RENDERED: APRIL 11, 2025; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals NO. 2024-CA-0461-MR
JJ&C DISTRIBUTING, LLC APPELLANT
APPEAL FROM WHITLEY CIRCUIT COURT v. HONORABLE DANIEL BALLOU, JUDGE ACTION NO. 23-CI-00007
JIMMIE LEE JACKSON APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: THOMPSON, CHIEF JUDGE; KAREM AND TAYLOR, JUDGES.
THOMPSON, CHIEF JUDGE: JJ&C Distributing, LLC (“Appellant”) appeals
from an order of the Whitley Circuit Court granting the motion of Jimmie Lee
Jackson (“Appellee”) for a judgment on the pleadings per Kentucky Rules of Civil
Procedure (“CR”) 12.03. Appellant argues that the circuit court abused its
discretion in concluding that Appellant had actual or constructive notice of
Appellee’s off-conveyance deed to the Commonwealth of Kentucky, and should have examined the public record prior to purchasing a parcel of real property from
Appellee. Appellant also argues that the circuit court improperly failed to
conclude that Appellee breached his contract with Appellant. After careful review,
we find no error and affirm the order of the Whitley Circuit Court.
FACTS AND PROCEDURAL HISTORY
Appellant is a limited liability company conducting business as Dr.
P’s Auto Clinic. John Pfoutz is Appellant’s sole owner. In 2020, Appellee owned
a parcel of commercial real property situated on Cumberland Falls Highway in
Whitley County, Kentucky.
The parties entered into an agreement whereby Appellee would lease
the parcel to Appellant for one year at $1,000.00 per month, with that $12,000.00
being applied as a down payment on Appellant’s purchase of the parcel for
$199,900.00. The agreement provided for 12-month extensions of the lease if
Appellant did not purchase the parcel at the end of the first year.
Between January and March, 2022, and after Appellant paid the initial
$12,000.00 lease/downpayment, Pfoutz received a letter from the Commonwealth
of Kentucky, Transportation Cabinet (“the Cabinet”), communicating its intention
to widen the roadway in front of the parcel, to take by eminent domain a portion of
the parcel, and the amount the Cabinet was willing to pay to Appellee. A
representative of the Cabinet also inspected the parcel. Pfoutz communicated these
-2- facts to Appellee. Thereafter, Appellee came to an agreement with the Cabinet and
executed a deed to it on March 15, 2022, transferring title of 0.04 acres to the
Cabinet. We will refer to this deed as the Cabinet’s deed.
On August 15, 2022, the parties closed on the sale of the parcel at
issue. The deed, which we will refer to as Appellant’s deed and which was
recorded on August 23, 2022, stated that 0.04 acres conveyed to the Cabinet was
not included in the conveyance to Appellant.
On January 4, 2023, Appellant filed the instant action against
Appellee in Whitley Circuit Court alleging fraud, fraud in the inducement, breach
of contract, and entitlement to punitive damages. The complaint centered on
Appellant’s allegation that Appellee improperly failed to inform it of Appellee’s
transfer of the 0.04 acre parcel to the Cabinet, and failed to transfer to Appellant
the entire parcel contemplated by the parties’ initial agreement.
Discovery commenced, and on January 26, 2024, Appellee moved for
a judgment on the pleadings per CR 12.03. After conducting a hearing on the
motion, and upon considering the arguments of counsel and the pleadings, the
circuit court rendered an order on March 5, 2024, granting Appellee’s motion for a
judgment on the pleadings. The circuit court ruled in relevant part that Appellant
had actual, constructive and inquiry notice of the content and legal effect of
Appellee’s deed to the Cabinet transferring title to the 0.04 acres. Appellant
-3- moved to alter, amend or vacate the judgment, which was denied by way of an
order entered on April 3, 2024. This appeal followed.
STANDARD OF REVIEW
A motion for a judgment on the pleadings presents a question of law,
which requires an examination of the pleadings; therefore, we conduct a de novo
review. Russell v. Johnson & Johnson, Inc., 610 S.W.3d 233, 238-39 (Ky. 2020).
The motion should be granted only if it appears beyond doubt that the nonmoving
party could not present any set of facts that would entitle him to relief. Id. at 240.
ARGUMENTS AND ANALYSIS
Appellant argues that the Whitley Circuit Court erred in granting
Appellee’s motion for a judgment on the pleadings. While acknowledging that a
deed’s description of a prior off-conveyance of a portion of commercial property is
generally sufficient to require the purchaser to examine the title prior to closing
based on principles of constructive notice, Appellant argues that an exception to
the general rule is found where the seller made fraudulent misrepresentations so as
to induce the purchaser to buy the property. Appellant asserts that this exception
applies to the matter before us, as Appellant’s allegations of fraud, fraudulent
misrepresentation, and fraud in the inducement invalidated the Appellee’s defense
of constructive or actual notice. Specifically, Appellant alleged in its complaint
that Appellee “perpetrated a fraud upon the Plaintiff [Appellant] by knowingly and
-4- falsely asserting that the property conveyed to the Commonwealth of Kentucky
would not interfere with Plaintiff’s use of the property, none of which was true.”
The complaint also alleged that Appellee failed to communicate to Appellant how
much of the property was conveyed to the Cabinet. On this basis, Appellant
requests an opinion reversing the order granting Appellee’s motion for a judgment
on the pleadings.
CR 12.03 provides that,
[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on such motion, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided for in Rule 56, and all parties shall be given reasonable opportunity to present all materials made pertinent to such a motion by Rule 56.
A motion for a judgment on the pleadings admits, for purposes of the motion, the
truth of the nonmoving party’s pleadings. Sheffer v. Chromalloy Mining and
Mineral Division of Chromalloy American Corp., 578 S.W.2d 594, 595 (Ky. App.
1979).
The question for our consideration, then, is whether it appears beyond
doubt that Appellant – the nonmoving party – would be unable to present any set
of facts that would entitle it to relief. Russell, supra. After examining the
pleadings de novo, we must answer this question in the affirmative.
-5- Kentucky is a race-notice jurisdiction, in which a prior interest in real
property prevails over a subsequent interest that was taken with actual or
constructive knowledge of the prior interest. Hays v. Nationstar Mortgage, LLC,
510 S.W.3d 327, 330 (Ky. App. 2017). “[C]onstructive notice is established by
mere proof that a valid interest in real property is properly recorded in the office of
a county [] clerk.” State Street Bank & Trust Co. of Boston v. Heck’s, Inc., 963
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RENDERED: APRIL 11, 2025; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals NO. 2024-CA-0461-MR
JJ&C DISTRIBUTING, LLC APPELLANT
APPEAL FROM WHITLEY CIRCUIT COURT v. HONORABLE DANIEL BALLOU, JUDGE ACTION NO. 23-CI-00007
JIMMIE LEE JACKSON APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: THOMPSON, CHIEF JUDGE; KAREM AND TAYLOR, JUDGES.
THOMPSON, CHIEF JUDGE: JJ&C Distributing, LLC (“Appellant”) appeals
from an order of the Whitley Circuit Court granting the motion of Jimmie Lee
Jackson (“Appellee”) for a judgment on the pleadings per Kentucky Rules of Civil
Procedure (“CR”) 12.03. Appellant argues that the circuit court abused its
discretion in concluding that Appellant had actual or constructive notice of
Appellee’s off-conveyance deed to the Commonwealth of Kentucky, and should have examined the public record prior to purchasing a parcel of real property from
Appellee. Appellant also argues that the circuit court improperly failed to
conclude that Appellee breached his contract with Appellant. After careful review,
we find no error and affirm the order of the Whitley Circuit Court.
FACTS AND PROCEDURAL HISTORY
Appellant is a limited liability company conducting business as Dr.
P’s Auto Clinic. John Pfoutz is Appellant’s sole owner. In 2020, Appellee owned
a parcel of commercial real property situated on Cumberland Falls Highway in
Whitley County, Kentucky.
The parties entered into an agreement whereby Appellee would lease
the parcel to Appellant for one year at $1,000.00 per month, with that $12,000.00
being applied as a down payment on Appellant’s purchase of the parcel for
$199,900.00. The agreement provided for 12-month extensions of the lease if
Appellant did not purchase the parcel at the end of the first year.
Between January and March, 2022, and after Appellant paid the initial
$12,000.00 lease/downpayment, Pfoutz received a letter from the Commonwealth
of Kentucky, Transportation Cabinet (“the Cabinet”), communicating its intention
to widen the roadway in front of the parcel, to take by eminent domain a portion of
the parcel, and the amount the Cabinet was willing to pay to Appellee. A
representative of the Cabinet also inspected the parcel. Pfoutz communicated these
-2- facts to Appellee. Thereafter, Appellee came to an agreement with the Cabinet and
executed a deed to it on March 15, 2022, transferring title of 0.04 acres to the
Cabinet. We will refer to this deed as the Cabinet’s deed.
On August 15, 2022, the parties closed on the sale of the parcel at
issue. The deed, which we will refer to as Appellant’s deed and which was
recorded on August 23, 2022, stated that 0.04 acres conveyed to the Cabinet was
not included in the conveyance to Appellant.
On January 4, 2023, Appellant filed the instant action against
Appellee in Whitley Circuit Court alleging fraud, fraud in the inducement, breach
of contract, and entitlement to punitive damages. The complaint centered on
Appellant’s allegation that Appellee improperly failed to inform it of Appellee’s
transfer of the 0.04 acre parcel to the Cabinet, and failed to transfer to Appellant
the entire parcel contemplated by the parties’ initial agreement.
Discovery commenced, and on January 26, 2024, Appellee moved for
a judgment on the pleadings per CR 12.03. After conducting a hearing on the
motion, and upon considering the arguments of counsel and the pleadings, the
circuit court rendered an order on March 5, 2024, granting Appellee’s motion for a
judgment on the pleadings. The circuit court ruled in relevant part that Appellant
had actual, constructive and inquiry notice of the content and legal effect of
Appellee’s deed to the Cabinet transferring title to the 0.04 acres. Appellant
-3- moved to alter, amend or vacate the judgment, which was denied by way of an
order entered on April 3, 2024. This appeal followed.
STANDARD OF REVIEW
A motion for a judgment on the pleadings presents a question of law,
which requires an examination of the pleadings; therefore, we conduct a de novo
review. Russell v. Johnson & Johnson, Inc., 610 S.W.3d 233, 238-39 (Ky. 2020).
The motion should be granted only if it appears beyond doubt that the nonmoving
party could not present any set of facts that would entitle him to relief. Id. at 240.
ARGUMENTS AND ANALYSIS
Appellant argues that the Whitley Circuit Court erred in granting
Appellee’s motion for a judgment on the pleadings. While acknowledging that a
deed’s description of a prior off-conveyance of a portion of commercial property is
generally sufficient to require the purchaser to examine the title prior to closing
based on principles of constructive notice, Appellant argues that an exception to
the general rule is found where the seller made fraudulent misrepresentations so as
to induce the purchaser to buy the property. Appellant asserts that this exception
applies to the matter before us, as Appellant’s allegations of fraud, fraudulent
misrepresentation, and fraud in the inducement invalidated the Appellee’s defense
of constructive or actual notice. Specifically, Appellant alleged in its complaint
that Appellee “perpetrated a fraud upon the Plaintiff [Appellant] by knowingly and
-4- falsely asserting that the property conveyed to the Commonwealth of Kentucky
would not interfere with Plaintiff’s use of the property, none of which was true.”
The complaint also alleged that Appellee failed to communicate to Appellant how
much of the property was conveyed to the Cabinet. On this basis, Appellant
requests an opinion reversing the order granting Appellee’s motion for a judgment
on the pleadings.
CR 12.03 provides that,
[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings. If, on such motion, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided for in Rule 56, and all parties shall be given reasonable opportunity to present all materials made pertinent to such a motion by Rule 56.
A motion for a judgment on the pleadings admits, for purposes of the motion, the
truth of the nonmoving party’s pleadings. Sheffer v. Chromalloy Mining and
Mineral Division of Chromalloy American Corp., 578 S.W.2d 594, 595 (Ky. App.
1979).
The question for our consideration, then, is whether it appears beyond
doubt that Appellant – the nonmoving party – would be unable to present any set
of facts that would entitle it to relief. Russell, supra. After examining the
pleadings de novo, we must answer this question in the affirmative.
-5- Kentucky is a race-notice jurisdiction, in which a prior interest in real
property prevails over a subsequent interest that was taken with actual or
constructive knowledge of the prior interest. Hays v. Nationstar Mortgage, LLC,
510 S.W.3d 327, 330 (Ky. App. 2017). “[C]onstructive notice is established by
mere proof that a valid interest in real property is properly recorded in the office of
a county [] clerk.” State Street Bank & Trust Co. of Boston v. Heck’s, Inc., 963
S.W.2d 626, 630 (Ky. 1998) (citation omitted).
Appellant’s complaint reveals, and Appellee’s answer so
acknowledges, that Appellant had actual or constructive knowledge of Appellee’s
conveyance to the Cabinet prior to the filing of Appellant’s deed. Appellant’s
complaint quotes a portion of Appellant’s deed, which expressly states that
excepted from Appellant’s deed is the 0.04 acre transfer made from Appellee to the
Cabinet on March 15, 2022, and which was recorded in Deed Book 567, page 604.
The complaint acknowledges that the Cabinet’s deed was filed some five months
prior to the filing of Appellant’s deed. Thus, by reference only to Appellant’s
complaint, the Whitley Circuit Court properly concluded that Appellant had at
least constructive notice of the March 15, 2022 deed to the Cabinet.
Appellant asserts that Appellee’s statements to Appellant some weeks
or months prior to closing constitute fraud which induced Appellant to purchase
the property. Specifically, Appellant maintains that Appellee incorrectly stated
-6- that the conveyance to the Cabinet would affect Appellant’s signage but not the
parking lot. The merger doctrine holds, however, “that all prior statements and
agreements, both written and oral, are merged into the deed and the parties are
bound by that instrument.” Borden v. Litchford, 619 S.W.2d 715, 717 (Ky. App.
1981). Thus, Appellee’s statement about the signage and parking lot, if made, are
merged into the deed and Appellant is bound by it. Again, this derives from the
fact that Appellant had actual or constructive notice of the Cabinet’s deed, and
purchased the parcel subject to that deed. We find the case law cited by Appellant
to be distinguishable.
Appellant also argues that the Whitley Circuit Court erred in
rendering the judgment on the pleadings since Appellee clearly breached his
contract with Appellant. Appellant asserts that the parties entered into an
enforceable contract with certain terms; that Appellant strictly complied with those
terms; and, that Appellee breached the contract by failing to deliver the parcel as
bargained for.
Just as the merger doctrine holds that all prior statements are merged
into the deed and the parties are bound by that instrument, the doctrine also
“provides that upon delivery and acceptance of a deed, the deed extinguishes or
supersedes the contract for the conveyance of the realty.” Jackson v. Mackin, 277
S.W.3d 626, 628 (Ky. App. 2009) (citation omitted). Appellant is correct that
-7- Appellee did not convey the parcel as originally contemplated by the parties;
however, since Appellant had actual or constructive knowledge of the 0.04 acre
conveyance to the Cabinet and nonetheless chose to proceed to closing, he is
bound by the deed to which he assented. The Whitley Circuit Court properly so
found.
CONCLUSION
Based solely on the pleadings, the Whitley Circuit Court properly
concluded that Appellant could not present any set of facts at trial that would
entitle it to the relief sought. Accordingly, a judgment on the pleadings was
properly rendered. For these reasons, we affirm the order of the Whitley Circuit
Court.
ALL CONCUR.
BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
Sandra J. Reeves Ralph W. Hoskins Corbin, Kentucky Corbin, Kentucky
-8-