Court Opinion

ID: 6329068
Source: CourtListenerOpinion
Date Created: 2022-04-01 14:06:10.069593+00
Date Added: 2024-06-11T09:22:48.126328
License: Public Domain

RENDERED: MARCH 25, 2022; 10:00 A.M.
                  NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                  Court of Appeals

                    NO. 2020-CA-0116-MR

PATRICIA DIANE DOTY, AS
EXECUTRIX OF THE ESTATE OF
FRANKIE FOSTER, DECEASED                           APPELLANT

           APPEAL FROM MADISON CIRCUIT COURT
v.         HONORABLE JEFFREY M. WALSON, JUDGE
                  ACTION NO. 15-CI-00563

RICHMOND HEALTH FACILITIES –
KENWOOD, LP D/B/A KENWOOD
HEALTH & REHABILITATION CENTER;
RICHMOND HEALTH FACILITIES –
KENWOOD GP, LLC; PREFERRED CARE
PARTNERS MANAGEMENT GROUP, LP;
PREFERRED CARE OF DELAWARE, INC.;
PCPMG, LLC; KENTUCKY PARTNERS
MANAGEMENT, LLC; GLENN COX, IN
HIS CAPACITY AS ADMINISTRATOR OF
KENWOOD NURSING AND REHABILITATION
CENTER; AND JOHN DOES 1 THROUGH 5                  APPELLEES

                        OPINION
                       REVERSING
                     AND REMANDING

                        ** ** ** ** **
BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.

MAZE, JUDGE: Patricia Diane Doty, as executrix of the estate of Frankie Foster

(Appellant) appeals from an order of the Madison Circuit Court granting

Appellees’ motion to dismiss based upon Appellant’s failure to timely substitute

and revive following Doty’s death. On appeal, Appellant argues that because

certain defendants filed a petition for bankruptcy relief, the automatic stay of 11

United States Code (U.S.C.) § 362(a)(1) and the associated savings statute, 11

U.S.C.A. § 108(c)(2), gave Appellant thirty days after notice of the termination of

the stay in which to file its motion to substitute and revive. Therefore, Appellant

contends that the trial court’s conclusion that the motion was untimely, and its

subsequent dismissal of the action were in error.

              On October 22, 2015, a complaint was filed in Madison Circuit Court

alleging neglect and abuse against various providers in connection with Frankie

Foster’s care at Kenwood Health & Rehabilitation Center. On April 25, 2016,

following Ms. Foster’s death, Patricia Diane Doty, as executrix of the estate, was

substituted as plaintiff.

              Thereafter, on November 15, 2017, the following defendants filed

their suggestion of bankruptcy: Preferred Care of Delaware, Inc. d/b/a Preferred

Care, Inc., Kentucky Partners Management; LLC, Preferred Care Partners

Management Group, LP; PCPMG, LLC; Richmond Health Facilities – Kenwood

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LP d/b/a Kenwood Health and Rehabilitation Center; Richmond Health Facilities –

Kenwood GP, LLC; and Glenn Cox, in his capacity as administrator of Kenwood

Health and Rehabilitation Center (Defendants). That document served to inform

the trial court that “certain defendants” had filed for bankruptcy protection in the

Northern District of Texas, Fort Worth Division. Among those defendants was

Kenwood Health & Rehabilitation Center. The bankruptcy proceedings involving

that debtor did not terminate until April 10, 2020.

                In 2018, Doty died. On April 11, 2018, her successor executrix was

appointed in the Madison District Court probate case. Thereafter, on July 31,

2019, Appellant filed a motion to substitute and revive. On September 13, 2019,

that motion was denied, based on Appellant’s failure to file the motion within the

time limits of CR1 25.01 and KRS2 395.278. As a result, on December 19, 2019,

the defendants’ motion to dismiss with prejudice and strike motion to set status

conference was granted. In the notice of appeal, Appellant states that it is the latter

order that is being appealed. As this appeal involves pure questions of law, the

Court’s review will be de novo. Fox v. Grayson, 317 S.W.3d 1 (Ky. 2010).

                CR 25.01(1) provides that “[i]f a party dies during the pendency of an

action and the claim is not thereby extinguished, the court, within the period

1
    Kentucky Rules of Civil Procedure.
2
    Kentucky Revised Statutes.
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allowed by law, may order substitution of the proper parties. If substitution is not

so made the action may be dismissed as to the deceased party.” The applicable

“period allowed by law” herein is one year as set forth in KRS 395.278. Thus, as a

matter of Kentucky law alone, the substitution should have been made one year

from Ms. Doty’s death. Were that the only applicable law, the trial court’s

determination would clearly have been appropriate.

             However, the disposition of this matter is not dependent solely upon

state law, but on the provisions of the United States Bankruptcy Code as well. 11

U.S.C. § 362(a)(1) imposes an automatic stay against the commencement or

continuation of an action involving the debtor. In Daniel v. Fourth & Market, Inc.,

445 S.W.2d 699, 701 (Ky. 1968), the Court recognized that “a revivor is much in

the nature of a new action as distinguished from an act done during the course of a

proceeding . . . .” As Kenwood Health & Rehabilitation Center filed for

bankruptcy protection, any effort at reviving the cause of action in the name of the

new personal representative would be “a new action” commenced against a

bankruptcy debtor and therefore, stayed.

             Further, 11 U.S.C. § 108(c)(2) provides that when state law sets a time

limit for commencing or continuing an action, it shall not expire until thirty days

after notice of the termination of the bankruptcy stay. The application of this

statute was recognized in Raikes v. Langford, 701 S.W.2d 142 (Ky. App. 1985),

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where the personal representative failed to commence his wrongful death action

within thirty days of the termination of the stay in Langford’s Chapter 11

proceeding. In this case, Appellant filed a motion to substitute and revive while

the stay was still in place (presumably to preserve the record) although the statute

provides for an additional thirty days after the stay is lifted.

             In the case of In re Baird, 63 B.R. 60 (Bankr. W.D. Ky. 1986), the

United States Bankruptcy Court for the Western District of Kentucky addressed the

effect of the automatic stay on statutes of limitation. In determining that 11 U.S.C.

§ 108(c) does not toll the running of a statute of limitations but extends it for thirty

days, the Court relied upon the legislative history of that statute as set forth in

House Report No. 95-595, § 108, at 318 (1977), which states that:

             SUBSECTION (C) EXTENDS THE STATUTE OF
             LIMITATIONS FOR CREDITORS. THUS, IF A
             CREDITOR IS STAYED FROM COMMENCING OR
             CONTINUING AN ACTION AGAINST THE DEBTOR
             BECAUSE OF THE BANKRUPTCY CASE, THEN
             THE CREDITOR IS PERMITTED AN ADDITIONAL
             30 DAYS AFTER NOTICE OF THE EVENT BY
             WHICH THE STAY IS TERMINATED, WHETHER
             THAT EVENT BE RELIEF FROM THE AUTOMATIC
             STAY UNDER PROPOSED 11 U.S.C. [§] 362 OR
             1301, THE CLOSING OF THE BANKRUPTCY CASE
             (WHICH TERMINATES THE STAY), OR THE
             EXCEPTION FROM DISCHARGE OF THE DEBTS
             ON WHICH THE CREDITOR CLAIMS.

             Hardin County v. Wilkerson, 255 S.W. 3d 923 (Ky. 2008), relied upon

by the trial court in its order of September 13, 2019 denying Appellant’s motion to
                                           -5-
substitute and revive, is factually distinguishable because it addressed the effect of

the stay provided in the Kentucky Insurance Guaranty Association Act upon the

time permitted for revival. However, it does contain analysis that is useful in

resolving the issue herein.

             First, the Court noted that, unlike the stay under consideration in

Hardin, supra, the stay imposed in the United States Bankruptcy Code is “self-

executing.” It goes into effect upon the filing of the petition for relief, requiring no

court action. Second, the Court recognized that the Code employs 11 U.S.C. § 108

not to toll the limitations period, but to extend it. Thus, in the case at bar,

Appellant would have thirty days from the termination of the stay in which to seek

substitution and revivor of its claims. As noted in Raikes, supra, any action taken

by the trial court prior to the termination of the stay would have been “void and of

no effect.” 701 S.W.2d at 144 (citation omitted).

             As such, at the time it was filed, the trial court was without authority

to act upon the Appellant’s motion to substitute and revive. The Court recognizes

that the motion was filed in violation of the automatic stay but finds that to be a

matter for the United States Bankruptcy Court for the Northern District of Texas,

Fort Worth Division to resolve. For the purposes of this appeal, the Court finds

that the trial court’s order of dismissal was prematurely entered as Appellant’s

motion to substitute and revive was timely filed as a matter of federal law.

                                           -6-
             Accordingly, we reverse the Madison Circuit Court’s order dismissing

and remand the matter with instructions for the trial court to grant Appellant’s

motion to substitute and revive as of the date of filing.

             ALL CONCUR.

 BRIEF FOR APPELLANT:                       NO BRIEF FOR APPELLEES.

 Robert E. Salyer
 Lexington, Kentucky

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