Court Opinion

ID: 4568637
Source: CourtListenerOpinion
Date Created: 2020-09-22 23:06:59.977079+00
Date Added: 2024-06-11T13:27:13.261169
License: Public Domain

RENDERED: AUGUST 21, 2020; 10:00 A.M.
                  NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                  Court of Appeals

                   NO. 2019-CA-001077-MR

LARRY MILLS AND
BRANDON MILLS                                       APPELLANTS

            APPEAL FROM KNOX CIRCUIT COURT
v.          HONORABLE GREGORY A. LAY, JUDGE
                 ACTION NO. 10-CI-00552

RICKY MILLS AS ADMINISTRATOR
OF THE ESTATE OF ENIS J. MILLS;
RICKY MILLS; CAROLYN WARREN;
LISA GAY ALSIP; JERRY MILLS;
DONNA LAWSON; HAZEL ENTERPRISES, LLC;
KNOX COUNTY, KENTUCKY;
DWIGHT JASON WARREN; WILLIAM GROOME;
TAX EASE LIEN INVESTMENTS 1, LLC;
ASSET ACCEPTANCE, LLC;
WHITLEY LAND COMPANY; AND
PAUL BAKER, MASTER COMMISSIONER
OF THE KNOX CIRCUIT COURT                            APPELLEES

AND
                             NO. 2019-CA-001128-MR

RICKY MILLS, INDIVIDUALLY AND
AS ADMINISTRATOR OF
THE ESTATE OF ENIS J. MILLS                                  CROSS-APPELLANT

               CROSS-APPEAL FROM KNOX CIRCUIT COURT
v.               HONORABLE GREGORY A. LAY, JUDGE
                        ACTION NO. 10-CI-00552

BRANDON MILLS; LARRY MILLS;
CAROLYN WARREN; LISA GAY ALSIP;
JERRY MILLS; DONNA LAWSON;
HAZEL ENTERPRISES, LLC;
KNOX COUNTY, KENTUCKY;
DWIGHT JASON WARREN; WILLIAM GROOME;
TAX EASE LIEN INVESTMENTS 1, LLC;
ASSET ACCEPTANCE, LLC; AND
WHITLEY LAND COMPANY                                          CROSS-APPELLEES

                                     OPINION
                                    VACATING

                                   ** ** ** ** **

BEFORE: COMBS, GOODWINE, AND LAMBERT, JUDGES.

GOODWINE, JUDGE: Ricky Mills (“Ricky”), individually and as the

administrator of Enis J. Mills’ estate, brought an action to settle the estate. The

Knox Circuit Court granted a judgment and order of sale for Ricky. Larry Mills

and Brandon Mills (collectively “Larry and Brandon”) raise several issues on

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appeal, including the complaint failed to meet the requirements of KRS1 395.515.

After careful review of the record and applicable law, we vacate the circuit court’s

judgment and order of sale.

                The Knox Circuit Court summarized the background of this case as

follows:

                       Because of the long and complex history of this
                case, the Court will attempt to briefly summarize the
                case’s extensive procedural history. On July 10, 2007,
                Enis Mills passed away. After his death, it was ruled that
                the existence of his Will could not be verified and thus it
                was deemed that Enis Mills died intestate. As a result,
                his six children were designated as his heirs, among
                which included the Plaintiff [Ricky Mills] and Defendant
                Larry Mills. At the time of his death, Enis owned a few
                assets of particular note, including a mobile home and
                two tracts of land. One of these tracts of land
                (hereinafter “the Coles Branch property”) was
                encumbered by a mortgage held by Union National Bank,
                n/k/a Commercial Bank. The mobile home likewise had
                a lien on it but was not affixed to the Coles Branch
                property, while the other tract of land was not
                encumbered by a mortgage or lien.

                      On August 1, 2007, Plaintiff was appointed the
                administrator of the Estate. While the Plaintiff did not
                file an Inventory of the Estate until September 16, 2010
                and a Periodic Settlement until September 22, 2010,
                several events took place that affect this litigation. On
                February 27, 2008, Donna Lawson, Jerry Mills, and
                Defendant Larry Mills (all heirs of Enis Mills) conveyed
                their interest in the Coles Branch property to Defendant
                Brandon Mills (son of Defendant Larry Mills and the
                grandson of Enis Mills). On April 11, 2008, Plaintiff

1
    Kentucky Revised Statutes.

                                            -3-
conveyed his interest in the same property to Brandon
Mills and Lisa Gay Alsip and Carolyn Warren also
conveyed their interest in the property to Brandon Mills
on November 5, 2008. Thereafter, Defendants Brandon
and Larry Mills continued to live on the Coles Branch
property, allegedly making improvements to the property
as well, including the construction of a pond and a barn.

       On October 20, 2010, Plaintiff filed his initial
Complaint in Knox Circuit Court. In his Complaint,
Plaintiff named several Defendants, including Brandon
and Larry Mills along with Enis Mills’ other heirs, Hazel
Enterprises, LLC, Commercial Bank, Inc., Knox County,
and other parties. Plaintiff asserted in his Complaint
several causes of action, including: 1) Settlement of the
Estate of Enis Mills, 2) Conversion of Estate asset claims
against Brandon and Larry Mills, 3) To disallow the
claim of Larry Mills against the Estate for funeral
expenses and the claim of Brandon Mills for
improvements made to the Coles Branch property, 4) A
Judicial Sale of the Coles Branch property, 5) To set
aside the deeds of Enis Mills’ heirs that conveyed their
interest in the Coles Branch property to Brandon Mills,
and 6) Unspecified damages.

       After the Complaint was filed, several of the
parties filed their Answers and respective counter-claims.
Several Defendants, however, were forced to file for
extensions of time in order to have sufficient time to file
their respective filings. While many of these motions are
not necessary to understand the progression of this case,
several motions were particularly important in the case’s
development. Commercial Bank moved to dismiss
themselves from Plaintiff’s Complaint on February 24,
2011, which was then granted on March 7, 2011. On
November 23, 2011, the Honorable J.R. Wesley Hoskins
moved to withdraw as counsel for Defendants Brandon
Mills, Carolyn Warren, Lisa Gay Alsip, Jerry Mills,
Larry Mills, and Donna Lawson. The Court granted this

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motion on December 5, 2011 and gave the Defendants
thirty (30) days to find new representation.

       On January 30, 2012, Plaintiff filed a Motion for
Default Judgment, Partial Summary Judgment, and Order
of Sale. In the Motion, Plaintiff requested that the Court
enter default judgments against Defendants William
Groome, Tax Ease Lien Investments, LLC, and Asset
Acceptance, LLC; order summary judgment on all of the
Plaintiff’s claim barring the Estate Settlement claim;
schedule a hearing to ascertain damages against certain
Defendants; and award the Plaintiff all relief to which
they ma[y] be entitled. After this motion was filed, on
February 1, 2012 the Honorable Kenneth [Boggs] made
his Entry of Appearance as counsel for Defendants
Brandon Mills, Carolyn Warren, Lisa Gay Alsip, Jerry
Mills, Larry Mills, Donna Lawson, and Dwight Jason
Warren. However, Boggs soon thereafter made a Motion
to Withdraw as Counsel on March 21, 2012 based on
several of the Defendants’ failure to assist in the
discovery process and on April 6, 2012 the Motion was
granted in regard to Boggs representing Donna Lawson,
Lisa Gay Alsip, and Jerry Mills.

       On May 4, 2012, this Court ruled on Plaintiff’s
January 30, 2012 Motion. In that Order, this Court
awarded Hazel Enterprises, LLC a judgment based on its
Certificate of Delinquency “in the amount of $346.05,
plus accrued twelve percent (12%) interest from August
30, 2010, plus accrued interest pursuant to KRS 134.125
from March 30, 2012 until paid.” The Court also
awarded Plaintiff a Default Judgment against Defendants
William Groome, Asset Acceptance, LLC, and Tax Lien
Investments 1, LLC. The Court also ruled that Hazel
Enterprises, LLC had a valid and protected lien on the
Coles Branch property and that the property should be
sold. As a result, the deeds conveying various parties’
interests in the Coles Branch property were to be set
aside to allow for the judicial sale. Perhaps most

                           -5-
importantly, in paragraph ten (10) of the Order, the Court
made the following ruling:

      Plaintiff, with reference to the Periodical
      Settlement he filed in the underlying Knox
      District Court probate action, sets out that
      the personal estate of the decedent is
      insufficient for the payments of all debts.
      No defendant has addressed this contention.
      Otherwise, KRS 395.515, upon which this
      action is premised, provides, in relevant
      part, “if it shall appear that the personal
      estate is insufficient for the payment of all
      debts, the court may order the real property
      descended or devised to the heirs or devisees
      who may be parties to the action . . . to be
      sold for the payment of the residue of such
      debts, thus also requiring a Judicial
      Sale of the subject property.”

       On May 10, 2012, Brandon Mills filed a Motion to
Amend the May 4th Order. In his Motion, Brandon Mills
argued that the Order should be amended because he
was willing to personally pay for the Default Judgment
awarded in favor of Hazel Enterprises, LLC and any
other obligations incurred by the Estate to avoid the
necessity of a judicial sale. The matter was heard on
June 1, 2012, and on June 20, 2012 the Court ordered the
previous order to be amended “to the extent that the
damages and other unliquidated damages by and against
the parties shall be determined by the Court prior to any
such sale taking place.” On September 23, 2013, an
Agreed Partial Summary Judgment Order was entered
between the Plaintiff and Defendants Brandon and Larry
Mills ordering the Defendants’ claims against the
Estate to be disallowed pursuant to KRS 396.055(1).
Sometime in December of 2013, the Honorable Kenneth
Boggs passed away and on December 26, 2013, the Court
entered an Order granting Defendants Larry and Brandon
Mills sixty (60) days to obtain new counsel. On May 12,

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2014 the Honorable Christopher Mills entered his
appearance as counsel for Larry and Brandon Mills.
Unfortunately, Christopher Mills moved to withdraw as
counsel on May 29, 2014, citing a conflict of interest
with this case which was then granted on June 13, 2014.
On July 11, 2014 the Honorable Marilyn Benge McGhee
entered her appearance as counsel for Brandon and Larry
Mills.

        After several more motions and discovery had
taken place, on August 10, 2015 the Court entered an
Order Setting Trial Date, having the case docketed for
trial for February 15, 2016. On January 28, 2016,
Plaintiff moved to bifurcate certain issues from the
scheduled jury trial. Specifically, Plaintiff wished to
bifurcate the issues regarding administrator and attorney
fees. The Motion to Bifurcate was then granted
on February 11, 2016, on the basis that these issues were
not matters to be decided by a jury. While the case was
set for trial on February 15, 2016, inclement weather
forced the Court to cancel the trial on March 15, 2016.
Thereafter, the case was set for a pre-trial conference on
May 9, 2016, and the trial was rescheduled for August
17, 2016. At the pre-trial conference, only counsel for
the Plaintiff and Defendants Larry and Brandon Mills
appeared. At that conference, the Court considered
whether the previously ordered judicial sale should take
place before the trial on the underlying damages claims.
Because counsel for the Plaintiff and Defendants
Brandon and Larry Mills consented to the sale at the pre-
trial conference, the Court entered an Order of Sale on
June 9, 2016 to sell the Coles Branch property. The sale
took place on July 29, 2016 and the Master
Commissioner reported that Defendant Larry Mills
purchased the property for fifty-six thousand dollars
($56,000). As part of the arrangement, Larry Mills put
ten percent (10%) of the purchase price down to secure
the sale, with the understanding that the remaining sum
would be due in thirty (30) days. During the sale,
however, a representative for Whitley Land Company,

                           -7-
LLC appeared and claimed to be the true owner of the
Coles Branch property.

        On August 12, 2016, the trial date was once again
continued due to counsel for Defendants Larry and
Brandon Mills suffering a severe ankle injury, and on
August 19, 2016 the case was once again set for a pre-
trial conference for September 16, 2016. However, on
September 7, 2016, Marilyn McGhee moved to withdraw
as counsel for the Defendants Larry and Brandon Mills
on the grounds that the Defendants had failed to pay her
over the last few months and that the introduction of
Whitley Land Company, LLC meant that the case would
take even longer to resolve than previously anticipated.
McGhee’s withdrawal motion was granted by the Court
on September 16, 2016 and the Defendants were given
another thirty (30) days to find new counsel. The
Honorable Frank C. Medaris, Jr. then entered his
appearance as Defendants’ counsel on October 12, 2016.
On November 4, 2016, this Court granted leave for the
Plaintiff to file a Second Amended Complaint that joined
Whitley Land Company, LLC as an additional defendant.
After attempting service on Whitley Land Company,
LLC the Court appointed a Warning Order Attorney for
Whitley Land Company, LLC. When the company failed
to respond, Plaintiff moved for default judgment
against it on July 24, 2017 and moved to reschedule the
case for trial. On August 8, 2017 the Court entered an
Order setting February 20, 2018 as the date for the bench
trial. On August 10, 2017, the Court also entered an
Order granting default judgment against Whitley Land
Company, LLC.

      On October 9, 2017, the Court granted Plaintiff’s
motion seeking to confirm the sale of the Coles Branch
property that occurred on July 29, 2016. In its Order, the
Court ordered Larry Mills to pay the remaining balance
owed on the sale within ten (10) days of the entry of the
Order. On October 23, 2017, Defendant Hazel
Enterprises, LLC made a motion to have the Court

                           -8-
             declare the amount owed to it due to its lien on the Coles
             Branch property and to have the Master Commissioner
             distribute the funds needed to satisfy the debt and the
             Motion was granted on November 6, 2017. There was a
             scheduled trial date of February 20, 2018, but the
             Defendant Brandon Mills was not present due to being
             incarcerated with the Department of Corrections.
             Plaintiff’s motion to continue that trial was sustained, and
             the trial date was continued to April 24, 2018. The bench
             trial was finally conducted on April 24, 2018, where all
             issues except attorney fees and administrator fees were
             heard by this Court. The issues heard at trial were: 1)
             the sufficiency of the decedent’s personal estate as to any
             debts owed by the Estate, 2) whether the Estate was
             entitled to the gas royalties paid to Defendant Brandon
             Mills from June 2012 to February 2018, 3) whether the
             Defendants were liable for the fair rental value of the
             property for the time they lived on the Coles Branch
             property, 4) whether the Defendants Larry and Brandon
             Mills converted estate assets, 5) whether the Estate is
             entitled to sale damages and interest, 6) whether punitive
             damages should be levied against the Defendants, 7)
             whether the Plaintiff is entitled to administrative
             damages, 8) whether the Defendants’ counterclaims
             should be dismissed via a directed verdict. Parties filed
             their post-trial briefs on June 11, 2018. On the same day,
             Plaintiff made his Motion for Attorney Fees and the
             matter was heard before this Court on October
             5, 2018.

             On March 29, 2019, the circuit court entered findings of fact,

conclusions of law, judgment, and order of sale. First, the circuit court found the

personal estate was insufficient to discharge the obligations of the estate. In

reaching this conclusion, the circuit court determined the complaint met the

requirements of KRS 395.515, and Commercial Bank’s and Hazel Enterprises’

                                         -9-
claims were not time-barred by KRS 396.011. Second, the circuit court found the

estate was entitled to recover natural gas royalties paid to Brandon from June 2012

through February 2018. Third, the circuit court found the plaintiff failed to

establish the fair rental value of the property and could therefore not recover it.

Fourth, the circuit court held the plaintiff’s claim for conversion of estate assets

fell outside the limitations period under KRS 314.125. Fifth, the circuit court

ordered a new sale of the property because Larry failed to pay the master

commissioner in full. The court also found the plaintiff was entitled to recover

damages and interest as a result of Larry’s failure to pay the balance. Sixth, the

circuit court denied an award of punitive damages. Seventh, the circuit court

awarded administrator fees to Ricky. Eighth, the circuit court denied Larry and

Brandon’s claims for recovery of improvements made to the Coles Branch

property but awarded Larry recovery for funeral expenses. Finally, the circuit

court granted Ricky an award of attorney’s fees.

             On April 8, 2019, Ricky moved to alter or amend the judgment.

Ricky argued he was entitled to the fair rental value of the property, and the circuit

court erred in failing to apply the lodestar method in calculating attorney’s fees.

Larry and Brandon objected. The circuit court denied Ricky’s motion as to its

denial of an award of fair rental value of the property. The circuit court granted

Ricky’s motion regarding attorney’s fees, finding the lodestar method applied. The

                                         -10-
court’s ruling increased Ricky’s award of attorney’s fees. This appeal and cross-

appeal followed.

             On appeal, Larry and Brandon argue the circuit court erred in: (1)

finding the petition was sufficient under KRS 395.515; (2) finding Commercial

Bank’s and Hazel Enterprises’ claims were not time-barred by KRS 396.011; and

(3) setting aside the deeds of conveyance to Brandon, finding Brandon was not

entitled to receive gas royalties, and ordering the master commissioner to sell the

property.

             The issues before us are matters of statutory interpretation, which we

review de novo. Maupin v. Tankersley, 540 S.W.3d 357, 359 (Ky. 2018) (citing

Workforce Dev. Cabinet v. Gaines, 276 S.W.3d 789, 792 (Ky. 2008)). “We

interpret statutory terms based upon their common and ordinary meaning, unless

they are technical terms.” Id. “As such, we must look first to the plain language of

a statute and, if the language is clear, our inquiry ends.” University of Louisville v.

Rothstein, 532 S.W.3d 644, 648 (Ky. 2017) (citing Revenue Cabinet v.

O’Daniel, 153 S.W.3d 815, 819 (Ky. 2005)).

             First, Brandon and Larry argue the complaint failed to meet the

requirements of KRS 395.515. “Under KRS 395.515, a petition must contain

certain allegations before the circuit court has authority to act.” White v. White,

883 S.W.2d 502, 504 (Ky. App. 1994). KRS 395.515 provides:

                                         -11-
             In such an action the petition must state the amount of the
             debts and the nature and value of the property, real and
             personal, of the decedent, so far as known to the plaintiff;
             if it appears that there is a genuine issue concerning the
             right of any creditor, beneficiary or heir-at-law to receive
             payment or distribution, or if it appears that there is a
             genuine issue as to what constitutes a correct and lawful
             settlement of the estate, or a correct and lawful
             distribution of the assets, such issues may be adjudicated
             by the court; and, if it shall appear that the personal estate
             is insufficient for the payment of all debts, the court may
             order the real property descended or devised to the heirs
             or devisees who may be parties to the action, or so much
             thereof as shall be necessary, to be sold for the payment
             of the residue of such debts.

(Emphasis added.) KRS 395.515 clearly states a petition under the statute must

state the amount of debts and the nature and value of the property in the estate.

Thus, for a circuit court to have authority to determine whether the personal estate

appears to be insufficient for the payment of all debts, the petition must include the

amount of debts and nature and value of the property in the estate.

             Here, the petition incorporates the nature and value of the estate by

referencing the periodical settlement, which is attached to the complaint.

However, the petition failed to state the amount of the estate’s debts either in the

petition or by incorporating the amount of the debts by reference to a document

attached to the complaint. The circuit court determined that mere “references to

documents that would describe the value of each of these claims ensures that the

petition satisfies the requirements of KRS 395.515.” Because the amount of the

                                         -12-
debts owed by the estate is not stated in the complaint or incorporated by reference

to any attached document, we hold the complaint and second amended complaint

are facially deficient under KRS 395.515. As such, we must vacate the judgment

and order the underlying action to be dismissed.

             Second, Brandon and Larry argue the circuit court incorrectly applied

KRS 396.011 to Commercial Bank’s and Hazel Enterprises’ counter-claims.

Specifically, they argue Commercial Bank’s claim was time-barred by the statute,

and Hazel Enterprises’ claim does not fall under the statute because the claim arose

after the decedent’s death. The version of KRS 396.011(1) in effect during the

pendency of this action sets forth the applicable limitations period for claims

against an estate:

             All claims against a decedent’s estate which arose before
             the death of the decedent, excluding claims of the United
             States, the State of Kentucky and any subdivision
             thereof, whether due or to become due, absolute or
             contingent, liquidated or unliquidated, founded on
             contract, tort, or other legal basis, if not barred earlier by
             other statute of limitations, are barred against the estate,
             the personal representative, and the heirs and devisees of
             the decedent, unless presented within six (6) months after
             the appointment of the personal representative, or where
             no personal representative has been appointed, within
             two (2) years after the decedent’s death.

However, the statute carves out two exceptions:

             (2) Nothing in this section shall affect or prevent:

                                         -13-
             (a) To the extent of the security only, any proceeding to
             enforce any mortgage, pledge, lien or other security
             interest securing an obligation of the decedent or upon
             property of the estate; or

             (b) To the limits of the insurance protection only, any
             proceeding to establish liability of the decedent or the
             personal representative for which he is protected by
             liability insurance.
Id.

             Based on this statute, the circuit court determined that the counter-

claims of Commercial Bank to enforce its mortgage and Hazel Enterprises for

enforcement of its lien were not time-barred by 396.011(1). Although Commercial

Bank’s mortgage would fall under this exception, its lien was satisfied well before

entry of the final judgment. More importantly, the circuit court’s ruling ignores

that Hazel Enterprises’ certificate of delinquency is for 2009 state and county

taxes, and the decedent died in 2007. This debt arose after the decedent’s death, so

KRS 396.011(1) is not applicable to Hazel Enterprises’ claim. See Underwood v.

Underwood, 999 S.W.2d 716, 719 (Ky. App. 1999). In fact, Hazel Enterprises

does not cite this statute in its counter-claim and instead brought its claim under

KRS 134.546 to foreclose upon the property to enforce its lien. As such, the

circuit court’s finding that the exception to the limitations period under KRS

396.011(2)(a) permits sale of the property to enforce Hazel Enterprises’ lien is

                                         -14-
erroneous. However, nothing in this opinion prevents Hazel Enterprises from

enforcing its lien through a foreclosure action.

             Third, Larry and Brandon argue the circuit court erred in setting aside

the deeds conveying the property to Brandon, awarding recovery of natural gas

royalties to the estate for the period of June 2012 through June 2018, and ordering

the sale of the property. In its May 4, 2012 order, the circuit court determined the

decedent’s personal estate was insufficient to satisfy the debts of the estate. Based

on this finding, the circuit court set aside the deeds conveying the property to

Brandon, awarded the estate recovery of natural gas royalties, and ordered the

property to be sold. Above, we held the petition was deficient under KRS 395.515;

thus, the circuit court lacked the authority to make any of these rulings.

             However, after this case is dismissed, nothing prevents Ricky from

filing a new complaint in compliance with KRS 395.515. If the complaint states

the amount of debts owed by the estate, if any, and states the nature and value of

the estate’s property, then the circuit court may determine whether it appears the

personal estate is insufficient to satisfy the estate’s debts under KRS 395.515.

“[R]eal property cannot pass free and clear to a decedent’s heirs when the

personalty of the estate is insufficient to cover the claims of creditors of the estate.”

Gregory v. Hardgrove, 562 S.W.3d 911, 915 (Ky. 2018). If the court finds the

personal estate is insufficient to satisfy the estate’s debts, then it will have the

                                           -15-
authority to set aside the deeds conveying the property to Brandon, award the

estate recovery of natural gas royalties, and order the sale of the property.

             Because the complaint was deficient, we must vacate the judgment.

Therefore, we need not address Ricky’s arguments on cross-appeal and dismiss it

as moot.

             For the foregoing reasons, we vacate the judgment of the Knox Circuit

Court.

             ALL CONCUR.

 BRIEFS FOR                                 BRIEF FOR APPELLEE/
 APPELLANTS/CROSS-                          CROSS-APPELLANT,
 APPELLEES, LARRY MILLS AND                 RICKY MILLS:
 BRANDON MILLS:
                                            Scott M. Webster
 Frank C. Medaris, Jr.                      London, Kentucky
 Hazard, Kentucky

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