Court Opinion

ID: 5123679
Source: CourtListenerOpinion
Date Created: 2021-11-05 14:07:37.612764+00
Date Added: 2024-06-11T08:22:35.371556
License: Public Domain

RENDERED: OCTOBER 29, 2021; 10:00 A.M.
                          TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2020-CA-0254-MR

BRADWELL SCOTT CHANEY AND
PIKEVILLE FOOT CARE CENTER,
PLLC                                                               APPELLANTS

                   APPEAL FROM PIKE CIRCUIT COURT
v.                HONORABLE STEVEN D. COMBS, JUDGE
                        ACTION NO. 18-CI-01152

HEATHER FIELDS                                                         APPELLEE

                                   OPINION
                                  AFFIRMING

                                  ** ** ** ** **

BEFORE: CETRULO, LAMBERT, AND TAYLOR, JUDGES.

LAMBERT, JUDGE: Bradwell Scott Chaney and Pikeville Foot Care Center,

PLLC, (collectively, the defendants or the appellants) have appealed from the

January 17, 2020, order of the Pike Circuit Court granting Heather Fields a

judgment in the amount of $17,330.37, plus 6% interest, for funds withheld from

Fields’ paycheck and converted to Chaney’s benefit. We affirm.
             Pikeville Foot Care Center, PLLC, is a business in Pikeville,

Kentucky, that is registered with the Kentucky Secretary of State. Bradwell Scott

Chaney is the registered agent and manager of the business. Fields worked for the

business from 2012 to 2018. During that time, deductions were taken from her

paychecks to pay mandatory state and federal payments for employees, including

taxes, unemployment, Social Security, and Medicare. But rather than making the

required payments, she alleged that Chaney converted the funds to his own use and

deprived Fields of her rightful money, which damaged her financially and caused

her to file inaccurate federal and state tax forms.

             Based upon these factual allegations, Fields filed a complaint with the

Pike Circuit Court on October 2, 2018, seeking both compensatory and punitive

damages. Fields named both Pikeville Foot Care Center and Chaney as defendants

and served the complaint on Chaney both individually and for the business via

certified mail at the business address on Trivette Drive. The envelopes containing

the copies of the complaint mailed to the Trivette Drive addresses were returned as

undeliverable. The defendants subsequently were served via civil summons served

on Chaney on October 16, 2018. Chaney, who is not an attorney, filed an answer

on behalf of himself and the business on November 2, 2018. He indicated that the

correct operating address for the business was on Town Mountain Road. He

admitted that Fields had been an employee of the business from February 25, 2013,

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through August 10, 2018, where she was paid an hourly wage and standard

deductions were withheld from her paycheck. He also indicated that the monthly

and quarterly business tax returns were being filed. Chaney did not include a

certificate of service in this filing.

              On November 6, 2018, Fields moved the court for a default judgment

against the defendants as no answer had been filed. The court denied the motion

by order entered November 8, 2018, noting that Chaney had filed an answer a few

days earlier. The court cautioned Chaney that he could not file anything on behalf

of the business going forward, as a licensed attorney was required to make all

filings on behalf of a corporation. Fields then filed a notice that she had served

discovery requests on the defendants on December 18, 2018. When the defendants

failed to respond to the discovery requests, Fields filed a motion to compel on

January 28, 2019. By order entered January 31, 2019, the court granted the motion

and provided Chaney with 20 days to submit his answers to the discovery requests.

              On March 6, 2019, Fields moved the court to strike Chaney’s

pleadings and sought a summary judgment. She stated that Chaney had filed a

procedurally deficient answer without a certificate of service and had not served

her counsel. The court had admonished Chaney that he could not act as counsel

for Pikeville Foot Care Center, but no answer had ever been filed on behalf of the

business. Additionally, no responses to her discovery requests had been filed, even

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after the court provided the defendants with 20 days to file responses. Because the

defendants had done nothing to litigate the case, including filing a proper answer to

the complaint, Fields moved the court to strike Chaney’s pleadings and grant

summary judgment as there were no circumstances under which the defendants

could prevail. The court scheduled a hearing for April 5, 2019. Chaney, still

without an attorney, filed a response to the order scheduling the hearing to state

that he was waiting to receive payment records from the revenue service to show

that payments had been made. Chaney appeared at the hearing without counsel,

where the court considered Fields’ motion. The court entered an order on April 19,

2019, granting the motion to strike Chaney’s pleadings and entering a summary

judgment against both defendants. The court scheduled a hearing for May 24,

2019, to determine damages.

             On May 21, 2019, the defendants, now represented by counsel, filed a

motion to dismiss the case pursuant to 26 United States Code (U.S.C.) § 3403,

which, they argued, prohibited such actions to collect wage payments that have

been withheld. After holding a hearing, the court denied the motion to set aside the

summary judgment and dismiss the action, and it rescheduled the damages hearing.

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               The court held the damages hearing in January 2020,1 and it entered a

judgment on January 17, 2020. The court set forth the procedural background of

the case and made the following conclusions:

               1. Pursuant to the Summary Judgment entered by this
               [c]ourt on April 19, 2019, all allegations as against the
               Defendants are deemed admitted.

               2. The Defendant, Bradley [sic] Scott Chaney is listed as
               the Manager of Pikeville Foot Care Center PLLC and
               appears at all times to be the person responsible for the
               business activities of Pikeville Foot Care Center PLLC[.]

               3. The Plaintiff was an employee of Pikeville Foot Care
               Center from approximately 2012 until 2018. During that
               time the Plaintiff was paid wages and certain deductions
               were taken from her wages.

               4. The Defendants, Pikeville Foot Care [Center] PLLC
               and Brandon [sic] Scott Chaney took money from the
               wages owed the Plaintiff and told her that the money was
               deducted and used to pay certain mandatory state and
               federal payments for employees, such as federal taxes,
               state taxes, unemployment, Social Security and
               Medicare. However, the Plaintiff learned that none of
               these payments were made on her behalf.

               5. The Defendants deprived the Plaintiff of money that
               was rightfully hers, damaging her financially.

               6. The Defendants caused the Plaintiff further damages,
               causing [her to] file inaccurate federal and state tax
               forms, which caused penalties and interest to accrue, and
               amended forms to be filed.

1
 The circuit court clerk did not certify a video record in this action, and we note that the
defendants did not file a designation of the record.

                                                -5-
The court ultimately held that Chaney had “withheld monies from [Fields’] check

and converted them to his own benefit.” It then awarded Fields a judgment in the

amount of $17,330.37 as well as 6% statutory interest until the judgment was paid

in full. This appeal now follows.

             On appeal, the appellants present two arguments. First, they assert

that actions regarding the liability of an employer to deduct and withhold taxes are

procedurally barred. Second, they assert that the circuit court lacked jurisdiction to

hear the case. We find no merit in these arguments.

             The issues raised by the appellants represent questions of law, which

we shall review de novo. See Benningfield v. Pettit Environmental, Inc., 183

S.W.3d 567, 570 (Ky. App. 2005) (internal quotation marks and citations omitted)

(“In making this decision, the trial court is not required to make any factual

findings. Therefore, the question is purely a matter of law. Accordingly, the trial

court’s decision will be reviewed de novo.”).

             For their first argument, the appellants cite to sections of the Internal

Revenue Code and various federal cases to argue that cases such as the one Fields

brought are statutorily barred as an employer is not liable to an employee for

complying with its legal duty to withhold taxes. They specifically cite to 26

U.S.C. § 3403, which states that “[t]he employer shall be liable for the payment of

the tax required to be deducted and withheld under this chapter, and shall not be

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liable to any person for the amount of any such payment.” And in Chandler v.

Perini Power Constructors, Inc., 520 F. Supp. 1152 (D.N.H. 1981), the United

States District Court in New Hampshire explained:

                     With exceptions not here relevant, the Anti-
             Injunction Act, 26 U.S.C. § 7421(a), prohibits taxpayers
             in the position of plaintiff from bringing a suit “for the
             purpose of restraining the assessment or collection of any
             tax”. The statutory language “could hardly be more
             explicit”, Bob Jones University v. Simon, 416 U.S. 725,
             736, 94 S. Ct. 2038, 2046, 40 L. Ed. 2d 496 (1974).
             Manifestly, the purpose of the Act “is to permit the
             United States to assess and collect taxes alleged to be due
             without judicial intervention, and to require that the legal
             right to the disputed sums be determined in a suit for
             refund.” Enochs v. Williams Packing and Navigation
             Co., Inc., 370 U.S. 1, 7, 82 S. Ct. 1125, 1129, 8 L. Ed. 2d
             292 (1962). The instant case is clearly one which has
             been brought for restraining the collection (through
             withholding) of federal income taxes, and the Court finds
             it is barred by the provisions of the Anti-Injunction Act.

Chandler, 520 F. Supp. at 1155. The cited statutes and associated cases bar

taxpayers from bringing suit to restrain the withholding of funds by employers

from their paychecks. That is not at issue in this case.

             Fields appropriately argues that this case has nothing to do with

whether the appellants should withhold taxes and other funds from her paycheck;

she expected and wanted that to happen. Rather, Fields alleged that the appellants

had converted the withheld funds for Chaney’s use rather than making the required

payments. The tort of conversion is defined as “the wrongful exercise of dominion

                                         -7-
and control over property of another[,]” State Auto. Mut. Ins. Co. v. Chrysler

Credit Corp., 792 S.W.2d 626, 627 (Ky. App. 1990), and the elements of this tort

are as follows:

             (1) the plaintiff had legal title to the converted property;

             (2) the plaintiff had possession of the property or the
             right to possess it at the time of the conversion;

             (3) the defendant exercised dominion over the property in
             a manner which denied the plaintiff’s rights to use and
             enjoy the property and which was to the defendant’s own
             use and beneficial enjoyment;

             (4) the defendant intended to interfere with the plaintiff’s
             possession;

             (5) the plaintiff made some demand for the property’s
             return which the defendant refused;

             (6) the defendant’s act was the legal cause of the
             plaintiff’s loss of the property; and

             (7) the plaintiff suffered damage by the loss of the
             property.

C&H Mfg., LLC v. Harlan County Indus. Dev. Auth., Inc., 600 S.W.3d 740, 745

(Ky. App. 2020) (emphases omitted) (citing Jones v. Marquis Terminal, Inc., 454

S.W.3d 849, 853 (Ky. App. 2014)). We agree with Fields that she met the

elements of conversion. Accordingly, we hold that Fields was not statutorily

barred from bringing her action for conversion against the appellants.

                                          -8-
             For their second argument, the appellants assert, without any further

explanation, that the circuit court lacked subject matter jurisdiction over the claim.

The circuit court certainly had subject matter jurisdiction to decide Fields’

common law claim of conversion.

             For the foregoing reasons, the judgment of the Pike Circuit Court is

affirmed.

             ALL CONCUR.

 BRIEF FOR APPELLANTS:                     BRIEF FOR APPELLEE:

 Lawrence R. Webster                       Ron Diddle
 Pikeville, Kentucky                       Pikeville, Kentucky

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