D. D. ROBERTS; EDITH ROBERTS; JOHN BILL KECK; and GLORIA KECK v. GLENN THOMAS; PHYLLIS THOMAS; KENTUCKY, INC.
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RENDERED:
December 11, 1998; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1997-CA-000642-MR
D. D. ROBERTS; EDITH ROBERTS;
JOHN BILL KECK; and GLORIA KECK
APPELLANTS
APPEAL FROM HART CIRCUIT COURT
HONORABLE LARRY RAIKES, JUDGE
ACTION NO. 91-CI-164
v.
GLENN THOMAS; PHYLLIS THOMAS;
and WESTERN ADVERTISING OF
KENTUCKY, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUIDUGLI, KNOPF, AND SCHRODER, JUDGES.
SCHRODER, JUDGE:
This case for specific performance is back
before us after a remand to the circuit court in order to
recalculate damages for breach of contract.
On remand, the
circuit court reconfigured the damages and the defaulting
purchasers again appeal.
In the previous opinion, this Court noted that Glen
Thomas and Phyllis Thomas (the “Thomases”) entered into a
contract with the appellants (“R & K”), whereby R & K agreed to
build a motel on the Thomases’ land and to subsequently purchase
said motel.
After building the motel, R & K refused to purchase
the same and the Thomases filed suit for specific performance.
The trial court ordered specific performance and awarded damages
which R & K appealed.
This Court held, “[T]he chancellor was
correct in ordering specific performance.”
After affirming the
trial court on specific performance, the Court addressed the
damage award and remanded “[f]or the purpose of fixing damages
consistent with Graves [v. Winer, Ky., 351 S.W.2d 193 (1961)],
supra, and Kentucky Water Serv. [Co. v. City of Middlesboro, Ky.,
247 S.W.2d 40 (1952)], supra, together with any other damages
emanating from the breach.”
On remand, the trial court noted that the motel had
since been sold for $1,100,000, so that the sale price should be
substituted for the earlier estimated market value.
Reviewing
the contract, the court found R & K obligated themselves to
purchase the motel for $200,000, assume the $975,000-SBA
construction loan as well as a $20,000-Econo Lodge franchise,
plus all closing costs and attorney fees associated with the loan
and its enforcement, with a closing by November 15, 1991.
In the court’s earlier findings of fact which were not
set aside, the court had found there was no Econo Lodge franchise
to transfer and the value of said franchise would be $20,000.
On
remand, the trial court found that the motel was sold on June 28,
1996 for $1,100,000, with the proceeds being applied to paying
off the SBA loan and its debt; that $125,000 of the $200,000
purchase price had been paid, leaving a balance of $75,000; that
R & K was entitled to a $20,000 credit from November 15, 1991,
for the value of the untransferred franchise; that the out-of-
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pocket expenses by the Thomases in servicing the SBA loan totaled
$242,900.88, not counting interest; and that reasonable attorney
fees for the sellers amounted to $50,000.
On remand, the judgment of the trial court awarded the
Thomases (sellers) $55,000 of the $200,000, plus 12% interest,
from November 15, 1991, compounded annually; $242,900.88 as the
unpaid balance of the SBA loan debt plus 8% interest on each
expenditure until the date of judgment and then at 12% compounded
annually; and $50,000 in attorney fees for the Thomases, plus
costs.
R & K appeals the calculation of damages as not being
in accordance with Graves, 351 S.W.2d 193 and Kentucky Water
Serv. Co., 247 S.W.2d 40, as mandated by this Court in its
opinion rendered January 27, 1995 (93-CA-2149-MR and 93-CA-2705MR).
Under Graves, 351 S.W.2d 195, damages for breach of a
contract for the sale of land is “[t]he difference between the
contract price and the actual value of the land on the date of
the breach, provided the actual value is less than the contract
price.”
(Citations omitted.)
Appellants’ first argument is that the “actual value”
of the land on the date of breach was not used.
If fact, the
Judge originally accepted the expert testimony of Rick
Baumgardner that the actual value at the time of breach was
$650,000.
This ruling was interlocutory and after the motel was
sold, long after the date of breach, the court adjusted the
actual value figure to reflect the sale price which was
considerably more.
Appellees did not cross-appeal this issue.
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Therefore, we agree that on remand, the $1,100,000 sale price was
properly substituted by the trial court for actual value.
Appellants also contend that the trial court erred in
calculation of credits and offsets between the parties in
arriving at the contract price, specifically:
the $125,000 in
payments on the $200,000 purchase price; $75,000 in loan
proceeds, (which were never paid to R & K,) from the SBA loan of
$975,000 for construction of the motel; $375,867.17 in motel
revenue distributed to the Thomases for the period between the
original date of closing and date of sale; $20,000 as the value
of the Econo Lodge franchise never received by R & K; and $14,000
in out-of-pocket expenses advanced by R & K to operate the motel
for six months, plus interest.
Clearly, appellants have not read
the findings of fact and judgment after remand which were entered
January 15, 1997 (attached as exhibit 3 to their brief) because,
out of the $200,000 cash of the purchase price, the court found
and gave credit for $125,000 in payments, (findings, paragraph
A), leaving $75,000 still owed.
The court then deducted the
$20,000 value of the Econo Lodge franchise from the $75,000, with
a balance of $55,000 due out of the original $200,000 (judgment,
paragraph 1).
The trial court went on to find that the SBA debt
consumed all of the net proceeds from the sale of the motel plus
additional sums from the Thomases.
The court then determined the
net of the additional sums amounted to $242,900.88, not including
interest.
This net recognized that the revenues produced by the
motel were not sufficient to cover operating expenses or the debt
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service, resulting in supplemental payment by the Thomases.
The
evidence presented by Richard Callahan supports this conclusion.
Therefore, the court’s decision is based on substantial evidence
and is not clearly erroneous.
CR 52.01; Alvey v. Union Inv.,
Inc., Ky. App., 697 S.W.2d 145 (1985).
The $14,000 out-of-pocket expenses by R & K are
rightfully their expenses as consequential damages for their
breach.
If the Thomases had paid those expenses, we would have
added them to the final award in favor of them.
Thus, R & K’s
paying those expenses up front merely reduces the amount of the
judgment against them.
As to the $75,000 in unpaid loan proceeds from the
$975,000 SBA loan, there was testimony that this money was used
by the Thomases to pay closing costs and service the debt.
The
trial court, as finder of fact, is in a position to weigh the
evidence, judge credibility, and make findings.
CR 52.01; White
v. Howard, Ky., 394 S.W.2d 589 (1965); Warner v. Sanders, Ky.,
455 S.W.2d 552 (1970); Ironton Fire Brick Co. v. Burchett, Ky.,
288 S.W.2d 47 (1956).
The appellants filed a motion to amend the January 15,
1997 judgment, which was denied except that the court did reduce
the judgment to a sum certain -- $308,953.76, plus 12% interest
from January 15; $50,000 in attorney fees, plus 12% interest; and
$4,590.72 to the court-appointed manager of the motel.
The
Thomases were also given a lien on the escrow on deposit with the
circuit court clerk.
This February 4, 1997 order clears up the
loose ends.
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Appellants’ next argument is that the trial court’s
judgment awarded interest on top of interest, based on Mr.
Callahan’s testimony and calculations.
However, the court did
not accept Mr. Callahan’s figures that included the 8% interest
appellants are discussing (Callahan Exhibit 5R), but instead,
accepted a lower figure, $242,900.88, and specifically stated
that the interest figures were to be ignored.
The court did
award 8% interest for each debt service payment and added that to
the total judgment with 12% interest from January 15, 1997.
To
that extent, the interest is compounded annually, and this is the
proper method of computation per KRS 360.010, KRS 360.040, and
Borden v. Martin, Ky. App., 765 S.W.2d 34, 35 (1989).
Appellants contend that the liquidated damage provision
of the contract should override actual damages to limit their
liability.
Under the January 27, 1995 opinion from this Court,
the “liquidated damage clause” was discussed but the panel chose
to allow actual damages, citing Kentucky Water Serv. Co. v. City
of Middlesboro, Ky., 247 S.W.2d 40 (1952).
Appellants cannot re-
argue liquidated damages as the earlier decision is now the “law
of the case.”
Board of Trustees of University of Kentucky v.
Hayse, Ky., 782 S.W.2d 609 (1989), cert. denied, by 497 U.S.
1025, 110 S. Ct. 3273, 111 L. Ed. 2d 783 (1990) and 498 U.S. 938,
111 S. Ct. 341, 112 L. Ed. 2d 306 (1990).
Appellants’ fifth argument is that the trial court
erred in refusing to make specific findings of fact pursuant to
CR 52.04 and in rendering findings which were clearly erroneous.
Specifically, appellants ask for explanations by the court for
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its findings related to out-of-pocket expenses, credits, and the
testimony the court relied upon to establish the same,
calculation of attorney fees, calculation of interest, and the
value of the motel on the date of breach.
The trial court did
discuss the evidence before it and relied heavily upon Richard
Callahan’s “exhibit 5 R,” and even attached a copy which it
incorporated by reference to the findings of fact dated
January 13, 1997, and entered January 15, 1997.
This exhibit
listed each out-of-pocket expense for servicing the SBA debt from
November 15, 1991 (date of breach) through July 8, 1996 (shortly
after the sale).
The purchase price, closing costs, and the like
used by the court were set out in the agreement, and after remand
there was no question as to those figures; even the $20,000 value
of the Econo Lodge franchise was decided earlier and not altered
on remand.
Thus, the law of the case renders further findings
unnecessary.
See Hayse, 782 S.W.2d 609.
Attorney fees are discretionary with the trial court
and the Thomases’ “exhibit G” detailed said expenses which the
court reviewed and evaluated, and from which the court then
picked and chose the items which would be a direct consequence of
the appellants’ breach.
The appellants were given copies of
these documents (both appendix B and exhibit G) and were
permitted cross-examination.
Now the appellants want the court
to recap its decision as to specific items of credit and so
forth, which are all included in the record.
We believe the
trial court has done enough under Clark Mechanical Contractors,
Inc. v. KST Equipment Company, Ky., 514 S.W.2d 680 (1974).
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In
Clark, the Court recognized the duty under CR 52.04 to make
specific findings when requested but held it was not always
reversible error to decline.
The Court then quoted:
“The duty of the trial court to make
findings of fact should be strictly followed.
But such findings are not a jurisdictional
requirement of appeal which this court may
not waive. Their purpose is to aid appellate
courts in reviewing the decision below. In
cases where the record is so clear that the
court does not need the aid of findings it
may waive such a defect on the ground that
the error is not substantial in the
particular case. This is the situation here.
Hurwitz v. Hurwitz, 78 U.S.App.D.C. 66, 136
F.2d 796, 799, 148 A.L.R. 226, 229 (1943).”
Perry v. McLemore, Ky., 414 S.W.2d 141
[(1967)].
Clark, 514 S.W.2d at 682.
We believe that the trial court’s
explanations with references to a clear record are sufficient to
review the case sub judice, and additional, even duplicative,
findings are not necessary.
In reviewing the record, we are of the opinion that the
trial court’s findings are not clearly erroneous, are supported
by substantial evidence, and should be affirmed.
Hammonds, Ky. App., 586 S.W.2d 307 (1979).
Burke v.
Appellants’ argument
that several findings of fact were clearly erroneous contradicts
their earlier argument that there were not specific findings,
which was disposed of above.
Appellants’ last argument alleges error in the award of
attorney fees.
Again, this argument was disposed of above as to
the court’s findings of fact.
As to the trial court’s
conclusions of law and judgment for $50,000, we also affirm the
trial court.
In the case of Harding’s Adm’r. v. Harding, 132 Ky.
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133, 116 S.W. 305 (1909), the Court recognized the attorney fee
should be reasonable, taking into consideration the character of
services rendered; time employed; size of the estate; and, the
extent of the litigation.
Realizing the variables peculiar to
each case, and that the trial court should have a handle on these
variables, the Court in Motch’s Ex’x. v. Motch’s Ex’rs., 306 Ky.
334, 207 S.W.2d 759 (1948), said the attorney fee should be left
largely to the trial court’s discretion.
Martin v. Martin’s
Ex’rs., 311 Ky. 164, 223 S.W.2d 345, 347 (1949) added that in
seeking the reasonableness of the attorney fee in probate cases,
no one consideration in itself is controlling.
The Kentucky
Rules of Professional Conduct (KRPC) (Rules Of The Supreme Court,
Rule 3.130) Rule 1.5(a) lists these factors to be considered in
the determination of the reasonableness of a fee:
(1) The time and labor required, the
novelty and difficulty of the questions
involved, and the skill requisite to perform
the legal service properly;
(2) The likelihood, that the acceptance
of the particular employment will preclude
other employment by the lawyer;
(3) The fee customarily charged in the
locality for similar legal services;
(4) The amount involved and the results
obtained;
(5) The time limitations imposed by the
client or by the circumstances;
(6) The nature and length of the
professional relationship with the client;
(7) The experience, reputation, and
ability of the lawyer or lawyers performing
the services; and
(8) Whether the fee is fixed or
contingent.
In reviewing the trial court’s award of attorney fees, in light
of the above, the Court is of the opinion that the final amount
awarded as an attorney fees does not amount to an abuse of
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discretion.
Capitol Cadillac Olds, Inc. v. Roberts, Ky., 813
S.W.2d 287 (1991); Brown v. Fulton, Hubbard & Hubbard, Ky. App.,
817 S.W.2d 899 (1991).
For the foregoing reasons, the judgment of the Hart
Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEES, GLENN
THOMAS AND PHYLLIS THOMAS:
Howard O. Mann
Corbin, Kentucky
Patrick A. Ross
Horse Cave, Kentucky
Charles Williams
Munfordville, Kentucky
Walter A. Baker
Glasgow, Kentucky
Robert K. Claycomb
Hodgenville, Kentucky
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