FOLEY (DEANNA) VS. BAKER (VICKY)
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RENDERED: AUGUST 27, 2010; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-000725-MR
AND
NO. 2009-CA-000770-MR
DEANNA FOLEY
v.
APPELLANT/CROSS-APPELLEE
APPEAL AND CROSS-APPEAL FROM BOURBON CIRCUIT COURT
HONORABLE PAUL F. ISAACS, JUDGE
ACTION NO. 07-CI-00205
VICKY F. BAKER
APPELLEE/CROSS-APPELLANT
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, VANMETER, AND WINE, JUDGES.
VANMETER, JUDGE: Deanna Foley appeals from an opinion and order of the
Bourbon Circuit Court granting Vicky Baker’s motion for summary judgment on
Deanna’s action to recover money owed by Baker under the terms of a promissory
note.1 Baker cross-appeals from that same order which also granted Deanna’s
motion for summary judgment on Baker’s cross-claim against Deanna for money
owed under the terms of a lease agreement. For the following reasons, we affirm.
In the early 1990’s, Baker, her brother, Ricky Foley, and Ricky’s
wife, Deanna, went into the cattle business together on property owned by Baker
and located at 667 Mount Sterling Road, Paris, Kentucky. Baker conveyed six
acres of this property to the Foleys and in March 1993, the Foleys built and moved
into a 5,000-square-foot, five-bedroom home on the property.
On March 4, 1997, the Foleys conveyed the property back to Baker by
deed of record. In exchange, Baker agreed to pay the Foleys $240,000; Baker paid
approximately $140,000, and the parties executed and recorded a five-year
promissory note in the amount of $100,000 in favor of the Foleys and a mortgage
on the property in favor of the Foleys to secure the note. Simultaneously, the
parties executed a lease agreement, whereby the Foleys promised to pay Baker
$5,000 annual rent to continue residing in the home located on the property.
In 2001, Baker conveyed a life estate interest in the property to Ricky
by deed of record. On November 28, 2001, Ricky executed and recorded a
mortgage release discharging Baker’s obligation under the promissory note on the
grounds that the $100,000 had been paid in full. Ricky also executed an affidavit
1
Hereinafter, we refer to Deanna Foley as “Deanna” and Vicky Baker as “Baker” for
clarification purposes. No disrespect is intended in doing so.
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stating that he released the mortgage because the $100,000 obligation had been
satisfied in full.
In 2003 and 2005, the Foleys obtained loans from Kentucky Bank and
gave the bank two mortgages on the property as collateral. In the process of
securing the loans, the Foleys represented to the bank that they owned the property
in fee simple. Both mortgages were recorded and contain clauses stating that the
property is free from all liens and encumbrances. Later on, when the Foleys
decided to sell their home, Kentucky Bank realized that Ricky held only a life
estate interest in the property. The Foleys claim that at this time they, too, first
learned that Ricky did not hold the property in fee simple.
In July 2007, Deanna filed this lawsuit requesting that the trial court
set aside the November 28, 2001 mortgage release signed by Ricky as
unenforceable since it did not bear her signature and was executed without her
consent, and hold Baker accountable for the unpaid balance on the promissory
note. Baker filed claims against the Foleys seeking, in part, unpaid rent due under
the lease agreement, and filed claims against Kentucky Bank. Further, Kentucky
Bank filed claims against the Foleys to recover amounts due under the loans.
Ricky failed to appear or respond to any pleadings. The trial court
entered a default judgment against him on Baker’s claims and determined that
Baker held a reversionary fee simple interest in the property. Kentucky Bank also
received a default judgment against Ricky, and Deanna and Kentucky Bank
entered into an agreed judgment deeming her interest, if any, in the property to be
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inferior to that of the bank and foreclosing any interest she may have in the life
estate. Kentucky Bank apparently is pursuing a court-ordered judicial sale of the
life estate under its mortgages.
This matter came before the trial court on cross-motions for summary
judgment. The trial court granted summary judgment in favor of Baker on
Deanna’s claim for money owed under the promissory note and granted summary
judgment in favor of Deanna on Baker’s claim for rent owed under the lease
agreement. This appeal followed.
Summary judgment shall be granted only if “the pleadings,
depositions, answers to interrogatories, stipulations, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a matter of
law.” CR2 56.03. The trial court must view the record “in a light most favorable to
the party opposing the motion for summary judgment and all doubts are to be
resolved in his favor.” Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476,
480 (Ky. 1991) (citations omitted). Further, “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 (citations omitted).
On appeal from the grant of summary judgment, our standard of
review is “whether the trial court correctly found that there were no genuine issues
2
Kentucky Rules of Civil Procedure.
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as to any material fact and that the moving party was entitled to judgment as a
matter of law.” Lewis v. B & R Corp., 56 S.W.3d 432, 436 (Ky.App. 2001)
(citations omitted). Because no factual issues are involved and only legal issues
are before the court on a motion for summary judgment, we do not defer to the trial
court and our review is de novo. Hallahan v. Courier-Journal, 138 S.W.3d 699,
705 (Ky.App. 2004).
Our analysis lends itself to addressing the claims of error Baker raises
in her cross-appeal before addressing the issues Deanna raises in her appeal. Baker
asserts the trial court erred by granting summary judgment to Deanna on the basis
that Deanna satisfied her obligation under the lease agreement. We disagree.
The record reflects that Baker testified that when the parties executed
the promissory note and lease agreement in 1997, Baker instructed her secretary to
keep a ledger documenting the financial transactions between Baker and the
Foleys. The ledger is styled “Note Payable Ricky and Deanna Foley on purchase
at 667 Mt. Sterling Road” and reveals a beginning note balance of $100,000,
annual deductions of approximately $5,000 for rent, and various deductions for
payments Baker made to the Foleys. In considering the ledger, the trial court
noted:
As to the lease agreement, the court finds that the
evidence is clear that, although the Foleys made no
formal payment of $5,000 annually, the defendant Baker
gave them credit each year for the $5,000 by deducting
[it] from the $100,000 note that she was owed them.
Therefore, she received, through these deductions, the
moneys owed to her. The fact that the note was
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subsequently released does not change the fact that her
debt under the note was reduced through these
deductions. Therefore Baker is not entitled to any funds
under the lease agreement.
Baker maintains the trial court improperly considered the ledger since
the lease agreement is unambiguous and the ledger is inadmissible extrinsic
evidence. Since the lease agreement is unambiguous, she argues “the parties’
intentions must be discerned from the four corners of the instrument without resort
to extrinsic evidence.” Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d
381, 385 (Ky.App. 2002) (citations omitted).
The lease agreement provides as follows:
We, the undersigned [Ricky and Deanna Foley], hereby
acknowledge that we will pay at least annually to Vicky
L. Foley the sum of $5,000.00 as annual rent for property
located at 667 Mount Sterling Road, Paris, Kentucky.
This obligation will remain in effect until terminated by
all parties hereto.
However, “‘[w]here a contract is ambiguous or silent on a vital
matter, a court may consider parol and extrinsic evidence involving . . . the subject
matter of the contract, the objects to be accomplished, and the conduct of the
parties.’” Auto-Owners Ins. Co. v. Goode, 294 S.W.3d 32, 36 (Ky.App. 2009)
(quoting Cantrell, 94 S.W.3d at 385). In this case, the promissory note, mortgage,
and lease agreement were executed on March 4, 1997, in conjunction with the
conveyance of the property from the Foleys to Baker. However, the documents are
silent with respect to the parties’ intended exchange of finances; specifically,
whether formal payments of rent and money owed under the note should be made
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or whether amounts owed should be deducted under a bookkeeping arrangement.
Accordingly, the trial court properly admitted evidence of the ledger to explain the
parties’ agreement to deduct annual rental payments from the amount owed under
the note in lieu of making formal payments of $5,000 annually.
Likewise, the ledger reflects the parties’ agreement to deduct various
payments made by Baker to the Foleys in satisfaction of the note. The ledger
shows that Baker fully satisfied the note by deducting rent and making various
payments to the Foleys over the years. Accordingly, the trial court did not err by
granting summary judgment to Baker and Deanna on their respective claims.3
The opinion and order of the Bourbon Circuit Court is affirmed.
ALL CONCUR.
BRIEFS FOR APPELLANT/CROSSAPPELLEE:
BRIEF FOR APPELLEE/CROSSAPPELLANT:
Michael D. Kalinyak
Lexington, Kentucky
Leila G. O’Carra
W. Craig Robertson, III
Lexington, Kentucky
3
We note that the terms of the note are not contrary to the payment arrangement under the
ledger. The note provides that accrued interest shall be payable annually beginning March 4,
1998, and continuing on the 4th day of March thereafter, until March 4, 2002, at which time the
unpaid principal, together with accrued interest thereon, shall become due and payable. The note
further provides that Baker shall have the privilege to prepay the note at any time and from time
to time, without penalty. Since we hold that the ledger shows satisfaction of the note, we find it
unnecessary to reach the merits of Deanna’s claims that the trial court erred by failing to hold
that the mortgage release was unenforceable and by concluding that her representations to
Kentucky Bank constituted ratification of the mortgage release.
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