Court Opinion

ID: 3159722
Source: CourtListenerOpinion
Date Created: 2015-12-03 16:05:19.653299+00
Date Added: 2024-06-11T11:57:20.676105
License: Public Domain

IMPORTANT NOTICE
        NOT TO BE PUBLISHED OPINION

THIS OPINION IS DESIGNATED "NOT TO BE PUBLISHED."
PURSUANT TO THE RULES OF CIVIL PROCEDURE
PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C),
THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE
CITED OR USED AS BINDING PRECEDENT IN ANY OTHER
CASE IN ANY COURT OF THIS STATE; HOWEVER,
UNPUBLISHED KENTUCKY APPELLATE DECISIONS,
RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR
CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED
OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE
 BEFORE THECOURT. OPINIONS CITED FOR CONSIDERATION
 BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED
 DECISION IN THE FILED DOCUMENT AND A COPY OF THE
                                          .

 ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE
 DOCUMENT TO THE COURT AND ALL PARTIES TO THE
 ACTION.
                                               RENDERED: OCTOBER 29, 2015
                                                     NOT TO BE PUBLISHED

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                                                        UL
                               2015-SC-000106-MR

                                                                   1A-Act-‘s-
SIMON M. VANDERPOOL, ET AL.                                        APPEL-rANTS—

                   ON APPEAL FROM COURT OF APPEALS
V.                       NO. 2014-CA-001495-OA
                  WHITLEY CIRCUIT COURT NO. 02-CI-00371

K. PETROLEUM, INC.                                                   APPELLEE

                  MEMORANDUM OPINION OF THE COURT

                                  REVERSING

      Appellants, Simon M. Vanderpool and Sandra Joan Vanderpool ("the

Vanderpools"), appeal from the Court of Appeals' Order granting a petition for

writ of mandamus filed by Appellee, Kentucky Petroleum, Inc. ("KPI"). For the

reasons set forth below, we reverse.

                               I. BACKGROUND
      The underlying controversy involves a dispute over the rightful use and

production of natural gas. KPI filed suit against the Vanderpools in Whitley

Circuit Court seeking a declaration of its leasehold rights. The Vanderpools

counterclaimed, alleging trespass and wrongful taking of natural gas from their

property. Judgment was entered in favor of the Vanderpools in the amount of

$217,890.24.
        KPI filed a notice of appeal to the Court of Appeals on May 9, 2012. Nine

 days later, an order of garnishment was issued to Seminole Energy Services,

 LLC, which held $45,022.25 belonging to KPI. That amount was ultimately

 distributed to the Vanderpools. On June 4, 2012, KPI filed a supersedeas bond

 in the amount of $280,000.00.

        In the mean time, the Court of Appeals issued an Opinion rendered May

 9, 2014, reversing and remanding the underlying matter for new trial.'

Thereafter, KPI filed a motion in the trial court seeking restitution of the

$45,022.25 in garnished funds. The trial court denied the motion on

September 3, 2014, and, on September 12, 2014, KPI filed a petition for writ of

prohibition and/or mandamus in the Court of Appeals. The Court of Appeals

granted KPI's petition for a writ, finding that KPI had demonstrated the lack of

an adequate remedy by appeal or otherwise and irreparable injury:

                     There is no adequate remedy by appeal or
              otherwise for the divestiture of a party's funds without
              a due process of adjudication of liability. PremierTox
              2.0 v. Miniard, 407 S.W.3d 542, 548 (Ky. 2013). Our
              Supreme Court has stated that "[a] judgment which
              has been reversed is as though it never has been."
              Drury v. Franke, 247 Ky. 758, 57 S.W.2d 969, 972
              (1933) (quoting Knights Adm'r v. Ill. Central R. Co., 143
Ky. 418, 136 S.W. 874, 875 (1911). In the present
              case, the judgment has been reversed. Consequently,
              there has been no adjudication of liability to support
              the continuation of the garnishment order. Therefore
              the order of the trial court denying the motion for

       1 In K Petroleum, Inc. v. Vanderpool, 2014 WL 1881913 (2012-CA-00859-MR)
(Ky. App. 2014), the Court of Appeals determined that the trial court's evidentiary
ruling (excluding a settlement agreement between Sandra Vanderpool's parents and
KPI), and the directed verdicts that followed, were in error and denied KPI aJair trial.
The Court of Appeals directed the circuit court to admit the subject agreement into
evidence at the new trial.

                                             2
             restitution 'is essentially a pre judgment attachment
             for which . . . [Petitioners] do not have an adequate
             remedy* on appeal or otherwise." PremierTox, 407
S.W.3d at 548. We conclude [KPI] has demonstrated
             the lack of an adequate remedy by appeal or otherwise.

                    Gross injustice and irreparable injury result[]
             from an order requiring the payment of money in
             satisfaction of a judgment without an adjudication on
             the merits of the claim. Id. "Aside from the
             deprivation of property and its attendant due process
             implications, seizing control of such a substantial
             amount of an individual's or business's money to
             assure payment of an unproven claim can, and often
             does result in devastating consequences for that
             individual or business's future operations." Id. at 549.
             Therefore, we conclude that [KPI] has demonstrated
             irreparable injury.

The Vanderpools appealed the Court of Appeal's decision granting the writ, and

that forms the basis of the case presently before this Court.

                                   II. ANALYSIS
      On appeal, the Vanderpools argue that: (1) KPI has not shown that there

exists no adequate remedy by appeal; (2) CR 60.03 precludes this action; and

(3) the trial court did not abuse its discretion in refusing to order restitution.

      This Court recently discussed the standards under which we review writs

of mandamus:

                   The issuance of a writ of mandamus is an
             extraordinary remedy. . . . As a result of this Court's
             cautious approach to writ proceedings, we have
             adopted, and stringently applied, a strict set of
             requirements for issuing a writ.

                    Writs are "divided into two classes, which are
            distinguished by whether the lower court allegedly is
            (1) acting without jurisdiction (which includes 'beyond
            its jurisdiction') or (2) acting erroneously within its

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             jurisdiction." . . . [W]e are not now concerned with the
             first class of cases.

                    Under the second class of writ cases, a writ
             "may be granted upon a showing . . . that the lower
             court is acting or is about to act erroneously, although
             within its jurisdiction, and there exists no adequate
             remedy by appeal or otherwise and great injustice and
             irreparable injury will result if the petition is not
             granted." This Court has consistently recognized an
             exception to the irreparable harm requirement in
             "certain special cases." In these special cases, a writ
             may issue "in the absence of a showing of specific
            great and irreparable injury . . . provided a substantial
            miscarriage of justice will result if the lower court is
            proceeding erroneously, and correction of the error is
            necessary and appropriate in the interest of orderly
            judicial administration." Even when these
            requirements are met, the issuance of a writ is not
            mandatory; instead, "whether to grant the writ is in
            the sound discretion of the Court."

                   As with other decisions that are within the
            discretion of the court, the decision of the Court of
            Appeals regarding the issuance of a writ is reviewed for
            an abuse of discretion. Questions of law, however, will
            be reviewed de novo. "And if the alleged error lies in
            findings of fact of the Court of Appeals, e.g. the finding
            regarding irreparable harm, then we review for clear
            error under CR 52.01." Because the decision of the
            Court of Appeals only held that Ridgeway had an
            adequate remedy by appeal or otherwise, a question of
            law, our review is de novo.

Ridgeway Nursing & Rehab. Facility, LLC v. Lane, 415 S.W.3d 635, 639-41 (Ky.

2013) (footnotes omitted).

      Sub judice, the Court of Appeals held that KPI demonstrated the lack of

an adequate remedy by appeal or otherwise, relying on PremierTox, 407
S.W.3d at 548.

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                No adequate remedy by appeal or otherwise means
                that the injury to be suffered . . . "could not therefore
                be rectified in subsequent proceedings in the case." In
                order for a writ to issue, the lack of an adequate
                remedy by appeal or otherwise is an absolute
                prerequisite, regardless of whether the writ is sought
                by alleging irreparable harm or invoking the "certain
                special circumstances" exception.

Ridgeway, 415 S.W.3d at 640 (footnote omitted).

          PremierTox is distinguishable on its facts. It involved a dispute between

Kentucky Spirit, which managed Medicaid payments to medical providers, and

PremierTox, a laboratory. PremierTox alleged that Kentucky Spirit owed it

$1,880,293.46 for services provided to Medicaid recipients for which Kentucky

Spirit had been paid by the Commonwealth of Kentucky. Kentucky Spirit

disputed the validity of PremierTox's claims for payment. The circuit court

ordered Kentucky Spirit to deposit the funds into a court-controlled escrow

account pending adjudication of PremierTox's claim. Kentucky Spirit sought a

writ of prohibition to prevent the circuit court from enforcing the order.

      The Court of Appeals issued the writ, concluding that "a circuit court has

no authority 'to require a party to pay a demanded judgment into court in

advance of an adjudication that he owes it"' pursuant to CR 67.02 2 and J.R.E.,

Inc. v. Asbury, 993 S.W.2d 960 (Ky. 1999). PremierTox at 545.

      2   CR 67.02 provides:

               When it is admitted by the pleading or examination of a
               party that he has in his possession or control any money or
               other thing capable of delivery which being the subject of
               the litigation, is held by him as trustee for another party, or
               which belongs or is due to another party, the court may
               order the same to be deposited in court or delivered to such
               other party, with or without security, subject to further

                                              5
      Asbury explained that:

               When CR 67.02 was adopted . . . , it incorporated .. .
               provisions of . . . of our former Civil Code . . . . [which]
               appear to have been a codification of the common law
               rule that a party to a controversy involving a right to a
               certain sum of money or thing cannot be required to
               deposit that money or thing in court, unless it is either
               clearly admitted by his pleading or by proof that he
               has no right to retain it and that the other party to the
               action is entitled to it or at least has an absolute
               interest in it.
993 S.W.2d at 962.
      This Court affirmed the issuance of the writ in PremierTox, concluding

that the circuit court had misconstrued the function of CR 67.02.              "The

amount of money in dispute is significant. The circuit court's order is

essentially a pre judgment attachment[ 3 ] for which Appellees do not have an

adequate remedy on appeal or otherwise." PremierTox, 407 S.W.3d at 548.

               direction. If such order is disobeyed, the court may punish
               the disobedience as a contempt, and may also require the
               sheriff or other proper officer to take the money or property
               and deposit or deliver it in accordance with the direction
               given. Money paid into court under this rule shall be
               deposited in an interest-bearing account or invested in an
               interest-bearing instrument approved by the court. At the
               conclusion of the action, the interest accruing on any such
               account or instrument shall be paid to the person to whom
               the principal amount of the account is paid.

      3   This Court explained that:

               [T]he circuit court's order would effectively convert CR 67
               into a substitute for the provisional remedy of pre judgment
               attachment established by KRS 425.301 et seq. It would
               also circumvent the safeguards built into those statutes.
               For example, KRS 425.309 would require PremierTox to
               execute a bond of not less than double the amount of its

                                             6
      The Court of Appeals' reliance on PremierTox was simply misplaced. In

the case at bar, KPI has not been ordered to pay a sum into court before an

adjudication on the merits. Rather, the adjudication already took place and

KPI seeks restitution of funds that were previously garnished. "Kentucky law

makes it clear that an appellant who fails to file a supersedeas bond does so at

his own risk and that execution may proceed . . . . " Marshall v. Goodwine, 332
S.W.3d 51, 55 (Ky. 2010) (quoting Hardy v. Goodwine, No. 2007-SC-00284-

MR, 2009 WL 1830782, at *2 (Ky. June 25, 2009)). The underlying case has

already been remanded for a new trial. In the event KPI prevails, it does have

an adequate remedy that can be rectified in subsequent proceedings in the

case, either in the trial court or on appeal.

      We review the decision of the Court of Appeals in this instance for an

abuse of discretion. "The test for abuse of discretion is whether the trial

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

legal principles." The Court of Appeals' decision in the present matter was

unsupported by sound legal principles, as it misapplied PremierTox as noted

above, and therefore, we hold that it abused its discretion in granting KPI's

petition for a writ. Having so concluded, we do not reach the remaining

arguments.

             claim, a safeguard not available under the methods
             imposed by the circuit court.

      Id. at 547.

                                             7
                              III. CONCLUSION

      The Court of Appeals' Order granting mandamus is hereby reversed.

      All sitting. Minton, C.J., Barber, Cunningham, Keller, Noble, Venters,

JJ., concur. Abramson, J., concurs in result only.

COUNSEL FOR APPELLANTS:

Darrell L. Saunders

COUNSEL FOR APPELLEE:

Scott Marlow Webster

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