Fischer v. Fischer

Decision Date27 October 2011
Docket NumberNo. 2009–SC–000245–DG.,2009–SC–000245–DG.
Citation348 S.W.3d 582
PartiesJoseph FISCHER; and Cindy Fischer, Appellants,v.John R. FISCHER, Successor Executor of the Estate of John Fischer, Appellee.
CourtUnited States State Supreme Court — District of Kentucky

OPINION TEXT STARTS HERE

Thomas V. Haile, Louisville, KY, Counsel for Appellant.James C. Nicholson, Nicholson Law Office, Louisville, KY, Counsel for Appellee.Opinion of the Court by Justice NOBLE.

This case involves a dispute between two brothers, Appellant Joseph Fischer and Appellee John R. Fischer, over an alleged oral agreement relating to the care of their elderly and ill mother by which one brother agreed to give up part of his inheritance if the other brother would care for their mother. The trial court found that a valid agreement had been reached. The Court of Appeals reversed on an issue that had not been raised at the trial court but which the court reached as part of its overall examination of the validity of the agreement. The primary question before this Court, then, is whether the Court of Appeals can reverse the judgment of the trial court on an issue that was not specifically raised at the trial court, and if so, whether the appellate court erred in finding the contract invalid. Answering the first question in the negative, this Court nevertheless affirms for other reasons. In so doing, this Court resolves the longstanding conflict between two lines of cases requiring that a party raise by cross-petition for discretionary review issues raised but not decided at the Court of Appeals and that a lower court decision be affirmed for any valid reason raised and appearing in the record.

I. Background

Faced with the decision of taking their mother into one of their homes or putting her in a nursing home, which would deplete her entire estate, the brothers engaged in a series of conversations wherein Joseph Fischer agreed to keep their mother in his home and care for her, and not to charge for expenses during her care in order to preserve the estate in exchange for John Fischer's agreement to take only 13% of the estate at distribution. Their mother had a will that left her estate equally to both sons. She was incompetent at the time of the brothers' agreement, having Alzheimer's disease. The brothers' agreement was never reduced to writing.

At the time of the agreement, Joseph had already moved his mother into his home, and he and his wife continued to care diligently for her until her death. True to his agreement, he did not charge the estate for caring for his mother. In fact, at trial he acknowledged that he would have cared for his mother regardless of the agreement.

After their mother's death and probate was instituted, the brothers could not agree whether John had agreed to take 13% of the entire estate or only 13% of the stocks. John balked and demanded his entire inheritance share. Thereafter, probate languished, and on May 25, 2006, Joseph and Cindy Fischer filed an action in Jefferson Circuit Court alleging that John had breached their oral agreement and raising a quantum meruit theory for recovery of the value of their services. In answer, John denied the complaint, and affirmatively raised the statute of frauds, the statute of limitations, and lack of consideration as defenses. A later motion for a continuance of trial filed by John chronicled the history of the case in probate, and stated that Joseph had been removed as Executor of their mother's estate on July 11, 2006 due to his neglect of the estate action, and that John had been served with civil summons in this suit on that same day. The trial court granted the continuance, allowing further discovery. This case was subsequently tried to a jury, which entered a verdict in favor of the Appellants on May 9, 2007.

On appeal, John raised a number of issues, including that his agreement was void under the rule against assigning a mere expectancy and generally that no valid agreement was reached. The Court of Appeals reversed, holding that the claim about assigning a mere expectancy had not been raised at trial and was therefore not preserved for appellate review.

The court went on to address whether there was a valid agreement between the brothers. Though John claimed that he was entitled to a directed verdict below on a number of grounds, the court limited itself to this issue, finding his claim that there was no valid agreement to be dispositive. The court ruled that under basic contract law, the agreement failed because it was lacking in consideration. The basis for this finding was that John could not use his expectancy in his inheritance as consideration for an agreement. Though the court had already ruled that this issue, at least as an independent ground for reversal, was not preserved for appellate review, having been raised for the first time on appeal, it nevertheless discussed the matter because it was necessarily a part of reviewing “whether there was a valid agreement,” which required “apply[ing] basic contract principles, including whether there was consideration flowing both ways.”

This Court took discretionary review to examine whether John's failure to raise the issue of assignment of his mere expectancy at trial barred its consideration on appeal, even as part of what the Court of Appeals characterized as the larger issue of the validity of the agreement between the brothers.

II. Analysis
A. An Appellate Court Cannot Review Distinct Issues That Were Never Raised at the Trial Court Absent Palpable Error.

As noted above, John argued at the Court of Appeals that he was entitled to a directed verdict because he could not contract to transfer his expectancy in his mother's estate during her lifetime, among other issues which the Court of Appeals did not address. This is clearly a correct statement of the longstanding law of this state. See, e.g., Hunt v. Smith, 191 Ky. 443, 230 S.W. 936, 938 (1921); McCall's Adm'r v. Hampton, 98 Ky. 166, 32 S.W. 406 (1895). However, this argument was never made to the trial court.

In his motion for directed verdict at the close of Joseph's case, John raised several specific grounds. First, he argued that Joseph's claim was properly a claim against the estate, rather than a contract claim, since the services were for the mother's benefit, not his own. As such, the claim should instead have been made in the probate action under KRS 396.011 (and because no probate claim had been filed, any claim against the estate was now time-barred). John also argued that he had no duty to pay for his mother's care, and that no contract could be implied from Joseph and Cindy's services because the law presumes them to be “natural” caretakers. He also argued that there was no express contract, and that the evidence of any contract was insufficient because it was not clear and convincing, there was no meeting of the minds, and his own promise had been gratuitous. Finally he argued that there could be no quantum meruit claim because the Appellants made no change in their position, having testified they would have cared for their mother with or without his promise.

John specified essentially the same grounds on his motion for directed verdict at the close of all the proof, though he also raised the issue that the purported agreement “bump[ed] up against the statute of frauds,” because it was in part about real estate. Finally, John reiterated these arguments in his motion for judgment notwithstanding the verdict or for a new trial. At the close of all the proof, the trial court denied John's directed verdict motion on the question of whether there was a contract, and allowed that claim to go to the jury. The court, however, granted the motion as to the quantum meruit claim, which was dismissed.

After careful review of the record, it is clear that at no time did John argue to the trial court that there was a failure of consideration because he did not provide consideration to Joseph and Cindy. John's actual argument in his directed verdict motion was that Joseph and Cindy provided no consideration to him because his promise to forgo part of his inheritance had been gratuitous. More specifically, at no time was there a discussion of a failure of consideration because of his inability to assign his expectancy interest in his mother's estate.

Yet, in a circuitous fashion, the Court of Appeals determined that while John had not preserved this issue for appeal, it nonetheless had to consider the issue because John had argued generally that the contract was invalid and thus preserved review of any issue going to the validity of the contract, including whether there was consideration on both sides. But, as demonstrated by the recitation of what John argued in his directed verdict motion above, no such broad claim that the contract was simply invalid was made.

Instead, John made very narrow and specific claims about the contract (e.g., that there was no meeting of the minds, and that the evidence did not support finding a contract). In fact, the closest John came to arguing the ground on which the Court of Appeals relied—that consideration failed because John could not assign an expectancy—was that all he ever did was make a gratuitous promise. A gratuitous promise does not seek any consideration from the other side; it is in the nature of a potential gift. But by making this argument to the trial court, John at best claimed that Joseph and Cindy gave no consideration. John made no argument to the trial court that the contract failed because he did not give consideration. The entire thrust of his arguments on both motions for directed verdict was that the Appellants should have made a claim in probate court for their services, because he never entered into a binding agreement with them at all, having merely promised to forgo part of his inheritance out of appreciation and then subsequently changing his mind. He never argued that he was unable to enter into an...

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