Jack Day v. Jennifer Bishop

• Court: Court of Appeals of Kentucky
• Decided: October 11, 2024
• Docket: 2023-CA-1404
• Status: Unpublished

Opinion

RENDERED: OCTOBER 11, 2024; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals NO. 2023-CA-1404-MR

JACK DAY APPELLANT

APPEAL FROM MADISON CIRCUIT COURT v. HONORABLE KRISTIN CLOUSE, JUDGE ACTION NO. 19-CI-00288

JENNIFER BISHOP AND LOREN BISHOP APPELLEES

OPINION AFFIRMING

** ** ** ** **

BEFORE: CETRULO, ECKERLE, AND GOODWINE, JUDGES.

CETRULO, JUDGE: Appellant Jack Day (“Jack”) appeals three Madison Circuit

Court orders – a partial summary judgment, partial directed verdict, and judgment

after a bench trial – that collectively dismissed his claims in a property rights

action. After review, we affirm. BACKGROUND

In 1982, Jack bought 591 Lost Fork Road in Richmond, Kentucky

(“Property”). The Property is composed of “the house” with separate upstairs and

downstairs living spaces, a double-wide trailer, and a standalone apartment. Jack

lived upstairs in the house and for approximately three-and-a-half years. Jack’s

daughter, appellee Jennifer Bishop (“Jennifer”), and her husband, appellee Loren1

Bishop (collectively, the “Bishops”), lived in the downstairs unit.

In August 2015, Jack signed a deed conveying title of the Property in

fee simple absolute to the Bishops “in consideration of the love and affection” and

retained a life estate for himself (“Deed”). The next month, in September 2015,

Jack and the Bishops refinanced the Property. Jack and the Bishops both signed

the new mortgage paying off Jack’s existing $45,900 mortgage, and the Bishops

alone signed an additional “promissory note” for home improvement funds. The

Bishops then began paying the Property’s mortgage, paying on their promissory

note, and purchased homeowners’ insurance on the Property. Sometime in 2018,

Jack and the Bishops’ relationship fractured, and the Bishops moved out.

Thereafter, the Bishops stopped making payments on the Property’s mortgage and

1 At times in the appellate record “Loren” appears as “Lorren,” but for consistency, we shall utilize the spelling as it appeared before the circuit court and within Loren’s appellee brief.

-2- canceled their homeowners’ insurance policy. Jack again assumed all the debt for

the Property.

In May 2019, Jack filed a breach of contract claim in Madison Circuit

Court demanding the Bishops execute a quitclaim deed to return title of the

Property to him. Jack asserted that he agreed to transfer title of the Property in

exchange for the Bishops paying the mortgage, insurance, and taxes on the

Property. Conversely, the Bishops asserted that they agreed to pay the mortgage in

lieu of rent while they lived on the Property, but that the Deed was an

unconditional gift. Litigation continued through the next four years.

In August 2023, the circuit court (a) granted partial summary

judgment in favor of the Bishops because Kentucky Revised Statute (“KRS”)

371.010, the statute of frauds, barred Jack’s breach of contract claim on the oral

agreement, but (b) denied the remainder of the Bishops’ claims. The parties

proceeded to trial on the remaining claims, and in September 2023, the Madison

Circuit Court held a one-day bench trial.

At trial, Jack testified that Jennifer approached him about having the

Property deeded over to her for tax benefit purposes. He stated that he agreed,

deeded her the Property in exchange for her assuming the mortgage, insurance, and

property taxes, but never intended the Deed to be an unrestricted, unconditional

gift. He testified that he agreed, in part, to the conveyance because he wanted to

-3- retire to Florida and the Bishops’ assuming the Property’s payments would allow

him to do that. Jack stated, “she would have gotten the property anyway.”

Next, an employee of the mortgage lender (“Banker”) testified. The

Banker testified that she knew the parties and managed the 2015 refinancing. She

stated that the promissory note belonged exclusively to the Bishops and that the

Bishops paid the mortgage payments from approximately 2015 to 2018; in July

2018, Jack resumed the mortgage payments. She also stated that at the time Jack

resumed mortgage payments, the mortgage was almost at the amount that he owed

prior to the 2015 refinancing.

After testimony of Jack and the Banker, both parties moved for a

directed verdict, Jack first. The circuit court denied Jack’s motion and granted the

Bishops’ motion in part. The court found that the Deed was complete and

unambiguous, and Jack did not meet his burden of establishing the Deed was

conditioned upon the Bishops paying the Property’s debt in full. The circuit court

allowed Jack’s unjust enrichment claim to proceed, but only as to those alleged

debts, expenses, and enrichments incurred by the parties post-deed, not the

possessory interests addressed within the Deed.

Next, the trial resumed, and Jennifer testified. She stated that she

orally agreed to pay the Property’s mortgage in lieu of rent while she lived at the

Property. She stated that she and Jack made no firm agreement as to who would

-4- pay the taxes and insurance on the Property. She stated that she and Loren spent

more than $25,000 on property improvements while they lived there and have not

sought return on those costs from Jack. Jennifer stated that after an argument over

a ceiling light, Jack told her and her family to leave the Property and that he would

shoot them if they returned.

After Jennifer’s testimony, the circuit court found in favor of the

Bishops and dismissed Jack’s final claim of unjust enrichment because Jack did

not meet his burden. The partial directed verdict and bench trial judgment are

reflected in two separate orders entered on September 28, 2023. In October 2023,

pursuant to Kentucky Rule of Civil Procedure (“CR”) 59.05, Jack moved to alter,

amend, or vacate the partial summary judgment, partial directed verdict, and the

judgment of the bench trial. In November 2023, the circuit court denied the

motion in full. Jack appealed.2

STANDARD OF REVIEW

The circuit court may grant a motion for summary judgment if the

record shows “there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.” CR 56.03. The court must view

2 As orders denying CR 59.05 motions are interlocutory and non-appealable, Jack appeals the underlying orders, i.e., the partial summary judgment, partial directed verdict, and the judgment of the bench trial. See Ford v. Ford, 578 S.W.3d 356, 365 (Ky. App. 2019) (internal quotation marks and citation omitted).

-5- the record “in a light most favorable” to the non-moving party. Steelvest, Inc. v.

Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky. 1991) (citation omitted).

Whether summary judgment should be granted is a question of law we review de

novo. Blankenship v. Collier, 302 S.W.3d 665, 668 (Ky. 2010). Similarly,

questions of statutory interpretation are questions of law we review de novo.

Seeger v. Lanham, 542 S.W.3d 286, 290 (Ky. 2018) (citation omitted).

Within the September 28, 2023 Orders, we review findings of fact for

clear error and give due regard to the opportunity of the circuit court to judge the

credibility of the witnesses. CR 52.01. Findings of fact are clearly erroneous if

not supported by substantial evidence. Moore v. Asente, 110 S.W.3d 336, 354 (Ky.

2003) (citation omitted). However, the circuit court’s conclusions of law –

including ambiguity in a contract and interpretation of a deed – are subject to de

novo appellate review. Gosney v. Glenn, 163 S.W.3d 894, 898-99 (Ky. App. 2005)

(citation omitted); Big Sandy Co., L.P. v. EQT Gathering, LLC, 545 S.W.3d 842,

844 (Ky. 2018) (citation omitted); Morganfield National Bank v. Damien Elder &

Sons, 836 S.W.2d 893, 895 (Ky. 1992).

ANALYSIS

First, Jack argues the Bishops breached their oral agreement and that

the written Deed does not include all the terms of the parties’ agreement. The

Deed explicitly stated that Jack conveyed the Property in fee simple absolute to the

-6- Bishops in consideration of only love and affection with a life estate for himself.

Jack asserts that “love and affection” was not the only consideration, and that the

parties orally agreed, prior to signing the Deed, that Jennifer would assume the

Property’s entire remaining mortgage, taxes, and insurance in exchange for the

Deed conveyance. The oral agreement and written Deed require disparate

analyses.

Jack argues the statute of frauds does not bar enforcement of the oral

agreement because he completely performed his end of the agreement by executing

the Deed within one year, citing the exception discussed in Sawyer v. Mills, 295

S.W.3d 79, 84 (Ky. 2009). He argues that Jennifer promised to assume all the

Property’s debt in exchange for him transferring title of the Property, an obligation

he performed approximately one month after the agreement. Conversely, the

Bishops argue that no such agreement ever existed; but for argument’s sake, if it

did occur, such an oral agreement would not be enforceable because Jack did not

perform within one year. They argue that implicit in his version of the alleged oral

contract is Jack’s obligation to allow the Bishops to remain on the Property, which

he did not. Jack refutes this and asserts that as the Bishops were living on the

Property for several years prior to the alleged oral agreement – “living

arrangements were not apart [sic] of the Agreement terms.” Yet, even accepting

-7- Jack’s version of the oral agreement, his facts do not fit within the exception he

cites in Sawyer, supra.

Sawyer does recite an exception to the application of the statute of

frauds: “if a contract may be performed within a year from [making it], the

inhibition of the [statute of frauds] does not apply, although its performance may

have extended over a greater period of time.” Id. at 84 (internal quotation marks

and citation omitted). To determine if the contract “fall[s] within the rule or the

exception[,]” the court should consider the intentions of the parties. Id. “[W]here

it is obvious from all surrounding facts and circumstances that it was not within the

contemplation of the parties or within reason that it would be performed within a

year[,] the statute applies.” Id. (quoting Lively v. Elkhorn Coal Co., 101 F.Supp.

1014, 1016-17 (E.D. Ky. 1952)). Yet, Jack’s own testimony negates this

argument.

During depositions, legal counsel for the Bishops asked Jack, “Is it a

correct statement that this [oral] agreement would have taken more than a year to

accomplish?” Jack responded, “Yeah, I would say so, yes.” Bishop’s counsel

asked, “It would have taken several years?” Jack replied, “It’s took me several

years to put it together.” Applying Sawyer, our goal is to determine if the parties

contemplated that the contract at issue would be performed within one year, and

according to Jack’s own words, he did not intend the oral contract to be performed

-8- within one year. Jack’s deposition testimony overtly stated as much and implied

an ongoing obligation for his performance as part of the oral agreement; but, even

looking beyond Sawyer, this alleged oral agreement is the kind of unclear,

unsubstantiated, oral agreement relating to the transfer of real property that the

statute of frauds protects against. “[T]he object of the [statute of frauds] is to

prevent the evil arising from parol testimony in so far as certain subjects [are]

concerned, particularly that of land.” Gray v. Stewart, 658 S.W.3d 1, 8 (Ky. 2022)

(internal quotation marks and citations omitted). KRS 371.010(6)3 bars an action

on a contract for the sale of real estate if it is not in writing and signed by the party

to be charged. Stewart, 658 S.W.3d at 8. Here, the statute of frauds prevents

enforcement of the alleged oral agreement. KRS 371.010(6); see also Smith v.

Williams, 396 S.W.3d 296, 299-300 (Ky. 2012). Likewise, beyond the statute of

frauds, the merger doctrine also prevents enforcement of the alleged oral

agreement.

“The merger doctrine holds that all prior statements and agreements,

both written and oral, are merged into the deed and the parties are bound by that

instrument.” Yeager v. McLellan, 177 S.W.3d 807, 809 (Ky. 2005) (quoting

Borden v. Litchford, 619 S.W.2d 715, 717 (Ky. App. 1981)). “Under the merger

3 “No action shall be brought to charge any person . . . (6) [u]pon any contract for the sale of real estate, or any lease thereof for longer than one year . . . unless the promise, contract, [or] agreement . . . be in writing and signed by the party to be charged therewith . . . .”

-9- doctrine, upon delivery and acceptance of a deed[,] the deed extinguishes or

supersedes the provisions of the underlying contract for the conveyance of the

realty.” Burch v. Thomas, 677 S.W.3d 827, 831 (Ky. App. 2023) (quoting Drees

Co. v. Osburg, 144 S.W.3d 831, 832 (Ky. App. 2003)). As such, any alleged oral

agreements that might have occurred between Jack and Jennifer merged into, and

are superseded by, the Deed. Jack argues the merger doctrine has exceptions –

“fraud, mistake, or contractual agreement[s] clearly not intended to be merged into

the deed” – but none are applicable here. See Harrodsburg Indus. Warehousing,

Inc. v. MIGS, LLC, 182 S.W.3d 529, 532 (Ky. App. 2005) (citation omitted). Jack

does not allege fraud or mistake, nor is there a collateral written agreement

(independent from the Deed) that the parties intended to keep separate. See Burch,

677 S.W.3d at 831-32. Again, “[i]t is presumed that the written agreement is final

and complete and that all prior negotiations between the parties have either been

abandoned or incorporated into the final written instrument.” New Life Cleaners v.

Tuttle, 292 S.W.3d 318, 322 (Ky. App. 2009) (citation omitted). Thus, the alleged

oral agreement is not enforceable. Even viewing the record in a light most

favorable to Jack, the circuit court did not err in dismissing his breach of contract

claim.

The analysis varies for a written contract. “A contract written in clear

and unambiguous language is not subject to interpretation or construction and must

-10- be enforced according to its terms.” Big Sandy Co., 545 S.W.3d at 844-45

(internal quotation marks and citation omitted). “The intention of parties to a

written instrument must be gathered from the four corners of that instrument.”

Hoheimer v. Hoheimer, 30 S.W.3d 176, 178 (Ky. 2000) (citation omitted). “The

fact that one party may have intended different results, however, is insufficient to

construe a contract at variance with its plain and unambiguous terms.” Kentucky

Shakespeare Festival, Inc. v. Dunaway, 490 S.W.3d 691, 695 (Ky. 2016) (citing

Abney v. Nationwide Mut. Ins. Co., 215 S.W.3d 699, 703 (Ky. 2006)). Here, the

Deed conveys title of the Property from Jack to the Bishops for “love and

affection” and reserves a life estate for Jack. The Deed is clear, straightforward,

and unambiguous. As the Deed is unambiguous, we are bound by the terms of the

Deed and must determine the intent of the parties from the four corners of that

document. See Hoheimer, 30 S.W.3d at 178.

Jack argues the Deed was revocable and conditioned upon Jennifer

assuming the entirety of the Property’s debt, but the Deed did not contain either

term. In fact, the Deed is an inter vivos gift. “An inter vivos gift is a voluntary

transfer of property by one living person to another living person, without any

valuable consideration, which is perfected and becomes absolute during the

lifetime of the parties.” Howell v. Herald, 197 S.W.3d 505, 507 (Ky. 2006)

(internal quotation marks and citation omitted). A valid inter vivos gift requires:

-11- (a) a competent donor; (b) an intention to make the gift; (c) a donee capable of

taking it; (d) a complete gift with nothing left undone; (e) delivery of the property

effective at once; and (f) an irrevocable gift. Id. (citation omitted). “If any of the

elements of the gift are absent or incomplete, then the gift will fail.” Id. “[T]he

burden of establishing the gift rests on the party claiming it[.]” Knox v. Trimble,

324 S.W.2d 130, 132 (Ky. 1959) (citation omitted).

We turn to the elements required for a valid inter vivos gift. Here, the

Bishops do not challenge Jack’s competence. Next, Jack intended to make the gift.

He admits he signed the Deed willingly, stated he intended to transfer title to help

Jennifer with “taxes,” and testified that she was “going to get the place regardless

one of these days.” Moreover, Kentucky jurisprudence recognizes that the

common meaning, usage, and understanding of the phrase “in consideration of love

and affection” – when that phrase is paired with nothing else and used in the

context of a deed – unambiguously imparts a gift. See, e.g., Sword v. Fields, 234

S.W. 202 (Ky. 1921) (“The transaction was in the nature of a gift, the only

consideration being ‘love and affection.’”); Yates v. Wilson, 339 S.W.2d 458,

461-62 (Ky. 1960) (equating recipient of unsolicited deed to a “gratuitous grantee,”

where deed in question recited that it was solely in consideration of “love and

affection”); see also Sparks Milling Co. v. Powell, 143 S.W.2d 75, 77 (Ky. 1940)

(“[W]here words having a definite legal meaning are knowingly used in a writing

-12- the parties will be presumed to have intended such words to have their proper legal

meaning in the absence of any contrary intention appearing in the instrument.”).

Third, it is apparent the Bishops are capable of taking the gift.

Fourth, the gift was complete as Jack intended to transfer title in fee

simple absolute.4 Transfer of a gift can be actual, symbolic, or constructive; when

the gift is constructively delivered, the relevant issue is the donor’s intent. Howell,

197 S.W.3d at 508-09. Reservation of a life estate does not negate the

“completeness” of the gift. Id. at 512 (“The reservation of a life estate in a deed

signifies that the grantor believes he has parted with the land conveyed. It is an

acknowledgement that the remainder interest has been disposed of, for otherwise

the retention of a life estate would be unnecessary.”). Here, the unambiguous

Deed was, at a minimum, constructively delivered, and illustrates Jack’s intent to

transfer present title, thus making the gift complete.

Somewhat repetitively, the title was delivered to the Bishops and went

into effect at once. When Jack initiated this suit, his complaint demanded the

Bishops execute a quitclaim deed to return the remainder interest. Implicit in that

demand is acknowledgment that the Deed was delivered; the Bishops accepted it;

4 “A fee simple absolute estate is the largest estate that can be transferred in land . . . . There are no limitations of the estate expressed in the conveyance. This estate is a merger of both a present and future interest.” Establishing Fee Simple Determinable Title, 118 AM. JUR. PROOF OF FACTS 3d 125 § 2 (2024).

-13- and title transferred to the Bishops. Id. at 512. Also, on appeal Jack acknowledges

that he is “a life tenant who no longer holds the remainder interest in [the

Property].” Again, all parties agree the Deed transferred title to the Bishops.

Lastly, the gift was irrevocable. Familial relationships create a

presumption that a conveyance of real property – such as the one in question – is a

gratuitous settlement, i.e., an intended gift by virtue of the relationship. Rakhman

v. Zusstone, 957 S.W.2d 241, 244 (Ky. 1997) (citations omitted). Once that

presumption is established, the other party bears the burden of proving the

conveyance was not a gift. Id. at 245 (citation omitted). To overcome that

presumption, the donor must produce “the same quantum of evidence as is required

to overcome any other rebuttable presumption.” Id. (citation omitted). “[W]here

property is conveyed as a gift, the transaction is by its very nature unilateral, and

the grantee’s intent or conduct (other than acceptance) plays no part in fixing the

rights of the parties.” Twyford v. Huffaker, 324 S.W.2d 403, 406 (Ky. 1958).

Here, the title transfer is presumed to be a gift due to the consideration stated in the

Deed, the transfer of title, and the familial relationship between Jack and Jennifer.

See Zusstone, 957 S.W.2d at 244-45. Jack needed to overcome that rebuttable

presumption but failed to do so. See id. at 245 (citation omitted). As Jack

conveyed the Property as a gift, that transaction is unilateral, and Jennifer’s intent

-14- and conduct (other than acceptance) played no part in fixing the rights of the

parties. See Twyford, 324 S.W.2d at 406.

Jack explicitly, in writing, gifted the Property in fee simple absolute to

the Bishops without retaining a right of revocation or conditioned upon any

financial obligations by the Bishops. To conclude otherwise would be to disregard

the Deed’s explicit language. “[A] court cannot make a contract for the parties, but

can only construe the contract it finds they have entered into. Nor has the court the

authority to read words into a contract.” Big Sandy Co., 545 S.W.3d at 847

(quoting Alexander v. Theatre Realty Corp., 70 S.W.2d 308, 387-88 (Ky. 1934)).

Thus, the Deed was an irrevocable inter vivos gift, and the circuit court did not err

in dismissing Jack’s claim that the Deed was a revocable, conditional gift.

Jack’s third claim is one of unjust enrichment. To recover on a claim

of unjust enrichment, Jack would have had to prove: (1) benefit conferred upon

the Bishops at his expense; (2) a resulting appreciation of benefit by the Bishops;

and (3) inequitable retention of that benefit without payment for its value. See

Superior Steel, Inc. v. Ascent at Roebling’s Bridge, LLC, 540 S.W.3d 770, 777-78

(Ky. 2017) (internal quotation marks and citation omitted). Yet, under these

circumstances, we need not analyze these elements. As unjust enrichment is

rooted in equity and “law trumps equity,” unjust enrichment is unavailable when

the terms of an express contract control. Id. (citations omitted). Here, as

-15- discussed, the Deed is an express, controlling contract that conveyed the Property

to the Bishops. As previously stated, this controversy is a matter of law best

addressed by contract principles. See Furlong Dev., Co., LLC v. Georgetown-Scott

Cnty. Plan. & Zoning Comm’n, 504 S.W.3d 34, 39-40 (Ky. 2016).

Finally, Jack argues that the circuit court’s directed verdict was

procedurally improper (despite being the party who originally moved for the

directed verdict). Even if we disagreed with the circuit court’s decision to limit

Jack’s claims via directed verdict, any error would be harmless because it did not

affect the substantial rights of the parties. See CR 61.01 (“The court at every stage

of the proceeding must disregard any error or defect in the proceeding which does

not affect the substantial rights of the parties.”). In granting the Bishops’ motion,

the circuit court allowed the unjust enrichment claim to proceed, but only as to

those alleged debts, expenses, and enrichments incurred post-deed, not the

possessory interests addressed within the Deed. True, the directed verdict limited

Jack’s unjust enrichment claim, but that limitation was harmless because any

unjust enrichment claim was doomed to fail in light of the aforementioned

dispositive contractual principles. Thus, the circuit court did not err in dismissing

Jack’s unjust enrichment claim.

CONCLUSION

Thus, we AFFIRM the judgments of the Madison Circuit Court.

-16- ALL CONCUR.

BRIEF FOR APPELLANT: BRIEF FOR APPELLEES:

Michael S. Fore Rodney G. Davis Isaac N. Claywell Richmond, Kentucky Richmond, Kentucky

-17-