Kurtsinger v. Board of Trustees

• Decision Date: 21 November 2002
• Docket Number: No. 2001-SC-0261-DG.,2001-SC-0261-DG.
• Parties: Michael KURTSINGER, et al., Appellants, v. BOARD OF TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS, et al., Appellees.
• Court: United States State Supreme Court — District of Kentucky

Page 454

90 S.W.3d 454

Michael KURTSINGER, et al., Appellants, v. BOARD OF TRUSTEES OF KENTUCKY RETIREMENT SYSTEMS, et al., Appellees.

No. 2001-SC-0261-DG.

Supreme Court of Kentucky.

November 21, 2002.

Herbert L. Segal, Everett C. Hoffman, Segal Stewart Cutler Lindsay Janes & Berry, PLLC, Louisville, Counsel for Appellants.

Robert W. Kellerman, Lee A. Webb, Stoll, Keenon & Park, LLP, J. Eric Wampler, James Dodrill, Kentucky Retirement Systems, Frankfort, Todd S. Page, Stoll, Keenon & Park, LLP, Lexington, Counsel for Appellees.

LAMBERT, Chief Justice.

The trial court entered an order denying Appellants' CR 59.05 motion, but Appellants and Intervening Appellees did not receive notice of entry of that order. Pursuant to CR 60.02, the trial court vacated the order and thereafter entered a new order. Appellants appealed to the Court of Appeals based on time computation from the last order. The Court of Appeals held that the trial court abused its discretion under CR 60.02 when it vacated the previous order. The question here is whether a trial court may vacate a CR 59.05 order under CR 60.02 upon a finding that a party did not receive notice of entry of the order.

Thirteen weeks following oral argument on the motion, the trial court entered summary judgment in favor of Appellees. Appellants timely filed a motion to alter, amend or vacate the summary judgment pursuant to CR 59.05. This motion was denied on June 29, 2000 and notice of entry of the order was sent to Appellees but not to Appellants. Appellants became aware of the June 29 order on August 15, 2000 when a telephone call was made by counsel to check the status of the CR 59.05 motion. On learning of the June 29 order Appellants immediately filed a motion pursuant to CR 60.02 requesting the trial court to vacate the June 29 order and enter a new order ruling on their CR 59.05 motion.

On August 23, 2000, the trial court held a hearing on Appellants' motion pursuant to CR 60.02 and granted the motion. The trial judge stated that his office had made a mistake by not including the Appellants or the Intervening Appellees on the distribution list of the June 29 order.¹ The motion was granted on grounds of "mistake, inadvertence, excusable neglect and reasons of an extraordinary nature justifying relief" and upon a finding that Appellants "acted with due diligence and acted promptly." The trial court vacated the June 29, 2000 order. The trial court then entered a new order denying the CR 59.05 motion. On August 29, 2000, Appellants filed a notice of appeal from the summary judgment that had become final by virtue of the order denying the CR 59.05 motion.²

On January 19, 2001, the Court of Appeals granted Appellees' motion to dismiss the appeal. The Court of Appeals dismissed on grounds that the trial court abused its discretion by granting the Appellants' motion pursuant to CR 60.02 and that Appellants failed to demonstrate "excusable neglect" as required by CR 60.02. The Court of Appeals also concluded that the language of CR 77.04(4)³ mandated dismissal of the appeal based upon CR 73.02(1)(a).

The rule upon which the trial court acted, CR 60.02, is a safety valve, error correcting device for trial courts. It applies in six enumerated situations: "(a) mistake, inadvertence, surprise or excusable neglect; (b) newly discovered evidence ...; (c) perjury or falsified evidence; (d) fraud affecting the proceedings ...; (e) the judgment is void ...; or (f) any other reason of an extraordinary nature justifying relief."⁴ The rule is designed to allow trial courts a measure of flexibility to achieve just results and thereby "provides the trial court with extensive power to correct a judgment."⁵ Accordingly, CR 60.02 addresses itself to the broad discretion of the trial court and for that reason, decisions rendered thereon are not disturbed unless the trial judge abused his/ her discretion.⁶ As to the applicability of CR 60.02 to the facts presented here we discern no abuse of trial court discretion. The trial judge clearly believed himself or his office staff (not Appellants) to have been culpable in the error that prevented Appellants from learning of entry of the June 29 order, and in our view, CR 60.02 was adopted for such circumstances.

This case need not turn on appellate rights or CR 77.04. Instead, this is nothing more than a trial court vacating an order on the basis of mistake, inadvertence, or excusable neglect and there is no doubt that a trial court has authority pursuant to CR 60.02 to grant such relief. In the order granting relief under CR 60.02 the trial court did not extend the time for appeal contrary to CR 77.04, rather the trial court merely vacated its previous order. By vacating the order the trial court returned the case to the status quo prior to the ruling on the CR 59.05 motion. We could end this opinion here but the parties have debated the interplay between CR 60.02 and CR 77.04 and we deem it expedient to address their contentions.

This case reveals a latent conflict between CR 60.02 and CR 77.04. If CR 77.04 is applied literally, where appellate rights are implicated CR 60.02 is unavailable to trial courts. This would be so despite the absence of an express CR 60.02 exclusion in CR 77.04. CR 60.02 is a mistake correcting rule that allows the trial court broad discretion. We should not apply one rule in a manner that destroys another and eliminates its essential purpose. While this case arose out of a simple mistake, one could imagine outright fraud occurring in a manner that prevented a party from learning of entry of a judgment. Surely in such a circumstance, CR 77.04 would not be applied to prevent relief on egregious facts, but unless a harmony is possible between CR 77.04 and CR 60.02, such would be the result.

In Potter v. Eli Lilly & Co.,⁷ the trial court suspected collusion on the part of the parties whereby a settlement had been reached prior to the return of a jury verdict. The trial court undertook an inquiry into the true facts and the parties sought a Writ of Prohibition. This Court allowed the trial court to reopen the case after judgment under the inherent authority of courts to see that their judgments are not tainted with deceit. The Eli Lilly Court agreed that "the courts have developed and fashioned [the equity rule] to fulfill a universally recognized need for correcting injustices."⁸ Although, CR 60.02 was not utilized by the Court in Eli Lilly, the decision displays a belief that under the rules of equity courts have an inherent authority to correct mistakes and protect the integrity of the judicial process. Equity and fairness were the bases of that decision and it illustrates the importance of CR 60.02 in other contexts. In the present case, literal application of CR 77.04 would effectively make CR 60.02 nonexistent and would deprive courts of an important error correcting device and otherwise offend established equitable principles.

The Court of Appeals relied on Stewart v. Kentucky Lottery Corp.⁹ where the issue was timeliness of filing a notice of appeal. In Stewart, on April 9; the trial court denied reconsideration of summary judgment. The clerk failed to serve notice of entry to either party but made the required docket entry, causing commencement of the time for taking an appeal. On May 26, the appellant notified the Administrative Office of the Courts (AOC) that in April a motion for reconsideration had been submitted. The AOC responded that the motion had already been ruled upon in April. In an effort to preserve his appellate rights the appellant, on July 2, filed CR 60.01 and CR 60.02 motions seeking a nunc pro tunc order to correct the date of entry of the order denying reconsideration of the summary judgment. The trial court denied the CR 60.01 and CR 60.02 motions. The appellant subsequently filed a notice of appeal from the summary...