Opinion
NO. 2012-CA-002081-MR
05-09-2014
NATHAN DAY; MICHELLE DAY; BOBBY REYNOLDS; AND ARLENE REYNOLDS APPELLANTS v. INEZ DEPOSIT BANK; CAPITAL ONE BANK (USA), N.A.; JAMOS FUND 1, LP; U.S. BANK, AS CUSTODIAN FOR SASS MUNI V; COUNTY OF KNOTT; AND JERRY SLONE, MASTER COMMISSIONER OF KNOTT COUNTY APPELLEES
BRIEF FOR APPELLANT: Adam P. Collins Hindman, Kentucky BRIEF FOR APPELLEE: John R. Triplett Inez, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM KNOTT CIRCUIT COURT
HONORABLE KIM C. CHILDERS, JUDGE
ACTION NO. 12-CI-00144
OPINION
AFFIRMING
BEFORE: DIXON, LAMBERT, AND NICKELL, JUDGES. LAMBERT, JUDGE: This is an appeal from the trial court's entry of summary judgment in favor of Inez Deposit Bank finding that there was no genuine issue of material fact and that the Bank was entitled to judgment as a matter of law. After careful review, we affirm.
Appellant Nathan Day executed and delivered to the underlying Plaintiff and the Appellee herein, Inez Deposit Bank (hereinafter the bank), a promissory note, dated October 4, 2002, in the principal sum of One Hundred Twenty Two Thousand Three Hundred Dollars (122,300.00), with interest thereon at the rate of 7.25%, payable in monthly installments of $1,213.74 beginning the first day of December 2002, and the entire balance and interest becoming due and payable in full on or before November 1, 2032.
Nathan Day and his wife, Michelle Day, along with Bobby and Arlene Reynolds, the other appellants in this case (collectively the appellants), concurrently executed a mortgage in favor of the bank on a property that consisted of several tracts of land located in Knott County, Kentucky.
The appellants defaulted on the mortgage, and on May 31, 2012, the bank filed suit alleging that the appellants had defaulted under the agreement by failing to make the required payments and that the bank was electing to declare the entire balance due under the terms of the contract. On July 19, 2012, the appellants initially answered the complaint, and shortly thereafter, on August 22, 2012, they filed an amended answer asserting counterclaims for fraud and breach of promise against the bank. In the counterclaims, Bobby Reynolds alleged that the bank, "by and through its agents, Jaime Williamson and/or others falsely represented and/or promised...that it would hold a mortgage on his properties only for one (1) year" whereupon "it would release said mortgage regardless of whether [] Nathan Day and/or Michelle Day had satisfied their alleged obligations to the [Bank] or not." Bobby Reynolds claimed that as a result of the alleged promise, he was induced to pledge his property in security for the loan that the bank made to Nathan and Michelle Day, and that he relied to his detriment upon the bank's promise to hold a mortgage on his properties only for one year.
Mr. Reynolds also alleged in his counterclaim that the bank, by and through its agent, Jaime Williamson, falsely represented that it would only release money to his contractor upon his actual express agreement even though the bank knew that it did not intend to honor such a promise and that such representation was false, or he acted with a reckless disregard as to the truthfulness of his representations and/or promises and also otherwise acted in material breach of such representation or promise.
The bank filed its response to the counterclaims on September 12, 2012, and moved for summary judgment on all claims, alleging that there was no genuine issue as to any material fact and that the bank was entitled to judgment as a matter of law. In support of the motion for summary judgment, the bank attached the affidavit of its assistant Vice President, James Ayers, who averred that, as to Mr. Reynolds's counterclaims, "[t]he mortgage and adjustable rate note represent the complete and unambiguous agreement between the parties, and these documents clearly state the property owned by Bobby Reynolds and Arlene Reynolds is subject to the Mortgage for the life of the loan" and that the allegations that disbursements were made to contractors without consent are misplaced." Mr. Ayers also averred that the appellants had never disputed that the debt was owed or that the documents and contracts were not duly executed.
On October 10, 2012, the appellants responded to the bank's summary judgment motion, arguing that they had not been afforded a reasonable amount of time to conduct discovery on their defensive claims and counterclaims against the bank and that, therefore, summary judgment was premature. On October 17, 2012, the trial court entered in rem summary judgment in favor of the bank. The appellants moved the trial court to alter, amend, or vacate the judgment, again arguing they were not afforded ample time to conduct discovery. The trial court denied the appellants' motion to alter, amend, or vacate, and issued findings of facts, conclusions of law, and in rem judgment and order of sale on November 16, 2012. This appeal now follows.
The standard of review of summary judgment is whether the trial court correctly determined that there were no genuine issues of material fact and that the moving party was entitled to judgment as a matter of law. Scifes v. Kraft, 916 S.W.2d 779 (Ky. App. 1996). The purpose of summary judgment is to expedite the disposition of cases and to avoid unnecessary trials when no genuine issues of fact are raised. Steelvest v. Scansteel Service Center, 807 S.W.2d 476, 482 (Ky. 1991). It has long been recognized that a party opposing a properly supported summary judgment motion has the responsibility of specifically showing an issue of material fact and cannot defeat the motion without presenting a least some affirmative evidence demonstrating that there is a genuine issue of material fact requiring trial. Hubble v. Johnson, 841 S.W.2d 169, 171 (Ky. 1992) (citing Steelvest, supra, at 482). If the opposing party does not meet this burden and present affirmative evidence of a genuine issue of material fact, summary judgment is properly granted as a matter of law.
On appeal, the appellants first argue that the trial court erred in granting summary judgment because they had not been afforded ample time to conduct discovery. In Blankenship v. Collier, 302 S.W.3d 665, 668 (Ky. 2010), the Kentucky Supreme Court held that a trial court's determination that a sufficient amount of time has passed and that it can properly take the summary judgment motion for a ruling is reviewed for an abuse of discretion. "The test for abuse of discretion is whether the trial court's decision was arbitrary, unreasonable, unfair, or unsupported by sound legal principles." Miller v. Eldridge, 146 S.W.3d 909, 914 (Ky. 2004) (internal citation omitted). In the instant case, the appellants were served on June 4, 2012, and June 7, 2012, respectively, and filed an answer on July 19, 2012—more than forty days after service. The appellants then filed an amended answer on August 22, 2012, some 77 days after service. The appellants filed their first set of interrogatories and requests for production of documents on October 10, 2012, over four months after service had occurred. The trial court set a hearing on the bank's motion for summary judgment on October 11, 2012, more than four months after the bank's complaint was filed and the appellants were served. During this time the appellants had not undertaken any discovery on the bank's claims. We cannot say that it was an abuse of discretion for the trial court to entertain the bank's summary judgment motion. A review of the record shows that the appellants were afforded deference by the trial court, having filed a late answer eight days after the bank's motion for default judgment. Also, the appellants filed an amended answer over one month later, without requesting leave of the court to do so. For these reasons, we cannot say that the trial court's decision to consider the motion for summary judgment was unfair, arbitrary, or based on unsound principles of law.
The appellants next argue that the trial court erred in granting summary judgment to the bank based upon the statute of frauds and Kentucky Revised Statutes (KRS) 371.010. The trial court held that the alleged oral promise testified to by Mr. Reynolds could not have been performed "within one year from the making thereof." The appellants contend that the bank promised it would hold a mortgage on the Reynoldses' properties only for one year whereupon it would release the mortgage "regardless of whether [] Nathan Day and/or Michelle Day had satisfied their alleged obligations to the [Bank] or not." In his affidavit submitted in opposition to the bank's motion for summary judgment, Mr. Reynolds averred that a loan officer for the bank "told me and Arlene Reynolds that the [Bank] would release the mortgage on my property within a year of its creation and would not hold it over our heads for more than one year regardless of whether Nathan Day and/or Michelle Day had satisfied their alleged obligations to [the Bank]."
The bank argues, and we agree, that the appellants' allegation that oral promises were made in addition to, or contrary to, the terms of their written mortgage is barred by KRS 371.010. The statute of frauds and Kentucky statutes require all contracts to be in writing "upon any agreement that is not to be performed within one year from the making thereof." KRS 371.010(7). By Mr. Reynolds's own admission, he claims that the bank's representative made oral promises to release the mortgage on his properties after one year. Whether viewed as a separate contract or oral amendment, the fact that the alleged promise could not have been performed within one year from the making thereof, means that the alleged promise had to be in writing to be enforceable. Because the alleged oral promise concerned an interest in real property and was to be acted upon one year or more from the making thereof, the alleged oral promise had to be in writing and is barred by the statute of frauds and KRS 371.010(7).
The appellants cite United Parcel Service Co. v. Rickert, 996 S.W.2d 464, 471 (Ky. 1999), for the proposition that "Kentucky is within the majority of states in holding that the statute of frauds is not a bar to a fraud or promissory estoppel claim based on oral promise." Actually, the cited phrase reads, "Kentucky is with the majority of states in holding that the statute of frauds is not a bar to a fraud or promissory estoppel claim based on an oral promise of indefinite employment." Id. (Emphasis added). The rationale for this holding is that an oral promise by an employer of indefinite employment could be performed within one year because the employee could die at any time. The appellants' reliance on United Parcel is misplaced, and we are not persuaded that it controls in the instant case.
The purpose of the statute of frauds is to prevent fraud on the part of both parties to a contract, by requiring that certain promises be in writing where they are deemed to be of sufficient significance. The object of the statute of the frauds is not to aid, but to prevent fraud. See Appleby v. Buck, 351 S.W.2d 494, 495 (Ky. 1961). The alleged promise by the bank to release the mortgaged property of Bobby and Arlene Reynolds after one year was counter to the clear and unambiguous terms of the mortgage and is of such significance that it had to be in writing to be enforceable.
Finally, the appellants argue that the trial court erred in rejecting their claims on the basis of estoppel as a matter of law. The trial court held that the appellants are estopped from raising the issue of an alleged oral promise to release the mortgaged property after one year because they have previously affirmed the debt, or failed to assert a defense against the bank's interest. The bank points out that the mortgage in this matter is dated October 4, 2002, and that the appellants are only raising the issue of an alleged one-year oral promise now that foreclosure proceedings have commenced against the properties. The bank argues that at no other time in the last ten years have the appellants or Mr. Reynolds raised the issue, even though they have had opportunities to do so. For instance, on March 12, 2004, Bobby and Arlene Reynolds filed Chapter 13 bankruptcy, converted to a Chapter 7 on May 24, 2005, and discharged on September 2, 2005, and at no time during those proceedings did he raise the defense of an oral one-year promise to release his property from the mortgage. At that time, the Reynoldses' property had been mortgaged for nearly two years—well past the alleged one-year date of release. Furthermore, Nathan and Michelle Day filed Chapter 7 bankruptcy on April 9, 2004, and it was discharged on July 20, 2004. At no time did they raise the issue of the alleged promise by the bank to release the property.
In Kentucky Hosp. Ass'n Trust v. Chicago Ins. Co., 978 S.W.2d 754, 755 (Ky. App. 1998), this Court set out the rule for equitable estoppel. "Generally equitable estoppel is applied to transactions where it would be unconscionable to allow a person to maintain a position inconsistent with one in which he or she acquiesced or accepted benefit." Id. (Internal citations omitted). If the Reynoldses believed that their property was not subject to this mortgage due to their claims of an oral promise, even after they were personally discharged from the debt, why would they continue to attempt to pay the debt associated? We agree with the trial court and the bank that the appellants are taking an inconsistent position with the one they have maintained over the course of ten years.
Finding no genuine issues of material fact, we agree that Inez Deposit Bank was entitled to judgment as a matter of law. We find no error with the Knott Circuit Court's entry of summary judgment and hereby affirm.
ALL CONCUR. BRIEF FOR APPELLANT: Adam P. Collins
Hindman, Kentucky
BRIEF FOR APPELLEE: John R. Triplett
Inez, Kentucky