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Persels & Associates, LLC v. Capital One Bank, (USA), N.A.

Court of Appeals of Kentucky

February 14, 2014

PERSELS & ASSOCIATES, LLC; ROBERT REID GILLISPIE; AND K. DAVID BRADLEY, JR. APPELLANTS
v.
CAPITAL ONE BANK, (USA), N.A.; CITIBANK, SOUTH DAKOTA, N.A. APPELLEES

APPEAL FROM DAVIESS CIRCUIT COURT HONORABLE JOSEPH W. CASTLEN, III, JUDGE ACTION Nos. 10-CI-00550, 11-CI-00502.

BRIEF FOR APPELLANT: William G. Deatherage, Jr. Hopkinsville, Kentucky Joyce A. Merritt Lexington, Kentucky.

NO BRIEF FOR APPELLEE.

BEFORE: CLAYTON, MAZE, AND NICKELL, JUDGES.

OPINION

CLAYTON, JUDGE:

Persels & Associates, LLC appeal the Daviess Circuit Court's findings and imposition of sanctions based on the trial court's determination that the respondents violated Kentucky Rules of Civil Procedure (CR) 11. After careful consideration, we affirm.

BACKGROUND

This case originated with two debt collection cases, which were consolidated for the purposes of deciding the CR 11 issue. The cases are Capital One Bank v. Sarah Jackson (hereinafter the "Jackson Case") and Citibank, South Dakota v. David Thomas (hereinafter the "Thomas Case").

Initially, Sarah Jackson and David Thomas, separately, retained Persels & Associates, LLC (hereinafter "Persels") to represent them in collection cases. Persels is a national law firm organized in Maryland and engaged primarily in unsecured debt collection cases such as a credit card debt. To provide services to clients, Persels hires local counsel to assist their clients when creditors file suit.

Here, after Persels was retained by the parties, it hired K. David Bradley and Robert Gillespie, attorneys licensed to practice in Kentucky, to provide limited representation for these litigants in the above-styled cases. K. David Bradley represented Sarah Jackson, and Robert Gillespie represented David Thomas. The terms of the Jackson and Thomas' limited representation agreement with Persels specifically noted that neither Bradley nor Gillespie were required to sign a pleading, enter an appearance, or attend a court proceeding.

On July 11, 2011, the trial court sua sponte entered an order in the Jackson case that required Bradley, Jackson's attorney, to appear before the court and show cause as to the reason he should not be held in contempt for his failure to sign the pleadings and enter an appearance. Bradley appeared as ordered. Similarly, on October 31, 2011, in the Thomas case, the trial court entered another show cause order for Gillespie, Thomas' attorney, to also appear in court.

At this juncture, the trial court permitted Persels to intervene as a third party respondent in both cases. Further, the trial court issued an order consolidating the two cases and providing "preliminary findings of fact." Thereafter, Persels pursued a writ of prohibition with our Court based on Persels' contention that the trial court did not have jurisdiction. Following the motion for a writ of prohibition, Persels made a motion for the trial court judge to recuse himself.

Following the Court of Appeals denial of the writ, the trial court held a hearing on July 3, 2012 at which Persels, Bradley, and Gillespie presented evidence. On July 27, 2012, the trial court entered an order titled "Finding that Respondents violated Civil Rule 11; Sanctions." Persels, Bradley, and Gillespie now appeal this order. While Capital One Bank (USA), N.A. and Citibank, South Dakota, N.A. are the named appellees, no response brief was filed by any appellee. The original party plaintiffs, Jackson and Thomas, and the respondent banks have no interest in the appeal as the underlying case has been resolved.

STANDARD OF REVIEW

Appellate review of a trial court's actions related to CR 11 requires a multi-standard approach, that is, a clearly erroneous standard to the trial court's findings in support of sanctions, a de novo review of the legal conclusion that a violation occurred, and an abuse of discretion standard on the type and/or amount of ...


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