Kentucky Court Report - SCOKY & COAKY

Disparagement of property claim properly dismissed: KEITH V. LAUREL COUNTY FISCAL COURT (COA 5/16/2008)

KEITH V. LAUREL COUNTY FISCAL COURT
REAL ESTATE:  Disparagement of property claim
2007-CA-000446
PUBLISHED: AFFIRMING
PANEL:  GRAVES PRESIDING; COMBS, NICKELL CONCUR
LAUREL COUNTY
DATE RENDERED: 5/16/2008

In this appeal a landowner brought an action against the county fiscal court, county's development authority, and county officials, alleging that he incurred injury when the development authority's director made false statements about property adjacent to his which discouraged a hospital from locating on the adjacent property. The circuit court dismissed his action, and this appeal ensued.

The Court of Appeals held false statements regarding adjacent property did not provide a basis for disparagement of property claim, and the landowner's claim was barred by statute of limitations for slander and libel actions.

Digested by Michael Stevens

Owners of record are indispensable parties to quiet title action: BAKER V. WEINBERG (COA 5/16/2008)

BAKER V.  WEINBERG
REAL PROPERTY: Quiet title action re: gas leases and requirement that       titled owners be party to the action
2005-CA-001326
PUBLISHED: VACATING AND REMANDING
PANEL: HENRY PRESIDING; LAMBERT, WINE CONCUR
KNOTT COUNTY
DATE RENDERED: 5/16/2008

This appeal has at its genesis the entitlement to gas leases of property       in Eastern Kentucky going back to the late 1800's and a dispute over the       existence and/or ownership of the mineral rights between certain heirs and       purchases of the gas lease.  The matter involved the heirs of the       surface owner who had conveyed the gas lease (aka the Cooley Lease) versus       the heirs of those who had obtained the gas lease.  The leaseholders       relied upon an earlier judgment for purposes of res judicata to perfect       their title, but not all of the titled owners were parties to that action       and thus the earlier decision had no res judicata effect.       Furthermore, there were genuine issues of material fact on the       leaseholder's claim that they were entitled to the property via adverse       possession.  Both issues were remanded.       

Clean Gas is a family gas business owned by Bill Weinberg, his wife Lois Combs Weinberg, their son Jed Weinberg and, it appears, by other members of the Weinberg family. Clean Gas seeks out gas leases in Eastern Kentucky and sells the removed gas to wholesale gas distributors.
      
Clean Gas became interested in working the 1945 well and gas lease herein,       and the record reflects that members of the Weinbergs' extended family were successors to interests in the T.A. Martin Partnership which, again, had been assigned the W.W. Cooley lease in the 1940s.
      
      Believing that the lease was still valid, Clean Gas set about locating other successors to interests in the T.A. Martin       Partnership. In due course Clean Gas assembled what it alleged to be a majority of the T.A. Martin Partnership interests and, in effect, obtained a vote from the partners to remove gas from the Tandy Martin mineral estate, beginning with reworking the 1945 well. As part of its preparations Clean Gas executed a Department of Mines and Minerals Well Transfer form dated August 21, 1997, purporting to transfer from Lawrence Hall (who was then deceased) to Clean Gas the operating rights to the 1945 well.      

The COA followed other jurisdictions in holding that the owner of record must be named as a party to a quiet title action, and thus amply demonstrate that it is the rule that the record owners in a quiet title action (such as the Tandy Martin heirs in the present case) are required to be named as parties to the action.  The failure to include the Tandy Martin heirs as parties to the lawsuit is fatal to the appellants' counterclaim of adverse possession of the Tandy Martin mineral tract. The Tandy Martin heirs are record holders of title to the property pursuant to the 1912 deed. Their status as the lawful owners of the mineral estate was reaffirmed in the 1982 judgment in the coal lease case. The appellants, in effect, seek to defeat the ownership interest of the Tandy Martin heirs in the T.A. Martin mineral estate in a lawsuit in which the heirs are not present to defend their title.
      
As the appellants' adverse possession claim is not properly before this COA, it did not address the issue upon the merits, nor any of the other issues listed above which are ancillary to the claim.
      
Accordingly, the matter was remanded upon this issue for dismissal of the appellants' counterclaim of adverse possession, without prejudice.
      
The appellants contend, for various reasons, that the appellees do not possess a valid leasehold interest in the Tandy Martin mineral estate and, therefore, are not entitled to enter onto their property to work the lease. The COA agreed with the appellants that there are genuine issues of material fact relating to all of the foregoing issues and remanded on this issue, as well.

      

Digested by Michael Stevens
      
      

   

REAL PROPERTY: Oil and gas lease interpreted that "commencing" a well did not mean re-establishing an existing well on the property: HEEL V. CHADWICK (COA 3/14/2008)

HEER V. CHADWICK
REAL PROPERTY:  Oil and gas lease interpreted that "commencing" a well did not mean re-establishing an existing well on the property
2006-CA-001489
PUBLISHED: AFFIRMING
PANEL: ACREE PRESIDING; LAMBERT, HENRY CONCUR
COUNTY: METCALFE
DATE RENDERED: 3/14/2008

This was a combined appeal interpreting language in an oil and gas lease from the Fraser sisters which included the condition that “[i]f no well be commenced on said premises on or before the 1[sic] day of July 2005 this lease shall terminate as to both parties.”  In addition, the property was landlocked so obtaining access to their landlocked property was as important as tapping the oil reserves under it. So, as consideration, the lease agreement included the provision that, “[i]nstead of upfront money for lease, Cody Heer will attempt to get permanent right of way, 20 foot [sic] wide.”

This was not the first time the Fraser sisters leased the property. Approximately 10 to 15 years earlier, East Fork Crude had rights to, and did successfully, extract oil and gas. For part of that leasehold period, East Fork Crude traversed an adjoining property with the permission of the owner, Robert Chadwick. But the withdrawal of Chadwick's permission caused East Fork Crude to end its lease.

COA held that the lessee did not commence a well within the time period.  Having maintenance performed on an existing well that was sufficient to re-establish well and effectuate the successful extraction of commercial quantities of crude oil from the well did not comply with the lease's requirement that he “commence a well,” as lessee neither drilled existing well deeper or wider, nor did he produce commercial quantities of oil from that well for the first time.

Cash advance system for real estate commissions affirmed: KENTUCKY REAL ESTATE COMMISSION V. HILLIARD FINANCIAL, LLC (COA 2/15/2008)

KENTUCKY REAL ESTATE COMMISSION V. HILLIARD FINANCIAL, LLC
BUSINESS:  REAL ESTATE COMMISSIONS AND ASSIGNMENTS
2007-CA-000861
PUBLISHED: AFFIRMING
PANEL: LAMBERT PRESIDING; VANMETER, KNOPF CONCUR
COUNTY: JEFFERSON
DATE RENDERED: 2/15/2008

COA affirmed a declaratory judgment holding that the cash-advance business of Hillard Financial (d/b/a Commission Express) and Commission Express National, Inc., does not violate Kentucky's Real Estate Code following appeal by Kentucky Real Estate Commission.  The cash-advance business did not conflict with Real Estate Code provision prohibiting commission splitting or with Code provision prohibiting agents from receiving cash advances in consideration for the performance acts under the Code.

Commission Express is in the business of providing cash advances to real estate agents who have commissions pending from real estate transactions. In return for the advance, Commission Express takes an assignment of the agent's pending commission as well as a percentage of that commission. Commission Express characterizes its business as “factoring,” while one court has characterized it as a straight-forward consumer-lending business.

Michael Stevens

Property: Mechanics lien does not include services provided by contractor (mowing, etc): STEEPLECHASE SUBDIVISION HOMEOWNERS ASSOCIATION V. THOMAS (COA 2/8/2008)

STEEPLECHASE SUBDIVISION HOMEOWNERS ASSOCIATION V. THOMAS
PROPERTY:  Mechanics lien does not include services provided by contractor (mowing, etc).
2006-CA-002146
PUBLISHED: REVERSING
PANEL: THOMPSON PRESIDING JUDGE; BUCKINGHAM, HENRY CONCUR
COUNTY: BOONE
DATE RENDERED: 2/08/2008

Steeplechase Subdivision Homeowners Association, Inc. appealed from an order and judgment awarding judgment on a mechanic's lien asserted against a common area in the Steeplechase Subdivision on which the neighborhood clubhouse and swimming pool are located. Steeplechase asserts that the lien is not enforceable under KRS 376.010. Because the lien was for maintenance, street cleaning services, and mowing services, CPA held that it was unenforceable and reverse as services provided by contractor could not give rise to mechanics' lien.

Michael Stevens

Circuit court has inherent jurisdiction to partition real estate and estoppel applied to objections: HISLE V. LEXINGTON-FAYETTE URBAN COUNTY GOV'T (COA 2/1/2008)

HISLE V. LEXINGTON-FAYETTE URBAN COUNTY GOV'T
PROPERTY:  Real estate partition and circuit court jurisdiction
2006-CA-001733
PUBLISHED: AFFIRMING
PANEL: BUCKINGHAM, PJ; THOMPSON, HENRY CONCUR
COUNTY: FAYETTE
DATE: 02/01/2008

Edwin A. Hisle and Olive Sue Hisle Cook appealed from an Opinion and Order of the Fayette Circuit Court that denied their motion for relief brought pursuant to Kentucky Rules of Civil Procedure (CR) 60 .02, which sought to set aside as void two judgments entered in 1966 partitioning several parcels of real property. Appellants maintain that the circuit court lacked subject matter jurisdiction to entertain the original partition action in 1965-66 and, thus, that the judgments should be set aside and they should be granted fee simple title pursuant to the wills of their grandparents. COA affirmed.

If as requested the judgments are set aside, the appellants would then claim fee simple ownership of the two tracts of realty at issue as the surviving remaindermen under the wills of their grandparents following the deaths of their own parents. The COA disagreed with the appellants' position on jurisdiction finding the circuit court did have jurisdiction and further held that the appellants are precluded from challenging the 1966 judgments at this late date.

Although modern partition proceedings generally involve statutory provisions, the jurisdiction of equity courts to partition real property is very ancient and has existed in common law both in England and this country since its founding.  The statutes supplement, or are supplemented by, the traditional jurisdiction of equity courts to decree partition.  With the merger of the historical court of law and court of equity, courts of general jurisdiction are empowered with jurisdiction over partition actions by the state constitutions.

In this case, the appellants acknowledge that in the 1965 partition action, the Fayette Circuit Court had in personam jurisdiction over the parties, all of whom were residents of the county and entered appearances in the suit, and in rem jurisdiction over the five tracts of realty involved in the suit, which were physically located within the geographical boundaries of the county. The appellants contend the court lacked authority to divide or partition the realty because the grandparents' deeds did not devise equal estates to the grandchildren as remaindermen as arguably required for application of KRS 381.136.

While there is a legitimate question concerning whether the provisions of the grandparents' wills strictly complied with the factors set forth in KRS 381.136, that issue concerns the specific facts of the case and does not concern the circuit court's subject matter jurisdiction. As a court of general jurisdiction, the Fayette Circuit Court had subject matter jurisdiction derived from the Kentucky Constitution to decide “this type” of case, that being, a partition action.  The General Assembly does not have authority to limit or control the circuit court's subject matter jurisdiction.  Furthermore, grandchildren either consented, waived, or were estopped from challenging any error in judgments partitioning family property.

Michael Stevens

Extrinsic evident to explain ambiguties in deed involving "stake patents" and "conditional line agreements": C.W. HOSKINS HEIRS V. BOGGS (SC 12/20/2007)

C.W. HOSKINS HEIRS V. BOGGS
PROPERTY:  Real Estate Deed, ambiguities, and extrinsic evidence; "stake patents" and "conditional line agreements"
2005-SC-000618-DG.pdf
PUBLISHED: REVERSING
OPINION BY SCOTT; MINTON NOT SITTING
DATE RENDERED: 12/20/2007

This was an action to quiet title to a 155 acre tract of coal (the disputed tract) between the Boggs Heirs and the Hoskins Heirs and the entitlement to mining royalties. Summary judgment was granted in favor of the Boggs Heirs upon trial court's determination that the deed was not ambiguous. The SC determined that the 1981 deed to the Boggs Heirs' predecessor in title (Silas Boggs) was not ambiguous and the trial court therefore erred in not considering extrinsic evidence offered by the Hoskins Heirs to show the parties intent as to what was intended to be conveyed by the parties.

Having determined that the deed to Silos Boggs is in fact "ambiguous," thus necessitating consideration by the trial court of any admissible extrinsic evidence relevant to the intention of the parties, and that otherwise, material issues of fact existed at the time of summary judgment, the SC reversed the opinion of the Court of Appeals and vacated the judgment of the trial court, but only as to the issues of title between the Hoskins Heirs and the Boggs Heirs, and remanded the matter back to the trial court for further proceedings consistent with this opinion.

At the heart of this title dispute were "stake patents" and "conditional line agreements." "Stake patents," although valid in Kentucky, have nevertheless engendered a multitude of litigation of their boundaries as to the location of their boundaries, as well as, overlaps with other adjacent patents. "Stake patents," being as imprecise as they were, led to the use of "conditional line agreements" between adjoining neighbors, so as to avoid the inconvenience and expense of boundary line litigation . "A conditional line in eastern Kentucky is a line made by agreement of the parties, generally without the aid of a surveyor. "Conditional line agreements" were often unrecorded, yet marked and known on the ground by their reators--and just sometimes their heirs.

In determining the intention of the parties, courts look at the whole deed, along with the circumstances surrounding its execution, and courts may also consider the acts of the parties following the conveyance. Then, if the ambiguity is not resolved by extrinsic evidence of the parties' intentions, the rule is well settled that the deed will be construed most strongly against the grantor and in favor of the grantee if it admits of two constructions. The construction of a deed is a matter of law, and absent an ambiguity, the intention of the parties is to be gathered from the four corners of the instrument.for what was said."

There also being genuine issues of material fact existing at the time, the entry of summary judgment was therefore in error.

Michael Stevens

Failure to include consideration clause in deed: SMITH V. VEST (COA 11/30/2007)

SMITH V. VEST
PROPERTY:  Real estate deed flaws and title 
2006-CA-000864
TO BE PUBLISHED: REVERSING AND REMANDING
PANEL: ACCREE PRESIDING; KELLER, LAMBERT CONCUR
COUNTY: SHELBY
DATE RENDERED: 11/30/2007

The COA reversed summary judgment in favor of the appellee finding that the deed was not void ab initio for failing to satisfy the statutory requirements of KRS 382.135.

James transferred his property by deed to his daughter and her husband.  Several years later he filed suit alleging the property transfer was void ab initio since the deed does not cite any consideration and therefore is void or voidable pursuant to KRS 382.135 and common law principles. The referenced statute requires parties to a deed to include within its body what is commonly referred to as a consideration certificate.  Circuit court granted James' motion holding that the deed in question did not meet the requirements of KRS 382.135 and was so flawed on its face as to render it void ab initio.

Although failure to conform to KRS. 382.135(1) makes a deed unrecordable, this flaw does not make the document void or legally insufficient so as to divest Lee of title to the property and the deed in question substantially complies with the statute.

In general, recording a deed is ¡necessary only to secure the title against subsequent creditors and purchasers;  deeds are valid between the parties claiming under them, even though they may not be recordable instruments under our statutes.

The statute did not contravene the common law regarding the validity of any deed. As between the grantor and grantee, and third parties with notice, even a complete failure to include the consideration certificate called for in KRS 382.135 will not affect the validity of a deed if that deed contains the fundamental elements necessary to a valid and enforceable deed. The deed will remain unrecordable, however, until it substantially complies with KRS 382.135.

The deed in question is a valid deed since it contains the fundamental elements necessary to a valid and enforceable deed, which are: (1) a grantor and grantee; (2) delivery and acceptance; (3) a divesting of title by grantor and a vesting of title in the grantee. Haynes v. Barker, 239 S.W.2d 996, 997 (Ky. 1951). If each of these elements is present, the deed's recordability in this case is irrelevant.  The parties would be wise to prepare a deed of correction, consistent with this opinion, indicating that the original grantees were Sandra, Lee and James.

Michael Stevens

Failure to act during partition: STROHSCHEIN V. CRAGER (and Nadine Howard) (COA 11/30/2007)

STROHSCHEIN V. CRAGER (and Nadine Howard)
PROPERTY:  Real estate, partition, failure to object
2005-CA-000687
TO BE PUBLISHED: AFFIRMING
PANEL: THOMPSON PRESIDING; VANMETER, GUIDUGLI CONCUR
COUNTY: FLOYD
Date: 11/29/2007

This appeal arose from a property line dispute, but the property had been previously partitioned and one of the parties took no action in the earlier proceeding. 

This matter proceeded to a trial before the court on the issues of whether Nadine owned the property that is the subject of the complaint and the property boundary
between the subject property and the appellants' property. As to the issue of the boundary line between the properties, the appellants introduced a survey (childers) of the property which showed the appellants property was actually 20.98 acres larger than the 30 acres described in the 1997 deed such that the appellants' property encompassed Crager's driveway and part of his yard and totally encompasses the property which Nadine claims.

Nadine and Crager both employed the same surveyor (Tackett) who concluded that the appellants' tract was actually 34.24 acres who relied upon interviews and testified that the 'rocky part¡' described in Nadine's deed and a prior 1994 deed was very distinctive and established the boundary between the properties.

The court held that the boundary line between Nadine's property and Crager's property was as set forth in the Tackett survey and as testified to by Crager and Nadine.

COA agreed with the trial court that the failure of the appellants and their predecessor in title to assert their alleged ownership to the property now in dispute during the partition action or to file exceptions to the master commissioner's sale, precludes them from asserting title against Nadine. It is a maxim of the law that 'he who is silent when he should have spoken, shall not be afterward heard to assert the claim on which, on the proper occasion, he failed to disclose.' Disney v. Creech, 298 Ky. 758, 762, 184 S.W.2d 80, 82 (1944).

The appellants' silence during the partition proceeding precludes them from asserting title superior to that claimed by Nadine.

The court has total discretion to choose between the conflicting opinions of the surveyors if the opinion relied upon is not based on erroneous assumptions or fails to take into account established factors. Croley v. Alsip, 602 S.W.2d 418, 419 (Ky. 1980).

Michael Stevens

Settlement and Releases: LARKINS V. MILLER (COA 10/26/2007)

LARKINS V. MILLER
SETTLEMENTS AND RELEASES: SALE OF LAND
2006-CA-002043
PUBLISHED: AFFIRMING
PANEL:  THOMPSON PRESIDING; WINE HENRY CONCUR
COUNTY: BOONE
DATE RENDERED: 10/26/2007

Larkins appeals TC's entry of summary judgment for Miller on their claims for breach of contract and fraud stemming from the sale of an unimproved lot in a new subdivision being developed by Miller. At the time of sale, Larkins alleged that Miller advised them that the slope of the lot would result in additional construction costs that would not exceed a few thousand dollars. Larkins completed the sale and signed a formal Release Agreement that disclaimed any reliance on Miller's representations about slope stability and released Miller from all claims and demands relating directly or indirectly to slope stability issues. When the Larkins finally moved forward with construction 5 years later, they learned that the slope of the lot would result in an additional $83,000 in building costs. Larkins moved forward with this lawsuit, which Miller defended on the clear wording of the Release. Larkins countered that the Release was invalid because it wasn't supported by valuable consideration.

On appeal, the COA summarily rejected Larkins' argument that the Release was not enforceable, pointing out that the Release was executed by them on the same date the check was written by them to Miller for the full purchase price of the property. The COA held that the check constituted valuable consideration and therefore validated the Release. Consequently, the TC's entry of SJ for Miller was affirmed.

Chad Kessinger
Schiller, Osbourn, Barnes & Maloney