Dreamers, LLC v. Don's Lumber & Hardware, Inc.

366 S.W.3d 381, 2011 Ky. LEXIS 136, 2011 WL 4431170
CourtKentucky Supreme Court
DecidedSeptember 22, 2011
DocketNo. 2010-SC-000227-DG
StatusPublished
Cited by7 cases

This text of 366 S.W.3d 381 (Dreamers, LLC v. Don's Lumber & Hardware, Inc.) is published on Counsel Stack Legal Research, covering Kentucky Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dreamers, LLC v. Don's Lumber & Hardware, Inc., 366 S.W.3d 381, 2011 Ky. LEXIS 136, 2011 WL 4431170 (Ky. 2011).

Opinion

Opinion of the Court by

Justice NOBLE.

This case is before the Court on an order entered by the Court of Appeals on March 3, 2010, dismissing the Appellants’ appeal as moot due to satisfaction of the judgment which is the subject of the appeal. This Court accepted jurisdiction to consider whether this violated Appellants’ constitutional right of appeal and whether a party must specifically reserve a right to appeal when paying a judgment in full in lieu of the supersedeas bond allowed by CR 73.04 if the appeal is to continue. The parties did not specifically frame the issues in this manner, but it is clear from the record that these are the questions presented. Because this Court concludes that paying a judgment in full, absent clear evidence of a settlement and compromise, does not extinguish a right to appeal, the judgment below is reversed and this matter is remanded to the Court of Appeals to hear the merits of the appeal.

I. Background

A somewhat convoluted set of facts occurred here, and not all are necessary to resolution of this case, but a recitation of the process to reach this point will put the issues before the Court in context.

Appellant, The Dreamers, LLC is in the business of building and selling homes. In particular, Dreamers contracted to build a house for Glenda Hoffman. The materials to construct the home were purchased at Don’s Lumber & Hardware, Inc. by the Vice-President of Dreamers, Willie Neal, who is also an Appellant. Don’s Lumber claimed that Willie Neal also signed for the debt in a personal capacity, but that claim is disputed. Dreamers finished con-[383]*383struetion of the house and sold it to Glenda Hoffman, but allegedly failed to pay Don’s Lumber for the materials it supplied.

Don’s Lumber then filed a material-man’s lien (styled as mechanic’s lien) on the property Glenda Hoffman had purchased. It then filed suit against Dreamers and Willie Neal for judgment on the debt. Don’s Lumber also filed a foreclosure action against Glenda Hoffman. The trial court, by way of a special judge, set the summary judgment motion for hearing in another county, and Dreamers’ attorney failed to attend due to a scheduling conflict. Summary judgment was granted to Don’s Lumber, and the property was ordered sold.

Dreamers’ attorney then filed a CR 59.05 motion, claiming excusable neglect and that he had notified the clerk that he had a scheduling conflict and could not appear on the date of the summary judgment hearing. He asked the trial court to set aside the summary judgment and to stop the sale for several stated reasons. The trial court denied the motion, and the Master Commissioner set a date for the sale. Dreamers then filed a motion with the trial court claiming that the time for filing a notice of appeal had not run and. that the sale could not go forward. The trial court disagreed and suggested the notice of appeal should be filed before time ran, and a supersedeas bond should be posted to stop the sale.

Dreamers filed the notice of appeal, but for whatever reason, it apparently could not post the supersedeas bond at that time. Instead, it filed a motion for a writ at the Court of Appeals and also asked for temporary emergency relief stopping the sale, which the Court of Appeals granted. Later, the Court of Appeals denied the writ, thus negating the temporary relief previously granted, and the sale was reset. Shortly thereafter, Dreamers filed a second writ action, which the Court of Appeals eventually dismissed as moot.

On the day of the sale, November 19, 2009, Dreamers paid the full judgment amount of $48,309.95 to Don’s Lumber to stop the sale. In a written receipt, the agent for Don’s Lumber stated: “I, Jerry Coleman, hereby acknowledge receipt on behalf of Don’s Lumber for $48,309.95 from Willie M. Neal in case number 2009-CA-2136-OA which is being made to stop a pending sale on property located at 200 Mary Lee Street, Elizabethtown, Kentucky, 42701.” The case number in the statement referred to the second writ action that had also been filed in the Court of Appeals, not the direct appeal.

In the direct appeal, all steps had been taken, including briefing, necessary for the case to be in a posture to be heard or submitted on the briefs and record to the appropriate Court of Appeals panel. However, the Court of Appeals did not receive the trial court record until December 15, 2009. On December 9, 2009, Don’s Lumber filed a motion to dismiss the appeal as moot because the judgment had been paid. On December 21, 2009, the Appellants responded that there had not been an agreement to dismiss the appeal, and that they had specifically not included such language even though Don’s Lumber wanted the appeal dismissed.

On March 3, 2010, the Court of Appeals entered a one-paragraph order stating that the Appellants had satisfied the judgment and dismissed the appeal making no specific findings on the arguments that had been raised by Appellants. This Court granted discretionary review.

II. Analysis

Dreamers raises two issues, one based on the Kentucky Constitution and one based on the law of supersedeas [384]*384bonds. Because a court should not resolve a question on constitutional grounds if other legal grounds will address the problem, Louisville/Jefferson County Metro Gov’t v. TDC Grp., LLC, 283 S.W.3d 657, 660 (Ky.2009), this Court will not address the constitutional question as the question about relinquishment of an appeal after paying a judgment in full can be resolved on other legal grounds.

It has long been the law in Kentucky that “a party ... does not need to post a supersedeas bond to take an appeal from a judgment,” though “[t]he failure to post a bond ... leaves the party who obtained the judgment free to execute on it.” Elk Horn Coal Corp. v. Cheyenne Resources, Inc., 163 S.W.3d 408, 419-20 (Ky.2005). In this case, neither a superse-deas bond was posted, nor was the judgment executed upon. Instead, Dreamers voluntarily paid the judgment to avoid the chosen means of executing the judgment, namely, sale of the property by the Master Commissioner. But “it is clear where a litigant pays an adverse judgment he does not thereby impair his right to appeal.” Moss v. Smith, 361 S.W.2d 511, 514 (Ky.1962).

Payment of a judgment, however, can extinguish a right of appeal where the payment is part of a settlement or compromise. See Stairs v. Riley, 306 Ky. 645, 208 S.W.2d 961 (1948). The basic question before the Court, then, is whether Dreamers’ payment of the judgment in full in this case was part of a settlement or compromise and therefore waived its right to appeal. Both parties cite Stairs v. Riley as precedent for their position. However, Don’s Lumber misreads Stairs.

In Stairs, our highest court, then sitting as the Court of Appeals, reiterated longstanding law that the mere payment of a money judgment does not affect the losing party’s right of appeal. It then distinguished the case before it on its facts. The appellee in the case had obtained a personal judgment for $3400 and obtained an order of sale on a piece of mortgaged property. Id. at 962.

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Bluebook (online)
366 S.W.3d 381, 2011 Ky. LEXIS 136, 2011 WL 4431170, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dreamers-llc-v-dons-lumber-hardware-inc-ky-2011.