Opinion
NO. 2012-CA-001740-MR
06-13-2014
JOHN J. FLESCH, SR. APPELLANT v. BANK OF KENTUCKY, INC., SUCCESSOR IN ACQUISITION TO FIRST BANK OF NORTHERN KENTUCKY, INC., F/K/A FIRST NATIONAL BANK OF KENTUCKY APPELLEE
BRIEF FOR APPELLANT: John J. Flesch, Jr. Covington, Kentucky BRIEF FOR APPELLEE: C. Richard Colvin Brian F. Eviston Covington, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM KENTON CIRCUIT COURT
HONORABLE GREGORY M. BARTLETT, JUDGE
ACTION NO. 11-CI-02055
OPINION
AFFIRMING
BEFORE: LAMBERT, MAZE, AND MOORE, JUDGES. MAZE, JUDGE: Appellant, John Flesch, appeals an order of the Kenton Circuit Court dismissing his Counterclaim and granting summary judgment in favor of Appellee, Bank of Kentucky, in the latter's foreclosure action. Our review of the record reveals no error in the trial court's order. We therefore affirm.
Background
The facts of this case are not in dispute. For the tax years of 1995, 1996, and 1997, Flesch purchased the delinquent tax and county ad valorem property taxes on a piece of real estate then owned by Gregory Hughes. On five occasions between 1996 and 2004, Hughes refinanced his mortgage with First Bank of Northern Kentucky, Bank of Kentucky's predecessor-in-interest. However, the delinquent taxes on the property, including those for which Flesch held liens, remained unpaid.
On August 4, 2011, Bank of Kentucky filed a Complaint which named Hughes as a defendant in its foreclosure action on the subject real estate. Bank of Kentucky filed an Amended Complaint in February 2012 which added Flesch as a defendant. Flesch subsequently filed an Answer, Counterclaim, and Cross-claim, asserting a total claim against the property worth more than $7,500 pursuant to his liens for the three tax years. Flesch also asserted that his liens held priority and that, upon sale of the property, the proceeds must satisfy his claim.
In June 2012, Bank of Kentucky filed a motion for summary judgment on its foreclosure action against Hughes. A month later, it filed a motion to dismiss Flesch's Counterclaim asserting that he, in fact, no longer held enforceable liens on the property upon which Bank of Kentucky was foreclosing. The trial court granted both motions, agreeing that Bank of Kentucky held a lien superior on the property and ordering that the Master Commissioner extinguish Flesch's liens and sell the property at the courthouse door. Flesch now appeals from that order.
Standards of Review
We apply similar standards of review to the trial court's respective orders dismissing Flesch's Counterclaim and granting summary judgment on Bank of Kentucky's foreclosure claim. "Since 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." South Woodford Water District v. Byrd, 352 S.W.3d 340, 341 (Ky. App. 2001). The standard of review governing an appeal of a summary judgment is similar and well-settled. Since a summary judgment involves no fact-finding, this Court's review is de novo. Blevins v. Moran, 12 S.W.3d 698, 700 (Ky. App. 2000).
Analysis
The primary issues Flesch asserts on appeal are whether he maintained a superior claim through his tax liens and whether that claim prevented Bank of Kentucky from prosecuting its foreclosure action against the property which was the subject of those liens. We first look to whether the trial court committed error in dismissing Flesch's Counterclaim before addressing whether summary judgment was appropriate.
Kentucky Revised Statutes (KRS) 134.420 provides, in part,However, the law imposes a limitation upon suits stemming from these liens. KRS 134.546(1) states, "[a]ny action to collect any amount due on a certificate of delinquency ... may be brought at any time after the passage of one (1) year from the date the taxes became delinquent, and shall be brought within eleven (11) years of the date when the taxes became delinquent."
(1) The state and each county, or other taxing district shall have a lien on the property assessed for taxes due them respectively for eleven (11) years following the date when the taxes become delinquent.
(2) This lien shall not be defeated by gift, devise, sale, alienation, or any means except by sale to a bona fide purchaser, but no purchase of property made before final settlement for taxes for a particular assessment date has been made by the sheriff shall preclude the lien covering the taxes. ...
Furthermore, the clock does not start anew for a subsequent third-party purchaser. Rather, the purchaser "stand[s] in the shoes of the state, county, city, or taxing district in whose name the lien has been imposed." United States Bank Nat. Ass'n. v. Tax Ease Lien Invs. 1, LLC, 356 S.W.3d 770, 772 (Ky. App. 2011) (citing Flag Drilling Company, Inc. v. Erco, Inc., 156 S.W.3d 762, 767 (Ky. App. 2005)).
With this in mind, the trial court could not dismiss Flesch's Counterclaim for failure to state a claim "unless [Flesch] appear[ed] not to be entitled to relief under any state of facts which could be proved in support of his claim." Edmonson County v. French, 394 S.W.3d 410, 413 (Ky. App. 2013) (citing Pari-Mutuel Clerks' Union of Kentucky, Local 541, SEIU, AFL-CIO v. Kentucky Jockey Club, 551 S.W.2d 801, 803 (Ky.1977)); see also Kentucky Rules of Civil Procedure (CR) 12.02. In determining this, the trial court was required to construe the record in a light most favorable to Flesch. See Mims v. Western-Southern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App. 2007). Despite this high bar, the trial court was correct in granting Bank of Kentucky's motion to dismiss.
To summarize Flesch's argument on appeal, he asserts that KRS 134.420(2) imposed upon Bank of Kentucky, and its predecessors-in-interest, a duty to ensure that any and all liens were paid prior to refinancing. While we believe Flesch's is a strained reading of the statute, we do not reach the issue because the timing requirements of KRS 134.420(1) and KRS 134.546(1) ultimately bar his Counterclaim entirely.
Based upon the plain language of these statutes' eleven-year limitation, Flesch, as the successor in interest to the liens for tax years 1995, 1996, and 1997, had until 2009 to file suit to collect on the latest of those three certificates. He failed to do so until he filed his Counterclaim against Bank of Kentucky in April 2012. Thus, his Counterclaim is statutorily barred. Furthermore, to the extent Flesch requests equitable relief from this mandate, of which he "willingly admits his ignorance[,]" we see no inequity in the dismissal of his Counterclaim, as it impacted only the party who was ignorant of the law.
Finally, we turn to the trial court's grant of summary judgment. "The proper function of summary judgment is to terminate litigation when, as a matter of law, it appears that it would be impossible for the respondent to produce evidence at the trial warranting a judgment in his favor." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). This is such a case.
On appeal, Flesch concedes that no issues of fact remain. Indeed, Flesch asserts the legal superiority of his liens as the sole basis for his argument that summary judgment was inappropriate. Having now determined that the trial court appropriately dismissed his Counterclaim to this effect, it follows that Flesch's defunct tax liens did not render summary judgment in favor of Bank of Kentucky inappropriate. Rather, the trial court correctly concluded that Bank of Kentucky was entitled to judgment as a matter of law.
Conclusion
For the foregoing reasons, the order of the Kenton Circuit Court is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: John J. Flesch, Jr.
Covington, Kentucky
BRIEF FOR APPELLEE: C. Richard Colvin
Brian F. Eviston
Covington, Kentucky