MAXINE S. FELIX v. LYKINS ENTERPRISES, INC.; FUEL STOP REAL ESTATE COMPANY A/K/A FUEL STOPS REAL ESTATE COMPANY; DAVID O. LYKINS; FUEL STOPS, INC.; AND WILLIAM T. ESHAM
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RENDERED:
OCTOBER 14, 2005; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-001305-MR
MAXINE S. FELIX
v.
APPELLANT
APPEAL FROM MASON CIRCUIT COURT
HONORABLE ROBERT MCGINNIS, SPECIAL JUDGE
ACTION NO. 97-CI-00289
LYKINS ENTERPRISES, INC.;
FUEL STOP REAL ESTATE COMPANY
A/K/A FUEL STOPS REAL ESTATE COMPANY;
DAVID O. LYKINS; FUEL STOPS, INC.;
AND WILLIAM T. ESHAM
APPELLEES
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE:
JUDGE. 1
COMBS, CHIEF JUDGE; GUIDUGLI, JUDGE; MILLER, SENIOR
COMBS, CHIEF JUDGE:
This is an appeal from an order and final
judgment entered by the Mason Circuit Court concerning a lease
agreement and an option to purchase a parcel of commercial real
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and
KRS 21.580.
estate located in Brown County, Ohio.
We vacate and remand for
an order dismissing the action.
In August 1988, Florida resident, H. Lee Felix (now
deceased), and his wife, Maxine S. Felix, executed a lease
agreement as the lessor with Lykins Enterprises, Inc., a
Kentucky corporation, with respect to a truck-stop located in
Aberdeen, Ohio.
The initial term of the lease was due to expire
on August 31, 1989, but the lessee was granted the option of
extending the lease for a period of eight years.
In September 1988, the lease was assigned by Lykins
Enterprises, Inc., to Fuel Stops, Inc., an Ohio corporation.
On
February 10, 1989, Fuel Stops, Inc., sent the Felixes written
notice of an intent to extend the term of the lease through
August 31, 1997.
The lease agreement also provided the lessee with an
option to purchase the property during the term of the lease.
Section 17 of the lease provides, in part, as follows:
OPTION TO PURCHASE Lessee shall have an
exclusive option at any time during the
initial terms of this Agreement, and during
the extension term if exercised by Lessee,
to purchase the Leased Premises, including
real estate, fixtures, and all improvements
thereon other than said mobile home, for the
purchase price of $200,000. . . .In order to
exercise its option to purchase under this
paragraph, Lessee shall notify Lessor of
Lessee’s intention to purchase not less than
thirty days prior to expiration of the
initial term, or thirty days prior to
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expiration of the extension term of this
Agreement. The closing of such purchase
shall be on a business weekday prior to the
expiration of the current Agreement term,
but not less than thirty days after notice
given by Lessee unto Lessor of such closing
date. The closing shall be at the law
offices of Royse, Zwigart, Kirk & Brammer,
unless otherwise agreed by the parties.
This option to purchase shall . . .
automatically expire upon the expiration of
the initial terms of this Agreement, or
later upon expiration of the extension term
of this Agreement if extended by Lessee
. . . .
In November 1996, David Lykins, president of both
Lykins Enterprises, Inc., and Fuel Stops, Inc., contacted the
Felixes’ attorney, Susan Brammer, of Royse, Zweigert, Kirk &
Brammer.
At that time, Lykins was attempting to arrange a sale
of the leased premises to a third-party, Mid-Ohio Petroleum
Company (“Mid-Ohio”).
In order to facilitate the sale, Lykins
asked Brammer to prepare a deed transferring the leased premises
from the Felixes to an Ohio general partnership identified as
Fuel Stops Real Estate Company.
Lykins notified the Felixes by
mail that Fuel Stops, Inc., had assigned the lease agreement,
including the option to purchase, to Fuel Stops Real Estate
Company.
Brammer prepared the deed as requested, mailed the
deed to the Felixes in Florida, and forwarded a copy to Lykins
for his review.
On November 25, 1996, the Felixes executed the
deed prepared by Brammer.
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Several days later, Brammer received a copy of
correspondence from Lykins addressed to Mid-Ohio advising that
the proposed sale of the leased property to Mid-Ohio had been
cancelled.
A closing was subsequently re-scheduled for a date
in January 1997, but Lykins unilaterally cancelled this date
apparently because Mid-Ohio had backed out of the transaction.
On August 8, 1997, Lykins mailed a letter to Brammer
indicating that he “would like to close on the Felix property in
Aberdeen, Ohio this week, or no later than August 18.”
The
letter was prepared on the letterhead of Fuel Stops, Inc., and
was signed by Lykins as president of Fuel Stops Real Estate
Company.
The letter was copied to Terry Teegarden, the Felixes’
son-in-law, in Ohio.
By certified letter dated August 12, 1997,
the Felixes’ attorney advised Lykins that any notice of an
intent to exercise the option to purchase the leased premises
had not been timely given by the lessee.
In the meantime, H. Lee Felix had died, and Maxine
Felix filed a declaratory judgment action in Mason Circuit Court
on December 1, 1997, naming Lykins Enterprises, Inc., as
defendant.
Felix sought a determination that the parties’ lease
agreement had expired by its terms, that the defendant had
failed to exercise its option to purchase the leased premises,
and that Lykins Enterprises, Inc., occupied the premises solely
on a month-to-month tenancy.
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On December 17, 1997, Lykins Enterprises, Inc., filed
a motion to dismiss the action.
In the motion, Lykins
Enterprises, Inc., denied that it was a real party in interest,
explaining that the lease had been assigned first to Fuel Stops,
Inc., and then to Fuel Stops Real Estate Company.
Moreover, an
action brought by Fuel Stops Real Estate Company against Felix
demanding specific performance was already pending before the
Court of Common Pleas of Brown County, Ohio.
Lykins
Enterprises, Inc., contended that the Ohio court provided the
proper venue for a resolution of the dispute between the
parties.
Felix amended her complaint on December 12, 1997, to
add Fuel Stops, Inc., and Fuel Stops Real Estate Company as
defendants in the Mason County action.
Over Felix’s objection,
the Kentucky action was ordered stayed pending a decision by the
Ohio court.
On May 26, 1999, the Ohio court denied the motion for
summary judgment of Fuel Stops Real Estate Company.
In its
lengthy order, the Ohio court concluded that there were numerous
material questions of fact with respect to whether the lessee
had validly and unequivocally exercised the option to purchase
the Aberdeen truck-stop.
Included in the record before us are several other
documents from the Ohio court proceedings indicating that the
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parties remained actively involved in the Ohio litigation.
Nevertheless, upon Felix’s motion, the Kentucky action was
eventually restored to the active docket of the Mason Circuit
Court in February 2003.
On September 10, 2003, Felix filed a motion for
summary judgment in the Mason County action.
She argued that
only Fuel Stops, Inc., could exercise the option to purchase and
that the option had not been properly exercised under the
express terms of the lease agreement.
The lessees responded
with a cross-motion for summary judgment.
They contended that
the Felixes had timely, actual notice of the intent of Fuel
Stops Realty Company to exercise the option to purchase and that
the Felixes had initially participated diligently in
facilitating efforts by the lessee to consummate a closing.
Following a hearing, the trial court concluded that Fuel Stops
Realty Company had properly exercised the option to purchase on
a timely basis.
Felix was ordered to transfer the Aberdeen
property by deed to Fuel Stops Realty Company within sixty (60)
days.
This appeal followed.
On appeal, Felix contends that the trial court erred
by granting summary judgment since the lessee failed to comply
with the lease terms governing the exercise of the option to
purchase.
She argues that Ohio law controls and that it
requires strict compliance with the technical requirements of an
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option to purchase.
The lessees contend that Kentucky contract
law applies and that they were entitled to summary judgment
since the evidence shows that they exercised the option to
purchase “unequivocally, repeatedly, and in an on-going fashion,
to multiple agents of [the Felixes].”
Brief at 11.
In general, Kentucky prefers to apply its own laws
over those of another forum.
Custom Products, Inc. v. Fluor
Daniel Canada, Inc., 262 F.Supp.2d 767 (W.D.Ky. 2003).
“‘[U]nder Kentucky law, any significant contact with Kentucky is
sufficient to allow our law to apply.’”
Id. at 773 (citing
Bonnlander v. Leader Nat’l Ins. Co., Ky.App., 949 S.W.2d 618,
620 (1996).
However, that preference is not absolute:
although this principle should generally
dictate the outcome there are occasions when
a careful examination of the facts reveals
that the case’s actual connection to
Kentucky is simply too remote to justify
applying Kentucky law.
Id. at 771.
It will not suffice to prove just any contact with
See Bonnlander, 949 S.W.2d at 620.
Kentucky.
It is clear that there are no significant contacts in
this case to justify the application of Kentucky law to resolve
the dispute.
Felix is a Florida resident and all of her
activities (as well as those of her deceased husband) occurred
in Florida.
Teegarden, Felix’s son-in-law and purported agent,
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is an Ohio resident.
The lessee is an Ohio partnership, and the
leased premises are located entirely in Ohio.
We believe that the trial court should have dismissed
Felix’s action under the doctrine of forum non conveniens after
it became aware that Ohio had already assumed jurisdiction of
this matter.
While the court may well have had proper
jurisdiction of the case, it had both a right and a duty to
consider the doctrine of forum non conveniens and to decline
jurisdiction if appropriate.
See Williams v. Williams, 611
S.W.2d 807 (Ky. App. 1981).
Kentucky has no interest in this action.
It bears no
significant relationship to the parties, to the transaction, or
to the res.
There is no possibility that any public policy
important to Kentucky will be articulated or subverted.
Finally, the Ohio courts provide an adequate alternate forum for
the resolution of the dispute.
We are confident that the
parties will receive a fair hearing before the courts of Ohio
where the case in counterpart is being litigated.
We believe that the Mason Circuit Court erred in
accepting jurisdiction in this case.
Accordingly, we vacate the
summary judgment and remand for an order dismissing.
GUIDUGLI, JUDGE, CONCURS.
MILLER, SENIOR JUDGE, DISSENTS AND FILES SEPARATE
OPINION.
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MILLER, SENIOR JUDGE, DISSENTING:
The majority
reverses and remands for dismissal under the doctrine of forum
non conveniens in light of a pending litigation in Ohio.
The
majority reasons that dismissal is appropriate as Ohio is the
more convenient forum.
Because I believe that Mason Circuit
Court was a proper forum for the consideration of this case, and
the circuit court had no obligation to defer to Ohio as a
preferable forum, I would affirm on the merits.
I am unaware of any authority for dismissal of an
action in one jurisdiction simply because the same litigation is
pending in another jurisdiction which might be considered a more
convenient forum.
As I understand the law, a forum court may,
in its discretion, abate an action as a matter of comity, but it
may never dismiss an action as barred by litigation pending in
another state. 2
application.
The doctrine of forum non conveniens has no
Accordingly, I respectfully dissent.
The law in this area is succinctly stated in Brooks
Erection Co. v. William R. Montgomery & Associates, Inc., 576
S.W.2d 273 (Ky.App. 1979).
In Brooks, two Missouri companies
had a falling-out over a construction contract.
2
Brooks filed an
Lykins moved to dismiss the Kentucky case in deference to the Ohio case.
While the trial court did not grant the motion to dismiss, it did abate the
motion for a time in deference to the earlier filed Ohio case. I have no
qualms with abatement as a matter of comity, and, indeed, it is a practice
generally favored. See Brooks Erection Co. v. William R. Montgomery &
Associates, Inc., 576 S.W.2d 273 (1979).
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action in Missouri.
Montgomery subsequently filed an action in
Webster Circuit Court of Kentucky.
Brooks asked the Webster
Circuit Court to abate the Kentucky case on the grounds of the
former action in Missouri.
The circuit court declined to do so.
In affirming, upon appeal, it was stated as follows:
We think that the law is well settled that a
second action based on the same cause will
generally be abated where there is a prior
action pending in a court of competent
jurisdiction Within [sic] the same state,
between the same parties, involving the same
or substantially the same subject matter and
cause of action, and in which prior action
the rights of the parties may be determined
and adjudged. This principle has been
clearly enunciated in Delaney v. Alcorn, 301
Ky. 802, 193 S.W.2d 404 (1946), and in Akers
v. Stevenson, Ky., 469 S.W.2d 704 (1970).
However, a different problem arises when the
prior action is pending in another state.
The law in this instance is best set out in
an annotation contained in 19 A.L.R.2d 305,
in which we find the following statement:
This principle, however, does not hold
true in the case of a pending action in
another jurisdiction, it being
uniformly held that the pendency of
another action in another jurisdiction,
though between the same parties and
upon the same cause of action as the
one subsequently instituted at the
forum, is not a bar or ground for
abatement of the later action at the
forum. This is true even though a
foreign court in which the prior action
was commenced had complete jurisdiction
of the parties and of the action.
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Also in 21 C.J.S. Courts s 548, cited with
approval in Wilson v. Wilson, Ky., 511
S.W.2d 201 (1974), we find the following:
The pendency of an action in the courts
of one state or country is not a bar to
the institution of another action
between the same parties and for the
same cause of action in a court of
another state or country, nor is it the
duty of the court in which the latter
action is brought to stay the same
pending a determination of the earlier
action, even though the court in which
the earlier action is brought has
jurisdiction sufficient to dispose of
the entire controversy. Nevertheless,
sometimes stated as a matter of comity,
not of right, it is usual for the court
in which the later action is brought to
stay proceedings under such
circumstances until the earlier action
is determined . . .
Thus, we find that the general law, as
hereinabove stated, is that there is no duty
upon the court to grant a plea of abatement
where a prior action has been filed in
another state but that it is discretionary
only. This principle has been set out in
the cases of Salmon v. Wootton, 39 Ky.
Reports (9 Dana) 422 (1840), and Davis v.
Morton, Galt & Co., 67 Ky. Reports (4 Bush)
442 (1868). (Emphasis added).
Id. at 275.
The rule is neither unsound nor unreasonable.
All
cases should reach the same correct result wherever the forum.
The law of the forum governs procedure only.
The substantive
law is always that applicable given the nature and circumstances
of the case.
If the nature and circumstances of the case
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dictate that the law of a particular jurisdiction applies, it
will be so applied wherever the action is pending.
Thus, this
action pending in the Mason Circuit Court is subject to the same
substantive law as if pending in Ohio, should the principles of
conflict of laws so dictate.
In summary, courts always apply the procedural law of
the forum.
Moreover, courts apply the substantive law of the
forum unless there exists a conflict with the substantive law of
another jurisdiction having some relationship to the matter in
controversy, in which latter case the court will apply the
substantive law of the jurisdiction having the most significant
relationship.
In Lewis v. American Family Insurance Group, 555
S.W.2d 579 (Ky. 1977), involving a contract dispute, Kentucky
expressly adopted the “most significant relationship” test as
set forth in Restatement (Second) of Conflict of Laws, § 188
(1971), which provides as follows:
(1) The rights and duties of the parties
with respect to an issue in contract are
determined by the local law of the state
which, with respect to that issue, has the
most significant relationship to the
transaction and the parties under the
principles stated in § 6.[ 3 ]
(2) In the absence of an effective choice of
law by the parties (see § 187), the contacts
3
Section 6 generally provides that a court “will follow [the] statutory
directive of its own state on choice of law.”
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to be taken into account in applying the
principles of § 6 to determine the law
applicable to an issue include:
(a) the place of contracting,
(b) the place of negotiation of the
contract,
(c) the place of performance,
(d) the location of the subject matter of
the contract, and
(e) the domicile, residence, nationality,
place of incorporation and place of business
of the parties.
These contacts are to be evaluated according
to their relative importance with respect to
the particular issue.
(3) If the place of negotiating the contract
and the place of performance are in the same
state, the local law of this state will
usually be applied, except as otherwise
provided in §§ 189-199 and 203.
Felix does not argue that this matter should be tried
in Ohio.
Well she should not as she is the one who selected
Kentucky as the forum.
Her argument is that Ohio law should be
applicable and, if so applied, she, not Lykins, would be
entitled to summary judgment.
Felix has not persuaded me that Ohio law differs from
Kentucky.
This is a simple contract action pertaining to the
waiver of a notice provision contained therein.
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The law
throughout the various jurisdictions is rather uniform on the
issue presented.
In any event I am of the opinion that the
circumstances are such that Kentucky is the state of most
significant relationship to the transaction.
The Lykins
business operations have their origin and existence in Kentucky.
A Kentucky law firm handled the transaction on behalf of the
Felixes.
Essentially the only connection with Ohio is the
location of the premises.
Perforce, I think Kentucky law
applicable.
Under Kentucky law I am of the opinion that the
written notice provision in the exercise of the option was
waived.
The common definition of a legal waiver is that it is a
voluntary and intentional surrender or relinquishment of a known
right, or an election to forego an advantage which the party at
his option might have demanded or insisted upon.
Waiver may be
expressed or inferred from a failure to insist upon recognition
of the right or conformance with the condition.
Barker v.
Stearns Coal & Lumber Co., 291 Ky. 184, 163 S.W.2d 466, 470 (Ky.
1942).
Upon the whole of this case, I think waiver clear as a
matter of law.
Having determined that there was a valid exercise of
the option, for the sake of completeness, I further note that
Mason Circuit Court had the authority to order Felix, over whom
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it had personal jurisdiction, to convey the Ohio property to
Lykins.
Fall v. Eastin, 215 U.S. 1, 30 S.Ct. 3, 54 L.Ed. 65
(1909); Becker v. Becker, 576 S.W.2d 255 (Ky.App. 1979).
For the foregoing reasons, I would affirm the decision
of the Mason Circuit Court.
BRIEF FOR APPELLANT:
Edward S. Monohan
N. Jeffrey Blankenship
Florence, Kentucky
BRIEF FOR APPELLEES LYKINS
ENTERPRISES, INC., FUEL STOPS,
INC., AND FUEL STOPS REAL
ESTATE COMPANY:
ORAL ARGUMENT FOR APPELLANT:
Richard M. Sullivan
Jennifer Fust-Rutherford
Louisville, Kentucky
Edward S. Monohan
Florence, Kentucky
ORAL ARGUMENT FOR APPELLEES:
Richard M. Sullivan
Louisville, Kentucky
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