Hamburg Props. v. The Gibson Co.

• Decision Date: 25 February 2022
• Docket Number: 2021-CA-0165-MR
• Parties: HAMBURG PROPERTIES, LLC APPELLANT v. THE GIBSON COMPANY; ATLANTIC APPRAISAL COMPANY; AND BRADLEY KEAR APPELLEES
• Court: Kentucky Court of Appeals

HAMBURG PROPERTIES, LLCAPPELLANT v. THE GIBSON COMPANY; ATLANTIC APPRAISAL COMPANY; AND BRADLEY KEARAPPELLEES

No. 2021-CA-0165-MR

Court of Appeals of Kentucky

February 25, 2022

NOT TO BE PUBLISHED

APPEAL FROM FAYETTE CIRCUIT COURT HONORABLE JULIE M. GOODMAN, JUDGE ACTIONNO. 20-CI-03152

BRIEFS FOR APPELLANT: Joshua T. Rose Louisville, Kentucky

BRIEF FOR APPELLEETHE GIBSON COMPANY: Drake W. Staples Lexington Kentucky

BRIEF FOR APPELLEESATLANTIC APPRAISAL COMPANY AND BRADLEY KEARThomas M. ToddDavid A. Trevey Lexington, Kentucky

BEFORE: CALDWELL, MAZE, AND McNEILL, JUDGES.

OPINION

CALDWELL, JUDGE

Hamburg Properties, LLC("Hamburg") appeals from the Fayette Circuit Court's dismissal of its claims against The Gibson Company, Atlantic Appraisal Company, and Bradley Kear.We affirm.

FACTS

Hamburg bought property in an office condominium building in 2006.On October 27, 2020, Hamburg filed a complaint against Atlantic Appraisal Company("Atlantic"), appraiser Bradley Kear("Kear"), and real estate agency The Gibson Company("Gibson").^[1] According to the complaint, Hamburg had discovered-based on a recent appraisal by Atlantic-on or shortly after October 29, 2019, that it owned less square feet on the third floor of the office condominium than it believed it had purchased in 2006.

Hamburg alleged that Gibson negligently misrepresented that Hamburg would be buying the full 10, 000 square-foot third floor of the office condominium building during negotiations for the 2006 purchase-so the purchase price was based on Hamburg's acquiring 10, 000 square feet of space on the third floor.Hamburg similarly alleged that Atlantic and Kear had negligently misrepresented that Hamburg owned the full 10, 000 square footage of the third floor in a prior appraisal that had been prepared for purposes of securing a bank loan to improve the premises.According to Hamburg's complaint, Hamburg expended significant sums on improving the third-floor common areas it believed it owned in reliance on the defendants' representations.

Hamburg sought damages including the difference in value and appreciation loss "regarding the 1, 913 square feet not purchased, plus expenses associated with renovating common areas, plus losses related to the ability to resell the Premises, plus interest and court costs."

Atlantic and Kear filed a motion to dismiss or, in the alternative, motion for summary judgment.They argued that Hamburg's claim was barred by the one-year statute of limitations in KRS^[2]413.140(1)(f).^[3]They claimed Hamburg had constructive notice of the square footage of the premises from the date of its purchase in 2006, so that the one-year statute of limitations had run more than thirteen years prior to the filing of the complaint.They attached to their motion, inter alia, a copy of an appraisal performed by Kear as an agent of Atlantic in 2007 which was prepared for a bank regarding a construction loan sought by Hamburg.

Gibson also filed a motion to dismiss, arguing that Hamburg's claim against it was barred by the one-year statute of limitations.Gibson contended that Hamburg had constructive notice of the square footage of the premises based on items in the chain of title-including the deed in which Hamburg bought the property in 2006 and a plat of the condominium building which was referenced in the deed.It also argued constructive notice of the square footage from tax bills.Attached to Gibson's motion were the deed wherein Hamburg obtained the premises, a plat recorded about the third floor of the condominium, and Property Valuation Administrator ("PVA") records.(The deed, plat, and PVA records were also attached to Atlantic's and Kear's motion.)

The 2006 deed stated that the seller conveyed to Hamburg in fee simple "2700 Old Rosebud Road, Units 310 & 350, condominium units of the 2700 Old Rosebud Road Condominium, a horizontal property regime" described in the recorded master deed and "as shown on the floor plan for 2700 Old Rosebud Road" on a recorded plat "together with such Units' undivided percentage interests in the common elements of 2700 Old Rosebud Road Condominium," along with other rights and interests as described by the master deed.This 2006 deed provided deed book references with page numbers for the master deed and the plat.

The plat showed a floor plan of the third floor of the 2700 Old Rosebud Road condominium.It showed Unit 310 comprising 3, 992 square feet and Unit 350 comprising 4, 095 square feet.(3, 992 added to 4, 095 equals 8, 087 square feet.)It also showed a "3rd floor common area" located between Unit 310 and Unit 350 comprising 1, 913 square feet.

The PVA records described Unit 310 as being built in 2005 and having 3, 992 square feet and Unit 350 as being built in 2005 and having 4, 095 square feet.The square footage of Unit 310 and the square footage of Unit 350 would together total 8, 087 square feet according to PVA records-though the PVA records recite that the PVA makes no warranties on the information provided, despite its efforts to provide accurate information.

Based on the deed and the plat, the defendants contended that Hamburg had constructive notice of the square footage purchased in 2006, thus making claims stemming from any misrepresentations of the square footage clearly time barred-since the complaint was filed in 2020.The defendants also contended that Hamburg received notice of the square footage of the condominium units via its tax bills each year.

Hamburg filed a response.It argued that the plat was confusing and did not clearly show that it owned only 8, 087 square feet rather than the full 10, 000 square feet of the building on the third floor-especially since 1, 913 square feet on the plat was denoted as "third floor common area" so that one might believe this particular common area only belonged to the owner of the third floor.It also argued that the statute should not run until it received actual notice of the true square footage because of a special or confidential relationship between the parties, and that the statute of limitations was tolled due to the defendants' concealment.

The trial court conducted a hearing on the motions to dismiss.Before addressing when any statute of limitations would have started to run, the trial court first clarified that the five-year statute of limitations for breach of fiduciary duty^[4]was not applicable because Hamburg did not assert breach of fiduciary duty claims in its complaint.Instead, a one-year statute of limitations for negligence was clearly applicable.^[5]

Next, the trial court explained that Hamburg had constructive notice of the nature of its ownership interests in the building since the date it signed the deed buying the premises in 2006.The trial court opined that Hamburg did have an ownership interest in all 10, 000 square feet in the third floor of the office building-including having an undivided, percentage interest in the common areas- based on the deed and general law concerning condominiums.The trial judge orally stated she would grant the motion to dismiss at the end of the hearing.

After the hearing, the trial court entered a written order granting the defendants' motions to dismiss.In its written order, it adjudged that upon signing the 2006 deed, Hamburg had "constructive notice as to everything affecting the title to the commercial office condominiums it purchased, including the actual square footage of such commercial office condominiums as is set forth in the chain of title, seeCharles v. Whitt, 218 S.W. 994, 997(Ky.1920)."The trial court concluded that Hamburg's claims were time barred under the statute of limitations: "Because Hamburg Properties, as a matter of law, was on notice in 2006 of the actual square footage it purchased, the one-year statutes of limitations prescribed by KRS 413.140 ran, Hamburg Properties [sic] claims asserted herein are time barred . . . ."

The trial court thus dismissed Hamburg's claims with prejudice.^[6]The order concluded by stating: "This is a final and appealable order, there being no just cause for delay."

STANDARD OF REVIEW

An appellate court must review a trial court's granting a motion to dismiss for failure to state a claim pursuant to CR^[7]12.02(f)^[8] under the non- deferential de novo standard.Fox v. Grayson, 317 S.W.3d 1, 7(Ky.2010);Kendall v. Community Cab Co., Inc., 610 S.W.3d 694, 695(Ky. App.2020).Similarly, a trial court's grant of a summary judgment motion^[9] is reviewed under the de novo standard.Brown v. Griffin, 505 S.W.3d 777, 781(Ky. App.2016).

ANALYSIS

"When a motion is made pursuant to CR12.02(f) for dismissal for failure to state a claim upon which relief may be granted 'the pleadings should be liberally construed in a light most favorable to the plaintiff and all allegations taken in the complaint to be true.'"Kendall, 610 S.W.3d at 695(citingGall v. Scroggy, 725 S.W.2d 867, 869(Ky. App.1987)).

Hamburg, in its complaint, alleged misrepresentation by the real estate professionals.Hamburg argues that accepting the allegations in its complaint as true and construing them in the light most favorable to Hamburg, there is no basis for concluding that Hamburg should have known of its cause of action prior to the 2019 appraisal by Atlantic.But the trial court concluded that Hamburg had constructive notice of the nature and extent of its ownership interests in the premises based on public records in the chain of title since 2006.This constructive notice stands outside any implications as to the real estate professionals.

The trial court's consideration of public records-such as deeds and a recorded plat-attached to the defendants' motion to dismiss in this instance...