CHRISTOPHER BECHTLER; AND KISTER WOOD PRODUCTS, INC. v. FIFTH THIRD BANK, KENTUCKY, INC.
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RENDERED: SEPTEMBER 20, 2002; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2001-CA-001253-MR
CHRISTOPHER BECHTLER; AND
KISTER WOOD PRODUCTS, INC.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JAMES M. SHAKE, JUDGE
ACTION NO. 99-CI-004262
v.
FIFTH THIRD BANK, KENTUCKY, INC.
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUDGEL, JOHNSON AND TACKETT, JUDGES.
JOHNSON, JUDGE:
Christopher Bechtler and Kister Wood Products,
Inc., have appealed from a summary judgment entered by the
Jefferson Circuit Court on April 2, 2001, in favor of Fifth Third
Bank, Kentucky, Inc.
Having concluded that there is no genuine
issue as to any material fact and that Fifth Third Bank is
entitled to judgment as a matter of law, we affirm.
In April 1996 Bechtler purchased Kister Wood Products,
a manufacturer and installer of high-end custom wood products for
commercial and select residential construction. Bechtler sought
to expand the business and as a result required an influx of
capital.
Bechtler received a commitment from Banakor Swisse, a
Luxembourg banking concern, to loan Kister Wood Products $4
million provided Kister Wood Products was able to acquire the
services of a bank acceptable to Banakor Swisse to act as an
escrow agent.
On February 12, 1998, William Otten, Vice President of
Fifth Third Bank, wrote Bechtler a letter indicating that Fifth
Third Bank was willing to establish an escrow account for
Bechtler’s transactions with Kister Wood.
The letter reads as
follows:
Dear Chris,
This letter is to confirm that Fifth Third
Bank will set up an escrow account for your
transactions involving Kister.
Please call me with any questions.
Sincerely,
/s William J. Otten
Vice President
On July 17, 1998, Otten wrote Bechtler a much more
detailed follow-up letter.
In this letter, Otten specifically
stated that Fifth Third Bank would not set up an escrow account
that would be governed by the laws of Switzerland.
Otten
described the governing law requirement as a “threshold issue.”
Otten stated that Fifth Third Bank would be willing to provide
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routine escrow services, but it would not agree to be governed by
Switzerland law.
On July 22, 1999, Bechtler and Kister Wood Products
filed a complaint against Fifth Third Bank.
On September 1,
1999, Fifth Third Bank moved the trial court to dismiss the
complaint.
On October 6, 1999, the trial court granted Fifth
Third Bank’s motion and dismissed the complaint.
On December 30,
1999, the trial court vacated the order of dismissal based upon
Bechtler and Kister Wood Product’s motion pursuant to CR1 60.02.
On March 1, 2000, Bechtler and Kister Wood Products filed their
“First Amended Complaint.”
On April 7, 2000, Fifth Third Bank
moved the trial court to dismiss the amended complaint pursuant
to CR 12.05.
On June 7, 2000, Fifth Third Bank moved the trial court
to enter an order suspending discovery pending its decision on
the motion to dismiss.
The trial court ordered that the parties
would have until July 5, 2000, to complete already propounded
discovery.
On April 2, 2001, the trial court entered an opinion
and order granting summary judgment to Fifth Third Bank.
On
April 12, 2001, Bechtler and Kister Wood moved the trial court to
alter, amend or vacate the summary judgment.
On May 16, 2001,
the trial court denied Bechtler and Kister Wood Product’s motion.
This appeal followed.
1
Kentucky Rules of Civil Procedure.
-3-
Summary judgment is proper “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.”2
In Paintsville Hospital Co. v. Rose,3 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.”4
The standard of review on appeal of a summary
judgment is whether the trial court correctly found that there
was no genuine issue as to any material fact and that the moving
party was entitled to judgment as a matter of law.
There is no
requirement that the appellate court defer to the trial court
since factual findings are not at issue.5
“The record must be
viewed in a light most favorable to the party opposing the motion
2
CR 56.03.
3
Ky., 683 S.W.2d 255 (1985).
4
Steelvest, Inc. v. Scansteel Service Center, Inc., Ky., 807
S.W.2d 476, 480 (1991).
5
Goldsmith v. Allied Building Components, Inc., Ky., 833
S.W.2d 378, 381 (1992).
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for summary judgment and all doubts are to be resolved in his
favor.”6
Bechtler and Kister Wood Products argue that the trial
court erred in granting summary judgment in favor of Fifth Third
Bank because the trial court improperly substituted its judgment
for the trier of fact and determined that there was a “lack of
intent” of the parties to be bound in a contractual relationship.
The appellants also claim that the trial court prematurely
granted summary judgment before they had an opportunity to depose
certain employees of Fifth Third Bank.
However, we believe the
appellants have failed to address the fundamental finding of the
trial court--that the letter written from Otten to Bechtler
failed to satisfy the Statute of Frauds.
In its opinion the trial court in reference to the
Statute of Frauds issue stated as follows:
William S. Haynes, Kentucky
Jurisprudence-Contracts, 1986 asked the
question presented herein: “What is
sufficient note or memorandum which will
satisfy the Statute of Frauds?” At 209. He
wrote that, “. . . it is necessary to
emphasize that a considerable difference
exists between a written contract and a
written memorandum of an oral contract. In
the case of a written contract, parol
evidence cannot be admitted to impeach a
clear provision whereas, in the case of a
memorandum or note of an oral contract parol
evidence may be admitted for the purpose of
clarifying either the validity, existence, or
terms of a prior oral agreement.” At 209.
The author recognizes that K.R.S. 371.010,
“. . . is harmonious with the Restatement
6
Steelvest, supra at 480.
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(Second) of Contracts in requiring that the
writing (a) must be signed by the party
sought to be charged; (b) that it must
reasonably identify the subject matter; (c)
that it must evidence that a contract has
been made; and (d) that it must set forth the
essential terms.” At 210. The writing
submitted herein is in fact, signed by Mr.
Otten as a representative of Fifth Third. It
references an escrow account. However, that
document contains no references to the terms
of any agreement, nor does it allude to the
transaction involving Banakor Swisse. While
Section 132 of the Restatement (Second) of
Contracts (1979) states that multiple
documents may be used to satisfy the Statute
of Frauds, those writings must “. . . clearly
indicate that they relate to the same
transaction.” However, “. . . letters and
correspondence, which may be classified as
preliminary negotiations, may not constitute
a written memorandum, absent an intent of the
parties to be bound thereby.” At 213. Under
the circumstances presented herein, this
Court cannot find that the document is
sufficient to take the purported agreement
out of the Statute of Frauds.
KRS7 371.010(9) is the governing provision of the
Statute of Frauds in the case sub judice.
It states:
No action shall be brought to charge any
person:
. . .
(9)
7
Upon any promise, contract,
agreement, undertaking, or
commitment to loan money, to grant,
extend, or renew credit, or make
any financial accommodation to
establish or assist a business
enterprise or an existing business
enterprise including, but not
limited to the purchase of realty
or real property, but this
Kentucky Revised Statutes.
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subsection shall not apply to
agreements pursuant to which credit
is extended by means of a credit
card or similar device or to
consumer credit transactions[.]
The trial court agreed with Fifth Third Bank’s argument
that the February 12, 1998, letter written by Otten to Bechtler
does not satisfy this provision of the Statute of Frauds.
The
appellants contend that the trial court erred by limiting its
examination of the record to the letter from Otten to Bechtler
and by not taking into account admissible parol evidence.
The
appellants state that “Fifth-Third took several positive steps
that indicated their knowledge of such obligations.”
We have
reviewed the record in a light most favorable to the appellants
and have found that the record would not support a finding that
Fifth Third Bank had agreed to all of the essential terms of the
agreement.
In Clinkinbeard v. Poole,8 the former Court of Appeals
stated:
It seems well established in all
jurisdictions that a writing or memorandum
sufficient to satisfy the requirements of the
statute of frauds must be complete in itself
as to the parties charged with liability
thereunder and the essential terms of the
contract. 49 Am.Jur., Section 322, Page 636,
Statute of Frauds; Gibson v. Crawford, 247
Ky. 228, 56 S.W.2d 985; Purcell v. Campbell,
261 Ky. 644, 88 S.W.2d 670. Minor details
may in some instance be shown by parol, but
8
Ky., 266 S.W.2d 796, 798 (1954). See also Walker v. Keith,
Ky., 382 S.W.2d 198, 203 (1964). “The purpose of requiring a
writing to evidence an agreement is to assure certainty of the
essential terms thereof and to avoid controversy and litigation.”
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we have nowhere found any authority for
supplying the material and essential features
of an agreement based upon a writing which
does nothing more than furnish some evidence
of the existence of a prior parol agreement.
The letter dated February 12, 1998, simply did not
contain the essential terms of the contract and thus failed to
satisfy the requirements of the Statute of Frauds.
The letter
merely stated “that Fifth Third Bank will set up an escrow
account for [Bechtler’s] transactions involving Kister” Wood
Products.
The letter does not mention the Banakor Swisse
transaction or any of the essential terms of that contract such
as Fifth Third Bank’s willingness to be governed by the laws of
Switzerland.
The appellants have also argued that the trial court
prematurely dismissed their case by summary judgment because
discovery which was necessary in their development of parol
evidence had not taken place.
However, the case law is clear
that parol evidence is not admissible to supply essential terms
of a contract.
As stated in Clinkinbeard, in some cases “minor”
details of a contract may be supplied by parol evidence.
In the
case sub judice, the letter that the appellants are relying on to
show Fifth Third Bank’s intent to be bound would require parol
evidence to supply the essential terms of the contract.
The trial court was correct in its determination that
the record did not contain sufficient facts that would make it
possible for the appellants to prevail at trial.
The evidence
that appellants claim that they were prevented from obtaining due
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to the trial court’s premature granting of summary judgment would
have been inadmissible parol evidence.
Thus, we hold that the
letter from Otten to Bechtler failed to satisfy the requirements
of the Statute of Frauds and that parol evidence is not
admissible to supply the missing essential elements.
Bechtler also argues that the trial court erred as
matter of law in applying a one-year statute of limitations to
his “emotional damages” claim.
Bechtler argues that he asserted
damages based upon Fifth Third Banks’ outrageous conduct in
intentionally interfering with his contract rights.
In his
brief, Bechtler states:
The trial court incorrectly applied KRS
413.140 to Mr. Bechtler’s claims for
emotional distress, which imposed a one-year
statute of limitations that barred said
claims. Mr. Bechtler’s claims were properly
governed by KRS 413.120(6), which provides
for a five-year statute of limitations. The
trial court erred as a matter of law in
applying the wrong statute, and Appellants
are entitled to a reversal of the trial
court’s summary judgment of Mr. Bechtler’s
emotional damage claims as a matter of law.
Bechtler has failed to identify where in his complaint
he alleged an injury due to the outrageous conduct of Fifth Third
Bank.
In Bechtler’s original complaint filed on July 22, 1999,
paragraph 21 states:
The acts of Fifth Third described above,
represent wilful misrepresentation, and, as a
direct and proximate result thereof, the
Plaintiff, Bechtler, suffered, and will
continue to suffer, physical and mental pain
and anguish entitling him to monetary damages
in an amount in excess of the jurisdictional
requirement of this Court.
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Bechtler failed to make any additional allegations in the amended
complaint which would support a claim of intentional infliction
of mental distress.
While Bechtler’s complaints can be read
broadly enough to include the allegation that Fifth Third Bank’s
intentional or reckless conduct caused Bechtler to suffer
emotional distress, there was no allegation to support the
required elements that Fifth Third Bank’s conduct was
“intolerable in that it offends against the generally accepted
standards of decency and morality[,]” and that the emotional
distress suffered by Bechtler was “severe.”9
In Hoke v. Cullinan,10 the Supreme Court of Kentucky
stated:
Despite the informality with which
pleadings are nowadays treated, and despite
the freedom with which pleadings may be
amended, CR 15.01, the central purpose of
pleadings remains notice of claims and
defenses. Lee v. Stamper, Ky., 300 S.W.2d
251 (1957); see also Morgan v. O’Neil, Ky.,
652 S.W.2d 83 (1983).
Thus, since Bechtler has failed to sufficiently plead a claim of
intentional infliction of mental distress arising from Fifth
Third Bank’s conduct, the trial court correctly applied the oneyear statute of limitations pursuant to KRS 413.140(1)(a), and
not the five-year statute of limitations contained in KRS
413.120(6).
9
Kroger v. Willgruber, Ky., 920 S.W.2d 61, 65 (1996).
10
Ky., 914 S.W.2d 335, 339 (1995).
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Finally, we dispose of the appellants’ argument that
the trial court erred as a matter of law in its application of
KRE11 301 regarding evidentiary presumptions by agreeing with
Fifth Third Bank that the rule is not applicable to this case.
For the foregoing reasons, the summary judgment of the
Jefferson Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
Laurence J. Zielke
Benjamin S. Schechter
John T. Byrd
Louisville, Kentucky
Douglas Gene Sharp
Louisville, Kentucky
11
Kentucky Rules of Evidence.
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