RONALD MANNING AND MANNING FAMILY TRUST v. HARVIE WILKINSON AND STOLL, KEENON & PARK, A PARTNERSHIP AND ASSOCIATION OF ATTORNEYS
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RENDERED: AUGUST 3, 2007; 2:00 P.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2005-CA-002491-MR
RONALD MANNING AND
MANNING FAMILY TRUST
v.
APPELLANTS
APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE MARY C. NOBLE, JUDGE
ACTION NO. 94-CI-01139
HARVIE WILKINSON AND
STOLL, KEENON & PARK,
A PARTNERSHIP AND ASSOCIATION
OF ATTORNEYS
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: DIXON, MOORE, AND TAYLOR, JUDGES.
DIXON, JUDGE: Appellants, Ronald Manning and the Manning Family Trust, appeal
from an order of the Fayette Circuit Court dismissing their case under CR 77.02 for lack
of prosecution. Appellants also appeal a 1996 order granting partial summary judgment
in favor of Appellee, Harvie Wilkinson, and a 1998 order denying their motion for
reconsideration. For the reasons stated herein, we affirm the order of dismissal, thus
rendering all other issues moot.
In April 1994, Appellants filed a legal malpractice action in the Fayette
Circuit Court against Appellees, attorney Harvie Wilkinson and the law firm of Stoll,
Keenon & Park. The complaint asserted claims of conflict of interest and breach of
ethical duties in conjunction with Appellants' purchase of a bloodstock package in 1990.
Appellants had previously filed in the Fayette Circuit Court a 1990 lawsuit against
Lexington veterinarian John Backer1 and a 1993 lawsuit against First Security National
Bank2, both arising out of the same thoroughbred transaction.
In January 1995, Appellees moved for summary judgment claiming a lack
of any evidence of wrongdoing as well as a statute of limitations defense. Following a
March hearing, the trial court granted Appellants an additional ninety days to produce
some evidence of wrongdoing by either Wilkinson or Stoll, Keenon & Park. On June 17,
1996, the trial court granted partial summary judgment and dismissed the complaint
against Wilkinson. Appellants' motion for reconsideration was subsequently denied.
On August 16, 1996, the trial court entered an order granting Appellants' request for
additional time to disclose expert witnesses. The order directed compliance by
September 13, 1996. However, the record reflects that Appellants neither filed their
disclosure of experts nor took any further affirmative steps in this case.
In September 1999, the trial court entered the first of three show-cause
orders. Appellants appeared and were given sixty days to proceed. Appellants thereafter
moved to disqualify then-presiding Judge VanMeter based on his prior affiliation with
1
Manning Family Trust v. John W. Backer, et al., 90-CI-3506.
2
Manning Family Trust v. First Security National Bank, 93-CI-1774.
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Stoll, Keenon & Park. On January 4, 2001, Judge Noble was designated to preside over
the action.
On January 8, 2003, Appellants were served with the second CR 77.02(2)
notice to dismiss for lack of prosecution. Again, Appellants' counsel appeared at the
show cause hearing and the action was not dismissed. Nevertheless, no further action
was taken and on September 28, 2005, the trial court issued the third CR 77.02(2) notice.
During an October 28, 2005 hearing, Appellant's counsel was unable to
provide any reason for the repeated failure to prosecute the claims in this matter other
than asserting it was a complex case. As a result, the trial court dismissed the case
without prejudice on November 4, 2005. Fourteen days later, Appellants filed a motion
for reconsideration pursuant to CR 593 and CR 60. Attached to the motion was an
affidavit from one of Appellants' attorneys, C. Gilmore Dutton III, which asserted for the
first time that Appellants were “advised by the Court that this matter would proceed only
after the Manning Family Trust v. Chase4 litigation was concluded.” The affidavit
provided no details and no evidence of record as to when the court made such a ruling.
Dutton did not appear at the December 2, 2005, hearing on the motion.
Another of Appellants' attorneys who was present conceded he had no personal
knowledge of the affidavit, but informed the trial court that Dutton's professed
3
As was noted in the hearing on the motion, Appellants' motion was untimely under CR 59,
which required such motion to be filed within ten days.
4
This case is actually the Manning Family Trust v. First Security National Bank, 93-CI-1774
action. In 1991 Bank One acquired First Security National Bank & Trust. Bank One was
subsequently acquired by Morgan/Chase.
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understanding that the case was stayed resulted from a telephonic pretrial conference.
However, as the trial court noted, there is no record of this telephonic conference and
Appellees firmly deny any knowledge of such taking place. At the conclusion of the
hearing, the trial court denied the motion for reconsideration. This appeal ensued.
While Appellants' brief focuses primarily on the propriety of the 1996 order
granting partial summary judgment in favor of Wilkinson, we believe that the threshold
question is whether the trial court acted within its discretion in dismissing Appellant's
case pursuant to CR 77.02(2). We conclude that dismissal was proper, and we take this
opportunity to clarify what we perceive to be a confusion between dismissals pursuant to
CR 77.02 and those pursuant to CR 41.02.
There is no dispute herein that the trial court's sua sponte order of dismissal
was pursuant to CR 77.02(2), which provides,
(2) At least once each year trial courts shall review all
pending actions on their dockets. Notice shall be given to
each attorney of record of every case in which no pretrial step
has been taken within the last year, that the case will be
dismissed in thirty days for want of prosecution except for
good cause shown. The court shall enter an order dismissing
without prejudice each case in which no answer or an
insufficient answer to the notice is made.
CR 77.02 is commonly referred to as the “housekeeping rule,” and is intended to expedite
the removal of stale cases from the court's docket. Hertz Commercial Leasing
Corporation v. Joseph, 641 S.W.2d 753 (Ky.App. 1982). Under the plain language of
the rule, the trial court is required once a year to review its cases and dismiss those in
which no pretrial steps have been taken in the preceding year unless good cause is shown.
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See Bohannon v. Rutland, 616 S.W.2d 46, 46 (Ky. 1981). Notably, however, the rule
provides that cases shall be dismissed “without prejudice.”
CR 41.02, on the other hand, is triggered when a defendant moves for
dismissal of a case because of the plaintiff's failure to prosecute. The rule provides,
(1) For failure of the plaintiff to prosecute or to comply with
these rules or any order of the court, a defendant may move
for dismissal of an action or of any claim against him.
...
(3) Unless the court in its order for dismissal otherwise
specifies, a dismissal under this Rule, and any dismissal not
provided for in Rule 41, other than a dismissal for lack of
jurisdiction, for improper venue, for want of prosecution
under Rule 77.02(2), or for failure to join a party under Rule
19, operates as an adjudication upon the merits.
Unlike CR 77.02, a dismissal under CR 41.02 is with prejudice as it “operates as an
adjudication upon the merits.” CR 41.02(3).
In Ward v. Housman, 809 S.W.2d 717 (Ky.App. 1991), a panel of this
Court addressed dismissals under CR 41.02. Therein, the trial court had granted
summary judgment in favor of the appellees. On appeal, however, this Court determined
that because the trial court had used summary judgment as a sanctioning tool against the
appellants, the case should be treated as an involuntary dismissal under CR 41.02(1). In
reversing the lower court, we noted,
In ruling on a motion for involuntary dismissal, the trial court
must take care in analyzing the circumstances and must
justify the extreme action of depriving the parties of their
trial. Scarborough v. Eubanks, 747 F.2d 871 (3rd Cir.1984),
gives a worthwhile guideline for analysis of these situations
under Fed.R.Civ.P. 41(b), which is our counterpart rule on the
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federal side. Considering whether a case should be dismissed
for dilatory conduct of counsel, it would be well for our trial
courts to consider the Scarborough case and these relevant
factors:
1) the extent of the party's personal responsibility;
2) the history of dilatoriness;
3) whether the attorney's conduct was willful and in
bad faith;
4) meritoriousness of the claim;
5) prejudice to the other party, and
6) alternative sanctions.
Id., pp. 875-878.
Although CR 41.02(1) refers to dismissal of an action or a
claim therein as the sole remedy for a violation of the rule, it
is our conclusion that a sanction less than dismissal is also
appropriate. Needless to say, the rule is subject to the sound
discretion of the trial judge.
It is our opinion that the trial court abused its
discretion if the dismissal is one under CR 41.02(1). By
dismissing the complaint for a one-time dilatory act of
counsel when no other alternative sanctions were considered,
the trial court inappropriately applied the “death sentence” to
this civil action.
Ward, supra, at 719-20.
Recently, another panel of this Court rendered the decision in Toler v.
Rapid American, 190 S.W.3d 348 (Ky.App. 2006), wherein we reiterated the trial court's
obligation to consider the factors set forth in Ward, supra, before dismissing a case for
lack of prosecution. Toler refers to dismissals under both CR 77.02 and CR 41.02.
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Notably, however, the opinion states, “Given that the trial court's dismissal of the Tolers'
action here was pursuant to both CR 77.02 and CR 41.02 and gives no indication that it
was without prejudice, it effectively operates as a dismissal with prejudice and we shall
consider it accordingly.” Id. at 351. The Court continues,
Further factors relevant to whether the court should dismiss
an action with prejudice can be found in Ward v. Housman,
809 S.W.2d 717 (Ky. App. 1991). In Ward, this Court
adopted the guidelines set forth in Scarborough v. Eubanks,
747 F.2d 871 (3d Cir. 1984) for determining whether a case
should be dismissed for dilatory conduct under Rule 41(b) of
the Federal Rules of Civil Procedure-the counterpart to our
CR 41.02(1). We specifically held that the following factors
should be considered: (1) the extent of the party's personal
responsibility; (2) the history of dilatoriness; (3) whether the
attorney's conduct was willful and in bad faith; (4) the
meritoriousness of the claim; (5) prejudice to the other party;
and (6) the availability of alternative sanctions. Ward, 809
S.W.2d at 719.
...
The responsibility to make such findings as are set forth in
Ward before dismissing a case with prejudice falls solely
upon the trial court. (Emphasis added.)
Toler, supra.
Thus, although Toler speaks in terms of dismissals under both civil rules,
the principles and rationale espoused in the opinion clearly apply to dismissals with
prejudice. CR 41.02. Certainly, we would agree that the involuntary dismissal of a case
with prejudice “should be resorted to only in the most extreme cases” and a reviewing
court must “carefully scrutinize the trial court's exercise of discretion in doing so.” Polk
v. Wimsatt, 689 S.W.2d 363, 364-65 (Ky.App. 1985) (Citations omitted). As a dismissal
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with prejudice deprives a litigant of the opportunity to pursue his or her claim, the trial is
obligated to consider all relevant factors and lesser sanctions. Ward, supra.
We do not believe, however, that the same considerations necessarily
precede a dismissal without prejudice under CR 77.02. As previously noted, the rule
imposes annual housekeeping duties upon the trial court and requires only notice to the
parties and a warning of dismissal except for good cause shown. CR 77.02(2). We
further find it relevant that a CR 77.02 dismissal is a form order rather than an opinion
and order.
Dismissals for lack of prosecution pursuant to CR 41.02 and CR 77.02 are
both reviewed under an abuse of discretion standard. See Midwest Mutual Insurance Co.
v. Wireman, 54 S.W.3d 177, 179 (Ky.App. 2001); Wright v. Transportation Cabinet, 891
S.W.2d 412, 413 (Ky.App. 1995). “The test for abuse of discretion is whether the trial
judge's decision was arbitrary, unreasonable, unfair, or unsupported by sound legal
principles.” Sexton v. Sexton, 125 S.W.3d 258, 272 (Ky. 2004) (citations omitted); see
also Kuprion v. Fitzgerald, 888 S.W.2d 679, 684 (Ky. 1994). Nevertheless, “[t]he power
of dismissal for want of prosecution is an inherent power in the courts and necessary to
preserve the judicial process.” Nall v. Woolfolk, 451 S.W.2d 389, 390 (Ky. 1970).
We conclude that CR 41.02 and CR 77.02 serve different functions and
thus have different and distinct requirements. Further, the decisions in Toler v. Rapid
American, supra, and Ward v. Housman, supra, were, in our opinion, intended to apply to
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involuntary dismissals under CR 41.02, not those initiated by the trial court in accordance
to CR 77.02.
That having been said, we cannot conclude that the trial court herein abused
its broad discretion in dismissing Appellants' case. The fact that the case may involve
complex legal issues does not suffice to justify a complete failure by Appellants over the
last ten years to develop their cause of action, especially after the issuance of three CR
77.02 notices. The trial court herein exercised an abundance of patience and this is
precisely the type of case CR 77.02 (2) was designed to address.
Appellants also challenge the trial court's 1996 order granting partial
summary judgment in favor of Harvie Wilkinson. Appellees, however, urge this Court to
adopt the rule followed by many state and federal courts that interlocutory orders do not
merge with a final judgment dismissing an action for failure to prosecute. Shannon v.
General Electric Co., 186 F.3d 186 (2nd Cir. 1999). See John's Insulation, Inc. v. L.
Addison and Associates, Inc., 156 F.3d 101, 105 (1st Cir. 1998).
Because we have determined that dismissal of this case is proper, any prior
rulings by the trial court, including the 1996 summary judgment are necessarily rendered
moot. Hughley v. Eaton Corporation, 572 F.2d 556 (6th Cir. 1978); John's Insulation,
supra. See also Vernon v. Great Western Bank, 59 Cal. Rptr.2d 350, 353-54 (Cal. Ct.
App. 1996) (“Because we have upheld the dismissal for failure to prosecute, a decision
by us that the summary judgment adjudication motion was wrongly decided would
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accomplish nothing - the case would remain dismissed and the result would be Pyrrhic.”).
Accordingly, we decline to address the merits of Appellant's argument.
The Fayette Circuit Court's order dismissing the case herein is affirmed.
ALL CONCUR.
BRIEF AND ORAL ARGUMENT FOR
APPELLANT:
William A. Dykeman
Winchester, Kentucky
BRIEF FOR APPELLEE:
K. Gregory Haynes
Deborah Patterson
Louisville, Kentucky
ORAL ARGUMENT FOR APPELLEE:
K. Gregory Haynes
Louisville, Kentucky
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