CARROLL L. HAYS, APPELLANT
NATIONSTAR MORTGAGE LLC; SHANNON BRIGHT; VALUE FINANCE CORP.; KENTUCKIANA FINANCE, LLC; UNKNOWN SPOUSE (IF ANY) OF ALVIN LLOYD; AND LOUISVILLE/JEFFERSON COUNTY METRO GOVERNMENT, APPELLEES
FROM JEFFERSON CIRCUIT COURT HONORABLE BRIAN C. EDWARDS,
JUDGE ACTION NO. 12-CI-400680.
AND ORAL ARGUMENT FOR APPELLANT: James P. McCrocklin
AND ORAL ARGUMENT FOR APPELLEE NATIONSTAR MORTGAGE LLC:
Benjamin M. Rodriguez Cincinnati, Ohio
BEFORE: D. LAMBERT, THOMPSON AND STUMBO, JUDGES.
L. Hays appeals from an In Rem Judgment and Order of
Sale rendered by the Jefferson Circuit Court. Hays argues
that the Court improperly applied Kentucky Legal Sys.
Corp. v. Dunn, 205 S.W.3d 235 (Ky. App. 2006), to
determine that the lien of Plaintiff/Appellee Nationstar
Mortgage LLC is superior to a prior Judgment Lien filed by
Hays. Finding error, we REVERSE AND REMAND the Order on
AND PROCEDURAL HISTORY
November 22, 2006, Hays filed a Notice of Judgment Lien in
Jefferson County, Kentucky, against the Judgment debtor Alvin
Lloyd. The Judgment and Lien resulted from child support
arrearages owed by Lloyd to Hays in the amount of $13,
Shannon Bright purchased from Lloyd a parcel of real property
situated in Louisville, Kentucky. To effectuate the purchase,
Bright executed a Note in the amount of $90, 000 in favor of
Nationstar. Bright also executed a Mortgage on the parcel to
secure the payment of the Note. The Jefferson Circuit Court would later
determine that Nationstar had constructive notice of
Hays' Lien prior to executing the Bright Note and
February 28, 2012, Nationstar filed the instant foreclosure
action, alleging that Bright had defaulted on the Note.
Nationstar also sought to enforce the Mortgage. Hays asserted
an interest in the parcel by virtue of her Judgment Lien
22, 2013, Hays moved for partial summary judgment seeking a
ruling of lien priority over Nationstar's Mortgage.
Relying on Mortg. Elec. Registration Sys., Inc. v.
Roberts, 366 S.W.3d 405 (Ky. 2012), Hays argued that a
prior interest in real property takes priority over a
subsequent interest that was taken with actual or
constructive notice of the prior interest. Nationstar filed a
Response in Opposition, arguing that under Dunn,
purchase money mortgages have priority over judgment lien
creditors irrespective of timing and notice. Nationstar
argued that under Dunn, a purchase money lender does
not need to search for judgment liens, as purchase money
lenders automatically have priority regardless of whether
they had notice of any other interest.
21, 2013, Hays filed a Reply Memorandum in support of her
Motion for Partial Summary Judgment. Hays argued that the
Jefferson Circuit Court should not implicate the doctrine of
equitable subrogation, which would have the effect of
relieving Nationstar from negligent title examination and is
at odds with Roberts.
court referred the matter to the Master Commissioner, who
recommended that Hays' Motion for Partial Summary
Judgment be denied. The Commissioner found that Dunn
was controlling. Hays and Nationstar filed an exception and
response, respectively, and the matter then went before the
Jefferson Circuit Court for adjudication of Hays' Motion
for Partial Summary Judgment. On April 29, 2014, the
Jefferson Circuit Court rendered an Amended Order Adopting
Master Commissioner's Report and Denying Defendant's
Motion for Partial Summary Judgment. In support of the Order,
the court concluded that "Dunn is the
applicable law in this case and it holds that purchase money
mortgages are superior to previously entered judgment liens
against any property owned by mortgagor. Ms. Hays has failed
to address the legal effect of Dunn, or why her lien
allows for an unequivocal departure from Dunn."
The Jefferson Circuit Court's In Rem Judgment
and Order of Sale was rendered on December 22, 2014, and this