Roberts v. MT. Wash. Health Care, LLC

• Decision Date: 29 October 2021
• Docket Number: 2020-CA-1190-MR
• Parties: CHRISTY ROBERTS APPELLANT v. MT. WASHINGTON HEALTH CARE, LLC APPELLEE
• Court: Kentucky Court of Appeals

CHRISTY ROBERTS APPELLANT
v.
MT. WASHINGTON HEALTH CARE, LLC APPELLEE

No. 2020-CA-1190-MR

Court of Appeals of Kentucky

October 29, 2021

NOT TO BE PUBLISHED

APPEAL FROM BULLITT CIRCUIT COURT HONORABLE RODNEY D. BURRESS, JUDGE ACTION NO. 19-CI-00689

BRIEF FOR APPELLANT: Cynthia T. Griffin

BEFORE: CALDWELL, CETRULO, AND JONES, JUDGES.

OPINION

JONES, JUDGE.

Christy Roberts appeals an August 18, 2020 judgment of the Bullitt Circuit Court in favor of Mt. Washington Health Care, LLC, (appellee) representing the unpaid balance of a promissory note. She claims the underlying promissory note was illegal, and that it otherwise included an improper rate of

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post-judgment interest. Upon review, we affirm in part, vacate in part, and remand as set forth below.

I. Background

In September 2018, Erma Basham was admitted to Green Meadows, the appellee's long-term care nursing facility; from all indications of record, this is where Basham continues to reside. In March 2019, Basham's application for Medicaid benefits was approved, and there is no dispute that Medicaid paid for Basham's care and treatment at Green Meadows retroactively to January 1, 2019. Prior to the approval of her application, however, Basham had been considered a private-pay resident of the facility, and her expenses between her admission date and February 12, 2019 had accumulated to $34, 742.26.

The date of February 12, 2019 is significant because it is the date Basham's daughter, Christy Roberts, executed a promissory note in favor of the appellee. The relevant substance of the note provided:

I Christy Roberts WILL PAY $750.00 PER MONTH ON Erma Basham [sic] OUTSTANDING BALANCE OF $34, 742.26 BY THE 10TH OF EACH MONTH. I WILL CONTINUE TO PAY THIS AMOUNT TO GREEN MEADOWS HEALTHCARE CENTER UNTIL ACCOUNT [sic] IS PAID IN FULL

TELEPHONE CONVERSATION DATE: 2-12-19 RESPONSIBLE PARTY: Christy Roberts

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Roberts later defaulted on her obligation under this note after making only one payment of $750, and the appellee filed suit against her in Bullitt Circuit Court on July 10, 2019 to collect $22, 797.26 - what the appellee alleged was the remaining balance of the promissory note, minus what Medicaid had paid on Basham's account retroactive to January 1, 2019. Afterward, Roberts responded by asserting only one defense; namely, she contended the appellee could have sought partial or complete payment for her mother's outstanding balance from Medicaid, rather than herself.

This matter eventually proceeded to a bench trial, and it was later resolved by way of an August 18, 2020 judgment in which the circuit court made the following salient determinations: (1) Roberts had executed a valid promissory note in favor of the appellee; (2) the outstanding balance of the note was the amount the appellee had alleged; (3) Roberts' sole defense lacked merit, as she "neither present[ed] affirmative evidence supporting her claim nor [did] she present the court with a specific sum she believe[d] she should owe as a result"; and (4) the appellee was accordingly entitled to judgment against Roberts in the amount of "$22, 797.26, with interest thereon at the rate of 12% per annum[.]" This appeal followed.

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II. Analysis

In her appellate brief, Roberts concedes that the arguments she now wishes to assert were not raised before the circuit court or otherwise preserved. Echoing that notion, the appellee has moved this Court to strike her brief and dismiss her appeal. See Kentucky Rule of Civil Procedure (CR) 76.12(8)(a); see also Osborne v. Pepsi-Cola, 816 S.W.2d 643, 645 (Ky. 1991), superseded by statute on other grounds as stated in Smith v. Dixie Fuel Co., 900 S.W.2d 609 (Ky. 1995) (it is a "fundamental concept that one waives error at the trial level by failing to properly and timely object or otherwise bring the error to the attention of the trier of fact.").

Nevertheless, we will consider Roberts' arguments to an extent, ^[1] and by separate order have further denied the appellee's motion to strike her brief, on the ground that Roberts invokes CR 61.02 and requests^[2] palpable error review. Under that rule,

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A palpable error which affects the substantial rights of a party may be considered by the court on motion for a new trial or by an appellate court on appeal, even though insufficiently raised or preserved for review, and appropriate relief may be granted upon a determination that manifest injustice has resulted from the error.

Further elaborating upon this rule, the Kentucky Supreme Court has explained that to qualify as "palpable error, "

[A]n error "must be easily perceptible, plain, obvious and readily noticeable." Brewer v. Commonwealth, 206 S.W.3d 343, 349 (Ky. 2006). "Implicit in the concept of palpable error correction is that the error is so obvious that the trial court was remiss in failing to act upon it sua sponte." Lamb v. Commonwealth, 510 S.W.3d 316, 325 (Ky. 2017).

Nami Res. Co. v. Asher Land & Mineral, Ltd., 554 S.W.3d 323, 338 (Ky. 2018).

Considering that standard, Roberts' first argument is that her February 12, 2019 promissory note was unenforceable due to illegality. Before delving into the substance of her argument, we pause to note there is an ostensible contradiction in the law regarding when illegality must be raised. It is a basic principle of contract law that a court "may refuse to enforce a contract on grounds of illegality where the contract has a direct objective or purpose that violates the federal or a state Constitution, a statute, an ordinance, or the common law." Yeager v. McLellan, 177 S.W.3d 807, 809 (Ky. 2005) (citation omitted). It has also been

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held that "a contract is void ab initio if it seriously offends law or public policy," see Commonwealth v. Whitworth, 74 S.W.3d 695, 700 (Ky. 2002); and also, that the court "sua sponte will refuse to enforce a contract against public policy." S.J.L.S. v. T.L.S., 265 S.W.3d 804, 821 (Ky. App. 2008) (quoting Dodd v. Dodd, 278 Ky. 662, 129 S.W.2d 166, 169 (1939)).

However, despite being associated with phrases such as "void ab initio" and "sua sponte," "illegality" remains an affirmative defense. CR 8.03. "As a general rule, a party's failure to timely assert an affirmative defense waives that defense." Rose v. Ackerson, 374 S.W.3d 339, 345 (Ky. App. 2012) (internal quotation marks and citations omitted). And, Kentucky law tolerates the waiver of certain illegality arguments. See, e.g., Diaz v. Goodwin Bros. Leasing, Inc., 511 S.W.2d 680, 681 (Ky. 1974) (argument that guaranty was illegal deemed waived because not affirmatively pled); Crowder v. Stinson, 401 S.W.2d 761, 762 (Ky. 1966) ("Appellant's answer does not affirmatively or at all plead illegality of the contract."); Brand v. Howell, No. 2003-CA-000972-MR, 2004 WL 1229265, at *3 (Ky. App. Jun. 4, 2004)^[3] ("We conclude the defense of illegality based on an alleged illegal contingent fee contract was waived.").

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That said, any ostensible contradiction regarding when "illegality" must be raised is resolved by the palpable error review standard itself, which, as stated, only concerns errors that are...