RENDERED: FEBRUARY 24, 2023; 10:00 A.M. TO BE PUBLISHED 

# Commonwealth of Kentucky Court of Appeals

NO. 2022

- CA

- 0318

- MR
CHRIS JOHNSON APPELLANT

v. APPEAL FROM PIKE CIRCUIT COURT HONORABLE KIM BERLY C. CHILDERS, SPECIAL JUDGE

ACTION NO. 20

- CI

- 00182

AKERS DEVELOPMENT , LLC ; CARROLL ENGINEERING, CO

. ; COMMONWEALTH OF KENTUCKY

DIVISION OF UNEMPLOYMENT INSURANCE; COMMUNITY TRUST BANK, INC.; HAROLD E. AKERS, INDIVIDUALLY AND AS A MEMBER OF AKERS DEVELOPMENT AND HUBBLE MINING; HUBBLE MINING CO

. , LLC; JIM D. AKERS, AKA JIMMY D. AKERS, INDIVIDUALLY AND AS A MEMBER OF AKERS DEVELOPMENT AND HUBBLE MINING; MARK BRANHAM; RIVERSIDE SUPPLY, LLC; AND UNITED STATES OF AMERICA INTERNAL REVENUE SERVICE APPELLEES- 2

- OPINION AFFIRMING
**   **  **
BEFORE: CETRULO, DIXON, AND EASTON, JUDGES. CETRULO, JUDGE: This is an app eal from a Pike Circuit Court judgment that
confirmed a deed transfer to Appellee Akers Development, LLC (“Akers Development ”) 1 after determining Akers Development sufficiently satisfied the right of redemption statutory requirements

. After review , we affirm.

I. FACTS AND PROCEDURAL BACKGROUND In February 2020, Appellee Community Trust Bank, Inc. (“CT Bank”), 2 filed a foreclosure action against Akers Development for a property located on Regina Belcher Highway in Pike County, Kentucky (the “property”).
Thereafter , the Pike Circuit Court referr ed the matter to the master c ommissioner for judicial sale. The master c ommissioner ob tained an appraisal for the property, valuing it at $250,000. Eight months later, after a public auction, the m aster

co mmissioner filed a r eport of s ale to Appellant Chris Johnson (“Johnson”) for $55,000. After the sale, a lien was retained on the property

– p ursuant to Kentucky

1 Appellees Akers Dev elopment, LLC; Harold E. Akers, individually and as a member of Akers Development and Hubble Mining; Jim D. Akers, AKA Jimmy Akers, individually and as a member of Akers Development ; and Hubble Mining will be referred to as “Akers Development , ” collectively.

2 CT Bank was present at the circuit court hearing and approved the deed transfer to Akers Development but did not file a brief in this appeal.- 3

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Re vised Statute ( “ KRS ” ) 426.530 allowing Akers Development the right of redemption on the property within six months from the date of sale (expiring April 14, 2021) because the purchase price at auction was less than two

- thirds of the property’s appraised va lue

. Soon after, the circuit court ordered the funds from the sale of the property to be distributed and a deed executed to Johnson.

In the months that followed, Akers Development and Johnson were in contact to discuss the future of the property. The pa rties discussed Akers Development possibly buying back the property but subsequently renting it to
Johnson. Johnson later admitted that in “February or March” of 2021, Akers Development informed him of its intention to utilize its right of redemption to buy
back the property. 3 On March 26, 2021, the negotiations “fell apart

. ” Also on that day, Johnson called and informed the master c ommissioner that his only expense (beyond the purchase price) tow ard the property

– as of that date

– was $534 for
flood insurance. 4

3 Johnson stated at the May 2021 hearing that the parties “talked about” Akers Development buying the property back in “February or March,” but that nothing firm had been established. In its appellate brief, Akers Development argues that “[b]y January, Johnson had been told by the office of [Akers Development’s] CPA that redemption was being consider ed.”

4 Johnson paid the flood insurance in November 2020, months before Akers Development filed the Notice of Redemption. Akers Development argued to the circuit court that it did not have to reimburse Johnson for this insurance payment because the flood insurance was “optional and not legally required” for the property. The circuit court gave Akers Development an opportunity to contest the expenditure, but ultimately , A kers Development paid the flood insurance

– along with the other expenses

– without objection.- 4

- On March 29, 2021, Akers Development obtained a cashier’s check for the purchase price plus ten percent. That same day , Johnson paid the property

taxes , but did not inform Akers Development of th at payment at th at time

. The next day , Johnson paid property and casualty insurance , but again did not inform Akers Development of th at payment at th at time

. On March 31 , 2021

– 14 days before the right of redemption expired

– Akers Deve lopment paid the full purchase price plus interest ($57,531.51) to the clerk and filed a n otification of e xercise of

r edemption r ight (“Notice of Redemption”)

. On April 9 , 2021, CT Bank filed a
motion for issuance of deed and distribution of funds , stating that Akers Development had exercised its right of redemption and should have a deed
executed to it for the property. On April 21 , 2021, J ohnson filed an o bjection to
CT Bank’s motion and a m otion to d eclare the r ight of r edemption n ull and v oid because Akers Development did not pay the flood insurance, p roperty taxes , or property and casualty insurance before the expiration of the right of redemption.

In May 2021, the parties presented oral arguments. At th at hearing, Akers Development argued that Johnson did not inform it of his March 29 (property taxes) and March 30 (property and casualty insurance) expenditures until
after the statutory deadline ended . Moreover, Aker s Development argued that in the months preceding the deadline, it asked Jo hnson repeatedly if it owed additional funds, but Johnson did not answer n or show any proof of payments- 5

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( beyond a flood insurance payment o f $534 )

. As one element of its proof, Akers Development submitted a photograph of a cell phone showing a text it had allegedly sent on April 6 , 2021 to Johnson stating, “Hey, Cris [sic] , we did the redemption. Need to know if we owe you anything else, insurance? Let me
know.”
Johnson said he never received the text and later submitted phone records allegedly supporting his contention ; however, the photograph Akers Development submitted show ed the text was allegedly read on April 8 , 2021

. During his long narrative testimony at this hearing , Johnson admitted that his future plans for the property required him to own the property, not just rent it from Akers Development. He stated, “without the [property], I couldn’t get a loan on such a big remodel of the building, with no asset to put up for collateral, so I really needed the building, and if they purchased it back I wouldn’t have that.”

On January 3, 2022, the circuit court entered an order finding Akers Development had “made timely inquiry as to what sums its exercise of its redemption rights ha d cause [d ] it to owe [Johnson]” and overruled Johnson’s motion to declare the right of redemption null and void (“January Order”)

. Th e January Order instructed Johnson to submit an itemized list of sums Akers Development owed him within five days and allowed Akers Development to pay and/or object to the itemized totals within ten days after Johnson’s filing

. Johnson- 6

-

timely submitted receipts for flood insurance, property taxes, and property and casualty insurance. Akers Development did not object and timely paid the sum in full ($13,065.13) on January 12 , 202 2

.

The next day, Johnson filed a motion to alter, amend or vacate the January Order pursuant to Kentucky Rule of Civil Procedure ( “ CR ” ) 59.05 , alleging Akers Development paid th e reasonable costs owed to Johnson after the expiration of the statutory period for redemption. However, the court overruled his
motion and ordered Johnson to surrender possession of the property (“March Order”) . Johnson appealed. 5
II. STANDARD OF REVIEW On appeal, Johnson challenges the circuit court’s factual finding that Akers Development “made timely inquiry as to what sums its exercise of its redemption rights had cause [d] it to owe [Johnson.]” Our review must give d ue regard to the opportunit y of the trial court to judge the credibility of the witnesses. CR 52.01. Additionally, a ny findings of fact by the trial court shall not be set aside
unless clearly erroneous. Id

. Clearly erroneous facts are those not supported by

5 According to the n otice of a ppeal, Johnson appeals both the January Order and the March Order. However, denial of a motion to alter, amend , or vacate pursuant to CR 59.05 is not appealable because it does not alter the judgment. Ford v. Ford , 578 S.W.3d 356, 366 (Ky. App. 2019). Therefore, this appeal is from the underlying judgment and our analysis addresses only the January Orde r
.- 7

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substantial evidence. Eagle Cliff Resort, LLC v. KHBBJB, LLC , 295 S.W.3d 850, 853 (Ky. App. 2009) (citation omitted).

Additionally, Johnson argues that the circuit court erred in granting Akers Developm ent’s right of redemption because the full requirements of
KRS 426.530 were not met within the statutory period. He argues that if Akers Development wanted to know firm numbers on his expenditures, 6 it should have
motioned for the court to order him to release that information. The applicable
standard of appellate review for issues of law, including statutory interpretation , is
de novo. Wheeler & Clevenger Oil Co., Inc. v. Washburn , 127 S.W.3d 609, 612 (Ky. 2004).
III. ANALYSIS

Akers Development argues that Kentucky law favors the right of redemption ; we agree. Dating back to 1899, the highest c ourt of Kentucky upheld

a good faith attempt to make such a redemption

. Moore v. Bishop , 49 S.W. 957 (Ky. 1899)

. In Moore , a homeowner attempted to pursue his right to redeem but “by some mistake ” was nine dollars short. Id. at 957

- 58

. The Court determined
that the d ebtor will be allowed to complete the redemption after the expiration of

6 The parties agree that they had numerous conversations and text messages about taxes and fees for the property. Johnson argues Akers Development had knowledge of the general amount for those expenditures; Akers Development argues it was never given firm numbers or receipts despite repeated requ ests.- 8

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the time allowed , where he made a good faith attempt to redeem in time, but by mistake deposited a few dollars less than the amount due. Id.

More than 100 years later, Kentucky c our ts are still preserving th e right of redemption

. See, e.g. , Eagle Cliff Resort , 295 S.W.3d at 852 ( “[A] right [of redemption] is ‘protected’ when the court assures compliance with Kentucky statutes and caselaw regarding judicial sales.” )

. However, the right of redemption
is not without limits. Looking at the plain language of the current statute, i f a property is sold pursuant to an order of the court and does not bring two

- thirds of its appraised value, the defendant has six months from the date of sale to b u y b ack the property by paying 1) the auction purchase price, plus 2) ten percent interest, plus 3) “ an y reasonable costs incurred by the purchaser after the sale for maintenance or repair of the property, including but not limite d to utility expenses, insurance,

. . . taxes

. . . .” KRS 426.530(1) ( e mphasis added)

.

A. Findings of Fact : Clearly Erroneous Review Here, the parties agree Akers D evelopment paid the auction purchase price plus ten percent interest within the statutory period. All parties also agree that Akers Development did not pay the taxes and fees Johnson incurred within the statutory window. Johnson argues that Akers Develop ment’s failure to timely pay the taxes and fees extinguished the ir entire right of redemption; conversely, Akers- 9

-

Development argues that they attempted to pay in good faith, but Johnson’s actions prevented timely payment

.

T he circuit court determined that Akers Development made a good faith effort to request and pay those expenditures on time and the right of redemption was sufficiently exercised. We agree , and the record s upports the
circuit court’s finding : 1) the parties agree they had been in negotiations for months and it was reasonable for Akers Development to request the fee and tax information directly from Johnson; 2) evidence (the text message) exists that Akers Development did request the information directly from Johnson; 3) the parties agree that Johnson did not proffer proof of those payments until the January Order instructed him to do so; 4) Johnson admitted that he paid the property taxes and bought the property and casualty insurance mere days before Akers Development
filed his Notice of Redemption (and after Akers Development purchased the cashier’s check for the redemption ); 5 ) Johnson admitted in the May hearing that his business plan would fall through if Akers Development followed through with their redemption ; and 6 ) Akers Development paid all the taxes and fees within 10 days of Johnson showing proof of his payments. T he circuit court’s factual findings were not clearly erroneous because the y were supported by substantial
evidence

.- 10

- B. Conclusions of Law: De Novo Review Next, Johnson argues KRS 426.530 demands strict compliance. Akers Development, however, argues that under these circumstances , the statute does not require the reasonable expenses be paid within the statutory window. We
agree. First , Johnson cannot dema nd strict compliance with the right of redemption statutory timing when the delay in payment was of his own making.
See Hamilton Holdings LTD. v . Appalachian Royalty Tr., LLC , No. 2019

- CA

001556

- MR, 2020 WL 2790417 ( Ky. App. May 29, 2020). 7 Although unpublished, both parties cited Hamilton Holdings in their briefs ; therefore , we find it valuable to address.

In Hamilton Holding s , a trust’s property was sold

– subsequent to a mortgage foreclosure action

– but the purchase price at the public auction was less
than two

- thirds of the property’s appraised value, thereby initiating a right of redemption. Id. at *1. The trust, through legal counsel, informed the auction purchaser of the trust’s intent to redeem the property and requested that any
reasonable costs be made known. Id. T he parties could not reach an agreement on the reasonable costs incurred, and the circuit court held a hearing. Id. a t *2. The

7 We cite this unpublished opinion as persuasive, not binding, authority. See Kentucky Rule of Appellate Procedure 41 (A).- 11

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circuit court settled the dispute, but the purchaser appealed the determination of ownership of coal mining royalties ( accrued during right of redemption
discussions )

. Id.

Here, the parties interpreted Hamilton Holdings differently. Johnson
argue s that

– like the trust in Hamilton Holdings

– to ascertain the “ reasonable
costs incurred , ” a redeemer should either a) request through legal counsel, b) file a
motion with the court , and/ or c) request a hearing. While those are certainly
reasonable (and recommended) steps, Hamilton Holdings did not create such a
rule . The parties in Hamilton Holdings handled all negotiations through legal
counsel and the facts did not establish that the partie s had personal contact at any stage of the process. That is distinguishable from the situation before us. Here, it was reasonable for Akers Development to request the information directly from Johnson considering the months of negotiations that had alrea dy occurred between the two parties. Had those negotiations not happened, maybe more formal legal steps would have been necessary, but we address only the facts before us.

Akers Development argues that Hamilton Holdings place d the burden on the auction purchaser to make his or her reasonable costs known ; but again, Hamilton Holdings did not create such a mandate

. Akers Development quoted the
circuit court’s words within the Facts section of the opinion, not this Court’s
holdin g in Hamilton Holdings . This Court stated in Hamilton Holdings that an- 12

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auction purchaser cannot benefit from a delay of his own making in the redemption
process. Id. at *5 ( “ [W] e agree with the Bell Circuit Court that [the auction purchaser] may not use the delay it caused to unjustly lengthen its period of possessing the property and thereby not promptly allowing [the original owner ] to complete the redemption process and therea fter claim entitlement to the coal mining royalties.” Similarly, here, Johnson may not demand strict compliance to right of redemption timing when his own actions prevented strict compliance by
the redeemer.

That leads us to our second conclusion: Akers Development’s substantial compliance was sufficient to satisfy the requirements of the “reasonable costs incurred by the purchaser” provision of KRS 426.530. In Knox C ounty

. v.
Hammons , 129 S.W.3d 839 (Ky. 2004) , the Kentucky Supreme C ourt discussed
when substantial compliance (versus strict compliance ) was sufficient to satisfy a statutory provision. Th e Court’s determination focused on whether the provision in question was mandatory or directory

. Id. at 842.

In considering whether the provision is mandatory or directory, we depend not on form, but on the legislative intent, which is to be ascertained by interpretation from consideration of the entire act, its nature and object, and the consequence of construction one way or the other. In other words, if the directions given by the statute to accomplish a given end are violated, but the given end is in fact accomplished, without affecting the real merits of the case, then the statute is to be regarded as directory merely.- 13

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Id. at 843 (internal quotation marks and citations omitted).

There , t he Court concluded that the provision was directory , and strict interpretation was not absolutely necessary to accomplish the intent of the statute.
The facts before us are distinct from Knox County , 8 but the guidance is undeniable.

Here, i n April 2014, the legislature added the “reasonable costs” language to the right of redemption statute. From the plain meaning of the statu t e,

we can infer that the intent of the legislature was to make an auction purchaser whole for his expenses if he l os t the property through the right of redemption. Here, even though the “reasonable costs” deadline was not met, the real merits of
the case were in fact still accomplished , i.e. , the purchase price, plus interest, were paid within the strict six

- month window, and the reasonable costs were paid shortly after the right of redemption was utilized. Stated another way , strict interpretation of the “reasonable costs” provision is not a bsolutely necessary to accomplish the intent of the statute. Therefore, the “reasonable costs” provision is directory, requiring substantial (not strict) compliance.

Here, Akers Development substantially complied with the “reasonable costs” provision of KRS 426.530. Akers Development tried to make Johnson

8 Knox County dealt with, in relevant part, KRS 67.077(2) and whether “shall” in a tax ordinance created a mandate or if substantial compliance was acceptable.- 14

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whole before filing its Notice of Redemption, but Johnson did not turn over his expense receipts as requested; Akers Development di d make Johnson whole within

ten days of his submission of those expenses to the court. Under these circumstances, Akers Development substantially complied with the reason able costs provision of KRS 426.530.
IV. CONCLUSION
We detect no error in the court’s finding that Akers Development made timely attempts to pay the reasonable costs Johnson incurred. Further, here, the “reasonable costs incurred by the purchaser” provision of KRS 426.530 is directory, and Akers Development ’s substantial compliance with this provision was sufficient. Lastly, even if strict compliance would have been required,
Johnson’s actions waived strict compliance.

For the foregoing reasons, t he j udgment of the Pike Circuit Court is
AFFIRMED.

ALL CONCUR.

BRIEF S FOR APPELLANT: BRIEF FOR APPELLEE AKERS DEVELOPMENT, LLC : James L. Hamilton Lawrence R. Webster Pikeville, Kentucky Pikeville, Kentucky