DIXIE TRUSS, INC. v. JEFF COREY and DONNA COREY AND JERRY GARLAND v. DIXIE TRUSS, INC.
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RENDERED: MARCH 19, 2004; 10:00 a.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court Of Appeals
NO. 2002-CA-001305-MR
DIXIE TRUSS, INC.
v.
APPELLANT
APPEAL FROM LAUREL CIRCUIT COURT
HONORABLE LEWIS B. HOPPER, JUDGE
CIVIL ACTION NO. 00-CI-00682
JEFF COREY and DONNA COREY
APPELLEES
AND
NO. 2003-CA-000092-MR
JERRY GARLAND
v.
APPELLANT
APPEAL FROM LAUREL CIRCUIT COURT
HONORABLE LEWIS B. HOPPER, JUDGE
CIVIL ACTION NO. 02-CI-00257
DIXIE TRUSS, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUIDUGLI, MINTON, and VANMETER, Judges.
MINTON, Judge:
The issues in these companion cases are whether
trusses Dixie Truss designed and built for installation in the
home of Jeff and Donna Corey are defective and whether Donna’s
father,
Jerry
trusses.
Garland,
is
liable
for
payment
owed
for
those
Though the circuit court erred procedurally in its
disposition of the claims, it ultimately reached the correct
resolution of the substantive issues of law involved.
Jeff and Donna Corey were building a house using plans
obtained from Better Homes and Gardens.
However, they wanted an
open basement, necessitating the use of trusses to support the
floor.
Garland contacted Dixie Truss regarding the design and
manufacture
home.
the
trusses.
which
trusses,
of
Dixie
were
delivered
to
Truss
and
manufactured
installed
in
the
the
Corey
However, neither the Coreys nor Garland paid Dixie Truss.
Thereafter,
Truss
in
breach
Knox
of
in
Circuit
warranty.
January
2000,
the
Coreys
Court
claiming
breach
They
alleged
that
of
the
sued
Dixie
contract
trusses
defective and incapable of supporting their house.
and
were
Following
initial discovery, Dixie Truss moved the court in June 2000 to
join
Garland
indispensable
and
his
parties,
company,
to
G
&
M
Oil
Company,
assert
a
counterclaim
Inc.,
against
as
the
Coreys and a claim against Garland for the price of the trusses
and
for
a
change
of
venue
to
2
Laurel
County.
Dixie
Truss
tendered a copy of its proposed counterclaim and third-party
claim along with its motions.
In
August
2000,
the
court
entered
transferring venue to Laurel County.
an
agreed
order
However, there does not
appear in the record any action taken on Dixie Truss’ other
motions.
The
next
February 15, 2001.
relevant
entry
in
the
record
is
on
In an order by the circuit court denying a
motion by the Coreys to reconsider its earlier order denying
their
motion
language:
for
summary
judgment,
the
court
included
the
“The parties have 30 days from the date hereof to
make a motion to add additional parties.”
Dixie
Truss
made
no
new
motion
to
add
additional
parties, presumably because there had not been a ruling on its
motion filed the previous June.
On March 30, 2001, Dixie Truss
re-noticed that motion for another hearing to be held on May 4,
2001.
On August 1, 2001, the court entered an order granting
Dixie Truss’ motion to add Garland and G & M Oil as third party
defendants.1
entry
of
Garland
The court granted Dixie Truss thirty days from the
the
and
order
G
&
M
within
which
Oil.
However,
1
to
file
it
complaints
did
not
against
address
the
We are confused by the language of the court’s order assigning
the matter for a pretrial conference on August 1, 2001, because the
clerk’s notation reveals that the order was not signed or entered
until August 1, 2001.
3
complaints against Garland and G & M Oil which Dixie Truss had
already tendered along with its original motion in June 2000.
The Coreys moved the court to reconsider its order of
August
1,
2001,
granting
indispensable parties.
Dixie
Truss’
motion
to
add
The Coreys argued that the time for such
motions expired on March 16, 2001, thirty days after the order
of February 14, 2001, and thirteen days before Dixie Truss renoticed its motion on March 29, 2001.
Dixie Truss responded by
correctly noting that it had actually filed that motion many
months earlier and that its action on March 29 was simply to renotice
a
motion
which
had
been
lingering
since
June
2000.
However, for reasons it did not state, the circuit court, on
September 7, 2001, granted the Coreys’ motion to reconsider its
August 1 order and vacated its order allowing Dixie Truss to add
Garland and G & M Oil Co.
The
action
between
the
proceeded to trial before a jury.
contentions,
instead
Truss.
The
court
verdict,
from
However,
Dixie
which
Truss
returning
entered
and
Dixie
Truss
The jury rejected the Coreys’
a
verdict
judgment
judgment
has
Coreys
the
appealed,
in
Coreys
in
favor
accordance
have
arguing
not
that
of
Dixie
with
the
appealed.
the
circuit
court erred when it refused to allow it to assert claims against
Garland and G & M Oil Co., Inc.
4
On
complaint
March
against
13,
2002,
Garland
Dixie
alleging
Truss
that
filed
he
owed
a
separate
Dixie
Truss
roughly $20,300.00 for the trusses which were incorporated into
the Coreys’ house.
The circuit court entered a summary judgment
against Garland, ruling that his allegations of defects in the
trusses were conclusively disproved in the jury trial on the
claim by the Coreys against Dixie Truss.
Furthermore, the court
relied on Garland’s testimony in the first action to reject his
argument that he was acting solely as an agent for the Coreys,
his
disclosed
principals,
instead
finding
established his individual liability.
that
his
testimony
Garland did not otherwise
challenge the debt owed Dixie Truss.
On appeal, Garland argues that Dixie Truss should not
have been allowed to assert a claim against him in a subsequent
action.
Garland posits that Dixie Truss’ claim is a compulsory
counterclaim with respect to the Coreys’ original claim and that
by not bringing it as a counterclaim in the first action, Dixie
Truss
should
have
been
precluded
from
asserting
it
later.
Garland also argues that his testimony should not have been used
against him in a subsequent action because he was not a party to
the first action.
Finally, Garland argues that he was merely an
agent of the Coreys and, as such, cannot be personally liable
for the debt owed to Dixie Truss.
5
Kentucky Rules of Civil Procedure (CR) 13.01 provides
in relevant part:
A pleading shall state as a counterclaim any claim
which at the time of serving the pleading the pleader
has against any opposing party, if it arises out of
the transaction or occurrence that is the subject
matter of the opposing party’s claim and does not
require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction.
Dixie Truss’ claim was, therefore, a compulsory counterclaim in
that it arose out of the same transaction or occurrence that is
the subject matter of the Coreys’ complaint.
not
an
“opposing
party”
at
that
time,
While Garland was
that
scenario
is
contemplated by CR 13.08, which provides:
When the presence of parties other than those to the
original action is required for the granting of
complete relief in the determination of a counterclaim
or cross-claim, the court shall order them to be
brought in as defendants as provided in these rules.
Therefore,
quandary.
we
are
presented
with
something
of
a
Garland is correct in his appeal that Dixie Truss’
claim against him was a compulsory counterclaim and, therefore,
could not be brought in a subsequent action.
However, Dixie
Truss is correct in its appeal that the circuit court erred by
not
making
Garland
a
defendant
as
contemplated
by
CR
13.08.
Dixie Truss properly moved the court to assert its claim in June
2000, and it was only because of the circuit court’s failure to
rule on that motion that Dixie Truss was unable to assert its
claim against Garland.
6
CR 61.01 provides that the court at every
stage of the proceeding must disregard any error which
does not affect the substantial rights of the parties.
While this rule is primarily for the guidance of trial
courts, this court, since the adoption of the new
rules and before, [] has accepted it as a rule for
guidance and will not reverse or modify a judgment
except for error which prejudices the substantial
rights of the complaining party.2
Although
the
above
quotation
comes
from
Kentucky’s
highest
Court, we also have stated that “this Court disregards errors
not affecting the substantial rights of the parties.”3
As
stated
above,
Garland
and
correct in their respective appeals.
Dixie
Truss
are
both
We could reverse in both
cases and remand the matter with instructions to permit Dixie
Truss to add Garland as a third-party defendant in the original
action
filed
subsequent
necessary
Garland.
by
the
action.
because
Coreys
and
However,
we
can
we
discern
to
no
Dixie
to
fail
dismiss
how
see
prejudice
Truss’
that
is
suffered
by
He was on notice of Dixie Truss’ claim against him as
of June 2000, so it is not as if he is the victim of improper
“sandbagging.”
Furthermore, the policy motivation behind the
rule
compulsory
regarding
counterclaims
is
one
of
judicial
economy and efficiency in striving to avoid multiple actions
dealing with the same subject.
Though the circuit court’s error
2
Davidson v. Moore, Ky., 340 S.W.2d 227, 229 (1960) (citations
omitted).
3
Blair v. Day, Ky.App., 600 S.W.2d 477, 478 (1979) (citations
omitted).
7
forced Dixie Truss to engage in multiple lawsuits where only one
was required, remanding the case for still further proceedings
would only compound the error.
Therefore, while we agree that the circuit court erred
in
its
Truss’
handling
claim
harmless
of
against
and
may be
the
procedural
Garland,
any
disregarded
issues
such
surrounding
error
pursuant
to
is
Dixie
ultimately
CR 60.01.
We
affirm the circuit court in allowing the claim by Dixie Truss to
proceed against Garland.
We
entered
now
against
analyze
Garland.
the
As
merits
of
outlined
the
in
summary
CR
56.03,
judgment
summary
judgment is appropriate when there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a
matter of law.
This Court has said that the standard of review
on appeal of a 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....
There is no requirement that the appellate
court defer to the trial court since factual findings
are not at issue.4
Garland’s second argument is that it was error for the
circuit court, in the second action, to consider his testimony
from the first action.
evidentiary
However, this argument is not premised on
considerations
of
admissibility;
rather,
Garland
essentially restates his arguments regarding collateral estoppel,
4
Scifres v. Kraft, Ky.App., 916 S.W.2d 779, 781 (1996).
8
res judicata, and issue preclusion to assert that Dixie Truss
should not have been allowed to institute the second action.
We
have already rejected this contention so we need not revisit it.
The
evidentiary
question
may
be
easily
resolved.
Garland’s statements are clearly admissible under Kentucky Rules
of Evidence (KRE) 801A(b)(1), which provides that the statement
of a party may be admitted for the truth of the matter asserted
if the statement is offered against a party and is the party’s
own
statement,
capacity.
As
in
either
such,
an
individual
there
can
be
no
or
question
representative
but
that
the
statements were properly considered.
Finally, we must evaluate whether the circuit court was
correct in ruling that there was no genuine issue of material
fact regarding whether Garland was merely an agent of the Coreys.
In reaching this conclusion, the circuit court relied on several
statements by Garland, both in his deposition and at the trial of
the Coreys’ action.
We need not reproduce that lengthy testimony
here; but we agree with the circuit court that “[p]erhaps the
best evidence of Jerry Garland’s intent is derived again from his
own words when asked on cross examination if he was the head man
in charge and if the buck stopped with him, he replied, ‘You’ve
got it.’”
It is well established that “[u]nder Kentucky law the
right to control is considered to be the most critical element in
9
determining
whether
an
agency
relationship
5
exists.”
Furthermore, “[t]he burden of proving agency is on the party
6
alleging its existence.”
In this case, Garland had the burden
of proving the existence of the purported agency relationship
between
himself
and
the
Coreys.
However,
his
unchallenged
testimony established that he, not the Coreys, controlled his
actions toward Dixie Truss.
The circuit court was correct that
there was no evidence from which a jury could find Garland to
have been an agent of the Coreys.
Summary judgment was properly
entered in the absence of a genuine question of material fact.
In sum, we conclude that although the circuit court
erred in its handling of the procedural aspects of these related
cases, its rulings did not affect the substantial rights of the
parties
and,
therefore,
amounted
to
harmless
error.
Its
judgments are affirmed.
ALL CONCUR.
5
Reis v. Campbell County Bd. of Educ., Ky., 938 S.W.2d 880, 883
(1996), citing Grant v. Bill Walker Pontiac-GMC, Inc., 523 F.2d 1301
(6th Cir. 1975).
6
Wright v. Sullivan Payne Co., Ky., 839 S.W.2d 250, 253 (1992),
citing Cincinnati Insurance Company v. Clary, Ky., 435 S.W.2d 88
(1968).
10
BRIEF ORAL ARGUMENT FOR
APPELLANT JERRY GARLAND:
BRIEF AND ORAL ARGUMENT FOR
APPELLEES JEFF AND DONNA COREY:
Gary W. Napier
NAPIER & ASSOCIATES, P.S.C.
London, Kentucky
Gary W. Napier7
NAPIER & ASSOCIATES, P.S.C.
London, Kentucky
BRIEF AND ORAL ARGUMENT FOR
APPELLANT/APPELLEE DIXIE TRUSS:
Douglas G. Benge
JENSEN CESSNA & BENGE
London, Kentucky
7
It does not appear in the record that any party objected to
mutual representation despite the parties’ potentially adverse
interests.
11
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