RICHARD W. WEBB, SR., AND CAROLE WEBB v. AUTO CUSTOMIZING-SOUTH, INC.
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RENDERED: February 4, 2000; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-001625-MR
RICHARD W. WEBB, SR., AND
CAROLE WEBB
v.
APPELLANTS/
CROSS-APPELLEES
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JOHN POTTER, JUDGE
ACTION NO. 97-CI-06425
AUTO CUSTOMIZING-SOUTH, INC.
AND:
NO.
1998-CA-001686-MR
AUTO CUSTOMIZING-SOUTH, INC.
v.
APPELLEE/
CROSS-APPELLANT
CROSS-APPELLANT/
APPELLEE
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JOHN POTTER, JUDGE
ACTION NO. 97-CI-06425
RICHARD W. WEBB, SR., AND
CAROLE WEBB
CROSS-APPELLEES/
APPELLANTS
OPINION AND ORDER
AFFIRMING
** ** ** ** **
BEFORE:
COMBS, EMBERTON AND GUIDUGLI, JUDGES.
GUIDUGLI, JUDGE:
Richard Webb, Sr., and Carole Webb (Webb)
appeal from an order of the Jefferson Circuit Court entered March
27, 1998, which granted summary judgment in favor of Auto
Customizing-South, Inc. (ACSI).
ACSI cross-appeals from an order
of the same court entered June 8, 1998, which denied its motion
for attorney fees.
We affirm.
On September 7, 1994, Webb and ACSI entered into a
lease agreement whereby ACSI leased a piece of commercial real
estate owned by Webb.
The terms of the lease agreement which are
relevant to this appeal are as follows:
Section Twenty
Attorney Fees
In the event of any litigation between the
parties, the prevailing party shall be
entitled to recover form [sic] the other
party all reasonable attorney fees, costs,
and expenses of the prevailing party incurred
in connection with such litigation, except as
may be limited by applicable law.
...
Section Thirty-One
Option to Purchase
Lessee has the option to purchase the Demised
Premise [sic] during the term or any
extension thereof under the following terms
and conditions. In order to exercise this
option, Lessee must give the Lessor written
notice of the exercise of such option on the
manner provided in Section 27 not less than
120 days prior to the expiration of the then
term. If the option to purchase is
exercised, the Lessor and Lessee shall
immediately attempt to agree upon the then
fair market value of the Demised Premises.
If the parties are not able to agree upon the
fair market value of the Demised Premises,
they shall attempt to agree on an independent
qualified appraiser, who shall be employed by
them to determine the fair market value, the
expense incurred for such appraisal to be
shared equally by Lessor and Lessee. If
Lessor and Lessee are unable to agree upon
the selection of an independent qualified
appraiser within 15 days after the notice of
exercise of the option is given, Lessor and
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Lessee shall each select their own qualified
appraiser which appraisers shall select a
third qualified appraiser, and in such event
the fair market value of the Demised Premises
shall be the amount which shall be agreed
upon and certified in writing by two or more
of such three appraisers. The cost of
Lessor’s appraiser shall be borne by Lessor
and the cost of Lessee’s appraiser shall be
borne by Lessee. The cost of the third
appraiser shall be paid in equal shares by
Lessor and Lessee.
The closing of the option purchase and sale
for all cash shall take place on the earlier
of sixty (60) days from the date of the
determination of the purchase price or the
last business day before the termination of
the term in which the option to purchase is
exercised, unless otherwise agreed by the
parties in writing.
On April 18, 1997, ACSI, through its attorney, gave due
and timely written notice of its intent to exercise the option to
purchase.
Along with the letter, ASCI enclosed a copy of an
appraisal performed by Ronnie Galloway (Galloway) of Galloway
Appraisal which indicated a fair market value for the property of
$105,000.
ACSI offered to purchase the property for $105,000.
The letter further provided:
Under the terms of the lease, the lessor is
under an obligation to immediately attempt to
agree upon the fair market value of the
property and if the foregoing amount is not
agreeable to you or if no other value can be
agreed upon with [sic] fifteen (15) days from
this notice of exercise of the option, then
you must select your own qualified appraiser
within the fifteen days and the two
appraisers shall select a third qualified
appraiser to determine the fair market value,
with the cost of the third appraiser to be
paid equally by the lessor and lessee.
You therefore have fifteen days from date
hereof to either agree upon a fair market
value for the property or employ your own
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appraiser and notify us of same so that Mr.
Galloway and your appraiser may agree upon a
third appraiser under the terms of the lease.
Webb responded to ACSI through his attorney on May 2,
1997.
Webb expressed his opinion that ACSI’s offer was
unrealistic when compared to two other contracts on the property
which were currently in existence.
Webb also indicated that the
Galloway appraisal was “6 months old and does not contain
realistic comps nor all available current information.”
Webb
offered to “sit down” with ACSI to attempt to agree on a purchase
price or, upon failure of that option, to mutually agree on an
appraiser.
It appears that some time after his letter of May 2,
1997, Webb apparently contacted Galloway in regard to his earlier
appraisal.
In a letter dated May 8, 1997, Galloway informed Webb
that he was revising his earlier appraisal to show a fair market
value of $195,000 after re-inspecting the property and reevaluating other available data.
It also appears that during
this time Webb and ACSI were unable to agree upon a fair market
value for the property.
Upon receiving Galloway’s revised appraisal and due to
the lack of agreement as to fair market value, Webb wrote to ACSI
on May 8, 1997, regarding the selection of a mutually agreeable
appraiser.
The letter stated:
[W]e have decided that we will allow your
choice of Ronnie Galloway, MAI’s opinion
[sic] determine the market value of the
subject property. He will of course use
current information rather than the dated
appraisal which you have previously proposed.
Please be advised that we contacted Mr.
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Galloway regarding the property in question,
and he sent us the enclosed letter stating
that the current value of that property is
$195,000.
When ACSI failed to respond to Webb’s letter, Webb
mailed the following letter on June 23, 1997:
As you are aware, we have not heard from you
nor your client since my letter to you
regarding our acceptance of your choice of
appraisers, and the issuance of his updated
appraisal. The current appraised value of
the above property is $195,000. This was
confirmed to you by mail on May 8, 1997.
According to the terms of the lease, [ACSI]
has 60 days from the determination of the
purchase price in which to close for all
cash. Therefore, I will expect a
communication from you no later than July 7,
1997, to arrange a mutually convenient time
to close within the original 60 day period.
ACSI responded to Webb’s letter on June 25, 1997.
ACSI
indicated that it had never agreed to purchase the property for
any amount greater than its original offer of $105,000.
further stated:
According to the applicable terms of the
lease, the parties are to attempt to agree
upon the fair market value of the property.
There has been no agreement. Apparently your
client believes the property is worth
$195,000.00 and my client believes it is
worth $105,000.00. We cannot agree upon Mr.
Galloway as an independent appraiser due to
the discrepancy in the two appraisal figures
over a very short period of time.
We are open to the selection of an
independent qualified appraiser under the
terms of the lease and we are open to
suggestions in this regard. The fact that my
client based his purchase offer on an
appraisal from [Galloway] does not constitute
his selection of an “independent appraiser”
under the terms of the lease. Of course my
client remains willing to purchase the
property for $105,000.00, but otherwise we
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ACSI
will attempt to agree with you on the
selection of an independent appraiser other
than [Galloway].
It appears that negotiations between ACSI and Webb came to an end
at this point.
On November 6, 1997, Webb filed an action in the trial
court seeking an order directing ACSI to “specifically perform
and purchase the property at the appraised value of $195,000
pursuant to the terms of the Lease Agreement.”
Alternatively,
Webb asked the trial court to find ACSI had forfeited not only
its right to exercise the purchase option, but also its right of
tenancy under the lease due to an alleged breach and subsequent
failure to cure.
In its answer, ACSI argued that Webb was the
party in breach of Section 31 of the lease, and asked that (1)
Webb’s claim be dismissed; and (2) that both parties be ordered
to comply with the terms of Section 31 as regarding the selection
of the three independent appraisers.
Both parties sought an
award of attorney fees under Section 20 of the lease.
Each party filed a motion for summary judgment, and it
appears that the trial court held oral arguments on the parties’
motions.
On March 27, 1998, the trial court entered summary
judgment in favor of ACSI granting it the relief sought.
The
trial court further found that as a prevailing party, ACSI was
entitled to an award of attorney fees under the terms of the
lease and directed it to file an application with the court
regarding its requested fee.
Pursuant to the trial court’s order, ACSI filed its
motion for fees and costs on April 2, 1998.
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In his affidavit,
counsel for ASCI sought a total fee of $2,162.50 based on an
hourly rate of $125.
Counsel further informed the trial court
that original time records and billing statements sent to ACSI
were available for inspection.
Finally, ASCI’s counsel stated
that “[t]he hourly rate is fair and reasonable in light of
undersigned counsel’s experience and hourly rates paid attorneys
with similar experience in the Louisville legal community.”
Aside from the affidavit of counsel, no further documentation was
attached in support of counsel’s statements.
Webb responded to ACSI’s motion with a motion to set
aside and amend judgment filed on April 6, 1998.
Webb argued
that attorney fees were not warranted because “a citizen should
not be punished for asking the court to determine where in a
series of steps the parties are.”
In an order entered June 8, 1998, the trial court
denied both ACSI’s motion for attorney fees and Webb’s motion to
set aside and amend judgment.
This appeal and cross appeal
followed.
Before we address the parties’ arguments, we must rule
on a motion filed with this Court which was passed to the merits
by a three judge motion panel.
Webb filed a motion to exclude
three letters dated May 29, 1998, June 8, 1998, and June 25, 1998
from the record on appeal.
Although we do not have copies of the
three letters, it appears that they show both parties’ compliance
with the trial court’s entry of summary judgment.
As these
documents were not before the trial court at the time the order
granting summary judgment was entered and therefore have no
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relevance as to the question of whether the trial court’s order
was erroneous, Webb’s motion to exclude the letters is granted.
Furthermore, footnotes 4 and 6 as well as the sentence appearing
on the last line of page nine and the first five lines of page
ten of ACSI’s brief on appeal are hereby ordered stricken as
those items refer to the content of the letters in question.
Webb’s Appeal
Webb contends that given the facts established by the
correspondence in this case, it was improper for the trial court
to enter summary judgment in favor of ACSI.
Webb alleges that
ACSI breach the terms of the lease by (1) failing to attempt to
immediately agree upon the fair market value of the property; and
(2) failing to attempt to agree upon an independent qualified
appraiser once a fair market value could not be agreed upon.
Webb contends that because ACSI first breached the contract, it
cannot now complain if he refuses to perform or subsequently
breaches the contract himself.
We agree with Webb’s contention that “a party who
commits the first breach of a contract is deprived of the right
to complain of a subsequent breach by the other party.”
Williamson v. Ingram, Ky., 49 S.W.2d 1005, 1006 (1932).
However,
we agree with the trial court that is was Webb and not ACSI who
was in breach.
Section 31 of the lease clearly provides that upon
ACSI’s exercise of the option to purchase, the parties are to
“immediately attempt to agree upon the then fair market value” of
the property.
If the parties are unable to agree on a fair
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market value, they are then to attempt to agree on an
“independent qualified appraiser.”
If the parties are unable to
agree on an appraiser within fifteen days after ACSI gave written
notice of its intent to exercise the option to purchase, each
party is then to select its own appraiser and those appraisers
are to select a third appraiser with the fair market value being
that which is agreed upon by two of the three appraisers.
ACSI gave written notice of its intent to exercise the
purchase option on April 18, 1997, and further made an offer of
$105,000 based on Galloway’s appraisal.
It is clear from the
language of ACSI’s letter that it recommended that either
Galloway be used as the agreed-upon appraiser or that Webb choose
his own appraiser within fifteen days and so notify ACSI of his
selection.
Webb responded within the fifteen day period by his
letter of May 2, 1997, in which he both declined ACSI’s offer and
disavowed Galloway’s appraisal.
At that point, instead of selecting his own appraiser
in accordance with the terms of the lease due to the parties’
inability to agree on an appraiser, Webb contacted Galloway and
had him revise his earlier appraisal.
Upon receiving Galloway’s
revised appraisal showing a fair market value of $195,000, Webb
changed his mind about agreeing to the use of Galloway as the
agreed-upon appraiser and then tried to force his choice on ACSI.
Thus, it is clearly Webb who has breached the terms of the lease
due to the fact that he failed to select his own independent
appraiser after refusing to acquiesce in ACSI’s initial choice of
Galloway.
As Webb was clearly in breach of the terms of the
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lease, the trial court did not err in finding such and entering
summary judgment in favor of ACSI.
ASCI’S CROSS-APPEAL
ACSI appeals from the trial court’s denial of its
motion for attorney fees.
ACSI contends that it was clearly
entitled to attorney fees under the terms of the lease and that
the trial court erred in failing to enforce what the parties
originally agreed to.
We disagree.
Although attorney’s fees are generally the sole
responsibility of each individual party, contractual provisions
allowing for an award of attorney fees to the successful party in
the event of litigation are generally allowable and enforceable.
Bernard v. Russell County Air Board, Ky. App., 747 S.W.2d 610,
612 (1987).
“However, this rule does not, we believe, abolish
the equitable rule that an award of counsel fees is within the
discretion of the court depending on the circumstances of each
particular case.”
Kentucky Bank v. Ag Services, Inc., Ky. App.,
663 S.W.2d 754, 755 (1984).
The decision as to whether an award
of attorney’s fees is warranted in this case is vested in the
sound discretion of the trial court and will not be reversed
unless it is shown that the discretion was, in fact, abused.
Giacalone v. Giacalone, Ky. App., 876 S.W.2d 616, 620-621 (1994).
ACSI is correct that under Section 20 of the lease the
prevailing party is entitled to an award of “reasonable” attorney
fees in the event of litigation.
However, in reviewing ACSI’s
motion for attorney fees which was filed with the trial court we
note that it was not supported by any evidence which would tend
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to show that either the hourly rate of $125 or the total amount
of $2,162.50 sought by counsel for ACSI was reasonable.
Apparently ACSI has now realized its mistake because in its brief
on appeal it argues that remand is necessary to allow “counsel to
submit an Affidavit and records necessary to establish the amount
of attorney’s fees . . . which it should be awarded as the
prevailing party under the Lease Agreement.”
The time for ACSI
to present such evidence was when it submitted its original
motion.
It is not entitled to a second chance to remedy a
mistake of its own making.
Given the lack of evidence, the trial
court did not abuse its discretion in failing to award attorney
fees in this case.
Having considered the parties’ arguments on appeal, the
orders of the Jefferson Circuit Court are affirmed.
Furthermore,
Webb’s motion to exclude the letters of May 29, 1998, June 8,
1998, and June 25, 1998, from the record on appeal is granted.
Footnotes four and six, as well as the sentence appearing on
pages nine and ten of ACSI’s brief on appeal, are ordered
stricken as those items refer to the content of the
above-mentioned letters.
ALL CONCUR.
/s/
Daniel T. Guidugli
JUDGE, COURT OF APPEALS
ENTERED:
February 4, 2000
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BRIEF FOR APPELLANTS/CROSSAPPELLEES:
BRIEF FOR APPELLEE/CROSSAPPELLANT:
Kyle T. Hubbard
Louisville, KY
Marvin L. Coan
Louisville, KY
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