SAMUEL DOTSON; DENNIS DOTSON; MARY DOTSON; TENNESSEE DOTSON; SANDRA KAY SANDERS; and BRADLEY SANDERS v. BOBBY DOTSON
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RENDERED:
November 21, 1997; 10:00 a.m.
NOT TO BE PUBLISHED
NO. 96-CA-1044-MR
SAMUEL DOTSON; DENNIS DOTSON;
MARY DOTSON; TENNESSEE DOTSON;
SANDRA KAY SANDERS; and
BRADLEY SANDERS
APPELLANTS
APPEAL FROM PIKE CIRCUIT COURT
HONORABLE EDDY COLEMAN, JUDGE
ACTION NO. 94-CI-800
v.
BOBBY DOTSON
APPELLEE
OPINION
AFFIRMING IN PART, VACATING IN PART
AND REMANDING
* * * * * * *
BEFORE:
KNOPF, JOHNSON, AND MILLER Judges.
KNOPF, JUDGE:
Samuel Dotson, Dennis Dotson, Mary Dotson,
Tennessee Dotson, Sandra Kay Sanders, and Bradley Sanders
(appellants) appeal from orders of the Pike Circuit Court
granting default judgment and allowing the sale of property and
disbursement of proceeds from the sale.
After review of the
record, we affirm in part, vacate in part, and remand for further
factual findings.
On January 17, 1994, the appellee, Bobby Dotson,
(Bobby) brought an action pursuant to KRS 389A.030 for sale or
division of real property.
Bobby claimed ownership of a
115/12001 undivided interest in a tract of real property,
referenced as Parcel 1122, located on Rock Fork of Peter Creek in
Pike County, Kentucky.
He named as defendants his co-tenants in
common: Dennis Dotson and Mary Margaret Dotson, Ransom Dotson,
Sandra Kay Sanders and Bradley Sanders, Dallas Dotson and Betty
Dotson, Garley Dotson and Janie Dotson, Ronald Dotson and Barbara
Dotson, Donald Dotson, Alice Combs and James Combs, Sadie
Hatfield, Julie May and Larry May, Billy Hunt and Margie Hunt,
Ocie Abbot and Edward Abbott, Leroy Hunt and Geraldine Hunt,
Luther Hunt and Cheree Hunt, Fayetta Hunt, Tennessee Dotson,
Phyllis Muller and Eugene Muller, Floyd Dotson, Freelin Dotson,
Samuel Dotson, Glenn Coleman, Thurman Coleman and Janie Coleman,
Herman Coleman and Sharon Coleman, and Pansy Irene Dotson and
Delouis Dotson.
(Collectively, the Dotson heirs).
Bobby alleged
that the property was indivisible, and he sought sale of the
property to recover his interest and the value of improvements
which he alleged he made on Parcel 1122.
Bobby also named Kentucky Berwind Land Company as a
party having an interest in the property.
Kentucky Berwind
answered and filed a counterclaim claiming ownership of the oil,
gas, and coal estate underlying Parcel 1122.
1
By amended
Bobby's interest is approximately a 9.58% share.
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counterclaim, Kentucky Berwind also claimed an interest in the
surface and mineral estate of the adjacent Parcel 1116, also
owned by the Dotson heirs.
Kentucky Berwind also moved to name
certain unknown heirs as additional defendants to the action,2
and named other parties having recorded liens against the
property.3 Kentucky Berwind sought sale of both tracts.
Summons and complaints were issued to all of the Dotson
heirs, including the appellants.
The record reflects that signed
certified mail receipts were returned by some of the Dotson
heirs, including the appellants Sandra Kay Sanders, Bradley
Sanders, and Tennessee Dotson.
The summons sent to appellants
Dennis Dotson, Mary Dotson and Samuel Dotson were returned
unclaimed.
However, these appellants were personally served with
summons on Kentucky Berwind's counterclaim.
The trial court
appointed Richard Elswick as warning order attorney for the nonresponding defendants.
Mr. Elswick attempted to notify the
named defendants of the pendency of the action, and filed his
report notifying the court of his inability to locate the
remaining defendants.
2
Specifically: the unknown heirs of Clarence Dotson, The
unknown heirs of Dennis Dotson; the unknown heirs of Cally Hunt;
the unknown heirs of Adda Wagnor Coleman; the unknown heirs of
Chasy (Bud) Dotson, the unknown Heirs of Mandy Dotson; the
unknown children/heirs of Ranson Dotson; the unknown heirs of
Nellie Dotson; the unknown heirs of J.L. Dotson, Sr.; and the
unknown heirs of Thomas Hunt.
3
Those additional parties were: Gale Fausett; Ford Motor
Credit Company; Bevins Boron; and Citizens Bank of Pikeville (now
Trans Financial Bank).
-3-
The trial court set a non-jury trial date for June 20,
1995.
However on June 13, 1995, the trial court entered an order
setting aside the trial date.
The trial court further found that
no dispute regarding the indivisibility of the property had been
raised by any party filing pleadings in the action.
The court
appointed commissioners to appraise the surface, mineral, oil,
and gas interests in the property, as well as the value of the
improvements.
both tracts.
The court ordered the master commissioner to sell
On motion by Kentucky Berwind, the trial court
entered default judgments against the Dotson heirs, and against
the remaining non-responding parties.
The commissioners filed several reports appraising the
values of the various interests in the tracts.
On December 28,
1995, the trial court entered an order directing the sale of
Parcels 1122 and 1116.
On January 10, 1996, the master
commissioner entered a notice of sale for January 31, 1996.
The
sale was advertised in the local newspaper of general
distribution, and notices were posted on both parcels.
On January 26, 1996, the appellants filed motions to
set aside the default judgments, to file late answers, and to set
aside the commissioner's sale.
The trial court conducted an
emergency hearing on January 30, 1996.
Following the hearing,
the trial court denied the motions as follows:
(A) The motion to set aside defalt [sic]
judgment, the Motion to file late answer, and
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the Motion to set aside Master Commissioner's
sale be and are Overruled, without prejudice.
(B) The Movants may re-file their motion
to file late answer at the " Distribution of
Proceeds" part of the case following the
Master Commissioner's sale and confirmation
of same.
Record of Appeal (ROA) p. 188. (Emphasis in original)
The master commissioner's sale was conducted on January
31, 1996 as scheduled.
Kentucky Berwind was the highest bidder
for Parcel 1122, bidding $70,100.00 on the real estate and
$2,550.00 for the oil and gas rights.
Bobby was the highest
bidder for Parcel 1116, bidding $55,500.00 on the real estate.
Donald Dotson purchased the oil and gas rights for Parcel 1116.
The appellants filed exceptions to the master
commissioner's report, and renewed their motion to set aside the
default judgments and the sale.
Steven D. Combs also filed a
motion to intervene to set aside the sale, alleging that he had
been willing to submit a higher bid for the oil and gas tracts,
but he had been misled as to what interest was being sold.
The
trial court overruled the exceptions, and denied the motions to
set aside the commissioner's sale or to file late answer.
In its
order confirming the commissioner's sale, dated March 13, 1996,
the trial court ordered payment of $3,468.30 in commissioner's
fees, advertising and sale expenses.
The remaining proceeds were
divided as follows:
Parcel 1122:
Kentucky Berwind
Sandra and Bradley Sanders
$11,992.16 (credited to bid)
$17,540.63
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Bobby Dotson
Other parties
$35,709.54
$ 5,493.19
(paid to clerk pending further order of court)
Parcel 1116
Kentucky Berwind
$29,259.56 (Distribute)
Bobby Dotson
$
869.92
(credit or distribute if full price has been paid).
Bobby Dotson or Samuel Dotson
for residence and barn
$14,050.35
(Paid into court pending resolution of ownership issue)
Other parties
$13,366.26
(paid to clerk pending further order of court)
The appellants then filed a notice of appeal from the
trial court's order confirming the sale.
The appellants named
Bobby and Kentucky Berwind as parties to the appeal.
During the
pendency of this appeal, the appellants and Kentucky Berwind
settled the issues between them.
This court dismissed Kentucky
Berwind as a party to the appeal.
Consequently, the only issues
in this appeal are those between the appellants and Bobby.
Bobby first argues that the appeal was not timely
filed.
He contends that the trial court's order of January 30,
1996, was the final order from which the appellants were required
to appeal within thirty (30) days.
We disagree.
An order
denying relief under CR 60.02 may be a final and appealable
order, depending upon the circumstances.
Commonwealth,
Department of Highways v. Stahr, Ky., 351 S.W.2d 67, 68 (1961).
However, the test of finality within the meaning of CR 54.01 is
whether the order adjudicated the rights of the parties, required
additional evidence to be taken or operated to divest any party
of some right.
(1977).
Wagoner v. Mills, Ky. App., 566 S.W.2d 159
A final order or judgment from which an appeal lies
-6-
either terminates the action, or operates to divest some right in
such manner as to put it out of the power of the court making the
order to place the parties in their original condition.
Green
River Fuel Co. v. Sutton, 260 Ky. 288, 84 S.W.2d 79, 81 (1935).
An order of sale may be a final order where the order
leaves nothing before the court except to perform a purely
administrative act such as the entry of the report of sale and
the disbursement of proceeds.
Murty Brothers Sales, Inc. v.
Preston, Ky., 716 S.W.2d 239, 241 (1986).
In this case, the
trial court specifically reserved the issues regarding how the
proceeds were to be distributed. ROA, p. 155.
Consequently, we
conclude that the trial court's order of March 13, 1996,
confirming the commissioner's sale and ordering distribution of
the sale proceeds following payment of costs, was the final and
appealable order in this action.
Since the appellants filed
their Notice of Appeal on April 10, 1996, within thirty (30) days
from the trial court's final order, their appeal is timely.
The appellants primarily argue that the trial court
erred in overruling their motions to set aside the default
judgments, to file late answer, and to set aside the pending
commissioner's sale.
Default judgments are covered by CR 55.01,
which provides, in pertinent part:
When a party against whom a judgment for
affirmative relief is sought has failed to
plead or otherwise defends as provided by
these rules, the party entitled to a judgment
by default shall apply to the court therefor.
. . . The motion for judgment against a party
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in default for failure to appear shall be
accompanied by a certificate of the attorney
that no papers have been served on him by the
party in default. If, in order to enable the
court to enter judgment or to carry it into
effect, it is necessary to take an account or
to determine the amount of damages or to
establish the truth of any averment by
evidence or to make an investigation of any
other matter, the court, without a jury,
shall conduct such hearings or order such
references as it deems necessary and proper,
unless a jury is demanded by a party entitled
thereto or is mandatory by statute or by the
constitution. A party in default for failure
to appear shall be deemed to have waived his
right of trial by jury.
The appellants first contend that the initial entry of
default judgments against them was flawed.
While we agree that
the circumstances surrounding the entry of the default judgments
are questionable, we are unable to find any reversible error. The
appellants first note that there was no written motion for
default judgment.
not be in writing.
However, a motion for default judgment need
Pound Mill Coal Co. v. Pennington, Ky., 309
S.W.2d 772, 773 (1958).
The appellants also point out that the
motion was unaccompanied by a certificate of the attorney that no
papers have been served on him by the party in default.
Nonetheless, the failure of the attorney to submit such a
certificate is a mere procedural irregularity and is not grounds
to set aside the default judgment absent proof of prejudice.
Ryan v. Collins, Ky., 481 S.W.2d 85, 88 (1972).
We are more troubled by the absence of any indication
in the record that Bobby ever moved for default judgment.
-8-
However this error, standing alone, would not justify reversal of
the trial court.
As is the case with equity, the law likewise
regards as done those things which ought to have been done.
Sharps Adm'r v. Sharp's Adm'r, Ky., 284 S.W.2d 673, 675 (1955);
quoting, Thomas' Adm'r v. Maysville Gas Co., 112 Ky. 569, 66 S.W.
398, 399 (1902).
When the trial court entered its order granting
default judgment on June 13, 1995, none of the Dotson heirs had
filed a response to Bobby's complaint.
The trial court properly
noted that there were no disputed issues of fact.
Furthermore,
Kentucky Berwind had filed a motion for default judgment.
Based
upon the record, Bobby would have been entitled to default
judgment against the appellants on that date had he moved for it.
Therefore, the primary questions on appeal are whether
the trial court abused its discretion in denying the appellants'
motions to set aside the default judgment, to file a late answer,
and to set aside the commissioner's sale.
A default judgment may
be set aside for good cause shown in accordance with CR 60.02. CR
55.02.
The law clearly disfavors default judgments.
Moreover,
the trial court has wide discretion to set aside a default
judgment.
The moving party, however, cannot have the judgment
set aside and achieve his day in court if he cannot show good
cause and a meritorious defense.
Good cause is most commonly
defined as a timely showing of the circumstances under which the
default judgment was procured.
Green Seed Co. v. Harrison
Tobacco Storage Warehouse, Inc., Ky. App., 663 S.W.2d 755, 757
-9-
(1984). A liberal attitude should be observed toward a timely
application to set aside a default judgment, although delay in
pleading without reasonable excuse cannot always be overlooked.
Childress v. Childress, Ky., 335 S.W.2d 351, 354 (1960).
In the
absence of a showing of a reasonable excuse or good cause, a
default judgment will not be set aside.
Howard v. Fountain, Ky.
App., 749 S.W.2d 690, 692 (1988).
Bobby asserts that the trial court determined that the
appellants arguments were meritless.
Unfortunately, the order
denying the motions to set aside the default judgment, to set
aside the commissioner's sale, and to file a late answer, does
not address these issues.
We are particularly puzzled by the
trial court's denial of these motions without prejudice.
From
this language, it appears that the trial court declined to make
findings on the appellants' motions, and directed them to refile
the motions after the commissioner's sale.
A motion to set aside a default judgment or a motion to
set aside a pending commissioner's sale cannot be denied "without
prejudice."
The only reasonable explanation for the trial
court's choice of words is that the trial court intended for its
order of January 30, 1996, to be interlocutory.
As previously
discussed, the trial court's order of January 30, 1996 was not a
final order because it did not completely adjudicate all of the
issues before the court.
Preston, supra.
See Murty Brothers Sales, Inc. v.
However, a motion denying a default judgment is
-10-
"with prejudice" in that it is conclusive as to the rights of the
parties in default.
1603.
Black's Law Dictionary, (6th ed., 1990), p.
A party in default is deemed to have admitted all of the
factual allegations of the complaint.
Likewise, the order of
sale was with prejudice, in that it operated to divest the
appellants of their right to retain title to their property.
The second paragraph of the trial court's order
supports the inference that the trial court intended for the
order to be interlocutory, rather than without prejudice.
The
trial court then specifically permitted the appellants to refile
their motion to a file late answer after confirmation of the
commissioner's sale.
Since a defaulting party does not admit
unliquidated damages, the trial court's order allowing them to
participate in the distribution of proceeds portion of the case
was proper.
Howard v. Fountain, Ky. App., 749 S.W.2d at 690,
693.
However, our interpretation of the trial court's order
of January 30, 1996, as interlocutory does not explain the trial
court's failure to state its grounds for denying the motions.
The court made no written factual findings regarding the
appellant's stated excuses for their failure to respond to the
complaint.
In an effort to resolve this matter, we directed the
appellants to determine the existence of a video tape or
stenographically recorded transcript of the emergency hearing
conducted by the trial court on January 30, 1996.
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If such record
existed, we directed the appellants to file a copy with this
court.
We sought to determine if the trial judge made oral
findings of fact at that proceeding.
within the specified time.
No such record was filed
We can only take this to mean that no
such record exists.
Normally, the absence of a record of the circuit court
proceedings would compel us to conclude that the trial court's
order was supported by substantial evidence.
However, when a
court denies a motion to set aside a default judgment, the
court's order should be accompanied by some articulation of the
factual, legal and discretionary issues presented.
Greathouse v.
American National Bank & Trust Co., Ky. App., 796 S.W.2d 868, 870
(1990).
At best, the trial court's order is a qualified
statement which denies the motion to set aside the default
judgment, without any explanation of the trial court's reasoning.
If the trial court found that the appellants' grounds for failure
to file an answer were without merit, then the trial court should
have so found and denied the motion to set aside the default
judgment without qualification.
Nonetheless, a motion to set aside a default judgment
addresses itself to the sound discretion of the court and the
exercise of that discretion will not be disturbed on appeal
except for abuse.
574 (1959).
Richardson v. Brunner, Ky., 327 S.W.2d 572,
We will not reverse the trial court's order unless
the appellants' actually stated grounds for failing to respond
-12-
which constituted "good cause."
In connection with their motions
to set aside the default judgment, each of the appellants
submitted affidavits stating their grounds for failing to
respond.
served.
Samuel Dotson denied that he had been personally
However, the record reflects that on September 24, 1994,
Pike County Deputy Sheriff John Coleman served Samuel Dotson with
a summons and complaint.
ROA, p. 67.
Mere inattention on the
part of a defendant does not constitute good cause to set aside a
default judgment.
Perry v. Central Bank & Trust Co., Ky. App.,
812 S.W.2d 166, 170 (1991).
Samuel presented no good cause for
his failure to respond.
Dennis and Mary Margaret Dotson stated that, after they
received notice of the lawsuit, they took the matter to their
attorney.
However, that attorney failed to file an answer on
their behalf.
Again, mere inattention on the part of a
defendant's attorney does not constitute good cause to set aside
a default judgment.
Howard v. Fountain, 749 S.W.2d at 692.
Dennis and Mary Dotson cannot avoid the consequences of their
attorney's alleged professional negligence.
Sandra Kay Sanders and Bradley Sanders have a better
excuse.
1122.
Sandra and Bradley live in a house located on Parcel
They state that they are both deaf and mute and were
unable to understand the legal papers served upon them.
The fact
that a party has a disability, by itself, does not constitute
good cause for failure to respond.
-13-
However, that disability may
be relevant to show overreaching by the party moving for default.
Childress v. Childress, Ky., 335 S.W.2d 351, 354 (1960).
Furthermore, in an action for sale of property pursuant to
KRS 389A.030, a defendant who is under a disability shall be
represented in the action by a guardian ad litem.
389A.030(2).
KRS
The record does not indicate the extent of Sandra
Kay's and Bradley's impairment.
However, the trial court should
have considered this factor in the motion to set aside the
default judgment.4
We conclude that the trial court abused its
discretion in overruling their motion to set aside the default
judgment without making any findings as to the sufficiency of
their excuse.
Of all of the tendered defenses, Tennessee Dotson's is
the most striking.
Tennessee is a fifty-six (56) year old woman
of limited education.5
She states that she has lived in Samuel
Dotson's house on Parcel 1116 since at least 1990.
She alleged
in her affidavit:
That Tennessee Dotson was served by certified
mail with a Complaint in this lawsuit. When
Bobby Dotson asked her if she had received
her papers she said "yes" and Bobby Dotson
asked to see them. Bobby Dotson then took
the papers from Tennessee Dotson and within a
few days moved to Missouri. Tennessee Dotson
4
The trial court's failure to appoint a guardian ad litem
is noteworthy because Kentucky Berwind had previously moved for a
separate appraisal of the tracts because Sandra Kay and Bradley
were "under a disability". ROA p. 141.
5
According to the appellants' brief, Tennessee Dotson is
also the natural mother of both Samuel Dotson and Bobby Dotson.
-14-
never saw the papers again until Bobby Dotson
returned some 3 or 4 months later. At that
time Bobby Dotson informed Tennessee Dotson
that his lawyer had gotten a default judgment
against her concerning the heirship property.
ROA, p. 184.
We are disturbed by this allegation.
First, a familial
relationship existed between Bobby and Tennessee.
Second,
Tennessee alleges that Bobby took deliberate action to thwart her
effort to respond to the complaint until after the default
judgments were entered.
And third, if the allegation is true,
Bobby knew these facts when the trial court entered default
judgment against Tennessee.
These allegations, if true, would
clearly constitute fraud pursuant to CR 60.02, and would justify
setting aside the default judgment, at least as against
Tennessee.
A trial court has a duty and a right to determine
that its judgments are correct and accurately reflect the truth.
Potter v. Eli Lilly & Co., Ky., 926 S.W.2d 449, 453 (1996).
The
absence of any findings by the trial court, coupled with the
ambiguous nature of the trial court's order, compels this court
to vacate the default judgments against Tennessee Dotson, Sandra
Kay Sanders and Bradley Sanders and remand for findings of fact.
Lastly, the appellants argue that the commissioner's
sale should be set aside due to inadequacy of the sale price and
the circumstances surrounding the sale.
We disagree.
It is well
established that mere inadequacy of price is not in itself a
ground for setting aside a judicial sale unless it is so great as
-15-
to create a presumption of fraud or to shock the conscience.
Snawder v. Curry, 297 Ky. 360, 179 S.W.2d 665, 666 (1944).
The
appellants presented no evidence that the sale price was
inadequate.
Indeed, Parcel 1116 sold for more than the amount of
the commissioners' appraisal.
ROA, pp. 144-45.
Furthermore,
while the sale price of Parcel 1122 is substantially below the
commissioners' appraisal of the property, the amount is not so
grossly inadequate as to justify setting aside the sale.
The appellants also argue that when inadequacy of price
is accompanied by any apparent unfairness or impropriety or
oppression on the part of those connected with the sale, the sale
will be set aside, though such circumstances are slight and by
themselves do not furnish a sufficient reason for vacating the
sale.
Id. at 666-67.
The appellants point to the motion to
intervene by Steven Combs.
In an affidavit, Combs' agent at the
sale, Jesse Salyer, alleged that he was misled by Kentucky
Berwind that the oil and gas interest was subject to a lease.
Salyer asserted that he was "intimidated out of the bidding" by
these representations.
ROA, pp. 199-200.
We find no merit in this argument.
Even accepting Mr.
Salyer's allegations as true, there was no official mention of
the lease during the commissioner's sale.
Thus, Mr. Salyer had
no reasonable basis to rely on the alleged representations by
Kentucky Berwind's counsel.
Therefore, the trial court correctly
denied the motion to set aside the commissioner's sale.
-16-
However, we are remanding this case for further factual
findings concerning the denial of the motion to set aside the
default judgments against Tennessee Dotson, Sandra Kay Sanders
and Bradley Sanders.
If the trial court finds that the default
judgments should be vacated, the court must then consider whether
these parties can present an issue of fact challenging the
indivisibility of these parcels.
If they do, the trial court
must set aside the commissioner's sale.
Otherwise, the
commissioner's sale should be upheld.
Accordingly, the judgment of the Pike Circuit Court is
affirmed in part, vacated in part, and remanded for factual
findings and further proceedings consistent with this opinion.
ALL CONCUR.
-17-
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
Carole Friend Conway
Pikeville, Ky.
Lawrence R. Webster
Pikeville, Ky.
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