KNIGHTS OF ST. JOHN #130 v. HORNER NOVELTY CO., INC.
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RENDERED: May 19, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1998-CA-001769-MR
KNIGHTS OF ST. JOHN #130
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE ERNEST A. JASMIN, JUDGE
CIVIL ACTION NO. 98-CI-01668
HORNER NOVELTY CO., INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
DYCHE, EMBERTON and HUDDLESTON, Judges.
HUDDLESTON, Judge: Knights of St. John #130 appeals from a default
judgment granted to Horner Novelty Co., Inc. and an order denying
its motion to set aside the judgment.
The issues presented are:
(1) whether the circuit court erred by failing to apply the
appropriate standard for setting aside a default judgment; and (2)
whether the circuit judge erred in denying the Knights’ motion to
recuse.
Horner Novelty, located in Jeffersonville, Indiana, sold
bingo supplies and other items to the Knights.
Over a period of
time, the Knights purchased supplies in the amount of $13,173.23,
but failed to pay Horner Novelty.
After unsuccessful attempts to
obtain payment, Horner Novelty sued the Knights on March 26, 1998.
The Knights’ registered agent, Michael Meyer, was served with a
summons and copy of the complaint on April 4, 1998.
On April 28,
Horner Novelty filed a motion and affidavit seeking a default
judgment because the Knights had failed to answer or otherwise
defend against the complaint.
On May 12, 1995, a default judgment
was entered.
The Knights did not file and serve an answer until May 1.
In its answer, the Knights denied being liable for the debt and
alleged that an unnamed third party was ultimately responsible for
its payment.
judgment.
On May 14, the Knights moved to set aside the default
On June 10, the circuit court held a hearing and denied
the motion.
On June 11, the Knights moved to recuse the circuit judge
and filed an affidavit setting forth grounds for recusal.
In
particular, the Knights expressed concern about animosity between
its attorney and the circuit judge based on prior interactions
unrelated to this case.
Following a hearing on June 15, 1998, the
circuit court denied the motion to recuse.
The court found that
the Knights had failed show bias which prevented a fair trial and
that the Knights had failed to timely move for recusal.
On June 18, the Knights moved to alter, vacate or amend
the judgment pursuant to Kentucky Rule of Civil Procedure (CR)
59.05.
Following a hearing on June 29, the court denied the
motion, finding that the Knights had failed to advance any reason
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to vacate the judgment other than the arguments that the Knights
had previously made.
This appeal followed.1
On appeal, the Knights argue that the circuit court erred
in not setting aside the default judgment.
While it is true that
courts prefer to decide cases on their merits rather than by
default,2 we must consider the standard for setting aside a default
judgment. CR 55.02 provides that “[f]or good cause shown the court
may set aside a judgment by default in accordance with Rule 60.02.”
In Perry v. Central Bank & Trust Co.,3 this Court outlined the
factors to be considered when deciding whether to set aside a
default judgment:
“(1) valid excuse for default, (2) meritorious
defense, and (3) absence of prejudice to [the] other party.”4
In addressing whether a valid excuse for default existed,
we must consider the circumstances.
serve an answer until May 1, 1998.
The Knights did not file and
The Knights’ answer was due by
April 24, so it was clearly not timely.
The Knights claim to have a valid excuse because it is a
charitable organization, which made it more difficult to timely
respond to Horner Novelty’s complaint.
The organization did not
1
In its brief, Horner Novelty Co. appends exhibits that are
not in the transcript of evidence and thus, not properly before us.
The inclusion of these items is improper, and they will not be
considered on appeal.
Ky. R. Civ. Proc. (CR) 75.01; CR
76.12(4)(a)(vi). See also Croley v. Alsip, Ky., 602 S.W.2d 418
(1980) (noting that it is improper to include in a party’s brief
items not in the record).
2
Dressler v. Barlow, Ky. App., 729 S.W.2d 464, 465 (1987).
3
Ky. App., 812 S.W.2d 166 (1991).
4
Id. at 170 (citing 7 W. Bertelsman & K. Phillips, Kentucky
Practice, CR 55.02, cmt. 2 (4th ed. 1984)).
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employ in-house counsel and had to retain an attorney.
We are not
persuaded that this is a valid excuse for the delay in filing and
serving an answer.
The Kentucky Rules of Civil Procedure do not
provide any such exception for charitable organizations.
Furthermore, in order to be successful, the Knights must
show that it had a meritorious defense.
This it has failed to do.
In its answer, the only defense that the Knights raise is that
Horner Novelty has failed to name an indispensable party. However,
the Knights misstate whose responsibility it is to join a party in
this case.
The Knights claim that some unnamed third party is
responsible for the outstanding debt.
For that reason, it was the
responsibility of the Knights to either join that party as a thirdparty defendant pursuant to CR 14 to seek indemnification or to
file
a
separate
lawsuit
against
the
third
party
to
obtain
indemnification after Horner Novelty obtained a judgment against
the Knights.
The Knights must show that Horner Novelty will not be
prejudiced if the circuit sets aside the default judgment.
The
amount in controversy has been outstanding for a considerable
period of time, and Horner Novelty has the right to collect the
debt.
While it may be a closer question on the issue of prejudice,
the lack of support for the other two factors is enough to justify
the circuit court’s decision.
The Knights also insist that the circuit judge erred in
failing to recuse.
We disagree.
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As the Supreme Court noted in Bussell v. Commonwealth,5
“[a] motion for recusal should be made immediately upon discovery
of the facts upon which the disqualification rests.”6
If a party
fails to object, the objection is waived.7
In this case, the Knights knew which circuit judge was
assigned to the case when it filed and served its answer.
Instead
of objecting immediately, the Knights did not move to recuse the
circuit judge until after the court issued an unfavorable ruling.
The Knights could have applied to the Chief Justice of Kentucky or
the Court of Appeals for relief, but did not do so.
The Knights
failed to show bias in this routine case involving a dispute
between a business and a purchaser of supplies.
Because the
Knights failed to timely raise this issue, it was waived.
The judgment is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
J. Fox DeMoisey
Jonathan E. Breitenstein
DEMOISEY & SMITHER
Louisville, Kentucky
Kenneth J. Bader
Louisville, Kentucky
5
Ky., 882 S.W.2d 111 (1994).
6
Id. at 113 (citing Kohler v. Commonwealth, Ky., 492 S.W.2d
198 (1973); Bailey v. Bailey, Ky., 474 S.W.2d 389 (1972)).
7
Id.
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