IMPORTANT NOTICE 

NOT TO BE PUBLISHED OPINION 

THIS OPINION IS DESIGNATED "NOT TO BE PUBLISHED." 

PURSUANT TO THE RULES OF CIVIL PROCEDURE 

PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C), 

THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE 

CITED OR USED AS BINDING PRECEDENT IN ANY OTHER 

CASE IN ANY COURT OF THIS STATE; HOWEVER, 

UNPUBLISHED KENTUCKY APPELLATE DECISIONS, 

RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR 

CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED 

OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE 

BEFORE THECOURT. OPINIONS CITED FOR CONSIDERATION 

\ BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED 

DECISION IN THE FILED DOCUMENT AND A COPY. OF THE 

ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE 

DOCUMENT TO THE COURT AND ALL PARTIES TO THE 

ACTION. 
RENDERED: DECEMBER 17, 2015 

NOT TO BE PUBLISHED 

$uprrittr &Turf of ticg. la , unr 

u

itl 

20.15-SC-000125-MR U 

D)Ar- 

_11 1 

I I "'1•• (42 S.IAJiv.QTVItoJ e %A. 

APPELLANTS 

WAYNE MICHAEL PUTNAM; AND 

BETH DIANE GUDEMAN 

ON APPEAL FROM COURT OF APPEALS 

V. CASE NO. 2014-CA-001635-OA 

FAYETTE CIRCUIT COURT NO. 05-CI-01717 

HONORABLE ERNESTO M. SCORSONE, 

JUDGE, FAYETTE CIRCUIT COURT APPELLEE 

AND 

ESTATE OF JOSEPH WILLIAM PHELPS; MARY 

MARGARET PHELPS; MELANIE McCOOL; AND 

WILLIAM PHELPS, JR. REAL PARTIES IN INTEREST 

MEMORANDUM OPINION OF THE COURT 

VACATING AND REMANDING 

This case presents the question whether judgment-debtor defendants 

ordered to produce documents related to a company that they have a 

substantial interest in and that they likely control have standing to challenge 

the order in a writ action. The Court of Appeals concluded that they do not 

because they have no concrete, personal interest in the company's documents. 

This approach ignores that the discovery order is directed at the judgmentdebtor defendants, requiring them to produce the documents in question. 

Because the order affects their rights and obligations, to the extent they can 

even comply with it, they have standing to challenge it. For that reason, the 
order of the Court of Appeals denying the petition for a writ is vacated, and this 

case is remanded for further consideration. 

I. Background 

The Appellants, Wayne Michael Putnam and Beth Diane Gudeman, and a 

third person, Stephen L. Whitman,' were officers and part-owners of two sets of 

corporations. One set of corporations consisted of a series of pharmaceutical 

companies that were dedicated to developing a potentially lucrative cancer drug 

that appears to be undergoing FDA approval. These companies appear to have 

been consolidated into CBA Pharma, Inc. The only asset owned by the company 

is the cancer drug. The Appellants are not the only owners of CBA Pharma, 

Inc., which has approximately 800 shareholders, though they are trustees of a 

voting trust holding approximately 90% of the company's stock. 

The other set of companies, consisting at present of Scientific Imaging 

Technology Enterprises, Inc., Pixelvision of Oregon, Inc., and PixelVision, Inc., 

manufacture digital cameras and parts for digital cameras. These companies 

were allegedly profitable through the late 1990s. The profits are alleged to have 

been used to fund the pharmaceutical companies, which had no revenue 

because they were in the development phase. 

Joseph William Phelps became involved in a series of business 

transactions with the Appellants beginning in 2001, when the camera 

companies became less profitable. Specifically, Phelps provided a series of 

substantial loans to the companies, which the Appellants personally 

guaranteed and which were consolidated into a promissory note in 2002. 

1Whitman is not part of the litigation at this time. 

2 
Phelps also agreed to guarantee a substantial loan from U.S. Bank, N.A. to the 

camera companies, and, in turn, the Appellants agreed to a secondary 

guarantee under which they would repay any amount that Phelps had to pay to 

U.S. Bank. The details of these transactions are immaterial, but they are 

recounted in Scientific Imaging Technology Enterprises, Inc. v. Phelps, 2011-CA002119-MR, 2014 WL 97393 (Ky. App. Jan. 10, 2014) (unpublished). 

In 2003, Phelps entered into an agreement with the Appellants, and 

some of their companies, under which he agreed to release the remaining debt 

on the promissory note (which at that time was still almost $3,000,000) and to 

release the Appellants from all their guarantees, both as to the direct loans 

from Phelps and the loan from U.S. Bank. In exchange, Phelps received 

2,000,000 shares of CBA Pharma, Inc. common stock. 

As it turned out, Phelps was not well and had begun having symptoms of 

dementia. He was diagnosed as having Lewy body dementia, a degenerative 

neurological disease similar to Alzheimer's disease and Parkinson's disease. In 

light of this diagnosis and after discovering apparently unusual dealings in 

Phelps's finances, in 2004, Phelps's family contacted a lawyer to examine 

Phelps's relationship with the Appellants and their companies. 

In April 2005, the camera companies defaulted on the U.S. Bank loan, 

and U.S. Bank initiated the underlying litigation. Phelps, the Appellants, 

Whitman, and the camera companies were named as defendants. Phelps filed 

an answer and cross-claim against the other defendants alleging fraud and 

that he had lacked capacity to enter into the 2003 release agreement. Phelps 

also moved the circuit court for leave to file a third-party complaint against the 

3 
' pharmaceutical companies, but that was denied. The motion was made and 

denied at least one more time in the course of the litigation. 

Phelps died in October 2005, and his estate was substituted as a party. 

Eventually, U.S. Bank also brought suit against Phelps's wife, Mary Margaret 

Phelps; his daughter, Melanie McCool; and his son, William Phelps, Jr.; 

claiming they had participated in fraud in obtaining an extension of the 

substantial loan from U.S. Bank. They counterclaimed for abuse of process. 

Eventually, U.S. Bank settled with the estate and the named members of 

the Phelps family. The bank assigned its interest in its loan to the Phelps 

family. In exchange, the bank was paid $675,000, and the family dropped their 

counterclaims. The settlement agreement also provided that 20% of any money 

recovered based on the bank's assigned rights would be paid to the bank. This, 

in effect, made the estate and the family the plaintiffs in the underlying action, 

leaving the Appellants, Whitman, and the camera companies as the 

defendants. 

The case went to trial on the Phelps family's fraud and incapacity claims 

and for collection of amounts owed on the promissory note and the U.S. Bank 

loan. The trial court granted a directed verdict in the family's favor as to the 

enforceability of the loans, reserving the question of damages. The jury found 

that Phelps lacked capacity to enter into the 2003 release agreement and did 

not reach the fraud claim. The circuit court entered a judgment against the 

Appellants, Stephen Whitman, and the camera companies in an amount 

exceeding $12,000,000. This judgment, except for $675,000, was affirmed by 

the Court of Appeals, Scientific Imaging Technology Enterprises, Inc. v. Phelps, 

4 
2011-CA-002119-MR, 2014 WL 97393, at * (Ky. App. Jan. 10, 2014) 

(unpublished), and this Court declined discretionary review. 

The Phelps family then began trying to collect from the judgment 

debtors. As part of this effort, they served a series of post-judgment discovery 

requests. Eventually, in 2014, the circuit court entered a discovery order 

commanding 

that the Judgment Debtors shall produce to the Judgment 

Creditors within ten ... days of the date of entry of this Order the 

following information and documents: The name, address, type of 

account, name of account and account number of any bank or 

other institution at which any business in which the Judgment 

Debtors Michael Putnam and Beth Diane Gudeman have an 

interest maintains any type of account; and the production of bank 

statements and accounts receivable and payable ledgers for such 

businesses for the years 2001-2005 and the past year. 

Such documents may be produced subject to the Agreed 

Protective Order and Confidentiality Agreement submitted by the 

parties. 

Concerned that this order would lead to the production of irrelevant 

information about the pharmaceutical companies, particularly CBA Pharma, 

Inc. (and, apparently, sensitive information about the company that could help 

its competitors), the Appellants filed a petition for a writ of prohibition with the 

Court of Appeals seeking to bar enforcement of the order. The Court of Appeals 

did not address whether the remedy of a writ was available under the 

procedural test laid out in Hoskins v. Maricle, 150 S.W.3d 1 (Ky. 2004), nor did 

it address the substantive question whether the lower court was acting 

erroneously. Instead, the court denied the petition on the ground that the 

Appellants lacked standing because they were named only in their individual 

capacities, the pharmaceutical companies were not named parties, and thus 

5 
the Appellants "ha[d] not demonstrated a personal and concrete interest in the 

records of CBA Pharma." 

The Appellants now appeal to this Court. Because a writ petition filed in 

the Court of Appeals is an original action in that court, the Appellants' appeal 

to this Court is a matter of right. See CR 76.36(7)(a) ("An appeal may be taken 

to the Supreme Court as a matter of right from a judgment or final order in any 

proceeding originating in the Court of Appeals."); Ky. Const. § 115 ("In all 

cases, civil and criminal, there shall be allowed as a matter of right at least one 

appeal to another court...."). 

IL Analysis 

The Court of Appeals' conclusion about the Appellants' standing is 

incorrect for several reasons. The most important of these is that the circuit 

court's discovery order is directed at the Appellants, as "Judgment Creditors," 

not CBA Pharma. Though the order may have an effect on CBA Pharma, it will 

do so through the Appellants' interest in the company and possession or 

control over the documents ordered to be disclosed. 

The Phelps family claims there is keen irony in the Appellants' having 

fought throughout the litigation to keep CBA Pharma out of the underlying 

litigation as a named party, and their now seeking to assert that they have a 

concrete and personal interest in the records of the company. Ironic though 

this may be, it is not an irrational position to take in that the discovery order 

itself is directed to the Appellants, not CBA Pharma. To the extent that the 

discovery order—which aims to force disclosure of a third party's documents6 
is directed at the Appellants, they have standing to try to resist the order 

through legal means of redress, such as a writ petition. 

In support of its decision, the Court of Appeals cited Commonwealth ex 

rel. Brown v. Interactive Media Entertainment and Gaming Association, Inc., 306 

S.W.3d 32 (Ky. 2010), in which we stated: "Writs are to be granted only as an 

extraordinary remedy, and certainly only when parties who have demonstrated 

a concrete interest are before the court." Id. at 40. It is certainly true that a writ 

petitioner must have a concrete interest at stake. But that case is not 

analogous to this one. In that case, the underlying litigation was a forfeiture 

action. A pair of trade associations claimed to represent various owners of 

property at issue in the underlying litigation and tried to appear in the 

litigation on the owners' behalf, but they were unwilling to reveal the identity of 

those owners. This Court concluded that the trade associations had not 

established standing because they had not established that they were acting on 

behalf of anyone with anything at stake in the litigation. 

But in this case, the Appellants are not trying to intervene in the 

litigation on behalf of CBA Pharma. Instead, the Appellants are the named 

defendants, against whom a judgment has been rendered and against whom 

discovery has been ordered. If anything, this could suggest that the circuit 

court's discovery order is too broad to the extent that it arguably tries to bind a 

non-party. 

That said, this Court has held that discovery may extend to the records 

of a non-party where "the documents sought were 'in the possession, custody 

or control of the party upon whom the request is served."' Edwards v. 

7 
Hickman, 237 S.W.3d 183, 189 (Ky. 2007) (quoting CR 34.01). And the 

Appellees have alleged, repeatedly, that CBA Pharma is under the Appellants' 

control. As in Edwards, the discovery requests here were served on the named 

parties, the Appellants, and the discovery order purported to bind them. Of 

course they have standing to challenge that order—to the extent it can bind 

them. 

The Court of Appeals' approach to standing here is unusual. On the one 

hand, the trial court may order discovery only as to documents under a party's 

control, which may in this case extend to records of CBA Pharma. On the other 

hand, the Court of Appeals presumed that because the records in question 

were those of a third party, the Appellants had no standing to seek a writ to 

undo the discovery order. But both of those things cannot be correct. The 

Appellants cannot be subject to the discovery order and have no standing to 

challenge it. 

No doubt, questions of standing can be difficult at times. That is one of 

the reasons that this Court has held that standing may not be raised by a 

court sua sponte, Harrison v. Leach, 323 S.W.3d 702, 709 (Ky. 2010), as it 

appears to have been here. Where the issue is not fully litigated by the parties, 

there is too much danger of error based on incorrect assumptions about the 

relationships between the parties and third parties. Under Harrison, even if the 

Court of Appeals had been correct on the substance of the standing question, it 

had no power to raise the issue sua sponte. Since the Phelps family did not 

raise it, it is considered waived. 
Finally, because the Court of Appeals denied the petition on standing 

grounds, it never reached the merits of the petition, namely, whether the 

Appellants have satisfied the tests for availability of a writ of prohibition laid 

out in Hoskins v. Maricle, 150 S.W.3d 1 (Ky. 2004), and subsequent cases, and, 

if so, whether the lower court erred and a writ should issue. Because a writ 

action is an original action in the Court of Appeals, at least when the writ is 

sought against a circuit court judge, the appropriate forum for consideration of 

those questions for the first time is the Court of Appeals. We therefore decline 

to address them at this time. 

III. Conclusion 

The Court of Appeals was incorrect in deciding that the Appellants had 

no standing to challenge the trial court's post-judgment discovery order. That 

was the sole basis of the court's decision, which did not reach the traditional 

questions of whether a writ was even available as a remedy and, if it was, 

whether the writ should issue. The Court of Appeals' order denying the writ 

petition is vacated, and this matter is remanded to that court for further 

consideration of the Appellants' petition. 

Minton, C.J.; Abramson, Cunningham, Keller, Noble and Venters, JJ., 

sitting. All concur. Wright, J., not sitting. 
COUNSEL FOR APPELLANTS: 

Denise Duane Cook 

John Milton Sosbe 

Duane Cook 86 Associates, PLC 

135 N. Broadway 

Georgetown, Kentucky 40324 

APPELLANT: 

Honorable Ernesto M. Scorsone 

Judge, Fayette Circuit Court Court 

Robert F. Stephens Courthouse 

120 N. Limestone 

Lexington, Kentucky 40507 

COUNSEL FOR REAL PARTIES IN INTEREST: 

Sam Preston Burchett 

200 West Vine Street, #720 

Lexington, Kentucky 40507 

William Joseph Walsh IV 

Buchenberger Walsh, PLLC 

2010 Edgeland Avenue 

Louisville, Kentucky 40204 

10