DEATON (JAMES E.), ET AL. VS. MCMILLIAN (KAY F.) VACATING AND REMANDING COMBS (PRESIDING JUDGE) NICKELL (CONCURS) AND GRAVES (CONCURS)
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RENDERED: JULY 18, 2008; 2:00 P.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2006-CA-002333-MR
JAMES E. DEATON AND
VALERIE B. DEATON
v.
APPELLANTS
APPEAL FROM PULASKI CIRCUIT COURT
HONORABLE DAVID A. TAPP, JUDGE
ACTION NO. 04-CI-01286
KAY F. McMILLIAN1
APPELLEE
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE: COMBS, CHIEF JUDGE; NICKELL, JUDGE; GRAVES, SENIOR
JUDGE.
COMBS, CHIEF JUDGE: James and Valerie Deaton appeal from a summary
judgment entered by the Pulaski Circuit Court ordering the Deatons to reimburse
Kay F. McMillan $3,854.34, the amount that she spent on attorney’s fees and costs
There is a discrepancy in the spelling of the appellee’s name. “McMillian” appears on the
Notice of Appeal, but the circuit court pleadings refer to “McMillan.” Throughout this opinion,
we shall refer to the appellee as “McMillan” since that is the spelling used by her attorney on her
appellate brief.
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in a boundary dispute case involving a third party. The court found that the
Deatons had fraudulently misrepresented to McMillan that a pending dispute
would be settled prior to her purchase of the property at issue. After our review,
we are persuaded that the summary judgment must be vacated and that this matter
be remanded for further proceedings.
In April 2004, McMillan expressed an interest in purchasing the
Deatons’ property at 94 Twin Rivers Drive in the Twin Rivers Estates subdivision
in Bronston, Kentucky. McMillan received a form entitled, “Seller Disclosure of
Property Condition,” signed by both James and Valerie Deaton. Item (d) of the
“Boundaries” portion of the form contained a question: “Are there any
encroachments or unrecorded easements relating to the property of which you are
aware?” The Deatons answered, “YES,” providing the following handwritten
explanation: “We are currently dealing with a boundary dispute on the S.E. side of
the property which will be settled prior to closing.” McMillan subsequently
reached an agreement to purchase the property at 94 Twin Rivers Drive from the
Deatons for $230,000.00. The sale was closed on May 27, 2004.
The boundary dispute involved an ongoing claim by Roscoe and
Cheryl Vanover, the owners of an adjoining lot at 110 Twin Rivers Drive. The
Vanovers contended that the Deatons’ recently enclosed garage/boat-house
encroached upon their property by approximately five feet. Roscoe Vanover first
spoke with the Deatons about the encroachment on September 1, 2003. On
September 15, 2003, he sent them a letter offering to convey the disputed property
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to them in exchange for $5,000.00 and payment of all fees related to the sale.
Vanover received no response to this offer. On February 26, 2004, he sent another
letter to the Deatons advising them that his offer would remain valid only for
another thirty days.
On May 26, 2004 (one day prior to the sale of 94 Twin Rivers Drive
to McMillan), the Deatons’ attorney, John T. Mandt, wrote a letter to the
Vanovers, asserting that the alleged area of encroachment had been adversely
possessed by the Deatons and their predecessors in interest pursuant to Combs v.
Combs, 240 S.W.2d 558 (Ky. 1951). The letter was supported by affidavits from
previous property owners of 94 Twin Rivers Drive and 110 Twin Rivers Drive.
The record does not contain any indication of a response to this letter.
Approximately six months after McMillan purchased the property at
94 Twin Rivers Drive from the Deatons, she was served with a complaint that had
been filed by the Vanovers seeking to quiet title as to the area of the alleged
encroachment. They also asked for injunctive relief, an order that McMillan be
forced to remove the encroaching garage from her property, and damages for
trespass. McMillan subsequently filed a third-party complaint against the Deatons
for fraud, alleging that they were required to indemnify her as to any damages and
to reimburse her as to any costs that might result from the Vanover litigation. She
relied on: (1) the covenants inherent in a general warranty deed and (2) the express
written warranty that the Deatons had made in their seller disclosure form
indicating that the boundary dispute would be settled prior to closing.
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In January 2006, McMillan purchased the adjoining property at 110
Twin Rivers Drive from Roscoe Vanover, and the parties agreed to settle and
dismiss the lawsuit between them. The matter was dismissed by agreed order on
January 19, 2006. McMillan then moved for summary judgment in her third-party
claim against the Deatons and asked for reimbursement of her litigation and the
survey costs resulting from her lawsuit against the Deatons. The trial court granted
this motion in an order entered on September 5, 2006, and in a supplemental order
entered on October 9, 2006. The court found that there was no showing that the
Deatons had made an intentional misrepresentation to McMillan as to the seller
disclosure form. However, finding that they did make a reckless misrepresentation
intended to induce her reliance, the court awarded McMillan a total of $3,854.34 in
fees and costs. This appeal followed.
In reviewing a summary judgment, we are governed by the following
standard:
[t]he standard of review on appeal of a summary
judgment is whether the trial court correctly found that
there were no genuine issues as to any material fact and
that the moving party was entitled to judgment as a
matter of law.
Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky.App. 1996); Kentucky Rules of Civil
Procedure (“CR”) 56.03. Our review is de novo since we analyze solely questions
of law. Blevins v. Moran, 12 S.W.3d 698, 700 (Ky.App. 2000). We are required
to view the record in a light most favorable to the party opposing summary
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judgment, and all doubts are to be resolved in his favor. Steelvest, Inc. v. Scansteel
Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991).
Summary judgment is appropriate only when “it appears that it would
be impossible for the respondent to produce evidence at the trial warranting a
judgment in his favor.” Id. The issue of impossibility is viewed in a practical
sense rather than an absolute one. Perkins v. Hausladen, 828 S.W.2d 652, 654
(Ky. 1992). We must review the record as it stands at the time of the motion for
summary judgment rather than as to how it may be developed at trial:
[t]he inquiry should be whether, from the evidence of
record, facts exist which would make it possible for the
non-moving party to prevail. In the analysis, the focus
should be on what is of record rather than what might be
presented at trial.
Welch v. American Publishing Co. of Kentucky, 3 S.W.3d 724, 730 (Ky. 1999).
Consequently, a party opposing a motion for summary judgment cannot defeat that
motion without presenting at least some affirmative evidence that there is a
genuine issue of material fact that requires a trial. O’Bryan v. Cave, 202 S.W.3d
585, 587 (Ky. 2006); Steelvest, 807 S.W.2d at 482.
The Deatons first argue that the trial judge should have recused
himself from this matter because of an alleged conflict of interest. However, it
does not appear that this issue was ever raised below. Consequently, as it is not
preserved for our review, we decline to consider it. See Regional Jail Authority v.
Tackett, 770 S.W.2d 225, 228 (Ky. 1989).
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The Deatons’ remaining arguments and allegations are unsupported
by any affirmative evidence within the record. Nonetheless, even though the
Deatons failed to present at least a modicum of affirmative evidence, we conclude
that the record does not contain sufficient evidence to sustain entry of summary
judgment in McMillan’s favor. Kentucky law requires that a motion for summary
judgment be properly supported. Steelvest, 807 S.W.2d at 481. As McMillan’s
motion was deficient, we are persuaded that summary judgment was prematurely
entered in her favor despite the shortcomings of the Deatons’ evidence.
McMillan’s action against the Deatons was essentially one for fraud.
False and fraudulent misrepresentations which were made to induce a purchaser to
enter into a contract do not merge into a deed of conveyance so as to preclude an
action for fraud. See Yeager v. McLellan, 177 S.W.3d 807, 809 (Ky. 2005);
Sanford Const. Co. v. S & H Contractors, Inc., 443 S.W.2d 227, 232 (Ky. 1969);
Dunn v. Tate, 268 S.W.2d 925, 927 (Ky. 1954). In order to demonstrate that the
warranty was a fraudulent misrepresentation, McMillan bore the burden of
establishing by clear and convincing evidence the six elements of fraud. Yeager,
177 S.W.3d at 809. Those elements are:
a) a material representation
b) which is false
c) known to be false or made recklessly
d) made with inducement to be acted upon
e) acted in reliance thereon and
f) causing injury.
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Id.; see also United Parcel Service Co. v. Rickert, 996 S.W.2d 464, 468 (Ky.
1999). Just as all six of these elements must be satisfied in an action for fraud, so
must they be shown to properly support a motion for summary judgment.
In a fraud action, detrimental reliance can be shown by evidence that a
person either acted or failed to act because of the fraudulent misrepresentations of
another party. Rickert, 996 S.W.2d at 469. After reviewing the record, we can
find no evidence of detrimental reliance on McMillan’s part (through deposition,
affidavit, or any other source) other than the fact that she purchased the property
from the Deatons. While this fact may suggest reliance, by no means does it
indicate McMillan’s state of mind at the time of purchase. Reliance cannot be
inferred; it must be established by credible evidence of record. As the record
currently stands, we are presented with a mere inference unsupported by actual
evidence.
There is no evidence or testimony from McMillan as to her mental
state at the time she received the seller disclosure form and at the time she
purchased the subject property. Thus, there is no basis upon which to conclude
that she acted either in reliance upon the Deatons’ alleged misrepresentation or in
spite of it. In her third-party complaint and her memorandum in support of her
motion for summary judgment, McMillan recited that she relied upon the Deatons’
written warranty. However, pleadings are not evidence. Educational Training
Systems, Inc. v. Monroe Guar. Ins. Co., 129 S.W.3d 850, 853 (Ky.App. 2003).
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Summary judgment is appropriate only when a moving party shows
his or her right to judgment “with such clarity that there is no room left for
controversy.” Steelvest, 807 S.W.2d at 482. As McMillan failed to satisfy all of
the elements for fraud, the requisite clarity is absent. Therefore, summary
judgment was entered erroneously.
The summary judgment of the Pulaski Circuit Court is vacated, and
this matter is remanded for further proceedings consistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
James E. Deaton
Somerset, Kentucky
John B. Adams
Somerset, Kentucky
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