TERRY FOSTER, D/B/A DADDIO'S PIZZA v. FIRST FEDERAL LEASING AND MIDWEST LEASING GROUP
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RENDERED: JULY 14, 2006; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-002621-MR
TERRY FOSTER,
D/B/A DADDIO’S PIZZA
v.
APPELLANT
APPEAL FROM BULLITT CIRCUIT COURT
HONORABLE THOMAS L. WALLER, JUDGE
ACTION NO. 04-CI-00903
FIRST FEDERAL LEASING
AND MIDWEST LEASING GROUP
APPELLEES
OPINION AND ORDER
DISMISSING
** ** ** ** **
BEFORE: HENRY AND VANMETER, JUDGES; BUCKINGHAM, SENIOR JUDGE.1
HENRY, JUDGE:
Terry Foster appeals, pro se, from an order of
the Bullitt Circuit Court dismissing his action against First
Federal Leasing and Midwest Leasing Group.
Because we conclude
that the order at issue is not final or appealable, we must
dismiss the appeal.
1
Senior Judge David C. Buckingham, sitting as Special Judge by assignment of
the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution
and KRS 21.580.
When the events leading to this litigation began,
Foster - along with his wife, Karen - owned and operated a pizza
restaurant in Lebanon Junction, Kentucky.
In furtherance of
this business, Foster agreed to buy a barbecue cooker from a
salesman named Sherman Alex Ollie, who represented that he
worked for a vendor named Hickory Equipment Company.
To fund
this purchase, Ollie contacted Midwest Leasing Group, who sent
him a loan application for Foster to sign.
Once signed, the
application was sent by Midwest Leasing to First Federal for its
approval as lessor and funding entity.
First Federal approved
the application and agreed to fund the purchase; the lease
agreement was consequently assigned to First Federal at that
time.
On September 21, 1999, Foster signed the lease
agreement for a particular “Kook-Rite-Kooker” and also signed a
“Delivery and Acceptance Receipt” acknowledging that he had the
equipment and was satisfied with it.
It does not appear from
the record that the cooker had actually been delivered or
examined by Foster when he signed these documents, nor does it
appear that he reviewed the documents before signing them.
The
record further reflects that Foster received phone calls from
representatives of Midwest Leasing and First Federal during the
following days, and that he confirmed to them that he had
received the equipment and that it was satisfactory; he also
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gave First Federal permission to release the purchase funds to
the vendor.
Eventually, Foster discovered that the new “Kooker”
with which he was supposed to have been provided was instead a
used demonstration model that Ollie had left uninstalled in an
outbuilding behind the restaurant, and that the serial number
thereon did not match the one in the lease agreement.
On
November 3, 1999, Foster finally informed First Federal of these
facts, but was told that he was still obligated to make his
lease payments on the equipment, and that his complaints should
be directed to Ollie.
However, any efforts by both parties to
get Ollie to rectify the problem ultimately failed.
Foster’s lease payments subsequently became
increasingly delinquent and his lease was eventually referred to
a collection attorney.
The Fosters filed suit against Ollie and
First Federal on January 21, 1998 alleging breach of contract, a
violation of KRS2 367.170, fraud, and deceit.
First Federal
counterclaimed for breach of contract and requested as damages
the entirety of the amount owed under the lease, as well as
costs and attorney’s fees.
Prior to trial, the Fosters obtained
a default judgment against Ollie, but the judgment was left
unsatisfied.
At trial, the trial court granted directed
verdicts dismissing the Fosters’ claims for breach of contract
2
Kentucky Revised Statutes.
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and fraud against First Federal; the court also granted a
directed verdict on First Federal’s breach of contract claim
against the Fosters.
Foster and his wife were consequently
adjudged jointly and severally liable for the entire amount due
under the lease and for costs and attorney’s fees.
The decision
was affirmed on appeal by this court, and discretionary review
was denied by the Kentucky Supreme Court.
On September 16, 2004, Foster filed another complaint
– this time against First Federal and Midwest Leasing.
The
complaint alleged fraud and deceit by both defendants, in
violation of KRS 367.170 and 367.381(2); conspiracy to defraud;
defamation; and a violation of KRS 355.2A-201(1)(b).
On October
11, 2004, First Federal filed a motion to dismiss Foster’s
complaint pursuant to CR3 12.02(f) “for failure to state a claim
upon which relief can be granted based upon the doctrines of res
judicata and collateral estoppel.”
Specifically, First Federal
argued that Foster’s complaint did nothing more than repeat the
allegations made in his first suit against the company; as these
matters had already been fully litigated, the aforementioned
doctrines prevented him from prosecuting the action again.
Midwest Leasing did not file any pleadings with respect to the
motion.
On November 24, 2004, the trial court entered an order
dismissing Foster’s action with prejudice “based upon the
3
Kentucky Rules of Civil Procedure.
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doctrines of res judicata and collateral estoppel.”
This appeal
followed.
In reviewing the briefs and the record, an issue that
becomes of immediate concern to us is whether the order entered
below is a final order from which an appeal lies.
The issue is
of utmost importance because, without a “final” order or
judgment, we do not have the jurisdiction to consider an appeal.
Wilson v. Russell, 162 S.W.3d 911, 913-14 (Ky. 2005).
Although
this issue was not addressed by either the parties or the trial
court, as it concerns our jurisdiction we are obliged to
consider it.
Id. at 913; see also Hubbard v. Hubbard, 303 Ky.
411, 197 S.W.2d 923, 923 (1946).
CR 54.01 provides as follows:
A judgment is a written order of a court
adjudicating a claim or claims in an action
or proceeding. A final or appealable
judgment is a final order adjudicating all
the rights of all the parties in an action
or proceeding, or a judgment made final
under Rule 54.02. Where the context
requires, the term “judgment” as used in
these rules shall be construed “final
judgment” or “final order.”
(Emphasis added).
The trial court’s order of dismissal here
reads, in its entirety, as follows: “On Motion of the Defendant,
FIRST FEDERAL LEASING, and the Court being otherwise
sufficiently advised; IT IS HEREBY ORDERED that this action be
and is hereby DISMISSED WITH PREJUDICE based upon the doctrines
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of res judicata and collateral estoppel.”
While the trial
court’s order is obviously applicable to First Federal - as it
was the moving party and a defendant in Foster’s first lawsuit –
it does not address the fact that Midwest Leasing is also a
party-defendant here even though it was not involved in the
previous action.4
This fact is of particular note because the grounds
for the court’s order of dismissal were res judicata and
collateral estoppel.
We have long held that “a res adjudicata
estoppel is not available unless the parties to the judgment
relied on as such were the same, or that they stand in privity
with those who were actual parties to the first judgment.”
Wolff v. Employers Fire Ins. Co., 282 Ky. 824, 140 S.W.2d 640,
643 (1940), overruled in part on other grounds by Shatz v.
American Sur. Co. of N. Y., 295 S.W.2d 809 (Ky. 1956); see also
Gish Realty Co. v. Central City, 260 S.W.2d 946, 950 (Ky. 1953)
(“As a general rule res judicata can be invoked only where the
subsequent litigation is between the parties to the former
judgment or their privies, and where their interests were
adverse in the prior proceeding.”).
As collateral estoppel, or
“issue preclusion,” is a subpart of the doctrine of res
judicata, involvement of the same parties is a necessity there
4
We also note that Midwest Leasing failed to tender any pleadings with
respect to First Federal’s motion to dismiss and did not file a brief on
appeal.
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as well.
See Buis v. Elliott, 142 S.W.3d 137, 139-40 (Ky.
2004).
As Midwest Leasing was not involved in the first
lawsuit and has not been designated as being in privity with
First Federal, we must conclude that Foster’s action against it
cannot be dismissed on the grounds of res judicata or collateral
estoppel given the record as it stands before us.
Consequently,
as the judgment against Foster here was applicable only to First
Federal, we are not presented with a situation in which “all the
rights of all the parties” have been adjudicated pursuant to CR
54.01.
Accordingly, in order for this matter to be appealable
as a final judgment, the requirements of CR 54.02 must be
satisfied.
CR 54.02(1) provides as follows:
When more than one claim for
relief is presented in an action, whether as
a claim, counterclaim, cross-claim, or
third-party claim, or when multiple parties
are involved, the court may grant a final
judgment upon one or more but less than all
of the claims or parties only upon a
determination that there is no just reason
for delay. The judgment shall recite such
determination and shall recite that the
judgment is final. 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
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the entry of judgment adjudicating all the
claims and the rights and liabilities of all
the parties.
(Emphasis added).
Since the judgment here did not adjudicate
the claims between Foster and Midwest Leasing, the order was
required to clearly indicate that its judgment for First Federal
was final and that a determination was made “that there is no
just reason for delay.”
requirements is fatal.
1975).
The omission of even one of these
Hale v. Deaton, 528 S.W.2d 719, 722 (Ky.
As neither of these requirements was met here, the
judgment was therefore not made final under CR 54.02.
Id.
Accordingly, it was interlocutory and the appeal must be
dismissed as premature.
McCreary County Bd. of Ed. v. Stephens,
454 S.W.2d 687, 688-89 (Ky. 1968).
It is therefore ORDERED that this appeal be, and it
is, DISMISSED.
ALL CONCUR.
ENTERED:
July 14, 2006
/s/
Michael L. Henry
JUDGE, COURT OF APPEALS
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
Terry Foster
Shepherdsville, Kentucky
Eric G. Farris
Shepherdsville, Kentucky
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