Dec. Farm Int'l, LLC v. Dec. Estate, LLC

• Decision Date: 07 May 2021
• Docket Number: NO. 2019-CA-1057-MR,NO. 2019-CA-0983-MR,2019-CA-0983-MR,2019-CA-1057-MR
• Parties: DECEMBER FARM INTERNATIONAL, LLC APPELLANT/CROSS-APPELLEE v. DECEMBER ESTATE, LLC APPELLEE/CROSS-APPELLANT
• Court: Kentucky Court of Appeals

DECEMBER FARM INTERNATIONAL, LLC APPELLANT/CROSS-APPELLEE v. DECEMBER ESTATE, LLC APPELLEE/CROSS-APPELLANT

NO. 2019-CA-0983-MR

NO. 2019-CA-1057-MR

Commonwealth of Kentucky Court of Appeals

MAY 7, 2021

NOT TO BE PUBLISHED

APPEAL AND CROSS-APPEAL FROM SCOTT CIRCUIT COURT

HONORABLE BRIAN PRIVETT, JUDGE

ACTION NO. 09-CI-0608

OPINION

REVERSING AND REMANDING

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BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.

JONES, JUDGE:

Appellant December Farm International, LLC, ("the Farm") appeals the order of the Scott Circuit Court granting summary judgment to December Estate, LLC, ("the Estate") on a breach-of-contract claim concerning the 2007 relocation of an easement across the Estate's property.

The Farm appealed, raising numerous issues of error by the circuit court. Having reviewed the record, and being otherwise sufficiently advised, we reverse and remand for further proceedings in accordance with this Opinion for reasons more fully explained below.

I. STATEMENT OF THE FACTS

This ten-year litigation arises from an Access and Utility Easement Agreement (hereinafter referred to as the "Easement Agreement") for the Farm's benefit. In the spring of 2006, Nicole Hammond, the principle and sole member of the Farm, entered into a contract for the purchase of three adjoining tracts of real estate totaling roughly 456 acres in Scott County, Kentucky. Hammond did not have the financial ability to pay the approximately $2.5 million asking price, nor did she need the entire acreage for the Farm, so she proposed a deal to her acquaintance, Bruce Davis, who in turn proposed the deal to his business partner, Michael Milea.¹

The terms of the proposal involved Hammond assigning her right to purchase two parcels of the real estate in question to the Estate and, because the remaining 130-acre parcel was essentially "landlocked," the Estate simultaneously granting the Farm an easement across the Estate's property. The Estate agreed tothe proposal, and the two parties negotiated and executed a series of related agreements on October 31, 2006, including an Assignment and Assumption and Partial Assignment and Assumption of Purchase and Sale Agreements, by which the Farm assigned its right to purchase two of the tracts of land to the Estate, and and Easement Agreement, by which the Estate granted the Farm an easement across the two tracts of land purchased by the Estate.²

Pursuant to the Easement Agreement, the Estate had the authority to relocate or modify the road at the Farm's sole expense after providing the Farm with written notice and granting the Farm a three-month period during which to construct the relocated road itself. In relevant part, Paragraph 8 of the Easement Agreement provides:

a. Notwithstanding anything else set forth in this Agreement, [the Estate], in [the Estate's] sole discretion, reserves the right to modify or relocate, at [the Farm's] sole expense, the Private Drives, Access Easement, the Utility Facilities and/or the Utility Easement, from time to time on a temporary or permanent basis, provided such modification or relocation does not prevent ingress and egress to and from the Parcel 9 to a publicly dedicated right of way and does not cause an interruption of utility service to Parcel 9 (other than a temporary interruption resulting from the disconnection and re-connection of the Utility Facilities). It is agreed that the Access Easementmay be relocated to provide access to either Ironworks Pike,³ Scott County, Kentucky or Lantern Trail, Scott County, Kentucky. Within three (3) months from written notice to [the Farm] of such relocation, [the Farm], at [the Farm's] sole expense, shall construct the relocated Private Drives and the Utility Facilities in the relocated Access Agreement and Utility Easement. Such relocated Private Drives and Utility Facilities shall comply with all applicable laws, rules, regulations and ordinances and the requirements of applicable utility companies. . . . In the event [the Farm] does not construct the relocated Private Drives and Utility Facilities within such three (3) month period, [the Estate] shall have the right to do so, and [the Farm] shall immediately reimburse [the Estate] for the cost thereof. Any amounts not reimbursed to [the Estate] within twenty (20) days after demand for reimbursement shall accrue interest at the rate of twelve percent (12%) per annum.

b. Notwithstanding anything else set forth in this Agreement, [the Estate] further reserves the right to specifically locate and describe the Access Easement and the Utility Easement.

c. Upon such relocation or location, Grantor is hereby authorized to and shall solely and unilaterally amend this Agreement and shall file such amendment in the Scott County Clerk's office for the purpose of describing the specific location of the relocated or located Private Drives, Access Agreement, the Utility Facilities and/or the Utility Easement shall be terminated with respect to all areas outside the specific Access Agreement and/or Utility Easement. The width of the relocated and/or located Access Easement shall be the minimum width required by the applicable government authority or utility company for the Private Drives or Utility Facilities, as applicable.d. So long as [the Farm] has not constructed the relocated Private Drives as contemplated in Paragraph 8.a of this Agreement and in the event [the Farm] obtains an access, ingress and egress easement for pedestrians, motor vehicles (including without limitation commercial, non-commercial, and trailers attached thereto) and horses on a lead accompanied by a handler, to Muir Lane, the Access Agreement shall terminate upon the recording of an agreement granting [the Farm] access to Muir Lane . . . .

R. at 415-16 (emphasis added).

The original easement followed a preexisting old farm road on the Estate's land from Ironworks Road to the Farm's parcel of land. That road, which for approximately half its length consisted of two tire tracks through fields, was expressly accepted as an adequate right of way to the Farm's property in the Easement Agreement, and a map of that route was incorporated by reference as Exhibit "C" to the Easement Agreement.

In the summer of 2007, as the Estate began developing its property into a residential community, it became necessary to relocate the Farm's easement across the Estate's property. The Estate received a bid from Woodford Excavation and Transport ("WET"), a company owned and operated by Galen Young. WET had previously performed considerable work for the Farm, including building gravel roads in 2006. On March 5, 2007, WET provided the Estate with a written estimate for the construction of the new access road for the Farm. Aside from being more lineal feet of driveway, WET's proposal to the Estate was identical toits 2006 quotes for the Farm. WET's 2007 estimate for the Estate provided for the excavation of the new roadway and the installation of an eight-inch stone base over the estimated length of 3,800 lineal feet by fourteen-feet wide. The estimate anticipated the need for 6,000 square yards of gravel at the same $9.00 per square yard totaling $54,000.00 and an additional $12,000.00 for grubbing the proposed gravel roadway.

WET faxed a copy of the estimate to the Farm that same day. A handwritten note at the bottom of the Fax Cover Sheet states that it was "[s]ent to Nicole [Hammond] in [sic] behalf of Bruce." WET sent its estimate to Hammond at the same fax number it used to send prior estimates and invoices for work that it had performed for the Farm and received a confirmation sheet denoting successful transmission. Hammond denies receiving the estimate or even knowing the estimated cost of the road prior to its construction, although the fax was produced by the Farm during discovery. Hammond admitted that, in or around spring or summer of 2007, Davis "orally notified [her] that the road would be constructed."

WET performed the work as quoted, excavating the land to create the new access road and installing gravel to the specifications provided. The only difference was an additional $1,400.00 worth of clearing and grubbing that was approved by Davis. WET submitted its bill, which included the change order, totaling $56,600.00, and, on August 7, 2007, the Estate paid the bill.

In September 2007, the Estate unsuccessfully sought reimbursement from the Farm for the relocated road. In January 2008, Milea attempted to set up a meeting with Hammond in a series of emails. The two finally met on February 13, 2008, at which time Milea requested the reimbursement of the $56,600.00 that the Estate paid WET for the relocated easement and the $78,000.00 promissory note due on or before May 31, 2007.

The following day, Milea emailed Hammond: "It was good to see you yesterday. Please let me know when it is convenient for you to make the loan and road payments." R. at 492. On February 29, 2008, Milea emailed Hammond a proposed payoff date of March 3, 2008. Milea and Hammond, as well as Hammond's banker, then exchanged additional emails in which Hammond requested the payoff amount for the promissory note but refused to respond to Milea's repeated requests for a proposed payment timeline for the easement relocation reimbursement. On March 14, 2008, Milea wrote his final email to Hammond, saying: "It has been one month since we discussed this matter . . . We [would] appreciate if you [would] resolve a timeline for the road payment ASAP as you know it is past due . . . We look forward to hearing from you soon." There is no evidence in the record that Hammond ever responded.

On July 17, 2009, following the Farm's refusal to reimburse the Estate for the 2007 relocation, the Estate filed suit, raising a single breach of contractclaim. The Farm answered, asserting a counterclaim seeking setoff for costs incurred by the Farm to repair the easement road. The Farm alleged that it had notified the Estate multiple times throughout the easement's construction that WET...