RENDERED: March 5, 1999; 2:00 p.m. NOT TO BE PUBLISHED MODIFIED: June 11, 1999; 2:00 p.m. NO CA MR and NO.

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1 RENDERED: March 5, 1999; 2:00 p.m. NOT TO BE PUBLISHED MODIFIED: June 11, 1999; 2:00 p.m. C ommonwealth Of K entucky Court Of A ppeals NO CA MR and NO CA MR MARGARET R. ENNES, in individual capacity and JOAN B. SULLIVAN, in individual capacity and LINDA FITZPATRICK, in individual capacity and JOHN T. GARRETT, in individual capacity and G & E ENTERPRISES, INC.; M.W. ENTERPRISES, INC.; LINDA SULLIVAN, in individual capacity and SARAH BROWN, in individual capacity and PAUL S. AULBACH, in individual capacity and BETTY GRAYSON, in individual capacity and MAH INC.; MINNIE HAMILTON, in individual capacity and ROSEZELL WADDLE, in individual capacity and ESTHER KERNS, in individual capacity and LOU VANCE, in individual capacity and as partner and member of MARMI, INC.; J D ASSOCIATES; JEAN BRYAN, in individual capacity and as partner and member of MARMI, INC.; DONNA WATKINS, in individual capacity and as partner and member of MARMI, INC.; NAOMI SCHULTZ, in individual capacity and CAP-TAX, INC.; MICKEY MACPHERSON, in individual capacity and ANN DRU GAMBILL, in individual capacity and as partner and member of MARMI, INC.; TERRY STACY, in individual capacity and as partner and member of MARMI, INC.; COLLEEN CAMPBELL, in individual capacity and and WILLIAM R. SMITH d/b/a H & R BLOCK, INC. APPELLANTS

2 APPEALS FROM JEFFERSON CIRCUIT COURT V. HONORABLE WILLIAM E. MCANULTY, JR., JUDGE ACTION NO. 89-CI MARMI, INC. and TAX MASTERS, INC. APPELLEES OPINION AFFIRMING ** ** ** ** ** BEFORE: BUCKINGHAM, COMBS, and MILLER, Judges. COMBS, JUDGE: This appeal was taken by the numerous appellants after the Jefferson Circuit Court denied their CR motion for relief as well as their request for leave of court in order to file a third amended complaint and then entered summary judgment in favor of Appellee Tax Masters, Inc. Having reviewed the arguments presented and the applicable law, we affirm. This matter has a complex and extended history with this appeal marking the appellants' second appearance before the panel. As the trial court succinctly noted, the litigation arose in 1989 as a result of difficulties: in the operation of a program known as "Rapid Refund." Plaintiffs, franchisees of Defendant Marmi, a.k.a. H & R Block, entered into contracts with Marmi in which Marmi agreed to provide electronic filing for income tax returns. Marmi also contracted with Co-Defendant Tax Masters, who agreed to assist in the electronic processing of these returns. (Opinion and Order of the Jefferson Circuit Court at 1. Entered January 14, 1997). Early in the litigation, the Jefferson Circuit Court determined that all but five of the franchisees were bound by arbitration agreements contained in their franchise arrangements with Marmi. As a result, the claims against Tax -2-

3 Masters were held in abeyance pending the outcome of the arbitration proceedings. In September 1992, the arbitrator determined that the hold harmless provision contained in the electronic filing contract between the franchisees and Marmi was valid and enforceable. As a result, Marmi was insulated from liability resulting from all but willful or wanton conduct. The franchisees' motion to set aside this initial determination was denied, and the subsequent appeal to this court was dismissed as interlocutory. In November 1992, the arbitration proceedings continued and a hearing was held to determine whether Marmi's actions were wanton or willful. In February 1993, the arbitrator entered his final award, finding that "[t]he actions of [Marmi], in this matter did not constitute wanton or willful negligence" and concluding, therefore, that Marmi was not liable to the franchisees. Subsequently, the franchisees filed a motion to set aside the arbitrator's determinations, contending that those determinations were contrary to law. The trial court denied the request for relief, and another appeal to this court was taken. On April 28, 1995, this court affirmed the trial court's decision refusing to set aside the arbitrator's determinations. The Kentucky Supreme Court denied the franchisees motion for discretionary review. After the appeal was decided, Marmi and Tax Masters filed motions for summary judgment. They argued, inter alia, -3-

4 that the decision of the arbitrator which had been affirmed by the circuit court and this court barred the remaining franchisees' claims because their contracts with Marmi contained the same exculpatory clauses. Alternatively, Tax Masters argued that the franchisees were only incidental beneficiaries to the contract between Marmi and Tax Masters; as a result of that capacity, they had no right to sue under that contract. The franchisees responded to the motions for summary judgment. In addition, they filed a request for leave to file a Third Amended Complaint and yet another CR.60.02(f) motion requesting that the arbitration results be set aside. The trial court denied the franchisees' request for relief from the judgment and denied leave of court to file the tendered amended complaint, which alleged fraud or misrepresentation against Marmi and Tax Masters. It also granted Tax Masters's motion for summary judgment. This consolidated appeal followed. The franchisees argue that the trial court erred by entering summary judgment in favor of Tax Masters. The franchisees sought to recover from Tax Masters under the theory that they are third- party beneficiaries of the contract between Marmi and Tax Masters. Rejecting this theory of recovery, the trial court entered summary judgment against the franchisees. Summary judgment should only be used to terminate litigation when it appears as a matter of law that it would be impossible for the respondent to produce evidence at trial warranting a judgment in his or her favor and against the movant. Steelvest, Inc. v. Scansteel Service Center, Inc., Ky.,

5 S.W.2d 476 (1991), quoting Paintsville Hosp. Co. v. Rose, Ky., 683 S.W.2d 255 (1985). Summary judgment is properly granted only when there is no genuine issue as to any material fact. Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245 (1992). The movant bears the burden of showing there is no genuine issue of material fact. Id. The court must review the record in the light most favorable to the party opposing the motion. Id. In this case, after reviewing the facts in the record in the light most favorable to the franchisees, we agree that they could not prevail as a matter of law. We find no error in the trial court's determination that the franchisees cannot recover for breach of the contract as intended third-party beneficiaries of that contract. "It is the law in this jurisdiction that no stranger to a contract may sue for its breach unless the contract was made for his benefit." Sexton v. Taylor County, Ky. App., 692 S.W.2d 808, 810 (1985). See also Long v. Reiss, 290 Ky., 198, 160 S.W.2d 668 (1942). While the franchisees may have been incidental beneficiaries of the contract, the contract clearly was not made and intended for their direct benefit. As a result, we conclude that the franchisees were not entitled to attempt to enforce the contract. Next, the franchisees contend that the trial court erred by denying their motion to amend the complaint adding allegations of fraud and misrepresentation as to Marmi and Tax Masters. We have reviewed the record and the circumstances surrounding the amendment and have found no error on the part of the trial court. -5-

6 CR provides, in part, as follows: A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 20 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. The decision to grant or to deny a motion to amend is within the discretion of the trial court and should not be disturbed unless abuse of discretion is clearly shown. Floyd v. Humana of Virginia, Inc., Ky. App., 787 S.W.2d 267 (1989). A trial court's discretion in refusing amendments will not be disturbed unless clearly erroneous. Ashland Oil & Refining Co. v. Phillips, Ky., 404 S.W.2d 449 (1966). Prejudice to the nonmoving party is the touchstone for the denial of an amendment. Cornell & Co. v. Occupational Safety and Health Review Comm'n, 573 F.2d 820 (3rd Cir. 1978). Lengthy passage of time before filing a motion to amend is a significant factor. See Floyd v. Humana of Virginia, Inc., 787 S.W.2d at 269. A trial court has wide discretion and may consider a number of factors such as the futility of the proposed amendment itself. First National Bank of Cincinnati v. Hartmann, Ky. App., 747 S.W.2d 614 (1988). In this case, the trial court did not abuse its discretion in denying the motion to amend. The motion to amend was filed more than two years after the second amended complaint had been filed and followed the appellees' motion for summary judgment. Thus, the third amended complaint could only be filed -6-

7 with leave of court. Additionally, the tendered amended complaint was fatally defective as it failed to aver the elements of fraud with sufficient particularity as required by CR As a result, we conclude that the trial court did not abuse its discretion in refusing to permit a third amended complaint to be filed in this action. Finally, the franchisees contend that the trial court abused its discretion by denying their motion to set aside the arbitration proceedings. They argue that the trial court erred in 1991 and again in 1996 by failing to apply the rule of law established in Meiman v. Rehabilitation Center, Inc., Ky., 444 S.W.2d 78 (1969). Specifically, they assert that the Meiman decision and the holding of Britton v. Wooten, Ky., 817 S.W.2d 443 (1991), indicate that the exculpatory language contained in the electronic filing contracts is void and unenforceable. As counsel for Marmi notes, this argument appears to be tantamount to a re-hash of the contentions raised by the franchisees in their first appeal before this panel. The law of the case doctrine holds that "a final decision, whether right or wrong, is the law of the case and is conclusive of the questions therein resolved and is binding upon the parties, the trial court, and the Court of Appeals." Hogan v. Long, Ky., 922 S.W.2d 368,370 (1995). See also Thomas v. Commonwealth, Ky., 931 S.W.2d 446 (1996); Inman v. Inman, Ky., 648 S.W.2d 847 (1982); E'Town Shopping Ctr., Inc. v. Holbert, Ky., 452 S.W.2d 396 (1970). On this basis, we decline to revisit our previous decision with respect to this matter. -7-

8 Based upon the foregoing, the judgment of the Jefferson Circuit Court is affirmed. ALL CONCUR. BRIEF FOR APPELLANTS MARGARET R. ENNES, ET AL: Marshall V. Gaither Pewee Valley, KY BRIEF FOR APPELLEE MARMI, INC.: James P. Sohan Louisville, KY BRIEF FOR APPELLEE TAX MASTERS, INC.: R. Lawrence Baird Frank F. Chuppe Louisville, KY -8-