Court Opinion

ID: 6338327
Source: CourtListenerOpinion
Date Created: 2022-05-06 14:06:58.966233+00
Date Added: 2024-06-11T08:12:52.931837
License: Public Domain

RENDERED: APRIL 29, 2022; 10:00 A.M.
                        NOT TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals

                              NO. 2020-CA-0956-MR

LINDSEY ANN YADEN PERKINS                                            APPELLANT

                APPEAL FROM JEFFERSON CIRCUIT COURT
v.              HONORABLE A. CHRISTINE WARD, JUDGE
                        ACTION NO. 15-CI-501398

CRAIG RANDALL PERKINS; CHAMBERS
PAINTING CO., LLC; AND PERKINS SCALE
CORPORATION                                                           APPELLEES

                                OPINION
                        REVERSING AND REMANDING

                                   ** ** ** ** **

BEFORE: CALDWELL, CETRULO, AND MAZE, JUDGES.

CETRULO, JUDGE: This appeal arises out of a long and contentious action for

the dissolution of the marriage between Lindsey Ann Perkins (now Yaden)

(“Lindsey”) and Craig Randall Perkins (“Craig”), although the order, findings of

fact, conclusions of law, and decree of dissolution (“decree of dissolution”) is not

on appeal. On appeal is (1) an amended order pertaining to LLC distributions
(entered as part of the dissolution action) and (2) the order denying Lindsey’s

motion to amend the above order. Lindsey argues that the findings of the Jefferson

Circuit Court, Family Division Six, (“family court”) are not supported by sound

legal principles. We agree with Lindsey that the court below did have the authority

to distribute the marital property under Kentucky Revised Statute (“KRS”) 403.190

and therefore reverse the family court. We remand for entry of an order consistent

with this Opinion.

                                     I.     BACKGROUND

               Lindsey and Craig were married in November 2009 and separated in

January 2015. Lindsey petitioned for dissolution of the marriage in May 2015.

The decree of dissolution was entered April 23, 2020. That same day, the family

court entered an order modifying October 16, 2018 order (“April 2020 Order”).1

Lindsey moved to amend that April 2020 Order, but the family court denied her

motion. The April 2020 Order and the order denying Lindsey’s motion to amend

the April 2020 Order are the two matters on appeal.

               At the onset of the dissolution action, Craig was employed by Perkins

Scale Corporation (“PSC”). PSC is a Kentucky corporation formed in the 1970s

1
  The order on appeal is titled “Order Modifying October 16, 2018 Order” and was entered by
the Jefferson Circuit Clerk on April 23, 2020. As such, the record refers to this order both as the
“Order Modifying October 16, 2018 Order” and the “April 23, 2020 Order.” While both are
correct, for clarity, hereinafter we will refer to the order as the “April 2020 Order.”

                                                -2-
by Craig’s parents, Larry Perkins and Ellena Perkins (“Larry” and “Ellena,”

respectively). In the late 2000s, Larry transferred control of PSC to his sons, Craig

and Keith R. Perkins.2 In a separate lawsuit,3 Larry and Ellena attempted to regain

control of PSC due to the “considerable losses in money, fees, clients, jobs and

employees because of the wil[l]ful and wrongful acts which [Craig] and Keith R.

Perkins, each aver against the other, including but not limited to allegations that

each has appropriated Corporate funds and property to his own use . . . .”4 In

pertinent part, Craig failed to answer or otherwise respond to that civil action. A

default judgment was entered against Craig on May 30, 2017, in the amount of

$2,500,000 plus interest and $5,000,000 in punitive damages.

                 During the marriage, and while Craig was ostensibly in control of

PSC, he formed a company with Lindsey’s cousin, Michael Chambers

(“Michael”). In January 2011, Craig and Michael formed Chambers Painting

Company, LLC, and CM Property Group (collectively “Chambers”).5 Chambers

2
 The legalities of this transfer are contested, but not a matter before this Court because the issue
was not adjudicated by the family court. Ten Broeck Dupont, Inc. v. Brooks, 283 S.W.3d 705,
734 (Ky. 2009) (stating “An appellate court is without authority to review issues not raised in or
decided by the trial court.”) (internal quotation marks and citations omitted).
3
    Perkins, Larry v. Perkins Scale Corp., Jefferson Circuit Court Case No. 13-CI-004138.
4
 Quoting the amended complaint entered by order on October 30, 2013. Perkins, Larry v.
Perkins Scale Corp., Jefferson Circuit Court Case No. 13-CI-004138. This civil action between
PSC, Larry, Ellena, Craig, and Keith was made part of the appellate record.
5
 The record refers to Chambers Painting Company, LLC and CM Property Group, LLC as both
separate and joint entities. A distinction is not necessary for purposes of our review and this

                                                -3-
was incorporated in Indiana. Craig and Michael each owned a 50% interest in

Chambers.6 It is Craig’s interest in Chambers that is the crux of the orders on

appeal.

                In her brief, Lindsey calls the divorce “bitter, acrimonious, and

contentious[.]” That is abundantly apparent from the record, and that animosity

seemingly played a role in the long delay in the adjudication of this case.

Approximately 16 months after divorce proceedings were initiated, the family

court entered a status quo order restraining both parties from disposing of or

transferring any property without leave of the court.7 Apparently, Craig did not

feel bound by that order.

                According to Lindsey’s brief, in the fall of 2018, “Lindsey discovered

that Craig had received over $1,000,000 in distributions from Chambers during the

pendency of the divorce, without her having any benefit or prior knowledge

Court shall refer to the corporations as the joint entity “Chambers.” Our characterization does
not reflect an opinion on the corporate status, but rather it is a simplification only for clarity in
this Opinion.
6
 Craig’s ownership interest in Chambers is contested but not an issue before this Court. Ten
Broeck Dupont, Inc., 283 S.W.3d at 734.
7
  The status quo order, entered July 27, 2016, stated, in pertinent part, “[e]xcept as shall be
necessary to pay reasonable living expenses, neither party shall sell, encumber, gift, bequeath or
in any manner transfer, convey or dissipate any property, cash, stocks or other assets currently in
their possession or control of another person, company, legal entity or family member without an
order of the Court or an agreed order signed by both parties or their attorneys.”

                                                  -4-
thereof[.]”8 Thereafter, Lindsey moved the family court to require Chambers to

pay directly to the Jefferson Circuit Court any further distributions due to Craig.

The family court sustained the motion and entered its order on October 16, 2018.

This order prevented Chambers from distributing additional funds to Craig,

because Craig’s assets were now subject to distribution in the dissolution. In

pertinent part, the October 16, 2018 Order provided, “IT IS HEREBY ORDERED

AND AJUDGED that [Chambers] shall pay any distribution in which [Craig] has

an interest to the Jefferson Circuit Court. Further, in the event that a distribution is

made to [Craig], it is to be paid directly into the Jefferson Circuit Court.”

               Shortly thereafter, Lindsey alleged that Craig was attempting to claim

his interest in Chambers to be held by his paramour, Brittany Middleton. As such,

Lindsey motioned the family court to amend her petition to assert a claim of

dissipation, which was granted and entered in December 2018.9 Lindsey further

moved the family court to forbid Chambers from transferring any shares of

ownership pending trial, which was likewise sustained by the family court and also

entered in December 2018.

8
 Lindsey’s estimate ultimately proved to be low; the parties later agreed that Craig (and/or his
paramour) received more than $2,200,000 in distributions after the separation but before the
Order of Settlement.
9
  In pertinent part, this order provides: “IT IS HEREBY ORDERED AND ADJUDGED that
[Chambers] shall not transfer any shares owned by [Craig] or [Lindsey] to any party, including
Brittany Middleton, pending the trial of this matter. Nor shall [Chambers] purchase any shares
from any party to this divorce.”

                                               -5-
              In January 2019, PSC filed suit in Clark County, Indiana Circuit

Court.10 Larry was effectively back in control of PSC by this time. Even though

Craig’s Chambers distributions were already ordered to be held by Kentucky’s

Jefferson Circuit Court, PSC attempted to claim ownership of Craig’s interest in

Chambers in Indiana. Specifically, this Indiana action was an attempt to

domesticate and enforce the default judgment obtained against Craig, in the state

where Chambers was incorporated (Indiana). PSC was successful, and the Indiana

court entered its first charging order on March 13, 2019. In pertinent part, the first

charging order states:

              IT IS . . . ORDERED by the Court that the interest of
              [Craig] as a member in [Chambers] and/or the interest of
              [Craig] in any other limited liability company,
              partnership or joint venture which he has an interest with
              [Michael] or anyone else be and the same is hereby
              subjected to an encumbrance and charging order in favor
              of and for the benefit of [PSC].

              This first charging order also scheduled a show cause hearing for

Craig to contest the payment of his Chambers’ interest to PSC. After Craig failed

to appear, the Clark County Circuit Court (Indiana) entered a second charging

order in April 2019. This second charging order (“Continuing Charging Order”)

reiterated that Craig’s interest in Chambers “is hereby subjected to an encumbrance

10
  Perkins Scale Corporation v. Craig R. Perkins, Clark County, Indiana, Circuit Court Case No.
10C01-1901-CC-000061.

                                             -6-
and charging order in favor of and for the benefit of [PSC] . . . . IT IS FURTHER

ORDERED by the Court that [Michael and Chambers] shall not transfer any

assets of [Chambers] without the permission of this Court.”

              While the charging order action was beginning in Indiana, Lindsey

and Craig’s dissolution final hearings were beginning in Kentucky, four years after

the parties separated.11 The dissolution of marriage trial began in January 2019,

with a second day in June 2019. When Lindsey and Craig returned to court in

October 2019, the parties announced that they had reached an agreement. On

October 16, 2019, Lindsey’s counsel gave a detailed oral recitation of the

agreement which was later memorialized in written form. Craig signed the

agreement, but only after striking the indemnification language.12 The family court

reserved ruling on the indemnification clause and entered its order reflecting in

court settlement (“Order of Settlement”) on January 29, 2020.

              A full discussion of the equitable distribution of marital assets in the

decree of dissolution is not necessary for our analysis; the Chambers’ distributions

allocated in this order are the core issues on appeal. The Order of Settlement gave

to Lindsey, as part of the equitable distribution of marital assets, ownership of

11
 During this four year period, the proceedings were in progress and included discovery,
multiple depositions, and continuances.
12
  The removed language was a provision holding Lindsey harmless and indemnifying her from
other legal actions involving Larry, PSC, or the Perkins Family Trust.

                                              -7-
Craig’s Chambers distributions (both those distributions held in the Jefferson

Circuit Court and those yet to be disseminated). The distributions to Lindsey were

intended to balance the $2,200,000 in Chambers distributions that Craig received

after the initiation of the dissolution action. In pertinent part, the Order of

Settlement states:

                a. [Chambers13]:

                [Lindsey] shall retain as her own all right, title and
                interest in the shares of [Chambers] presently subject to
                litigation in the Clark County Circuit Court No. 1,
                Indiana, action No. 10C01-1809-MI-000209. Both
                parties acknowledge that [Craig] has individually or
                through his girlfriend’s company received dividend
                distributions from [Chambers] in excess of $2,200,000
                (Two-Million Two Hundred Thousand Dollars) since the
                parties’ separation. [Craig] further acknowledges that
                [Lindsey] received no part of those distributions.
                Accordingly, because the company is now being
                disbanded through judicial action, he has received his
                portion of the company. The remaining assets of
                [Chambers] therefor[e] belong to [Lindsey], as her
                marital portion, free and clear of any and all claims by
                [Craig]. [Craig] shall execute any necessary documents
                to effectuate the transfer of any interest he might have in
                the Company.

                b. Funds Deposited in Jefferson Circuit Court Action
                   No. 15-CI-501398

                The parties acknowledge that certain funds have been
                deposited into the Circuit Court through this action. Both
                parties further acknowledge that those funds now exceed
                $600,000 (Six-Hundred Thousand Dollars). [Lindsey]

13
     This order refers only to Chambers Painting Company, LLC.

                                              -8-
               and [Craig] agree that all funds on deposit with the
               Circuit Court shall be [Lindsey’s] marital distribution and
               become her own property in fee, free and clear of all
               claims by [Craig]. [Craig] further hereby agrees to
               immediate distribution of said funds to [Lindsey], in her
               sole name by this Court. Husband agrees that his prior
               distribution of over $2,000,000 from [Chambers]
               represent his marital cash distribution during the
               separation of the parties, and thus he willingly agrees to
               distribution to [Lindsey].

               Also on January 29, 2020, Chambers moved14 the family court to

remand its order entered on October 16, 2018 (which had ordered Craig’s

distributions from Chambers to be paid into Jefferson Circuit Court). Chambers

argued the family court’s October 16, 2018 Order and the charging orders out of

Indiana were conflicting. Then on February 7, 2020, PSC filed a response to

Chambers’ motion to remand, arguing that matters involving Chambers should be

addressed only in Clark County, Indiana. Lindsey filed an objection and response.

               On April 23, 2020, the family court entered (1) the decree of

dissolution and (2) the April 2020 Order. The April 2020 Order states:

               Although the 2018 Orders recognized that [Lindsey]
               likely had a claim in this dissolution action to [Craig’s]
               membership interest in [Chambers] and prohibited
               [Craig] from accessing and/or dissipating any distributed
               funds, the Orders did not determine ownership or
               allocation of the funds to be deposited; they simply

14
  From our review of the record, it appears the family court permitted Chambers and PSC to file
motions and to be heard at oral arguments despite not being intervening parties to the dissolution
action. For consistency and clarity, we will refer to PSC and Chambers as “parties,” but their
party status is discussed in more detail below.

                                               -9-
                 created a place for [safekeeping] the funds until a
                 determination could be made. It was not until the Order
                 of Settlement was entered January 29, 2020, that the
                 property was designated to [Lindsey]. That means the
                 Indiana [] Charging Orders predate this Court’s
                 determination of whether the property constituted a
                 marital asset and to whom it should be allocated, making
                 this case distinguishable from the case law cited by
                 [Lindsey] in her brief.[15]

                 ....

                 As the Court concludes that the Charging Orders predate
                 this Court’s designation and allocation of marital
                 property, the Court further concludes that the Indiana
                 Charging Action, where all parties have made
                 appearances, should be resolved prior to any further
                 distributions in this action.

                 WHEREFORE, IT IS HEREBY ORDERED AND
                 ADJUDGED AS FOLLOWS: The Motion to Remand is
                 denied, however, the October 2018 Order is modified to
                 allow [Chambers] to withhold further payment until the
                 Indiana claim is resolved.

                 Lindsey moved the family court to amend the April 2020 Order, but

the family court denied her motion. On appeal, Lindsey contends the family court

“misconstrued and misapplied the applicable law and committed reversible error”

in amending its October 16, 2018 Order (via the April 2020 Order) and denying

Lindsey’s motion to amend the April 2020 Order. Pertinent facts will be added or

repeated as necessary for analysis and/or clarification.

15
     Strong v. First Nationwide Mortg. Corp., 959 S.W.2d 785 (Ky. App. 1998).

                                              -10-
                          II.    STANDARD OF REVIEW

             The denial of a motion to alter, amend, or vacate is subject to the

abuse of discretion standard. William C. Eriksen, P.S.C. v. Kentucky Farm Bureau

Mut. Ins. Co., 336 S.W.3d 909, 911 (Ky. App. 2010). Emberton v. GMRI, Inc.,

299 S.W.3d 565, 579 (Ky. 2009). “The test for abuse of discretion is whether the

trial judge’s decision was arbitrary, unreasonable, unfair, or unsupported by sound

legal principles.” Goodyear Tire and Rubber Co. v. Thompson, 11 S.W.3d 575,

581 (Ky. 2000). Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999).

                       III.     JURISDICTIONAL MATTERS

             First, we note that only PSC has filed a brief before this Court in

response to the appeal filed by Lindsey. In that brief, by a non-party, PSC argues

“[a]s Lindsey pegs the superiority of her marital property claim to Craig’s

[Chambers] interests upon the October 2018 Order, the absence of [the family

court’s] personal jurisdiction over [Chambers] negates the efficacy of such Order.”

But, Chambers appeared numerous times before the family court for more than a

year before first raising the lack of personal jurisdiction claim in January 2020.

Therefore, Chambers waived personal jurisdiction when it appeared generally,

rather than specifically, in the family court. Williams v. Indiana Refrigerator

Lines, Inc., 612 S.W.2d 350, 351 (Ky. App. 1981). See also Kentucky Rules of

Civil Procedure (“CR”) 12.02 and 12.08(1).

                                         -11-
              Second, we address PSC’s party status. Lindsey argues16 that PSC is

not a party to this case or this appeal because PSC did not move to intervene in the

underlying action, nor was such a request granted. But, PSC too was treated like a

party in the lower court proceeding: (1) the family court allowed PSC to be heard

at numerous oral arguments, (2) PSC filed numerous pleadings in the lower court,

including motions pertaining to both orders on appeal, and (3) both orders on

appeal specifically address PSC legal claims and motions. Additionally, Lindsey

referred to PSC as an intervening party on the motion to amend the April 2020

Order and named PSC as an appellee. They did not move to dismiss and filed the

only brief in response to the appeal.

              KRS 403.150 sets out the procedures for commencing a divorce

action and includes a general subsection that simply states that “[t]he court may

join additional parties proper for the exercise of its authority to implement this

chapter.” KRS 403.150(6). Neither this Court nor the Kentucky Supreme Court

have fully addressed the procedural mechanics necessary for a trial court to bring a

non-party into a case. However, the Supreme Court has acknowledged the

authority provided to trial courts in divorce proceedings by KRS 403.150(6).

In Lewis LP Gas, Inc. v. Lambert, 113 S.W.3d 171, 173 n.1 (Ky. 2003), overruled

16
  While Lindsey argues PSC is not a proper party, she does so only in a footnote in her brief and
does not give much emphasis to the argument.

                                              -12-
on other grounds by Hoskins v. Maricle, 150 S.W.3d 1 (Ky. 2004), the Court noted

that KRS 403.150(6) permits a trial court to “join additional parties proper for the

exercise of its authority to implement this chapter.” Furthermore, in Medical

Vision Group P.S.C. v. Philpot, 261 S.W.3d 485, 491 (Ky. 2008), the Kentucky

Supreme Court held that “given the facts and circumstances of this case, it would

be proper for the trial court to join [Company 1] and [Company 2] under KRS

403.150(6) so that it could ensure that [the spouse] receives the property judgment

to which she is entitled.” We believe that reasoning is particularly true to the facts

and circumstances of this case, considering that these entities have actively and

voluntarily participated in the dissolution action throughout the years of litigation.

               Further, no harm will result from considering PSC’s brief and

arguments in this appeal. Adversely, not allowing PSC to continue with this

appeal could implicate due process concerns that can easily be avoided by

addressing the arguments of all briefing parties, i.e., Lindsey and PSC.

                                       IV.     ANALYSIS

               First and foremost, we must find the forest through the charging order

trees. The convoluted facts become more clear after we clarify one simple point:

charging orders are liens. KRS 275.260(3)17 states a charging order “constitutes a

17
  The charging orders in question are Indiana charging orders, but because we are determining
the priority of the charging orders, and not challenging the validity of the charging orders, we
apply Kentucky law.

                                              -13-
lien on and the right to receive distributions made with respect to the judgment

debtor’s limited liability company interest. A charging order does not of itself

constitute an assignment of the limited liability company interest.” (Emphasis

added.)

              In 2018, the family court ordered Craig’s Chambers distributions to be

held in Jefferson Circuit Court, and further entered a “status quo” order as to the

sale or transfer of the Chambers’ distributions. PSC argues that it is a judgment

creditor of Craig and claims a superior priority over Lindsey’s claim by way of its

domesticated judgment (2017) and perfected charging orders (2019). PSC argues,

and the family court ultimately agreed, that Lindsey’s place in line was not held

until the Order of Settlement (2020), i.e., after PSC domesticated their Indiana

charging orders in the dissolution action.

              Looking specifically at the orders on appeal, the April 2020 Order

found PSC had a superior claim to Craig’s Chambers distributions over Lindsey.

The second order on appeal, the order denying the motion to amend the April 2020

Order, is consistent with the April 2020 Order. The family court was unpersuaded

by Strong v. First Nationwide Mortgage Corporation, 959 S.W.2d 785,18 because

18
  Lindsey also cited to Bank One, NA, v. Vaught, No. 2001-CA-001662-MR, 2003 WL
21674759, at *15 (Ky. App. Jul. 18, 2003), but because that opinion is unpublished and
unnecessary for our analysis, we will not discuss it.

                                             -14-
Strong dealt with real property protected by a lis pendens, while here, we are

discussing charging order liens. However, our reading of Strong does, in fact,

align with Lindsey’s argument. We conclude that the family court’s decision

failed to appreciate the difference in the form of the parties’ interests before giving

deference to timing: Lindsey’s ownership interest has priority over the charging

order liens because those were perfected after the initiation of the dissolution

proceedings. 19 More recent precedent takes priority in our analysis and further

supports Lindsey’s claims. Our forest path is paved not with Strong, but with

Stone. Stone v. DuBarry, 513 S.W.3d 325 (Ky. 2016).

               In Stone v. DuBarry, our Kentucky Supreme Court elucidated on the

various forms that liens can take, specifically statutory liens versus

consensual/contractual liens. Id. Intermingling legal concepts applicable to the

various types of liens is like “mixing apples and oranges.” Id. at 329. Stone dealt

with an attorney fee lien (a statutory lien), as opposed to a charging order lien (also

a statutory lien), but the analysis is still clear and guiding.

               There is no debate that an attorney is entitled to be paid
               for the work he or she performed in accordance with the
               agreement of employment entered into with the client.
               These fees can be collected by direct order of a court
               where the statutes allow an award of attorney’s fees, such

19
  “It is abundantly clear to this Court that [the wife] is entitled to one-half of the proceeds of the
sale of the realty because of the determination in the dissolution proceedings that she had a one-
half ownership interest in the property – not a mere lien.” Strong, 959 S.W.2d at 787 (emphasis
added).

                                                -15-
             as in a domestic-relations action; by suit to obtain fees
             earned under the employment contract; or by attachment
             of a lien under the employment contract. But an attorney
             may not file a lien under KRS 376.460 (the attorney’s
             lien statute) and thereby attach money or property subject
             to division in a divorce action, because the very property
             an attorney seeks to file a lien against is in fact the
             subject matter of the court’s jurisdiction when it comes to
             property division. Allowing such a lien, entered into by
             only one party without notice to the spouse (and
             opposing party) thwarts the ability of the court to make a
             just division of property as is required by law.

Id. at 329-30 (emphasis added).

             Consistent with Stone, allowing PSC to recover part of the marital

assets via a judgment and lien perfected after the initiation of the marriage

dissolution would “thwart[] the ability of the court to make a just division of

property.” Id. at 330.

             Additionally, the Stone Court discussed the root of the lien itself.

              [A] key point to consider is that such a restriction on
             someone else’s property [i.e., a lien] can only be justified
             if the lienholder has some legitimate claim against that
             very property. That is the general nature of how liens
             work.

             ....

             In a domestic relations case. . . [w]hen it comes to money
             or property [division] . . . each spouse asks that his or her
             personal property be assigned to him or her, and that the
             joint marital property be divided in just proportions.
             KRS 403.190. All the property that will ever be subject
             to the divorce court’s orders, or the right to obtain that
             property in the future, exists at that very point in time,

                                         -16-
             including any claims to the personal or marital estates
             that might be contested outside the divorce. For such
             contested claims, whatever amount that is established
             outside the divorce action is also subject to assignment
             or division by the divorce court.

             ....

             [I]f the [spouse’s bank] account contains funds that were
             earned during the marriage, those funds are designated as
             marital, losing their separate status, and are subject to
             equitable division. This occurs by operation of law, and
             is not due to any effort of the attorney. While it may be
             that a highly skilled attorney succeeds in getting a larger
             share for his client, his work did not create the fund, and
             his client’s right to claim against the fund upon filing for
             divorce is a contingency against that fund even during the
             marriage. This is established by statute, and not because
             the attorney established the propriety of allowing such a
             claim.

Id. at 330-32.

             Stated another way, the attorney in Stone could not enforce his lien

against the marital property because he did not have an interest in those specific

assets; i.e., his work did not create the marital assets. Here, the root of the lien

against Craig is the $7.5 million judgment. The charging order liens extended that

judgment lien to the LLC distributions, but the monetary award is the root of the

lien. Again, a lien “can only be justified if the lienholder has some legitimate

claim against that very property.” Id. at 330. Even if we considered the charging

orders as an avenue to somehow change the claim form (from monetary recovery

to specific distribution recovery), we believe that the family court underestimated

                                          -17-
its authority and ability to make distributions and orders that addressed the division

of property and assets of the marriage throughout the lengthy proceedings. In

short, the family court’s status quo order alone entered in December of 2018

established that the assets at issue were within the jurisdiction of this Court and we

conclude that the family court did have the authority to “assign” the subsequently

presented lien. In essence, the court had already done so in an effort to equalize

the division of assets upon being presented with the uncontested fact that Craig had

received significant assets in violation of the status quo order.

             “It is well-established that Kentucky encourages the amicable

resolution of divorce actions via settlement agreements. See Shraberg v. Shraberg,

939 S.W.2d 330, 333 (Ky. 1997). However, a settlement agreement is subject to

judicial scrutiny and will not be enforced when procured by fraud, bad faith, or a

material misrepresentation.” Taylor v. Taylor, No. 2009-CA-001902-MR, 2011

WL 4861802, at *3 (Ky. App. Oct. 14, 2011).

             In her motion to amend the April 2020 Order, Lindsey argued:

             [Craig] and his father caused a default judgment to be
             entered against Craig while this [dissolution action] was
             pending. There have been absolutely no attempts by
             Craig’s father to collect on that judgment other than
             through the charging order. While Craig has had other
             high value assets that could have been applied to the
             judgment, it was only after it became apparent that
             Lindsey could obtain the LLC distributions that the
             charging order was sought to prevent that. The attempted

                                         -18-
              effect is to have only Lindsey, not Craig, ever suffer
              financially for the default judgment against Craig.

              There is certainly evidence in the record to support this contention.

On June 12, 2019, PSC’s legal counsel testified at the dissolution trial of Lindsey

and Craig. Counsel testified that during civil litigation between Larry and Craig,

the ownership interest in PSC stock was called into question. In relation to this

ownership interest, counsel stated that Larry and Craig signed an agreed order

because it was time to “wrap up the case.” Counsel stated:

              I basically said, I’m going to file a motion for summary
              judgment on behalf of [PSC]; I’m gonna lay out the law
              . . . and Craig, you’re going to be, have no response to
              this. The best course, to save the company money and
              my time and my effort, I would rather do it that way than
              have to bill the company unnecessarily for a win I know
              I’m going to get. Let’s enter into an agreed order for
              everybody that says “I give up” basically.

              Similarly, Craig did not appear at the show cause hearing for the

Indiana charging order, in effect, helping PSC obtain those orders. Craig made no

response in the civil litigation that resulted in the $7.5 million judgment against

him, in favor of PSC. Before that judgment was entered, Larry was deposed. At

that deposition in 2017, Larry stated “What is money anyway? What good does it

do you personally? . . . Hundred years from now, think about it. Somebody will

have every bit of it. . . . It won’t be us . . . blood is thicker than water. It’s that

simple.”

                                           -19-
                Lindsey also pointed out in her motion to amend the April 2020

Order, Craig’s testimony at the 2017 contempt hearing. At that hearing, while the

embezzlement litigation was still pending, Craig admitted that he borrowed money

from his father to pay off his Mercedes. This contempt hearing was not the only

one of its kind.

                From our review of the record, we have reason to believe that Craig

intentionally slowed the dissolution proceedings, possibly to enable his father to

receive and domesticate the charging orders, in hopes of preventing Lindsey from

receiving those distributions. In fact, we found ten motions to compel and/or

motions for contempt in the dissolution action.20 Additionally, Craig made at least

five motions for continuance.21 There was additional testimony that Craig misled

the family court about a back surgery, arrived late on numerous occasions, and

likely hindered the appearance of at least one subpoenaed witness (Brittany

Middleton).

                Furthermore, no harm results for PSC from their inability to recover

Craig’s distributions in Chambers. PSC still has a valid judgment against Craig

and can choose to recover its judgment from the assets Craig retained after the

20
  November 10, 2015; April 5, 2016; September 18, 2016; January 3, 2017; January 31, 2017;
June 13, 2017; November 6, 2017; May 13, 2019; December 26, 2019; December 27, 2019.
21
     February 23, 2016; December 19, 2017; May 1, 2018; August 29, 2018; January 22, 2019.

                                              -20-
Order of Settlement. “[A] pendente lite lienholder can have no greater interest in

the property at issue than that of his debtor.” Cumberland Lumber Co. v. First and

Farmers Bank of Somerset, Inc., 838 S.W.2d 403, 406 (Ky. App. 1992). It is true

that after the Order of Settlement, Craig had no ownership interest remaining in

Chambers’ distributions. Therefore, PSC has no Chambers distributions to claim

from Craig. But, in the Order of Settlement, Craig did retain assets including, but

not limited to, two homes and 77 acres of land in Hardinsburg, Kentucky. Also,

that order stated that “[b]oth [Craig and Lindsey] acknowledge that [Craig] has

individually or through his girlfriend’s company received dividend distributions

from [Chambers] in excess of $2,200,000 (Two-Million Two Hundred Thousand

Dollars) since the parties’ separation.” If PSC chooses to enforce their judgment

against Craig, it can do so from his remaining assets post-Order of Settlement.

             Additionally, as should be apparent, the distributions that were held

by the Jefferson Circuit Court and awarded to Lindsey as part of an equitable

distribution of marital assets remain Lindsey’s. PSC has no claim or lien on that

financial distribution.

             We deem all other arguments made by the parties to be redundant,

irrelevant or unnecessary for a proper resolution of this appeal.

                                         -21-
                               V. CONCLUSION

            In accordance with this Opinion, the Jefferson Circuit Court is

REVERSED and the matter REMANDED with instructions to GRANT Lindsey’s

motion to amend the April 2020 Order giving Lindsey ownership interest, and

superior claim over PSC, in Craig’s Chambers distributions.

            ALL CONCUR.

BRIEFS FOR APPELLANT:                    BRIEF FOR APPELLEE PERKINS
                                         SCALE CORPORATION:
Jesse A. Mudd
Stuart A. Scherer                        J. Gregory Troutman
Louisville, Kentucky                     Louisville, Kentucky

                                       -22-