Released for Publication January 8, 2015.
ON APPEAL FROM COURT OF APPEALS. CASE NO. 2013-CA-000430-OA. WARREN CIRCUIT COURT NO. 11-CI-01813.
FOR APPELLANT: Thomas Dulaney Bullock, Preston Scott Cecil, Bullock & Coffman, LLP.
FOR UNION UNDERWEAR, INC., D/B/A FRUIT OF THE LOOM, REAL PARTY IN INTEREST: Gregory N. Stivers, Scott Donald Laufenberg, Kerrick Bachert Stivers, PSC.
FOR PARQUE INDUSTRIAL BUFALO, S.A. DE C.V., REAL PARTY IN INTEREST: Elizabeth Kenly Ames, English, Lucas, Priest & Owsley, LLP.
OPINION OF THE COURT BY JUSTICE ABRAMSON. All sitting. Minton, C.J.; Keller, and Noble, JJ., concur. Venters, J., dissents by separate opinion in which Cunningham and Scott, JJ., joins.
Inverultra, S.A., appeals from an order of the Court of Appeals denying writs of mandamus and prohibition. Inverultra seeks the lifting of a protective order and the issuance of orders compelling the real parties in interest, Union Underwear Company, Inc., and Parque Industrial Bufalo, S.A. de C.V., to respond to certain discovery requests Inverultra has propounded in a judgment-enforcement action in the Warren Circuit Court. The Court of Appeals denied relief upon finding that the trial court's protective order did not amount to an abuse of discretion. Although we have different reasons for so concluding, we agree with the Court of Appeals that Inverultra is not entitled to the relief it seeks, and thus affirm the denial of the requested writs.
In September 2011, Appellant Inverultra, S.A., a Panamanian company, was
awarded, in a New York Supreme Court, a $1.8 million judgment against three Honduran companies, one of which is the Appellee/Real Party in Interest, Parque Industrial Bufalo, S.A. de C.V. (ZIP Bufalo). Soon thereafter, in November 2011, Inverultra, pursuant to Kentucky Revised Statute (KRS) 426.955 (the pertinent provision of Kentucky's version of the Uniform Enforcement of Foreign Judgments Act, KRS 426.950-975), registered its New York judgment in the Warren Circuit Court. Warren County is the home of Real Party in Interest Fruit of the Loom, also known as Union Underwear, Inc., and referred to herein as " Union." Union is the parent corporation of a Honduran company, Confecciones dos Caminos S.A. de C.V., which leases commercial property in Honduras from ZIP Bufalo, the judgment debtor. Believing that through its connection with Confecciones, Union might owe money to ZIP Bufalo, Inverultra, with the aforementioned Kentucky judgment in hand, filed in the Warren Circuit Court an affidavit for a writ of garnishment against Union. See KRS 425.501 (proceedings for obtaining order of garnishment). The affidavit alleged Union's indebtedness to ZIP Bufalo, and on the basis of that affidavit the circuit court issued to Union an order of garnishment requiring it, among other things, to " hold and safely keep" any funds or property due to ZIP Bufalo and to " answer as garnishee" within twenty days of its receipt of the order.
Union duly answered and averred that it neither owed money to ZIP Bufalo; held any of its property; nor had, then or previously, any contractual relation with it. Almost contemporaneously with Union's answer, ZIP Bufalo moved to quash the order of garnishment, on the ground that Union was not indebted to it, and Inverultra moved for an order enjoining Union to pay into court the nearly $44,000 monthly rental payment due under the Confecciones-ZIP Bufalo lease. In support of its motion, Inverultra noted that the lease referred to Union as Confecciones's parent, was written in English, called for payment in United States currency, included Union among those to be given notices concerning the contract, and included Warren County as a possible venue for claims brought by ZIP Bufalo. Inverultra argued that Confecciones was really Union; that Union was the source of the rental payments; and that to safeguard Inverultra's remedy Union should be ordered to make those lease payments, if not directly to Inverultra, then into court.
Following a hearing on February. 3, 2012 (a few days after Union filed its answer to the order of garnishment), the trial court denied both motions--ZIP Bufalo's as moot and Inverultra's on the merits--conditioned, it appears, upon the prompt filing of a " supplemental affidavit" by Bufalo's representative to the effect that ZIP Bufalo " ha[s] no property in Warren County, Kentucky, and that no rent payments are or will be due from Fruit of the Loom [Union] to ZIP Bufalo under the lease between Confecciones dos Caminos S. de R.L. de C.V. and ZIP Bufalo." The company's representative filed the supplemental affidavit, and there the matter stood for about a month, until mid-April 2012.
At that point, Inverultra moved to " propound discovery on Fruit of the Loom." In support of its motion, Inverultra noted that subsequent to the February 3, 2012 garnishment hearing, this Court issued its Opinion in Inter-Tel Techs., Inc. v. Linn Station Props., LLC, 360 S.W.3d 152 (Ky. 2012), a case in which a real-property lessor sought to pierce the corporate veil of its lessee so as to impose liability for the lessee's breach on the lessee's parent and grandparent companies. In that case, this Court reviewed the law of corporate veil piercing and discussed factors bearing on a
piercing claim before ultimately concluding that piercing was appropriate. Inverultra represented that it sought discovery from Union " on the [veil-piercing] factors as set forth in Inter-Tel."
The trial court denied Inverultra's motion. It explained that in its view this case was distinguished from Inter-Tel by virtue of the fact that unlike Inter-Tel, wherein piercing was sought against a judgment debtor that had been rendered judgment proof by the transfer of its assets to its parent and grandparent, piercing was sought here against a complete stranger to the judgment--Confecciones--which had done absolutely nothing to frustrate the enforcement of Inverultra's judgment. On the contrary, Confecciones was performing its contract with judgment debtor ZIP Bufalo, and it was subject, apparently, to process in Honduras, where it had been formed and where it ...