Edwards v. Headcount Management

421 S.W.3d 403, 2014 WL 346070, 2014 Ky. App. LEXIS 14
CourtCourt of Appeals of Kentucky
DecidedJanuary 31, 2014
DocketNo. 2012-CA-000535-MR
StatusPublished
Cited by3 cases

This text of 421 S.W.3d 403 (Edwards v. Headcount Management) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edwards v. Headcount Management, 421 S.W.3d 403, 2014 WL 346070, 2014 Ky. App. LEXIS 14 (Ky. Ct. App. 2014).

Opinion

OPINION

ACREE, Chief Judge:

At issue is whether the Marion Circuit Court abused its discretion when it denied Appellant Debbie Edwards’s motion to set aside summary judgment under Kentucky Rule of Civil Procedure (CR) 60.02. Finding no abuse, we affirm.

I. Facts and Procedure

In July 2007, Staff Corp., Inc. and appel-lee Headcount Management entered into a Master Services Agreement whereby Headcount agreed to provide Staff Corp. with payroll processing and personnel services. The Agreement identified Headcount as Arrow Funding Corp. d/b/a Headcount Management. The Agreement was buttressed by a Guaranty issued by Edwards, Amanda Wood, and Russell Wood, III.

Three years later, Headcount sued Staff Corp., Edwards, Amanda, and Russell claiming they were each individually and severally liable to Headcount for services rendered in the amount of $22,467.65. Headcount identified itself in the caption of its complaint merely as “Headcount Management”; no mention of Arrow Funding Corp. was made.

[404]*404The defendants filed a joint and simultaneous motion to dismiss and an answer to the complaint. In the motion to dismiss, the defendants asserted the affirmative defenses identified in CR 12.02 and, in their answer, they raised numerous affirmative defenses identified in CR 8.03. Significantly, in neither the motion to dismiss nor the answer did the defendants “raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity” either by “specific negative averment” or otherwise. CR 9.01.1 By order entered November 12, 2010, the circuit court denied the defendants’ dismissal motion.

In February 2011, Headcount sought summary judgment asserting the defendants’ failure to respond to certain requests for admissions disposed of any genuine issues of material fact, and therefore it was entitled to judgment as a matter of law. Edwards opposed the motion.2 The motion was noticed for hearing on March 21, 2011. At the hearing, Edwards put into issue, for the first time, Headcount’s capacity to file suit, arguing Headcount was a non-entity incapable of suing. Headcount admitted “Headcount Management” was a d/b/a or trade name, and indicated it would readily amend the complaint to reflect the plaintiff to be Arrow Funding Corp. d/b/a Headcount Management.

On March 22, 2011, the circuit court granted Headcount’s summary-judgment motion, thereby tacitly rejecting Edwards’s capacity defense. Edwards moved to alter, amend, or vacate the circuit court’s summary-judgment order under CR 59.05, which the circuit court denied. No direct appeal was taken.

Edwards then moved the circuit court to set aside the March 22, 2011 summary judgment pursuant to CR 60.02 on grounds that Headcount committed fraud upon the court when Headcount concealed the fact that it is a non-entity incapable of bringing suit. By order entered February 16, 2012, the circuit court declined to afford Edwards CR 60.02 relief. From this order, Edwards appeals.3

II. Standard of Review

CR 60.02 is an exceptional remedy necessitating cautious application. Louisville Mall Associates, LP v. Wood Center Properties, LLC, 361 S.W.3d 323, 335 (Ky.App.2012). Relief under CR 60.02 is appropriate “only under the most unusual and compelling circumstances.” Age v. Age, 340 S.W.3d 88, 94 (Ky.App.2011). For that reason, the decision “to grant or to deny a motion filed pursuant to the provisions of CR 60.02 lies within the sound discretion of the trial court.” Id. [405]*405We will not disturb the circuit court’s decision absent an abuse of that discretion. Kurtsinger v. Bd. of Trustees of Ky. Ret. Sys, 90 S.W.3d 454, 456 (Ky.2002). Only a decision that is “arbitrary, unreasonable, unfair, or unsupported by sound legal prin-cipíese ]” manifests an abuse of discretion. Artrip v. Noe, 311 S.W.3d 229, 232 (Ky.2010).

III. Discussion

Edwards claims she is entitled to relief under CR 60.02(d), which authorizes the trial court to afford a party relief from a final judgment or order where fraud affected the proceedings. CR 60.02(d). Edwards contends Headcount is a non-entity prohibited from filing suit because “Headcount Management” is merely a d/b/a or trade name, not a legal entity. Edwards further asserts Headcount concealed this fact prior to seeking summary judgment, thereby committing a fraud upon the court. The real party in interest, Edwards avows, is Arrow Funding Corp. d/b/a Headcount Management. While not framed using the customary nomenclature, the essence of Edwards’s defense is one of capacity; that is, Headcount Management lacks the capacity to sue.

In response, Headcount asserts it may sue in the name in which it transacts business, Edwards waived her right to assert a capacity defense, and Edwards cannot articulate a valid reason for setting aside summary judgment under CR 60.02. Headcount’s position is well-taken.

Edwards directs us to no Kentucky authority holding an entity may not sue in its trade name, or assumed name, or what the public often refers to as its “d/b/a.” Instead, Edwards relies solely on Bryant v. Pulaski County Detention Center, 330 S.W.3d 461 (Ky.2011), in which the Kentucky Supreme Court held the Pulaski County Detention Center Corporation is not an entity capable of being sued because it “is entitled to sovereign immunity as an alter ego of the county.” Id. at 465. An entity’s capacity to sue or be sued in its trade name or assumed name was neither at issue nor discussed in Bryant. Bryant is of no consequence to the resolution of this matter, and Edwards’s reliance thereon is misplaced.

Nonetheless, presuming without decision that a party is indeed barred from suing in its assumed name, we agree with Headcount that Edwards waived the defense of capacity. “[Although an objection to a party’s capacity ... is not technically speaking an affirmative defense, it can be analogized to an affirmative defense and treated as waived if not asserted by motion or responsive pleading, subject, of course, to the liberal pleading amendment policy of Rule 15.” 5A Wright, et al, Fed. Prac. & Proc. Civ. § 1295 (3d ed.). To assert capacity as a defense — whether the basis of that assertion is a plaintiffs capacity to bring suit or a defendant’s capacity to be sued — compliance with CR 9.01 is compulsory and non-negotiable. Abbott v. Southern Subaru Star, Inc., 574 S.W.2d 684, 688 (Ky.App.1978) (“CR 9.01 ... required] that the ‘specific negative averment’ shall include ‘supporting particulars.’ ”).

Here, Edwards wholly failed to assert capacity as a defense, by motion or responsive pleading, in a timely manner.

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Bluebook (online)
421 S.W.3d 403, 2014 WL 346070, 2014 Ky. App. LEXIS 14, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edwards-v-headcount-management-kyctapp-2014.