JACOBS (MARIA), ET AL. VS. CENTER SERVICES, INC., ET AL.
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RENDERED: MARCH 19, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-000427-MR
AND
NO. 2009-CA-000011-MR
MARIA JACOBS AND SHANE JACOBS
D/B/A JACOBS LADDER, LLC
v.
APPELLANTS
APPEAL FROM OLDHAM CIRCUIT COURT
HONORABLE KAREN A. CONRAD, JUDGE
ACTION NO. 07-CI-00510
CENTER SERVICES, INC.;
LOUISVILLE MALL ASSOCIATES, L.P.;
W & G LOUISVILLE ASSOCIATES; AND
THREEMCEE PROPERTIES, LLC
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CLAYTON, DIXON, AND THOMPSON, JUDGES.
DIXON, JUDGE: In these consolidated appeals, Maria Jacobs and Shane Jacobs,
doing business as Jacobs Ladder, LLC, (hereinafter collectively “Appellants”)
appeal from an order of the Oldham Circuit Court granting summary judgment in
favor of Center Services, Inc. (“CSI”), Louisville Mall Associates, L.P., W & G
Louisville Associates, and Threemcee Properties, LLC. Appellants also appeal a
subsequent order of the Oldham Circuit Court denying their motion for post
judgment relief pursuant to Kentucky Rules of Civil Procedure (CR) 60.02.
Finding no error, we affirm.
Appellants operated a pre-school in the Crestwood Station shopping
center in Crestwood, Kentucky. The shopping center was owned by Louisville
Mall Associates and managed by CSI.1 In addition to renting space inside the
center, Appellants also had permission from CSI to utilize a fenced playground
located on an outlot adjacent to the shopping center (hereinafter “the outlot”). On
May 23, 2007, Jess Greene, the vice president of development for CSI, sent a letter
to Appellants, which is the focus of this controversy. The introductory paragraph
of the letter stated:
This Letter of Intent will summarize the terms and
conditions under which Center Services, Inc. is willing to
simultaneously proceed with (1) a Lease Agreement for
Space 14 within the Crestwood Station Shopping Center
and (2) a Purchase Agreement of Property (as defined
below).
1
We note that this dispute concerns the transaction between Appellants and CSI. Further, it
appears W & G Louisville Associates had no tangible interest in this case, as it was the prior
owner of the outlot property, which it sold to Louisville Mall Associates. Finally, Threemcee
Properties, LLC, was named as a party to the lawsuit because it claimed title to the outlot by
adverse possession.
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The remainder of the letter summarized several terms for both a lease
agreement and a purchase agreement, as the Appellants wanted to purchase the
outlot to build a daycare center. At the conclusion, a signature line for CSI was
left blank, and a signature line was provided for Appellants to accept or reject the
terms contained in the letter. Appellants accepted the terms, signed the letter, and
tendered a $7500.00 deposit to CSI.2
On June 8, 2007, Greene sent a second letter to Appellants, which
stated in part:
Unfortunately a problem has just popped up that is going
to delay our planned lot sale. Yesterday (Thursday June
7, 2007) the Oldham County School Board’s General
Counsel, Anne Coorsen, called to advise us that there is a
potential Adverse Possession Claim from the previous
adjoining property Owner, BB&T. This claim is against
a portion of the property that we want to sell to you.
***
I apologize for this unforeseen obstacle and will keep you
informed of our progress. We would, of course, be
willing to go forward with the sale to you if you would
close subject to the bank’s claim. I doubt that your
attorney would permit this – and I must say that I don’t
blame him.
Shortly thereafter, on July 13, 2007, Appellants filed a complaint
against CSI alleging breach of contract and seeking specific performance of the
May 23, 2007, agreement. CSI filed an answer denying Appellants’ allegations
and asserting a counter-claim for trespass. On December 27, 2007, the court held a
2
One of the terms delineated in the letter was payment of a “purchase deposit.” While
Appellants characterize the deposit as accepted by CSI, they do not dispute CSI’s contention that
the deposit was returned.
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hearing to address CSI’s motion to obtain rent from Appellants for their use of the
outlot. Based on expert testimony from a commercial real estate agent, the court
concluded CSI was entitled to monthly rent of $1125.00. The parties subsequently
filed cross-motions for summary judgment, and on January 30, 2008, the court
granted summary judgment in favor of CSI. Thereafter, Appellants filed a notice
of appeal with this Court. (2008-CA-000427-MR).
While their appeal was pending, Appellants moved the trial court for
post-judgment relief pursuant to CR 60.02. This Court agreed to hold the first
appeal in abeyance until the trial court ruled on the CR 60.02 motion. On
December 4, 2008, the trial court rendered an order denying Appellants’ motion.
Appellants then filed a second notice of appeal (2009-CA-000011), and the two
appeals were consolidated for review by this Court.
We first address Appellants’ contention that the court erred by
granting summary judgment in favor of CSI. On appeal of a summary judgment,
we consider whether the trial court correctly found that “there is no genuine issue
as to any material fact and the moving party is entitled to a judgment as a matter of
law.” Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky.
1991) (quoting Kentucky Rules of Civil Procedure (CR) 56.03). Furthermore, we
are mindful that “a party opposing a properly supported summary judgment motion
cannot defeat it without presenting at least some affirmative evidence showing that
there is a genuine issue of material fact for trial.” Id. at 482.
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In the case at bar, both parties moved for summary judgment.
Appellants believed they were entitled to summary judgment because the Letter of
Intent constituted a contract for sale of real estate, and CSI breached the contract
by failing to follow through with the sale. CSI argued it was entitled to summary
judgment because the Letter of Intent was not an enforceable contract. After
thorough review of the record and consideration of the parties’ arguments, we
conclude that summary judgment in favor of CSI was proper.
Appellants refer to the Letter of Intent as a “Purchase Contract,” and
they contend that, although CSI did not sign the Letter of Intent, Greene’s
subsequent letter regarding the adverse possession claim ratified the prior
agreement, thereby satisfying the statute of frauds. We disagree with Appellants’
theory and find their focus on the statute of frauds misplaced.
Under the Statute of Frauds, KRS 371.010(6), for a contract to sell
real estate to be enforceable, it must be in writing and signed by the party to be
charged. However, “[t]he statute of frauds does not lend itself to the issue of
whether there is or is not a contract in existence.” Bennett v. Horton, 592 S.W.2d
460, 463 (Ky. 1979).
In Dohrman v. Sullivan, 310 Ky. 463, 220 S.W.2d 973 (Ky. 1949), a
case cited by Appellants in support of their statute of frauds argument, the Court
noted,
Preliminary negotiations leading up to the execution of a
contract are distinguishable from the contract itself;
likewise, a mere agreement to reach an agreement, which
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imposes no obligation on the parties thereto. It is
sometimes a close question whether correspondence
between parties constitutes final and complete mutual
assent or meeting of minds, essential to the creation of a
contract. The correspondence may constitute only
negotiation and but evidence their intention ultimately to
form or to execute a contract. The question of whether
there was a consummated contract is to be determined
from the consideration and practical construction of all
the separate letters or telegrams that make up the whole
correspondence.
Id. at 466-67 (citation omitted).
In the case at bar, we are not persuaded that the Letter of Intent
created a binding contract between the parties. The opening paragraph of the
document contemplated the subsequent execution of both a lease agreement and a
purchase agreement. The Letter of Intent provided a summary of several terms
proposed by CSI, and it included an exhibit page, which stated the lease agreement
document was “to be provided upon execution of letter of intent.” According to
the affidavit of Greene, and not disputed by Appellants, Appellants submitted
counter-terms when they returned the Letter of Intent. CSI did not sign the Letter
of Intent, and Greene thereafter sent Appellants a proposed lease agreement
document on May 31, 2007, which Appellants did not execute. Further, while the
June 8, 2007, letter from Greene referenced a willingness to sell the property, it did
not imply that a contract existed. The letter, instead, advised of a material change
in circumstances, as the adverse possession claim clouded title to the property.
Under the circumstances presented here, we are simply not persuaded that the
“correspondence between parties constitute[d] final and complete mutual assent or
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meeting of minds, essential to the creation of a contract.” Dohrman, 220 S.W.2d at
466. We conclude the Letter of Intent merely summarized terms acceptable to CSI
for executing a subsequent lease agreement and purchase agreement; consequently,
summary judgment in favor of CSI was proper.
Next, Appellants contend CSI was estopped from claiming a contract
did not exist. The elements of equitable estoppel are:
(1) conduct which amounts to a false
representation or concealment of material facts, or, at
least, which is calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those
which the party subsequently attempts to assert; (2) the
intention, or at least the expectation, that such conduct
shall be acted upon by, or influence, the other party or
other persons; and (3) knowledge, actual or constructive,
of the real facts.
And, broadly speaking, as related to the party
claiming the estoppel, the essential elements are (1) lack
of knowledge and of the means of knowledge of the truth
as to the facts in question; (2) reliance, in good faith,
upon the conduct or statements of the party to be
estopped; and (3) action or inaction based thereon of such
a character as to change the position or status of the party
claiming the estoppel, to his injury, detriment, or
prejudice.
Electric and Water Plant Bd. of City of Frankfort v. Suburban Acres Development,
Inc., 513 S.W.2d 489, 491 (Ky. 1974).
Appellants contend they relied on the Letter of Intent by: 1) tendering
a deposit; 2) obtaining preliminary bids and drawings from a construction
company; 3) having the property appraised; 4) having an accountant review their
finances; and 5) discussing the project with their bank.
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In light of Appellants’ allegations, we note, “the injury or prejudice
involved must be actual and material or substantial, and not merely technical or
formal.” 28 Am. Jur. 2d Estoppel and Waiver § 83. After reviewing the record,
we are simply not persuaded that Appellants satisfied the requirements of equitable
estoppel.
Appellants next argue the court erroneously awarded CSI monthly
rent to compensate for Appellants’ continued use of the outlot. Appellants
maintain they were the equitable owners of the property and were not obligated to
pay rent. Appellants also acknowledge they did not execute a lease for the lot, but
nonetheless continued occupying the property. In light of our conclusion that there
was not an enforceable contract, we are not persuaded by this argument.
Finally, in their CR 60.02 motion, Appellants asserted they were not
obligated to pay rent because they were holdover tenants from their prior lease,
which permitted them to use the lot as a playground. Appellants further argued the
court’s calculation of rent was erroneous, as Appellants only occupied one-third of
the lot, they should not pay rent for the entire one-acre parcel. Finally, the
Appellants contended the final judgment should be amended to reflect that rent
was owed by Jacobs Ladder, LLC, rather than Shane and Maria Jacobs personally.
It is well settled that “the determination to grant relief from a
judgment or order pursuant to CR 60.02 is one that is generally left to the sound
discretion of the trial court with one of the chief factors guiding it being the
moving party's ability to present his claim prior to the entry of the order sought to
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be set aside.” Schott v. Citizens Fidelity Bank and Trust Co., 692 S.W.2d 810, 814
(Ky. App. 1985). In the case at bar, the allegations raised by Appellants are
precisely the sort of claims that could have (and should have) been raised at the
December 2007 hearing which addressed CSI’s claim for rent. Consequently, we
decline to address these arguments on appeal.
For the reasons stated herein, the orders of the Oldham Circuit Court
are affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANTS:
BRIEF FOR APPELLEES:
Kathleen M.W. Schoen
Stuart E. Alexander, III
Louisville, Kentucky
Myrle L. Davis
Louisville, Kentucky
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