United States District Court, E.D. Kentucky, Southern Division
MEMORANDUM OPINION & ORDER
A. INGRAM UNITED STATES MAGISTRATE JUDGE.
Court considers cross motions for summary judgment from
Plaintiff Farmer's and Miner's Bank and Defendants
Eastern Kentucky Mining, Inc. (“Eastern Kentucky
Mining”) and Key-Way, LLC (“Key-Way”). D.E.
44 and 45. Because, after a full consideration of the record
and governing law, the Court finds that no genuine dispute as
to any material fact exists and that Plaintiff is entitled to
judgment as a matter of law, the court grants Plaintiff's
Motion for Partial Summary Judgment and denies
AND PROCEDURAL BACKGROUND
following facts are undisputed.
August 11, 2008,  Terry Lee, Richard Collett, and Rafe
Collett, individually and on behalf of LC&C Energy, Inc.,
(“Debtors”) signed a commercial security
agreement (“Security Agreement”) granting
Farmer's and Miner's Bank (the “Bank”) a
security interest in certain equipment, including a
Caterpillar 988G Serial #BNH000349 (“Caterpillar
988G”), a Caterpillar 773D Serial #7CS00179, and a SKF
50 Drill Serial #1R68Z44, together with “all parts,
accessories, repairs, improvements, accessions,
substitutions, and replacements anytime hereafter made or
acquired.” D.E. 44-3 at 8. Farmer's and Miner's
Bank filed an initial UCC-1 financing statement
(“Financing Statement”) with the Kentucky
Secretary of State on August 11, 2008, describing this
equipment. D.E. 44-3 at 11. On August 26, 2012, Debtors
signed a promissory note for an original principal amount of
$817, 305.14. (“Promissory Note”). D.E. 44-3 at
5. The Promissory Note stated that Debtors promised to pay
interest at the rate of 7.00% per year on the original sum of
$817, 305.14 from August 26, 2012, until January 9, 2016.
D.E. 44-3 at 5. If Debtors failed to make a payment, the
Promissory Note provided that the Bank could accelerate the
debt. D.E. 44-3 at 6. Additionally, if payment was more than
fifteen days late, Debtors promised to pay a late charge of
6.00% of the late amount with a minimum of $6.00. D.E. 44-3
at 5. Plaintiff filed a continuation statement on June 20,
2013. D.E. 44-3 at 14. Plaintiff also filed an amendment to
the initial Financing Statement (“UCC Amendment”)
on October 29, 2013. D.E. 44-3 at 16. The UCC Amendment
stated that the type of amendment was a “Collateral
Change - Delete, ” referenced the initial Financing
Statement, and indicated that the amendment covered the
Caterpillar 773D Serial #7CS00180 and the SKF 50 Drill Serial
#1R68Z44. D.E. 44-3 at 16. Debtors defaulted on the Promissory
Note and Farmer's and Miner's Bank accelerated the
debt per the Promissory Note on April 18, 2014. D.E. 44-3 at
Energy, Inc. entered into a Contract Mining Agreement and
Security Agreement (“Contract Mining Agreement”)
with Eastern Kentucky Mining, Inc. on November 2, 2012. D.E.
45-3 at 2. According to the Contract Mining Agreement,
LC&C Energy, Inc. agreed to provide personal services and
skills to mine, remove, stockpile, and prepare coal, and to
perform all reclamation and environmental obligations to a
Phase One release on Eastern Kentucky Mining's leased
coal field in Lawrence County, Kentucky. D.E. 45-3 at 2.
Additionally, pursuant to the Contract Mining Agreement,
LC&C “shall, at all times, operate solely as an
independent contractor and not as an agent, employee, or
servant of [Eastern Kentucky Mining].” D.E. 45-3 at 3.
The Contract Mining Agreement expressly states that LC&C
is not an agent of Eastern Kentucky Mining multiple times.
See id. LC&C defaulted on the Coal Mining
Agreement on or before before July 5, 2013, and ceased all
mining operations. D.E. 45-2 at 3. When LC&C defaulted on
the Coal Mining Agreement, Eastern Kentucky Mining and
Key-Way took possession of the Caterpillar 988G.
September 18, 2015, until September 21, 2015, Eastern
Kentucky Mining and Key-Way hired a heavy equipment and
repair service to fix and repair the Caterpillar 988G after
it was vandalized. D.E. 45-4 at 2. The total for these
repairs was $3, 603.46. Id. Eastern Kentucky Mining
and Key-Way hired a transportation company to transport the
Caterpillar 988G from Martha, Kentucky to Irvine, Kentucky on
September 24, 2015, for $1, 500.00. D.E. 45-4 at 3.
Defendants also stored the Caterpillar 988G beginning on July
5, 2013, at a cost of $20.00 per day, so that as of July 24,
2017, that cost had risen to $29, 200.00. D.E. 45-2 at 3.
filed a Notice of Mechanics and Mineral Leasehold Lien
(“Mechanics and Mineral Leasehold Lien”)
ostensibly pursuant to K.R.S. §§ 376.010 and
376.140 in the amount of $23, 973.81 on July 30, 2013, with
the Lawrence County Clerk. D.E. 45-13 at 2-5. The lien stated
it attached to:
the mineral leasehold (Exhibit A), its improvements, coal
produced and the proceeds thereon, as well as the entire
interest including all machinery and mining equipment
(Exhibit B) of Contractor, LC&C Energy, Inc. . . .,
located on the leasehold premises; as well as proceeds . . .
(Exhibit C), settlement and the entire real property mineral
leasehold interest of the Owner/lessee as referenced and
described in Lawrence county records. . . .
lien stated that Key-Way provided labor and services to
LC&C Energy and Eastern Kentucky Mining until LC&C
ceased coal production and left the leasehold premises on
“approximately July 20, 2013 and has refused to remit
the proceeds due Ke[y]-Way, LLC.” Id. The
proceeds, described in Exhibit C to the lien, “are
being held improperly at Commercial Bank, 1431 Cumberland
Avenue, Middlesboro, Kentucky 40765.” Id.
Exhibit A describes various leaseholds, none of which the
parties have identified as the leasehold in
question. D.E. 45-13 at 4. Exhibit C lists
“[c]oal sale proceeds due subcontractor Key-Way, LLC
via Eastern Kentucky Mining, [Inc], at Commercial Bank,
Middlesboro in escrow account with amount of $23,
973.81.” D.E. 45-13 at 5. Exhibit B, which describes
the equipment covered by the lien, is noticeably absent from
the record. There is no specific mention of the Caterpillar
988G in the Mechanics and Mineral Leasehold Lien.
filed an initial complaint in the Eastern District of
Kentucky on April 7, 2015, against LC&C Energy, Inc.,
Lee, Richard Collett, and Appolo Fuels. D.E. 1. Defendant Lee
filed an Answer on June 22, 2015. D.E. 6. Because Plaintiff
failed to show cause as to why it failed to serve Ray Collett
and Appolo Fuels, District Judge Bunning dismissed the claims
against those Defendants without prejudice. D.E. 8. Defendant
Lee and Plaintiff entered into an agreement whereby Lee's
obligations to Plaintiff will be satisfied by periodic
payments and Plaintiff agreed not to proceed with efforts to
obtain a judgment against Lee as long as he complied with the
terms of the agreement. D.E. 12. By oral motion of Plaintiff,
Judge Bunning dismissed the claims against LC&C Energy.
subsequently filed an Amended Complaint on March 7, 2016,
omitting Defendants LC&C Energy, Appolo and Ray Collett,
and joining Defendants Eastern Kentucky Mining and Key-Way.
D.E. 15. Defendants Eastern Kentucky Mining and Key-Way filed
a joint answer to the amended complaint, a counterclaim
against Farmer's and Miner's Bank, and a crossclaim
against Lee on June 27, 2016. D.E. 22. The parties consented
to the jurisdiction of the undersigned for all proceedings.
D.E. 29 at 2.
filed a Motion for Partial Summary Judgment on July 7, 2017.
D.E. 44. Defendant Lee supports Plaintiff's Motion for
Partial Summary Judgment. D.E. 43. Defendants Eastern
Kentucky Mining and Key-Way filed a combined Motion for
Summary Judgment and response to Plaintiff's Partial
Motion for Summary Judgment on July 25, 2017. D.E. 45 and 46.
Plaintiff filed a combined Reply to Defendants' Response
and a Response to Defendants' Motion for Summary Judgment
on August 15, 2017. D.E. 48. The motions are ripe for review.
Court shall grant a motion for summary judgment if the movant
identifies each claim or defense, or part of each claim or
defense, on which it seeks summary judgment and shows that
“there is no genuine dispute as to any material fact
and [that] the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a); Kand Med., Inc. v. Freund
Med. Prods., Inc., 963 F.2d 125, 127 (6th Cir. 1992). A
motion under Rule 56 challenges the viability of the other
party's claim by asserting that at least one essential
element of that claim is not supported by legally sufficient
evidence. Fed.R.Civ.P. 56(a); Celotex Corp. v.
Catrett, 477 U.S. 317, 324-25 (1986).
moving party does not need his own evidence to support this
assertion, but need only point to the absence of evidence to
support the claim. Turner v. City of Taylor, 412
F.3d 629, 638 (6th Cir. 2005). The responding party cannot
rely upon allegations in the pleadings, but must point to
evidence of record in affidavits, depositions, and written
discovery which demonstrates that a factual question remains
for trial. Hunley v. DuPont Auto, 341 F.3d 491, 496
(6th Cir. 2003). “A trial court is not required to
speculate on which portion of the record the non-moving party
relies, nor is there an obligation to ‘wade
through' the record for specific facts.” United
States v. WRW Corp., 986 F.2d 138, 143 (6th Cir. 1993).
Court reviews all of the evidence presented by the parties in
a light most favorable to the responding party and draws all
reasonable factual inferences in her favor. Harbin-Bey v.
Rutter, 420 F.3d 571, 575 (6th Cir. 2005). The Court
must grant summary judgment if the evidence would not support
a jury verdict for the responding party with respect to at
least one essential element of his claim. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). If the
applicable substantive law requires the responding party to
meet a higher burden of proof, his evidence must be
sufficient to sustain a jury's verdict in his favor in
light of ...