PATRIOT TOBACCO COMPANY v. COMMONWEALTH OF KENTUCKY, EX REL. GREGORY D. STUMBO ATTORNEY GENERAL
Annotate this Case
Download PDF
RENDERED: MARCH 25, 2005; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2003-CA-002014-MR
AND
NO. 2003-CA-002355-MR
PATRIOT TOBACCO COMPANY
v.
APPELLANT
APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE WILLIAM L. GRAHAM, JUDGE
ACTION NO. 02-CI-00876
COMMONWEALTH OF KENTUCKY,
EX REL. GREGORY D. STUMBO
ATTORNEY GENERAL
APPELLEE
OPINION AND ORDER
DISMISSING APPEALS
** ** ** ** **
BEFORE:
GUIDUGLI, McANULTY, AND MINTON, JUDGES.
GUIDUGLI, JUDGE: Patriot Tobacco Company (hereinafter “Patriot”)
appeals two orders of the Franklin Circuit Court.
The orders in
question amended a previous order entered by the court which
ordered Patriot to pay civil penalties in the amount of
$255,539.91 for violating KRS 131.602(3).
dismissed Patriot’s counterclaim.
the two appeals.
The first order also
This Court has consolidated
Having thoroughly reviewed this matter, we are
compelled to dismiss Patriot’s appeals because they are from
non-final and appealable orders.
CR 54.02.
On June 28, 2002, the Commonwealth of Kentucky, ex
rel. Albert B. Chandler, III, Attorney General (hereinafter “the
Commonwealth),1 filed a complaint for injunction and other relief
against Patriot in the Franklin Circuit Court.
The complaint
alleged Patriot had violated KRS 131.600, et seq., by selling
cigarettes to consumers in Kentucky without paying into a
“qualified escrow account” as established by the Master
Settlement Agreement (hereinafter “MSA”).2
Pursuant to the MSA,
all non-participating manufacturers (those who did not join in
the MSA) selling tobacco within this state must pay a required
amount into escrow by April 15 of each year.
The escrow amount
is based upon the number of cigarette cartons sold by the
manufacturer during the preceding year.
The Commonwealth sought
an injunction ordering Patriot to establish a “qualified escrow
fund” and deposit into that fund $85,179.97 as its escrow
liability for 2001 sales.
The complaint also sought civil
penalties and attorney fees against Patriot pursuant to KRS
131.602(3)(b) and for the court to retain continuing
jurisdiction over Patriot to insure compliance with this action
1
Following the filing of appeal, this Court permitted Gregory D. Stumbo,
Attorney General to be substituted for Albert B. Chandler, III.
2
The MSA is the agreement reached in November 1998 between the major tobacco
companies and the Attorneys General of 46 states.
-2-
and future compliance with the statute.
Patriot eventually
moved to dismiss the Commonwealth’s complaint and filed
counterclaims requesting the circuit court to declare the escrow
statute unconstitutional.
The Commonwealth then filed a motion
to strike Patriot’s answer and counterclaim or in the
alternative, to dismiss Patriot’s counterclaims.
Each party filed memoranda arguing its position and
responding to the other party’s arguments.
Finally, on May 19,
2003, the Commonwealth filed a motion to submit for a decision.
Thereafter, the circuit court entered an opinion and order
disposing of the case.
In its order, the circuit court
discussed Patriot’s counterclaims and affirmative defenses and
dismissed them.
The court then found that Patriot had violated
KRS 131.602, determined that Patriot should have placed
$85,179.97 into an escrow account by April 15, 2002, but did
not, and accessed civil penalties against Patriot in the amount
of $255,539.91 (three times the 2001 escrow account).
Patriot
was also ordered to pay the costs and attorneys’ fees incurred
by the Commonwealth.
Patriot timely filed a motion to reconsider together
with a memorandum in support with attached exhibits, which
argued that only the motion to dismiss their counterclaim had
been submitted to the court.
The court viewed Patriot’s motion
as a CR 59.05 motion to alter, amend or vacate the judgment.
-3-
The court agreed with Patriot and on August 20, 2003, entered
the following order amending prior opinion and order:
ORDER AMENDING PREVIOUS OPINION AND ORDER
This matter having come before the
Court upon Defendant’s Motion to Reconsider
(treated by the Court as a Motion to Alter,
Amend or Vacate a Judgment), the Court
having reviewed the motion and the opposing
memorandum, and having heard oral argument
on August 6, 2003, and for good cause shown,
the Court hereby AMENDS its previous Opinion
and Order entered on July 16, 2003,
maintaining that portion of the Order which
dismisses Defendant’s Counterclaim, and
vacating that portion of the Order which
deals with the dismissal of Defendant’s
defenses, with the finding of liability
against Defendant, and with the assessing of
penalties and attorneys’ fees. The Court
further determines that there are factual
issues which need to be determined before a
decision can be made on liability and
damages, and hereby allows the parties an
opportunity to engage in discovery with
respect to those issues, for the purpose of
presenting evidence to the Court at a later
date.
On September 18, 2003, Patriot appealed that order
(2003-CA-002014-MR).
On September 19, 2003, the Commonwealth
filed a motion to clarify the August 20, 2003, order as it
related to vacating the July 16, 2003, order dismissing
Patriot’s defenses, especially that of lack of personal
jurisdiction.
Following another hearing, the Franklin Circuit
Court entered the following order on October 20, 2003:
ORDER AMENDING AUGUST 20, 2003
“ORDER AMENDING PREVIOUS OPINION AND ORDER”
-4-
Upon Motion of the plaintiff to clarify
the Court’s August 20, 2003[,] Order wherein
the Court “maintain[ed] that portion of the
[July 16, 2003] Order which dismisses
defendant’s Counterclaim, and vacating that
portion of the Order which deals with the
dismissal of defendants defenses, with a
finding of liability against defendant, and
with the assessing of penalties and attorney
fees,” the Court hereby amends and clarifies
that Order as follows:
1. The Court maintains those portions of
the July 16, 2003[,] Order which dismissed
the defense of lack of personal
jurisdiction, and which dismissed the
Affirmative Defenses/Counterclaims raised in
Patriot Tobacco Company’s Affirmative
Defenses two through seven (17)[sic]/Counterclaims one through six (1-6).
2. The Court vacates those portions of the
July 16, 2003[,] Order which dismissed all
other defenses which Patriot Tobacco Company
may have to the Complaint and which assessed
penalties and attorney fees against Patriot
Tobacco Company.
Patriot also timely appealed this order.
002355-MR).
(Appeal No. 2003-CA-
This Court has consolidated the two appeals.
Prior to the briefs being filed in this matter, the
Commonwealth filed a motion to dismiss and remand based upon the
argument that this Court lacked jurisdiction because the orders
appealed from were not final and appealable orders.
panel passed this motion to the “merits” panel.
The motion
Having
thoroughly reviewed this matter, we agree with the
Commonwealth’s argument and thus, are compelled to dismiss
-5-
Patriot’s appeals and remand the matter back to the Franklin
Circuit Court for further proceedings.
CR 54.01 defines a final or appealable judgment as one
that “adjudicate[s] all the rights of all the parties in an
action or proceeding.”
including counterclaims.
CR 54.02 addresses multiple claims
In such actions, the court may grant a
final judgment upon one or more but less than all the claims or
parties only upon a determination that there is no just cause
for delay.
However, to be final and appealable, the judgment
shall recite that “the judgment is final.”
CR 54.02 further
states:
In the absence of such recital, any order or
other form of decision, however designated,
which adjudicates less than all the claims
or the rights and liabilities of less than
all the parties shall not terminate the
action as to any of the claims or parties,
and the order or other form of decision is
interlocutory and subject to revision at any
time before the entry of judgment
adjudicating all the claims and the rights
and liabilities of all the parties.
Patriot’s reliance on Ratliff v. Fiscal Court of
Caldwell Cty.3 is misplaced.
Ratliff dealt with condemnation of
property and established an exception to the rule in that the
property, if taken, would be materially altered or destroyed if
an immediate appeal was not permitted.
3
617 S.W.2d 36 (Ky. 1981).
-6-
This distinction was
pointed out in The Lexington Herald-Leader Co. v. Beard,4 when
the Kentucky Supreme Court stated:
The qualitative distinction between a
discovery order and an order divesting a
property owner of his property should be
readily apparent. An order of immediate
possession which irreversibly disposes of
the use and possession of property is final
in character even though there is another
issue in the case, compensation for the
taking, which remains to be decided. A
discovery order is totally dissimilar. As a
general proposition to permit appeals from
discovery orders would create intolerable
delay and unmitigated chaos in the progress
of the litigation.
Id. at 376.
Similarly, various cases have reinforced the rule
that only final orders are appealable.5
As to Patriot’s reliance
on Rosenblatt v. American Cyanamid Co.,6 we believe it to be both
factually and legally distinguishable and not relevant to the
matter herein.
Reviewing the two orders from which Patriot appeals,
it is clear that neither is a final and appealable order.
In
amending the July 16, 2003, order (which we note was final), the
Franklin Circuit Court specifically stated that “there are
factual issues which need to be determined before a decision can
be made on liability and damages, and [the Court] hereby allows
4
690 S.W.2d 374 (Ky. 1984).
5
See Burroughs v. Bake Oven Supply Co., Inc., 434 S.W.2d 33 (Ky. 1968); Hook
v. Hook, 563 S.W.2d 716 (Ky. 1978); Franz, Inc. v. Blue Grass Hams, Inc., 520
S.W.2d 313 (Ky. 1975); Lebus v. Lebus, 382 S.W.2d 873 (Ky. 1964) citing four
additional cases.
6
86 S.Ct. 1, 15 L.Ed.2d 39 (1965).
-7-
the parties an opportunity to engage in discovery with respect
to those issues, for the purpose of presenting evidence to the
Court at a later date.”
Since neither order is final, neither
order is appealable, and thus we grant the Commonwealth’s motion
to dismiss the appeals.
ALL CONCUR.
ENTERED:
March 25, 2005
/s/ Daniel T. Guidugli
JUDGE, COURT OF APPEALS
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Carolyn A. Taggart
Kenneth J. Crehan
Cincinnati, OH
Gregory D. Stumbo
Attorney General
Leonard Violi
New York, NY
Michael Plumley
James M. Herrick
Assistant Attorneys General
Frankfort, KY
-8-
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
