SHAFER PLAZA VI LTD VS. LANG (TIMOTHY), ET AL.Annotate this Case
RENDERED: OCTOBER 31, 2008; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
SHAFER PLAZA VI, LTD.
APPEAL FROM WARREN CIRCUIT COURT
HONORABLE STEVE ALAN WILSON, JUDGE
ACTION NO. 05-CI-00424
TIMOTHY LANG; AND
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BEFORE: ACREE AND CLAYTON, JUDGES; GUIDUGLI,1 SENIOR JUDGE.
GUIDUGLI, SENIOR JUDGE: Shafer Plaza VI, Ltd., appeals from a jury verdict
awarding Timothy Lang and Rem Lang damages for wrongful eviction from
commercial property. Shafer Plaza contends the trial court erred by: (1) failing to
Senior Judge Daniel T. Guidugli sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
enforce the choice of law and forum-selection clauses in the contract; (2) denying
its motion for directed verdict on the basis that the Langs were delinquent in their
rent payments; and (3) denying its motion to vacate, alter, or amend the judgment
on the basis that the damage award was not supported by competent evidence.
On November 6, 2000, the Langs executed a five-year lease with
Shafer Plaza, a Texas limited partnership, for commercial property located in
Bowling Green, Warren County, Kentucky. The lease contained a choice of law
provision and forum-selection clause, which specified:
The laws of the State of Texas shall govern the
interpretation, validity, performance and enforcement of
this lease. Venue for any action under this lease shall be
the county in which Rental is to be paid pursuant to
Section 4.2 and Section 1.1 of this lease.
Section 4.2 provides that the rental payments shall be made at the landlord’s
address as set forth in Section 1.1. Section 1.1. states the landlord’s address as
located in Dallas, Texas.
Apparently, the parties’ contractual relationship was fraught with
difficulty from the outset. The Langs were penalized for late payments on
numerous occasions. In 2003, Shafer locked out the Langs from the premises for
failure to make timely payment. However, Shafer permitted the Langs to continue
operating the restaurant when payment was made. On March 14, 2005, Shafer sent
agents to lock out the Langs from the property for nonpayment. The agents
ordered the Langs and their employees to vacate the premises and the locks were
changed. The Langs were not permitted to remove any of their property from the
building. The Langs never reoccupied the property and filed suit in Warren Circuit
Court alleging breach of contract and wrongful eviction.
Shafer filed a motion to dismiss the suit on the basis of the forumselection clause. The trial court denied the motion and found that it would be
unfair and unreasonable to enforce the provision. Trial was held before a jury.
The jury found in favor of the Langs and awarded them $10,000.00 for lost profits,
$80,000.00 for mental distress, humiliation, and embarrassment, and $50,000.00
for lost or destroyed property. This appeal followed.
Shafer argues that the trial court erred by failing to enforce the choice
of law and forum-selection clauses in the lease and denying its motion to dismiss
the suit. The Langs filed a response and affidavit in opposition to the motion.
The rule in Kentucky is that forum-selection clauses shall be enforced
as prima facie valid unless the party opposing enforcement can demonstrate
circumstances that would render the clause unfair or unreasonable. Prezocki v.
Bullock Garages, Inc., 938 S.W.2d 888, 889 (Ky. 1997). In determining whether a
forum-selection clause is unreasonable, the trial court should consider the
following factors: “the inconvenience created by holding the trial in the specified
forum; the disparity of bargaining power between the two parties; and whether the
state in which the incident occurred has a minimal interest in the lawsuit.” Id.
Appellate decisions in this Commonwealth have uniformly applied Kentucky law
in the interpretation of forum-selection clauses. Wilder v. Absorption Corp., 107
S.W.3d 181 (Ky. 2003); Prezocki v. Bullock Garages, Inc., supra; Prudential
Resources Corp. v. Plunkett, 583 S.W.2d 97 (Ky.App. 1979). Moreover, we
believe that the Texas rule governing the interpretation of forum-selection clauses
is virtually identical to our own: “enforcement of forum-selection clauses is
mandatory unless the party opposing enforcement ‘clearly show[s] that
enforcement would be unreasonable and unjust, or that the clause was invalid for
such reasons as fraud or overreaching.’” In re Automated Collection
Technologies, Inc., 156 S.W.3d 557, 559 (Tex. 2004).
Applying the Prezocki factors, we believe, as did the trial court, that
enforcement of the forum-selection clause under these circumstances would
constitute an unreasonable hardship. As small business owners, the time and
expense of travelling to Texas to pursue their suit would essentially deprive the
Langs of their day in court. There was a disparity of bargaining power between the
parties in that the lease was a complicated eighteen-page pre-printed document that
was offered on a “take it or leave it” basis. The only connection to Texas is that it
is the location of Shafer Plaza’s residence. Except for Shafer Plaza, the absentee
owner, every witness to this matter resided in Warren County. The Langs’
business is located in Kentucky and the lease was signed in Kentucky. Shafer
Plaza’s action of locking the Langs from the property occurred in Kentucky. The
trial court did not err by finding that the forum-selection clause was unenforceable.
Next, Shafer Plaza argues that it was entitled to a directed verdict
because the Langs were delinquent in their rent payments. The standard of review
for a motion for directed verdict is well established:
when an appellate court is reviewing evidence supporting
a judgment entered upon a jury verdict, the role of an
appellate court is limited to determining whether the trial
court erred in failing to grant the motion for a directed
verdict. All evidence which favors the prevailing party
must be taken as true and the reviewing court is not at
liberty to determine credibility or the weight which
should be given to the evidence, these being functions
reserved to the trier of fact. The prevailing party is
entitled to all reasonable inferences which may be drawn
from the evidence.
Upon completion of such an evidentiary review, the
appellate court must determine whether the verdict
rendered is palpably or flagrantly against the evidence so
as to indicate that it was reached as the result of passion
Bierman v. Klaphehe, 967 S.W.2d 16, 17 (Ky. 1998).
The Langs did not make a rental payment in March 2005. However,
their theory of the case was that they had paid the rent in advance by overpayment.
Shafer Plaza introduced a ledger into evidence which both parties relied on to
demonstrate the history of payments made by the Langs. During his testimony,
Mr. Lang counted out the number of payments he made using the ledger as a
reference. Mr. Lang testified that he was three months ahead on his rent payments.
Additionally, Mr. Lang testified that Shafer Plaza demanded a payment of
$12,000.00 after the first lockout, which he paid, and was not accounted for in the
ledger. The evidence presents a close question; however, issues of weight and
credibility are left to the trier of fact. This Court cannot conclude that there was
such an absence of proof as to compel a directed verdict in favor of Shafer Plaza.
Nor can this Court conclude that the verdict reached by the jury was so flagrantly
against the evidence as to be the result of passion or prejudice.
Finally, Shafer Plaza argues that the damages for lost profits and loss
of property awarded in this case were not supported by the evidence.
Loss of anticipated profits as an element of recoverable
damages for breach of contract is fully recognized in
Kentucky. Mere uncertainty as to the amount will not
preclude recovery. There must be presented, however,
sufficient evidence on which a reasonable inference as to
the amount of damage can be based. In proving a claim
of loss of profits of an established business, the record of
past profits is usually the best available evidence. Mere
“estimates” of witnesses will not serve, if books were
kept. McCormick states: “Opinions of witnesses as to the
amount of profits that would have been gained are not
admissible, except where the opinion is that of an expert
based upon relevant facts.”
Illinois Valley Asphalt, Inc. v. Harry Berry, Inc., 578 S.W.2d 244, 246 (Ky.
1979)(internal citations omitted). There is no single definition of “reasonable
certainty” and the issue of whether reasonable certainty has been established must
be considered on a case-by-case basis. Pauline’s Chicken Villa, Inc. v. KFC Corp.,
701 S.W.2d 399, 401 (Ky. 1985).
While the Langs did not present any expert testimony, Mr. Lang
testified as to his approximate monthly earnings at the restaurant in the past rather
than to a future expectancy of profits. This testimony was supported by ledger
sheets for the restaurant as well as the Langs’ tax returns. We find that there was
sufficient evidence to sustain the jury’s award for lost profits.
Finally, Shafer Plaza argues that the Langs relied upon an improper
measure of damage to support their claim for loss of personal property. Shafer
Plaza argues that there was only evidence of replacement cost rather than the fair
market of the damaged property. The law in Kentucky is “that the proper measure
of damages for injury to personal property is the difference in the fair market value
of the property before and after the accident.” McCarty v. Hall, 697 S.W.2d 955
(Ky. App. 1985). Expert testimony is not required to establish fair market value.
Mr. Lang testified as to the fair market value of his food inventory and
equipment on the date the business was locked out. These figures were supported
by an inventory summary sheet. The weight and credibility of this testimony was
subject to attack under cross-examination. We find that the evidence was
sufficient to withstand a motion for directed verdict. The trial court did not err in
submitting the case to the jury.
For the foregoing reasons, the judgment entered by the Warren Circuit
Court is affirmed.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
Greg N. Stivers
Scott D. Laufenberg
Bowling Green, Kentucky
Bowling Green, Kentucky