In 1959, Charles K. Monin, Sr. and Charles K. Monin, Jr., with their wives, purchased 150 acres of some of the most valuable property in Nelson County.  In 1975 they all formed Monin, Inc. (MI), with each owning 25% of the total 2,000 outstanding shares, and in that year they deeded the land to Monin, Inc., with its being the primary asset of the corporation.  When Sr. and his wife died, their 50% share went to their ten kids equally, and when Jr.’s wife died, he ended up with 55% of the capital stock of the corp., sharing that with his nine siblings who had 5% each.  In Feb. of 1994, Jr. and Don, a brother, filed the instant suit against the other siblings.  In 1994, these siblings, the cross-appellants at bar, requested the court dissolve the corporation and appoint a Receiver to accomplish same. In 1997, the trial court sustained their motion and appointed Roger Leggett as Receiver.  The order was final and appealable.  The CA affirmed the dissolution and appointment of Receiver.

In 2000, the cross-appellants named as additional third party defendants six corporations owned by Jr., alleging he illegally used assets of MI for the benefit of himself and these corporations.  They sought reimbursement on behalf of Receiver Leggett.  He filed an intervening complaint seeking reimbursement from Jr. for rental value of a residence located on MI’s property.

Ultimately various actions were brought by the shareholders of the  regarding disagreements over the operation and management of corporation and a complaint seeking dissolution of corporation. The Nelson Circuit Court ordered dissolution and appointed receiver to wind up corporation, and there was an appeal.  The Circuit Court entered judgment directing majority shareholder and his businesses to reimburse receiver for their use of the farm and for wrongful withdrawals from corporation's checking accounts. All parties appealed. 

The COA held (among other things) that the minority shareholders had no standing to bring claims on behalf of corporation's receiver to recover misappropriated corporate assets; there was insufficient evident that the majority shareholder made wrongful withdrawals from corporation for his personal benefit;  receiver was not entitled to a fixed fee of 7.5% of the gross proceeds of the sale of corporation's property; and trial court did not abuse its discretion by awarding $15,225 in attorney fees to attorney appointed to represent receiver.

CROSSFIELD   V.   CROSSFIELD
FAMILY LAW - Child Custody

Dad appealed from TC’s order substituting Mom in his place as the primary residential custodian (PRC)  of the three minor children of their marriage.  The parties’ decree of dissolution incorporated the parties’ agreement that Mom and Dad share joint custody, with Dad receiving PRC status and Mom paying child support to Dad.  Less than nine months after entry of the decree, Mom filed a “Motion to Modify Time Sharing Schedule.”  No affidavits were submitted with the Motion.  Mom acknowledged at the first hearing on the motion that she wanted the court to modify the original decree so that she would become the children’s PRC and Dad would assume the child support obligation.  Using the KRS 403.320(3) “Best Interests of the Child” standard, the Domestic Relations Commissioner recommended that TC grant Mom’s motion making her the PRC, reversing the parenting time schedule and creating a child support obligation for Dad to pay Mom.  Dad argued to CA that such a change amounted to a change in custody subject to KRS 403.340-.350. Mom argued that the change amounted to only a visitation modification to which KRS 403.320(3) applied. 

CA held that the change in the PRC amounted to a modification of the joint custody arrangement, because the change would transfer to Mom the primary role in minor day-to-day decisionmaking for the children and the responsibility for providing for their primary residence and routine care and control.  Following Fenwick v. Fenwick , Ky. , 114 S.W.3d 767 (2003), CA held that any change in custody, including a change in joint custody, must be tailored to the requirements of KRS 403.340 and .350.  CA further found that “When KRS 403.340(2) and KRS 403.350 are read together, they require that a motion to modify a prior custody decree must be accompanied by at least one affidavit; and if the motion is made earlier than two years after its date, it must be accompanied by at least two affidavits… KRS 403.350 also provides that the court should deny the motion for modification unless it finds that adequate cause for hearing is established by the affidavits.”  Thus, since Mom failed to submit any affidavits with her motion, TC was without jurisdiction to hear the motion.  TC reversed and remanded, with an Order to return children to Dad as PRC.

Gardner, a black male, was a senior equipment manager with the Lexington-Fayette Urban County Government Division of Solid Waste whose primary job was operating a sanitation vehicle.  In January, 1997, he was eligible for a promotion to a supervisory position within the Department of Sanitation but was passed over for the job by James Lee, acting director of the Department, in favor of Clarence Steele, a white man.  In Feb. 1998, Gardner filed first of three suits in Fayette Circuit against the LFUCG, Civil Service Comm'n and various employees alleging a "religiously hostile" work environment, among other things, in violation of KRS Chapter 344.  In July, 1998, he filed a second suit alleging the Comm'n wrongfully upheld a suspension he received for failing to show up for work without calling.  In Sept., 1998, he filed a third action alleging the Comm'n improperly denied his appeal from a reprimand he received for failing to attend a safety meeting.  In May, 2000, the trial court consolidated the actions and held a jury trial in Feb., 2003.  The jury returned a verdict in favor of the defendants, and Gardner 's CR 59.05 motion to alter, amend or vacate was denied.  This appeal followed.

While Gardner argued a whole slew o' issues on appeal, the main one the CA deals with is the argument that the trial court should have recused herself from the case because she and the mayor of Lexington were first cousins.  He cited KRS 26A.015(2) in support.  The CA examined SCR 4.300 Canon (3)(E), which states that a judge shall disqualify herself where the judge's impartiality might be questioned in instances where a person within the third degree of relationship to a judge is a party to the proceeding, or an officer, director or trustee of a party, or where that person is known by the judge to have a more than de minimis interest that could be substantially affected by the proceeding.  The CA noted that the SCR calculates the degree of relationship according to the civil law system, which holds a cousin as a fourth degree relationship; therefore, the trial court was not subject to SCR 4.300 Canon 3(E)(1)(d) and KRS 26A.015.

However, the CA states that the issue then becomes whether the trial court should have disqualified herself because her impartiality might reasonably have been questioned.  The CA felt she should have done so.  The defendants' attorney admitted in oral arguments to the CA that the judge had recused herself from another case in which the mayor and the city were named parties, and explained that she did not do so in Gardner's case because it wasn't an important, high profile case like the other had been.  The CA found the nature of the case or its public awareness does not dictate when recusal is warranted.  If there is an appearance of bias, prejudice or impartiality present because of a relationship, it is present in all cases involving the same parties.

It also found that the mayor of Lexington had a significant interest in the outcome of a civil action against the city government.  When more than a de minimis interest exists that could be substantially affected by the proceedings, any potential conflicts of interest or potential appearances of impropriety should be disclosed.  The CA found that Gardner's other arguments of error were moot in light of its finding that the trial court should have recused herself and reversed and remanded the case.

CRANCE  V.  CRANCE
FAMILY LAW  -  Maintenance

Husband appealed from decree of dissolution of marriage, arguing that TC erred in awarding maintenance of $618.00 per month to Wife by failing to consider both his ability to pay and the sufficiency of Wife’s property, and further erred in the division of property by failing to consider the value of the property set apart to each spouse.

TC found that Husband received Social Security and Disability payments totalling $1,674 per month, with expenses totalling $1,656 monthly; and Wife received disability totalling $438 per month, with expenses totalling $1,479 monthly.  Husband argued to CA that TC failed to consider KRS 403.200(2)(f), which states that any “maintenance order shall be in such amounts . . . as the court deems just, and after considering all relevant factors including . . . [t]he ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance.”  However, CA found that TC considered the financial condition of both parties prior to making a specific finding to equalize the income of the parties. 

TC set aside non-marital property (all furniture) to wife, and equally divided the marital property between the parties.  Husband argued that Wife had other property in her possession that should have been considered in an award of maintenance and in the division of marital property.  CA held that TC’s findings with regard to the marital estate were clearly supported by the evidence.  TC affirmed. 

HALE   V.   HALE
FAMILY LAW - Child Support (Credits, Social Security)

Dad appealed from TC’s decree of dissolution, arguing that TC erred in its calculation of child support, in failing to give him credit for social security retirement benefits received by the child on his behalf, in awarding maintenance, and by declining to make the final child support and maintenance awards retroactive to the date of the temporary order.

Dad received $2,100 per month in retirement benefits and $800 per month in SS retirement benefits.  Daughter received $575 as her portion of Dad’s SS benefits.  Mom was unemployed, with no high school diploma or GED.  TC initially ordered Dad to pay temporary child support and maintenance in the respective amounts of $399 and $700.00 per month.  In its decree of dissolution, TC ordered Dad to pay $347 monthly in child support and maintenance of $400 monthly for seven years.   In its child support calculation, TC allocated daughter’s $575 SS benefits to Mom as income.  Dad first argued to CA that this amount should have been credited to him and deducted from his obligation.  CA agreed with Dad, stating that SS benefits “are like the income received from an insurance policy or a trust. Although the income belongs to the custodial parent who receives it, the benefits are paid on behalf of the non-custodial parent. Consequently, the non-custodial parent is entitled to credit for payments received by the child against his child-support obligation” and the value of the benefits are included in the custodial parent’s income.  Although Dad argued that KRS 403.211(14) specifically requires that this amount is not to be included in the income of either parent, CA held that the statute applied only to disability benefits, and was thus inapplicable to this case.  Further, the CA held that an obligor parent is entitled to a credit for retirement benefits received in excess of the child support obligation against a child support arrearage which accrued after the date of the parental disability, but not for any arrearage that accrued prior to the date of disability. 

Dad next argued that the new, lesser child support amount should have been retroactive to the date of the temporary order or at least to the date of the final hearing, and that he was thus entitled to a refund.  Excess child support payments are not subject to restitution or recoupment unless the benefits have not been consumed for support and have instead accumulated, and retirement benefits paid to a child in excess of a child support obligation may not be reimbursed to the parent without a showing of extenuating circumstances.  Therefore, retroactive application of the order would not have changed the result of TC’s order. 

Dad further argued that TC should not have awarded maintenance to Mom, or that, even if maintenance was appropriate, it should not extend for seven years.  CA held that TC’s finding of Mom’s entitlement to maintenance was supported by substantial evidence, and the duration of the award provided “a reasonable period for Mom to acquire sufficient skills to obtain a job with an income sufficient to sustain her needs,” while still allowing Dad sufficient income to meet his reasonable needs.  Dad last argued that the maintenance order should have been retroactive to the date of the temporary maintenance order or to the date of the final hearing, thus entitling him to a credit for overpayments.  CA held that, because determination of a final award is contingent upon division of marital property, the two amounts need not be the same.  A TC may make an award retroactive if it determines that the temporary award was excessive.  However, Dad pointed to no evidence supporting such a finding.  TC reversed and remanded for additional findings on the amount of credit to which Dad is entitled for SS retirement benefits received by daughter on his behalf.

TERRY   V.  KENTUCKY RETIREMENT SYSTEMS
LABOR & EMPLOYMENT - Government Disability Retirement

C/A affirmed order of Franklin Circuit Court which had denied disability benefits to Appellant.  C/A affirmed the lower court's ruling on the basis the record did not present substantial evidence meriting relief. 

Appellant worked as a janitor and bus driver for the Lawrence County Board of Education.  He filed for disability benefits claiming he was suffering from depression, nerve, back and leg difficulties.  Because these conditions pre-existed his membership in the retirement system, he was ineligible to recieve disability benefits.  He subsequently argued that he suffered from sleep apnea which also contributed to his disability and that the sleep apnea did not predate his membership in the retirement system.  However, Appellant's initial claim had made no referral to his sleep apnea.  Further, at the time of his retirement he was no longer being treated for sleep apnea.  Thus, the hearing officer appropriately found there was no objective medical evidence to show Appeallant was permanently disabled as a result of the sleep apnea. 

Cotenant made improvements on real property prior to acquiring any ownership in it.  Cotenant wants to recover the value of those improvements from the sale proceeds in a partition suit instituted by other cotenants. TC allowed the recovery on the ground of adverse possession. CA says TC erred when it based its holding of adverse possession on its finding that the improvements were constructed with the “knowledge, permission, and acquiescence” of Cotenants. CA states that “possession by permission cannot ripen into title no matter how long it continues.”  The cotenant was not entitled to recover under adverse possession.

The Cotenant was not entitled to recovery for the improvements under equity either because of Kelly v. Kelly (168 S.W.2d 339). In Kelly the court stated as follows: “in order [to] recover for improvements made on another’s land… (1) The occupant must have made the improvements in good faith; (2) he must have been in possession adversely to the title of the true owner; and (3) his possession must have been held under color or claim of title. CA said no evidence that he made improvements in good faith, that he adversely possessed the property, nor that his possession was under color or claim of title.

The claimant injured her left hand at work when stacking boxes.  She continued to work and developed bilateral carpal tunnel syndrome.  After surgery she never returned to work.  The Administrative Law Judge was not convinced that the claimant was unable to return to work because of her in jury, and therefore did not apply the 3 multiplier to her benefits.  Because she did not attempt a return to work after her surgery, he also did not apply the 2-multiplier to her benefits, which would apply if the claimant “ceased employment for any reason, with or without cause”  after the injury.  The claimant appealed to the Workers’ Compensation Board on two grounds, one disputing the date the ALJ decided that TTD should end, and the other arguing that the 2-multiplier should be applied as a matter of law, because she did return to her employment after her injury.  The WCB reversed the ALJ on the 2-multiplier issue, but not the TTD issue.  Wal-mart appealed to the Court of Appeals, arguing that the repetitive motion injury lasted until the date the claimant last worked, and therefore she never returned to work after the injury, making her ineligible for the 2-multiplier.  The claimant cross appealed on the issue of the duration of TTD.  The CA affirmed on both counts, holding that the WCB made no error in their assessment of the evidence.