WILLIAM E. BOLLINGER v. BANK ONE, N.A., EXECUTOR OF THE ESTATE OF MARSHALL M. ROYCE, DECEASED
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RENDERED: April 25, 2003; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2002-CA-000664-MR
WILLIAM E. BOLLINGER
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE JUDITH E. McDONALD-BURKMAN, JUDGE
ACTION NO. 96-CI-002295
v.
BANK ONE, N.A., EXECUTOR OF THE
ESTATE OF MARSHALL M. ROYCE, DECEASED
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
COMBS, KNOPF, AND TACKETT, JUDGES.
KNOPF, JUDGE:
This is the second appeal from findings of fact,
conclusions of law and a judgment of the Jefferson Circuit
Court.
Under the terms of a mediation agreement, William
Bollinger was granted the right to purchase a tract of land from
Bank One, but the agreement was voidable if an inspection showed
that the structures on the property were in “substantial
disrepair.”
Bollinger takes issue with the trial court’s
finding that the structures were not in substantial disrepair.
We conclude that the trial court’s factual findings were not
clearly erroneous in any significant aspect.
Hence, we affirm.
The facts of this action were set forth in this
Court’s prior opinion as follows:
In 1994, Marshall Royce executed a will
which gave appellant, William Bollinger, the
option to purchase a parcel of land in
Anderson County on which there was a barn, a
cabin, and a lake. Pursuant to the will, the
purchase price was to be determined by an
appraiser having certain qualifications set
out in the will. Upon Royce's death,
appellee, Bank One, became executor of the
estate. Thereafter, a dispute arose between
Bollinger and Bank One as to the appraisal
and purchase price of the property. On April
18, 1996, Bollinger brought an action
against Bank One alleging that Bank One
wrongfully refused to convey the subject
property to Bollinger pursuant to the terms
of the will. Subsequently, the trial court
ordered that the parties attend mediation
regarding all issues in the case. As a
result of the mediation, the parties entered
into an agreement approved by the mediator
whereby Bollinger agreed to purchase the
subject property for $74,000 by March 28,
1998. The agreement additionally provided:
Bollinger may inspect to determine
if any substantial damage to
structures. If structures in
substantial disrepair, settlement
is voidable by Bollinger.
Subsequently, Bollinger inspected the
property and thereafter attempted to void
the mediation agreement on the basis that
structures thereon were in substantial
disrepair. Specifically, Bollinger
maintained that the following conditions
were evidence of "substantial disrepair":
the cistern was half full, possibly
indicating a leak; the barn's foundation
2
needed repair; the barn roof needed repair
and was missing in places; stress cracks in
the dry wall of the house indicated problems
with the roof of the house; the wood siding
of the house needed treatment; and the lake
depth was unusually low, possibly indicating
a leak.
Bank One then filed a motion to enforce the mediation
agreement.
In ruling for Bank One, the trial court construed
the definition of "substantial disrepair" in the parties'
agreement to mean "unfit for human habitation.”1
The court
found that, while the structures on the property were clearly in
need of varying degrees of repair, they all remained usable.
On
appeal, this Court reversed, concluding that the trial court
erred in construing the term “substantial disrepair” as used in
the agreement to mean “unfit for human habitation.”
However,
this Court declined to state what exactly the parties meant by
"substantial disrepair", offering only that it was something
less than "unfit for human habitation.”
Rather, this Court
remanded the matter to the trial court for further findings as
to the parties’ intent.2
On remand, the matter was submitted to the trial court
on the existing record.
On March 6, 2002, the trial court
rendered findings of fact, conclusions of law and a judgment in
Bank One’s favor.
The court held that in the context of the
1
Citing Johnson v. City of Paducah, Ky., 512 S.W.2d 514 (1974).
Bollinger v. Bank One, 2000-CA-001590-MR, (Not To Be Published
Opinion Rendered May 25, 2001).
2
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parties’ agreement, the term “substantial disrepair” means “’in
need of considerable repairs’ because of damage to the
structures.” (Emphasis original)
Based upon the evidence, the
court found that the damage to the structures, while
significant, did not render the structures in “substantial
disrepair” as that term was used in the agreement.
In a
subsequent order denying Bollinger’s CR 59.05 motion, the trial
court explained:
Bollinger asks the Court to make a
specific finding of fact, pursuant to CR
52.02 and 52.04, stating that the repair to
the roof of the house constituted evidence
that the structures in question were in
substantial disrepair. However, the issue
in this case is not whether an individual
repair was substantial in the absolute
sense, but whether the need for repairs,
considering the property as a whole, was
such that the structures were in a state of
“substantial disrepair.” The substantiality
of a particular repair is relative, so that
while a $2000 repair on property worth
$20,000 may be substantial, the same repair
on a property whose agreed value is $74,000
represents only 2.7% of the agreed property
value and is not, in itself, substantial.
The Court need not, and does not, make any
specific finding of fact as to the
substantiality of the roof repair in and of
itself. Rather, considering the property as
a whole, the Court declines to vacate or
alter its original finding that the
structures in question were not in
“substantial disrepair.”
Based upon the trial court’s prior rulings, the court
held that the mediation agreement remained in effect, and that
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Bollinger’s right to purchase the property under that agreement
had lapsed on March 28, 1998.3
This appeal followed.
The trial court’s March 4, 2001, judgment summarizes
the mediation agreement as allowing “Bollinger to terminate the
sale if, upon inspection, he determined that structures on the
property were in ‘substantial disrepair’”.
Based upon this
language, the dissent concludes that Bollinger’s subjective
evaluation and assessment of the condition of the property is
controlling as long as it was objectively reasonable.
However,
the trial court’s summary does not accurately reflect the
operative provision of the mediation agreement.
Furthermore,
the trial court did not apply this standard, nor does Bollinger
argue that it should have.
Rather, the trial court made factual
findings to determine whether the structures were in substantial
disrepair based on an objective standard.
Bollinger does not take issue with the trial court’s
construction of the term “substantial disrepair”, or with the
trial court’s analysis of the property under an objective
standard.
Instead, he argues that the trial court clearly erred
3
The trial court had previously found that the mediation agreement
constituted a novation of Bollinger’s contract claim to purchase the
property and that ruling was undisturbed by this Court’s prior
decision. Had the trial court found that the structures were in
substantial disrepair, Bollinger could have exercised his right to set
aside the mediation agreement and reinstate his original contract
claim. Since the trial court found that the structures were not in
substantial disrepair, and the mediation agreement required Bollinger
to purchase the property for $74,000.00 prior to March 28, 1998,
Bollinger’s option to purchase the property has lapsed.
5
in finding that the structures were not in a state of
“substantial disrepair.”
Although the trial court noted that there was
conflicting evidence regarding the state of the structures,
Bollinger does not dispute the trial court’s findings concerning
their condition.
The house roof was leaking and in need of
replacement, but there was evidence that the roof had been
damaged in a storm sometime after Bollinger had the property
inspected.
Some of the wood siding on the house was cracked and
was in need of preventative maintenance.
The barn foundation
was crumbling and the barn roof was missing a piece of tin.
driveway was not well-maintained but was usable.
The
The cistern
was half-full, but a previous leak had been repaired.
Bollinger
contends that the necessary repairs to the structures are, in
fact, considerable, and the trial court erred in concluding
otherwise.
CR 52.01 provides in part that findings of fact shall
not be set aside unless clearly erroneous with due regard given
to the opportunity of the trial judge to assess the credibility
of the witnesses.4
Findings of fact are not clearly erroneous if
supported by substantial evidence.5
Substantial evidence is
evidence which, when taken alone or in the light of all the
4
5
See also Reichle v. Reichle, Ky., 719 S.W.2d 442, 444 (1986).
See Black Motor Company v. Greene, Ky., 385 S.W.2d 954 (1965).
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evidence, has sufficient probative value to induce conviction in
the minds of reasonable persons.6
Unfortunately, the mediation agreement did not define
what the parties intended for the term “substantial disrepair”
to mean.
The trial court’s definition, “in need of considerable
repair”, is reasonable given the common and accepted meaning of
“substantial disrepair.”
Nonetheless, the court’s definition
still leaves open the central question in this case: when do
“significant” repairs become “considerable” repairs?
Bollinger focuses on the trial court’s contrasting of
the cost of the repairs to the house roof to the total value of
the property.
He contends that the trial court should have
applied the “substantial disrepair” standard to the structures
alone, and not to the property as a whole.
Bollinger points
out that the necessary repairs to the structures exceed ten
percent of their value, and should be deemed to be considerable.
We agree with Bollinger that the trial court’s
consideration of the substantiality of the necessary repairs
against the total value of the property was erroneous.
The
mediation agreement requires a determination of whether the
structures were in “substantial disrepair.”
However, Bank One
points out that the trial court made this reference in its order
6
Kentucky State Racing Commission v. Fuller, Ky., 481 S.W.2d 298, 308
(1972).
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denying Bollinger’s motion to set aside the March 6, 2002,
judgment.
Consequently, it contends that the reference was not
necessary to the judgment, and may be disregarded as dicta.
Bank One further argues that the trial court properly considered
the necessary repairs in the context of all of the structures:
although certain repairs might be substantial in the context of
one structure, the necessary repairs to all of the structures
are not substantial in light of their total value.
The necessary repairs to the structures, while
undoubtedly significant, were not necessarily substantial when
taken as a whole.
The appraiser characterized the barn to be in
poor condition, but stated that the house was in fair to good
condition.
Furthermore, the damage to the house roof occurred
after the inspection provided for in the mediation agreement.
Given the evidence, the trial court would have been authorized
to find that the structures were in substantial disrepair.
the evidence was not so overwhelming as to compel that
conclusion.
Consequently, we find that the trial court’s
findings of fact are not clearly erroneous.
Accordingly, the judgment of the Jefferson Circuit
Court is affirmed.
TACKETT, JUDGE, CONCURS.
COMBS, JUDGE, DISSENTS BY SEPARATE OPINION.
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But
COMBS, JUDGE, DISSENTING:
I dissent as I agree with
appellant that the trial court clearly erred in failing to
characterize the dilapidated condition of the property as
constituting “substantial disrepair.”
In the order from which
this appeal is taken, the trial judge cited the terms of
Bollinger’s mediation agreement as allowing Bollinger “to
terminate the sale if, upon inspection, he determined that
structures on the property were in ‘substantial disrepair’.”
(Findings of Fact, Conclusions of Law, Judgment of March 4, 2002
at p. 1).
(Emphasis added).
Although the court’s first opinion labored over an
acceptable definition of “substantial disrepair,” this second
opinion reverted to the language of the mediation agreement.
That language specifically deferred to Bollinger’s subjective
evaluation and assessment of the property:
determined . . . .”
evidence.
“if . . . he
He did so determine based on substantial
His subjective determination was not objectively
arbitrary or unreasonable in light of the many serious problems
attendant to the property.
By its own ruling, the court should have deferred to
Bollinger’s definition of “substantial disrepair” instead of
substituting its own appraisal and disregarding the terms of the
mediation agreement that unequivocally accorded him such
discretion.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Grover S. Cox
Theodore L. Mussler, Jr. &
Associates
Louisville, Kentucky
Rebecca A. Wood
Laura M. Haara
Frost Brown Todd, LLC
Louisville, Kentucky
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