Omni Commercial Properties, LLC v. Mark Moody

• Court: Court of Appeals of Kentucky
• Decided: January 10, 2025
• Docket: 2024-CA-0422
• Status: Unpublished

Opinion

RENDERED: JANUARY 10, 2025; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals NO. 2024-CA-0422-MR

OMNI COMMERCIAL PROPERTIES, LLC APPELLANT

APPEAL FROM MADISON CIRCUIT COURT v. HONORABLE DAVID M. WARD, JUDGE ACTION NO. 21-CI-00159

MARK MOODY AND SHERRILL MOODY APPELLEES

OPINION AFFIRMING

** ** ** ** **

BEFORE: ECKERLE, L. JONES, AND KAREM, JUDGES.

ECKERLE, JUDGE: Appellant, Omni Commercial Properties, LLC (“Omni”),

seeks review of a judgment of the Madison Circuit Court denying its request for

specific performance of a real estate purchase agreement (“the Purchase

Agreement”) against Appellees, Mark and Sherrill Moody (collectively, “the

Moodys”). Omni contends that the Trial Court abused its discretion in denying specific performance based on its finding that the Moodys failed to comply fully

with their obligations under the Purchase Agreement. However, the Trial Court

also found that Omni failed to comply fully with its own obligations under the

Purchase Agreement. Under these circumstances, the Trial Court had the

discretion to deny specific performance. Hence, we affirm.

The relevant facts are not in dispute. On January 7, 2021, Omni

entered into two separate contracts with the Moodys for the purchase of 714

Candlewood Drive and 716 Candlewood Drive, which are both located in Berea,

Kentucky. Brandon Tyree, Omni’s owner (“Tyree”), signed the Purchase

Agreements on Omni’s behalf. The sales of both properties were originally set to

close on February 22, 2021. The 714 Candlewood Drive purchase closed as

provided in that Purchase Agreement.

However, the route to attempting to finalize the 716 Candlewood

Drive property was circuitous. The Purchase Agreement for 716 Candlewood

Drive had listed a sale price of $279,000.00, and that amount was originally to be

financed. However, on January 21, 2021, Omni advised the Moodys that it

intended to pay cash for the property. On February 16, 2021, the parties removed

what was described as a “roofing contingency” from their agreement. They also

continued to engage in negotiations as to other contingencies related to the sale.

Moreover, the property was the subject of an ongoing eviction again by the

-2- Moodys against a tenant of that property. Accordingly, Omni and the Moodys

agreed to extend the date of the closing for approximately 30 days, to March 26,

2021, to address all of these concerns. The extension of the closing date required

Omni to place an additional $10,000.00 in escrow.

Shortly before the second closing date, on March 19, 2021, Tyree

requested that the Moodys provide documentation that the roofing contractor had

been paid. On March 25, 2021, Omni’s real estate agent, Cassie Foley (“Foley”),

informed the Moodys that Omni had just recently applied for financing and

requested that the closing date be extended again, for an additional 30 days. No

mention was made of Omni’s earlier intention to pay cash without financing. The

Moodys agreed to the extension, subject to a non-refundable $10,000.00 payment

into escrow. Omni alternatively proposed that the Moodys refund the escrow

amounts already paid and execute a release. The parties could not reach an

agreement, and the March 26, 2021, closing did not go forward.

On March 29, 2021, Omni’s closing attorney, Tracy Blevins

(“Blevins”), emailed the Moodys identifying potential title defects, including a lien

by the roofing contractor. This same contractor had worked on the roof on the

other property, which did close. Shortly thereafter, the Moodys re-listed the

property for sale.

-3- On April 5, 2021, Omni filed suit seeking specific performance of the

Purchase Agreement and damages flowing from the Moodys’ contract breach.

Specifically, Omni alleged that the Moodys failed to: (1) close the sale transaction

within the time requirements or reasonable extensions; (2) fulfill their obligations,

including installing a new roof; (3) provide proof that the tenants of the property

were evicted; and (4) extend the terms of the contract without an additional, non-

refundable deposit. During litigation, Omni expounded upon the Moodys’ failures

to include neglecting to: (1) provide access for an inspection; (2) give proper

notice of the status of the eviction; (3) obtain a home warranty; (4) rectify an issue

with the Heating, Ventilation, and Air Conditioning (“HVAC”) unit; (5) provide

proof that the property could be conveyed free of any roofing liens; and (6) agree

to a reasonable extension of time. The Moodys responded that Omni never

requested the additional information or conditions prior to the extended closing

date. In addition, the Moodys noted Omni’s own failures, including providing

proof of a loan commitment as required by the Purchase Agreement.

Over two years after the commencement of litigation, the matter

proceeded to a bench trial on October 13, 2023. Four months later, on February

28, 2024, the Trial Court entered findings of fact, conclusions of law, and a

judgment. The Trial Court noted at the outset that the parties were sophisticated in

the negotiation and purchase of real estate, and yet that they had decided against

-4- drafting a contract to conform to their desires. Instead, they opted to use a form

contract that offered less-than-ideal clarity and often more beneficial terms to the

buyer. The Trial Court held that the Purchase Agreement included an implied

covenant of good faith and fair dealing that imposed a duty upon the parties to

undertake all actions reasonably necessary to fulfill the contract. In its findings,

The Trial Court addressed the defenses asserted by both Omni and the Moodys.

However, the Trial Court found none to be entirely convincing.

In its detailed findings, the Trial Court first rejected the Moodys’

alleged justifications for their refusal to extend the closing date. In particular, the

Trial Court found that, under the Purchase Agreement, Omni’s failure to provide

proof of financing provided only Omni with the unilateral right to void the

contract. The Trial Court also noted that the Purchase Agreement failed to specify

that “time is of the essence,” and indeed, that it had included provisions for

extensions under certain circumstances. Consequently, the Trial Court held that

the Moodys had an obligation to grant Omni a reasonable extension to close the

sale.

The Trial Court then turned to Omni’s defenses to its failure to close

the sale by the second, March 26, 2021, date. First, the Trial Court held that the

Purchase Agreement required the Moodys either to hire a licensed and insured

roofing contractor to replace the roof, or to escrow the amount of the roof

-5- replacement, not to exceed $10,000.00, at or before closing. The Moodys provided

conflicting information to Omni about which of these options they intended to

exercise. Nonetheless, the Moodys hired a contractor to replace the roofs on both

the 714 and 716 Candlewood Drive properties. While Omni objected to the lack of

certification documentation, it did not raise concerns about the potential liens until

after the extended closing date had passed. Nonetheless, as the Trial Court

delineated, the parties agreed to eliminate the roofing contingency in the February

16, 2021, amendment. Consequently, the Trial Court held that Omni’s claim

regarding the Moody’s obligation to replace the roof was not a valid excuse for its

failure to close the sale.

Second, the Trial Court addressed Omni’s title-related claims

concerning both the potential roofing lien and the eviction action. With regard to

the lien, the Trial Court noted that Omni closed on 714 Candlewood Drive despite

the same concerns, and that no lien has ever been asserted on either property. And

the Trial Court re-emphasized that Omni never objected to the lack of roofing

documentation until after the closing date. The Trial Court also separately noted

that Omni failed to provide the Moodys with notice of any title defect as required

by the Purchase Agreement. Thus, the Trial Court held that Omni’s claim on this

point was not a valid excuse for its failure to close the sale.

-6- Similarly, regarding the eviction and Omni’s lack of access to the

property, the Trial Court found that the litigation against the tenants did not

prevent Omni from inspecting the property, and that the Moodys provided Omni’s

agent with access to the property as requested. The Court further found that, while

the Moodys failed to clarify the status of the eviction, Omni never indicated that it

would be an impediment to the sale until after the closing date. In addition, the

eviction process was a matter of public record that Omni could have discovered on

its own with reasonable diligence had it wanted to do so. Under these

circumstances, the Trial Court rejected Omni’s defense of a valid excuse to close

the sale because of its failure to complain to the Moodys prior to closing of the

alleged problems of the eviction and the alleged lack of access.

Third, the Trial Court found no evidence of any issues with the

HVAC unit or that Omni ever communicated any concern about this matter prior to

the closing date. The Court recognized that the Moodys had an obligation to

obtain a home warranty but held that the Moodys could not comply due to Omni’s

failure to proceed with the closing in good faith.

The Trial Court ultimately concluded that the Moodys had an

obligation either to close on the sale or provide a reasonable extension of the

closing date. While the Moodys offered to extend the closing date on the condition

of an additional, non-refundable deposit, the Trial Court found that the Moodys

-7- were nonetheless obligated to provide the information requested by Blevins, and

that they failed to do so. Yet, on the other hand, the Trial Court also concluded

that Omni was likewise not diligent in its efforts to obtain this information or close

the sale. It summarized the Moodys’ desire to close and Omni’s lack of

responsiveness thusly:

Relevant to Sellers’ actions is the fact that it was Seller Mark Moody who contacted the Buyer’s agent on March 19, 2021, Cassie Foley, concerning the upcoming and already extended closing date of March 26, 2021, inquiring as to whether “everything’s moving forward for next Friday?” After receiving no immediate response to his 9:40 a.m. text, he asks at 3:04 p.m. that same day “Any update?” Notably as it relates to Plaintiff’s other claims, neither Ms. Foley nor Brandon Tyree, nor anyone else responded to Mr. Moody prior to March 26th, the actual extended closing date, requesting information about the payment of the roofer, access to the property, whether an HVAC unit has been fixed, etc. Rather, Ms. Foley’s response was “I emailed the loan officer earlier today and she hasn’t responded yet.”

Findings of Fact, Conclusions of Law, and Judgment, February 28, 2024. Record

on Appeal (“ROA”) at 400 (footnotes omitted).

In conclusion, the Trial Court found that, while the Moodys were not

entirely diligent in their communications, Omni was less than assiduous in

fulfilling its obligations to close by March 26, 2021. Significantly, the Trial Court

found that Omni failed to document its financial ability to close the transaction by

that date, either through a loan or cash. Given Omni’s multiple failures to comply

-8- strictly with its own obligations, the Trial Court concluded that an award of

specific performance would be inequitable. Rather, the Trial Court rendered a

judgment to Omni only for the amount held in escrow, but it allowed no other

damages or relief.

Following entry of the judgment, Omni filed a motion to alter, amend,

or vacate pursuant to Kentucky Rule of Civil Procedure (“CR”) 59.05. The Trial

Court denied the motion in an order entered on March 27, 2024. This appeal

followed. Additional facts will be set forth below as necessary.

As an initial matter, we note that Omni’s brief fails to include a

statement showing how and where its arguments were preserved for review before

the Trial Court, as required by Kentucky Rule of Appellate Procedure (“RAP”)

32(A)(4). After this matter was submitted to the merits panel, Omni filed a motion

for leave to file a supplemental brief to include such a statement. We appreciate

Omni’s unprompted, although belated, effort to comply with the rule that it had

violated. However, we were compelled to deny the motion because the very rule

mandates compliance before briefing and not afterward, there is no rule that

permits supplemental briefing to cure deficiencies that should never have been

tendered, and granting the motion would merely require more briefing by a non-

offending party.

-9- The rule requiring preservation statements is meant to conserve

judicial resources and, importantly, ensures appellate courts apply the appropriate

standard of review to each issue. See Gasaway v. Commonwealth, 671 S.W.3d

298, 311 (Ky. 2023) (citations omitted). We are empowered to strike a brief for a

party’s failure to comply substantially with the rules for briefing. RAP 31(H)(1).

However, the Supreme Court of Kentucky has held that “[b]ecause preservation

determines the appropriate standard of review, an appellate court should determine

for itself whether an issue is properly preserved.” Gasaway, 671 S.W.3d at 311.

In this case, while we do not condone Omni’s actions, we determine

that sanctions are not appropriate. As noted above, Omni brought its initial failures

to this Court’s attention and made a good faith effort to correct them. Moreover, it

is clear from the record that Omni’s complaint, the bench trial below, and the Trial

Court’s judgment were all focused on Omni’s claim seeking specific performance

of the Purchase Agreement. Thus, the issue for review is plain and its review

simple. We will thus excuse the error on this occasion. However, we strongly

caution that adherence to the RAPs is mandatory, and future failures will not likely

be countenanced.

As this matter was tried before the Trial Court without a jury, our

review of factual determinations is made under the clearly erroneous standard.

Kentucky Rules of Civil Procedure (“CR 52.01”). A finding of fact is not clearly

-10- erroneous if it is supported by substantial evidence, which is “evidence of

substance and relevant consequence having the fitness to induce conviction in the

minds of reasonable men.” Owens-Corning Fiberglas Corp. v. Golightly, 976

S.W.2d 409, 414 (Ky. 1998). It is within the province of a trial court as the fact-

finder to determine the credibility of the witnesses and the weight given to the

evidence. Frances v. Frances, 266 S.W.3d 754, 756 (Ky. 2008). We review a trial

court’s conclusions of law de novo. Gosney v. Glenn, 163 S.W.3d 894, 898 (Ky.

App. 2005).

Omni does not contest any of the Trial Court’s factual findings.

Rather, Omni argues that the Trial Court abused its discretion by denying specific

performance despite its finding that the Moodys breached their duties under the

Purchase Agreement. Omni points to Paragraph 6 of the Purchase Agreement,

which provides:

In the event of a default by Purchaser, Seller shall receive the earnest money deposit and shall also be entitled to pursue any other legal remedy, including the right to bring an action against Purchaser for damages or for specific performance of this Contract. In the event of a default by Seller, Purchaser shall be entitled to a refund of the earnest money deposit and shall also be entitled to pursue any other legal remedy, including the right to bring an action against Seller for damages or for the specific performance of this Contract.

We first note that this provision merely allows a non-defaulting party

to pursue an action for damages or specific performance. It does not require a

-11- Court to grant such relief. And, importantly, it does not address the circumstances

here where both the purchaser and the seller have defaulted in their contract

obligations.

We review the Trial Court’s equitable decision to deny or grant

specific performance for abuse of discretion. See West Ky. Coal Co. v. Nourse,

320 S.W.2d 311, 314 (Ky. 1959) (“[S]pecific performance of a contract is not

granted as a matter of right, but is always addressed to the reasonable discretion of

the court, to be exercised according to the facts of each case.”). “The test for abuse

of discretion is whether the trial judge’s decision was arbitrary, unreasonable,

unfair, or unsupported by sound legal principles.” Goodyear Tire & Rubber Co. v.

Thompson, 11 S.W.3d 575, 581 (Ky. 2000). More specifically, a court abuses the

discretion afforded it when “(1) its decision rests on an error of law . . . or a clearly

erroneous factual finding, or (2) its decision . . . cannot be located within the range

of permissible decisions.” Miller v. Eldridge, 146 S.W.3d 909, 915 n.11 (Ky.

2004).

Omni claims that the Trial Court’s discretion to deny specific

performance is limited to situations where there is a showing of fraud, breach or

misconduct by the buyer, or undue hardship. Puritan Homes, Inc. v. Abell, 432

S.W.2d 632, 638 (Ky. 1968). However, Abell also emphasizes that the party

seeking relief by specific performance must not be at fault and must be willing to

-12- complete any remaining contractual requirements on its own part. Id. Abell also

cites to Nourse, which holds that “[t]he courts have been careful to exercise the

extraordinary and delicate right of specific performance only in cases that are

entirely free from fraud, illegal or inequitable conduct and, in addition, they have

required strict compliance with all terms of the contract by those who request its

exercise.” Nourse, supra, at 314-15.

Omni also relies extensively on this Court’s unpublished opinion in

Jones v. Triple Springs, Inc., No. 2023-CA-0229-MR, 2024 WL 737343 (Ky. App.

Feb. 23, 2024) (unpublished), which is cited pursuant to RAP 41(A). Jones cites to

both Abell and Nourse for the legal propositions cited above, which offer Omni no

relief. Furthermore, the buyer in that case fully performed all of his obligations,

while the seller failed to do so. Id. at * 6-7. Under these circumstances, this Court

held that the trial court in that case abused its discretion by denying specific

performance. Id. at *7. This Court further held that in that particular case, there

were no findings of injustice or hardship sufficient to deny specific performance.

Id. at *8-9.

While it is true that the Trial Court here did not make any findings of

fraudulent, illegal, or unconscionable conduct or of injustice or undue hardship,

Jones offers no solace to Omni here. First, it is an unpublished and non-binding

case. Second, it is entirely distinguishable from the case at hand. In its detailed

-13- findings of fact, conclusions of law, and order, the Trial Court here performed a

yeoman’s job of clearly setting out the detailed facts and long-standing case law

that the Moodys and Omni each bore legal responsibility for the failures to close

the Purchase Agreement:

The Court determines that time was not of the essence of the parties’ purchase agreement as it was neither explicitly stated nor may such requirement be implied given the facts of this case. Accordingly, the Defendants, Mark and Sherrill Moody, were in breach by failing to timely clear certain title exceptions once explicitly notified of same by Attorney Blevins in her email sent after the already extended closing date. However, given (1) Buyer’s failure to strictly comply during the contract period with the Notice obligations required by the purchase agreement with respect to exceptions to title, (2) Buyer’s request transmitted to Sellers through their agent that Buyer needed thirty (30) additional days beyond the extended closing date to obtain financing which the Court determines an unreasonable extension, (3) Buyer’s failure to timely bring its multiple concerns clearly and in writing to the attention of Sellers prior to the extended closing date of March 26, 2021, and (4) Buyer’s insistence that any obligation on its part be conditioned upon its further inspection of the realty with it then being provided the option to determine whether it desired to go forward with the purchase, the Court determines that specific performance of the contract is not appropriate as same would be inequitable.

Findings of Fact, Conclusions of Law and Judgment, February 28, 2024. ROA at

405-06.

-14- We adopt the Trial Court’s well-reasoned analysis in its entirety. And

as noted above, the Trial Court also found that Omni never demonstrated its

capacity to close on March 26, 2021, either with bank financing or cash on hand.

As the party seeking specific performance, Omni bore the burden of proving that it

complied with all of its duties under the Purchase Agreement. Given the Trial

Court’s uncontested finding to the contrary, we find that the Trial Court did not

abuse its discretion by denying Omni’s request for specific performance.

Accordingly, we affirm the judgment of the Madison Circuit Court.

ALL CONCUR.

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEES:

Rodney G. Davis Zachary R. Smith Richmond, Kentucky Lexington, Kentucky

-15-