Court Opinion

ID: 4646902
Source: CourtListenerOpinion
Date Created: 2020-12-25 15:05:58.029979+00
Date Added: 2024-06-11T08:01:02.103157
License: Public Domain

RENDERED: DECEMBER 18, 2020; 10:00 A.M.
                          TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2019-CA-1764-MR

MID SOUTH CAPITAL PARTNERS,
LP                                                                   APPELLANT

                   APPEAL FROM BOYD CIRCUIT COURT
v.                 HONORABLE JOHN F. VINCENT, JUDGE
                        ACTION NO. 17-CI-00162

BRYAN ADKINS; UNKNOWN
SPOUSE, IF ANY, OF BRYAN
ADKINS; CAPITAL ONE BANK;
AND COMMONWEALTH OF
KENTUCKY, COUNTY OF BOYD                                              APPELLEES

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

BEFORE: ACREE, DIXON, AND K. THOMPSON, JUDGES.

DIXON, JUDGE: Mid South Capital Partners, LP (“Mid South”) appeals from the

final judgment and order of sale entered on October 25, 2019, by the Boyd Circuit

Court. Following a careful review of the brief, record, and law, we affirm.
                FACTS AND PROCEDURAL BACKGROUND

             Mid South purchased two certificates of delinquency (“COD”)

encumbering the real property of Bryan Adkins for unpaid ad valorem taxes for the

2011 and 2012 tax years. The face value of the COD for the 2011 tax year was

$269.76; the face value of the COD for the 2012 tax year was $261.15. After

unsuccessful prelitigation debt collection efforts, Mid South filed the underlying

complaint. Its litigation efforts culminated in the final judgment and order of sale

awarding it certain fees and costs. Although the court granted judgment for the full

amounts of the CODs, it did not award all attorney’s fees and costs presented. Mid

South requested prelitigation attorney’s fees of $391.50, litigation attorney’s fees

of $2,804.12, and litigation costs of $704.79. Finding these amounts to be

unreasonable in relation to the amount of the CODs, the trial court only allowed

prelitigation attorney’s fees of $200.00, litigation attorney’s fees of $400.00, and

litigation costs of $415.97. This appeal followed.

                            STANDARD OF REVIEW

             Unless otherwise directed by statute, the amount of an award of

attorney’s fees is within the trial court’s discretion. King v. Grecco, 111 S.W.3d
877, 883 (Ky. App. 2002), superseded by statute on other grounds as stated in

Meece v. Feldman Lumber Co., 290 S.W.3d 631 (Ky. 2009). “The test for abuse

of discretion is whether the trial judge’s decision was arbitrary, unreasonable,

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unfair, or unsupported by sound legal principles.” Goodyear Tire and Rubber Co.

v. Thompson, 11 S.W.3d 575, 581 (Ky. 2000) (citation omitted). “When a trial

court is considering whether to award attorney fees and costs and/or how much to

award, the trial court’s decision should be guided by the purpose and the intent of

providing an award of attorney fees and costs[.]” Alexander v. S & M Motors, Inc.,

28 S.W.3d 303, 305 (Ky. 2000).

                           ATTORNEY’S FEES AND COSTS

                On appeal, Mid South argues the trial court abused its discretion by

awarding reduced attorney’s fees and costs contrary to the legislative intent and

mandates of KRS1 134.452. This statute clearly distinguishes three types of

attorney’s fees which may be awarded for collection efforts on a COD. The first

type of attorney’s fee is a prelitigation fee related to a graduated percentage of the

tax bill. KRS 134.452(1)(c)2.a. The second type of attorney’s fee concerns

prelitigation fees for a third-party purchaser owning more than one COD relating

to a single taxpayer and is limited to one-and-a-half times the maximum permitted

by KRS 134.452(1)(c)2.a. KRS 134.452(1)(c)2.b. The third type is an award for

enforcement or protection of a COD through litigation. KRS 134.452(3). Unlike

prelitigation fees, however, the litigation fees are not expressly linked to the

amount of the underlying tax bill, and there is no precise formula for determining

1
    Kentucky Revised Statutes.

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the amount. KRS 134.452(3) only states that the fees must be actual and

reasonable.2 All three types of attorney’s fees are at issue in the case herein.

                As there is no dispute that Mid South is entitled to an award of

attorney’s fees, the question is whether the trial court erred when it did not award

the entire amount requested. Mid South directs us to KRS 134.452(5), which

provides:

                The General Assembly recognizes that third-party
                purchasers play an important role in the delinquent tax
                collection system, allowing taxing districts to receive
                needed funds on a timely basis. The General Assembly
                has carefully considered the fees and charges authorized
                by this section, and has determined that the amounts
                established are reasonable based on the costs of
                collection and fees and charges incurred in litigation.

2
    KRS 134.452(3)(b) states:

                For purposes of this subsection:

                       1. Actual attorneys’ litigation fees up to two thousand
                       dollars ($2,000) may be reasonable if the fees are based
                       upon documented work performed at a rate commensurate
                       with hourly rates customarily charged by private attorneys
                       in that jurisdiction for similar services. . . .

                       2. Any attorneys’ litigation fee in excess of two thousand
                       dollars ($2,000) shall be allowed if authorized by the court
                       upon a finding that the third-party purchaser incurred actual
                       attorneys’ litigation fees in excess of two thousand dollars
                       ($2,000) and that those attorneys’ litigation fees were
                       warranted based upon the complexity of the issues
                       presented in the litigation.

(Emphasis added.) This language indicates an award of attorney’s fees is permitted if the
amount is reasonable and warranted. Contrary to Mid South’s assertions, this language does not
create a presumption of reasonableness of charges for attorney’s fees up to two thousand dollars.

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(Emphasis added.) Mid South argues this provision creates a presumption of

entitlement to attorney’s fees presented in connection with collection efforts under

this statute. We disagree with Mid South’s contention that the trial court was

mandated by this subsection and/or statute to approve the full amount of the

attorney’s fees and costs presented so long as they do not exceed the maximum

amounts contained in this statute. Rather, it appears from the text of this

subsection that its purpose is to declare that the legislature found its own calculated

amounts detailed in this statute to be reasonable ceilings for recovery.

             There is a dearth of published case law interpreting the effect of KRS

134.452 upon the determination of appropriate awards of attorney’s fees and costs

in association with collection efforts on a COD. Nevertheless, we hold that the

proper method for determining actual and reasonable attorney’s fees pursuant to

KRS 134.452 is set forth in Meyers v. Chapman Printing Co., Inc., 840 S.W.2d
814 (Ky. 1992). Although Meyers involved claims under the Kentucky Civil

Rights Act, it is instructive because it dealt with appellate review of the

appropriateness of an award of attorney’s fees authorized by statute. An

“attorney’s fee awarded should consist of the product of counsel’s reasonable

hours, multiplied by a reasonable hourly rate, which provides a ‘lodestar’ figure,

which may then be adjusted to account for various special factors in the litigation.”
Id. at 826. Using the lodestar method, a court may consider the complexity or

                                          -5-
simplicity of a proceeding to collect or protect the COD, the skill required, and the

fee customarily charged in the locality for similar proceedings.

             Special factors that may be considered in awarding attorney’s fees are

set forth in Axton v. Vance, 207 Ky. 580, 269 S.W. 534 (1925). These factors

include:

             (a) Amount and character of services rendered.

             (b) Labor, time, and trouble involved.

             (c) Nature and importance of the litigation or business in
             which the services were rendered.

             (d) Responsibility imposed.

             (e) The amount of money or the value of property
             affected by the controversy, or involved in the
             employment.

             (f) Skill and experience called for in the performance of
             the services.

             (g) The professional character and standing of the
             attorneys.

             (h) The results secured.
Id., 269 S.W. at 536-37. What can be gleaned from these factors in considering the

reasonableness of attorney’s fees is that a determination should be made based

upon the trial court’s knowledge, experience, and common sense. As the Court

cautioned in In re Citizens Fidelity Bank & Trust Co., 550 S.W.2d 569, 570 (Ky.

App. 1977): “(It) should be done with a view to common sense realism, that is to

                                         -6-
say, it should pose an amount that public standards will approve for the work done,

time consumed and the skill required.” (Citation omitted.) It is the trial court’s

role to follow the statutory language to provide a third-party purchaser of a COD

with the means to recover and protect its tax lien, as well as to safeguard the public

against possible abuses of the judicial process by not allowing excessive attorney’s

fees and costs to be imposed upon economically burdened citizens.

             Here, Mid South argues this case was “complex” because it concerned

more than one COD and Mid South had issues with achieving service upon Adkins

and eventually had to hire a warning order attorney. However, we note that the

record is straightforward, and ultimately the final judgment and order of sale was

entered on Mid South’s dispositive motions with no answer, response, or objection

ever having been filed by Adkins. Mid South further asserts the trial court

acknowledged the reasonableness of its hourly rate. However, the trial court also

expressed its hesitancy to award the full amount of the claimed attorney’s fees and

costs when they so greatly exceeded the face value of the CODs at issue as

unreasonable and uncustomary for an award of attorney’s fees in its jurisdiction. It

was also noted that at least a portion of the attorney’s fees was for travel, and that

amount would have been lower had this case been handled by local counsel. Thus,

applying the lodestar method and a common-sense analysis to the case herein, we

                                          -7-
cannot say that the trial court abused its discretion in awarding reduced attorney’s

fees and costs.

                                  CONCLUSION

             Therefore, and for the foregoing reasons, the order entered by the

Boyd Circuit Court is AFFIRMED.

             ALL CONCUR.

BRIEF FOR APPELLANT:                       NO BRIEF FILED FOR APPELLEES

M. Scott Mattmiller
Della C. Cummings
Lexington, Kentucky

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