Joya De Andalucia Farms, LLC v. First Nat'l Bank N. Platte

Decision Date02 December 2016
Docket NumberNO. 2013-CA-001754-MR,NO. 2014-CA-000869-MR,2013-CA-001754-MR,2014-CA-000869-MR
CourtKentucky Court of Appeals




ACTION NO. 13-CI-00503



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JONES, JUDGE: This is a consolidated appeal from an order granting summary judgment in favor of Appellees and from an order denying Appellants' motion for CR1 60.02 relief and for leave to file an amended answer and counterclaims. After careful review, for the reasons more fully explained below, we affirm both orders.


Appellants, Jose and Christina Cardenas, are husband and wife. They moved to North Platte, Nebraska in 2006, so that Dr. Cardenas could start a medical practice there. After moving to Nebraska, the Cardenas purchased approximately 128 acres of undeveloped farmland, which was split into two (2) separate tracts. The Cardenas planned to build a residence on one part of the land and operate an Andalusian horse farm on the remainder. They formed a limited liability company, Joya De Andalucia Farms, LLC, ("Joya Farms") to run the horse farm.2

Thereafter, the Cardenas and their LLC developed a lending relationship with Appellee, First National Bank ("the Bank"). This relationship produced several loans. The loans included the Bank financing the Cardenas' Spanish style residence, funding the construction of a large scale, state of the art barn facility, funding the construction of an indoor riding arena for competition activities relative to the horses, and other various personal and small business loans. Each of the Cardenas' loans was cross-collateralized with deeds of trustsuch that each separate deed of trust secured each individual loan which was owed to the Bank.

In May of 2012, the Cardenas left Nebraska and moved to Somerset, Kentucky. In February of 2013, the Bank declared the Cardenas and Joya Farms to be in default with respect to three separate promissory notes and accelerated their debt in accordance with the terms of the notes. The balance on the three notes combined exceeded four hundred thousand dollars plus interest from March of 2013. The notes were secured by personal property, which had been moved to Kentucky, and real property located in Nebraska.3

On April 26, 2013, the Bank filed an action in Pulaski Circuit Court against Joya Farms and the Cardenas. The Bank requested the circuit court to award it a writ of possession ordering that the collateral in possession of Joya Farms and the Cardenas be delivered to the Bank as well as a money judgment against the Cardenas and Joya Farms, jointly and severally, in the amount of any deficiency remaining after the Bank's disposition of the collateral including late charges, interest, collections costs, and attorneys' fees.

With the assistance of counsel, the Appellants filed an answer to the complaint. Therein, the Appellants admitted the existence of the notes, but denied that the unpaid balances were due. They also took issue with the Bank's description in its complaint of some of the collateral. The answer did not set forthany counter-claims or affirmative defenses. Instead, Appellants stated: "The Defendants may have causes of action which become more apparent as the process of discovery takes place, and therefore reserve the right to make such Counter-Claims at the time when their proof becomes substantiated. They therefore preserve any right to file compulsory counter-claims."

On July 5, 2013, the circuit court conducted an evidentiary hearing. At this hearing, David DeTurk, Vice President of First National Bank, North Platte, testified regarding Appellants' default. On August 7, 2013, the court entered an Order awarding the Bank a writ of possession which allowed it to recover the various horses and equipment at issue.

The Bank filed a motion for summary judgment on August 23, 2013. The motion included an affidavit with supporting documentation on the notes and default. In response, Appellants argued that summary judgment was improper because there were outstanding issues concerning whether the Bank followed the proper procedures in setting up the notes, giving credit for payment, and declaring the notes to be in default.

The court held a hearing on the Bank's summary judgment motion. After the hearing, by order entered September 6, 2013, the court granted summary judgment to the Bank. On September 30, 2013, Appellants filed a CR 60.02 motion for relief from judgment and for leave to file an amended answer and counterclaim. They filed a supporting memorandum of law a few days later.4On October 4, 2013, prior to the court's ruling on their CR 60.02 motion, Appellants timely appealed the court's summary judgment order.5 This Court agreed to hold the appeal in abeyance until such time as the trial court disposed of the CR 60.02 motion.

The circuit court then held a hearing on Appellants' CR 60.02 motion on December 6, 2013. Following the hearing, and various filings by the parties, on May 14, 2014, the court entered an order denying Appellants relief under CR 60.02 as well as the opportunity to amend their answer. Appellants filed a timely appeal for review of this order. Thereafter, we returned the prior appeal to the Court's active docket and consolidated the appeals for review.

II. Analysis
A. Summary Judgment

Summary judgment serves to terminate litigation where "the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." CR 56.03. Summary judgment should be granted only if it appears impossible that the nonmoving party will be able to produce evidence at trialwarranting a judgment in his favor. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky. 1991). Summary judgment "is proper where the movant shows that the adverse party could not prevail under any circumstances." Id. (citing Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255 (Ky.1985)). "A party's subjective beliefs about the nature of the evidence is not the sort of affirmative proof required to avoid summary judgment." Haugh v. City of Louisville, 242 S.W.3d 683, 686 (Ky. App. 2007). "[T]he party opposing summary judgment "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must present affirmative evidence in order to defeat a properly supported motion for summary judgment." O'Bryan v. Cave, 202 S.W.3d 585, 587 (Ky. 2006) (quoting Steelvest, 807 S.W.2d at 481).

"Although a defendant is permitted to move for a summary judgment at any time, this Court has cautioned trial courts not to take up these motions prematurely and to consider summary judgment motions 'only after the opposing party has been given ample opportunity to complete discovery.'" Blankenship v. Collier, 302 S.W.3d 665, 668 (Ky. 2010) (quoting Pendleton Bros. Vending, Inc. v. Commonwealth Finance and Admin. Cabinet, 758 S.W.2d 24, 29 (Ky. 1988)). "Whether a summary judgment was prematurely granted must be determined within the context of the individual case." Suter v. Mazyck, 226 S.W.3d 837, 842 (Ky. App. 2007).

Approximately six month elapsed between the time the Bank filed its complaint and entry of the circuit court's summary judgment order. Admittedly,this is not a great deal of time. However, on its face, this matter did not appear to be overly complex. The only issue presented for determination was whether Appellants defaulted on the notes at issue. In answering the complaint filed against them, Appellants asserted no affirmative defense and only denied the precise description of the collateral and whether the Bank had properly declared them to be in default and properly made a demand of them to pay. In responding to the Bank's summary judgment motion, the Appellants only made the vaguest of arguments without any supporting evidence as to why the motion was premature.6

Even so, the circuit court scheduled an evidentiary hearing prior to ruling on the Bank's motion for summary judgment. At the hearing, Appellants had the opportunity to call witnesses, present evidence, and cross-examine the Bank's witnesses. Additionally, counsel was permitted to make arguments to the court. At this time, counsel could have requested additional time for discovery; no such request was made of the trial court. We cannot identify anywhere in the record where Appellants were denied an opportunity to present their own evidence,to cross-examine the witnesses called by the Bank, or to make any legal arguments they deemed relevant. Likewise, we cannot find anywhere in the record where Appellants requested the trial court to allow them to take any specific, additional discovery prior to it deciding the issue of default on summary judgment. Having reviewed the record, we must conclude that Appellants were provided with ample opportunity to develop or request discovery to defeat summary judgment, but failed to do so.

If a respondent to a summary judgment motion has proof that a genuine fact issue exists, it is the respondent's duty to tender some proof to the court or make known to the court what additional discovery is necessary to enable it to properly respond. Neel v. Wagner-Shuck Realty Co., 576 S.W.2d 246 (Ky. App. 1978). A party who fails to challenge underlying facts presented by the movant in support of the summary judgment risks having the summary judgment granted and then affirmed on appeal. Kenton County Fiscal Court v. Elfers, 981 S.W.2d 553, 557 (Ky. App. 1998). In sum, none of the arguments and legal theories that Appellants now contend render the summary judgment erroneous were put before the trial...

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