Opinion
NO. 2011-CA-001511-MR
02-08-2013
CHRISTINE A. ANDERSON APPELLANT v. JP MORGAN CHASE BANK, N.A. APPELLEE
BRIEFS FOR APPELLANT: Robert N. Trainor Covington, Kentucky BRIEF FOR APPELLEE: Daniel Hitchcock Lexington, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM KENTON CIRCUIT COURT
HONORABLE PATRICIA M. SUMME, JUDGE
ACTION NO. 09-CI-00109 & 11-CI-00624
OPINION
AFFIRMING
BEFORE: CAPERTON, STUMBO, AND THOMPSON, JUDGES. CAPERTON, JUDGE: Christine A. Anderson appeals from the findings of fact, conclusions of law, and order upon motion to dismiss complaint of July 22, 2011, in which the trial court dismissed Anderson's complaint in case number 11-CI-00624, which had been consolidated with case number 09-CI-00109. After a thorough review of the parties' arguments, the record, and the applicable law, we affirm the trial court's order dismissing Anderson's complaint.
On January 13, 2009, JP Morgan Chase Bank, N.A. (hereinafter "JP Morgan Chase") initiated a foreclosure action against Christine Anderson in the Commonwealth of Kentucky, Kenton County Circuit Court, 4th Division, case number 09-CI-00109 (hereinafter "the foreclosure action"). In the foreclosure action JP Morgan Chase sought foreclosure of a note and mortgage on certain real property located in Kenton County and owned by Anderson. On January 30, 2009, Anderson filed her original answer and asserted numerous affirmative defenses.
Thereafter, Anderson filed amendments to her original answer, including various counterclaims. Anderson filed a motion seeking leave to file a proposed third amended answer and third party complaint against multiple entities, including JP Morgan Chase. Anderson attempted to assert a claim against JP Morgan Chase for predatory lending when the loan was originated, a claim for breach of contract by alleging that JP Morgan Chase had not dealt in good faith and fair dealing in evaluating Anderson for loan modification during the foreclosure action, and a claim for violation of the Kentucky Consumer Protection Act through its alleged predatory lending and breach of contract conduct.
Prior to ruling on Anderson's September 30, 2010, motion seeking leave to file a third amended answer and the third party complaint, the court on December 20, 2010, entered an order dismissing the original counterclaims Anderson had filed against JP Morgan Chase, including claims under the Truth in Lending Act, Real Estate Settlement Procedures Act, the Kentucky Consumer Protection Act, breach of contract, misrepresentation, and breach of fiduciary duty.
The original counterclaims were asserted against Washington Mutual; JP Morgan Chase had acquired Anderson's loan through FDIC receivership of Washington Mutual.
On February 4, 2011, the court entered an order denying Anderson's motion for leave to file a proposed third amended answer and third party complaint. This order provided in part that the requested amendment was not timely filed and that the facts of the case did not support the proposed claims. Upon entry of the February 4, 2011, order, Anderson had no claims remaining in the foreclosure action against JP Morgan Chase. Anderson did not appeal this order.
Specifically, the court noted that: (1) JP Morgan Chase was not a party to the loan origination in relation to the predatory lending charge; (2) the facts of the case did not support Anderson's claim for breach of contract for failing to act in good faith and fair dealing in Anderson's pursuit of a loan modification; and (3) the facts did not support Anderson's claim that JP Morgan Chase had violated the Kentucky Consumer Protection Act through predatory lending and breach of contract conduct.
Thereafter, Anderson initiated a separate action on March 3, 2011, by filing a complaint against JP Morgan Chase in Kenton Circuit Court, 3rd Division, Case Number 11-CI-00624. In the complaint Anderson asserted the same claims against JP Morgan Chase as what was previously disallowed by the court in the foreclosure action. JP Morgan Chase sought either dismissal of the complaint or consolidation with the foreclosure action in the 4th Division, Case Number 09-CI-00109. After a hearing, the 3rd Division court entered an order consolidating the cases.
Specifically Anderson asserted claims against JP Morgan Chase for breach of contract in evaluating Anderson for loan modification, fraud in allegedly failing to act in good faith and fair dealing in the loan modification process, and violations of the Kentucky Consumer Protection act. In reviewing the complaint and the proposed third-party complaint it is apparent that Anderson was asserting the same causes of action.
On May 25, 2011, JP Morgan Chase filed a motion to dismiss the complaint in Case Number 11-CI-00624, as consolidated with the foreclosure action, Case Number 09-CI-00109. Anderson filed her objection to the dismissal. The court, on July 22, 2011, entered its findings of fact, conclusions of law, and order dismissing the complaint.
In its July 22, 2011, order the court determined that the February 4, 2011, order disallowing the claims of Anderson against JP Morgan Chase was final and conclusive of the rights, questions and facts in issue. The court determined that the parties and the claims asserted by Anderson in the complaint filed in Case Number 11-CI-00624 were identical to those set forth in the proposed third party complaint filed by Anderson in the foreclosure action, Case Number 09-CI-00109, which was disallowed under the February 4, 2011, order that Anderson did not appeal. Thus, the court determined that res judicata applied in the case and prevented Anderson from attempting to relitigate the same causes of action which were previously disallowed. It is from the July 22, 2011, order that Anderson now appeals.
On appeal, Anderson presents two arguments, namely, (1) the trial court erroneously dismissed Anderson's claims based on a motion that was not properly before the trial court; and (2) the lower court erroneously dismissed Anderson's claims as res judicata did not apply to the case before it. JP Morgan Chase argues that Anderson's complaint was properly dismissed as: (1) the motion to dismiss was properly before the court; (2) res judicata applies; and (3) the law of the case doctrine prevents Anderson from attempting to re-litigate the same claims previously disallowed by the court. With these arguments in mind we turn to our applicable standard of review.
In ruling on a motion to dismiss, the pleadings should be liberally construed in the light most favorable to the plaintiff, all allegations being taken as true. Mims v. Western-Southern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App. 2007). Therefore, "the question is purely a matter of law." James v. Wilson, 95 S.W.3d 875, 884 (Ky. App. 2002). Accordingly, the trial court's decision will be reviewed de novo. Revenue Cabinet v. Hubbard, 37 S.W.3d 717, 719 (Ky. 2000).
Certainly, it is true that in reviewing a motion to dismiss, the trial court is not required to make any factual findings. Benningfield v. Pettit Environmental, Inc., 183 S.W.3d 567, 570 (Ky. App. 2005). Nevertheless, in reviewing a motion to dismiss, the trial court may properly consider matters outside of the pleadings in making its decision. However, reliance on matters outside the pleadings by the court effectively converts a motion to dismiss into a motion for summary judgment. McCray v. City of Lake Louisvilla, 332 S.W.2d 837, 840 (Ky. 1960), and CR 12.02.
Sub judice, because the trial court based its decision on matters outside the pleadings, namely, the prior motions before it, the motion to dismiss was converted into a motion for summary judgment. The applicable standard of review on appeal of a summary judgment is, "whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996). Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." CR 56.03. The trial court must view the record "in a light most favorable to the party opposing the motion for summary judgment and all doubts are to be resolved in his favor." Steelvest v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). Summary judgment is proper only "where the movant shows that the adverse party could not prevail under any circumstances." Id. However, "a party opposing a properly supported summary judgment motion cannot defeat that motion without presenting at least some affirmative evidence demonstrating that there is a genuine issue of material fact requiring trial." Hubble v. Johnson, 841 S.W.2d 169, 171 (Ky. 1992), citing Steelvest, supra. See also O'Bryan v. Cave, 202 S.W.3d 585, 587 (Ky. 2006); Hallahan v. The Courier Journal, 138 S.W.3d 699, 705 (Ky. App. 2004). Since summary judgment involves only legal questions and the existence of any disputed material issues of fact, an appellate court need not defer to the trial court's decision and will review the issue de novo. Lewis v. B & R Corporation, 56 S.W.3d 432, 436 (Ky. App. 2001). With this in mind we turn to the parties' arguments.
First, Anderson argues that the trial court erroneously dismissed her claims based on a motion that was not properly before the trial court. We agree with JP Morgan Chase that the motion to dismiss was properly before the trial court. Sub judice, the trial court had ruled on various motions before it in the foreclosure action, including Anderson's motion to file a proposed third amended answer and third party complaint. When the trial court denied Anderson's motion, Anderson filed a new action, premised on the same facts and against the same party in the same circuit. JP Morgan Chase brought this to the court's attention and the case was properly consolidated with the foreclosure action. See CR 42.01. Anderson does not contest that the consolidation of the cases was proper; instead Anderson argues that JP Morgan Chase was required to file an answer ten days after the motion to dismiss was denied in the order consolidating the cases. Anderson relies upon CR 12.01, which states:
A defendant shall serve his/her answer within 20 days after service of the summons upon him/her. A party served with a pleading stating a cross claim against him/her shall serve an answer thereto within 20 days after the service upon him/her. The plaintiff shall serve his/her reply to a counterclaim in the answer within 20 days after service of the answer or, if a reply is ordered by the court, within 20 days after service of the order, unless the order otherwise directs. The service of a motion permitted under Rule 12 alters these periods of time as follows unless a different time is fixed by order of the court: (1) if the court denies the motion or postpones its disposition until the trial on the merits, the responsive pleading shall be served within ten (10) days after entry of the court's order; (2) if the court grants a motion for aWe believe this matter to be resolved by Melone v. Morgan, 676 S.W.2d 805, 806 (Ky. App. 1984):
more definite statement, the responsive pleading shall be served within 10 days after the service of the more definite statement.
CR 42.01 governs the consolidation of civil actions. Under that rule the actions may be consolidated for a specific purpose such as trial, or they may be consolidated generally. When the actions are consolidated for a specific purpose, the actions remain otherwise independent. When they are consolidated generally, they have become one action.
Sub judice, the cases were consolidated generally, becoming one action, in which JP Morgan Chase had previously filed an answer, negating Anderson's argument. Thus, we agree with JP Morgan Chase that the second motion to dismiss was properly before the trial court.
Anderson next argues that as res judicata did not apply to the case before it and the trial court erroneously dismissed Anderson's claims. JP Morgan Chase disagrees and argues that res judicata did apply as the matter involved the same facts, the same causes of action, the same parties, and the trial court had previously denied Anderson's motion to amend her answer and third-party complaint, resulting in a final judgment which Anderson did not appeal. We ultimately agree with Anderson that the trial court's denial of her motion to amend her answer and third-party complaint was not a final judgment and thus, res judicata did not apply. However, the trial court's misplaced reliance on res judicata does not render reversible error, as the law of the case doctrine clearly applies sub judice. Moreover, it is proper for us to affirm the trial court for any reason. See O'Neal v. O'Neal, 122 S.W.3d 588, 589 (Ky. App. 2002) (citing Old Republic Ins. Co. v. Ashley, 722 S.W.2d 55, 58 (Ky. App. 1986)).
This Court explained the law of the case doctrine, and the difference between it and res judicata, in Hallahan v. The Courier-Journal:
The doctrine of law of the case establishes a presumption that a ruling made at one stage of a lawsuit will be adhered to throughout the lawsuit. See Rezzonico v. H & R Block, Inc., 182 F.3d 144, 148 (2nd Cir.1999). Res judicata regulates judicial affairs in subsequent actions following a final judgment; whereas, law of the case involves issue preclusion in the same case prior to final judgment. Pacific Employers Ins. Co. v. Sav-A-Lot of Winchester, 291 F.3d 392, 398-99 (6th Cir.2002); N.L.R.B. v. Coca-Cola Bottling Co. of Buffalo, Inc., 55 F.3d 74, 77 (2nd Cir.1995). A judge has discretionary authority to reconsider a ruling. See, e.g., CR 54.02; 18B Charles Alan Wright, Arthur R. Miller, and Edward H. Cooper, Federal Practice and Procedure § 4478.1 (2d ed.2002). Generally, a judge may reexamine an earlier ruling and rescind it if he has a reasonable conviction that it was wrong and it would not cause undue prejudice to the party that benefited from it. See Avitia v. Metropolitan Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir.1995); Pacific Employers, 291 F.3d at 398 (court may reconsider prior determination under abuse of discretion standard of review)Hallahan v. The Courier-Journal, 138 S.W.3d 699, 706, n.4 (Ky. App. 2004).
See also United States v. Todd, 920 F.2d 399, 403 (6th Cir. 1990):
Under the doctrine of the law of the case, a decision on an issue made by a court at one stage of a case should be given effect in successive stages of the same litigation. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816, 108 S.Ct. 2166, 2177, 100 L.Ed.2d 811 (1988) (citing Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983)); 1B J. Moore, J. Lucas, & T. Currier, Moore's Federal Practice 0.404[1], at 117 (1988) [hereinafter "Moore's"]. This doctrine applies with equal vigor to the decisions of a coordinate court in the same case and to a court's own decisions. Christianson, 486 U.S. at 816, 108 S.Ct. at 2177. The purpose of this doctrine is twofold: (1) to prevent the continued litigation of settled issues; and (2) to assure compliance by inferior courts with the decisions of superior courts. Moore's 0.404[1], at 118. The Supreme Court has noted that this doctrine will not deprive a court of the power to revisit an issue:
[T]he law-of-the-case doctrine "merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power." ... A court has the power to revisit prior decisions of its own or of a coordinate court in any circumstance, although as a rule courts should be loathe to do so in the absence of extraordinary circumstances....
Christianson, 486 U.S. at 817, 108 S.Ct. at 2178 (quoting Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56 L.Ed. 1152 (1912)); In re Upjohn Co. Antibiotic Cleocin Prods. Liab. Litig., 664 F.2d 114 (6th Cir.1981) (stating that a transferee court should accord considerable deference to the judgment of a transferor court). The doctrine of the law of the case, therefore, does not foreclose a court from reconsidering issues in a case previously decided by the same court or another court. Applied to coordinate courts, the doctrine is a discretionary tool available to a court in order to promote judicial efficiency. As such, a decision to reconsider a previously decided issue will be deemed erroneous only if it is shown that the transferee court abused its discretion.
Todd at 403.
Sub judice, the trial court's order of February 4, 2011, did not dispose of all the claims of all the parties in the foreclosure action; moreover, the order did not recite that it was final and that there was no just reason for delay, rendering said order interlocutory under CR 54.02(1). As such, res judicata did not apply. However, we believe that the law of the case doctrine empowered the trial court to dismiss Anderson's complaint once it was consolidated with the foreclosure action. As discussed in Hallahan, the law of the case doctrine involves issue preclusion in the same case prior to final judgment. Anderson should have requested the trial court's reconsideration of her motion to amend instead of initiating a separate action, premised on the same facts, the same causes of action, and the same parties. Thus, the trial court did not err in dismissing the complaint.
CR 54.02(1) states:
When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may grant a final judgment upon one or more but less than all of the claims or parties only upon a determination that there is no just reason for delay. The judgment shall recite such determination and shall recite that the judgment is final. In the absence of such recital, any order or other form of decision, however designated, which adjudicates less than all the claims or the rights and liabilities of less than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is interlocutory and subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.
While not argued by the parties, we note that the dismissal was in actuality a grant of summary judgment; however, this does not change our analysis sub judice.
While not argued by the parties we note that CR 13.01 also supports the trial court's dismissal of Anderson's complaint:
A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. The pleader need not state the claim if (a) at the time the action was commenced the claim was the subject of another pending action, or (b) the opposing party brought suit upon his claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment on that claim, and the pleader is not stating any counterclaim under Rule 13. Any counterclaim against the Commonwealth, or any agency or political subdivision thereof, may be stated at the pleader's option.CR 13.01.
Sub judice Anderson attempted to circumvent the trial court's denial of her motion to amend her answer and third-party complaint by filing a new action. Thus was prohibited by CR 13.01 which requires compulsory counterclaims such as those sought by Anderson.
Finding no reversible error, we affirm.
ALL CONCUR. BRIEFS FOR APPELLANT: Robert N. Trainor
Covington, Kentucky
BRIEF FOR APPELLEE: Daniel Hitchcock
Lexington, Kentucky