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Kentucky Tax Bill Servicing, Inc. v. Fultz

Court of Appeals of Kentucky

December 14, 2018

KENTUCKY TAX BILL SERVICING, INC. APPELLANT
v.
DOUGLAS RAY FULTZ; UNKNOWN SPOUSE OF DOUGLAS RAY FULTZ; MICHAEL D. FULTZ; DANIEL M. FULTZ; ANDREW FULTZ; JAMES T. BARKER; INTERNAL REVENUE SERVICE; TAX EASE LIEN INVESTMENTS 1, LLC; SECURED CAPITAL INVESTMENTS, LLC, AS ASSIGNEE OF KY LIEN HOLDINGS, LLC; LIGHTSTORM PROPERTIES, LLC; MID SOUTH CAPITAL PARTNERS, LP; COMMONWEALTH OF KENTUCKY, DEPARTMENT OF REVENUE, DIVISION OF UNEMPLOYMENT INSURANCE AND COUNTY OF ROWAN, KENTUCKY APPELLEES

          APPEAL FROM ROWAN CIRCUIT COURT HONORABLE BETH LEWIS MAZE, JUDGE ACTION NO. 11-CI-90342

          BRIEF FOR APPELLANT: Joshua M. Bilz Cold Spring, Kentucky

          BRIEF FOR APPELLEES: No brief filed.

          BEFORE: CLAYTON, CHIEF JUDGE; MAZE AND THOMPSON, JUDGES.

          OPINION

          THOMPSON, JUDGE

         Kentucky Tax Bill Servicing, Inc. (KTBS) appeals from an order of the Rowan Circuit Court confirming a judicial sale, ordering the distribution of the sale proceeds and directing that a deed be issued. KTBS argues the trial court lacked jurisdiction to alter its 2015 judgment and order of sale awarding KTBS post-judgment interest at the rate of 12%; interest on the certificate of delinquency until the proceeds of the sale were distributed; and attorney fees incurred after the judgment and order of sale.

         We conclude that the 2015 judgment and order of sale did not resolve the issues of post-judgment interest, interest under Kentucky Revised Statutes (KRS) 134.125, and costs and attorney fees incurred after the entry of the 2015 judgment and order and, therefore, the circuit court could properly consider such awards to KTBS. We further conclude that the trial court did not abuse its discretion when it denied post-judgment interest. However, it had no discretion to deny simple interest on the amount owed on the certificate of delinquency until the proceeds were distributed. Finally, we conclude the trial did not abuse its discretion when it denied attorney fees claimed after the judgment and order of sale.

         KTBS is the holder of a 2005 certificate of delinquency for delinquent ad valorem taxes assessed against the real property located at 1105 Ky Highway 137, Morehead, Kentucky 40351 owned by Douglas Ray Fultz. The original tax bill was purchased by KTBS for $1, 943.60. On September 2, 2011, when KTBS filed a foreclosure action against the property, the amount due on the certificate of delinquency was $3, 890.65. There were multiple holders of certificates of delinquency named in the action.

         On January 6, 2015, a judgment and order of sale was entered. KTBS was awarded $10, 085.67 "with interest at the statutory rate of 12% until paid plus any continuing [costs] or attorney's fees[.]" The $10, 085.67 awarded included $3, 918.50 in litigation attorney fees. The property sold on June 29, 2016, for $53, 000.

         On July 29, 2016, KTBS moved the circuit court to distribute the sale proceeds on a pro rata basis among the tax lien holders in conformity with its 2015 judgment and order. KTBS requested a total of $23, 358.01, to include post-judgment interest at the rate of 12% and $7, 324.50 in post-judgment litigation costs. The matter was referred to the master commissioner.

         On October 19, 2016, the master commissioner recommended that adjustments to KTBS's claim for post-judgment interest and attorney fees be made. First, the master commissioner had "serious reservations" about the original tax bill for $1, 943 becoming a judgment in the amount of $10, 085.67. The master commissioner noted that attorney fees are governed by KRS 134.452 and that the hourly rate charged by local attorneys in the Morehead area for similar work performed by KTBS's attorney was an average of $150 per hour, far less than the $245 per hour requested by KTBS for the principal attorney, the $225 per hour charge for an associate and $100 per hour for paralegal work. It further noted that the litigation had been delayed, in part, by KTBS's failure to prosecute the action and in setting the property for sale and there was nothing complex about the litigation. The master commissioner recommended "that the post-judgment costs and attorneys' fees be denied, and a careful review of the amount of interest that accrued during long periods of inactivity and [KTBS's] claim for interest be adjusted accordingly."

         On December 6, 2016, the circuit court issued an order confirming, order of distribution and order for deed. The trial court found that an award of post-judgment interest to KTBS was not warranted. It noted that "[a]lthough the action was filed against Fultz, and although the judgment appears to reflect a personal judgment against Fultz, it is actually an in rem action to enforce a lien against the property." It further found that given the lienholders' claims exceeded the amount of money available for distribution, post-judgment interest was not appropriate.

         Although the trial court expressed regret that it awarded KTBS $10, 085.67 in the judgment and order of sale including attorney fees, it concluded that it could not revisit that award. As to KTBS's claim for attorney fees after the entry of the judgment and order of sale, the trial court adopted the recommendation of the master commissioner and denied the claim.

         KTBS's initial contention is that after the expiration of ten days, the circuit court lost jurisdiction to alter its 2015 order, including the award of post-judgment interest ...


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