Premier Surgery Properties, LLC v. Jewish Hospital and St. Mary's Healthcare, Inc.

• Court: Court of Appeals of Kentucky
• Decided: April 11, 2024
• Docket: 2023 CA 000914
• Status: Unknown

Opinion

RENDERED: APRIL 12, 2024; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

NO. 2023-CA-0914-MR

PREMIER SURGERY PROPERTIES, LLC APPELLANT

APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE MITCH PERRY, JUDGE ACTION NO. 22-CI-006282

JEWISH HOSPITAL AND ST. MARY’S HEALTHCARE, INC. APPELLEES

OPINION AFFIRMING

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BEFORE: THOMPSON, CHIEF JUDGE; ECKERLE AND KAREM, JUDGES.

ECKERLE, JUDGE: Two, sophisticated parties negotiated a purchase and sale

agreement regarding two lots of real property. Appellant, Premier Surgery

Properties, LLC (“Premier”), purchased the lots and constructed a surgery center

on one of them. The other lot remains undeveloped and is the subject of this

dispute. Premier claims the seller, Appellees, Jewish Hospital and St. Mary’s Healthcare, Inc. (the “Hospital”), have not complied reasonably and timely with

their obligation to construct a permanent, drivable lane that would provide access

to the undeveloped lot. The Hospital agrees that it has not constructed the lane.

Nonetheless, it claims the case should be dismissed because there is allegedly no

need to impute a reasonable timeline for a permanent lane’s construction as the

contract provides Premier the right to construct a temporary, drivable lane. The

Trial Court granted the Hospital’s motion to dismiss, holding that it would not read

any reasonable timeline into an arm’s-length contract between two, sophisticated

parties that negotiated a means of lot access. Premier appealed. Having reviewed

the record and the relevant law, we agree with the Trial Court. Hence, we affirm.

BACKGROUND

Premier purchased, via a land swap, Lots 4-1 and 4-3 on Terra

Crossing Boulevard, Louisville, Jefferson County, Kentucky, from the Hospital

pursuant to a Purchase and Sale Agreement dated June 11, 2011. Premier arranged

for a surgery center to be constructed on Lot 4-1, and the construction is complete.

Premier left Lot 4-3 undeveloped, claiming that the Hospital has not yet

constructed a permanent, drivable lane to provide access to the lot. A review of the

approved, minor subdivision plan shows that Lot 4-1 has access to Terra Crossing

Boulevard via an existing curb cut, while Lot 4-3 has no such access and requires

access to Terra Crossing Boulevard via a to-be-developed drivable lane. That

-2- currently non-existing lane would also provide access to substantial, undeveloped

acreage that constitutes the remainder lot. Certainly aware of this access issue

during their negotiations, Premier and the Hospital provided agreements and

reciprocal easements in a Special Warranty Deed dated March 7, 2012, conveying

Lots 4-3 and 4-1 (the “Contract”), to wit:

2. [The Hospital], its successors and assigns, shall provide for the design and construction of the permanent driveways, sidewalks, and other improvements in the Easement Area, at [the Hospital’s] sole cost and expense (collectively the “Drive Lanes”). In the event [the Hospital] has not constructed the Drive Lanes prior to the development of Lot 4-3, [Premier] shall have the right to design and construct a temporary driveway, sidewalks, and other improvements in the Easement Area at [Premier’s] sole cost and expense (collectively, the “Temporary Drive Lanes”). [The Hospital] shall submit the design plans for the Drive Lanes to [Premier] for review and approval prior to construction, which approval shall not be unreasonably withheld. Said plans shall provide for improvements to the property line of Lot 4-3 and, if applicable, Lot 4-1. [The Hospital] shall obtain all governmental approvals necessary for the construction of the Drive Lanes, if required, and [the Hospital] shall cooperate in that regard. [Premier] shall obtain all governmental approvals necessary for the construction of the Temporary Drive Lanes, if required. Immediately after construction of the Temporary Drive Lanes, [Premier] shall use commercially reasonable methods to restore [the Hospital’s] Property to its original condition.

It does not appear that either party has constructed permanent or

temporary, drivable lanes. Instead, Premier has requested that the Hospital

-3- construct the permanent lanes. The Hospital has refused, resulting in Premier’s

filing of a Complaint alleging breach of the Contract. Premier claims that the

Hospital failed during the previous 11 years to construct the permanent, drivable

lanes; and the Hospital agrees with this point. However, the Hospital moved to

dismiss the Complaint, arguing that the Contract has not been breached because

Premier has the option of constructing temporary, drivable lanes, and there is no

express timeline in the Contract for the Hospital to construct permanent, drivable

lanes. Premier argues that a reasonable timeline should be read into the Contract

as a matter of law. The Trial Court below granted the motion to dismiss, noting

that the Contract’s terms were unambiguous and provided Premier a means of

access; thus, no reasonable timeline should be added to the Contract’s terms.

Premier appealed.

Premier argues three errors by the Trial Court on appeal: (1) it did not

apply the proper standard; (2) it should have read a reasonable time period into the

Contract; and (3) it conflated Premier’s right to construct temporary lanes into a

duty to perform. The Hospital responds to each of these issues and further asserts

that Premier’s claim should fail because it has not proven any prejudice by the

Hospital’s failure to act. We begin with the standard of review.

-4- ANALYSIS

The Trial Court dismissed this case pursuant to a CR1 12.02 motion.

“Under CR 12.02 a court should not dismiss for failure to state a claim unless the

pleading party appears not to be entitled to relief under any state of facts which

could be proved in support of his claim.” Weller v. McCauley, 383 S.W.2d 356,

357 (Ky. 1964). “In making this decision, the circuit court is not required to make

any factual determination; rather, the question is purely a matter of law.” James v.

Wilson, 95 S.W.3d 875, 883-84 (Ky. App. 2002). “Accordingly, ‘the pleadings

should be liberally construed in the light most favorable to the plaintiff, all

allegations being taken as true.’” Fox v. Grayson, 317 S.W.3d 1, 7 (Ky. 2010)

(quoting Morgan v. Bird, 289 S.W.3d 222, 226 (Ky. App. 2009)). “Stated another

way, the court must ask if the facts alleged in the complaint can be proved, would

the plaintiff be entitled to relief?” James, 95 S.W.3d at 884.

Appellate review of orders of dismissal is de novo. Certain

Underwriters at Lloyd’s, London v. Abundance Coal, Inc., 352 S.W.3d 594, 596

(Ky. App. 2011) (citing Hamilton-Smith v. Commonwealth, 285 S.W.3d 307 (Ky.

App. 2009)). We “owe[] no deference to a trial court’s determination[.]” Fox, 317

S.W.3d at 7.

1 Kentucky Rules of Civil Procedure.

-5- Accordingly, Premier’s first allegation of error is a non sequitur.

Whether the Trial Court applied the proper standard is irrelevant to our de novo

review that owes no deference to the Trial Court’s determination.

Premier’s second and third allegations of error address the substance

of this appeal, though we find neither warrants reversal. Distilled down to the

basics, the question before us is whether a reasonable time period should be read

into the Contract’s terms regarding the permanent, drivable lane’s construction.

Kentucky law is clear regarding timelines that are applicable in the

absence of contract terms. It holds that where “the contract was for a definite

amount of work . . .” and “there is no provision in such a contract as to the time for

performance, the general rule is that the contract must be performed within a

reasonable time.” Stephens v. Horn, 314 Ky. 752, 754, 236 S.W.2d 953, 954

(1950) (citing Martin Oil & Gas Co. v. Fyffe, 251 Ky. 517, 65 S.W.2d 686 (1933),

and Carhart Holding Company v. Mitchell, 261 Ky. 297, 87 S.W.2d 360 (1935)).

See also Liggett Group, Inc. v. Commonwealth, 232 S.W.3d 559 (Ky. App. 2007).

And yet here, this legal principle is inapplicable because there is no

definitiveness in the Contract as to the amount of work that should be performed.

The Contract expressly permits two possible outcomes: (1) the Hospital constructs

permanent lanes of access while Premier waits to develop Lot 4-3; or (2) Premier

constructs temporary lanes to develop Lot 4-3 on its own timeframe. In other

-6- words, one cannot look at the Contract and say, definitively, that the Hospital or

Premier should be the first to perform. Contracts that require courts to add a

reasonable time requirement involve definite performance. See, e.g., United

Equipment Co. v. D.T. Bohon Co., 203 Ky. 527, 263 S.W. 27 (1924) (adding

reasonable timeframe to a contract to construct sprinkler system); Miller v.

Bradley, 217 Ky. 553, 290 S.W. 319 (1927) (adding reasonable timeframe to a

contract to furnish water for drilling). Here, the Contract is not definitive about

which party should be the first to perform the building of any drivable lanes.

Premier argues that one cannot come to this conclusion because the

contract requires the Hospital to perform, but it only permits Premier to perform.

This argument misses the central issue: Does the Contract include a singular,

definitive act to be performed? The answer to this question must be in the

negative, as the parties negotiated express terms that permitted each an alternate

path to control the development on their own, respective timelines.

Premier further posits that if the Courts decline to impute a non-

negotiated, allegedly reasonable timeline for the Hospital to construct the

permanent lanes, then the Hospital would never perform. But Premier fails to

account for its own reason for neglecting to assert this point in contact negotiations

between parties at arm’s length. It likewise ignores here the Hospital’s obvious

reason for not wanting to include a definite timeline, i.e., simple, economic

-7- advantage. This profit motive is the same reason Premier has to construct the

temporary lanes. Once the Hospital finds a valuable use for the remainder

property, it must construct permanent lanes of access pursuant to the Contract’s

terms. In the same way, Premier has an economic incentive to construct temporary

lanes solely for its own access to its adjacent property if it finds a profitable use for

the lot that overcomes the additional, construction costs.

Simply put, had Premier wanted permanent lanes constructed within a

time certain, it could have and would have negotiated those terms when purchasing

the properties. We will not read into this Contract anything more than its express

and unambiguous terms, O’Bryan v. Massey-Ferguson, Inc., 413 S.W.2d 891, 893

(Ky. 1966) (“In the absence of ambiguity a written instrument will be enforced

strictly according to its terms.”), especially in an arm’s-length transaction between

sophisticated parties, cf. Cumberland Valley Contractors, Inc. v. Bell County Coal

Corp., 238 S.W.3d 644, 650 (Ky. 2007) (noting most exculpatory clauses are

enforced in arm’s-length transactions between sophisticated parties).

Accordingly, the Trial Court did not err by granting the motion to

dismiss. Having so found in the Hospital’s favor, we need not address its ancillary

issues.

-8- CONCLUSION

Because the Contract unambiguously provides that either party may

construct drivable lanes depending on its desire to develop its lot, there is no

definite performance regarding which we may construct a reasonable timeframe.

The Trial Court properly granted the Hospital’s motion to dismiss. Accordingly,

we AFFIRM.

ALL CONCUR.

BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE:

Casey L. Hinkle Christopher W. Brooker Louisville, Kentucky Matthew R. Palmer-Ball Louisville, Kentucky

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