Court Opinion

ID: 4691100
Source: CourtListenerOpinion
Date Created: 2021-05-28 14:08:29.968438+00
Date Added: 2024-06-11T08:05:05.871125
License: Public Domain

RENDERED: MAY 21, 2021; 10:00 A.M.
                        NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2019-CA-1595-MR

DAVID HATFIELD AND AMANDA J.
HATFIELD                                                           APPELLANTS

                 APPEAL FROM BOYLE CIRCUIT COURT
v.              HONORABLE DARREN W. PECKLER, JUDGE
                       ACTION NO. 17-CI-00301

BLUEGRASS COMMUNITY BANK,
INC.; J. THOMAS HENSLEY,
MASTER COMMISSIONER OF
BOYLE COUNTY; SALLY STATOM;
STEVE P. KIESLER; AND THE
MONTICELLO BANKING
COMPANY                                                              APPELLEES

                                   OPINION
                                  AFFIRMING

                                  ** ** ** ** **

BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.

JONES, JUDGE: Acting without the assistance of counsel, the Appellants, David

Hatfield and his wife, Amanda Hatfield (“Hatfields”), appeal the Boyle Circuit

Court’s orders of September 18, 2019, overruling their objections to the Master
Commissioner’s report, and confirming the sale of a parcel of real estate located at

1145 Gwinn Island Road in Danville, Boyle County, Kentucky (“the Property”).

The Appellees are Bluegrass Community Bank, Inc. and the Monticello Banking

Company; J. Thomas Hensley Master Commissioner of Boyle County; and Steve

P. Kiesler and Sally Statom, the parties who purchased the property at the judicial

sale.1 On appeal, the Hatfields assert the trial court erred because the appraised

value set by the Master Commissioner was too low. Having reviewed the record,

and being otherwise sufficiently advised, we affirm.

                                        I. BACKGROUND

               On August 22, 2017, Bluegrass Community Bank, Inc. (“Bluegrass”)

filed a complaint against the Hatfields. Bluegrass alleged that on or about June 17,

2015, the Hatfields executed and delivered to Bluegrass a Promissory Note by

which they promised and agreed to pay the sum of $144,724.44, with interest

accruing thereon, initially, at a fixed rate of 5.5%, due in full on June 27, 2035

(“Note”). The Promissory Note was secured by a mortgage in favor of the

1
  None of the appellees filed a brief. When the appellee does not file a brief our court may, but is
not required to impose penalties, against the non-responding appellee, including (1) accepting the
appellant’s statement of facts and issues; (2) reversing the judgment if reasonably supported by
the appellant’s brief; or (3) regarding the appellee’s failure to file a brief as a confession of error
and reversing the judgment without considering the merits of the case. Kentucky Rules of Civil
Procedure (“CR”) 76.12(8)(c). “The decision as to how to proceed in imposing such penalties is
a matter committed to our discretion.” Coblentz v. Day, 540 S.W.3d 384, 385-86 (Ky. App.
2018) (citing Roberts v. Bucci, 218 S.W.3d 395, 396 (Ky. App. 2007)). The record in this case is
relatively short and the issues are straightforward. Accordingly, we have elected not to impose a
penalty, and will proceed to review the merits of this appeal in the normal course.

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Property.2 Bluegrass further alleged that the Hatfields defaulted under the terms of

the Note. As of August 1, 2017, Bluegrass alleged the Hatfields were jointly and

severally liable to it for $140,590.49 plus accruing interest, late fees, expenses,

attorney’s fees, and court costs, as also provided for under the Note. By virtue of

the mortgage, Bluegrass alleged it had a valid and existing first lien on the Property

to secure payment of all sums owed under the Note, and that terms of the mortgage

provided for the filing of an action to sell the Property in the event of a default by

the Hatfields.

              As relief, Bluegrass sought: (1) a judgment against the Hatfields,

jointly and severally, in the principal sum of $140,590.49 plus interest at the

agreed rate, late fees, expenses, court costs, and attorney’s fees; (2) that the court

adjudge that Bluegrass had a valid and enforceable first lien on the Property; and

(3) that if the court ordered the Property be sold, a sufficient portion of the net

proceeds of such sale (after paying the current year’s property taxes and the costs

of selling the property) be remitted to Bluegrass to fully satisfy any judgment

against the Hatfields.

              The Hatfields were individually served with copies of Bluegrass’s

complaint on September 4, 2017. They did not file an answer or responsive

2
 It does not appear that the Hatfields resided at the Property. It is described as being
approximately one acre with a 50-foot by 145-foot building located thereon, and commercial in
nature.

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pleading. Accordingly, on November 27, 2017, Bluegrass filed a motion for

default judgment. By order entered December 28, 2017, the trial court granted

Bluegrass a default judgment against the Hatfields in the amount of $140,590.49,

as of August 1, 2017, plus interest at the agreed legal rate, late fees, costs and

attorneys’ fees. It further adjudged that Bluegrass had a valid lien on the Property.

             On May 29, 2018, Bluegrass moved for an order directing sale of the

Property to satisfy its judgment against the Hatfields. On June 5, 2018, the trial

court granted Bluegrass’s motion and referred the matter to the Master

Commissioner for a judicial sale. However, the sale was stalled when the Hatfields

filed for Chapter 13 bankruptcy. After the Hatfields bankruptcy action was

dismissed for failure to make the required filings, Bluegrass removed the trial court

to reinstate the judicial sale. Bluegrass’s motion was granted, and on December

10, 2018, the matter was again referred to the Master Commissioner for a judicial

sale.

             Two “disinterested housekeepers” of Boyle County were appointed to

appraise the Property. On July 3, 2019, they filed a sworn affidavit attesting they

appraised the value of the property to be $63,000.00. A judicial sale was

conducted on July 23, 2019, at which Steve Kiesler and Sally Statom purchased the

property for $43,000.00. Since the purchase price was over two-thirds of the

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appraised value, the Hatfields could not claim a right of redemption. On July 24,

2019, the Master Commissioner filed a report of sale.

                 Acting with the assistance of counsel, on August 3, 2019, David filed

exceptions to the Master Commissioner’s Report of Sale and requested an

evidentiary hearing.3 The motion argued the appraised value set by the Master

Commissioner was so low as to be unconscionable where: (1) in 2005 the Property

was appraised with a market value of $155,000.00; (2) on June 17, 2015–just four

years prior–Bluegrass loaned the Hatfields $144,724.44 based on the value of the

Property; (3) that the tax assessed value of the Property was $70,000.00; and (4)

that upon information and belief a prospective buyer had offered Bluegrass

$80,000.00 prior to sale. The motion included David’s affidavit, a copy of the

2005 appraisal, and the affidavit of Kevin Cooley, a “longtime friend” of David.

Mr. Cooley averred that he was familiar with the Property and based on his

familiarity with the area believed the Commissioner’s appraisal was “dramatically

understated and unconscionable.”

                 On September 16, 2019, the trial court conducted an evidentiary

hearing on the objection. Two days later, on September 18, 2019, the trial court

overruled David’s exceptions finding “the appraisal entered on July 3, 2019, stands

as correct and valid” and denying David’s motion to assign a different value to the

3
    It is unclear why Amanda did not join in the exceptions.

                                                 -5-
property. A separate Confirmation of Sale was also entered on September 18,

2019.

             This appeal followed.

                                     II. ANALYSIS

               The disposition of property through a judicial sale requires the court

to “refer the matter to the master commissioner or appoint a commissioner to

conduct a public sale[.]” KRS 389A.030(4). “[T]he terms of a judicial sale are

ultimately determined by the circuit court; and the court may accept or reject the

master commissioner’s suggestions.” Sterling Grace Mun. Securities Corp. v.

Central Bank & Tr. Co., 926 S.W.2d 670, 673 (Ky. App. 1995). We review the

trial court’s finding as to the appraised value for an abuse of discretion. Eagle Cliff

Resort, LLC v. KHBBJB, LLC, 295 S.W.3d 850, 852-53 (Ky. App. 2009).

             The Master Commissioner’s report set the appraised value of the

Property at $63,000.00. Two-thirds of this amount is $42,000.00. Mr. Kiesler and

Ms. Statom purchased the property at the judicial sale for $43,000.00 thereby

cutting off the Hatfields’ right of redemption. KRS 426.530. “When a party

whose redemption rights are at stake believes the appraisal of his property is

inadequate in any way, he is entitled to an evidentiary hearing to determine

whether the appraisal was ‘irregular, fraudulent, or so erroneous as to be

                                          -6-
unconscionable[.]’” Eagle Cliff Resort, 295 S.W.3d at 852-53 (quoting Burchett v.

Bank Josephine, 474 S.W.2d 66, 68 (Ky. 1971)).

             As required, the trial court conducted a hearing at which the Hatfields

were given an opportunity to introduce evidence regarding the appraisal process

and value assigned to the Property. With respect to the appraisal process, the

Hatfields failed to show that there was any irregularity or fraud. KRS 426.520

establishes the requirements for real property sold under an order or judgment of

court. It provides:

             (1) Before any real property is to be sold under an order
             or judgment of a court, other than an execution, the
             commissioner or other officer selling the property shall
             have it appraised, under oath, by two (2) disinterested,
             intelligent housekeepers of the county, who may be
             sworn by the officer. If they disagree, the officer shall
             act as umpire. If only a part of a tract of land is sold, the
             part sold shall, after the sale, be revalued in like manner.

             (2) The appraisal made shall be in writing, signed by the
             persons making it, and returned by the commissioner or
             officer to the court which made the order or rendered the
             judgment for the sale of the property. Prior to the sale,
             the appraisal shall be filed among the papers of the cause
             in which the judgment was rendered or the order made,
             and entered on the records of the court.

KRS 426.520. The record confirms that this statute was followed.

             Moreover, we disagree that the Hatfields’ evidence was so compelling

as to require a finding that the Commissioner’s appraisal value was

unconscionable. The 2005 appraisal was performed almost fifteen years prior to

                                          -7-
the sale. Its age alone calls its reliability into question. While Kevin Caudill, the

appraiser, testified on behalf of the Hatfields that he believed the estimate by the

Master Commissioner was erroneous insomuch as it discounted the property more

than 30%, he did not testify to any actual fraud or irregularity. Finally, the tax

assessment of $70,000.00 is only $7,000.00 more than $63,000.00 set by the

Master Commissioner. Such a small discrepancy is insufficient to compel a

finding of unconscionability.

             Finally, we cannot agree with the Hatfields that the testimony of Ray

Preston, one of the two appraisers, compelled a finding in their favor. The fact that

Mr. Preston could not recall the precise details of a property he appraised over two

months prior is not entirely surprising, and it is certainly not indicative of fraud or

irregularity. And, contrary to the Hatfields’ implications otherwise, there is no

requirement for an appraiser to go onto the property. See Southwood v. Willis, 222

Ky. 782, 2 S.W.2d 660, 660 (Ky. 1928).

                                  III. CONCLUSION

             In sum, we can discern no abuse of discretion by the trial court.

Accordingly, for the reasons set forth above, we affirm the Boyle Circuit Court.

             ALL CONCUR.

                                          -8-
BRIEF FOR APPELLANT:       NO BRIEF FOR APPELLEES.

David Hatfield, pro se
Amanda Hatfield, pro se
Danville, Kentucky

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