GERALD BAILEY AND MADONNA BAILEY v. TRADITIONAL BANK, INC.
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RENDERED: AUGUST 8, 2003; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2001-CA-001615-MR
GERALD BAILEY AND
MADONNA BAILEY
APPELLANTS
APPEAL FROM MENIFEE CIRCUIT COURT
HONORABLE WILLIAM B. MAINS, JUDGE
ACTION NO. 00-CI-90103
v.
TRADITIONAL BANK, INC.
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
JUDGE.1
GUIDUGLI AND JOHNSON, JUDGES; AND HUDDLESTON, SENIOR
JOHNSON, JUDGE:
Gerald Bailey and Madonna Bailey have appealed
from a summary judgment and order of sale entered by the Menifee
Circuit Court on June 27, 2001, in favor of Traditional Bank,
Inc.
The circuit court ruled as a matter of law that the
property should be sold as a whole to satisfy the debt on a
promissory note secured by a real estate mortgage on the
1
Senior Judge Joseph R. Huddleston sitting as Special Judge by assignment of
the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution
and KRS 21.580.
property.
Having concluded that there is a genuine issue as to
a material fact concerning the indivisibility of the property,
we reverse the summary judgment and remand for further
proceedings.
In July 1999 Gerald and Madonna Bailey executed and
delivered a negotiable promissory note to Traditional Bank that
was secured by a real estate mortgage in the amount of
$165,000.00 with interest at the rate of 8.5%, due and payable
on July 26, 2000.
On November 22, 2000, Traditional Bank filed
an action in Menifee Circuit Court claiming that the Baileys had
failed to pay the note when due and demanding (1) judgment
against the Baileys in the amount of $166,759.37 with legal
interest thereon from judgment until paid; (2) attorney’s fees
and costs as provided in the promissory note; and (3) an order
directing the Special Commissioner to sell the real estate and
to apply the net proceeds to the judgment.
Traditional Bank
alleged that the property could not be divided for sale without
impairing its vendible value.
In their answer, the Baileys
denied the amount claimed as owed and they further denied that
the real estate was indivisible.
On May 23, 2001, Traditional Bank served a motion for
summary judgment on the Baileys.
Attached to the motion was an
affidavit of the bank’s branch manager and vice-president
stating that the Baileys were indebted to Traditional Bank for
2
the sum of $173,167.79, and after demand being made, refused to
pay the balance owed.
No mention was made in the motion as to
the indivisibility of the property and the affidavit did not
include any averment that the property was indivisible.
The
Baileys did not respond to the motion.2
On June 27, 2001, the circuit court entered “Findings,
Conclusions and Judgment.”
The trial court found that the
Baileys owed the amount set forth in the affidavit and that the
property “could not be divided without impairing plaintiff’s
interest, and should be sold as a whole.”
The trial court
concluded that “Plaintiff’s claim is valid and a Summary
Judgment should be awarded for a Commissioner’s Sale of the
property as a whole, there being no justiciable controversy.”
On July 5, 2001, an order of sale was entered, and on July 13,
2001, the trial court approved the notice of sale.
On July 27, 2001, the Baileys filed a notice of
appeal; and on August 2, 2001, they filed a motion to approve a
supercedeas bond and a motion pursuant to CR3 60.02 to vacate and
set aside the summary judgment and order of sale.
The Baileys
claimed that there were genuine issues as to material facts,
2
We note that the Baileys’ attorney filed a motion to withdraw as counsel on
June 13, 2001, without having responded to the motion for summary judgment.
With the motion to withdraw still pending, on June 27, 2001, the circuit
court entered the summary judgment and on July 5, 2001, entered the order of
sale. The motion to withdraw was granted on July 13, 2001.
3
Kentucky Rules of Civil Procedure.
3
including in particular, the need to sell the mortgaged property
as a whole to satisfy the judgment debt.
The trial court denied
both motions on August 3, 2001, and on August 4, 2001, the
property was sold by Commissioners Sale, as a whole, to
Traditional Bank for the sum of $116,000.00.
The Baileys argue on appeal that the circuit court
erred by granting the motion for summary judgment, as there
existed a genuine issue of material fact, particularly as to the
indivisibility of the property.
Pursuant to CR 56.03, summary
judgment is proper “if the pleadings, depositions, answers to
interrogatories, stipulations, and admissions of file, together
with the affidavits, if any, show that there is no genuine issue
as to any material fact and that the moving party is entitled to
a judgment as a matter of law.”
The standard of review of a
trial court’s granting of summary judgment is “whether the trial
court correctly found that there were no genuine issues as to
any material fact and that the moving party was entitled to
judgment as a matter of law.”4
We are to view the record in the
light most favorable to the party opposing the motion and
resolve all doubts in its favor.5
In their answer to the complaint filed by Traditional
Bank, the Baileys denied that the property was indivisible.
4
The
Scifres v. Kraft, Ky.App., 916 S.W.2d 779, 780 (1996).
5
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476, 480
(1991).
4
property subject to the mortgage was described in four different
exhibits, with exhibit “D” consisting of 37 separate lots.
The
affidavit attached to Traditional Bank’s motion for summary
judgment did not address the issue of indivisibility and no
other proof was offered to support the circuit court’s finding
that the property was indivisible.
KRS6 426.685(1) provides as follows:
Before ordering a sale of real property for
the payment of debt, the court must be
satisfied by the pleadings, by an agreement
of the parties, by affidavits filed, or by a
report of a commissioner or commissioners,
whether or not the property can be divided
without materially impairing its value, and
may cause it to be divided, with suitable
avenues, streets, lanes or alleys, or
without any of them.
The pleadings in the case sub judice joined the issue
of the indivisibility of the property.
There was clearly no
agreement of the parties concerning this issue, the single
affidavit in support of summary judgment made no averment of
indivisibility, and there was no Commissioner’s report.
Viewing
the record in the light most favorable to the Baileys, we
conclude that the trial court erred by granting summary judgment
and ordering that the property be sold as a whole.
Accordingly, the judgment and order of sale are
reversed with directions to set aside the Commissioner’s sale
6
Kentucky Revised Statutes.
5
and this matter is remanded for further proceedings consistent
with this Opinion.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Jace Nathanson
Morehead, Kentucky
No brief filed.
6
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