David Hatfield v. Bluegrass Community Bank, Inc. ( 2021 )

RENDERED: MAY 21, 2021; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-1595-MR
DAVID HATFIELD AND AMANDA J.
HATFIELD APPELLANTS
APPEAL FROM BOYLE CIRCUIT COURT
v. HONORABLE DARREN W. PECKLER, JUDGE
ACTION NO. 17-CI-00301
BLUEGRASS COMMUNITY BANK,
INC.; J. THOMAS HENSLEY,
MASTER COMMISSIONER OF
BOYLE COUNTY; SALLY STATOM;
STEVE P. KIESLER; AND THE
MONTICELLO BANKING
COMPANY APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.
JONES, JUDGE: Acting without the assistance of counsel, the Appellants, David
Hatfield and his wife, Amanda Hatfield (“Hatfields”), appeal the Boyle Circuit
Court’s orders of September 18, 2019, overruling their objections to the Master
Commissioner’s report, and confirming the sale of a parcel of real estate located at
1145 Gwinn Island Road in Danville, Boyle County, Kentucky (“the Property”).
The Appellees are Bluegrass Community Bank, Inc. and the Monticello Banking
Company; J. Thomas Hensley Master Commissioner of Boyle County; and Steve
P. Kiesler and Sally Statom, the parties who purchased the property at the judicial
sale.1 On appeal, the Hatfields assert the trial court erred because the appraised
value set by the Master Commissioner was too low. Having reviewed the record,
and being otherwise sufficiently advised, we affirm.
I. BACKGROUND
On August 22, 2017, Bluegrass Community Bank, Inc. (“Bluegrass”)
filed a complaint against the Hatfields. Bluegrass alleged that on or about June 17,
2015, the Hatfields executed and delivered to Bluegrass a Promissory Note by
which they promised and agreed to pay the sum of $144,724.44, with interest
accruing thereon, initially, at a fixed rate of 5.5%, due in full on June 27, 2035
(“Note”). The Promissory Note was secured by a mortgage in favor of the
1
None of the appellees filed a brief. When the appellee does not file a brief our court may, but is
not required to impose penalties, against the non-responding appellee, including (1) accepting the
appellant’s statement of facts and issues; (2) reversing the judgment if reasonably supported by
the appellant’s brief; or (3) regarding the appellee’s failure to file a brief as a confession of error
and reversing the judgment without considering the merits of the case. Kentucky Rules of Civil
Procedure (“CR”) 76.12(8)(c). “The decision as to how to proceed in imposing such penalties is
a matter committed to our discretion.” Coblentz v. Day, 540 S.W.3d 384, 385-86 (Ky. App.
2018) (citing Roberts v. Bucci, 218 S.W.3d 395, 396 (Ky. App. 2007)). The record in this case is
relatively short and the issues are straightforward. Accordingly, we have elected not to impose a
penalty, and will proceed to review the merits of this appeal in the normal course.
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Property.2 Bluegrass further alleged that the Hatfields defaulted under the terms of
the Note. As of August 1, 2017, Bluegrass alleged the Hatfields were jointly and
severally liable to it for $140,590.49 plus accruing interest, late fees, expenses,
attorney’s fees, and court costs, as also provided for under the Note. By virtue of
the mortgage, Bluegrass alleged it had a valid and existing first lien on the Property
to secure payment of all sums owed under the Note, and that terms of the mortgage
provided for the filing of an action to sell the Property in the event of a default by
the Hatfields.
As relief, Bluegrass sought: (1) a judgment against the Hatfields,
jointly and severally, in the principal sum of $140,590.49 plus interest at the
agreed rate, late fees, expenses, court costs, and attorney’s fees; (2) that the court
adjudge that Bluegrass had a valid and enforceable first lien on the Property; and
(3) that if the court ordered the Property be sold, a sufficient portion of the net
proceeds of such sale (after paying the current year’s property taxes and the costs
of selling the property) be remitted to Bluegrass to fully satisfy any judgment
against the Hatfields.
The Hatfields were individually served with copies of Bluegrass’s
complaint on September 4, 2017. They did not file an answer or responsive
2
It does not appear that the Hatfields resided at the Property. It is described as being
approximately one acre with a 50-foot by 145-foot building located thereon, and commercial in
nature.
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pleading. Accordingly, on November 27, 2017, Bluegrass filed a motion for
default judgment. By order entered December 28, 2017, the trial court granted
Bluegrass a default judgment against the Hatfields in the amount of $140,590.49,
as of August 1, 2017, plus interest at the agreed legal rate, late fees, costs and
attorneys’ fees. It further adjudged that Bluegrass had a valid lien on the Property.
On May 29, 2018, Bluegrass moved for an order directing sale of the
Property to satisfy its judgment against the Hatfields. On June 5, 2018, the trial
court granted Bluegrass’s motion and referred the matter to the Master
Commissioner for a judicial sale. However, the sale was stalled when the Hatfields
filed for Chapter 13 bankruptcy. After the Hatfields bankruptcy action was
dismissed for failure to make the required filings, Bluegrass removed the trial court
to reinstate the judicial sale. Bluegrass’s motion was granted, and on December
10, 2018, the matter was again referred to the Master Commissioner for a judicial
sale.
Two “disinterested housekeepers” of Boyle County were appointed to
appraise the Property. On July 3, 2019, they filed a sworn affidavit attesting they
appraised the value of the property to be $63,000.00. A judicial sale was
conducted on July 23, 2019, at which Steve Kiesler and Sally Statom purchased the
property for $43,000.00. Since the purchase price was over two-thirds of the
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appraised value, the Hatfields could not claim a right of redemption. On July 24,
2019, the Master Commissioner filed a report of sale.
Acting with the assistance of counsel, on August 3, 2019, David filed
exceptions to the Master Commissioner’s Report of Sale and requested an
evidentiary hearing.3 The motion argued the appraised value set by the Master
Commissioner was so low as to be unconscionable where: (1) in 2005 the Property
was appraised with a market value of $155,000.00; (2) on June 17, 2015–just four
years prior–Bluegrass loaned the Hatfields $144,724.44 based on the value of the
Property; (3) that the tax assessed value of the Property was $70,000.00; and (4)
that upon information and belief a prospective buyer had offered Bluegrass
$80,000.00 prior to sale. The motion included David’s affidavit, a copy of the
2005 appraisal, and the affidavit of Kevin Cooley, a “longtime friend” of David.
Mr. Cooley averred that he was familiar with the Property and based on his
familiarity with the area believed the Commissioner’s appraisal was “dramatically
understated and unconscionable.”
On September 16, 2019, the trial court conducted an evidentiary
hearing on the objection. Two days later, on September 18, 2019, the trial court
overruled David’s exceptions finding “the appraisal entered on July 3, 2019, stands
as correct and valid” and denying David’s motion to assign a different value to the
3
It is unclear why Amanda did not join in the exceptions.
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property. A separate Confirmation of Sale was also entered on September 18,
2019.
This appeal followed.
II. ANALYSIS
The disposition of property through a judicial sale requires the court
to “refer the matter to the master commissioner or appoint a commissioner to
conduct a public sale[.]” KRS 389A.030(4). “[T]he terms of a judicial sale are
ultimately determined by the circuit court; and the court may accept or reject the
master commissioner’s suggestions.” Sterling Grace Mun. Securities Corp. v.
Central Bank & Tr. Co., 926 S.W.2d 670, 673 (Ky. App. 1995). We review the
trial court’s finding as to the appraised value for an abuse of discretion. Eagle Cliff
Resort, LLC v. KHBBJB, LLC, 295 S.W.3d 850, 852-53 (Ky. App. 2009).
The Master Commissioner’s report set the appraised value of the
Property at $63,000.00. Two-thirds of this amount is $42,000.00. Mr. Kiesler and
Ms. Statom purchased the property at the judicial sale for $43,000.00 thereby
cutting off the Hatfields’ right of redemption. KRS 426.530. “When a party
whose redemption rights are at stake believes the appraisal of his property is
inadequate in any way, he is entitled to an evidentiary hearing to determine
whether the appraisal was ‘irregular, fraudulent, or so erroneous as to be
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unconscionable[.]’” Eagle Cliff Resort, 295 S.W.3d at 852-53 (quoting Burchett v.
Bank Josephine, 474 S.W.2d 66, 68 (Ky. 1971)).
As required, the trial court conducted a hearing at which the Hatfields
were given an opportunity to introduce evidence regarding the appraisal process
and value assigned to the Property. With respect to the appraisal process, the
Hatfields failed to show that there was any irregularity or fraud. KRS 426.520
establishes the requirements for real property sold under an order or judgment of
court. It provides:
(1) Before any real property is to be sold under an order
or judgment of a court, other than an execution, the
commissioner or other officer selling the property shall
have it appraised, under oath, by two (2) disinterested,
intelligent housekeepers of the county, who may be
sworn by the officer. If they disagree, the officer shall
act as umpire. If only a part of a tract of land is sold, the
part sold shall, after the sale, be revalued in like manner.
(2) The appraisal made shall be in writing, signed by the
persons making it, and returned by the commissioner or
officer to the court which made the order or rendered the
judgment for the sale of the property. Prior to the sale,
the appraisal shall be filed among the papers of the cause
in which the judgment was rendered or the order made,
and entered on the records of the court.
KRS 426.520. The record confirms that this statute was followed.
Moreover, we disagree that the Hatfields’ evidence was so compelling
as to require a finding that the Commissioner’s appraisal value was
unconscionable. The 2005 appraisal was performed almost fifteen years prior to
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the sale. Its age alone calls its reliability into question. While Kevin Caudill, the
appraiser, testified on behalf of the Hatfields that he believed the estimate by the
Master Commissioner was erroneous insomuch as it discounted the property more
than 30%, he did not testify to any actual fraud or irregularity. Finally, the tax
assessment of $70,000.00 is only $7,000.00 more than $63,000.00 set by the
Master Commissioner. Such a small discrepancy is insufficient to compel a
finding of unconscionability.
Finally, we cannot agree with the Hatfields that the testimony of Ray
Preston, one of the two appraisers, compelled a finding in their favor. The fact that
Mr. Preston could not recall the precise details of a property he appraised over two
months prior is not entirely surprising, and it is certainly not indicative of fraud or
irregularity. And, contrary to the Hatfields’ implications otherwise, there is no
requirement for an appraiser to go onto the property. See Southwood v. Willis, 222
Ky. 782, 2 S.W.2d 660, 660 (Ky. 1928).
III. CONCLUSION
In sum, we can discern no abuse of discretion by the trial court.
Accordingly, for the reasons set forth above, we affirm the Boyle Circuit Court.
ALL CONCUR.
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BRIEF FOR APPELLANT: NO BRIEF FOR APPELLEES.
David Hatfield, pro se
Amanda Hatfield, pro se
Danville, Kentucky
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