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A Kentucky Motion to Intervene – Cases Cited

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Kentucky appellate decisions cited:

  1. Fugate v. Creech, 271 Ky. 3, 111 S.W.2d 402. 1937
  2. Monticello Electric Plant Board v. Board of Education, 310 S.W.2d 272 (Ky. 1958)
    This case involved the sale of a privately owned power plant to a municipal agency. The sale closed on January 20, 1954. Subsequently a civil action was brought to collect a franchise tax that was assessed effective January 1, 1954 when the plant was still owned privately. The tax assessment was for a whole year and the sales contract possibly obligated the new municipal owner to reimburse the seller for most of the tax assessment, pro rata. Judgment was entered against the prior owner on January 15, 1957. About one month after the judgment was entered, the new municipal owner sought to intervene in the action to question the imposition of the tax.
    The motion to intervene was denied and the denial of the motion was affirmed on appeal.
    The Court of Appeals observed that the applicant for intervention: (1) Failed to allege or prove the existing parties to the action would not adequately protect its interest regarding the imposition of the tax. (2) The applicant for intervention offered no justification for delaying until after judgment was entered before seeking to intervene. The court stated, “While intervention after judgment may be permitted under some circumstances . . . we think that in making a motion for intervention after judgment the applicant has a special burden of justifying the apparent lack of timeliness.” And, (3) the court was of the opinion the new municipal owner would not prevail even if it had been allowed to intervene. Without the court saying so, it is possible to surmise the problem was with the sales contract which was not being litigated, rather than being with the tax. The court did say the existence of a pending sales contract on the assessment date, “was of no concern of the taxing authorities, and furnished no basis for assessing less than the full tax against the company.
  3. City of Henderson v. Todd, Ky., 314 S.W.2d 948, 951 (1958)
    The City of Henderson sought to issue municipal bonds to finance the purchase of an industrial property for the purpose of economic development. To test the legal sufficiency of the plan, the city filed a ‘reverse taxpayer suit’ for declaratory judgment. Other taxpayers sought to intervene in the action. The motion to intervene was denied and Notice of Appeal was filed immediately. Nonetheless, the declaratory action proceeded to judgment, which was adverse to the bond issue and the city appealed. The city’s appeal and the appeal of the unsuccessful intervenors were consolidated.
    Although the Court agreed that an appeal may be taken from the denial of a motion to intervene as a matter of right, citing Fugate v. Creech, 271 Ky. 3, 111 S.W.2d 402. (1937), since the court affirmed the judgment below adverse to the bond issue, the matter of intervention was essentially moot. The intervenors got what they wanted.
  4. Stewart v. Burks, Ky., 384 S.W.2d 316 (1964)
    This case was a voter suit brought to challenge the nominating petition of a candidate in a local school board election. Another candidate in the same election sought to intervene as a party plaintiff. The original plaintiffs were dismissed for lack of statutory standing, the motion to intervene was granted, the intervening plaintiff adopted the complaint of the original plaintiffs and judgment was entered in the intervening plaintiff’s favor, invalidating the nominating petition of the defendant candidate. The judgment was affirmed on appeal. The only objection to allowing the intervention was the ruling was very late in the trial court action, apparently just before judgment was entered.
    Relying on Monticello Electric Plant Board v. Board of Education, Ky., 310 S.W.2d 272, the Court of Appeal dealt with the issue of intervention by saying, “[s]ince the intervenor was presenting no new claim, and was adopting the original complaint in which he had a real interest, the trial court did not commit error in permitting him to be made a party.
    The intervenor sought only to adopt and present a claim which had been timely made by another party.
  5. Webster v. Board of Education of Walton-Verona Independent School District, 437 S.W.2d 956, 957 (Ky 1969)
    A May, 1967 tax referendum was contested by an action filed in October, 1967. Intervention was requested in November, 1967. Summary judgment “under CR 12.03” was entered against both plaintiff and intervening plaintiffs because Kentucky election law required such contests to be commenced within 30 days of the election. Intervening plaintiffs appealed, claiming their intervening complaint asserted claims in addition to the election contest and these additional claims were not addressed by the trial court’s summary judgment. For example, the intervening complaint alleged the tax in question was “arbitrary, capricious, confiscatory and in violation of the Constitution,”
    Although the Court of Appeals discussed the difference between Civil Rule 24.01 (intervention as of right) and Civil Rule 24.02 (permissive intervention), the issue of intervention was not central to the court’s holding. One suspects the Court of Appeals viewed allowing the intervention to have been a mistake, or at least unnecessary. The court decided the intervening plaintiffs’ “additional claims” were “insufficient” and did not amount to “multiple claims.” The judgment was affirmed.
  6. Murphy v. Lexington-Fayette County Airport Board, Ky., 472 S.W.2d 688 (1971)
    A car rental firm obtained a judgment for specific performance of a contract for an airport car rental concession. The airport board announced it did not intend to appeal the judgment and a competing car rental firm sought to intervene with the claim the rental concession of the first firm would adversely affect its own exclusive contract for the airport’s rental car concession. The motion to intervene was denied and an appeal of that denial followed.
    The applicant for intervention argued the airport board’s failure to appeal was evidence its interests were not being adequately represented by the party to the action. The Court of Appeals countered with, “The mere fact that an unfavorable judgment was entered and that the airport board chose not to appeal from that judgment does not establish lack of adequate representation in the trial of the case, which is what CR 24.01 deals with.
    The court recognized that intervention after judgment may be appropriate in some circumstances and that a failure to appeal might also indicate inadequate representation, but this case did not qualify. The court held the post-judgment motion to intervene to be untimely. The court did not discuss the possibility that the applicant for intervention might have an adequate remedy in an action for breach of contract regarding its exclusive rental concession.
  7. Barry v. Keith, Ky., 474 S.W.2d 876 (Decided December 17, 1971)
    This was an original action seeking a Writ of Prohibition regarding the difficult issue of an automobile insurance company asking to intervene in a personal injury action. The court observed there was no consensus of opinion or clear analysis to be gleaned from other jurisdictions, The court stated:

    Without attempting to outline all of the conditions which might be required, we believe intervention should not be allowed except upon the inclusion of the following conditions: (1) It should be established that there is in fact an uninsured motorist. If non-insurance becomes a disputed question of fact, it may be submitted to the court for determination before the trial of the main issue. (2) The intervenor should acknowledge that it will be bound by the judgment subject, of course, to the right of appeal. (3) The intervenor must take the case with the issues as joined, unless it can make a showing to the trial court that justice requires other issues to be joined. (4) The identification of the respective parties and the attorneys should be revealed to the jury. (5) The intervenor should disclose to the insured that the interest of the insured might be in conflict with the interest of the intervenor and that the insured is not required to cooperate with the intervenor. Any information gained by the intervenor from the insured by reason of the insurer insured relationship should not be used adversely to the insured. (6) Other conditions as the trial judge in his reasonable discretion believes are necessary to insure a fair and orderly trial should be invoked.

  8. Dairyland Insurance Company v. Clark, Ky., 476 S.W.2d 202 (1972)
    This was an appeal from a denial of an automobile insurance company to intervene in a personal injury action under the provisions of its uninsured motorist coverage, for the purpose of preserving the insurance company’s defenses. The issue was the timeliness of the motion. Defendant failed to appear and defend the action, Plaintiff moved for default judgment and a hearing on the issue of damages was held. Before default judgment was actually entered, however, the insurance company moved to intervene and objected to the entry of default judgment.
    The motion to intervene was overruled for the reason that it was not timely filed. The court found that the untimeliness of the motion to intervene was not the result of excusable neglect and a default judgment for appellee was entered. On appeal the facts relating to the timeliness of the motion to intervene were closely examined. The court ruled, “The proper application and utilization of the Civil Rules should be left largely to the supervision of the trial judge and we must respect his exercise of sound judicial discretion in their enforcement . . . Under these circumstances we cannot say that the trial court clearly abused its discretionary powers in ruling that the motion to intervene was untimely.” The denial of the motion to intervene was affirmed.
  9. Pearman v. Schlaak, Ky., 575 S.W.2d 462 (1978)
  10. Yocom v. Hi-Flame Coals, Inc., Ky.App., 568 S.W.2d 757 (1978)
    The Commissioner of Labor and Custodian of the Special Fund sought to intervene in the Circuit Court review of a Workers’ Compensation award, under prior law. The provisions of KRS 342.285, which granted a right to appear in the proceedings, have since been substantially amended and the review procedures for Workers’ Compensation changed. This case has little value as precedent today in Worker’s Compensation cases. The court did state, “Our courts, generally, construe CR 24 liberally in order to effect the purpose of intervention.”
  11. Ashland Public Library Board of Trustees v. Scott Ky., 610 S.W.2d 895 (1981)
    The Supreme Court of Kentucky embraced the dictum in City of Henderson v. Todd, Ky., 314 S.W.2d 948, 951 (1958) that an appeal may be taken from the denial of a motion to intervene as a matter of right, Civil Rule 24.01. This is to be distinguished from the denial of a permissive intervention under Civil Rule 24.02 or the grant of any motion to intervene, none of which are final appealable orders in Kentucky practice.
    The court also dismissed the argument that The provisions of Civil Rule 54.02(1)apply to orders denying intervention.

    Applicants for intervention are not parties to an action and do not present claims for relief in an action unless and until they are permitted to intervene. Rather, they seek to become parties so that they may then assert a claim or defense in the action. CR 24.03. Consequently, recitation of a determination that there is no just reason for delay and that the order is final is neither a condition precedent to appellate review of a denial of intervention sought as a matter of right, nor a vehicle to authorize appellate review of a denial of permissive intervention prior to judgment disposing of the whole case.

  12. Ambassador College v. Combs Ky., 636 S.W.2d 305, 307 (1982)
    This was a will contest brought by the heirs of the survivor of a childless couple who executed a new will and deeded several parcels just weeks before his death. The allegations involved issues of undue influence and mental incapacity. Ambassador College, the primary beneficiary of a previously executed, and presumably valid, will sought to intervene in the action. The motion to intervene came after a trial, judgment and reversal on appeal, but before the re-trial. Counsel for the original plaintiffs withdrew from the case and the motion of Ambassador College to intervene was filed. Plaintiffs failed to obtain replacement counsel in the time allotted by the court and the action was dismissed and the motion to intervene was denied, without explanation. The Kentucky Court of Appeals affirmed the dismissal and denial of the motion to intervene and the Kentucky Supreme Court reversed.
    The issue in the second appeal was the timeliness of the motion to intervene. The court recognized “[i]t is well established that persons who are beneficiaries in a prior will have such an interest as entitles them to contest another alleged will of the same testator which would reduce their share in his estate.”
    Timeliness is a question of fact, the determination of which should usually be left to the judge. Dairyland Insurance Company v. Clark, Ky., 476 S.W.2d 202 (1972). In the subject action, however, the trial judge made no finding of timeliness on Ambassador College’s motion to intervene.” The Kentucky Supreme Court observed there had been no re-trial of the matter following remand from the first appeal and timeliness was not a big concern. There would have been no prejudice to the other parties by allowing the intervention. For all practical purposes it looks as if the intervention would have had the effect of substituting Ambassador College for the original plaintiffs, once the prior will had come to light.
  13. Gayner v. Packaging Serv. Corp. of Kentucky, Ky.App., 636 S.W.2d 658, 660 (1982)
    Gemini Laminating was a Kentucky corporation. Packaging Service was the majority owner of Gemini and Chapnick was Gemini’s president. Chapnick and Packaging Services had an agreement that gave Chapnick right of first refusal if Packaging sought to sell any of its Gemini stock. When the time came that Packaging sought to sell stock in Gemini, Chapnick gave notice of his intent to exercise his stock purchase option, but it turned out that Chapnick lacked the funds. Litigation ensued.

    Gayner was an outside investor who was a stranger to the agreements between Chapnick and Packaging, but he was Chapnick’s financial backer with a plan to enable Chapnick’s purchase of the Gemini stock. Gayner sought to intervene in the litigation.

    The Jefferson Circuit Court denied Gayner’s right to intervene because he had not demonstrated a direct, substantial and legally protectable interest in the suit between Packaging and Chapnick sufficient to establish intervention. Later . . . Packaging and Chapnick settled and dismissed the Kentucky suit. This appeal is prosecuted from the order denying intervention in that action.

    The Court of Appeals affirmed the Circuit Court’s denial of intervention, holding that Gaynor’s interest in the litigation was remote, contingent and not permitted by Civil Rule 24.01(b)

    CR 24.01(b), like its federal counterpart, Fed.R.Civ.P. 24, does not permit a contingent interest such as the Gayner claim to be placed in issue by intervention. Gayner’s interest does not qualify as significantly protectable . . . .

    The Court stated the issue was similar to a “real party in interest” question.

  14. Grange Mutual v. McDavid, Ky., 664 S.W.2d 931 (1984)
  15. Donald v. City of Glenview, Ky. App., 723 S.W.2d 861 (1986)
  16. Rosenbalm v. Commercial Bank of Middlesboro, Ky.App., 838 S.W.2d 423, 427 (1992)
    In the early 1980’s the Bell County Waste District devised a plan to convert garbage into electricity and borrowed some $400,000 from the bank for the project. The plan did not work as planned and the bank loan could not be repaid. The bank sued and obtained a default judgment in 1984. The powers that be in Bell County were adamantly and publicly opposed to a tax levy to pay the debt, and the debt remained unpaid.
    In 1989 the bank obtained a court order requiring either a tax levy or the issuance of a municipal bond to pay the judgment debt. When the tax bills with the additional levy went out, taxpayers very promptly sought to intervene, as a matter of right, in the action to contest the constitutionality of the original debt.  The taxpayers also moved to set aside the 1984 default judgment. The court observed that the original lawsuit was well publicized at the time, and the taxpayers should have known. The taxpayers were denied the opportunity to seek relief and this appeal followed. A primary issue was the timeliness of the taxpayers’ intervention.
    The Court of Appeals stated the general rule:

    An attempted intervention clearly must be undertaken in a timely fashion. The timeliness of a motion for intervention is a question of fact, the determination of which ordinarily falls to the presiding judge. Ambassador College v. Combs, Ky.App., 636 S.W.2d 305, 307 (1982). An applicant who moves for intervention after judgment carries a special burden of justifying the apparent lack of timeliness. Monticello Elec. Plant Bd. v. Board of Educ., Ky., 310 S.W.2d 272, 274 (1958).

    Although there is considerable discussion of taxpayer suits, the rights of taxpayers and equitable principles of laches, an important part of the court’s reversal of the Circuit Court’s decision was the fact that taxpayers had no present complaint until the tax was actually imposed, in line with the general rule that intervention will not be allowed for parties with only conditional or contingent interests at stake.
  17. Arnold v. Commonwealth ex rel. Chandler, 62 SW 3d 366(Ky.) 2001 2001-SC-0288-TG
    The Tobacco Master Settlement Agreement (MSA) was entered in November 1998  between the largest United States tobacco companies and the attorneys general of 46 states, including Kentucky. The settlement arose from the states’ claims for reimbursement from the tobacco companies for Medicaid healthcare expenditures resulting from tobacco related illness. Kentucky implemented its portion of the settlement by filing a civil action in the Franklin Circuit Court against the tobacco companies and then immediately dismissing the action, with prejudice, as settled. Subsequently, the following year, the Kentucky Legislature enacted a Bill directing how the settlement proceeds would be allocated and used.
    More than a year after the dismissal of the civil action, some 46 individuals claiming to be Medicaid recipients suffering from smoking-related illness sought to intervene in the action to assert a right to a portion of the settlement. The Circuit Court overruled  the motion to intervene as being untimely.
    The applicants for intervention argued they did not know they would not individually and directly benefit from the settlement until the Kentucky Legislature acted, and that the settlement agreement prejudiced their individual claims for compensation.
    Although the Kentucky Supreme Court spoke to the timeliness issue generally, the crux of the decision to affirm the denial of intervention was the fact the settlement agreement specifically preserved the rights of individual claimants to proceed against the tobacco companies directly. Essentially, without saying it this way, intervention would have done nothing to protect the intervenors’ rights. There was no indication the applicants for intervention had any legitimate claim to the settlement proceeds.
  18. Baker v. Webb, 127 SW 3d 622 – Ky: Supreme Court 2004
    The blood relatives (cousins) of a minor child sought to intervene in an adoption proceeding under Civil Rule 24.01, as of right. The Circuit Court overruled the motion and the Supreme Court of Kentucky reversed.
    Although 922 KAR 1:140 states a preference for adoptions by qualified relatives, there is no absolute priority. The applicants for intervention did not have a right to adopt, but they did have a regulatory expectation that they would be appropriately considered for adoption. This the Cabinet for Families and Children did not do, in apparent violation if its own rules. The court found the Cabinet’s procedural failure provided a sufficient legal interest compelling intervention in the adoption proceeding.
    A strong dissenting opinion from Justice Keller focused upon the fact the motion to intervene was procedurally insufficient in that it was not accompanied by “a pleading setting forth the claim or defense for which intervention is sought,” as required by Civil Rule 24.03.
  19. Carter v. Smith, 170 SW 3d 402 – Ky: Court of Appeals 2004
    A complaint filed on December 2, 2002 alleged violations of Kentucky’s Open Meetings Act by a school board. On December 19, 2002 the school superintendent resigned his position, allegedly contingent upon a one-year consulting contract with the school board. In February, the court allowed Plaintiff to file an amended [sic] complaint to add a claim the December 19, 2002 board meeting also violated the Open Meetings Act with a request to void the consulting contract. Plaintiff also moved for a temporary injunction requiring payments on the consulting contract to be diverted to an escrow account pending final judgment. On April 9 the former superintendent made a motion to intervene in open court, which motion was subsequently reduced to writing.
    The trial court denied the motion to intervene on the grounds the validity of the consulting contract was contingent upon compliance with the Open Meetings Act and therefore too remote from the pending action; and that the application for intervention was untimely. The Kentucky Court of Appeals reversed. As an initial matter the court observed that the motion to intervene was base on both Civil Rule 24.01, interventions of right, and Civil Rule 24.02, permissive intervention. The appeal was limited to the denial of the Civil Rule 24.01 motion. which was a final and appealable order.

    To establish an intervention under Civil Rule 24.01, an applicant must:

    • Make a timely application;
    • Show an interest relating to the subject of the action;
    • Show the ability to protect this interest may be impaired or impeded in the absence of intervention; and
    • Show that none of the existing parties could adequately represent his interests.

    On the issue of timeliness, the court reiterated the five-factor test in Grubbs v. Norris, 870 F.2d 343 (6th Cir.1989). and Triax Co. v. TRW, Inc, 724 F.2d 1224 (6th Cir.1984):

    1. The point to which the suit has progressed;
    2. The purpose for which intervention is sought;
    3. The length of time preceding the application during which the proposed intervenor knew or reasonably should have known of his interest in the case;
    4. The prejudice to the original parties due to the proposed intervenor’s failure, after he or she knew or reasonably should have known of his or her interest in the case, to apply promptly for intervention; and
    5. The existence of unusual circumstances militating against or in favor of intervention.

    The standard of review of the denial of a motion to intervene as untimely is abuse of discretion or clearly erroneous. The court conducted a de novo review of the record and the denial of Carter’s motion to intervene, and held that the decision was clearly erroneous

  20. Commonwealth of Kentucky  v. LJP, 316 SW 3d 871 – Ky: Supreme Court 2010
    The Cabinet for Health and Family Services filed a petition for the involuntary termination of parental rights. Some four months later, while the petition for involuntary termination was pending, the parents filed in the same action a petition for voluntary termination of parental rights conditioned upon the child being placed with the biological grandparents for adoption. Thereupon, the grandparents immediately sought to intervene. The Family Court denied the intervention, reasoning the petition for involuntary termination preempted the petition for voluntary termination. The Court of Appeals reversed and upon discretionary review the Supreme Court of Kentucky reversed the Court of Appeals.
    The Supreme Court held the mere filing of an involuntary termination petition by itself did not deprive the parents of their right to seek voluntary termination or to consent to adoption. The Court also held that the procedures for termination of parental rights and the procedures for adoption could not so easily be collapsed into a single unified proceeding.
    The grandparents were seeking to intervene in an adoption proceeding which did not exist. This was a termination proceeding into which there was no right to intervene. The Family Court denial of intervention was affirmed, but for different reasons.
  21. Hazel Enterprises v. Community Financial Bank, 382 SW 3d 65 – Ky: Court of App. 2012
    This was a foreclosure action. After the Commissioner’s sale of the property and the court’s approval of the sale and the Commissioner’s report for the distribution of the proceeds of the sale, including the payment of past due property taxes, Hazel bought the tax delinquency certificate. Then Hazel moved to intervene in the foreclosure action to claim $1050.62, for interest, attorney fees, and administrative fees in addition to $588.84 in actual taxes.

    The motion to intervene was denied and the Court of Appeals affirmed the denial. In an opinion remarkably devoid of any overt scoffing, the court observed that prejudice to the other parties to an action is an additional consideration in a motion to intervene, particularly with a post-judgment motion to intervene.

    [R]e-opening the litigation to account for Hazel’s late acquired interests clearly would have prejudiced the parties where the circuit court had already made a final determination with respect to the rights of all parties involved. Given that timeliness is a factual issue generally left to the discretion of the trial court and under the facts of this case, we find no abuse of discretion.

  22. Boggs v. Commonwealth of Kentucky, EX REL. BOGGS, Ky: Court of Appeals 2012
    A Kentucky county attorney has a right to intervene in any existing action concerning child support as between the child’s parents. When a county attorney files a motion to intervene for purposes of securing child support, the motion must be granted. However, the county attorney cannot show up one day, change the case caption to include the Commonwealth as a party and start filing motions. There has to be an actual motion to intervene.
  23. Interactive Gaming Council v. Commonwealth, Ky: Court of Appeals 2014
    The Commonwealth of Kentucky commenced an in rem action seeking the forfeiture of numerous internet domain names as being gambling devices. Interactive Gaming Counsel sought to intervene in the action as an association representing online gambling operations, some of which owned domain names subject to forfeiture. The issue is the law of associational standing which just happened to arise in the context of a motion to intervene. The Court of Appeals decision provides an enlightening and scholarly discussion of associational standing in Kentucky, but it does not have much to do with the issues distinctly related to intervention.
  24. Commonwealth of Kentucky v Shepherd Case No. 2011-SC-000482-MR (KY S.Ct., Apr. 26, 2012) http://opinions.kycourts.net/sc/2011-SC-000482-MR.pdf
    Citizen suits to enforce the federal Clean Water Act must be filed in federal District Court. Before filing such a action, 60 day notice must be given of the intention to file, and if state or federal agencies commence an enforcement action prior to the expiration of the 60 days, the citizen plaintiffs are barred from proceeding. That’s what happened here.

    When the Commonwealth of Kentucky’s Energy and Environment Cabinet filed an enforcement action in the Franklin Circuit Court, it also filed a proposed consent decree. The citizen plaintiffs moved to intervene in the action to object to the proposed consent decree. Opposition to the intervention was based upon the idea the presence of the citizen plaintiffs as parties in the state court action would collide with the exclusive jurisdiction of federal courts provided by 33 USC 1365, and it would deprive the Franklin Circuit Court of jurisdiction. The Supreme Court of Kentucky did not agree and allowed the intervention, at least to the extent of commenting upon and criticizing the proposed consent decree.

    In sum, the trial court’s ordinary authority to permit sufficiently interested parties to intervene in a suit properly before it has not been preempted here, at least not completely, by federal law. On the contrary, federal law encourages the states to permit interested citizens to intervene and be heard in state court enforcement proceedings under the state analogs of the federal environmental protection statutes. To the extent, therefore, that the trial court has allowed the Citizen Plaintiffs to intervene in the Cabinet’s enforcement action so as to accord them an opportunity to challenge the proposed consent judgment, it has not trespassed upon the federal courts’ exclusive jurisdiction. Whether the trial court would likewise have jurisdiction to entertain the Citizen Plaintiffs’ own claims under the Clean Water Act is a much harder question, but one we need not address at this time since the trial court has not of yet and may not ever assert that jurisdiction.

    The court did not once mention the possibility that “commencing a civil action” anywhere but in a federal district court (33 USC 1365) may be categorically different from intervening in an action commenced by another.
  25. Ipock v. Ipock, 403 SW 3d 580 – Ky: Court of Appeals 2013
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Written by Tom Fox

March 30, 2014 at 12:16 pm

Rules for Legal Greenhorns – A Kentucky Case Caption

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Specific guidelines for Kentucky civil court paperwork:

  • Use standard letter size (8.5 x 11 inch) opaque, non-glossy, white paper;
  • Provide one inch margins on top, bottom  & right (suggested) and one and one-half inch margin on left side (required by CR 7.02(4));
  • Use 12 point, or larger, type size;
  • Generally use regular style type, but italics or underline for case names  and for emphasis;
  • Use double-space lines in the main body, except for indented quotations;
  • Print on one side of the paper only;
  • Staple multiple pages together;
  • Use black ink only, and;
  • Check you local rules of court for variations to these guidelines.

It must be easy for everyone involved to quickly identify which of the many thousands of pending cases your particular piece of paper belongs with, and the specific purpose your paper is intended to serve. All the necessary identifying information must go at the top of the first page. There are variations in how this essential information is arranged, but however it is presented, the human mind must be able to understand it in the blink of an eye. The single most important piece of information is the case number. It may also be called a ’cause number’, a ‘docket number’ or possibly something else depending upon local practice and habit. However, the case number is not all there is. Here is an eight point example of a properly formatted case caption:

Sample Kentucky civil case caption

Caption-3-CROPED-600px

  1. At the very top is the name of the court in which the case is pending. If you have been sued, take this information from the summons and complaint that were served on you;
  2. The name of the county where the case is pending;
  3. The name of the plaintiff or plaintiffs. These are the folk doing the suing.
  4. Your name as defendant, who is being sued.
  5. “Pro se” means you don’t have a lawyer and you are representing yourself. This is not needed if you have a lawyer; but if you have a lawyer you you would not be devising your own case caption.
  6. The case, cause or docket number. Get it right.
  7. Who if filing this piece of paper. In this example it is you, the defendant.
  8. What is this piece of paper? In this example, it is an answer to a complaint.  There are many other types of paperwork, motions or pleadings.

NOTE: The sample caption shown above uses red to highlight the different important parts of the caption. In a real pleading, use black print only.

KRCP  Rule 10.01 provides:

“Every pleading shall have a caption setting forth the name of the court, the style of the action, the file number, and a designation as in Rule 7.01. In the complaint the style of the action shall include the names of all the parties, but in other pleadings it is sufficient to state the name of the first party on each side with an appropriate indication of other parties.”

Points 1 and 2 in my sample caption cover the complete “name of the court” in Rule 10.01.

The “style of the action” in Rule 10.01 means, basically, the names of the parties: Example:  John Jones, Plaintiff vs. Jimmy Smith, Defendant. This would be points 3, 4 and 5 in my sample caption.

The “file number” is the case number of point 6.

A“designation as in Rule 7.01″ mentioned in Rule 10.01 means  a “Complaint.” Answer to Complaint,” “Counterclaim” etc., or the type of pleading, which are points 7 and 8, above.

Written by Tom Fox

February 24, 2014 at 11:27 am

The Mystery of Motion Day – Kentucky Practice

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Occasionally judges and courts take action without being asked to do so, and there are several specific instances when law and practice require a court to act ‘on its own motion’. However, in the normal course of civil litigation, the litigants and their lawyers have the duty to move a case through its various stages to completion. Quite a bit of activity occurs outside the court house through communication, cooperation, negotiation and agreement between the lawyers representing the various parties. But, when disagreements arise or when the spirit of professional courtesy is lacking, the parties petition the court to make a decision.

In Kentucky practice, a litigant’s request to the court for permission, decision or compulsion is generally called a ‘motion’. There are dozens upon dozens of different types of motions that can be submitted to a court. Motions can be made before trial in writing and motions may be made orally in open court, on the record, during the course of trials and hearings. The more serious types of pre-trial motions;  such as motions to dismiss a case, motions for judgment on the pleadings and motions for summary judgment; are  assumed to be contested. For these types of motions the applicable rules of procedure and practice generally provide for each party to prepare written briefs with time to answer and further time to respond to the answer before the matter is submitted to the court for a ruling.

The lesser motions that come before a court are handled more routinely, while allowing for another party to fight the motion if doing so is in his or her interest. In Kentucky practice, these more routine motions are automatically docketed, or put upon a court’s schedule, for the next upcoming Motion Day.

Kentucky Rules of Civil Procedure (KRCP) Rule 78 – Motions Days; Submission of Motions – provides:

“(1) Each circuit and district court shall establish by rule regular motion days as required by statute, and a copy of the rules shall be certified to the Supreme Court as provided in SCR 1.040(3)(a).
“(2) To expedite its business, the court may make provision by rule or order for the submission and determination of motions without oral hearing upon brief written statements of reasons in support and opposition.”

Kentucky has fifty-seven circuit court judicial districts and sixty district court judicial districts. Each of these one hundred seventeen judicial districts  adopt their own respective local rules of procedure on a wide variety of matters. Specifically, pursuant to  KRCP Rule 78, supra, there are one hundred seventeen local variations on Motion Day practice. I have yet to find the individual who has read and compared each of these various local Motion Day rules.

From the several set of local  rules I have examined, Motion Day practice appears to be fairly consistent across the Commonwealth. Generally, a set time on the same day every week is designated as ‘motion hour’ and the motions that were filed and served before the cut-off the prior week are called one by one in open court. If the party who made the motion is in the courtroom when the case is called, the judge considers the motion and either:

  • Grants the motion;
  • Denies the motion;
  • Takes the motion under advisement;
  • Sets the motion for a more complete hearing, or;
  • Punts the motion to the next motion day.

There are many ways the parties or attorneys can avoid the necessity of appearing in person in court on motion day. The non-moving party can simply agree to the motion without objection, for example. Or, the parties might agree that the motion be submitted to the court for decision upon written briefs and stipulated facts. The system works better with civil communication and cooperation among the litigants and the court. The main proviso is that all communications to the court must be in writing with copies served upon each of the other parties, or in open court and on the record.

Court, after all, is a very formal arena.

Remember to consult your local rules of practice. Kentucky Local Rules of Court collection

Written by Tom Fox

February 23, 2014 at 7:58 pm

Kentucky exemption statutes

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Kentucky exemption law

See: Garnishment Exemptions Available to Kentucky Residents

Kentucky Revised Statutes (KRS)
Title 39 – Provisional Remedies, Enforcement
Chapter 427 – Exemptions

Contents:

  • KRS §427.005 Definitions.
  • KRS §427.010 Exempt personal property and disposable earnings of individual debtors.
  • KRS §427.020 Appraisement of defendant’s property — Selection by defendant.
  • KRS §427.030 Debtor’s tools exempt.
  • KRS §427.040 Professional libraries and vehicle exempt.
  • KRS §427.045 Exemptions not applicable to claims for child support.
  • KRS §427.050 Out-of-state law applicable when wages earned and payable out-of-state — Exceptions.
  • KRS §427.060 Homestead and burial plot exemptions — Exceptions.
  • KRS §427.070 Right of spouse and children to homestead.
  • KRS §427.080 Valuation and allotment of homestead exemption.
  • KRS §427.090 Payment of money in lieu of homestead exemption.
  • KRS §427.100 Waiver of homestead exemption — Continuance after death
  • KRS §427.110 Insurance benefits — Exemptions.
  • KRS §427.120 Police and firefighters’ pension fund in cities of the first, second, and third classes — Exempt from process in some cases.
  • KRS §427.125 Police and firefighters’ pension fund in cities of fourth class — Exempt from process in some cases.
  • KRS §427.126 Repealed, 1966.
  • KRS §427.130 Salaries of public officials and employees and sums due from governmental agencies are subject to attachment or garnishment — Service of process.
  • KRS §427.140 Employee may not be discharged for garnishment for one (1) indebtedness.
  • KRS §427.150 Property totally or partially exempt.
  • KRS §427.160 Additional general exemption.
  • KRS §427.170 Federal bankruptcy code exemptions applicable in Kentucky.
  • KRS §427.180 Grain storage receipt or scale ticket as prima facie claim of right to possession.
  • KRS §427.990 Penalty.

Written by Tom Fox

February 21, 2009 at 7:11 pm

Usury and interest law – Kentucky

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Kentucky Revised Statute
Title 24 – Commerce and trade
Chapter 360 – Interest and usury

  • KRS § 360.010
    Legal interest rate
    Agreement for higher rate
    Minimum charge for negotiated bank loan.

    • KRS § 360.010(1) The legal rate of interest is eight percent (8%) per annum, but any party or parties may agree, in writing, for the payment of interest in excess of that rate as follows:
      • KRS § 360.010(1)(a) at a per annum rate not to exceed four percent (4%) in excess of the discount rate on ninety (90) day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve District where the transaction is consummated or nineteen percent (19%), whichever is less, on money due or to become due upon any contract or other obligation in writing where the original principal amount is fifteen thousand dollars ($15,000) or less, and
      • KRS § 360.010(1)(b) at any rate on money due or to become due upon any contract or other obligation in writing where the original principal amount is in excess of fifteen thousand dollars ($15,000); and any such party or parties, and any party or parties who may assume or guarantee any such contract or obligation, shall be bound for such rate of interest as is expressed in any such contract, obligation, assumption, or guaranty, and no law of this state prescribing or limiting interest rates shall apply to any such agreement or to any charges which pertain thereto or in connection therewith; provided, however, nothing herein contained shall be construed to amend, repeal, or abrogate any other law of this state pertaining to any particular types of transactions for which the maximum rate of interest is specifically prescribed or provided.
    • KRS § 360.010(2) Any state or national bank may charge ten dollars ($10) for any loan negotiated at the bank in this state, even if the legal interest does not amount to that sum.

  • KRS § 360.020
    Civil penalty for charging excessive interest
    Partial payment applied first to interest.

    • KRS § 360.020(1) The taking, receiving, reserving, or charging a rate of interest greater than is allowed by KRS 360.010, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the creditors taking or receiving the same: provided, that such action is commenced within two (2) years from the time the usurious transaction occurred.
    • KRS § 360.020(2) Partial payment on a debt bearing interest shall be first applied to the interest then due.

  • KRS § 360.022
    Other laws not affected by KRS 360.010, 360.020, or 360.990.
    Nothing contained in KRS 360.010, 360.020, or 360.990 shall be construed to amend, repeal, or abrogate any other law of this state pertaining to any particular types of transactions for which exemptions, pleading of defenses is denied, or the maximum rate of interest is specifically prescribed or provided.


  • KRS § 360.025
    Excess rate of interest prohibited as defense of corporation.KRS § 360.025(1) No corporation shall hereafter plead or set up the taking of more than the legal rate of interest, as a defense to any action brought against it to recover damages on, or enforce payment of, or other remedy on, any mortgage, bond, note or other obligation, executed or assumed by such corporation: provided, that this section shall not apply to any action which is now pending or to any suit or action instituted subsequent to June 16, 1960, upon any mortgage, bond, note or other obligation executed or assumed by such corporation prior to June 16, 1960.
    KRS § 360.025(2) The provisions of subsection (1) of this section shall not apply to a corporation, the principal asset of which shall be the ownership of a one (1) or two (2) family dwelling.


  • KRS § 360.027
    Excess rate of interest prohibited as defense of limited partnership, limited liability company, or business trust.KRS § 360.027(1) No limited partnership, limited liability company, or business trust shall hereafter plead or set up the taking of more than the legal rate of interest, as a defense to any action brought against it to recover damages on, or enforce payment of, or other remedy on, any mortgage, bond, note or other obligation, executed or assumed by such limited partnership, limited liability, or business trust; provided, that this section shall not apply to any action instituted subsequent to June 16, 1972, upon any mortgage, bond, note or other obligation executed or assumed by such limited partnership or business trust prior to June 16, 1972.
    KRS § 360.027(2) The provisions of subsection (1) of this section shall not apply to a limited partnership, limited liability company, or business trust, the principal asset of which shall be the ownership of a one (1) or two (2) family dwelling.


  • KRS § 360.030
    Premiums on insurance to secure loan not considered as interest.Where an insurance company, as a condition for a secured loan, requires the borrower to insure his life or the life of another, or his property, with the company, and to assign the policy of insurance to the company as security for the loan and agree to pay the premiums thereon during the continuance of the loan, and the premiums charged do not exceed those charged for similar policies to persons who do not obtain loans, the premiums in any such case shall not be considered as interest on the loan, and the loan shall not be rendered usurious by reason of any such requirement.


  • KRS § 360.040
    Interest on judgment.A judgment shall bear twelve percent (12%) interest compounded annually from its date. A judgment may be for the principal and accrued interest; but if rendered for accruing interest on a written obligation, it shall bear interest in accordance with the instrument reporting such accruals, whether higher or lower than twelve percent (12%). Provided, that when a claim for unliquidated damages is reduced to judgment, such judgment may bear less interest than twelve percent (12%) if the court rendering such judgment, after a hearing on that question, is satisfied that the rate of interest should be less than twelve percent (12%). All interested parties must have due notice of said hearing.


  • KRS § 360.050
    Presumption as to interest on foreign debt or judgment.Any indebtedness incurred or judgment rendered out of this state is presumed to bear interest in accordance with the provisions of KRS 360.040.


  • KRS § 360.060
    Interest on holdbacks or reserves by persons financing loans on personal property – Reports to dealers.KRS § 360.060(1) Each person engaged in the business of financing loans on personal property sold by dealers to purchasers on credit shall pay interest at the rate of two and one-half percent (2.5%) per annum on holdbacks, reserves or other money withheld from the dealer under any contract for financing such a purchase on credit. Interest on such money withheld shall be paid to each dealer on January 1 and July 1 of each year.
    KRS § 360.060(2) Any amount withheld by a person engaged in making such loans shall be due immediately upon the close of the loan account.
    KRS § 360.060(3) Each person engaged in making such loans shall furnish each dealer as of January 1 and July 1 of each year, a report showing the status of the dealer’s reserve or holdback account, if any.


  • KRS § 360.070
    Rates of exchange for commercial paper, how fixed.Once in each month or oftener, each bank and each institution authorized to deal in bills of exchange shall fix the rates of exchange at which bills shall be purchased and enter them upon the proceedings of the board of directors, designating the difference to be made, if any, on account of the time the bill has to run. A copy of the rates shall be posted in some conspicuous place in the public room of the bank or institution. If the rates of exchange are fixed by a branch of the bank or institution, they shall not be entered on its records or acted upon by it until corrected, if necessary, and approved by the principal bank or institution. Any alteration made in the rates of exchange shall, before it is acted upon, be noted on the copy posted in the public room. All officers of any such bank or institution shall conform to its rates of exchange so fixed.


  • KRS § 360.080
    Rates of exchange to be transmitted to Governor.Each bank and each institution authorized to deal in bills of exchange shall, each month, transmit copies of its rates of exchange to the Governor for his information and for the information of the General Assembly.


  • KRS § 360.100
    Predatory lending
    Definitions
    Limitations on high-cost home loans
    Conditions
    Penalties.KRS § 360.100(1) The following definitions apply for the purposes of this section:

    • KRS § 360.100(1)(a) “High-cost home loan” means a loan other than an open-end credit plan or a reverse mortgage transaction in which:
    • KRS § 360.100(1)(a)1. The principal amount of the loan is greater than fifteen thousand dollars ($15,000) and does not exceed two hundred thousand dollars ($200,000);
    • KRS § 360.100(1)(a)2. The borrower is a natural person;
    • KRS § 360.100(1)(a)3. The debt is incurred by the borrower primarily for personal, family, or household purposes;
    • KRS § 360.100(1)(a)4. The loan is secured by a mortgage on residential real property or secured by collateral which has a mortgage lien interest in residential real property, which is or will be occupied by the borrower as the borrower’s principal dwelling; and
    • KRS § 360.100(1)(a)5. The terms of the loan exceed either or both of the following thresholds:
    • KRS § 360.100(1)(a)5a. Without regard to whether the loan transaction is or may be a “residential mortgage transaction” as defined in 12 C.F.R. 226.2(a)(24), as amended from time to time, the loan at the time the loan is consummated is such that the loan is considered a “mortgage” under section 152 of the Home Ownership and Equity Protection Act of 1994, Pub. L. No. 103-325, 15 U.S.C. sec. 1602(aa), as the same may be amended from time to time, and regulations adopted pursuant thereto by the Federal Reserve Board, including 12 C.F.R. 226.32, as the same may be amended from time to time; or
    • KRS § 360.100(1)(a)5b. The total points and fees payable by the borrower at or before the loan closing exceed the greater of three thousand dollars ($3,000) or six percent (6%) of the total loan amount as shown as the amount financed on the final Truth-in-Lending Statement.
    • KRS § 360.100(1)(b) “Lender” means any person who funds or negotiates the terms of a high-cost home loan or acts as a mortgage broker or lender, finance company, or retail installment seller with respect to a high-cost home loan. However, any person who purchases or is otherwise assigned a high-cost home loan shall be subject to an action for violation of this section only if the violation for which the action or proceeding is brought is apparent on the face of the disclosure or the underlying promissory note.
    • KRS § 360.100(1)(c) “Material change” means any of the following:
    • KRS § 360.100(1)(c)1. A change in the type of loan being offered, such as a fixed or variable rate loan or a loan with a balloon payment;
    • KRS § 360.100(1)(c)2. A change in the term of the loan, as reflected in the number of monthly payments due before a final payment is scheduled to be made;
    • KRS § 360.100(1)(c)3. An increase in the interest rate of more than one-quarter of one percent (0.25%), or an equivalent increase in the amount of discount points charged;
    • KRS § 360.100(1)(c)4. A change regarding the requirement of escrow for taxes and insurance; and
    • KRS § 360.100(1)(c)5. A change regarding the requirement or payment, or both, of private mortgage insurance.
    • KRS § 360.100(1)(d)
    • KRS § 360.100(1)(d)1. “Total points and fees payable by the consumer at or before the loan closing” means all amounts payable by a borrower at or before the closing of a home loan, excluding any interest or time-price differential due at closing on the loan proceeds and includes:
    • KRS § 360.100(1)(d)1a. All mortgage broker fees, including fees paid by the consumer directly to the broker, fees paid by the consumer to the creditor for delivery to the broker, and yield spread premiums paid by the creditor to the broker;
    • KRS § 360.100(1)(d)1b. Any amount payable under an add-on or discount system of additional charges:
    • KRS § 360.100(1)(d)1c. Service, transaction, activity, and carrying charges that exceed similar charges on a noncredit account;
    • KRS § 360.100(1)(d)1d. Points, loan fees, assumption fees, finder’s fees, and similar charges;
    • KRS § 360.100(1)(d)1e. Appraisal, investigation, and credit report fees when service is provided by the lender or an affiliate and not by a third party;
    • KRS § 360.100(1)(d)1f. Charges imposed on a creditor by another person for purchasing or accepting the borrower’s obligation, if the borrower is required to pay the charges in cash, as an addition to the loan obligation, or as a deduction from loan proceeds;
    • KRS § 360.100(1)(d)1g. Premiums or other charges for credit life, accident, health, or loss-of-income insurance, or debt-cancellation coverage, whether or not the debt-cancellation coverage is insurance under applicable law; or
    • KRS § 360.100(1)(d)1h. Closing agent fees charged by a third party, but only if the lender requires the particular services for which the borrower is charged and the lender requires the imposition of the charge or the lender retains a portion of the charge.
    • KRS § 360.100(1)(d)2. “Total points and fees payable by the consumer at or before the loan closing” does not include real estate related fees paid to third parties if the charge is reasonable, the creditor receives no direct or indirect compensation in connection with the charge, and the charge is not paid to an affiliate of the creditor. Real estate related fees include:
    • KRS § 360.100(1)(d)2a. Fees for title examination, abstract of title, title insurance, property survey, and similar purposes;
    • KRS § 360.100(1)(d)2b. Fees for preparing loan-related documents, such as deeds, mortgages, and reconveyance or settlement documents;
    • KRS § 360.100(1)(d)2c. Notary and credit report fees;
    • KRS § 360.100(1)(d)2d. Property appraisal fees or fees for inspections to assess the value or condition of the property if the service is performed prior to closing, including fees related to pest infestation and flood hazard determinations; and
    • KRS § 360.100(1)(d)2e. Amounts required to be paid into escrow or trustee accounts if the amounts would not otherwise be included in the finance charge.

    KRS § 360.100(2) A high-cost home loan shall be subject to the following limitations:
    KRS § 360.100(2)(a)
    KRS § 360.100(2)(a)1. No lender may make, provide, or arrange a high-cost home loan with a prepayment penalty unless the lender offers the borrower a loan without a prepayment penalty, the offer is in writing, and the borrower initials the offer to indicate that the borrower has declined the offer. The lender shall disclose the discount in rate received in consideration for a high-cost home loan with the prepayment penalty; and
    KRS § 360.100(2)(a)2. If a borrower declines an offer required in paragraph (a)1. of this subsection, the lender may include a prepayment penalty schedule. No prepayment penalty shall be assessed against the borrower following the third anniversary date of the mortgage or sixty (60) days prior to the date of the first interest rate reset, whichever is less. No prepayment penalty shall exceed three percent (3%) for the first year, two percent (2%) for the second year, and one percent (1%) for the third year of the outstanding balance of the loan; but in no event shall a prepayment penalty be assessed against a borrower refinancing with the mortgage loan company that funded the mortgage;
    KRS § 360.100(2)(b) A high-cost home loan may not contain a provision which permits the lender, in its sole discretion, to accelerate the indebtedness. This provision does not apply when repayment of the loan has been accelerated by default, pursuant to a due-on-sale provision, or pursuant to some other provision of the loan documents unrelated to the payment schedule;
    KRS § 360.100(2)(c) A high-cost home loan may not contain a scheduled payment that is more than twice as large as the average of earlier scheduled payments. This provision does not apply when the payment schedule is adjusted to the seasonal or irregular income of the borrower;
    KRS § 360.100(2)(d) A high-cost home loan may not contain a payment schedule with regular periodic payments that cause the principal balance to increase;
    KRS § 360.100(2)(e) A high-cost home loan may not contain a provision which increases the interest rate after default. This provision does not apply to interest rate changes in a variable rate loan otherwise consistent with the provisions of the loan documents, provided the change in the interest rate is not triggered by the event of default or the acceleration of the indebtedness;
    KRS § 360.100(2)(f) A high-cost home loan may not include terms under which more than two (2) periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the borrower;
    KRS § 360.100(2)(g) A lender may not charge a borrower any fees to modify, renew, extend, or amend a high-cost home loan or to defer any payment due under the terms of a high-cost home loan, unless the fees are less than one-half (1/2) of any fees that would be charged for a refinance or unless the borrower is in default and it is in the borrower’s best interest;
    KRS § 360.100(2)(h) A lender may not make a high-cost home loan unless the borrower has been provided the following notice or a substantially similar notice, in writing, not later than the time that notice provided by 12 C.F.R. 226.31(c), as amended from time to time, is required:

    NOTICE TO BORROWER
    IF YOU OBTAIN THIS LOAN, THE LENDER WILL HAVE A MORTGAGE ON YOUR HOME. YOU COULD LOSE YOUR HOME AND ANY MONEY YOU PUT INTO IT IF YOU DO NOT MEET YOUR OBLIGATIONS UNDER THE LOAN.
    MORTGAGE LOAN RATES AND CLOSING COSTS AND FEES VARY BASED ON MANY FACTORS, INCLUDING YOUR PARTICULAR CREDIT AND FINANCIAL CIRCUMSTANCES, YOUR EMPLOYMENT HISTORY, THE LOAN-TO-VALUE REQUESTED AND THE TYPE OF PROPERTY THAT WILL SECURE YOUR LOAN. THE LOAN RATE AND FEES COULD ALSO VARY BASED ON WHICH LENDER OR BROKER YOU SELECT. YOU SHOULD SHOP AROUND AND COMPARE LOAN RATES AND FEES.
    YOU SHOULD ALSO CONSIDER CONSULTING A QUALIFIED INDEPENDENT CREDIT COUNSELOR OR OTHER EXPERIENCED FINANCIAL ADVISOR REGARDING THE RATE, FEES, AND PROVISIONS OF THIS MORTGAGE LOAN BEFORE YOU PROCEED. YOU SHOULD CONTACT THE UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FOR A LIST OF CREDIT COUNSELORS AVAILABLE IN YOUR AREA.
    YOU ARE NOT REQUIRED TO COMPLETE THIS LOAN AGREEMENT MERELY BECAUSE YOU HAVE RECEIVED THESE DISCLOSURES OR HAVE SIGNED A LOAN APPLICATION.
    REMEMBER, PROPERTY TAXES AND HOMEOWNER’S INSURANCE ARE YOUR RESPONSIBILITY. NOT ALL LENDERS PROVIDE ESCROW SERVICES FOR THESE PAYMENTS. YOU SHOULD ASK YOUR LENDER ABOUT THESE SERVICES.
    ALSO, YOUR PAYMENTS ON EXISTING DEBTS CONTRIBUTE TO YOUR CREDIT RATINGS. YOU SHOULD NOT ACCEPT ANY ADVICE TO IGNORE YOUR REGULAR PAYMENTS TO YOUR EXISTING CREDITORS;

    KRS § 360.100(2)(i) A lender may not make a high-cost home loan unless the lender reasonably believes at the time the loan is consummated that one (1) or more of the borrowers, when considered individually or collectively, will be able to make the scheduled payments to repay the loan based upon a consideration of their current and expected income, current obligations, current employment status, and other financial resources, other than the borrower’s equity in the dwelling which secures repayment of the loan. A borrower shall be presumed to be able to make the scheduled payments to repay the loan if, at the time the loan is consummated:
    KRS § 360.100(2)(i)1. The borrower’s total monthly debts, including amounts owed under the loan, do not exceed fifty percent (50%) of the borrower’s monthly gross income as verified by the credit application, the borrower’s financial statement, a credit report, financial information provided to the lender by or on behalf of the borrower, or any other reasonable means;
    KRS § 360.100(2)(i)2. The loan has been approved by an automated underwriting service offered by FNMA or Freddie MAC;
    KRS § 360.100(2)(i)3. The lender verifies and documents that the borrower has liquid assets equal to fifty percent (50%) of the principal loan amount; or
    KRS § 360.100(2)(i)4. The borrower has sufficient residual income as defined in the guidelines established in 38 C.F.R. 36.4337(e) and United States Veterans Administration form 26-6393;
    KRS § 360.100(2)(j) If the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan held by the same lender as noteholder, the lender may not directly or indirectly finance:
    KRS § 360.100(2)(j)1. Any prepayment fees or penalties payable by the borrower; or
    KRS § 360.100(2)(j)2. Points and fees, excluding those provided for in 12 C.F.R. 226.4(c)(7), which in the aggregate are in excess of four percent (4%) of the total amount financed;
    KRS § 360.100(2)(k) A lender or mortgage loan broker may not, within one (1) year of the consummation of a high-cost home loan, charge a borrower points and fees in connection with a high-cost home loan if the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan on which points were charged. A lender may not, at any time, charge a borrower points and fees in addition to those allowed by 12 C.F.R. 226.4(c)(7) if the proceeds of the high-cost home loan are used to refinance an existing high-cost home loan, on which points were charged, held by the same lender as noteholder. However, points and fees in accordance with this section may be charged on any proceeds of a high-cost home loan which are in excess of the amount refinanced on the existing high-cost home loan;
    KRS § 360.100(2)(l) A lender may not pay a contractor under a home-improvement contract from the proceeds of a high-cost home loan other than by an instrument payable to the borrower or jointly to the borrower and the contractor, or at the election of the borrower, through a third-party escrow agent in accordance with terms established in a written agreement signed by the borrower, the lender, and the contractor prior to the disbursement;
    KRS § 360.100(2)(m) A lender shall not refinance, replace, or consolidate a zero interest rate or low interest rate loan made by a governmental or nonprofit lender with a high-cost home loan. For purposes of this paragraph, a low interest rate loan is defined as a loan that carries a current interest rate that is two (2) percentage points or more below the current yield on United States Treasury securities with a comparable maturity;
    KRS § 360.100(2)(n) A lender shall not finance single premium credit life, credit accident, credit health, credit disability, or credit loss of income insurance in connection with a high-cost home loan;
    KRS § 360.100(2)(o) A lender shall not make a high-cost home loan unless the lender has made available to the borrower a videotape, or other similar audio-video media format such as DVD or CD, approved by the Office of Financial Institutions, which explains the borrower’s rights and responsibilities with regard to this section or high-cost home loans. A lender shall have available for viewing at least one (1) copy of the video in the principal office and each branch office of the lender;
    KRS § 360.100(2)(p) A lender shall not make a high-cost home loan subject to a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers. Arbitration clauses that comply with the standards set forth in the Statement of Principles of the National Consumer Dispute Advisory Committee of the American Arbitration Association in effect on June 24, 2003, shall be presumed not to violate this subsection;
    KRS § 360.100(2)(q) A lender shall not charge a late payment fee on a high-cost home loan except in accordance with the following:
    KRS § 360.100(2)(q)1. The late payment fee may not be in excess of five percent (5%) of the amount of the payment past due or ten dollars ($10), whichever is greater;
    KRS § 360.100(2)(q)2. The loan documents must specifically authorize the late payment fee;
    KRS § 360.100(2)(q)3. The late payment fee may only be assessed for a payment past due fifteen (15) days or more; and
    KRS § 360.100(2)(q)4. The late payment fee may only be charged once with respect to a single late payment;
    KRS § 360.100(2)(r) A lender may not charge a borrower a fee for the first request of each calendar year for a written payoff calculation. Thereafter, for each subsequent request in a calendar year, the lender may charge a reasonable fee not to exceed in excess of ten dollars ($10) or actual costs, whichever is greater, per request for a written payoff calculation on a high-cost home loan by a borrower in a calendar year;
    KRS § 360.100(2)(s) A lender shall not initiate a foreclosure or other judicial process to terminate a borrower’s interest in residential real property subject to a high-cost home loan without first providing the borrower, at least thirty (30) days prior to the initiation of any process, written notice of default and of the borrower’s right to cure. The notice shall include a statement of the amount needed to be paid by the borrower in order to cure the default and the date by which the payment is due to cure the default. If the amount needed to be paid will change during the thirty (30) day notice period, the notice shall provide information sufficient to enable a calculation of the daily change;
    KRS § 360.100(2)(t) A lender shall not recommend or encourage default on an existing loan or other debt in connection with the closing of a high-cost home loan that refinances all or a portion of the existing loan or debt;
    KRS § 360.100(2)(u) A lender shall not make a high-cost home loan that does not require an escrow account for taxes and insurance;
    KRS § 360.100(2)(v) A lender shall not process the application to make a high-cost home loan if the proceeds shall be used, in whole or in part, to repay the principal of an existing loan secured by the borrower’s principal dwelling that is not a high-cost home loan, without first requiring the borrower to obtain housing counseling by a HUD-approved counselor;
    KRS § 360.100(2)(w) A lender shall not make a high-cost home loan that allows the borrower, for any part or all of the term of the loan, to make payments that are applied only to interest and not to principal;
    KRS § 360.100(2)(x) A lender shall provide timely notice to the borrower of any material change in the terms of a high-cost home loan if the change is made after an application has been taken but before the closing of the loan. Notice shall be deemed timely if given not later than three (3) days after the lender has learned of the change or twenty-four (24) hours before the high-cost home loan is closed, whichever is earlier. If the lender discloses a material change more than three (3) days after learning of the change but still twenty-four (24) hours before the high-cost home loan is closed, it will not be liable for penalties or forfeitures if the lender cures in time for the borrower to avoid any damage;
    KRS § 360.100(2)(y) A lender shall not make a high-cost home loan without verifying the borrower’s income and financial resources through tax returns, payroll receipts, bank records, or other similarly reliable documents, whether provided directly by the borrower or through a third party with the borrower’s permission; and
    KRS § 360.100(2)(z) A lender shall not make a high-cost home loan without verifying the borrower’s reasonable ability to pay all scheduled payments of principal, interest, real estate taxes, homeowner’s insurance, and mortgage insurance premiums, as applicable. For loans in which the interest rate may vary, the reasonable ability to repay shall be determined based upon the following:
    KRS § 360.100(2)(z)1. In the case of a high-cost home loan in which the rate of interest varies solely in accordance with an index, the interest rate determined by adding the index rate in effect on the date of consummation of the transaction to the maximum margin permitted at any time during the loan agreement; or
    KRS § 360.100(2)(z)2. In the case of a high-cost home loan in which the rate may vary at any time during the term of the loan for any reason other than in accordance with an index, the interest charged on the loan at the maximum rate that may be charged during the term of the loan.
    KRS § 360.100(3) Except as provided in paragraph (e) of subsection (2) of this section, the making of a high-cost home loan which violates any provisions of subsection (2) of this section is usurious, subject to the penalties of this chapter, and unlawful as an unfair and deceptive act or practice in or affecting commerce in violation of the provisions of KRS 367.170. The provisions of this section shall apply to any person who in bad faith attempts to avoid the application of this section by:
    KRS § 360.100(3)(a) The structuring of a loan transaction as an open-end credit plan for the purpose and with the intent of evading the provisions of this section when the loan would have been a high-cost home loan if the loan had been structured as a closed-end loan; or
    KRS § 360.100(3)(b) Dividing any loan transaction into separate parts for the purpose and with the intent of evading the provisions of this section; or
    KRS § 360.100(3)(c) Any other such subterfuge.
    The Attorney General, the executive director of the Office of Financial Institutions, or any party to a high-cost home loan may enforce the provisions of this section. Any person seeking damages or penalties under the provisions of this section may recover damages under either this chapter or KRS Chapter 367, but not both.
    KRS § 360.100(4) A lender of a high-cost home loan who, when acting in good faith, fails to comply with subsection (2) of this section, will not be deemed to have violated this section if the lender establishes that either:
    KRS § 360.100(4)(a) Within thirty (30) days of the loan closing the borrower is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made, at the choice of the borrower, to the loan to either:
    KRS § 360.100(4)(a)1. Make the high-cost home loan satisfy the requirements of subsection (2) of this section; or
    KRS § 360.100(4)(a)2. Change the terms of the loan in a manner beneficial to the borrower so that the loan will no longer be considered a high-cost home loan subject to the provisions of this section; or
    KRS § 360.100(4)(b) The compliance failure was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid such errors, and within sixty (60) days after the discovery of the compliance failure, the borrower is notified of the compliance failure, appropriate restitution is made, and whatever adjustments are necessary are made to the loan to either, at the choice of the borrower, make the high-cost home loan satisfy the requirements of subsection (2) of this section or change the terms of the loan in a manner beneficial to the borrower so that the loan will no longer be considered a high-cost home loan subject to the provisions of this section. Examples of a bona fide error include clerical, calculation, computer malfunction and programming, and printing errors.
    KRS § 360.100(4)(c) For purposes of this subsection, “appropriate restitution” means the reimbursement by the lender of any points, fees, interest, or other charges made by the lender and received from the borrower necessary to put the borrower in the same position as he or she would have been had the loan, as adjusted in accordance with paragraphs (a) and (b) of this subsection, been originally made in accordance therewith.
    KRS § 360.100(5) For purposes of this section, any extension of credit shall be deemed to have been made in the Commonwealth of Kentucky, and therefore subject to the provisions of this section, if the lender offers or agrees in Kentucky to lend money to a borrower, who is a resident of Kentucky, on real property located within the Commonwealth of Kentucky, or if such borrower accepts or makes the offer in Kentucky to borrow, regardless of the situs of the contract as specified therein. Any oral or written solicitation or communication to lend originating outside of Kentucky, but forwarded to and received in Kentucky by a borrower who is a resident of Kentucky, shall be deemed to be an offer or agreement to lend in Kentucky and, therefore, subject to this section. Any oral or written solicitation or communication to borrow originating within Kentucky, from a borrower who is a resident of Kentucky, but forwarded to and received by a lender outside of Kentucky, shall be deemed to be an acceptance or offer to borrow in Kentucky. Any oral or written offer, acceptance, solicitation, or communication to lend or borrow, made in Kentucky to, or received in Kentucky from, a borrower who is not a resident of Kentucky, shall be subject to the provisions of this section, applicable federal law, law of the situs of the contract, or law of the residence of the borrower, as the parties may elect. The provisions of this section shall be severable and if any phrase, clause, sentence, or provision is declared to be invalid, the validity of the remainder of this section shall not be affected thereby.

    Effective: April 24, 2008


  • KRS § 360.150
    Manufactured home financing.KRS § 360.150(1) As used in this section, unless the context otherwise requires:
    KRS § 360.150(1)(a) “Lender” means a person regularly engaged in the business of selling or financing manufactured homes:
    KRS § 360.150(1)(a)1. Who is an arranger of credit; or
    KRS § 360.150(1)(a)2. Who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four (4) installments (not including a down payment) and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract;
    KRS § 360.150(1)(b) “Interest” means finance charge expressed as an annual percentage rate. The finance charge is the cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the lender as an incident to or a condition of the extension of credit;
    KRS § 360.150(1)(c) “Manufactured home” means a moveable dwelling unit, designed and constructed for permanent occupancy by a single family, which dwelling contains permanent eating, cooking, sleeping, and sanitary facilities; or a prefabricated dwelling that is manufactured in two (2) or more modules at a location other than a homesite and which is designed to be used as a residence when the modules are transported to the homesite, and the modules are joined together and installed on a permanent foundation system. The term includes the plumbing, heating, air conditioning, and electrical systems contained in the structure; and
    KRS § 360.150(1)(d) “Manufactured home financing transaction” shall include both the credit sale of a manufactured home and a direct loan used to finance the purchase of a manufactured home.
    KRS § 360.150(2) A manufactured home financing transaction may provide for a fixed rate of interest payable in substantially equal successive installments over a fixed term, or may provide that the rate of interest may be adjusted at certain regular intervals. In this latter event, the manufactured home financing transaction shall be subject to the provisions in this section.
    KRS § 360.150(3) Adjustments in the interest rate charged must be based on changes in a specific index, as set forth in the financing agreement. The index may be only:
    KRS § 360.150(3)(a) The monthly average yield on United States Treasury securities adjusted to a constant maturity of five (5) years; or
    KRS § 360.150(3)(b) An index approved by the Federal Home Loan Bank Board or by the Office of the Comptroller of the Currency, Department of the Treasury, for adjustable or variable interest rates on residential mortgage loans.
    KRS § 360.150(4) The rate of interest shall not increase or decrease during the six (6) month period beginning with the date of execution of the financing agreement, and at least six (6) months shall elapse between changes.
    KRS § 360.150(5) Adjustments, either up or down, to the rate of interest on each adjustment date shall, for the initial adjustment, be equal to the difference between the index value in effect on the first day of the second calendar month preceding the adjustment date and the value in effect on the first day of the month in which the financing agreement is executed. For adjustments after the initial adjustment, adjustments shall be equal to the difference between the index value in effect on the first day of the second month preceding the adjustment date and the index value in effect on the first day of the second month preceding the date of the immediately preceding rate adjustment.
    KRS § 360.150(6) Where the stated regular interval between rate adjustments is six (6) months, an adjustment to the interest rate may not result in a rate of interest which is more than one (1) percentage point greater or less than the interest rate in effect prior to such adjustment. If the stated regular interval between rate adjustments exceeds six (6) months, then the maximum adjustment either up or down shall be one (1) percentage point multiplied by the number of whole consecutive six (6) month periods in the interval between rate adjustments.
    KRS § 360.150(7) Any increase in the rate of interest permitted by this section shall be optional with the creditor. Decreases in the rate of interest shall be mandatory whenever the total decrease in the index value equals or exceeds one-quarter (1/4) of one (1) percentage point.
    KRS § 360.150(8) If the creditor agrees to impose limitations on interest rate changes that are more restrictive than the limitations specified in this section, then such limitations shall apply to both increases and decreases.
    KRS § 360.150(9) Any changes in the index which are not reflected in a rate adjustment may, by agreement of the parties, be carried over to subsequent rate adjustment periods, and be implemented to the extent not offset by opposite movement in the index.
    KRS § 360.150(10) By agreement of the parties, adjustments to the rate of interest may result in changes in the amount of regular installment payments due under the financing agreement, or in changes in the term of the financing agreement, or in a combination of such changes in amount and term. Adjustments to the amount of installment payments may be made less frequently than adjustments to the interest rate.
    KRS § 360.150(11) For all manufactured home financing transactions under this section, the creditor shall comply with all applicable requirements and disclosures pursuant to Part I of the Consumer Protection Act (Truth-In-Lending Act), 15 U.S.C. secs. 1601 et seq., as amended, and as implemented by Regulation Z promulgated by the Board of Governors of the Federal Reserve System.
    KRS § 360.150(12) The creditor shall send written notification of any rate adjustment, by first class mail, postage prepaid, at least one (1) month before the date that the new rate of interest shall take effect.
    KRS § 360.150(13) Notwithstanding any of the requirements and limitations set forth by subsections (3) through (12) of this section, the parties may agree on any terms or provisions in the manufactured housing financing agreement as may be authorized or permitted in any program for residential mortgage loans by the Federal Home Loan Bank Board or by the Office of the Comptroller of the Currency, Department of the Treasury, or any other federal department, agency or board. In such event, the creditor shall comply with all applicable limitations, requirements and disclosures of the agency that relate thereto.
    Effective: July 13, 1984


  • KRS § 360.990
    Penalties.Any person who violates any of the provisions of KRS 360.060 shall be fined not less than ten dollars ($10) nor more than fifty dollars ($50) for each offense.

Written by Tom Fox

January 21, 2009 at 1:13 am