Risner v. McCarty

• Decision Date: 09 August 2019
• Docket Number: NO. 2018-CA-000394-MR,2018-CA-000394-MR
• Parties: GARY RISNER APPELLANT v. SCOTTIE MCCARTY AND COMMERCIAL BANK APPELLEES
• Court: Kentucky Court of Appeals

GARY RISNER APPELLANT
v.
SCOTTIE MCCARTY AND COMMERCIAL BANK APPELLEES

NO. 2018-CA-000394-MR

Commonwealth of Kentucky Court of Appeals

AUGUST 9, 2019

TO BE PUBLISHED

APPEAL FROM MAGOFFIN CIRCUIT COURT
HONORABLE KIMBERLY CHILDERS, JUDGE
ACTION NO. 14-CI-00384

OPINION
AFFIRMING

** ** ** ** **

BEFORE: ACREE, LAMBERT, AND SPALDING, JUDGES.

LAMBERT, JUDGE: Gary Risner has appealed from the February 23, 2018, judgment of the Magoffin Circuit Court dismissing his claim against Scottie McCarty related to the ownership of a farm. Finding no error, we affirm.

The subject of the present dispute is an approximately 1000-acre farm in Magoffin County that was conveyed to Risner by his parents in 1970. In 1991,

Page 2

Risner began a large marijuana cultivation and distribution enterprise on the property. Concerned that the farm would be subject to forfeiture due to his illegal activities, Risner conveyed the property to H. B. Arnett, who in turn conveyed the property to another individual. In 1996, Risner was indicted and later convicted on drug-related charges, and upon his release from prison, he had the property conveyed back to him by Arnett in March 2011 through a series of conveyances for a purchase price of $50,000.00. By deed dated a few days later, Risner conveyed the same property to McCarty for a purchase price of $110,000.00. It is the conveyance to McCarty that is at issue in the present case.

In December 2014, Risner filed a complaint against McCarty, alleging that pursuant to an oral agreement in 2011, McCarty had given him two personal loans in the amount of $95,000.00 and $72,000.00, for which Risner was to repay him the amount of $1,000.00 per month. Risner claimed that as collateral for the loans, he executed a general warranty deed to McCarty on March 4, 2011, rather than executing a mortgage on the property. Risner made payments to McCarty pursuant to the agreement and paid the property taxes. McCarty refused to cash more recent payments, claiming that there was no loan agreement or land contract between them. Therefore, Risner requested a declaratory judgment establishing that a loan repayment agreement or land contract existed relating to the property

Page 3

that provided that he would get the deed to the property back upon repayment of the full amount of the loans pursuant to their agreement.

McCarty filed an answer disputing Risner's allegations, raising such defenses as his failure to name all parties (including Commercial Bank, which held mortgages on the property) as well as the statute of frauds. In addition, McCarty filed a counterclaim against Risner, alleging that he (McCarty) had spent in excess of $100,000.00 in improvements on the subject property. In the event that the court determined that a loan agreement or land contract existed between them, McCarty requested a judgment against Risner in the amount that the improvements increased the fair market value of the property. In his response, Risner stated that the cost of the improvements was added to the loan amount. Risner also moved to amend his complaint to add Commercial Bank as a defendant, which the court granted. McCarty had executed two mortgages to Commercial Bank for a loan in 2013.¹

Risner essentially claimed that after borrowing a large sum of money from McCarty, he gave McCarty the deed to the farm with the express

Page 4

understanding that the property would be re-conveyed to Risner when the loan was paid off. He made notations on the checks to McCarty stating "land payment" or similar language, which McCarty endorsed and cashed. After they had a falling out, McCarty renounced the oral agreement and denied one had existed. On the other hand, McCarty's version of the events was that he had purchased the subject property, and due to their close relationship, he permitted Risner to continue to live on the property for the rest of his life for a monthly rental amount of $1,000.00. Risner was permitted to keep the coal royalties and farming profits from the property.

A bench trial was held in January 2018, after which the court directed the parties to tender proposed judgments. The court ultimately entered a judgment on February 23, 2018, in favor of McCarty, dismissing Risner's claims and determining that McCarty owned the subject property in fee simple absolute. The court did not find that any loan agreement or constructive trust existed between the parties as Risner argued. This appeal now follows.

Our standard of review is set forth in Barber v. Bradley, 505 S.W.3d 749, 754 (Ky. 2016), as follows:

As this is an appeal from a bench trial, our standard of review is set forth in Kentucky Rule of Civil Procedure (CR) 52.01. Under CR 52.01, the trial court is required to make specific findings of fact and state separately its conclusions of law relied upon to render the court's judgment. Further, those "[f]indings of fact, shall

Page 5

not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." CR 52.01. In fact, "judging the credibility of witnesses and weighing evidence are tasks within the exclusive province of the trial court." Vinson v. Sorrell, 136 S.W.3d 465, 470 (Ky. 2004) (quoting Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003)).

"If the trial judge's findings of fact in the underlying action are not clearly erroneous, i.e., are supported by substantial evidence, then the appellate court's role is confined to determining whether those facts support the trial judge's legal conclusion." Commonwealth v. Deloney, 20 S.W.3d 471, 473-74 (Ky. 2000). However, while deferential to the lower court's factual findings, appellate review of legal determinations and conclusions from a bench trial is de novo. Sawyers v. Better, 384 S.W.3d 107, 110 (Ky. 2012).

With this standard in mind, we shall review Risner's arguments on appeal.

For his first argument, Risner asserts that the trial court improperly adopted, with the exception of the addition of one word, the proposed judgment submitted by McCarty, thereby abandoning its duty to make independent findings. In support of this argument, Risner cites to this Court's opinion in Retherford v. Monday, 500 S.W.3d 229, 232 (Ky. App. 2016), in which we stated, "[t]he practice of adopting prepared findings of counsel as those of the court has been highly disfavored not only by CR 52.01 but by case law as well." However, we went on to state,

A return to the more rigorous and scrupulous compliance with CR 52.01 as discussed in [Callahan v.

Page 6

Callahan, 579 S.W.2d 385 (Ky. App. 1979),] would appear to be the preferred precedent in cases involving families and children. In Keifer v. Keifer, 354 S.W.3d 123 (Ky. 2011), our Supreme Court mandated in clear and admonitory language that CR 52.01 and applicable sections of KRS Chapter 403 must receive absolute compliance, advising trial courts "that it is their duty to comply with the directive of this Court to include in all orders affecting child custody the requisite findings of fact and conclusions of law supporting its decisions." Id at 125. Keifer emphasizes the overarching gravity of this process: "Consideration of matters affecting the welfare and future of children are among the most important duties undertaken by the courts of this Commonwealth." Id. at 125-26.

Retherford, 500 S.W.3d at 232-33 (footnote omitted). We note that the case at bar is not a family law case, but rather addresses real property.

McCarty, on the other hand, cites to Prater v. Cabinet for Human Resources, Commonwealth of Ky., 954 S.W.2d 954, 956 (Ky....