SEMINARY WOODS, LLC. VS. BROWN (JEFFREY B.)
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RENDERED: APRIL 1, 2011; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2009-CA-001769-MR
SEMINARY WOODS, LLC
v.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE FREDERIC COWAN, JUDGE
ACTION NO. 08-CI-010291
JEFFREY B. BROWN
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CAPERTON AND WINE, JUDGES, LAMBERT,1 SENIOR JUDGE.
WINE, JUDGE: Seminary Woods, LLC appeals from a summary judgment of the
Jefferson Circuit Court granting judgment and damages to Jeffrey B. Brown for
breach of contract for the purchase of a condominium. Seminary Woods argues
that there were issues of fact concerning whether Brown waived the “time-is-ofthe-essence” and completion date provisions of the contract, both orally and by his
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Senior Judge Joseph E. Lambert, sitting as Special Judge by assignment of the Chief Justice pursuant to Section
110(5)(b) of the Kentucky Constitution and KRS 21.580.
conduct. Kentucky law does not clearly allow enforcement of an oral waiver to the
writing requirement of the Statute of Frauds, and Seminary Woods has not alleged
sufficient facts which would warrant a finding of waiver in this case. Hence, we
affirm the trial court’s grant of summary judgment to Brown.
The essential facts of this action are not in dispute. On June 13, 2005,
Brown and Seminary Woods entered into a Condominium Sales Contract for the
sale of Condominium Unit #1005 in the development known as Seminary Woods.
The total purchase price was $995,000.00, toward which Brown made a
$199,000.00 down payment. This down payment was to be held in escrow until
closing when it would be applied to the purchase price. The Contract provided that
construction and finish work on the unit would be substantially completed by
December 31, 2006, and that closing would occur within thirty days from
completion. The parties specifically agreed that “[t]ime is of the essence in this
contract.”
The unit was not substantially complete by December 31, 2006. In
accord with the contract, on January 3, 2007, Brown mailed Seminary Woods a
certified letter putting it on notice that it had sixty days to cure its breach.
Seminary Woods did not substantially complete the unit within the contractual cure
period. Furthermore, Seminary Woods was unable to refund Brown’s deposit.2
2
The contract provided that Brown’s deposit would be held in escrow at the Taylor County Bank in Campbellsville
until construction financing was activated and construction commenced under that financing. According to
Seminary Woods, Brown’s deposit was removed from Taylor County Bank when it secured financing through
National City Bank, and the funds were spent toward construction of the project. Seminary Woods also states that
National City Bank refused to refund Brown’s deposit, stating that it was not obligated to do so under the terms of
its contract with Seminary Woods.
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However, the parties set about negotiating with one another and with
third parties, both orally and through e-mail, to pursue a number of alternate
methods to complete the purchase. Brown explored obtaining additional financing
on his own or through a separate entity. In addition, Seminary Woods produced an
affidavit which avers that Brown orally stated his intention that he did not want to
cancel the contract.
A certificate of occupancy was issued for the unit in March of 2008.
Although the parties continued to discuss completion of the transaction and
exchanged various draft agreements, the parties did not enter into any written
agreement. Finally, on September 30, 2008, Brown mailed a letter to Seminary
Woods which formally demanded a return of his down payment.
On October 1, 2008, Brown brought this action against Seminary
Woods, alleging breach of contract and unjust enrichment. Thereafter, Brown filed
a motion for summary judgment, arguing that there were no genuine issues of
material fact and he was entitled to judgment as a matter of law. Seminary Woods
opposed the motion asserting, among other things, that there were issues of fact
concerning whether the parties modified the completion date or Brown waived
timely performance of the contract.
On August 26, 2009, the trial court granted the motion for summary
judgment. There was no dispute that Seminary Woods had breached the contract
by failing timely to complete the unit and that Brown had given written notice
demanding cure of the breach as required by the contract. The trial court also
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found that the Statute of Frauds precluded Seminary Woods from arguing that
there had been an oral modification of the contract, and that Brown’s continued
negotiation did not amount to a waiver of his rights under the contract. Thus, the
trial court concluded as a matter of law that Brown was entitled to the return of his
deposit. Seminary Woods now appeals.
The standard of review governing an appeal of a summary judgment
is well settled. We must determine whether the trial court erred in concluding that
there was no genuine issue as to any material fact and that the moving party was
entitled to a judgment as a matter of law. Scifres v. Kraft, 916 S.W.2d 779, 781
(Ky. App. 1996). Summary judgment is appropriate “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.” Kentucky Rule
of Civil Procedure (“CR”) 56.03. In Paintsville Hosp. Co. v. Rose, 683 S.W.2d
255, 256 (Ky. 1985), the Supreme Court of Kentucky held that for summary
judgment to be proper, the movant must show that the adverse party cannot prevail
under any circumstances. The Court has also stated that “the proper function of
summary judgment is to terminate litigation when, as a matter of law, it appears
that it would be impossible for the respondent to produce evidence at the trial
warranting a judgment in his favor.” Steelvest, Inc. v. Scansteel Service Center,
Inc., 807 S.W.2d 476, 480 (Ky. 1991). Because summary judgments involve no
fact finding, this Court reviews them de novo, in the sense that we owe no
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deference to the conclusions of the trial court. Blevins v. Moran, 12 S.W.3d 698,
700 (Ky. App. 2000).
In granting summary judgment for Brown, the trial court first noted
that Seminary Woods clearly breached the Agreement by failing to substantially
complete the unit by December 31, 2006 or within the sixty day cure period
provided by the contract. On appeal, Seminary Woods concedes that its failure to
complete the unit by that date or within the sixty day cure period amounts to a
breach of the Agreement.3 However, Seminary Woods argued that there were
issues of fact concerning whether the parties orally agreed to modify the contract
or to waive that provision.
The trial court rejected the former argument, pointing out that that the
contract clearly falls within the Statute of Frauds, KRS 371.010(6), which
precludes enforcement of any contract for the sale of real estate “unless the
promise, contract, agreement, representation, assurance, or ratification, or some
memorandum or note thereof, be in writing and signed by the party to be charged
therewith, or by his authorized agent…” In addition, the Agreement in this case
expressly provided that “[t]his Contract may not be amended, altered, or
discharged except by another agreement in writing signed by each of the parties
hereto”. Finally, the court also took note of the “time-is-of-the-essence” provision
of the Agreement. Based on the Statute of Frauds and the express provisions of the
Contract, the trial court concluded that any agreement to modify or extend the
3
Before the trial court, Seminary Woods argued that there was an issue of fact whether it had an obligation to
substantially complete the unit by December 31, 2006.
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completion date must be in writing. In the absence of any such writing, the trial
court found that Seminary Woods could not introduce evidence of an oral
agreement to modify the terms of the Contract.
Again, Seminary Woods now concedes that the Statute of Frauds and
the Agreement would preclude enforcement of an oral agreement to modify the
Contract. However, Seminary Woods contends that Brown waived enforcement of
the Agreement, either orally or by his conduct. Seminary Woods points to
Brown’s alleged statement that he did not want to cancel the contract, and his
subsequent conduct over a two-year period in negotiating with the developers to
secure alternative financing and working with them to design the interior of the
unit.
In rejecting this argument, the trial court noted that equitable estoppel
is generally not an exception to the writing requirement of the Statute of Frauds.
Farmers Bank and Trust Co. of Georgetown, Kentucky v. Wilmott Hardwoods,
Inc., 171 S.W.3d 4, 8 (Ky. 2005). Seminary Woods points out that the doctrines of
waiver and equitable estoppel are not synonymous. Seminary Woods also cites a
great deal of foreign and secondary authority holding that the defense of the statute
of frauds may be waived, either orally or by conduct. See, e.g., Canizaro v. Mobile
Communications Corp. of America, 655 So.2d 25 (Miss. 1995). See also, 13
Williston on Contracts §39:26 (4th ed.); 37 CJS Frauds, Statute of §168; and 73
Am. Jur. 2d Frauds and Deceit §480. This rule is also recognized in §150 of the
Restatement (Second) of Contracts, which provides that where the parties to an
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enforceable contract subsequently agree that all or part of a duty need not be
performed or that all or part of a condition need not occur, the Statute of Frauds
does not prevent enforcement of the subsequent agreement if reinstatement of the
original terms would be unjust in view of a material change of position in reliance
on the subsequent agreement.
Nevertheless, the Supreme Court noted that the application of the
doctrine of equitable estoppel should be applied cautiously, with due regard to the
legislature’s enactment of the Statute of Frauds. Farmers Bank, 171 S.W.3d at 10.
The Kentucky Supreme Court recently reiterated this point in Sawyer v. Mills, 295
S.W.3d 79, 90 (Ky. 2009). Although waiver is a distinct concept from estoppel,
the Restatement view indicates that waiver is also an equitable remedy to
enforcement of a contract governed by the Statute of Frauds. Restatement
(Second) of Contracts §150 (1981).4 Consequently, the reasoning of Farmers’
Bank limiting the application of equitable estoppel to the Statute of Frauds would
also seem to apply to limit the application of the doctrine of waiver.
Furthermore, even if the doctrine of waiver does apply in this case,
Seminary Woods has not alleged sufficient circumstances which would justify a
4
The comments to this section explicitly set out the requirement of reliance necessary to find a waiver. See
Comment b. “To the extent that the waiver is acted on before it is revoked, it excuses the other party from
performance of his own duty and of conditions of the duty of the waiving party.”; Comment c. “Where an
unenforceable modification of an enforceable contract operates as a waiver affecting an executory portion of the
contract, the waiving party may retract the waiver by reasonable notification received by the other party. The
original terms are then reinstated unless reinstatement would be unjust in view of a material change of position in
reliance on the waiver.”; and Comment d. “The change of position which prevents retraction of the waiver and
reinstatement of the original terms may consist of action or forbearance, and may result from reliance either by the
other party to the modifying agreement or by a beneficiary. But it must be a change of position in reliance on the
modifying agreement, and it must be such that reinstatement of the original terms would be unjust. See § 84 on the
effect of an extension of time by the party retracting a waiver. If the duty or condition would not have been
performed in any event, or if there is a waiver of performance after a failure of performance, the failure is not in
reliance on the modifying agreement.”
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finding that Brown waived his defenses under the Statute of Frauds. Indeed,
Brown complied with his duties under the contract and Seminary Woods did not.
Seminary Woods clearly breached the Agreement by failing to substantially
complete the unit by the date specified in the contract or within the sixty day cure
period. Brown sent the required written notice demanding that Seminary Woods
cure the breach. When Seminary Woods did not complete the unit within the cure
period, it notified Brown that it could not refund his deposit.
For purposes of the summary judgment motion, we must accept
Seminary Woods’s assertion that that Brown orally stated his intention to close the
deal at some point in the future. However, Seminary Woods does not allege that it
altered its position in reliance on Brown’s statements or actions or that Brown
received a benefit due to the delay. While the parties discussed a number of
alternative arrangements, Seminary Woods does not contend that Brown accepted
any of these proposals or that it took any action in reliance on Brown’s oral
statements or his silence. Consequently, we cannot find that Brown’s continued
negotiations in the eighteen month period following Seminary Woods’s breach was
sufficient to establish an enforceable waiver of the writing requirement of the
Statute of Frauds. Therefore, the trial court properly granted summary judgment
for Brown.
Accordingly, the judgment of the Jefferson Circuit Court is affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Griffin Terry Sumner
Steven M. Crawford
S. Chad Meredith
Frost Brown Todd, LLC
Louisville, Kentucky
Jason C. Vaughn
Lindsay P. Graves
Vaughn & Associates, PLLC
Louisville, Kentucky
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