Hazel Enterprises, LLC v. Dennis R. Faulkner ( 2023 )

RENDERED: APRIL 21, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2022-CA-0039-MR
HAZEL ENTERPRISES, LLC APPELLANT
APPEAL FROM WHITLEY CIRCUIT COURT
v. HONORABLE DANIEL BALLOU, JUDGE
ACTION NO. 20-CI-00564
DENNIS R. FAULKNER; CAROL A.
POWELL; GEORGE FAULKNER;
PEARL FAULKNER; SANDRA L.
BENSON; TAXCO, LLC; UNKNOWN
SPOUSE, IF ANY, OF CAROL A.
POWELL; UNKNOWN SPOUSE, IF
ANY, OF DENNIS FAULKNER;
UNKNOWN SPOUSE, IF ANY, OF
SANDRA L. BENSON; AND
WHITLEY COUNTY, KENTUCKY APPELLEES
OPINION
AFFIRMING
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BEFORE: THOMPSON, CHIEF JUDGE; ACREE AND MCNEILL, JUDGES.
MCNEILL, JUDGE: Appellees, George Faulkner and his wife, Pearl Faulkner (the
Faulkners), own real-estate in Whitley County, Kentucky. The Faulkners failed to
pay the property taxes that were assessed on their property for the 2009 tax year.
As a result, Appellant, Hazel Enterprises, LLC, (Hazel), purchased a certificate of
delinquency for those unpaid taxes from the county. In 2015, Hazel and the
Faulkners entered into an agreement to pay the amount owed on the debt over a
period of several years. The agreement included the assessment of the taxes,
interest, and various fees. The total amount owed under the agreement was
$2,266.20.
Although the parties agree that the Faulkners made payments, the
amount owed remains unclear. Hazel filed suit in Whitley Circuit Court on
December 31, 2020, seeking to foreclose on the Faulkners’ property due to an
alleged deficit in payment. For reasons that remain unclear, Hazel named the
incorrect defendants in that suit. Hazel filed an amended complaint on January 15,
2021, which included the correct defendants – the Faulkners, et al. Therein, Hazel
requests that collateral property be sold at public auction and for the payment of
$237.53 plus interest, as well as administrative and attorney’s fees.
The Faulkners filed a motion to dismiss for failure to state a claim on
the basis that the statute of limitations (SOL) had run. The trial court held a
hearing on the matter and granted the motion to dismiss. The court specifically
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concluded that the “relates back” provisions of CR1 15.03 did not apply here, and
that although the pro se answer failed to assert the statute of limitations defense,
Kentucky law permits the Faulkners to subsequently raise that defense. See
Underwood v. Underwood, 999 S.W.2d 716 (Ky. App. 1999). To be clear, the
Faulkners eventually retained counsel, who then filed the motion to dismiss. In
dismissing the tax lien case, the trial court further determined that a contract case
between the parties was viable and could proceed. Hazel filed a motion to alter,
amend, or vacate, which was denied. Hazel appeals to this Court as a matter of
right. For the foregoing reasons, we affirm.
ANALYSIS
“[A] motion to dismiss for failure to state a claim upon which relief
may be granted is a pure question of law, a reviewing court owes no deference to a
trial court’s determination; instead, an appellate court reviews the issue de
novo.” Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (citation omitted). First, we
deny Hazel’s motion to strike the Faulker’s brief for failure to conform to the rules
of appellate procedure. As to the merits of the appeal, we agree with the trial court
that Underwood applies here. Therein, the Court observed that the proposition
that, “[a]lthough failure to plead the statute of limitations constitutes a waiver of
that defense, if the complaint on its face shows that the action is barred by time, the
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Kentucky Rules of Civil Procedure.
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statute of limitations may be raised by a motion to dismiss.” Underwood, 999
S.W.2d at 720 (citing Tomlinson v. Siehl, 459 S.W.2d 166 (Ky. 1970)). The SOL
at issue here is eleven years from the date the taxes became delinquent. KRS2
134.420(1). The taxes were assessed in 2009. The trial court concluded that the
parties agreed that the SOL expired on January 1, 2021. The amended complaint
was filed on January 15, 2021.
The reasoning here appears to be that 2009 taxes became delinquent,
at the latest, on January 1, 2010. That date triggered the SOL which, again,
expired on January 1, 2021. However, Hazel disputes this and argues that the SOL
expired “sometime” in 2021, because the date the taxes became delinquent is
ambiguous and should be assessed on a case-by-case basis. In the absence of any
binding authority to the contrary, we agree that a natural and logical date to trigger
the SOL here would be January 1, 2010. To be clear, we do not opine as to the
effective date of any other taxes, including property taxes, that may differ based on
the specific facts and applicable law in subsequent cases not at issue here.
We also agree with the trial court that CR 15.03 does not apply here.
It provides in relevant part as follows:
(1) Whenever the claim or defense asserted in the
amended pleading arose out of the conduct, transaction,
or occurrence set forth or attempted to be set forth in the
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Kentucky Revised Statutes.
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original pleading, the amendment relates back to the date
of the original pleading.
(2) An amendment changing the party against whom a
claim is asserted relates back if the condition of
paragraph (1) is satisfied and, within the period provided
by law for commencing the action against him, the party
to be brought in by amendment (a) has received such
notice of the institution of the action that he will not be
prejudiced in maintaining his defense on the merits, and
(b) knew or should have known that, but for a mistake
concerning the identity of the proper party, the action
would have been brought against him.
Hazel does not cite any persuasive evidence indicating that the Faulkners “knew or
should have known” that they were the proper parties to the original suit. And
whatever notice the Faulkners are alleged to have received, would be eclipsed by
the prejudice they will endure if the lien case were to proceed – a decade after their
delinquency. More precisely, their home would be sold at auction to pay an
unspecified amount on a contract, initially worth $2,266.20, without deduction for
any payments made. In any event, in the absence of clear and binding authority to
the contrary, we cannot conclude that the trial court erred in this instance. Based
on the foregoing, and having considered the record and any remaining arguments
not expressly addressed herein, we affirm.
ALL CONCUR.
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BRIEF FOR APPELLANT: BRIEF FOR APPELLEES:
David Howard James H. Wren, II.
London, Kentucky Williamsburg, Kentucky
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