ADOLPH PETZOLD, ET AL. V. KESSLER HOMES, INC.
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ADOLPH PETZOLD, ET AL .
V.
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APPELLANTS
ON REVIEW FROM COURT OF APPEALS
CASE NOS. 2006-CA-001127,2006-CA-001179 AND 2006-CA-001928
FAYETTE CIRCUIT COURT NO . 02-CI-04138
KESSLER HOMES, INC .
APPELLEE
OPINION OF THE COURT BY JUSTICE VENTERS
REVERSING AND REMANDING
Appellants, Adolph and Marilyn Petzold, appeal from a decision of the
Court of Appeals vacating a judgment of the Fayette Circuit Court against
Appellee, Kessler Homes, Inc . (Kessler), on the grounds that the presiding
Judge, Pamela Goodwine, was retroactively disqualified from presiding over the
proceedings because the Petzolds are the parents of Judge Goodwine's
campaign treasurer in her 2003 campaign run for the circuit court bench. It is
undisputed that Judge Goodwine was unaware of the association during the
period she presided over the case . We granted discretionary review.
Because we conclude that the lower court erred in its determination that
Judge Goodwine was retroactively disqualified, we reverse and remand the
cause to the Court of Appeals for consideration upon the merits of the issues
left unaddressed by the court because of its disposition.
FACTUAL AND PROCEDURAL, BACKGROUND
On August ,.-30, 2000, the Petzolds and Kessler-_entered into a contract for
the construction of a residence. Toward the end of the construction project,
disputes arose between the parties concerning the quality of the work and
Kessler's billing practices . In light of the disagreements, the Petzolds refused to
pay Kessler. The efforts of the parties to resolve their differences failed.
On October 14, 2002, Kessler filed suit against the Petzolds in Fayette
Circuit Court seeking amounts it believed were owed by the Petzolds under the
contract. The Petzolds filed a counterclaim asserting various causes of action
relating to fraud, vi olations of the applicable building codes, and violations of
Kentucky's Consumer Protection Act. Protracted litigation followed. The
parties waived their respective rights to a jury trial, and a four-day bench trial
was held from August 29, 2005, to September l, 2005, presided over by Judge
Goodwine .
On February 3, 2006, Judge Goodwine entered an opinion, order, and
judgment. The judgment dismissed Kessler's claims against the Petzolds ;
awarded the Petzolds $21,668 .00 upon their claim for building code violations;
awarded the Petzolds $8,466 .00 upon a finding that Kessler breached its duty
of good faith and fair dealing, but dismissed the underlying fraud claim;
dismissed the Petzolds claims for damages for other construction defects, for
violation of the Consumer Protection Act, and for the loss of the use and
enjoyment of their residence ; and found that the Petzolds were entitled to
recover their attorney fees and expenses, expert lies and expenses, and costs .
:.,
Both parties thereafter filed motions to alter, amend:, ~:or vacate . On May
2, 2006, the trial court entered an order denying Kessler's motion to amend,
sustaining the Petzolds'motion to amend, and finalizing the award of
$106,024 .59 for attorney fees and expenses and $5,367.60 for expert lies.'
Both parties appealed the trial court's rulings to the Court of Appeals.
While the appeals were pending, Kessler learned that Judge Goodwine's
campaign treasurer during her 2003 run for the Fayette Circuit Court bench,
Lisa Petzold Castle, was the Petzolds' daughter . Concerned that this
association undermined the fairness of the proceedings, on August 18, 2006,
Kessler filed a CR 60 .02 motion asking that Judge Goodwine's orders of
February 3 and May 2, 2006, be set aside . Kessler did not allege that Judge
Goodwine had actual knowledge of the association, but requested that "[aft
minimum, [Kessler] requests the right to take discovery on the relationship
between Your Honor and the Petzolds ."2
Following a hearing, on September 7, 2006, Judge Goodwine denied the
motion. In the order, Judge Goodwine stated that she did not know of the
relationship during the pendency of the proceedings and thus could not have
Among the issues on the merits is the trial court's basis for awarding these fees and
expenses . Kessler argues that there is no statutory basis for the fees, and that the
parties' contract contained no provision for the payment of same by the nonprevailing party. The trial court's orders do not identify the basis for the award .
2 Formal discovery upon the issue was not conducted .
been influenced thereby; that under the circumstances at bar, even if she had
known of the association she would not have been under an obligation to
recuse herself; but had the association come to light sooner, upon proper
motion She would have recused herself . Judge Goodwine- further-~--oncluded
that the applicable Judicial Canons and ethical rules did not require her to
retroactively recuse herself from the proceedings or to set aside her previous
rulings in the case.
In her order Judge Goodwine provided the following narrative explaining
her recollection and understanding of the facts underlying the situation:
1 . Ms . Castle became this Court's3 personal certified public
accountant in the fall of 2000 or early spring of 2001 by default.
Prior to that time, Richard Bass, C.P.A., of Hisle 8s Company, was
this Court's personal certified public accountant and financial
planner .
2. In the summer or fall of 2000, Mr. Bass left Hisle 8, Company
and joined the firm where Ms . Castle worked. This Court is not
certain what type of business or employment relationship existed
between Mr. Bass and Ms . Castle.
3. In late 2000 or early 2001, Mr . Bass left the practice of
accountancy . As a courtesy to this Court as a client, he notified
this Court of his intent to leave the practice to care for his ailing
mother on a full-time basis .
4 . Mr. Bass gave this Court the option of requesting my personal
tax files or leaving them with the company. This Court chose to
leave my files with the company to be handled by one of the other
certified public accountants in the office .
5 . In early 2001, when it came time to prepare my 2000 tax
returns, this Court made an appointment with one of the
accountants in the office to discuss the preparation of said
s The references to "this Court" are, of course, references to Judge Goodwine herself.
returns . The accountant turned out to be Lisa P. Castle . The
Court did not know Ms . Castle prior to that meeting .
6. The meeting was professional and cordial. At no time did this
Court and Ms. Castle discuss anything other than business
relating to the preparation of my tax returns .
7. The Court was satisfied with Ms. Castle's services as well as the
services of her associates and chose to have Ms . Castle continue to
serve as her certified public accountant and financial planner .
8. In August of 2003 when this Court decided to seek the Office of
Circuit Judge, I discussed a committee with my husband and
closest advisors . We decided that my campaign treasurer should
be a certified public accountant rather than a personal friend . I
called Ms. Castle to see if she was interested in serving in that
capacity. She agreed to serve. She signed the campaign checks
and completed and signed the campaign finance reports . Her
services were reported as an in-kind contribution.
Kessler does not dispute Judge Goodwine's version of events, and makes
no contention that she had actual knowledge that her campaign treasurer was
the Petzolds' daughter at the time she presided over the proceedings.
Kessler appealed the denial of its CR 60.02 motion to the Court of
Appeals, where it was consolidated with the pending appeal and cross-appeal.
On January 18, 2008, the Court of Appeals rendered an opinion vacating the
trial court's judgment in the case on the grounds that "there can be no
question that the rule against appearance of impartiality has been violated ."
Because of its disposition of that issue, the Court of Appeals did not address
the remaining issues raised by Kessler's appeal and by the Petzolds' crossappeal. The Petzolds petitioned for discretionary review of the decision.
Kessler, however, did not file a protective cross-petition for review .
For the reasons set forth herein, we reverse the Court of Appeals, and
remand for its consideration of the unaddressed issues raised by the parties in
their respective appeal and cross-appeal .
1 . KENTUCKY LAW DOES NOT REQUIRE THE
RETROACTIVE DISQUALIFICATION OF JUDGE GOODWINE
The Petzolds contend that the Court of Appeals erred when it determined
that Judge Goodwine should have retroactively recused once she became aware
of the relationship between the Petzolds and her campaign treasurer and,
correspondingly, granted Kessler's motion for CR 60 .02 relief. We address the
argument under the premise that Judge Goodwine did not know of the
relationship throughout the course of the original proceedings, that is, until
Kessler's motion for post judgment relief, because that fact is undisputed .
We begin with the relevant provisions of the general Judicial Canon
addressing the disqualification of a judge, Canon 3E of the Judicial Code of
Conduct, which is codified in SCR 4.300 E(1)
A judge shall disqualify himself or herself in a proceeding in which
the judge's impartiality might reasonably be questioned, including
but not limited to instances where :
(a) the judge has a personal bias or prejudice concerning a
party or a party's lawyer, or personal knowledge of disputed
evidentiary facts concerning the proceeding;
Similarly, KRS 26A .015(2)(a) mandates that a judge recuse if "he has a
personal bias or prejudice concerning a party, or personal knowledge of
disputed evidentiary facts concerning the proceedings, or has expressed an
opinion concerning the merits of the proceeding." The statute also requires
recusal if the judge "has knowledge of any other circumstances in which his
impartiality might reasonably be questioned ." KRS 26A.015(e) . Thus, "[u]nder
both the, statute and the , Canon, recusal is proper if a judge determines that
`his impartiality might reasonably be questioned;' in fact, it is mandatory."
Jacobs v. Commonwealth, 947 S .W.2d 416, 417 (Ky. App. 1997) . Furthermore,
"there is always the higher consideration that every litigant is entitled to
`nothing less than the cold neutrality of an impartial judge' and should be able
to feel that his cause has been tried by a judge who is `wholly free,
disinterested, impartial and independent.' Dotson v. Burchett, 301 Ky. 28, 34,
190 S .W .2d 697, 700 (1945) .
Both the statute and the judicial canons, however, look prospectively at
recusal to guide judges and litigants with regard to ongoing or future
proceedings . The leading case addressing the issue of retroactive recusal is the
United States Supreme Court decision in Lijeberg v. Health Services Acquisition
Corp., 486 U .S . 847 (1988) . The Court of Appeals relied heavily on the case in
its decision, and both parties argue that the recusal principles described
therein support their respective positions. While there are substantial
differences between the operative facts in Liljeberg and the case at bar, we find
the decision to be instructive, and adopt the basic retroactive recusal principles
described in the opinion .
In Liljeberg, the United States Supreme Court considered the federal
judicial disqualification statute, similar to KRS 26A.015 . In that case, a
United States District Judge was assigned to preside over a case in which
Loyola University had a pecuniary interest. At the time of the litigation, and for
sometime prior to that, the judge served on Loyola-'s:. Board of Trustees. Id. at
850. Two days before the filing of the lawsuit, the judge attended a Board
meeting during which the subject of the litigation was discussed .
Following a bench trial, the judge entered a judgment favorable to
Loyola's interest. In so doing, he credited Mr. Liljeberg's testimony, which was
favorable to Loyola, over considerable evidence to the contrary. The judge
issued his ruling, and eight days later received in the mail a copy of minutes of
a Loyola Board meeting (which he had not attended) discussing the litigation.
Thus, during the period preceding finality of the judgment, the judge again
received actual notice of Loyola's involvement with the litigation . He
nevertheless did not disclose the conflict, and his judgment became final .
Ten months later, the unsuccessful party learned of the judge's
involvement with Loyola and filed the federal equivalent of a CR 60 .02 motions
seeking that the judge retroactively recuse from the case and that his rulings
be vacated. Liljeberg, 486 U .S. at 850 . The judge denied the motion .
4
5
28 U.S.C. § 455(a) states: "Any justice, judge, or magistrate judge of the United
States shall disqualify himself in any proceeding in which his impartiality might
reasonably be questioned ."
See Federal Rules of Civil Procedure 60(b) .
In Liljeberg , the United States Supreme Court held that the judge was
retroactively disqualified, setting forth the following interpretations and
standards relevant to our review :
Scienter is nuts an element of a violation of § 455(a) . The judge's
lack of knowledge of a disqualifying circumstance may bear on the
question of remedy, but it does not eliminate the risk that "his
impartiality might reasonably be questioned" by other persons. To
read § 455(a) to provide that the judge must know of the
disqualifying facts, requires not simply ignoring the language of the
provision-which makes no mention of knowledge-but further
requires concluding that the language in subsection (b)(4)-which
expressly provides that the judge must know of his or her interestis extraneous . A careful reading of the respective subsections
makes clear that Congress intended to require knowledge under
subsection (b) (4) and not to require knowledge under subsection
(a) . Moreover, advancement of the purpose of the provision - to
promote public confidence in the integrity of the judicial process, see
S .Rep. No . 93-419, p . 5 (1973) ; H.R.Rep . No. 93-1453, p . 5 (1974) does not depend upon whether or not the judge actually knew of
facts creating an appearance of impropriety, so long as the public
might reasonably believe that he or she knew. As Chief Judge
Clark of the Court of Appeals explained:
"The goal of section 455(a) is to avoid even the appearance of
partiality . If it would appear to a reasonable person that a
judge has knowledge of facts that would give him an interest
in the litigation then an appearance of partiality is created
even though no actual partiality exists because the judge
does not recall the facts, because the judge actually has no
interest in the case or because the judge is pure in heart and
incorruptible . The judge's forgetfulness, however, is not the
sort of objectively ascertainable fact that can avoid the
appearance of partiality.
Hall v.
Small Business
Administration, 695 F.2d 175, 179 (5th Cir. 1983) . Under
section 455(a), therefore, recusal is required even when a
judge lacks actual knowledge of the facts indicating his
interest or bias in the case if a reasonable person, knowing all
the circumstances, would expect that the judge would have
actual knowledge." 796 F.2d, at 802 .
Id. at 860 - 861 (Emphasis added) (Footnote omitted) .
Thus, the relevant inquiry is whether a reasonable person with
knowledge of all of the relevant circumstances relating to the unknown conflict
would expect the judge to have actual knowledge of the claimed conflicting
interest or bias .
At first blush, one might reasonably think it is inherently unfair for a
judge to preside over a case involving the parents of her campaign treasurer
and personal accountant. However, the test cited above stipulates "knowing all
the circumstances ." The circumstances here include the highly impersonal
relationship between Judge Goodwine and Castle, and the- manner in which
Castle came to be the judge's campaign treasurer. From the undisputed facts,
it is evident that Castle was not within the inner-circle of Judge Goodwine's
political advisors, as the term "campaign treasurer" may suggest . She did not
participate in campaign planning and strategy. Rather, Castle became Judge
Goodwine's accountant by happenstance when Goodwine's previous
accountant ceased practicing . Castle became the campaign treasurer for the
practical reason that Judge Goodwine wanted a competent, professional
accountant to serve as treasurer instead of a member of her political team .
Castle was not a social acquaintance of Judge Goodwine . The only prior
relationship between Judge Goodwine and Ms . Castle was as accountantclient.
Unlike Lilejeberg, where the judge's denial of knowledge of Loyola's
interest in the litigation was almost incredulous, Judge Goodwine's lack of
knowledge is most plausible . 6 When knowledge of the stipulation that Judge
Goodwine was unaware of the parent-daughter relationship is imputed to the
objective observer, any appearance of bias or partiality is removed'.'""" Moreover,
an objective observer would not reasonably assume that the judge knew that a
parent-daughter relationship existed between her campaign treasurer/
accountant, Lisa Castle, and the Petzolds.
Even where an actual disqualifying condition is discovered after entry of
judgment, it does not follow automatically that the judgment must be vacated .
Lilejeberg, applying the federal counterpart of CR 60 .02, established a three
part test to address the issue of when the vacating of a judgment is compelled
for violation of the appearance of impartiality stricture. The Court stated:
We conclude that in determining whether a judgment should be
vacated for a violation of § 455(a), it is appropriate to consider the
risk of injustice to the parties in the particular case, the risk that
the denial of relief will produce injustice in other cases, and the
risk of undermining the public's confidence in the judicial process .
We must continuously bear in mind that "to perform its high
function in the best way `justice must satisfy the appearance of
justice ."'
Lilejeberg, 486 U.S. at 864 (citation omitted)
We consider the United States Supreme Court's analysis of the issue to
be sound, and because Kentucky's Court of Justice and the federal court
system share virtually identical standards of judicial conduct regarding
6 We acknowledge here that a factor in the analysis must take into account the
community in which the judge serves . Judge Goodwine serves in Lexington, one of
Kentucky's larger urban areas.
disqualification and recusal, with nearly identical civil rules for vacating
judgments, we hold that the same standard should guide Kentucky courts in
determining whether a judgment should be vacated as a result of a violation of
CR 4 .300 E(1) -or KRS 26A.015 . Applying those standards to the facts of : this
case would not lead to a decision to vacate the judgment . Because all agree
that Judge Goodwine did not know of the relationship while she presided over
the case, there is no risk of injustice to Kessler. She could not have been
actually biased by facts that were not known to her. Second, there is no risk
that denial of relief to Kessler will produce an injustice in other cases because
the situation is unique to this case . 7 Lastly, there is no risk of undermining
the public's confidence in the judicial process because, as explained above, a
reasonable observer fully informed of the circumstances would not reasonably
expect that Judge Goodwine knew of the parent-daughter relationship .
In summary, for the reasons stated above, the Court of Appeals erred in
its conclusion that Kessler was entitled to relief under CR 60.02 . Accordingly,
we reverse .
II . WE NEED NOT ADDRESS THE MERITS OF THE PETZOLDS' CLAIM
THAT EVEN IF JUDGE GOODWINE KNEW OF THE RELATIONSHIP SHE
WAS UNDER NO OBLIGATION TO RECUSE
The Petzolds contend that Judge Goodwine would not have been bound
to recuse herself from presiding in this case even if she had known that her
accountant and campaign treasurer was the daughter of litigants in her court.
7 Judge Goodwine has already committed, upon proper motion, to recuse in the event
the Petzolds appear before her in further litigation.
12
Since the underlying premise of this argument (the assumption that Judge
Goodwine knew of the relationship) is at odds with the acknowledged facts of
this case, we decline to express an opinion on whether Judge Goodwine should
have recused herself if, prior to the entry, of judgment, she had become aware,,,.--.,.of the potential conflict . The resolution of that issue is best left to an occasion
when the facts mirror the question . We note, however, that in her Order of
September 7, 2006, Judge Goodwine stated. that if she had known of the
relationship, on proper motion she would have recused.
III . KESSLER'S FAILURE TO FILE A CROSS-PETITION FOR DISCRETIONARY
REVIEW DOES NOT BAR REMAND FOR CONSIDERATION OF ISSUES
PRESENTED TO BUT NOT ADDRESSED BY, THE COURT OF APPEALS
On appeal to the Court of Appeals, in addition to the argument that
Judge Goodwine should be retroactively recused, Kessler argued that Judge
Goodwine had abused her discretion in several instances, including the award
of attorney's fees to the Petzolds, the dismissal of Kessler's accounting claims,
the finding that Kessler breached a duty of a good faith and fair dealing, and
the admission of expert testimony. Kessler, completely satisfied with the Court
of Appeals' decision to vacate the judgment in its entirety and remand for a
new trial with a new judge, did not present those issues to this Court in the
form of a protective cross-petition for discretionary review as allowed by CR
76.21 .8
8 CR 76 .21(1) provides as follows : "If a motion for discretionary review is granted, the
respondent shall then be permitted ten days thereafter in which to file a cross
motion for discretionary review designating issues raised in the original appeal
which are not included in the motion for discretionary review but which should be
considered in reviewing the appeal in order to properly dispose of the case ."
13
The Petzolds argue that under CR 76 .21(1 ) Kessler's failure to file a
protective cross-petition forecloses any further litigation on the issues raised in
the original appeal. to the Court of Appeals, but which that court declined to
T-Ltose issues, the Petzolds contend, inust be treated as resolved in
their favor. In the Petzolds'view, their success in that Court on the recusal
issue ends the
litigation,
and the trial court's j udgment must be reinstated
without further delay. Resolution of the unrai-sed issues by this Court, or by
the Court of Appeals on remand, they assert, is impermissible under our prior
decisions .
The Petzolds cite Steel Technologies, Inc. v. Congleton, 234 S .W-3d 920
(Ky. 2007), which follows a line of authority that begins with Commonwealth,
Transportation Cabinet Department of Highways v. Taub, 766 S .W.2d 49 (Ky.
1988) . Taub afforded this Court its first opportunity to interpret and apply CR
76 .2 1, which became effective January 1, 1986, and sets forth the following
rule:
We will not address issues raised but not decided by the Court
below. It is the rule in this jurisdiction that issues raised on appeal
[in the Court of Appeals] but not decided will be treated as settled
against the [prevailing party] in that court upon subsequent
appeals unless the issue is preserved by cross-motion for
discretionary review . CR 76 .21(l) ; Nashville, C. & R.R. Ry-Co . v.
Banks, 168 Ky. 579, 182 S .W. 660 (1916) ; and Eagle Fluorspar Co.
v. Larue, 237 Ky. 263, 35 S .W.2d 303 (1931) .
Id. at 51-52 .
Perry v. Williamson, 824 S .W.2d 869 (Ky. 1992), expanded upon the idea
and set forth this version of the rule :
Our rules are specific that if the motion for discretionary review
made by the losing party in the Court of Appeals is granted, it is
then incumbent upon the prevailing party in the Court of Appeals
to file a cross-motion for discretionary review if respondent wishes
to 'preserve ;.the right 1o argue issues which respondent lost in the
Court of Appeals, or issues the Court of Appeals decided not to
address . If the party prevailing in the Court of Appeals wishes
further consideration of such issues along with the issues for
which discretionary review has been granted, the prevailing party
must file a cross motion for discretionary review . CR 76 .21 ; Green
River Dist. Health Dept. v. Wigginton, Ky., 764 S .W.2d 475 (1989) ;
Comm . Transportation Cabinet Dept. of Highways v. Taub, Ky ., 766
S .W.2d 49 (1988) .
Id. at 871 .
Kessler, on the other hand, relies upon the line of authority following
Commonwealth, Corrections Cabinet v. Vester, 956 S .W.2d 204 (Ky. 1997) 9 , for
the proposition that a prevailing party need not file a cross-appeal (and, by
implication, a cross-petition for discretionary review) 10 in order to assert that
the lower court reached the correct result for the reasons it stated, or for any
other reasons appropriately brought to its attention . Id. at 206. Kessler argues
that the issues it failed to assert by cross-petition are merely alternative
grounds by which we may conclude that the Court of Appeals reached the
correct result, that is, the vacating of Judge Goodwine's rulings .
9 Kessler cited directly Hale v. Combs, 30 S.W . 3d 146, 150 (Ky. 2000), which
addresses the Vester rule in a footnote .
io The civil rule addressing cross-appeals is contained in CR 74 .01 . The rule does not
contain language analogous to the CR 76.21(1) language "designating issues raised
in the original appeal which are not included in the motion for discretionary review
but which should be considered in reviewing the appeal in order to properly dispose
of the case ."
15
Vester
involved a wrongful death negligence complaint against the
Corrections Cabinet in the Board of Claims for two homicides committed by
escaped prisoners . Although the Board found that the Corrections Cabinet had
breached its duty to irraintaima prison facility to house dasageroug criminals,
id. at 205, the claim was dismissed on the grounds that the Cabinet's
negligence was not the proximate cause of the deaths. Vester appealed the
ruling to the Circuit Court, which affirmed . The Cabinet filed no cross-appeal
from the Board of Claims' implicit finding that it had a duty to the victims,
albeit a duty that had been superseded by the intentional acts of the escapees .
Vester appealed to the Court of Appeals, which reversed on the issue of
causation and remanded for the entry of an award of damages . The Court of
Appeals held the Cabinet's failure to cross-appeal foreclosed further appellate
review of the issue of its duty to the victims . On discretionary review, this
Court held :
We find no support for a conclusion that the Cabinet's failure to
cross-appeal from the Board of Claims' decision precludes it from
now claiming that it owed no duty to the [victims] . The fact that
the Board of Claims found for the Cabinet on the issue of
superseding cause as opposed to the issue of absence of duty did
not require the Cabinet to file a cross-appeal . Where the prevailing
party seeks only to have the judgment affirmed, it is entitled to
argue without filing a cross-appeal that the trial court reached the
correct result for the reasons it expressed and for any other
reasons appropriately brought to its attention . Carrico v. Cite, of
Owensboro, Ky., 511 S .W.2d 677 (1974) ; cf. Uninsured Employers'
Fund v. Brewster, Ky., 818 S .W.2d 602 (1991) . The Cabinet did
assert to the Board of Claims that it owed no duty to protect the
Vesters from harm perpetrated by the escaped prisoners .
Id. at 205-206 (Footnote omitted) .
Thus, we held in Vester that a cross-appeal was not required in order to
permit a party prevailing in a lower tribunal to argue on appeal that the
tribunal reached the OOrrect-result, albeit for reasons other than-those stated.
It should be noted that Vester was not a. CR 76.21 case . I I Vester would
otherwise be distinguishable on that basis but for our incorporation of the
principle into CR 76 .21 in Steel Technologies, 234 S .W .3d 920 . There, the
Court of Appeals had affirmed a damage award against Steel Technologies .
Discretionary review was sought and granted on the issue of sufficiency of the
evidence . Congleton, the prevailing party in the Court of Appeals, filed no
cross-petition but did argue that the claims of error relating to the sufficiency
of the evidence were not properly preserved for appellate review because no
motion for a directed verdict had been made at trial. Congleton made similar
arguments before the trial court and the Court of Appeals. In this Court, Steel
Technologies argued that Congleton was barred from raising the preservation
issue because the Court of Appeals had implicitly decided the matter against
him by not addressing it, and he had not kept the issue alive with a crossmotion for discretionary review .
In holding that Congleton's issue could be argued, we first noted the
11 We note that the principal case relied upon in Vester, Carrico v. City of Owensboro,
was a pre-CR 76 .21 case decided by our predecessor court. The trial court determined
that Carrico had standing but decided for Owensboro on other grounds . In its
appellate brief, Owensboro argued standing and Carrico argued that the issue could
not be raised because Owensboro did not file a cross-appeal . Our predecessor Court
determined that Owensboro could raise the issue though no cross-appeal was filed .
cross-petition rules as stated in Taub and Perry . While those decisions
support the rule barring review of issues not raised in a cross-petition, we
avoided applying the rule, stating as follows:
Steel Technologies' argument, however, incorrectly assumes that
preservation of an error [in the trial court] is a separate issue from
the claim of error itself. Rather, preservation is simply one aspect
of Steel Technologies' insufficiency-of-the-evidence claims .
Essentially,
[Congleton's] allegation that some of Steel
Technologies' claims of error were not properly preserved is simply
an alternate ground for affirming the Court of Appeals. Such an
allegation is not required to be cross-appealed . See Hale v. Combs,
30 S .W.3d 146, 150 (Ky. 2000) ("[T]he prevailing party need not
file a cross-appeal in order to assert that the lower court (or
administrative agency) reached the right result for the wrong
reason."); Commonwealth, Corr. Cabinet v. Uester, 956 S .W .2d 204,
205-06 (Ky.1997) ("Where the prevailing party seeks only to have
the judgment affirmed, it is entitled to argue without filing a crossappeal that the trial court reached the correct result for the
reasons it expressed and for any other reasons appropriately
brought to its attention .") . The Appellees are not now barred from
asserting that Steel Technologies' claims were not preserved.
Steel Technologies, 234 S .W.3d at 927 . Thus, Steel Technologies, by way of
Uester, established the limited exception to Taub that a cross-petition need not
be fled when the issues raised by the appellee in this Court may properly be
characterized as "simply an alternate ground for affirming the Court of
Appeals." Kessler argues that this exception applies here, and allows us to rule
on the various issues which were presented to the Court of Appeals, but were
not cross-appealed .
Undoubtedly, there will be occasions when it may be difficult to
determine whether an issue squarely presented to, but not addressed by, the
Court of Appeals (and thus deemed decided against the prevailing party) may
be "simply an alternate ground for affirming the Court of Appeals ." However,
this case presents no such difficulty . The issues which Kessler now wishes to
argue (e.g., the award of attorney's fees, ;- -the admissibility of expert testimony)
cannot be reasonably regarded as merely alternative grounds for upholding the
Court of Appeals' decision to vacate the trial judgment on account of Judge
Goodwine's perceived disqualification . To give Vester the expansive reading
urged by Kessler would eviscerate CR 76.21 . We accordingly reject its
application in this case .
Thus, under the Taub interpretation of CR 76 .21, Kessler's failure to
cross-petition for discretionary review on those issues raised before the Court
of Appeals, but not addressed, would seemingly result in those being treated as
decided against Kessler. In effect, Taub's interpretation of CR 76 .21 employs
the fiction that issues which the Court of Appeals did not address were decided
against the party prevailing in that court . It is, however, difficult to conceive
how that fiction can be employed when the rationale upon which the Court of
Appeals vacated the whole judgment would apply with equal force to the lesser
issues which it declined to address. For example, if Judge Goodwine's
disqualification invalidated the entire judgment, it would have also invalidated
each of the lesser rulings she made as she presided over the case. It is
inconceivable that a court which set aside the judgment because of the judge's
perceived disqualification can be deemed to have upheld the judge's separate
trial rulings, as those rulings would likewise be subject to the disqualification .
It is, we conclude, simply unreasonable to apply Taub here, and we find
support for that conclusion in Cowan v. Telcom Directories, 806 S.W .2d 638
(Ky . 1991),:
In Cowan, the Attorney General (AG) brought suit against Telcom for a
violation of the Consumer Protection Act. The Franklin Circuit Court entered
summary judgment in favor of the AG. The Court of Appeals reversed, holding
that the Franklin Circuit Court lacked subject matter jurisdiction over Telcom's
activity because the area had been preempted by federal law. Given its
perceived lack of jurisdiction, the Court of Appeals had no reason to rule on the
other issues presented . We granted discretionary review. Telcom did not
cross-petition on the other issues . We reversed, holding there was no federal
preemption . Telcom then argued that the matter should be remanded to the
Court of Appeals to rule on the issues which it failed to decide due to its
erroneous disposition of the case. The AG conversely argued that since Telcom
had not cross-petitioned, remand to the Court of Appeals to decide the other
issues was inappropriate and that summary judgment should be reinstated .
In determining that remand was proper despite CR 76.21(1), we stated as
follows:
It is the position of the Attorney General that by reason of the
failure of Telcom to file a cross-motion for discretionary review, as
required by CR 76.21(1), the merits of the summary judgment in
favor of the Attorney General have been affirmed. Specifically, that
based upon this Court's conclusion that state court jurisdiction
has not been federally preempted by implication, and absent
Telcom raising the merits of the summary judgment for review by
this Court, it is affirmed . The requirement of CR 76.21(1) is clear,
and it has been properly interpreted and applied in Comm. of Ky.,
Transportation Cabinet, Dept. of Highways v. Taub, Ky., 766 S.W .2d
49 (1988) and Green River District Health Dept. v. Wigginton, Ky.,
764 S .W .2d 475 (1989) .
In this instance, the only issue considered by the Court of Appeals
was whether state court jurisdiction had been federally preempted .
Upon its determination that such was the case, it was without
power to decide any other issue raised including the propriety of
the summary judgment . The determination by any court that it
lacks authority to decide the controversy constitutes an express
declaration that it is without power to decide any other issue.
Accordingly, we conclude that a cross-motion for discretionary
review was not required and that the Court of Appeals is not
precluded from consideration of this matter on the merits .
Id. at 642 . (Emphasis added.)
The facts of Cowan are sufficiently analogous to the present case that the
exception to Taub and CR 76.21 therein created should be applied. It follows
implicitly from the Court of Appeals' retroactive disqualification of Judge
Goodwine that it deemed the rulings she entered (from which Kessler now
seeks relief) void ab initio . This is conceptually similar to the Court's
determination in Cowan that the circuit court lacked jurisdiction to hear the
case and, therefore, its summary judgment order was void . Further, because
the Court of Appeals determined that Judge Goodwine was disqualified from
entering any orders in the case, it would have made no sense for it to address
any other issues raised on the merits, the same as in Cowan.
Thus, based upon Cowan and the unusual facts of this case, we decide
that when the Court of Appeals has disposed of a case upon grounds, such as
lack of subject matter jurisdiction or disqualification of a trial judge, that
eliminated the need for it to decide the other issues, and that basis for the
disposition would apply with equal effect to the undecided issues, the lack of a
protective cross-petition for discretionary review of the undecided issues will
not compel us to treat such issues as having been decided against the appellee.
In such circumstances, the proper disposition of the case referenced in CR
76.21 may include, as we believe it does here, remanding the case to the Court
of Appeals for consideration of the undecided issues .
CONCLUSION
For the reasons stated herein, the opinion of the Court of Appeals is
reversed, and this matter is remanded to the Court of Appeals for further
consideration of the other issues presented in the original appeal.
All sitting. All concur.
COUNSEL FOR APPELLANT:
William W. Allen
Lori Beth Shelburne
Gess, Mattingly 8v Atchison, PSC
201 West Short Street
Lexington, Kentucky 40507-1269
COUNSEL FOR APPELLEE:
Albert F. Grasch, Jr.
Grasch & Cowen, PSC
302 West High Street
Lexington, Kentucky 40507-1831
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