GILBERT releasing all garnishments,
executions and judgment liens [Defendants will pay any
filing fees associated with the releases and will file and
serve the releases] currently resulting from enforcement
of the December 14, 2007 judgment for accured [sic]
rents and charges due under the lease, the defendants,
BOWLING GREEN MARINE, INC. and THOMAS
EDDIE PAYNE have agreed to pay a compromise
amount in equal monthly installments on or before the
due date until the compromised is paid in full.. [sic] This
amount due in paragraph 1 of this judgment may be
satisfied by compromise if and only if it is paid by the
Defendants, as follows [otherwise the full amount is due
and execution and enforcement of the full amount due in
paragraph 1 may occur]:
A. The Defendants, agree to pay the sum of
$50,000.00 at 12% compounded annually in
equal monthly payments for a period of two
years on or before January 11, 2008 and by
the 11th of the month thereafter for a total of
24 months. That [sic] parties agree that this
means that the Defendants agree to pay
$2,353.67 on or before January 11, 2008 and
-3-
thereafter payments of $2,353.67 per month
toward payment of the judgment with
payments being due on or BEFORE THE
11th of EACH AND EVERY MONTH until
paid in full which will mean a total paid at
the end of 24 months of $56,488.08.
....
C. In the event the Defendants fails [sic] to
deliver payment of the amount due on any
given date, Defendants shall be in default.
In the event of default, the entire balance
under paragraph 1 above less credit or [sic]
any payments made shall become due and
payable in full and shall bear interest until
paid in full.
D. That in the event of default, it is agreed
and understood that the Plaintiff shall have
the right to immediate execution, including
garnishments, for all sums detailed above
including the balance, interest, and court
costs.
....
The above terms and conditions are ordered and
adjudged and made part of this judgment. This judgment
supersedes and merges the previous judgment entered in
this Court on December 14, 2007. The above terms and
conditions are ordered and adjudged and made part of
this judgment . . . .
In essence, the agreed judgment called for Payne to make twenty-four monthly
payments totaling $50,000.00 plus interest in exchange for Gilbert's waiver of his
claim to entitlement to a total of $100,000.00 plus interest. Thus, if Payne failed to
timely make the monthly payments, he would owe an additional $50,000.00. The
-4-
judge signed the agreed judgment, and it was entered by the clerk on January 22,
2008.
On October 22, 2009, Gilbert filed an affidavit for writ of garnishment
stating that Payne owed $69,871.19 on the January 2008 agreed judgment. The
amount listed in that affidavit represented the total amount of the agreed judgment
($100,000.00) plus interest and minus the monthly payments made by Payne. The
court entered an order of garnishment and Payne filed a motion to quash the
garnishment and to amend the judgment pursuant to Kentucky Rule of Civil
Procedure (CR) 60.02. In his motion, Payne noted that he had made twenty-one of
the twenty-four monthly payments under the agreed judgment and that Gilbert had
garnished one monthly payment. Therefore, only two payments were due and
owing at the time Payne filed his motion. Furthermore, Payne noted that Gilbert
had successfully re-let the premises and that permitting him to recover the entire
$100,000.00 from Payne would amount to a double recovery.
In his response to Payne's motion, Gilbert stated that the original lease called
for payments totaling $291,437.27 and that the property had been significantly
altered to meet Payne's needs. Gilbert noted that, when Payne vacated the
premises and stopped making payments under the lease, the parties negotiated a
mutually beneficial compromise settlement, which they reduced to an agreed
judgment. Payne did not timely make all of the payments called for in the
judgment, and Gilbert argued that he should not be "rewarded" for his failure to do
-5-
so. Gilbert did not address whether he had re-let the premises after the expiration
of the TVA's temporary lease.
Following a hearing,1 the court entered an order granting Payne's motion. In
doing so, the court characterized the additional $50,000.00 payment as a penalty.
The court noted that the parties can agree to a "seemingly excessive penalty for
delay if 'time is of the essence.'" The court noted that the agreed judgment did not
recite that time was of the essence. Furthermore, the court noted that Gilbert had
previously accepted late payments with no complaint. Based on the preceding, the
court found that the $50,000.00 penalty was inequitable, quashed the garnishment,
and ordered Payne to make a $1,400.00 late penalty payment. It is from this order
that Gilbert appeals.
STANDARD OF REVIEW
Gilbert makes three arguments, which have differing standards of review.
Therefore, we set forth the appropriate standard below as we address each of
Gilbert's arguments.
ANALYSIS
1. Whether the Court Had Jurisdiction Under CR 60.02
Gilbert argues that the court did not have jurisdiction to address Payne's
motion under CR 60.02. Whether the trial court has acted outside its jurisdiction is
1
We note that the parties refer to the hearing in their briefs; however, there is no copy of that
hearing in the record. Furthermore, we can find no designation of record indicating what the
circuit clerk was to provide to us on appeal. There is a copy of the clerk's certification of record
that indicates that the only record to the Court of Appeals was the written record. Having noted
the preceding, we do not believe that a transcript or audio or video recording of the hearing
would be instructive; therefore, we have not requested one.
-6-
a question of law. Therefore, the standard of review is de novo. Grange Mutual
Insurance Co. v. Trude, 151 S.W.3d 803, 810 (Ky. 2004).
CR 60.02 provides that:
On motion a court may, upon such terms as are just,
relieve a party or his legal representative from its final
judgment, order, or proceeding upon the following
grounds: (a) mistake, inadvertence, surprise or excusable
neglect; (b) newly discovered evidence which by due
diligence could not have been discovered in time to move
for a new trial under Rule 59.02; (c) perjury or falsified
evidence; (d) fraud affecting the proceedings, other than
perjury or falsified evidence; (e) the judgment is void, or
has been satisfied, released, or discharged, or a prior
judgment upon which it is based has been reversed or
otherwise vacated, or it is no longer equitable that the
judgment should have prospective application; or (f) any
other reason of an extraordinary nature justifying relief.
The motion shall be made within a reasonable time, and
on grounds (a), (b), and (c) not more than one year after
the judgment, order, or proceeding was entered or taken.
A motion under this rule does not affect the finality of a
judgment or suspend its operation.
Having reviewed the record, we note that Payne alleged entitlement to relief
under CR 60.02(e) and/or (f). Gilbert argues that Payne is not entitled to relief
under either provision. As to section (e), Gilbert argues that the judgment,
although it provides for timed payments and has a contingency, is simply a
"judgment for money damages" and has no prospective application. In support of
this argument, Gilbert cites to Alliant Hospitals, Inc. v. Benham, 105 S.W.3d 473
(Ky. App. 2003). In Benham, the parents of a disabled child sued the hospital
claiming that the child's disability resulted from negligence during labor and
delivery. A jury awarded more than three million dollars in damages, two million
-7-
of which was for future medical expenses. After entry of the judgment and while
post-trial motions were pending, the child died. The hospital then moved to set
aside that portion of the judgment related to future medical expenses, arguing
under CR 60.02(e) that it was no longer equitable to enforce the future medical
expenses portion of the judgment. This Court held that CR 60.02(e) did not apply
because "a simple judgment for money damages, even one not yet enforced, does
not have 'prospective application.'" Id. at 478. In doing so, this Court adopted the
federal court interpretation of its own similar rule as applying primarily to
injunctive relief or similar judgments that contemplate "'the supervision of
changing conduct or conditions [that] are . . . provisional and tentative.'" Id.
(Footnote omitted.)
We believe that Benham is distinguishable for two reasons. First, the
damage award for future medical expenses in Benham was not contingent on future
developments but was fixed. The damages herein were not fixed but contingent on
Payne making timely payments, thus rendering the judgment provisional and
tentative. Second, as noted by this Court in Benham, the former Court of Appeals
held in Cawood v. Cawood, 329 S.W.2d 569, 571 (Ky. 1959), that judgments that
have not been "satisfied in full" but "remain in whole or in part unenforced . . . are
capable of having 'prospective application' . . . ." The judgment herein had not
been satisfied in full but remained partially unenforced. Therefore, we hold that
the circuit court had jurisdiction under CR 60.02(e) to review the agreed judgment.
-8-
Although our above holding renders Gilbert's argument regarding CR
60.02(f) moot, we briefly address that argument. In Benham, this Court held that
CR 60.02(f) only applies when another provision of CR 60.02 does not. As we
understand it, Gilbert argues that Payne's motion was based on newly discovered
evidence; i.e. that Gilbert had continued to lease the property during the
intervening years, thus placing Payne's motion within CR 60.02(b). Because a CR
60.02(b) motion must be brought within a year, Gilbert argues that Payne's motion
was not timely brought and the circuit court therefore had no jurisdiction.
This argument fails for three reasons. First, the parties agree that Gilbert
was able to re-lease the property after Payne defaulted. However, as set forth by
Gilbert in his motion for summary judgment, the lease was only for a period of six
months. Therefore, the lease would have expired at or near the time the parties
entered into the agreed judgment. Any lease entered into after that time would not
have been in existence at the time of the judgment and, therefore, could not be
newly discovered. Benham, 105 S.W.3d at 478-79. Second, there is no evidence
of record regarding the existence of any lease after the TVA lease was scheduled to
expire. Evidence that does not exist cannot be newly discovered. Third, the circuit
court did not make a finding regarding the existence of any subsequent lease and it
did not base its order on any such lease. Therefore, we are not persuaded by
Gilbert's argument that CR 60.02(b) would apply to this case and act to negate a
claim for relief under CR 60.02(f).
-9-
For the foregoing reasons, we hold that the circuit court did have jurisdiction
under CR 60.02 to rule on Payne's motion.
2. Whether the Circuit Court's Order Was Whimsical
Gilbert argues that the circuit court acted "upon a whim" when it undertook
to "re-write" the agreed judgment. We disagree.
“The standard of review of an appeal involving a CR 60.02 motion is
whether the trial court abused its discretion.” White v. Commonwealth, 32 S.W.3d
83, 86 (Ky. App. 2000); see also Kurtsinger v. Board of Trustees of Kentucky
Retirement Systems, 90 S.W.3d 454, 456 (Ky. 2002). To amount to an abuse of
discretion, the trial court’s decision must be “arbitrary, unreasonable, unfair, or
unsupported by sound legal principals.” Clark v. Commonwealth, 223 S.W.3d 90,
95 (Ky. 2007) (citing Commonwealth v. English, 993 S.W.2d 941, 945 (Ky.
1999)). Absent a “flagrant miscarriage of justice,” the trial court will be affirmed.
Gross v. Commonwealth, 648 S.W.2d 853, 858 (Ky. 1983).
The circuit court determined that: the agreed judgment was not enforceable
because the additional $50,000.00 payment was a penalty; such a large penalty for
a late payment might have been supportable if the parties had specified that time
was of the essence, which they did not; and Gilbert had, in the past excused a
number of late payments. Initially, we note that a court's finding that a payment
amounted to a penalty is generally made with regard to a contractual term rather
than a judgment. However, we believe the court's finding and analysis herein are
-10-
appropriate because the agreed judgment, which provides contingent payment
schemes, is contractual in nature.
Kentucky follows the Restatement (Second) of Contracts with regard to
determining the difference between acceptable liquidated damages and penalties.
Damages for breach by either party may be liquidated in
the agreement but only at an amount that is reasonable in
the light of the anticipated or actual loss caused by the
breach and the difficulties of proof of loss. A term fixing
unreasonably large liquidated damages is unenforceable
on grounds of public policy as a penalty.
“Anticipated loss” refers to the time of the making of the
contract. “Actual loss” refers to the circumstances upon
occasion of the breach. These are two prongs, which
apply alternately. If the award of liquidated damages
exceeds any reasonable limitation by either one or the
other, to such extent it is unenforceable.
Mattingly Bridge Co., Inc. v. Holloway & Son Const. Co., 694 S.W.2d 702, 704-05
(Ky. 1985) (citing Restatement (Second) of Contracts § 356(1) (1981)).
Gilbert may have had an argument that the additional $50,000.00 payment
was reasonable at the time the agreed judgment was entered since neither party
knew what the actual damages would be. However, at the time of the breach, two
months shy of discharge of the debt, the actual damages could easily have been
determined. Gilbert did not file any evidence of record to support any claim that
the additional $50,000.00 payment represented his actual losses or any portion of
his actual losses. In light of that absence of evidence, it was not unreasonable for
the circuit court to conclude that the additional $50,000.00 payment represented a
penalty and that such a large penalty was not enforceable as unconscionable.
-11-
We recognize Gilbert's argument that the parties should be permitted to
make whatever deal they want no matter how bad that deal may be. However, as
noted by the circuit court, there are limits to that maxim. When a contract does not
provide that "time is of the essence," the court should not impose such a restriction
on the parties. Farmers Bank and Trust Co. of Georgetown, Kentucky v. Willmott
Hardwoods, Inc., 171 S.W.3d 4, 8 (Ky. 2005). Gilbert's argument for relief is that
Payne failed to timely make a payment. Absent a provision that "time is of the
essence," Gilbert had some obligation to show that a delay in payment resulted in
$50,000.00 in damages. Gilbert did not do so and, we suspect, he could not have
done so since he had waived the late payment provision a number of times in the
past.
Based on the preceding, we hold that the circuit court did not abuse its
discretion when it re-formed the agreed judgment.
3. Un-Clean Hands Doctrine
Gilbert argues that Payne was not entitled to equitable relief under the
"unclean hands" doctrine because he did not timely make all of the payments
called for in the agreed judgment. "The unclean hands doctrine is a rule of equity
that forecloses relief to a party who has engaged in fraudulent, illegal, or
unconscionable conduct but does not operate so as to 'repel all sinners from courts
of equity.'" Suter v. Mazyck, 226 S.W.3d 837, 843 (Ky. App. 2007) (citing
Dunscombe v. Amfot Oil Co., 201 Ky. 290, 256 S.W. 427, 429 (1923)). Payne's
failure to make timely payments amounted to a breach of contract. It did not
-12-
amount to fraudulent, illegal, or unconscionable conduct; therefore, the unclean
hands doctrine has no application to this case.
CONCLUSION
For the reasons set forth above, we affirm the circuit court.
ALL CONCUR.
BRIEFS AND ORAL ARGUMENT
FOR APPELLANT:
BRIEF AND ORAL ARGUMENT
FOR APPELLEE:
Dana R. Kolter
Louisville, Kentucky
B. Alan Simpson
Bowling Green, Kentucky
-13-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
