EXCEL ENERGY, INC. V. COMMONWEALTH INSTITUTIONAL SECURITIES, INC.; R. GENE SMITH; GERALD B. BRENZEL; and GEORGE LAWSON
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AS MODIFIED: MARCH 22, 2001
RENDERED: NOVEMBER 22,200O
TO BE PUBLISHED
1999-SC-0252-DG
EXCEL ENERGY, INC.
V.
ON REVIEW FROM COURT OF APPEALS
1998-CA-2975MR & 1998-CA-3030-MR
JEFFERSON CIRCUIT COURT NO. 95Cl-1090
COMMONWEALTH INSTITUTIONAL
SECURITIES, INC.; R. GENE SMITH;
GERALD B. BRENZEL; and
GEORGE LAWSON
APPELLEES
OPINION OF THE COURT BY JUSTICE JOHNSTONE
AFFIRMING
The Court of Appeals dismissed the appeal of Appellant, Excel Energy, Inc.
(hereinafter “Excel”), against Appellees on grounds that the appeal was not timely filed.
We granted discretionary review and affirm the Court of Appeals.
On October 30, 1998, the Jefferson Circuit Court entered an order granting
summary judgment to R. Gene Smith, who was a defendant in a lawsuit styled Excel
Enerav. Inc. v. Commonwealth Institutional Securities. Inc. et al., Civil Action No. 95CI01090. Pursuant to CR 73.02, the last day Excel had to timely file a notice of appeal
from this decision was November 30, 1998.
CR 73.02 provides in pertinent part:
(1) (a) The notice of appeal shall be filed within 30 days after the
date of notation of service of the judgment or order under Rule 77.04(2).
(b) If an appeal or cross-appeal is from an order or judgment of the
circuit court, the filing fee required by Rule 76.42(2)(a)(i) or (ii) shall be
paid to the clerk of the circuit court at the time the notice of appeal or
cross-appeal is filed, and the notice shall not be docketed or noted as filed
until such payment is made. . . .
(2) The failure of a party to file timely a notice of appeal,
cross-appeal, or motion for discretionary review shall result in a dismissal
or denial. Failure to comply with other rules relating to appeals or motions
for discretionary review does not affect the validity of the appeal or
motion, but is ground for such action as the appellate court deems
appropriate . . . .
Near the close of business on November 30, 1998, Excel took its notice of
appeal to the Jefferson Circuit Clerk’s office and file stamped it via a file stamp machine
located in the Clerk’s office. However, payment for the filing fee was not attached to the
notice of appeal. Further, apparently the notice was simply dropped in an in-box rather
than given to the Clerk for processing. The procedure in the Jefferson Circuit Court of
file stamping items and then depositing them in an in-basket at the Clerk’s office is
commonly known as “clock and drop.” The Jefferson Circuit Court Clerk notified
Excel’s counsel the next day, December 1, 1998, that the filing fee was missing and
refused to note on the docket sheet that the notice of appeal had been filed until the
filing fee was paid. Excel’s counsel promptly tendered the filing fee. The Clerk then
duly docketed the notice of appeal and noted it as being filed on December 1, 1998,
which was one day late under the rules.
The facts of this case are very similar to those in Manly v. Manly, Ky., 669
S.W.2d 537 (1984). Like the case at bar, the losing side in a civil case “clocked and
dropped” a notice of appeal on the last day to timely file a notice of appeal under the
rules. Id. at 538. Likewise, the losing party did not attach a filing fee to the notice;
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rather, the filing fee was paid two days later. Id.
However, unlike the case at bar, the
Clerk did docket the notice and note that it had been filed on the same day that the
notice had been “clocked and dropped.” Id. at 539-40.
The Manly Court held that the
notice was not timely filed because the Clerk had no authority under the rules to file or
docket the notice until the filing fee was paid. u at 540. Under Manly, the payment of
the filing fee was considered “a jurisdictional prerequisite to the filing of a Notice of
Appeal and that such payment is a condition precedent to the filing of an appeal.” Id. at
541 (Wrntersheimer, J., dissenting).
CR 73.02 was amended after Manly was decided. The amended rule marked a
change from a policy of strict compliance with the rules of appellate procedure, as
exemplified in Manly, supra, to a policy of substantial compliance with the rules of
appellate procedure. Readv v. Jamison, KY., 705 S.W.2d
479, 481 (1986). This
change to substantial compliance was central to our analysis of a case with a similar set
of facts in Foxworthv v. Norstam Veneers. Inc., KY., 816 S.W.2d
907 (1991).
In Foxworthv, the losing party in a civil case mailed its notice of appeal from
Lexington, Kentucky, to the Clerk of the Jefferson Circuit Court well before the last day
to file its notice of appeal, but failed to include payment of the filing fee as required by
CR 73.02(1)(b). Id. The Jefferson Circuit Court Clerk noted on the docket sheet the
notice of appeal as being filed on the same day it was received. Id. at 908. When
counsel for the losing party discovered the mistake, he promptly notified the Jefferson
Circuit Court Clerk and tendered payment for the filing fee. Id. However, by then, more
than thirty days had elapsed since the entry of judgment in the underlying case. Id.
The Foxworthy Court applied the doctrine of substantial compliance and held that
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failure to timely pay a filing fee was neither automatically fatal nor a jurisdictional
prerequisite to filing a notice of appeal. Id. at 910.
Excel argues that pursuant to Foxworthy, supra, we should apply the doctrine of
substantial compliance and hold that dismissal is not automatically required in this case.
Specifically, Excel argues that the one day late payment of the filing fee in no way
prejudiced the Appellees in this case. The Appellees conceded as much at oral
argument. If this case turned on whether late payment of a filing fee requires automatic
dismissal, then we would agree that the sanction is too harsh in this case. However,
this case turns on whether Excel timely filed its notice of appeal, rather than turning on
what penalty is appropriate for a late payment of a filing fee.
Excel argues that it did file a timely notice of appeal when it “clocked and
dropped” the notice of appeal as explained above. While not expressly saying so,
Excel’s argument seems to be that it is standard practice in Jefferson County for a
losing party to file a notice of appeal by time stamping the notice and leaving it in the
Clerk’s in-basket for processing. However, even if true, this practice of self-filing is not
consistent with either the Jefferson Rules of Practice or CR 73.02.
The “clock and drop” procedure in Jefferson County was not established to
facilitate the filing of notices of appeal. Rather, its only purpose is to facilitate motion
practice. Jefferson Rule of Practice (JRP) 304 is the only local rule which refers to the
“clock and drop” procedure and it clearly only applies to motion practice. JRP 304
provides in pertinent part: “All motions, civil and criminal, to be heard at motion hours
shall be filed and clocked no later than . . . .‘I There is no local rule in Jefferson County
that allows a party to file a notice of appeal via the “clock and drop” procedure.
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In the case at bar, the Jefferson Circuit Court Clerk refused to file Excel’s notice
of appeal, i.e., note it on the docket sheet as filed, until it received the filing fee. This is
exactly what the Clerk should do pursuant to CR 73.02(1)(b), which clearly states that
“the notice shall not be docketed or noted as filed until such payment is made. . . .”
Further, the rule does not provide a means for a party to “self file” a notice of appeal.
Excel did not file the notice of appeal when it time stamped the notice and left it in the
Clerk’s office for processing. At most, it merely tendered the notice to the Clerk to be
filed on the same date that was time stamped on the notice. In so doing, Excel
assumed the risk that the Clerk would not be able to file the notice as tendered because
the filing fee had not been paid.
The fact that the Clerk refused to file the notice of appeal until the filing fee had
been received distinguishes this case from Foxworthy, Isupra. x w o r t h v , t h e C l e r k
n Fo
“compounded counsel’s mistake by filing the Notice of Appeal rather than returning it.”
Foxworthv, 816 S.W.2d at 908. In the case at bar, the Jefferson Circuit Court Clerk did
everything possible to correct the error by refusing to file the notice and by promptly
notifying Excel’s counsel that the filing fee for the notice of appeal had not been
tendered. CR 73.02 and our cases interpreting the rule make clear that strict
compliance still applies to S e e notices g . appeal.h n s o n v . S m i t h , 8 8 5
tardy . e . of , J o
S.W.2d 944, 950 (1994); City of Devondale v. Stallings, Ky., 795 S.W.2d 954, 957
(1990).
The conclusion is inescapable that Excel’s notice of appeal was filed one day too
late, and, thus, it was not timely filed. “The failure of a party to file timely a notice of
appeal, cross-appeal, or motion for discretionary review shall result in a dismissal or
denial.” CR 73.02(2).
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We further note that Johnson v. Smith, supra, makes clear that this is not a
jurisdictional issue. As the Johnson Court explained:
[Llosing litigants are constitutionally vested with a right of appeal
and appellate courts are constitutionally vested with jurisdiction. Strictly
speaking, the notice of appeal is not jurisdictional. It is a procedural
device prescribed by the rules of the court by which a litigant may invoke
the exercise of the inherent jurisdiction of the court as constitutionally
delegated. This is why CR 73.02(2) describes automatic dismissal as the
penalty for failure of a party to file a timely notice of appeal, but not as a
lack of jurisdiction.
If it were otherwise, the rules could not be changed except by
constitutional amendment. This Court has the power to deny or dismiss
an appeal if the rules are not followed, based on its own rules, but no
power to create or deny jurisdiction.
Johnson, 885 S.W.2d 949-50.
Thus, our holding today, that a tardy notice of appeal is subject to automatic
dismissal and cannot be saved through application of the doctrine of substantial
compliance, is a policy decision that is reflected in CR 73.02. This policy choice is
necessary to preserve the finality of judgments. Id. at 950.
For the reasons set forth above, the decision of the Kentucky Court of Appeals is
bereby affirmed.
Cooper, Keller, and Wintersheimer, JJ., concur. Lambert, C.J., dissents by
separate opinion, with Graves and Stumbo, JJ., joining that dissent.
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COUNSEL FOR APPELLANT:
Donald L. Cox
William H. Mooney
Lynch, Cox, Gilman & Mahan, P.S.C.
400 West Market Street
Suite 2200
Louisville, KY 40202
COUNSEL FOR APPELLEES,
COMMONWEALTH INSTITUTIONAL SECURITIES, INC.
and R. GENE SMITH:
Janet P. Jakubowicz
John K. Bush
Thomas E. Powell II
Greenebaum, Doll & McDonald
3300 National city Tower
101 South Fifth Street
Louisville, KY 40202
COUNSEL FOR APPELLEE,
GEORGE LAWSON:
Nader G. Shunnarah
1735 Chichester Avenue
Louisville, KY 40205
COUNSEL FOR APPELLEE,
GERALD B. BRENZEL:
Gerald B. Brenzel
c/o Veranda Restaurant
15206 Shelbyville Road
Louisville, KY 40245
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RENDERED: NOVEMBER 22,200O
TO BE PUBLISHED
1999-SC-0252-DG
EXCEL ENERGY, INC.
V.
APPELLANT
ON REVIEW FROM COURT OF APPEALS
1998-CA-2975-MR & 1998-CA-3030-MR
JEFFERSON CIRCUIT COURT NO. 95-Cl-1090
COMMONWEALTH INSTITUTIONAL
SECURITIES, INC.; R. GENE SMITH;
GERALD B. BRENZEL; and
GEORGE LAWSON
APPELLEES
DISSENTING OPINION BY CHIEF JUSTICE LAMBERT
Respectfully, I dissent.
The “clock and drop” system is a mechanical substitute for a live person,
and this system was instituted by the clerk’s office for administrative convenience.
Moreover, the practice of filing notices of appeal through this system is accepted by the
Jefferson Circuit Clerk’s office. It also has the tacit approval of this Court, as we have
not denied its validity. Thus, we should not punish those who use this system by now
adhering to the outdated policy of strict compliance when substantial compliance is the
standard with regard to rules of appellate procedure. To do so accomplishes no
purpose recognized as meaningful within the administration of the courts.
The opposing party here was not prejudiced. The lawsuit was not
delayed. A simple phone call from the clerk’s office notifying counsel of the defect
engendered an immediate cure. Thus, the majority opinion represents nothing but a
Pyrrhic triumph of form over substance. Justice and its effective administration has not
been served.
When a mechanical device is offered in lieu of personal service in the
Kentucky court system, the device should guard against user error or the court should
make concessions for its imperfections. Although the defect in filing the notice of
appeal here was the fault of counsel in the first instance, the defect persisted because
of an imperfect processing procedure. This Court should adopt a stance of humility and
take responsibility for its share of the failure of this system. The goal of the judiciary as
a forum for the fair determination of controversies on the merits is disserved by the
inflexible position of the majority.
Graves and Stumbo, JJ., join this dissenting opinion.
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I.
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1999-SC-0252-DG
EXCEL ENERGY, INC.
APPELLANT
ON REVIEW FROM COURT OF APPEALS
1998-CA-2975MR & 1998-CA-3030-MR
JEFFERSON CIRCUIT COURT NO. 95-Cl-1090
V.
COMMONWEALTH INSTITUTIONAL
SECURITIES, INC.; R. GENE SMITH;
GERALD B. BRENZEL; AND
GEORGE LAWSON
APPELLEES
ORDER DENYING PETITION FOR REHEARING
AND
MODIFYING OPINION
The petition for rehearing or modification filed by Appellant Excel Energy, Inc., is
hereby denied.
The Court, on its own motion, hereby modifies the opinion rendered on
November 22,200O to the extent that page 4 has been replaced by a modified page,
attached hereto, in order to reflect a correction to the following listed cites: Jefferson
Rules of Practice and Jefferson Rule of Practice (JRP) 304. Said modification does not
affect the holding of the opinion as originally rendered.
All concur.
ENTERED: March 22, 2001.
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