GEORGE T. HAWKINS v. JAMES R BAILEY, III AND BOTAN CORPORATION
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RENDERED:
DECEMBER 1, 2000; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1999-CA-002280-MR
GEORGE T. HAWKINS
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS WINE, JUDGE
ACTION NO. 97-CI-000159
v.
JAMES R BAILEY, III AND
BOTAN CORPORATION
APPELLEES
OPINION
REVERSING IN PART, AFFIRMING AND REMANDING IN PART
** ** ** ** **
BEFORE:
GUDGEL, CHIEF JUDGE; BARBER, AND COMBS, JUDGES.
BARBER, JUDGE:
Appellant George T. Hawkins (Hawkins) was, at the
time the underlying action was filed,
the Commonwealth of Kentucky.
an attorney licensed in
Hawkins filed the underlying
action pro se to recover legal fees from Appellees James R.
Bailey III (Bailey) and Botan Inc. (Botan).
Hawkins claims that
Bailey and Botan owed a fee of $22,000.00 pursuant to a contract
for legal services.
Bailey and Botan claim that the contract was
oral and therefore unenforceable.
At trial, the trial court held
that the contract between the parties was oral.
However, both
parties agree that the terms of the contract are memorialized in
a letter setting out the services to be provided by Hawkins, and
in communications regarding the services performed by Hawkins.
The record is clear in showing that an initial fee payment of
$11,000 was made, and one monthly payment of $2,000 was also made
by Bailey and Botan, as discussed in the written communications.
Under the terms of the contract, Hawkins would incorporate Botan,
and assist Bailey and Botan in the initial capital formation of
the business venture in return for a set fee.
Clearly, a valid
and binding contract existed between the parties.
Hawkins asserts that Bailey and Botan were indebted for
the full payment of $22,000.00, but chose to make monthly
payments on the debt rather than making a lump sum payment.
Bailey and Botan failed to make any other monthly payments after
the first monthly payment.
The record contains written
communication from Hawkins accepting assignment of choses in
action and tangible property as partial payment on the debt.
These communications also show Hawkins’ ongoing efforts to
fulfill the requirements of the agreement.
Rather than continuing to make the monthly payments,
Bailey and Botan filed a counterclaim asserting that Hawkins was
required to perform certain additional conditions prior to being
paid any additional sums.
Hawkins claims that he performed all
necessary work, and that Bailey and Botan defaulted on the
payment plan.
Bailey and Botan also filed a counter-claim, which
alleged that Hawkins had performed no services after the initial
incorporation, and asked that he be required to repay a portion
of the $11,000.00 initial payment.
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Bailey and Botan relied on an
itemized monthly bill, with hourly increments, as evidence that
Hawkins had performed only $2,000 worth of work, and demanded a
refund of all monies other than that sum.
However, documents
provided in discovery responses clearly show that, as Hawkins
asserts, the hourly bill was prepared as an example of itemized
billing option which was not accepted by Bailey and Botan, who
instead elected to pay a flat sum of $22,000.00 in monthly
payments.
Early in the proceedings, Hawkins retained counsel to
protect his interests.
month before trial.
Counsel acted on his behalf until one
Counsel for Hawkins moved to withdraw from
the action on March 11 1999.
Counsel also requested a
continuance in the action, which was set for trial on April 13
1999.
The certificate of service on these documents reflects
service by certified mail on Hawkins at his current address.
The
trial court granted the motion to withdraw but denied the motion
for continuance.
The record does not show service of the trial
court’s orders on Hawkins at his current address.
Hawkins
asserts that he did not receive notice of the court’s denial of
the motion for continuance.
Bailey and Botan failed to serve
copies of their trial memorandum and jury instructions on Hawkins
at his current address, but rather mailed these documents to his
former office, which he had ceased to maintain two years earlier
when he no longer practiced law.
Hawkins denies receipt of these
documents and the certificate of service on these documents fails
to indicate that he was properly served.
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The trial court held the trial on the scheduled date,
despite the absence of Hawkins or counsel on his behalf.
trial court dismissed Hawkins’ complaint at trial.
The
The trial
court then entered judgment on the counterclaim in favor of
Bailey and Botan.
Hawkins did not receive a copy of the
judgment, as it was not served on him at his current address.
On
July 14 1999, Bailey and Botan served a Judgment Lien on Hawkins
at his current address.
The certificate of service on this lien
has the correct address for Hawkins, and does not reflect service
to his former office.
On August 5 1999, Hawkins filed a motion to set aside
the Judgment, arguing that he had not received service of the
court’s orders, or the pre-trial memoranda filed by opposing
counsel.
The trial court denied this motion.
Bailey and Botan
claim that their failure to serve Hawkins at his current address
was due to his never having filed a change of address notice in
the record.
Documents filed by counsel for Hawkins, prior to his
withdrawal from the action, show service upon Hawkins at his
current address.
Hawkins asserts that the judgment issued against him
was a default judgment, pursuant to CR 55.01. Hawkins asserts
that because he was not properly served with notice of a request
for default judgment after having appeared in the action, the
judgment entered is void.
Kearns v. Ayer, Ky. App., 746 S.W.2d
94 (1988), holds that the moving party must give notice of the
application for default judgment.
Id,, at 96.
Where a party has
appeared and prosecuted an action, or defended against a
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counterclaim, he must be given notice prior to entry of a
judgment against him.
Kearns v.
Ayer, supra., 746 S.W.2d at 95.
Bailey and Botan attempt to claim that as the original action was
dismissed, and then reinstated, Hawkins had never really
“appeared” in the reinstated action, and that therefore they were
not required to provide him with notice of the default judgment.
Such semantics may not be used to defeat the clear purpose of the
civil rules.
Hawkins filed the initiating complaint, and
therefore must be found to have appeared in the action.
A default judgment may properly be dismissed where the
defaulting party can show a reasonable excuse, and prove that he
is not guilty of unreasonable delay or neglect.
Liberty Nat.
Bank & Trust Co. v. Kummert, 305 Ky. 769, 205 S.W.2d 342 (1947).
Relief from a default judgment may be given for good cause shown.
S.R. Blanton Dev. Co. v. Investors Realty & Mgmt. Co., Ky. App.,
819 S.W.2d 727 (1991).
Where a party against whom a default
judgment has been entered shows a valid excuse for his failure to
appear and defend, and there is a lack of prejudice to the nondefaulting party, a default judgment may be set aside.
Perry v.
Central Bank & Trust Co., Ky. App., 812 S.W.2d 166, 170 (1991).
The Kentucky Rules of Civil Procedure mandate that
notice requirements must be met prior to permitting a default
judgment to be entered.
892 S.W.2d 607 (1995).
Foremost Ins. Co. v. Whitaker, Ky. App.,
Failure to abide by notice provisions in
a law or civil rule is excused only where the party against whom
judgment is entered has received actual notice, and where there
is no material prejudice to the party.
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Taylor v. Duke, Ky. App.,
896 S.W.2d 618 (1995).
It is clear that a party must receive
actual or constructive notice of a proceeding before a judgment
rendered against him may be considered valid and binding.
Halderman v. Sanderson Forklifts Co., Ky. App., 818 S.W.2d 270
(1991).
Hawkins was negligent in failing to ensure that his
current address was clearly made part of the record in the
underlying action.
Hawkins was also negligent in failing to
ascertain whether the trial had, in fact, been continued as
requested by his counsel.
However, as the court allowed his
counsel to withdraw, thereby leaving him without legal
representation, and also refused to reschedule the trial date,
set less than a month after counsel’s withdrawal, the trial court
should have ensured that Hawkins received notice of this fact.
Hawkins’ counsel clearly noted, in his certificate of service,
the new address he used to communicate with Hawkins.
Both the
trial court and opposing counsel should have taken notice of this
fact, rather than continuing to send documents to an address that
Hawkins had not used for almost three years.
As Hawkins denies receipt of the trial court’s orders,
and the record supports his claim, we find that he did not
receive proper notice of the proceedings against him.
CR 60.02
permits a court to set aside a judgment on the grounds of mistake
or excusable neglect.
CR 59.01(a) provides that a new trial may
be granted to a party where there has been an irregularity in the
proceedings of the court, or an abuse of discretion which
prevents a party from having a fair trial.
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The trial court
involuntarily dismissed Hawkins’ complaint due to his failure to
appear.
As this failure to appear was due, in whole or in part,
to the failure of the court and opposing counsel to provide
proper notice to Hawkins, it must be reversed.
For this reason,
the dismissal of Hawkins’ complaint, and the entry of judgment
against him on the counterclaim are reversed, and the action is
remanded for trial.
Hawkins further asserts that the judgment is void as
he did not consent to Bailey and Botan’s withdrawal of their
request for trial by jury.
CR 38.04 holds that once a demand for
a jury trial is made, it may not be withdrawn without the consent
of both parties.
is entered.
This right is waived where a default judgment
CR 55.01.
As it was Bailey and Botan, rather than
Hawkins, who requested a trial by jury, and as Hawkins was not
present at trial, any error in failing to impanel a jury is
harmless, and cannot constitute grounds for reversal.
case is remanded on other grounds, this issue is moot.
COMBS, JUDGE CONCURS.
GUDGEL, CHIEF JUDGE, DISSENTS.
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As the
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Nicholas G. Hawkins
Louisville, Kentucky
William E. Devers
Louisville, Kentucky
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