Moore Prop. Invs., LLC v. Fulkerson
| Decision Date | 02 July 2020 |
| Docket Number | NO. 2018-CA-001435-MR,NO. 2018-CA-000577-MR,2018-CA-000577-MR,2018-CA-001435-MR |
| Parties | MOORE PROPERTY INVESTMENTS, LLC APPELLANT v. DR. LAURA FULKERSON APPELLEE |
| Court | Kentucky Court of Appeals |
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT
In the first appeal, we affirm the circuit court. However, by separate Order entered contemporaneously with this Opinion, we dismiss the second appeal because the circuit court entered the August 29, 2018 order without jurisdiction to do so; that order is void ab initio and a nullity.
On July 15, 2009, veterinarians Laura Fulkerson and her business partner at the time, Todd Yates,1 entered into a lease agreement with Moore Property. Fulkerson agreed to lease a commercial office suite, Suite B, for use as a veterinary clinic. Because Fulkerson had to make significant improvements at her own expense to accommodate a veterinary practice, she contemporaneously negotiated an ancillary Option Agreement to purchase Suite B.
When Fulkerson exercised the option, Moore Property filed a civil action against her seeking a declaratory judgment and damages for her alleged failure to pay common area expenses. The circuit court entered summary judgment in favor of Moore Property which this Court reversed. Fulkerson v. Moore Property Investments, LLC, No. 2012-CA-000856-MR, 2014 WL 3714373 (Ky. App. July 25, 2014). The Court of Appeals did not address the parties'dispute regarding common area expenses, but held that Fulkerson adequately exercised her option to purchase Suite B. The summary judgment was vacated, and the case remanded to the circuit court for further proceedings. Id. at *7.
Thereafter, but before the circuit court conducted further proceedings, the parties mediated their dispute. Mediation yielded a fully executed Settlement Agreement. It said, "This Settlement Agreement (Agreement) is made this 7th day of December, 2015 by and between Moore Property Investments, LLC, Plaintiff, and Laura Fulkerson, Defendant, in full and final settlement of that lawsuit #11-CI-02310, now pending in Jefferson Circuit Court." The parties agreed to a number of issues, including certain modifications to the lease executed in 2009.
The Settlement Agreement stated the property will be divided pursuant to a condominium regime with Moore Property owning 52% and Fulkerson owning 48%. The Settlement Agreement also dealt with common area expenses, which read as follows:
For common area expenses which are $1,000 or less, either party may select the service provider and have the work performed without prior notice to the other. For expenses for common areas which exceed $1,000, either party shall provide the other with the bid for said services prior to hiring the service provider. If the other party does not object, the proposed service provider may perform the work. If the other party objects to the bid, he or she shall provide an alternative bid within 15 days. If the parties cannot agree on the work to be performed, they shall submit their differences to Ann O'Malley Shake. If she is not available for any reason, the disputed issue shall besubmitted to a mutually agreeable mediator. The paint color of the exterior will not be changed absent the agreement of the parties or submission to the mediator.
Additionally, Fulkerson was given $86,400 in credit toward the purchase of Suite B.
At the end of the Settlement Agreement, the parties included a clause which provides, The parties also agreed to mutually and fully release all claims made or which could have been made in the lawsuit.
Despite these efforts, conflict ensued again. The parties were unable to resolve the language for the sale in the subsequent documents. Specifically, Fulkerson did not agree to adding language that would terminate the common area expenses section upon a future sale of Suite B (she viewed them as running with the land), and that Moore Property, because of its majority stake, could effectively make unilateral amendments to the condominium documents, giving Moore Property control of the property. In light of this new issue, Fulkerson sought additional credits against the purchase price.
Moore Property returned to the circuit court, filing a motion asking the court to find the Settlement Agreement unenforceable. Moore Property claimed the Settlement Agreement violated the statute of frauds because it did not set forth all essential terms, such as: (1) a description of the real estate; (2) purchase price; (3) title to be conveyed; and (4) whether the common area expenses run with the land.
The circuit court denied Moore Property's motion and held the Settlement Agreement was enforceable. Specifically, the court found the parties intended that the Settlement Agreement resolve disputed terms under the Option Agreement, rather than function as a stand-alone real estate purchase contract replacing the Option Agreement; i.e., it was not a novation. Therefore, said the circuit court, the Settlement Agreement did not violate the statute of frauds. The circuit court also found the parties included all necessary material terms for enforcement given its purpose. Finally, the circuit court did not find Fulkerson was entitled to additional credit against the purchase price beyond what was originally agreed by the parties.
This appeal followed.
Martin/Elias Properties, LLC v. Acuity, 544 S.W.3d 639, 641-42 (Ky. 2018) (citations omitted).
Moore Property argues the Settlement Agreement is a stand-alone contract for the conveyance of real property and thus subject to the statute of frauds. KRS2 371.010(6). We disagree. We see no reason to disturb the circuit court's conclusion that the subject matter of the Settlement Agreement was the resolution of the parties' disputes about the Option Agreement and lease.
In construing an agreement, the objective "is to effectuate the intentions of the parties." Cantrell Supply, Inc., v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 384 (Ky. App. 2002) (citations omitted). Here, the parties expressly stated, not once, but twice, that the Settlement Agreement was to resolve all litigation between them, clearly indicating the Settlement Agreement was "a full and final settlement" of the case. It merely relates back to the lease and Option Agreement from 2009, but that does not mean it is a contract conveying real property. It is a settlement agreement.
The statute of frauds does not apply to settlement agreements. Our courts have said that such agreements need not even be in writing to beenforceable. Motorists Mut. Ins. Co. v. Glass, 996 S.W.2d 437, 445 (Ky. 1997) ().3 To the extent the Settlement Agreement can be interpreted as a modification of the lease or Option Agreement, a similar rule applies. "[T]he rule followed in this state [is] that a contract required by law to be in writing may be modified or rescinded by an oral agreement . . . ." Glass v. Bryant, 302 Ky. 236, 239, 194 S.W.2d 390, 392 (1946). Under either interpretation of the Settlement Agreement, it does not violate the statute of frauds.
Notwithstanding the inapplicability of the statute of frauds, Moore Property argues there are essential terms missing from the Settlement Agreement, making it unenforceable. We disagree.
An agreement must set forth all essential terms, and not leave them to be resolved by future negotiations. Brooks v. Smith, 269 S.W.2d 259, 260 (Ky. 1954). Essential terms are those without which the court is unable to determine a measure of damages in the event of a breach. Kovacs v. Freeman, 957 S.W.2d 251, 254 (Ky. 1997).
Moore Property claims the description of the property and purchase price are essential terms not included in the Settlement Agreement. This claim is based on an underlying premise that the Settlement Agreement memorializes a stand-alone real estate transaction. We have already concluded, agreeing with the circuit court, that it is not. The Settlement Agreement resolves disputes over the documents memorializing the real estate transactions between the parties and nothing more. The description of the property and the purchase price are in the documents over which the parties are in dispute, but there is no dispute about what real property is being purchased or what price will be paid.
Additionally, Moore Property believes two other essential terms are missing: (1) terms stating how title is to be conveyed; and (2) terms stating whether approval of common area expenses run with the land. Again, we disagree.
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