RENDERED: FEBRUARY 3, 2023; 10:00 A.M. NOT TO BE PUBLISHED 

# Commonwealth of Kentucky Court of Appeals

NO. 2022

- CA

- 0298

- MR

NATHAN LOCKARD AND MOUNTAIN NATURAL PRODUCTS, LLC APPELLANTS

v. APPEAL FROM PIKE CIRCUIT COURT

HONORABLE HOWARD KEITH HALL, JUDGE

ACTION NO. 20

- CI

- 01642

AMERICAN BOTANICALS, LLC APPELLEE

OPINION AFFIRMING
**   **  **
BEFORE: THOMPSON, CHIEF JUDGE; DIXON AND GOODWINE, JUDGES. DIXON, JUDGE: Nathan Lockard a nd Mountain Natural Products, L LC (MN P) appeal from the order s of t he Pike Circuit Court denying their motion to stay enforce ment of a foreign judgment and their motions to alter, amend , or vacate

same , entered on October 19, 2021, and February 28, 2022, respectively

. After careful review of the record, briefs, and applicable law, we affirm.- 2

- FACTS AND PROCEDURAL BACKGROUND
MNP i s a Kentucky l imited l iability c ompany (LLC) managed by Nathan Lockard , a Kentucky resident

. Lockard and MNP conducted business with American Botanicals, LLC , (“American Botanicals”)

– a Missouri LLC

– beginning in 2014. On January 5, 2015, American Bota nicals and MNP entered
into a c ash a dvance a greement (“Agreement”) signed by Lockard.

American Botanicals later brought a breach of contract action in Missouri against MNP and Lockard for their failure to comply with the Agreement

. MNP was served through its registered agent, Nathan Lockard , and Lockard by a
process server leaving a copy of the summons and petition with his wife, Brandy, at their residence

.

Neither Lockard nor MNP responded or appeared in the Missouri
action , and a de fault judgment was entered against them. On August 24, 2020, the Missouri court entered a final order and judgment against Lockard and MNP , jointly and severally for damages totaling $44,472.65.

On December 28, 2020, American Botanicals filed its n otic e and

a ffidavit of f

oreign j udgment r egistration in Kentucky’s Pike Circuit Court and served Lockard and MNP at the same address used in the Missouri action

. Lockard and MNP moved the court to stay enforcement of the foreign judgment

. A fter the matter was fully briefed and heard , the trial court denied the motion

.- 3

-

Lockard and MNP then moved the trial court to alter, amend, or vacate its order. Following a full briefing and hearing, the court denied the motion. This appeal followed. STANDARD OF REVIEW

Kentucky Rules of Civil Procedure ( CR ) 55.02 states that “[f]or good cause shown the court may set aside a judgment by default in accordance with Rule 60.02.” Whether a CR 60.02 motion should be granted is left to the sound discretion of the trial court. Because the law favors finality, relief should only be granted “with extreme caution and only under the most unusual and compelling circumstances.” Age v. Age , 340 S.W.3d 88, 94 (Ky. App. 2011). We, therefore, review for whether the trial court abused its discretion. Id

. “The test for abuse of discretion is whether the trial [court ’ s] decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles.” Commonwealth v. English , 993 S.W.2d 941, 945 (Ky. 1999) (citations omitted). Further, “[i]t is axiomatic that default judgments are not favored in the law. They are to be scrutinized carefully pursuant to three criteria: 1) valid excuse for default, 2) meritorious defense, and 3) the absence of prejudice to the other party.” Smith v. Flynn , 390 S.W.3d 157, 159 (Ky. App. 2012) (citations omitted).- 4

- LEGAL ANALYSIS Kentucky Revised Statutes (KRS) 426.955 allows a foreign judgment filed within a Kentucky court to have “ the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of a court of this state and may be enforced or satisfied in like manner. ” Appellants argue the Missouri judgment is unenforceable for three reasons: (1) the

cour t lacked in personam jurisdiction over them, (2) Lockard is not personally liable under the contract, and (3) they were not properly served in the Missouri action. We w ill address each of these arguments, in turn.

First, Appellants claim the Missouri c ourt lacked in personam

– or personal

– jurisdiction over them

. However, Missouri’s long

- arm statute clearly provides: 1. Any person or firm, whether or not a citizen or resident

of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts: (1) The transaction of any business within this state; (2) The making of any contract within this state [.]- 5

-

Missouri Annotated Statute ( Mo. Ann. Stat. ) 506.500. American Botanical s’ Missouri petition averred that both Lockard and MNP trans acted business within
Missouri

– i ncluding making and entering the Agreement, which is a contract

– sufficient to provide personal jurisdiction over them through Missouri’s long

- arm
statute. Yet, d espite having been served with a summons and petition, n ei ther Appellant challenged the Missouri court’s exercise of personal juri sdiction over them in that action.

Furthermore, and c ontrary to their arguments, the Missouri court’s exercise of personal jurisdiction over Appellants did not offend “ traditional n otions of fair play and substantial justice ” in violation of their due process rights

. Int ’ l Shoe Co. v. State of Wash., Office of Unemployment Comp

. & Placement , 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945) (citations omitted). It is well
establishe d that “to the extent that a [person or] corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. ” Id. at 319, 66 S. Ct. at 16 0. Therefore , the “ privilege may give rise to obligations; and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.” Id. The three

- pronged test for minimum contacts, “ requires that: (1) defendant has purposely availed itself of the privilege of acting within the state; (2)- 6

-

the cause of action must arise from defendant ’ s ac tivities; and (3) enough connections to the state must exist so that jurisdiction would be reasonable. ” Sunrise Turquoise, Inc. v. Chem

. Design Co., Inc. , 899 S.W.2d 856, 858 (Ky. App. 1995)

. American Botanicals produced affidavits from its president and accounting supervisor that Lockard traveled to their Missouri facility “on numerous occasions to discuss transacting business ,” including the date the Agreement was entered. An e mail from Lockard stated he was transporting product to American Botanicals in Missouri which was “to be applied to my
advance

. ” Another email from Lockard confirmed he : (1) met with American Botanicals’ president and accounting supervisor in Missouri , (2) delivered a shipment of product to them in Missouri , and (3) r eceived wires totaling $30,000. 00. Lockard also inquired if the consignment material from 2014 would be applied to “my” account. Thus, under Missouri law and consistent with due
process considerations , Missouri indeed had personal jurisdiction over Appel l ants.

Second, Lockard claims he is not personally liable under the contract. Once again, American Botanicals averred in its Missouri petition that MNP and Lockard jointly entered into the Agreement . Although Lockard was served with a summons and peti tion , he failed to contest that he jointly and personally entered the contract in the Missouri action. This failure to raise required affirmative- 7

-

defenses constitutes waiver. Just as the Supreme Court of Kentucky held in Sunrise Turquoise, Inc. , 899 S.W.2d at 859 , that “ Sunrise cannot now raise matters which should have been presented to the trial court in Florida [,] ” Appellants in the case herein cannot now be heard to complai n of matters which should have been presented to the trial court in Missouri

.

Third , Appellants claim they were not properly served in the Missouri action . Yet, “actual notice of the lawsuit is not required to effectuate service as long as it is done in compliance with the applicable statute.” HP Hotel Mgmt. , Inc. v. Layne , 536 S.W.3d 208, 214 (Ky. App. 2017) ( citing Cox v. Rueff Lighting Co ., 589 S.W.2d 606, 607 (Ky. App. 1979) )

. While a showing of no actual notice may constitute good cause sufficient to warrant setting aside a default judgment , i t is imperative that “[t]he facts and circumstances of each individual case should be weighed” in making such a deter mination. Id. at 215.

The law is clear : According to CR 55.02, if a defaulting party demonstrates good cause, a trial court may set aside a default judgment providing said good cause meets the requirements set forth in CR 60.02. To show good cause, and thereby justify vacating a default judgmen t, the defaulting party must: (1) provide the trial court with a valid excuse for the default; (2) demonstrate a meritorious defense; and (3) show the absence of prejudice to the non

- defaulting party. “All three elements must be present to set aside a de fault judgment.”- 8

-

First Horizon Home Loan Corp. v. Barbanel , 290 S.W.3d 686, 688

- 89 (Ky. App. 2009) (footnotes and citations omitted). To succeed in a motion to set aside a judgment, Appellants are required to show good cause, as well as a valid excuse, a meritorious defense, and the absence of prejudice to the nonmoving party.

Herein, Appellants claim there is no evidence in the record that they

were proper ly served with the complaint in the Missouri action. This is simply not borne out by the record. Lockard’s self

- serving affidavit s are undercut by the proof of service to Brandy Lockard on October 1 2 , 2019.

Undaunted by the facts in the record, Appellants discuss Kentucky’s rules of service. However, our courts have pointed out that our rules conc erning service are not the standard by which to measure foreign judgments ; t hey must be measured by the laws of that state. Here, we must review whether service followed Missouri rules. See Waddell v. Commonwealth , 893 S.W.2d 376, 379 (Ky. App. 1995) (“ To succeed in this collateral attack, Waddell must show that the judgment is void under Indiana law. Thus, his discussion regarding our CR 4.05

- 4.07 and the procedure outlined therein for a warning order are completely irrelevant. ”). Consequent ly, Appellants next attack American Botanicals ’ compliance with Missouri’s rules concerning service. American Botanical s filed proof of its compliance with Missouri’s rules of service. Pursuant to Mo. Ann.- 9

-

Stat. 506.100( 2 ) , “ service may be made

. . . (3) Upon a party, by leaving a copy at his usual place of abode with some person of his family over the age of fifteen
years. ” This was done by leaving a copy of the summons and petition with Brandy Lockard at “ their dwelling place .” MNP was served throu gh Lockard

– i ts registered agent

– i n the same fashion

. Thus, we ascertain no error.

Because they have failed to demonstrate good cause or a valid excuse why the Missouri default judgment should be set aside, we need not address whether Appellants have a meritorious defense or whether setting aside the judgment would prejudice American Botanical s . We do note, however, that Appellants have failed to demonstrate either. Failure to put forth evidence of a meritorious defense demonstrates the high li kelihood of simply postponing the inevitable with unjustifiable increased fees, costs, and delay. Appellants also failed to show how setting aside the judgment would not prejudice American Botanical s . “ We also agree with the trial court that the idea of fairness must be viewed from both sides. [The nonmovant] argues that if this judgment were set aside, the additional costs it had incurred in defending foreclosure actions as a result of its judgment lien would be ‘ money down the drain. ’ ” S.R. Blanton De v. , Inc. v. Invs

. Realty & Mgmt. Co., Inc ., 819 S.W.2d 727, 729

- 30 (Ky. App. 1991)

. Thus , we cannot say the trial court erred or abused its discretion in denying Lockard’s and MNP’s motion to stay enforcement of the foreign judgment.- 10

- CONCLUSION Therefore, and for the foregoing reasons, the order s of the Pike Circuit
Court are AFFIRMED.

ALL CONCUR.

BRIEF S FOR APPELLANT S : Donald H. Combs Pikeville, Kentucky BRIEF FOR APPELLEE:
C . Tom Anderson Pikeville, Kentucky Ryan D. Mosley Hazard, Kentucky