Developers Surety & Indemnity Co. v. Renaissance Valley Farms, LLC

36 F. Supp. 3d 742, 2014 WL 3887220, 2014 U.S. Dist. LEXIS 108903
CourtDistrict Court, W.D. Kentucky
DecidedAugust 7, 2014
DocketNo. 3:11-CV-00090-CRS-JDM
StatusPublished
Cited by3 cases

This text of 36 F. Supp. 3d 742 (Developers Surety & Indemnity Co. v. Renaissance Valley Farms, LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Developers Surety & Indemnity Co. v. Renaissance Valley Farms, LLC, 36 F. Supp. 3d 742, 2014 WL 3887220, 2014 U.S. Dist. LEXIS 108903 (W.D. Ky. 2014).

Opinion

[744]*744 MEMORANDUM OPINION

CHARLES R. SIMPSON III, Senior District Judge.

This action was initially brought to enforce a surety bond issued by the plaintiff, Developers Surety and Indemnity Company (“Developers”), to Cooper Farms, LLC, for the purpose of establishing infrastructure improvements to the Cooper Farms subdivision located in Jefferson County, Kentucky. Although the claims between the initial parties have been settled, various third-party claims remain.

I.

The present litigation stems from a Third-Party Complaint filed in this action by defendants/third-party plaintiffs DKCD, Inc., Cooper Farms, LLC, Donald J. Cook, and Deborah S. Cook (collectively, “Plaintiffs”), asserting claims against third-party defendant Ball Homes, LLC (“Ball Homes”). (Third-Party Compl., DN 18). The claims in this action derive from a Purchase Agreement entered into between Plaintiffs1 and Ball Homes, effective November 9, 2004, which contemplated Ball Homes’ purchase of certain developed and undeveloped property in the Cooper Farms subdivision.2

There are three motions pending before the court, each involving discrete disputes that require the court to interpret and apply the provisions of the Purchase Agreement. These disputes center on whether: (1) Ball Homes breached the Purchase Agreement when it refused to purchase certain undeveloped property in Cooper Farms; (2) Ball Homes is required to indemnify Plaintiffs for the cost of repairs to certain infrastructure improvements in Cooper Farms; and (3) Plaintiffs had a duty to notify Ball Homes of an existing easement on certain property purchased by Ball Homes.

1. The purchase of certain undeveloped property in Cooper Farms

We will first address the facts relevant to the issue of whether Ball Homes was [745]*745contractually obligated to purchase certain undeveloped property in Cooper Farms.

Plaintiffs owned and/or had the rights to purchase land in Cooper Farms. Some of this land was in an undeveloped, natural state, while other portions had been developed by Plaintiffs into subdivided lots, awaiting the construction of homes on the lots. In 2004, Plaintiffs decided to sell their remaining interest in Cooper Farms to Ball Homes, and they memorialized this transaction in the Purchase Agreement. (DN 24-3).

Due to the amount of land being sold, the Purchase Agreement expressly contemplated that the sale to Ball Homes would progress in several stages or phases. The Purchase Agreement gave Ball Homes “the exclusive right to purchase the ‘Initial Property,’ ... and the exclusive right to purchase the ‘Remainder Property’ in return for Ball Homes” payment of a “Deposit Payment” of ten thousand dollars. (Id. § 1). The “Initial Property” consisted of 140 subdivided lots located in Sections 1, 3, 5, 6, and 7 of Cooper Farms. (Id. § 2). The Purchase Agreement further defined the “Remainder Property” as all remaining land in Cooper Farms in which Plaintiffs had an interest. (Id. § 3). It also established the dates on which Ball Homes would close on the Remainder Property, with the closings set to occur in five separate phases (entitled “Second Closing,” “Third Closing,” “Fourth Closing,” “Fifth Closing,” and “Final Closing”).

The parties completed the sale of the Initial Property, as well as the portions of the Remainder Property which were sold in the Second and Third Closings. However, a problem arose in relation to the property contemplated for the Fourth Closing (the “Undeveloped Property”). This property was unplatted, but it could be divided into no less than 131 single family residential lots. In response to Plaintiffs’ request to set a closing for the sale of the Undeveloped Property, Ball Homes stated, in a letter dated September 6, 2007, that its obligation to purchase the Undeveloped Property had not yet been triggered due to Plaintiffs’ alleged failure to satisfy certain conditions precedent relating to the availability of sanitary sewer service. Plaintiffs claim that Ball Homes’ purchase obligation was in fact triggered, and that Ball Homes wrongfully refused to close on the Undeveloped Property in breach of the terms of the Purchase Agreement.

2. The infrastructure improvements

The next dispute relates to certain repairs that Plaintiffs made to the developed portions of Cooper Farms following the sale to Ball Homes. Prior to 2004, Plaintiffs had developed various sections of Cooper Farms by providing the infrastructure for single family residential lots, including among other things streets, curbs, sidewalks, storm sewer facilities, domestic water and fire service, sanitary service, and street signs (the “Infrastructure Improvements”). (DN 18, § 12). As part of its duties as the developer of Cooper Farms, Plaintiffs were required by local governmental agencies to obtain a bond to guarantee the proper installation, repair, and functioning of the Infrastructure Improvements. Plaintiffs’ obligations under the bond were not released until the Infrastructure Improvements received final approval from the appropriate government agencies, and this could not occur until the subdivision was substantially completed. Thus, Plaintiffs’ developer duties with respect to the maintenance of the Infrastructure Improvements survived the sale of the developed lots to Ball Homes.

Ball Homes was never made a party to the bond that Plaintiffs had secured to ensure the completion of these repairs, [746]*746despite the fact that it purchased the land on which the Infrastructure Improvements had been made. As such, the Purchase Agreement specifically addressed the parties’ respective duties as to any repairs that had to be made to the Infrastructure Improvements after the sale to Ball Homes: ,

Seller and Buyer[3:i agree that Buyer shall conduct a videotape inspection of infrastructure improvements (such as streets, curbs, sidewalks and storm sewer facilities) prior to the commencement of construction activities by Buyer on the portions of the Property acquired at the Initial and Second Closings. Buyer shall be responsible for the cost of the videotape inspection as well as any damages to such infrastructure that occur as a result of its construction activities.

(DN 24-3, § 30). In compliance with this provision, Ball Homes conducted a videotape inspection of the land prior to conducting any construction activities.

After Ball Homes came into possession of the developed lots, Plaintiffs received several notices from the Louisville Department of Public Works and Assets delineating the repairs that needed to be made to the Infrastructure Improvements before the bond would be released. Plaintiffs sent the notices, known as “punch lists,” to Ball Homes with the expectation that Ball Homes , would complete the repairs as requested. Ball Homes declined to complete the repairs on the grounds that some of the damage was unrelated to their construction activities on the land and thus was not within the scope of their contractual duty to repair. The parties were unable to resolve the issue, and, because they needed to get the bond released, Plaintiffs subsequently undertook to complete the repairs without any contribution from Ball Homes. Plaintiffs now seek to recover the cost of the repair work from Ball Homes.

3. The LG & E easement

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Cite This Page — Counsel Stack

Bluebook (online)
36 F. Supp. 3d 742, 2014 WL 3887220, 2014 U.S. Dist. LEXIS 108903, Counsel Stack Legal Research, https://law.counselstack.com/opinion/developers-surety-indemnity-co-v-renaissance-valley-farms-llc-kywd-2014.