Move over Hatfields and McCoys.
There's a modern-day battle that has been going on in Central Kentucky for nearly 10 years, and there's no sign of when the fighting might stop.
Unlike the infamous Hatfield-McCoy feud of the late 1800s, in which the weapons of choice were guns, knives and fists, the weapons in this fight are attorneys and the courts.
And, a TV set, not a hog, is at the center of this dispute.
The battle pits Lexington cardiologist Dermot Halpin and ex-wife Hilary Halpin against former Lexington electronics shop owner Bill Hardy and his wife, Susan Hardy.
The Halpins bought a $43,161.69 home entertainment system that includes the TV from Bill Hardy in 2002. The Halpins paid an additional $4,264.19 to have it installed. According to the Halpins, the system didn't work properly. They maintained that the TV was defective and not high definition, as they'd been told. (There was very little, if any, high definition programming in Central Kentucky at the time.)
The Halpins sued in 2003, and the situation snowballed from there.
Since then, there have been two jury trials in Fayette Circuit Court and several opinions and rulings handed down by the Kentucky Court of Appeals and Kentucky Supreme Court. The battle has even spilled over into federal bankruptcy court. The fight has taken many twists and turns, and even a couple of the attorneys involved in the fight have had to get their own attorneys.
Hundreds of thousands of dollars in attorney fees — many times the cost of the entertainment system — have been sought during the fight. The legal paperwork, if stacked vertically, would be more than six feet high, one of the attorneys involved in the situation said.
The most recent — and ongoing — skirmish in the Halpins versus Hardys dispute stems from a lawsuit filed in August in Fayette Circuit Court by Susan Hardy and a limited liability company she owns called Clay Avenue LLC.
In the lawsuit, Susan Hardy and Clay Avenue accuse attorney Thomas D. Bullock, who represents Dermot Halpin and Hilary Halpin, who got divorced after the fight began; Bullock's law firm, Bullock & Coffman LLP; and the Halpins of wrongful use of civil proceedings, malicious prosecution and abuse of process. Hardy says she has been harassed and forced to defend herself against fraud allegations, in spite of the fact she had nothing to do with the sale of the home entertainment system or the electronics business once owned by her husband. In the lawsuit, she is asking for compensatory and punitive damages, attorney fees, court costs and a jury trial.
Bullock says he and the Halpins went after Susan Hardy in court because she was in possession of her husband's assets, which were transferred to her so Bill Hardy could avoid paying a legal judgment involving the home entertainment system.
"She was helping him to avoid paying his legal obligation," Bullock said. "It's not right for somebody to transfer or hide assets to avoid paying a judgment."
Bullock, the son of Robert Bullock, a former long-time head of the consumer protection division in the state attorney general's office who was instrumental in writing Kentucky's Consumer Protection Act, said he's "a very big proponent of the consumer who has been defrauded by a business." He said the Halpins have continued to press on against the Hardys to help prevent what has happened to them from happening to other consumers.
Bullock said he sees Susan Hardy's lawsuit, which has led him and the Halpins to seek advice from different attorneys, as a "divide and conquer" tactic.
Joe Childers, the Hardys' attorney, said the latest lawsuit was filed in hopes of putting a stop to the fight once and for all.
Cincinnati attorney Matthew Bakota, who represents Dermot Halpin and Hilary Halpin in the latest lawsuit, declined to comment.
"This has a tortured history. It goes off in several different directions. It's an abuse of the judicial system. ... Somebody just kept pushing this case to the point of absurdity. ... It's the most convoluted abuse of the legal process that I've ever witnessed," said Childers, who has been a lawyer for about 30 years.
The feud has cost Bill Hardy his business, forced the Hardys to borrow money from a friend and forced the Hardys into bankruptcy, Childers said.
Meanwhile, the home entertainment system, including the TV set, which Bill Hardy says initially was worth about $20,000 by itself, is at the Hardys' home at 120 Clay Avenue. The picture and sound on the 50-inch plasma TV, which sits in the Hardys' living room, are crystal clear. Bill Hardy says no alterations have been made to the TV set, which he and his wife watch daily. The remainder of the entertainment system is packed away downstairs.
Bill Hardy said the Halpins did not have a receiver that would bring a high definition signal to the TV, which meant a bad picture. Bullock said jurors didn't buy that explanation.
Bill Hardy, who was in the TV and stereo business for more than 30 years, says he won national awards for service and never had a complaint lodged against him with the Better Business Bureau. A check with the local Better Business Bureau, which keeps complaint records for only a few years, showed no complaints against Bill Hardy's business.
Bill Hardy said he and ReVox USA Inc., the TV manufacturer, offered to replace it with a newer, more advanced model, and the Halpins countered, wanting the new TV and half of their money back. The counteroffer was rejected. Hardy said he wanted to give the Halpins all of their money back, but ReVox would not agree to that because the home entertainment system was a custom system.
The Halpins sued Bill Hardy and his electronics shop, ReVox and David Powers, who installed the home entertainment system, in Fayette Circuit Court in March 2003. In May 2005, a jury sided with the Halpins. The court awarded them $43,161.69 in compensatory damages, plus $5,000 in punitive damages, $75,223.66 in attorney fees, $7,727.30 in costs, and $10,004.37 in pre-judgment interest, a total of $141,117.02. Bill Hardy and Powers appealed to the state court of appeals several months later.
Before the final judgment on the jury's verdict was entered in Fayette Circuit Court, the Hardys sought and followed legal advice from attorney E. David Marshall, who specializes in bankruptcy and debtor/creditor relations law. Among other things, Marshall advised them to place their home on Clay Avenue into a limited liability company, and advised Susan Hardy to buy her husband's interest in it, according to court documents.
Marshall also advised that Bill Hardy's interest in a company called Newpast LLC, which was established by Hardy and businessman Joe Graviss to acquire property on West Main Street in Lexington and develop it with 14 condominiums, be transferred to Susan Hardy, with Susan Hardy paying for her husband's interest, according to court documents.
Bill Hardy later testified that all of the transfers and transactions were done to protect certain assets from attachment and enforcement of the judgment. Childers said the moves were made so Susan Hardy could protect what was hers, particularly her interest in her home.
The other defendants had filed for bankruptcy or gone out of business, leaving only Bill Hardy from whom the Halpins could collect their judgment. Bill Hardy could not afford to post a bond that would block enforcement of the judgment while the appeal was pending, Childers said. Hardy's failure to post such a bond allowed the Halpins to try to collect the judgment, and they did.
Later in 2005, the Halpins sued both Hardys, Clay Avenue LLC and Marshall for fraud, alleging violations of civil and criminal statutes, for their actions in moving Bill Hardy's assets. Susan Hardy and Marshall argued they should be dismissed from the suit because they had had no dealings with the Halpins and had had no judgments rendered against them in favor of the Halpins.
Marshall declined to comment about his involvement in the matter.
In May 2006, Bill Hardy, with a loan from his business partner, paid nearly $155,000, which included interest, to the Halpins, Bullock, and Bullock & Coffman to satisfy the judgment in the 2003 case.
The entertainment system was returned to Bill Hardy. Earlier, the Halpins had gotten permission from the court to sell the TV, but it was not sold, Childers said.
In early April 2007, the state court of appeals issued an opinion reversing and remanding the judgment on the jury verdict in the 2003 case, saying the trial court had committed various errors. Among other things, the appeals court said the trial court erred by not allowing the jury to see part of a letter sent to the Halpins by ReVox offering to replace the TV with a newer version.
Days after the appeals court reversal, the Halpins filed a motion to hold the Hardys and Marshall in contempt of court for their actions in moving Bill Hardy's assets. The Halpins also appealed the court of appeals' reversal to the state supreme court, which eventually decided not to review the case.
Bill Hardy asked that the circuit court, in light of the reversal, order his money to be returned to him, but the court said no.
In March 2009, a second Fayette Circuit Court jury heard the 2003 case and rendered a verdict in favor of the Halpins. The jury awarded compensatory damages of $38,495.91 but did not award any punitive damages to the Halpins.
The Hardys filed for bankruptcy about two weeks later. In August 2009, U.S. Bankruptcy Judge Joe Lee, at the request of the Halpins, allowed the state court cases involving the Hardys to continue. But Lee's order also says the automatic stay in the Hardys' bankruptcy case would remain in effect when it came to enforcement or collection of any judgments, according to Childers. The Halpins also filed an adversary complaint alleging fraud against the Hardys in bankruptcy court.
Just after the second jury verdict in circuit court, Susan Hardy, Clay Avenue LLC and Marshall asked the state court of appeals to prohibit Fayette Circuit Judge Pamela Goodwine from holding contempt hearings against them in the 2005 case, saying the 2005 case was completely dependent on the judgment in the 2003 case that was reversed. But the appeals court denied their request. They turned to the state supreme court.
In November 2009, while the contempt hearing issue was before the supreme court for consideration, Goodwine entered a default judgment against Susan Hardy in the 2005 case after Susan Hardy said she no longer could afford an attorney. In April 2010, with still no word from the supreme court, Goodwine held a two-day contempt hearing against the Hardys and Marshall.
Goodwine entered a "draft" judgment on all outstanding issues in the 2003 and 2005 cases in August 2010. In addition to listing who owed whom and how much, the draft judgment called for not holding Susan Hardy and Marshall in contempt of court, and setting aside the default judgment against Susan Hardy. The draft judgment called for holding Bill Hardy in contempt of court and fining him $15,000. The contempt charge against Bill Hardy stemmed from his purchase of a life insurance policy, which would be exempt from attachment, using money his wife had paid him to buy his interest in their assets.
But before a final judgment was made in circuit court, the supreme court issued an opinion saying that Goodwine had no jurisdiction to proceed with the 2005 case or the contempt proceedings because the 2005 case rested entirely on the judgment in the 2003 case that was reversed. The supreme court said that while it might be unfortunate that the Halpins incurred costs while trying to collect judgment money, "they were on notice that the judgment could be or had been appealed and was subject to reversal, and so must be deemed to have proceeded at their own risk."
Goodwine entered a final judgment in the 2003 and 2005 cases, which reflected the supreme court's ruling, on June 14. The final judgment set aside the finding of contempt against Bill Hardy and $57,748.69 in attorney fees to Bullock & Coffman for work on the 2005 case. After taking into account the difference between the damage amounts arrived at after both trials, adjusting attorney fees related to the 2003 lawsuit — trial preparation work leading up to the first trial went a long way in allowing the case to be retried so quickly after the reversal, according to the judge — and calculating interest, Goodwine decided the Halpins owed Bill Hardy $7,098.76.
Bill Hardy, who contends the final judgment is in violation of the bankruptcy court's order regarding the enforcement and collection of judgments and precludes him from discharging the second circuit court judgment against him in bankruptcy court, has appealed Goodwine's decision. The Halpins, not happy about the 2005 lawsuit and the contempt proceedings being tossed aside, also have appealed Goodwine's decision.
"I'm just devastated by what has happened," said Susan Hardy, a Macy's department store merchandiser. "They just kept coming after us. We were just trying to defend ourselves."
Reach Jennifer Hewlett at (859) 231-3308 or 1-800-950-6397, Ext. 3308.