David Dixon v. Pnc Bank, National Association Successor in Interest by Merger to National City Bank

• Court: Court of Appeals of Kentucky
• Decided: March 14, 2024
• Docket: 2021 CA 001462
• Status: Unknown

Opinion

RENDERED: MARCH 15, 2024; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals NO. 2021-CA-1462-MR

DAVID DIXON APPELLANT

APPEAL FROM LAUREL CIRCUIT COURT v. HONORABLE GREGORY A. LAY, JUDGE ACTION NO. 19-CI-00872

PNC BANK, NATIONAL ASSOCIATION SUCCESSOR IN INTEREST BY MERGER TO NATIONAL CITY BANK; ACR DEALER FUNDING, LLC; AND JEFFREY LEWIS APPELLEES

AND

NO. 2022-CA-0678-MR

DAVID H. DIXON APPELLANT

APPEAL FROM LAUREL CIRCUIT COURT v. HONORABLE GREGORY A. LAY, JUDGE ACTION NO. 19-CI-00872

PNC BANK, NATIONAL ASSOCIATION SUCCESSOR IN INTEREST BY MERGER TO NATIONAL CITY BANK APPELLEE

OPINION REVERSING

** ** ** ** **

BEFORE: ACREE, GOODWINE, AND JONES, JUDGES.

JONES, JUDGE: David Dixon (“Dixon”) appeals from the Laurel Circuit Court’s

order entered on July 9, 2021, which granted Appellee’s Motion to Enforce

Settlement Agreement. Dixon further appeals the Laurel Circuit Court’s order

sanctioning him also entered on May 10, 2022. We reverse.

I. BACKGROUND

Walter and Marie Lewis purchased a plot of land in Laurel County,

Kentucky in 1973. Record (“R.”) at 80-82. In 2007, they agreed to convey a

portion of their land to their son, Jeffery Lewis (“Lewis”). R. at 13-14. Lewis

constructed a home on the property; however, because his parents’ property

surrounded his own property and neither paid attention to the property lines,

Lewis’s driveway, sewage system lateral lines, and deck infringed upon his

parents’ property. R. at 117. To finance the construction of his home, Lewis

obtained a loan from National City Bank, later acquired by PNC. R. at 18-31.

PNC holds a mortgage upon Lewis’s property. Id.

-2- A foreclosure action was initiated against the property Walter and

Marie Lewis owned. The property was purchased by Dixon at a Master

Commissioner’s sale on March 20, 2014. R. at 37-42. However, the sale was later

set aside considering the encroaching driveway, sewage system lateral lines, and

deck. Video Record (“VR”) at 2/12/2021, 9:41:08-36. Attempting to resolve the

matter, PNC and Dixon had several discussions, and separately commissioned two

surveys to identify any property or title issues. R. at 116-17. These out-of-court

discussions were unsuccessful; thus, PNC filed a lawsuit against Dixon.

This appeal arises from the October 8, 2019, lawsuit PNC filed,

seeking an “order declaring that Mr. Lewis and the Lewis Property have an

irrevocable license or easement by implication or estoppel with respect to the

driveway, deck, and lateral lines located on the Dixon Property enforceable against

Mr. Dixon and his successors and assigns” and “[t]hat PNC’s Mortgage attaches to

any and all interest of Mr. Lewis in the Lewis Property, including, but not limited

to, any license or easement by implication or estoppel.” R. at 8-9.

On October 26, 2019, Dixon sent a letter to PNC regarding the

settlement agreement PNC and Dixon had been negotiating, which stated:

Before going into all the factually incorrect statements in the complaint we should cut to the quick and focus on the reasons why an easement for the sewer line cannot be granted.

-3- R. at 59 (emphasis added). After more correspondence between PNC and Dixon

attempting to negotiate a resolution, PNC sent a proposed Settlement Agreement to

Dixon, which stated in pertinent part:

Seller agrees to sell to Purchaser and Purchaser agrees to purchase from Seller certain property and improvements appurtenant thereto and certain easements as set forth in the Deed (the Property”) and Easement attached hereto as Exhibit A, in exchange for the total Purchase Price (the “Purchase Price”) of Thirty Thousand and No/100 Dollars ($30,000), subject to the terms and conditions set forth herein.

R. at 110. The attachments to this unexecuted Settlement Agreement included a

separate deed for the conveyance of the real property, and a limited easement

agreement for maintenance of the sewage lines. R. at 110-14. Dixon refused to

sign PNC’s proffered Agreement, as he had concerns with the easement for

maintenance of the sewage lines. R. at 67. On February 1, 2021, PNC filed a

Motion to Enforce the Settlement Agreement. R. at 67-119. On July 9, 2021, the

circuit court ordered Dixon and PNC to comply with the Settlement Agreement

and execute the required documents, including the deed. R. at 113-39. Dixon did

not execute the documents as ordered by the circuit court. On July 19, 2021,

Dixon, through counsel, filed a motion to alter, amend, or vacate the July 9, 2021

order. R. at 141-45. Along with the motion, Dixon filed an affidavit, stating:

That I agree to sell a portion of my property for $30,000.00 to resolve the driveway and deck

-4- encroachment, but never agreed to an easement for the septic system/leach field.

R. at 141 (emphasis added).

PNC and Dixon continued to work on executing a settlement

agreement without success. On August 16, 2021, Dixon sent a letter to PNC

expressing his interest in executing the required documents for the Settlement

Agreement. R. at 204. However, this letter explicitly stated his hesitation to an

easement upon the property:

Easements must be in writing and should be recorded with the deed. I have never seen such an easement and continued to be puzzled why you need “an access easement . . . for access to the Lewis Property septic system.” Wasn’t that the purpose of PNC purchasing the land? What more do you need? If you can figure out the answers to these questions, then perhaps we can agree upon an easement that could be agreed to when we meet to sign the purchase agreement . . . . I am willing to sign an agreement implementing [an easement] if it is reasonable, does not appreciably diminish the value of my property and does not subject me to an unwarranted risk of liability based on PNC’s nonconforming septic system and lines.

Id. (emphasis added). On November 19, 2021, the circuit court entered an order

denying the motion to alter, amend, or vacate. R. at 202-05. The circuit court

reasoned that Dixon was bound by the letters he delivered to PNC. R. at 204-05.

After Dixon failed to comply with the order issued on July 9, 2021, PNC filed a

“Motion to Compel Compliance” with the circuit court’s July 9, 2021 order on

-5- December 6, 2021, seeking attorney’s fees based on Dixon’s failure to execute the

necessary documents. R. at 206-12.

On May 10, 2022, the circuit court entered judgment against Dixon

confirming its prior orders. The circuit court invoked CR1 70, directing the Master

Commissioner to execute the necessary documents it had previously ordered Dixon

to sign. R. at 291-308. The circuit court also held Dixon in contempt for violating

the July 9, 2021 order and awarded sanctions in favor of PNC. R. at 293. The

court ordered that Dixon’s proceeds of $30,000 from the sale of the property would

be reduced by $20,865.20, the amount of attorney’s fees PNC expended trying to

enforce the circuit court’s order. Id. This appeal follows.

II. STANDARD OF REVIEW

“A settlement agreement is a type of contract which is governed by

contract law.” Ford v. Ratliff, 183 S.W.3d 199, 202 (Ky. App. 2006). “The

construction and interpretation of a contract, including questions regarding

ambiguity, are questions of law to be decided by the court.” First Commonwealth

Bank of Prestonsburg v. West, 55 S.W.3d 829, 835 (Ky. App. 2000).

A trial court’s decision holding a party in contempt and awarding

sanctions is reviewed for abuse of discretion. Meyers v. Petrie, 233 S.W.3d 212,

215 (Ky. App. 2007). “The test for abuse of discretion is whether the [circuit

1 Kentucky Rules of Civil Procedure.

-6- court’s] decision was arbitrary, unreasonable, unfair, or unsupported by sound

legal principles.” Id. (quoting Commonwealth v. English, 993 S.W.2d 941, 945

(Ky. 1999) (citations omitted)).

III. ANALYSIS

Dixon argues that he never signed the Settlement Agreement that PNC

presented and never assented to the easement clause in the Settlement Agreement.

The circuit court determined that, through Dixon’s actions and letters, he did assent

to the written Agreement that included a clause for an easement. R. at 291-95.

Under Kentucky law, certain transactions must be reduced to writing

and signed to be enforceable. The statute of frauds “prohibits the sale or transfer

of land by parol[.]” Bennett v. Horton, 592 S.W.2d 460, 462 (Ky. 1979). KRS2

371.010(6) provides:

No action shall be brought to charge any person: . . . Upon any contract for the sale of real estate, or any lease thereof for longer than one year; . . . unless the promise, contract, agreement, representation, assurance, or ratification or some memorandum or note thereof, be in writing and signed by the party to be charged therewith, or by his authorized agent.

Therefore, oral contracts for the sale of land are unenforceable. An agreement for

the sale of real property must be reduced to writing and include all material terms.

KRS 371.010. The parties may still execute an oral contract if they so wish;

2 Kentucky Revised Statutes.

-7- however, once the statute of frauds is raised as an issue, the oral contract becomes

unenforceable. Smith v. Williams, 396 S.W.3d, 296, 299 (Ky. 2012) (citations

omitted).

To satisfy the statute of frauds, the written contract of sale must be

signed by the party against whom enforcement is sought. KRS 371.010; see Smith

v. Ballou, 211 Ky. 281, 277 S.W. 286, 287 (1925). Adamson v. Adamson, 635

S.W.3d 72, 79 (Ky. 2021), involved a purported oral agreement for the sale of land

that occurred during a mediation. The terms of the agreement were reduced to

writing by the mediator; however, the appellant refused to sign the agreement

because he did not believe the terms matched the oral agreement that occurred

between the parties. Id. The Kentucky Supreme Court determined that the statute

of frauds was applicable to the agreement at issue; that the statute was not

satisfied; and that the agreement was therefore unenforceable because the appellant

had not signed it.3 Id.

In the case at hand, the Settlement Agreement for the sale of Dixon’s

property is an agreement for the sale of land, and the statute of frauds is applicable.

Dixon is the party against whom enforcement of the settlement agreement is

sought. The proposed Settlement Agreement including the easement was never

3 The Court determined that the mediator was not an agent of the appellant; therefore, the mediator’s signature was not binding. Adamson, 635 S.W.3d at 79-80.

-8- signed by Dixon, so the statute of frauds has not been satisfied, and the Agreement

is unenforceable. As the Adamson Court held, “[o]ur precedent makes clear that

whatever type of conveyance the lower courts perceived it to be, so long as there is

a purpose to transfer title to land, the Statute of Frauds is operable.” Adamson, 635

S.W.3d at 78.

PNC argues the October 26, 2019 and August 16, 2021 letters and the

July 19, 2021 affidavit take the agreement outside of the statute of frauds. Further,

PNC alleges the letters sent from Dixon exhibit his assent to the easement clause of

the Settlement Agreement. Kentucky law recognizes that a “written memorandum

[sufficient to meet the statute of frauds] may consist of a writing signed by the

party to be charged, coupled with another writing which is either expressly or

impliedly referred to in the signed writing.” Sweeny v. Theobald, 128 S.W.3d 498,

501 (Ky. App. 2004). There are multiple letters from Dixon confirming his assent

to the sale of his property that remove the transaction from the statute of frauds,

according to PNC.

While the letters from Dixon reference his willingness to assent to a

sale of the property, they also indicate that Dixon was unwilling to agree to the

proposed easement without something further. At best, the letters indicate an

agreement to consider a possible future agreement insomuch as Dixon stated that

“perhaps we can agree upon an easement that could be agreed to when we meet to

-9- sign the purchase agreement . . . .” Dixon went on to explain his future agreement

to the easement was dependent on its reasonableness, the effect it might have on

the value of his property, and the risk of possible liability vis-à-vis PNC’s

nonconforming septic system and lines.

“It should be obvious that an agreement to agree cannot constitute a

binding contract.” Walker v. Keith, 382 S.W.2d 198, 201 (Ky. 1964). “To be

enforceable and valid, a contract to enter into a future covenant must specify all

material and essential terms and leave nothing to be agreed upon as a result of

future negotiations.” Id. “Where an agreement leaves the resolution of material

terms to future negotiations, the agreement is generally unenforceable for

indefiniteness.” Cinelli v. Ward, 997 S.W.2d 474, 477 (Ky. App. 1998). At best,

the letters indicate that Dixon was open to considering the easement, but he did not

assent to all material terms related thereto. Moreover, we disagree that the

agreement to agree contained the kind of a “definite objective standard” that would

have allowed the court to determine that Dixon’s conditions had meet met.

Dixon’s future conditions were subjective and not capable of reduction to a

formalistic computation by the court. Walker, 382 S.W.2d at 200.

PNC further cites Dixon’s August 16, 2021 letter as a source of assent

to the easement. Reliance on that letter is unavailing it was sent after the order

enforcing the Settlement Agreement was made. Memoranda for the statute of

-10- frauds must be created contemporaneously with the oral agreement. Gray v.

Stewart, 658 S.W.3d 1, 20 (Ky. 2022). In Gray, there was a contract for the sale of

“certain real property located near Balkan and Calloway, in Bell County,

Kentucky.” The term “certain real property” did not expressly identify which part

of the Stewart’s property was to be conveyed. Id. Gray argued that other

references were made that would allow the Court to determine the parties’

intentions regarding the property to be conveyed, but the Court held:

we find nothing in the writing itself to resolve the dispute as to whether the parties intended 411 or 260 acres to be conveyed and verbal testimony, although considered and weighed here by the trial court in favor of Gray, is not admissible to resolve the dispute. Although Gray urges that various writings created after the contract may be used to explain the parties’ intentions and he urges those writings explain that the “certain real property” to be conveyed was the property surveyed by Grande, we view [our precedent] as clear authority guarding against their use.

Id. (emphasis added). Therefore, PNC cannot rely on the August 16, 2021 letter

sent from Dixon. There is no enforceable contract between PNC and Dixon; thus,

the circuit court erred in granting PNC’s Motion to Enforce the Settlement

Agreement.

-11- Furthermore, the trial court enforced contempt sanctions against

Dixon in the amount of PNC’s legal fees and costs.4 The standard of review for

contempt sanctions is abuse of discretion. Meyers v. Petrie, 233 S.W.3d 212, 215

(Ky. App. 2007). “A trial court abuses its discretion when it renders a decision

which is arbitrary, unreasonable, unfair or unsupported by legal principles.”

Williams v. Commonwealth, 229 S.W.3d 49, 51 (Ky. 2007). It is undisputed that

Dixon did not comply with the trial court’s orders directing enforcement of the

Settlement Agreement. But an order imposing sanctions for a party’s

contumacious failure to follow the court’s directives presupposes that the court’s

previous orders are legally sound, and in this case, as we have set forth in this

Opinion, they are not. Because the order sanctioning Dixon for non-compliance

rises and falls with the orders which we have concluded are erroneous, we hold

that the trial court abused its discretion in imposing sanctions under these

circumstances. Therefore, the May 10, 2022 order holding Dixon in contempt is

likewise reversed.

IV. CONCLUSION

For the foregoing reasons, the Laurel Circuit Court’s July 9, 2021 and

May 10, 2022 orders are REVERSED.

4 The trial court awarded $20,865.20 to PNC to be set off against the $30,000 settlement payment that had been agreed upon by Dixon and PNC.

-12- ALL CONCUR.

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:

David Dixon, pro se Sarah Mattingly London, Kentucky K. Cassandra Carter Louisville, Kentucky

-13-