SIEGEL (JOHN J.), ET AL. VS. GALLO (JOHN)
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RENDERED: JULY 11, 2008; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-000178-MR
JOHN J. SIEGEL, JR. and
PUMA ENERGY CORPORATION
v.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE GEOFFREY P. MORRIS, JUDGE
ACTION NO. 94-CI-005719
JOHN P. GALLO
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CLAYTON AND VANMETER, JUDGES; KNOPF,1 SENIOR
JUDGE.
1
Senior Judge William L. Knopf sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
21.580.
KNOPF, SENIOR JUDGE: John J. Siegel, Jr. and Puma Energy Corporation
appeal the November 29, 2006, opinion and order dismissing their counterclaim of
tortious interference of business relations against John P. Gallo. We affirm.
In 1991, the parties entered into an agreement whereas Flaget Fuels,
Inc., a company owned and operated by Gallo would loan $4,000,000.00 to Puma,
a company owned and operated by Siegel, to begin mining operations in Eastern
Kentucky. Only $1,000,000.00 of the loan was ever paid to Puma. On October 31,
1994, Gallo filed a complaint against Siegel, in Jefferson Circuit Court, alleging
breach of contract and fraud arising out of the 1991 agreement. On December 20,
1994, Siegel and Puma filed their answer and counterclaim, in which they alleged
that Gallo, in attempting to collect the $1,000,000.00 that had been lent, had
tortiously interfered with their business relations.
On September 25, 1996, Siegel and Gallo entered into a consent
agreement. Puma was not a party to the consent judgment. Exactly ten years later,
on September 25, 2006, Puma filed a motion to dismiss Gallo’s complaint for lack
of prosecution under CR2 41.02. Puma’s motion was granted on September 27,
2006. On October 25, 2006, Gallo filed a motion to dismiss the counterclaim of
Siegel and Puma, under CR 41.02 and CR 41.03, for failure to prosecute. Siegel
filed a response on November 9, 2006, to which Gallo filed a reply on November
20, 2006. The matter was set for oral argument on January 22, 2007, but before
the arguments could take place, the court entered an opinion and order granting
2
Kentucky Rules of Civil Procedure.
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Gallo’s motion and dismissing the counterclaim on November 29, 2006. Siegel
and Puma then filed a motion to reconsider on December 7, 2006. That motion
was denied on December 28, 2006, and this appeal followed.
On appeal, Siegel and Puma argue that the trial court abused its
discretion in granting Gallo’s motion to dismiss their counterclaim. They argue
that they were not under an affirmative duty to prosecute their claims against Gallo
and that any order of dismissal for lack of prosecution should be without prejudice
absent extraordinary circumstances.
CR 41.02 is typically initiated when a defendant moves for dismissal
of an action because of the plaintiff's failure to prosecute. The rule reads in part:
(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.
Dismissals for lack of prosecution pursuant to CR 41.02 are reviewed under the
standard of abuse discretion. Toler v. Rapid American 190 S.W.3d 348, 351
(Ky.App. 2006). “The test for abuse of discretion is whether the trial judge's
decision was arbitrary, unreasonable, unfair, or unsupported by sound legal
principles.” Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999); see also
Toler, 190 S.W.3d at 351. Although the courts are vested with an inherent power to
dismiss for lack of prosecution, such discretion is to be exercised with care.
. . . dismissal of a case pursuant to CR 41.02 or CR 77.02
“should be resorted to only in the most extreme cases”
and we must “carefully scrutinize the trial court's
exercise of discretion in doing so.” Polk v. Wimsatt, 689
-3-
S.W.2d 363, 364-65 (Ky.App.1985). The rule permitting
a court to involuntarily dismiss an action “envisions a
consciousness and intentional failure to comply with the
provisions thereof.” Baltimore & Ohio Railroad Co. v.
Carrier, 426 S.W.2d 938, 940 (Ky.1968). Since the result
is harsh, “the propriety of the invocation of the Rule must
be examined in regard to the conduct of the party against
whom it is invoked.” Id. At 941.
Toler, 190 S.W.3d at 351.
CR 41.03 reads, in part “[t]he provisions of Rule 41 apply to the
dismissal of any counterclaim, cross-claim, or third-party claim” (emphasis
added). In its order dismissing, the trial court stated, in part:
Mr Siegel opposes this motion, arguing that he, as a
[d]efendant, has no legal duty to bring about the trial of a
case, and that the [p]laintiff is the party against whom
due diligence to pursue a case must be charged. In
support, he cites two cases from California and
Pennsylvania. The [c]ourt is not convinced by this
argument for several reasons: first, there is no indication
that the cited cases involved ten-year old matters which
could be described, at best, as stagnant. Second, the law
in Kentucky clearly provides that dismissal for lack of
prosecution is applicable to counterclaims as well as
initial complaints. Finally, Mr. Siegel, as a
[c]ounterclaimant, is, in effect if not in name, a [p]laintiff
ostensibly pursuing his own cause of action against Mr.
Gallo. He and Puma Energy have made absolutely no
effort to pursue their [c]ounterclaim against Mr. Gallo,
and the [c]ourt finds its dismissal is indeed warranted.
We agree with the trial court’s analysis in its entirety. CR 41.02 clearly applies to
counterclaims through the imposition of CR 41.03. Siegel and Puma argue that
their failure to prosecute the counterclaim for the ten years in which the case sat
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stagnant in the trial court was due to their reluctance to “stir the pot.” While this
may be true, it does not support a holding of abuse of discretion.
CR 41.02(3) provides:
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.
This is easily interpreted to mean that without a notation by the trial court to the
contrary, i.e. “without prejudice” or “with leave to re-file,” any dismissal, other
than a dismissal for lack of jurisdiction, improper venue, lack of prosecution under
CR 77.02(2), or failure to join a party under CR 19, results in an adjudication upon
the merits. Polk v. Wimsatt, 689 S.W.2d 363 (Ky.App. 1985). Siegel and Puma
argue that the trial court’s failure to include such language was an abuse of
discretion. We disagree. The parties failed to prosecute their counterclaim for
over ten years. We have reviewed the record and we have found no indication that
any steps have been taken towards moving the case along during the ten year
period of inactivity. There is no evidence in the record that, during that ten year
period, they were preparing their case in any manner. Therefore, we do not believe
that the trial court’s failure to dismiss the case without prejudice was an abuse of
discretion.
For the foregoing reasons, the November 29, 2006, order and opinion
of the Jefferson Circuit Court is affirmed.
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ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Donald L. Cox
David W. Hemminger
Lynch, Cox, Gilman & Mahan P.S.C.
Louisville, Kentucky
Samuel Manly
Law Offices of Samuel Manly
Louisville, Kentucky
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