Opinion
NO. 2013-CA-000395-MR
01-09-2015
MATTHEW L. DARPEL, EXECUTOR OF THE ESTATE OF PATTI BYRL STEFFEN, DECEASED; AND RICHARD A. JARVIS, TRUSTEE OF THE PATTI BYRL STEFFEN LIVING TRUST APPELLANTS v. JEFFREY C. ARNZEN, ADMINISTRATOR OF THE ESTATE OF ANTHONY P. STEFFEN, DECEASED; AND SUSAN PEARMAN APPELLEES
BRIEF FOR APPELLANTS: Daniel T. Guidugli Richard Jarvis Matthew L. Darpel Covington, Kentucky BRIEF FOR APPELLEES: Jeffrey C. Arnzen Covington, Kentucky Jan Kipp Kreutzer Newport, Kentucky
NOT TO BE PUBLISHED APPEAL FROM CAMPBELL CIRCUIT COURT
HONORABLE JULIE REINHARDT WARD, JUDGE
ACTION NO. 08-CI-01388
OPINION
REVERSING AND REMANDING
BEFORE: MAZE, NICKELL AND STUMBO, JUDGES. MAZE, JUDGE: Matthew L. Darpel, Executor of the Estate of Patti Byrl Steffen, deceased, and Richard Jarvis, Trustee of the Patti Byrl Steffen Living Trust (hereafter "Byrl's Estate") appeal from an order of the Campbell Circuit Court dismissing an action for declaratory relief against Jeffrey C. Arnzen, Administrator of the Estate of Anthony P. Steffen, deceased, and Susan Pearman (hereafter, "Anthony's Estate"). Byrl's Estate brought this action pursuant to Kentucky Rules of Civil Procedure (CR) 60.03 to challenge the validity of judgments entered by the Campbell Circuit Court in prior dissolution and partition actions between Byrl and Anthony. The trial court in this case concluded that Byrl's Estate failed to bring the action within a reasonable time. We conclude that the trial court erred by imposing this requirement because the judgments were void as a matter of law. The circuit court lost jurisdiction to enter a decree after Anthony's death in 2000. Furthermore, Anthony's Estate was never timely substituted as a party to either the dissolution or the partition action. The circuit court's nunc pro tunc orders could not operate to restore jurisdiction in light of these facts. Accordingly, the order denying the CR 60.03 motion must be reversed, and this matter remanded for additional proceedings.
The underlying facts and history of this matter are not in dispute. Byrl and Anthony Steffen were married in 1941 and separated on August 17, 1998. During the marriage, Byrl and Anthony acquired several tracts of real property, including a fifteen-acre tract located on Murnan Road in Cold Spring, Campbell County, Kentucky, that was the site of their marital residence. This property was held via a tenancy by the entirety.
Byrl filed a petition for dissolution of the marriage on April 28, 1999. She also filed a separate petition for legal separation on March 17, 2000. While the dissolution action was pending, Anthony learned that he was terminally ill with only a short time to live. Realizing that his death was imminent, Anthony filed a motion to enter a decree of dissolution but reserve issues regarding the division of marital property. In addition, he filed a separate action requesting partition of the marital realty.
On March 22, 2000, the parties appeared in court for a hearing. Anthony's counsel requested that the trial court make the statutory findings and enter a decree of dissolution. Shortly before the hearing, the parties had completed taking all proof necessary for the entry of a decree. However, the court declined to enter the decree at that time. Instead, the court entered an order reserving a ruling on Anthony's motion to enter a final decree, stating that it would rule on the motion after the Domestic Relations Commissioner heard evidence and reported his findings to the court. The court added that, if necessary, it would enter a decree nunc pro tunc effective as of March 17, 2000.
Anthony died testate on April 2, 2000. A probate case was opened and an executor was appointed. In his will, Anthony disinherited Byrl and left the overwhelming majority of his estate to his daughter, Susan Pearman. Byrl subsequently renounced Anthony's Will, and her renunciation was upheld on appeal on July 6, 2001.
Jan Kipp Kreutzer was appointed as executrix, but shortly thereafter, Arnzen was substituted as Administrator.
Following Anthony's death, the partition and separation actions were transferred and heard with the dissolution action. However, the actions were not formally consolidated. In addition, no action was taken to substitute Anthony's Estate as a party. On November 14, 2000, Byrl filed a motion to dismiss the partition action, arguing that title to the marital property vested automatically to her upon Anthony's death. The court denied the motion, noting that it had reserved the right to enter a nunc pro tunc ruling in the dissolution action. Thereafter, the court directed the parties to submit proof and briefs addressing the issues in all three cases.
On May 8, 2002, the circuit court entered a consolidated order covering all of the actions. The court entered a nunc pro tunc decree of dissolution effective as of March 17, 2000 - or before Anthony's death. This decree also addressed the partition action by dividing the marital property equally between Anthony's Estate and Byrl - including the Murnan Road property - and ordering the property to be sold and the proceeds divided equally. A lis pendens was subsequently filed on the property to preserve the interest of Anthony's Estate. Finally, the court dismissed the separation petition as moot.
A number of post-judgment motions followed entry of this judgment. On July 29, 2002, Byrl died testate. A probate case was opened and Darpel was appointed as executor of her estate. Shortly thereafter, Byrl's Estate was substituted as a party to the dissolution and partition actions. On August 31, 2002, Byrl's Estate filed a notice of appeal from the dissolution judgment.
This Court dismissed the appeal on September 24, 2003. We noted that the notice of appeal named only Anthony as appellee, and that Anthony's Estate had never been substituted as a party to the action below or to the appeal. Since the action had not been revived within the statutory period, we concluded that the appeal must be dismissed for failure to join an indispensible party. Matthew L. Darpel, Executor of the Estate of Patti Byrl Steffen v. Anthony P. Steffen, No. 2002-CA-001853-MR (Order Dismissing Appeal September 23, 2003).
On June 6, 2003, while the dissolution action was on appeal, the circuit court entered an order in the dissolution and partition actions substituting Anthony's Estate as a party for Anthony. The court also entered this order nunc pro tunc, to be deemed effective as of May 17, 2002. Although the order does not explicitly state so, it appears that the circuit court took this action because the issue had been raised in the pending appeal. The court entered a separate order declaring its May 8, 2002 order to be final and appealable with respect to the partition action.
On July 5, 2003, Byrl's Estate filed a notice of appeal from the partition action. In that appeal, Byrl's Estate argued that the Murnan Road property automatically passed to Byrl upon Anthony's death, since the property was held as a tenancy by the entirety. Consequently, Byrl's Estate maintained that the partition action should have been dismissed because there was no longer any divisible interest.
In an Opinion and Order entered on January 6, 2006, this Court strongly questioned the circuit court's use of a nunc pro tunc order to adjudicate the rights of the parties after Anthony died. However, the Court pointed out that this issue was not presented in the appeal from the partition judgment. Rather, the only issue presented concerned the collateral effect of the dissolution decree in the partition action. This Court noted that the dissolution judgment ordered the property sold and the proceeds divided between the parties. Since the dissolution judgment was final and no further appeals were available, this Court concluded that "the procedural posture of this case precludes granting any relief to Byrl's estate." Under these circumstances, this Court was compelled to affirm the judgment in the partition action. Darpel v. Arnzen, 2003-CA-001411-MR, 2006 WL 29042 (Ky. App. 2006).
Although the circuit court had ordered the Murnan Road property sold and the proceeds divided equally between Anthony's and Byrl's Estates, the record indicates that the property was not sold immediately. There was an extended dispute between the estates and the respective beneficiaries regarding the property. On September 12, 2008, Byrl's Estate filed this action pursuant to CR 60.03, seeking declaratory relief and asserting claims for slander of title. Byrl's Estate sought a declaration that the dissolution action abated upon Anthony's death, and that the dissolution decree was void ab initio. Along similar lines, Byrl's Estate sought a declaration that the Murnan Road property passed to Byrl automatically upon Anthony's death, and that the partition judgment was likewise void ab initio. Finally, Byrl's Estate sought a declaration setting aside the lis pendens.
While not directly relevant to this appeal, there was a third appeal involving these parties and the same property. In the intervening years, Byrl's Estate fell behind on payment of the mortgage and taxes. In 2009, the mortgage-holder filed a foreclosure action against the property and the Estate. A number of other entities which had purchased the tax liens also joined the action. Ultimately, the circuit court ordered the property sold and the proceeds used to satisfy the various liens. This Court affirmed that judgment and order of sale on appeal. Darpel v. Columbia Savings Bank, No. 2010-CA-001639-MR, 2012 WL 1957304 (Ky. App. 2012).
Following extensive briefing of the issue, the trial court denied the motion in an order entered on June 15, 2009. The court concluded that a party seeking relief under CR 60.03 must demonstrate that the lack of any other available remedy was not due to his own fault, neglect, or carelessness. Given the delay, the trial court concluded that the motion for relief was not brought within a reasonable time. Subsequently, the trial court denied Byrl's Estate's motion to alter, amend or vacate the order.
Byrl's Estate filed a notice of appeal from this order. However, this Court dismissed the appeal as interlocutory, noting that the trial court had not addressed the claim regarding the validity of the lis pendens. Darpel v. Arnzen, No. 2009-CA-001644-MR, 2011 WL 4502033 (Ky. App. 2011). The prior panel of this Court noted that the trial court's order of June 15, 2009, did not dispose of all of the claims raised by Byrl's Estate and did not include finality language required by CR 54.02. Thereafter, on August 24, 2012, the trial court entered a final order disposing of all claims in this action. This appeal followed.
However, the trial court's order of August 4, 2009, denying the motion to alter, amend or vacate included finality language. For some reason, the parties did not direct this Court's attention to this fact in the prior appeal.
As the trial court noted, the first issue on appeal is whether CR 60.03 is the proper vehicle for challenging the validity of the dissolution and partition judgments. The rule provides as follows:
Rule 60.02 shall not limit the power of any court to entertain an independent action to relieve a person from a judgment, order or proceeding on appropriate equitable grounds. Relief shall not be granted in an independent action if the ground of relief sought has been denied in a proceeding by motion under Rule 60.02, or would be barred because not brought in time under the provisions of that rule.
The rule recognizes the right of a person to attack a judgment by independent action on appropriate equitable grounds. Under the express terms of the rule, an independent action cannot be brought if it was previously denied under CR 60.02 or would be time-barred under that rule. In addition, this Court has held a movant seeking equitable relief through independent actions must establish that: (1) he has no other available or adequate remedy; (2) the movant's own fault, neglect, or carelessness did not create the situation for which he seeks equitable relief; and (3) he has a recognized ground, such as fraud, accident, or mistake, for the equitable relief. Uninsured Employers' Fund v. Bradley, 244 S.W.3d 741, 747 (Ky. App. 2007), citing Bowling v. Commonwealth, 163 S.W.3d 361, 365 (Ky. 2005).
In denying the motion, the trial court focused on the second element of this test. The trial court also noted that a motion to set aside a judgment under CR 60.02(d)-(f) must be brought "within a reasonable time." See also Rogers Group, Inc. v. Masterson, 175 S.W.3d 630, 635 (Ky. App. 2005). The court found that Byrl's Estate was aware of the defects in the judgments as early as 2000, when the circuit court continued to exercise jurisdiction following Anthony's death. At the latest, the court found that Byrl's Estate should have been aware the jurisdictional defect in 2003, when the Court of Appeals dismissed the dissolution appeal for failure to join an indispensible party. Nevertheless, both parties continued to act as if the circuit court had jurisdiction until 2009, when Byrl's Estate brought this action. The trial court concluded that the failure to seek earlier relief was due to the fault, neglect, or carelessness of Byrl's Estate, and precluded relief under CR 60.03.
We review the trial court's factual determination under a clearly erroneous standard. CR 52.01. There is substantial evidence to support the trial court's conclusion that the delay in bringing this action for relief was attributable to Byrl's Estate, at least to a significant degree. Although Byrl's Estate did attempt to raise the issue on appeal several times, this Court could not reach the merits of the issue because the validity of the judgments was never properly presented. But as the trial court noted, Byrl's Estate could have sought equitable relief from the dissolution and petition judgments after the Court of Appeals dismissed the dissolution appeal in 2003. Given these circumstances, we agree with the trial court that the five-year delay in bringing this action was unreasonable.
On the other hand, there is a separate question of whether an action to challenge an allegedly void judgment is subject to any time restrictions. Since that is an issue of law, we review that question de novo and without deference to the trial court's determination. Grange Mut. Ins. Co. v. Trude, 151 S.W.3d 803, 810 (Ky. 2004). The text of CR 60.02 provides that all motions for relief must be brought within a reasonable time, which would seem to include motions challenging a void judgment under CR 60.02(e). However, in Foremost Insurance Company v. Whitaker, 892 S.W.2d 607 (Ky. App. 1995), this Court explained the treatment of void judgments as they pertain to CR 60.02.
A void judgment is not entitled to any respect or deference by the courts. Mathews v. Mathews, Ky. App., 731 S.W.2d 832, 833 (1987). A void judgment is a legal nullity, and a court has no discretion in determining whether it should be set aside. Bertelsman and Philipps, Kentucky Practice, Civil Rule 60.02 , Vol. 7, p. 396 (4th ed.1984). Therefore, because the trial court had no jurisdiction over Foremost at the time default judgment was entered, the judgment was void ab initio and the trial court erred as a matter of law in refusing to set it aside.Id. at 610.
Likewise, in Rogers Group, Inc. v. Masterson, supra, this Court acknowledged that a void judgment does not acquire validity with the passage of time. Id. at 635. See also Grubb v. Wurtland Water Distr., 384 S.W.2d 321, 323 (Ky. 1964). Although the delay in bringing this action was unreasonable, we are convinced that Byrl's Estate was still entitled to challenge the underlying judgments on the grounds that they were entered without jurisdiction.
Based on this conclusion, the controlling issue is whether the circuit court had jurisdiction to enter the judgments in the dissolution and partition actions. It is clear that the circuit court did not have jurisdiction over the dissolution action following Anthony's death. A dissolution action is strictly personal and terminates upon the death of either party. Rhodes v. Pederson, 229 S.W.3d 62, 65 (Ky. App. 2007). The doctrine of abatement is inapplicable where the dissolution of marriage has been ordered prior to the death of the party, and in such cases the court may retain jurisdiction over the attending issues. Id. However, a court cannot retain jurisdiction to enter a dissolution decree after the death of a party.
In the original action, the circuit court found that this jurisdictional defect could be avoided by entering the decree nunc pro tunc. But as this Court noted in a prior appeal, that was an improper use of the nunc pro tunc rule.
[T]he purpose of the nunc pro tunc rule is to record some act of the court done at a former time which was not carried into the record. The power of the court to make such entries is restricted to placing into the record evidence of judicial action which has been actually taken. It may be used to make the record speak the truth, but not to make it speak what it did not speak but ought to have spoken. Hence, a court in entering a judgment nunc pro tunc has no power to construe what the judgment means, but only to enter of record such judgment as had been formerly rendered, but which had not been entered of
record as rendered. Carroll v. Carroll, 338 S.W.2d 694 (Ky. 1960). See also Powell v. Blevins, 365 S.W.2d 104, 106 (Ky. 1963); James v. Hillerich & Bradsby Co., 299 S.W.2d 92, 94 (Ky. 1956); Benton v. King, 199 Ky. 307, 250 S.W. 1002, 1003 (1923).Darpel v. Arnzen, 2006 WL 29042 at 2 (citation footnotes added to text).
Furthermore, the nunc pro tunc rule cannot be used to make an order that it might or should have made. Hankins v. Hankins' Adm'r, 173 Ky. 475, 191 S.W. 258 (1917). In its March 22, 2000, order, the circuit court expressly declined to enter a decree at that time because the necessary proof had not been taken. While the circuit court could have, and perhaps should have entered a decree at that time, it failed to take any action to enter a decree prior to Anthony's death. The nunc pro tunc rule did not allow the court to correct that omission after his death.
A court may enter a dissolution decree nunc pro tunc where a decree has been pronounced by the trial court, but has not been entered of record through some accident or through negligence of the clerk. Rhodes v. Pederson, 229 S.W.3d at 66. See also Munsey v. Munsey, 303 S.W.2d 257 (Ky. 1957). However, "[t]here is simply no law in Kentucky that supports the conclusion that a divorce action may be revived after the death of one of the parties." Id. at 66. As a matter of law, the circuit court lost jurisdiction to enter a dissolution decree upon Anthony's death. Consequently, any judgment entered thereafter was void, and the nunc pro tunc rule cannot operate to render it valid.
The partition action presents a separate issue regarding jurisdiction. As this Court noted in the 2006 appeal, Anthony and Byrl owned the Murnan Road property as tenants by the entirety, meaning they each owned the property by the undivided whole. A distinguishing feature of a tenancy by the entirety is that the survivor takes the entire estate at the death of the deceased co-tenant not by virtue of that death, but because, in law, each was viewed to own the entire estate from the time of its creation. Sanderson v. Saxon, 834 S.W.2d 676, 678 (Ky. 1992). In the original action, the circuit court concluded that the nunc pro tunc decree operated to terminate the survivorship aspect of the parties deed prior to Anthony's death.
Since we have concluded that the dissolution decree was void, Byrl took possession of the entire estate immediately upon Anthony's death. Furthermore, the partition action did not remain viable following Anthony's death. KRS 389A.030(5) provides that "[t]he death of any party pending the [partition] action and prior to distribution of the proceeds of sale or setting apart a divisible share shall not affect the action but the court may direct distribution or apportionment to the successors in interest of the decedent upon application therefore." However, this statute does not apply to "tenants by the entirety in residential property actually occupied by them as a principal residence." KRS 389A.030(1). Although Byrl moved out of the Murnan Road residence in 1999, the property retained its character as a marital residence until Anthony's death. And since the entire estate passed to Byrl automatically, there was no interest remaining for the court to partition.
We would also point out that Anthony's Estate was never substituted as a party to either the dissolution or the partition action following Anthony's death. As noted in this Court's 2003 order dismissing the appeal from the dissolution judgment, KRS 395.278 requires that an application to revive an action in the name of the representative or successor of a party "shall be made within one (1) year after the death of a deceased party." In the absence of a valid substitution, any judgment entered against the deceased party is void due to the absence of the real party in interest. Snyder v. Snyder, 769 S.W.2d 70, 72 (Ky. App. 1989).
While the circuit court attempted to circumvent this rule by entering another nunc pro tunc order substituting Anthony's Estate, the court designated that the order "shall be deemed effective as of May 17, 2002." Even discounting the improper use of the nunc pro tunc rule, the effective date of the order was clearly beyond the statutory period for revival of the partition action against Anthony's Estate. Therefore, the circuit court was still acting outside of its jurisdiction by attempting to enter a judgment against a party who was not before the court.
In addition, the filing of a notice of appeal divests the circuit court of jurisdiction to modify the judgment, except in limited circumstances. Young v. Richardson, 267 S.W.3d 690, 695 (Ky. App. 2008). CR 76.24(a) allows for substitution of a personal representative where a party dies after the filing of a notice of appeal, or after entry of a judgment but prior to the filing of a notice of appeal. However, the rule specifies that "[a]fter the notice of appeal is filed substitution shall be effected in the appellate court in accordance with this substitution." We find no authority which would have allowed the circuit court to retroactively substitute Anthony's Estate after the filing of the notice of appeal.
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Against this result, Anthony's Estate focuses on the strong interest in upholding the finality of judgments. Martin v. Frasure, 352, S.W.2d 817, 818-19 (Ky. 1962). In the majority of cases, we would agree that a final decision of the court, right or wrong, is conclusive of the questions involved and cannot be reconsidered in a subsequent action. Id. However, it is well-established that when a court acts without jurisdiction, its judgments are void, not merely erroneous or irregular. Carpenter v. Moorelock, 151 Ky. 506, 152 S.W. 575, 577 (1913). Despite the strong interest in upholding the finality of judgments, a void judgment may be collaterally attacked at any time. Id. at 579.
We also recognize that the equities of this case do not favor this outcome. In 2000, Anthony's counsel attempted to obtain a dissolution judgment prior to Anthony's death. The circuit court was operating under the mistaken belief that it could enter a nunc pro tunc decree at any time following Anthony's death. As a consequence of this mistake, the trial court lost jurisdiction and Byrl automatically succeeded to Anthony's interests in the disputed marital property. This result works a substantial hardship on Anthony's Estate. The circuit court's use of the nunc pro tunc orders was an attempt to set the matter right.
In addition, neither ostensible party had any interest in raising this issue until after the entry of the nunc pro tunc orders in 2002. Anthony's Estate continued to participate actively in the litigation even though it had never been substituted as a party. The 2002 nunc pro tunc orders allowed Anthony's Estate to retain an interest in the Murnan Road property which would otherwise have passed to Byrl upon Anthony's death.
For her part, Byrl and her Estate had no problem with the circuit court continuing to exercise jurisdiction until there was an unfavorable ruling. Ironically, Byrl's Estate could not prevail in either prior appeal due to the same jurisdictional defects. Nevertheless, Byrl's Estate sat on its rights for at least five years without bringing a proper action to set aside the judgments.
In addition, we recognize the validity of a decree of dissolution is generally not subject to appellate review. Ky. Const. § 115. See also KRS 22A.020(3). Kentucky's appellate courts do not have the authority to set aside a dissolution decree even if the trial court's jurisdictional findings are clearly erroneous. Clements v. Harris, 89 S.W.3d 403, 404 (Ky. 2002). In this case, however, the circuit court lacked either personal or subject-matter jurisdiction to enter the dissolution decree following Anthony's death. Notwithstanding the strong public policy, constitutional and equitable considerations, we are compelled to find that the 2002 judgments in the dissolution and partition actions were void ab initio.
As a result, the trial court is now faced with the unenviable task of unwinding everything that has happened since 2000, at least with respect to the Murnan Road property. This determination is further complicated because the lienholders foreclosed on the Murnan Road property and it has since been sold. The foreclosure judgment and order of sale were independent of the dissolution and partition judgments, and are not affected by their invalidity. Hence, the motion to set aside the lis pendens notice is likely moot at this time. The slander-of-title claim may remain viable, at least for purposes of damages. The trial court also may have to sort out any liabilities between Byrl's and Anthony's Estates incurred as a result of the sale. Byrl's Estate does not address any other property which may be affected by the dissolution judgment, and those matters are not before this Court at this time.
Accordingly, the order of the Campbell Circuit Court dismissing the independent action pursuant to CR 60.03 is reversed. This matter is remanded for entry of an order holding that May 8, 2002 dissolution and partition judgments entered by the Campbell Circuit Court in Action Nos. 99-CI-483 and 00-CI-359 were void ab initio because they were entered without subject-matter or personal jurisdiction. Upon entry of this order, the trial court shall conduct additional proceedings and enter additional orders as necessary to resolve the remaining claims in this action.
ALL CONCUR. BRIEF FOR APPELLANTS: Daniel T. Guidugli
Richard Jarvis
Matthew L. Darpel
Covington, Kentucky
BRIEF FOR APPELLEES: Jeffrey C. Arnzen
Covington, Kentucky
Jan Kipp Kreutzer
Newport, Kentucky