Superash Remainderman, Lp v. Ashland, LLC

• Court: Court of Appeals of Kentucky
• Decided: October 18, 2024
• Docket: 2023-CA-0427
• Status: Published

Opinion

RENDERED: OCTOBER 18, 2024; 10:00 A.M. TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

NO. 2023-CA-0427-DG

SUPERASH REMAINDERMAN, LP APPELLANT

ON DISCRETIONARY REVIEW FROM FAYETTE CIRCUIT COURT v. HONORABLE LUCY A. VANMETER, JUDGE ACTION NO. 22-XX-00042

ASHLAND, LLC; AND SPEEDWAY, LLC APPELLEES

AND

NO. 2023-CA-0566-DG

ON DISCRETIONARY REVIEW FROM JEFFERSON CIRCUIT COURT v. HONORABLE TRACY E. DAVIS, JUDGE ACTION NO. 23-XX-000002

ASHLAND, LLC; AND SPEEDWAY, LLC APPELLEES AND

NO. 2023-CA-0578-DG

ON DISCRETIONARY REVIEW FROM HARRISON CIRCUIT COURT v. HONORABLE JAY DELANEY, JUDGE ACTION NO. 22-XX-00003

OPINION REVERSING AND REMANDING

** ** ** ** **

BEFORE: EASTON, ECKERLE, AND LAMBERT, JUDGES.

ECKERLE, JUDGE: This Court granted discretionary review to Appellant,

SuperAsh Remainderman, LP (“SuperAsh”) from orders of the Fayette, Jefferson,

and Harrison Circuit Courts. Those orders affirmed the orders of the Fayette,

Jefferson, and Harrison District Courts, respectively (the “District Courts”),

dismissing SuperAsh’s forcible detainer complaints against Appellees, Ashland,

LLC (“Ashland”), and its sub-lessee, Speedway, LLC (“Speedway”). SuperAsh

argues that the leases between it and Ashland expired without renewal, and that the

-2- Ohio and Kentucky Courts should not have granted equitable relief to cause the

leases to continue to operate contrary to their terms. SuperAsh further argues that

the District Courts were without jurisdiction to grant relief on equitable grounds,

and the Circuit Courts should not have affirmed them.

However, Ashland had commenced this litigation in Ohio, and the

Ohio Court made factual and legal findings that the Kentucky Courts interpreted as

binding upon them. Those Ohio findings are currently on appeal and are not final.

Moreover, the Kentucky District Courts also fashioned equitable relief, which is

reserved for Circuit Courts as Courts of general jurisdiction. At the outset, more

serious questioning should have occurred as to the reasons that these cases found

themselves in Kentucky District Court, as they are highly atypical of litigation

there. Much more analysis was warranted as to the type of relief District Courts

could offer, and as to why the Kentucky litigation was not commenced in

Kentucky Circuit Court. We find that regardless of an Ohio Court’s findings, the

Kentucky Courts must make initial findings of their own jurisdiction. Here, they

addressed crucial issues too summarily without adequate analysis and the

necessary, prerequisite, jurisdictional findings. Moreover, even where the District

Courts had jurisdiction over some parts of the dispute, they applied incorrect

factual and legal standards to determine issues.

-3- Hence, we reverse the Circuit Courts’ summary orders affirming, and

the Circuit Courts must reverse and remand these matters to the respective District

Courts for further adjudication. The District Courts may properly conduct forcible

detainer proceedings, but they must confine themselves jurisdictionally to

addressing matters of law and not equity, except where specifically and statutorily

authorized to do so. They cannot adopt the Ohio Court’s theories of equitable

remedies. On matters of law, the District Courts must make factual findings and

conclusions of law on the issues they are empowered to decide: renewal of leases

by their own terms and the terms of subsequent contracts, and waiver of

compliance by the acceptance of rent and Ashland’s other legal, non-equitable

defenses.

I. FACTUAL AND PROCEDURAL HISTORY

The underlying facts are not in dispute. Ashland is a publicly-traded

oil and chemical company. It is also the ground tenant of three Kentucky

properties: 803 South Broadway in Lexington; 4900 Outer Loop in Louisville; and

102 Ladish Road in Cynthiana. These three properties are part of a larger group of

leases between Ashland and SuperAsh governing 24 properties across five states

(the “Ground Leases”).

In 1990, Ashland entered into a sale-leaseback arrangement with

SuperAsh and State Street Bank for all 24 properties. State Street Bank held the

-4- properties in trust, with the remainder interest vesting with SuperAsh after 20

years. Beginning in 1998, Ashland subleased the properties to Speedway, which

continues to operate gas stations and convenience stores on the properties.

In 2010, when the sale-leaseback deal reached its 20-year sunset,

SuperAsh purchased its remainder interest in the properties. Around the same

time, SuperAsh entered into the Ground Leases with U.S. Bank, N.A. (successor in

interest to State Street Bank) and Ashland. The Ground Leases provided a five-

year term, with an option to renew for an additional five-year term. Thereafter, the

Ground Leases allowed Ashland to renew for additional, one-year terms by

providing written notice to SuperAsh 120 days before the expiration of the lease

term; thus, the notice was required by September 3, beginning in 2020, and each

following year.

The two, successive five-year terms proceeded without litigation. In

2020, when the one-year term could have commenced pursuant to the Ground

Leases, Ashland failed to send a timely, written notice of lease renewal by

September 3. Instead, Ashland waited until November 23, 2020, to attempt to

renew with the required, albeit late, notice. Nonetheless, the prior, five-year lease

still had not yet expired in November, and Ashland and SuperAsh continued to

operate as if a lease were still in effect, and SuperAsh accepted this particular

overdue notice without objection.

-5- The following year, in August of 2021, Ashland’s counsel prepared

and signed the notice of renewal. But once again and undisputedly, Ashland failed

to send the written notice of lease renewal before September 3. This time, on

November 3, 2021, SuperAsh advised Ashland that it had interpreted Ashland’s

failure as an intention to allow the Ground Leases to expire on December 31, 2021.

Ashland’s counsel then responded immediately by sending the admittedly overdue

notice of renewal – which had already been signed with a date of August 11, 2021

– for a lease that had already expired by its own terms.

As SuperAsh had provided notice of lease expiration, and Ashland

had given subsequent, non-compliant notice of renewal, the parties’ written

positions under the Ground Leases differed and left continued operations less than

clear. In the months that followed, the parties entered into a series of “Tolling

Agreements,” which allowed Ashland to continue occupying the properties beyond

December 31, 2021. All of the Tolling Agreements provided for continuation of

the terms of the Ground Leases. The first three Tolling Agreements provided for

one-month terms. The final Tolling Agreement, executed on March 29, 2022,

terminated on April 15, 2022. In addition, all of the Tolling Agreements contained

the agreed-upon limitations as to their effectiveness regarding the rights of the

parties:

[T]he purpose of this Agreement is to preserve the status quo as it was prior to its execution, and so nothing in this

-6- Agreement is intended to or shall be deemed to resolve any issues related to the Dispute or revive any rights that might have expired or otherwise been lost as of its execution.

The parties were unable to resolve their differences prior to the

expiration of the final Tolling Agreement. In April of 2022, Ashland filed an

action in the Court of Common Pleas of Franklin County, Ohio (“the Ohio

Litigation”). In the Ohio Litigation, Ashland sought a declaration from that Court

that its untimely 2021 notice was effective to renew its Ground Leases as to all 24

properties through 2022, including the real property in Kentucky, and despite the

language in the Tolling Agreements.

In July of 2022, SuperAsh filed countervailing, forcible detainer

complaints in Kentucky District Courts in three counties with respect to the three

properties at issue in this case. Before any of the Kentucky District Courts issued

any rulings but while these matters were still pending here, the Ohio litigation

proceeded to a bench trial. It does not appear that any party requested a stay of

that trial to allow the Kentucky cases to proceed. On September 27, 2022, the

Ohio Court issued an opinion granting Ashland’s request for declaratory relief. In

pertinent part, the Ohio Court concluded that Ashland was entitled to equitable

relief to excuse its breach in submitting the late notice of renewal for a contract

that had legally expired. The Ohio Court further opined that SuperAsh would

-7- suffer no prejudice as a result of Ashland’s “honest mistake.”1 Consequently, the

Ohio Court ruled that “SuperAsh may not declare the 24 Ground Leases

terminated[.]”2 On October 3, 2022, the Ohio Court issued an Amended Judgment

containing several additional findings but reaching the same result.3

These Ohio rulings resulted in cross-motions for summary judgment

in all three pending forcible detainer complaints in Kentucky. In the Fayette

District Court case (No. 22-C-01461), that Court adopted the Ohio Court’s factual

and legal findings and granted Ashland’s motion for summary judgment. The

Fayette District Court did not independently assess its own jurisdictional

limitations, but instead based its decisions on the conclusions reached in another

state with dissimilar laws. It then found without expounding upon its ruling that

Ashland was entitled to assert equitable defenses to SuperAsh’s forcible detainer

complaints in Kentucky Courts that did not possess unlimited equitable powers. It

then concluded that SuperAsh had waived detainer remedies by accepting rent after

the Tolling Agreement concluded. Therefore, the Fayette District Court dismissed

1 Ashland Global Holdings, Inc. v. SuperAsh Remanderman Ltd. Partnership, No. 22CV-2398 (Franklin Cty. Ohio Ct. Common Pleas) Opinion Sep. 27, 2022, pp. 11-12. 2 Id. p. 18. 3 The Ohio Court of Appeals, Tenth District, affirmed the Ohio Court’s judgment in an opinion rendered on September 29, 2023. Ashland Glob. Holdings, Inc. v. SuperAsh Remainderman Ltd. P'ship, 2023-Ohio-3556, 225 N.E.3d 1177 (Ohio App. 10th Distr. 2023). The Supreme Court of Ohio has accepted the appeal for review. Ashland Glob. Holdings, Inc. v. SuperAsh Remainderman, Ltd. P’ship, 2024-Ohio-202, 172 Ohio St. 3d 1475, 225 N.E.3d 1049 (Ohio Jan. 24, 2024).

-8- the complaint in forcible detainer. On December 11, 2022, the Harrison District

Court followed suit and also granted summary judgment for Ashland and

dismissed SuperAsh’s complaint. (No. 22-C-00198.) And on January 6, 2023, the

Jefferson District Court continued in the same vein and likewise granted summary

judgment for Ashland and dismissed on the same grounds as stated in the Fayette

action. (No. 22-C-008708.)

SuperAsh filed appeals from all three orders. The Fayette Circuit

Court ruled first and affirmed in an opinion and order entered on February 24,

2023. (Appeal No. 22-XX-00042.) The Fayette Circuit Court concluded that the

District Court had the authority to grant relief based on special circumstances

warranting equitable relief. In an opinion and order entered on April 12, 2023, the

Jefferson Circuit Court likewise affirmed. (Appeal No. 23-XX-000002.)

However, the Jefferson Circuit Court additionally held that the ruling of the

Fayette Circuit Court operated to preclude re-litigation of the same issue under the

doctrine of res judicata. On April 14, 2023, the Harrison Circuit Court entered an

opinion affirming its appeal, citing the same grounds found in the Fayette Circuit

Court appeal. (Appeal No. 22-XX-00003.)

SuperAsh then filed timely motions for discretionary review in all

three cases. The motion panel of this Court granted review and directed that the

-9- matters be assigned to the same merits panel. Additional facts will be set forth

below as necessary.

II. PROCEDURAL ISSUES AND ABNORMALITIES

Before we turn to the substantive merits of the appeals, we must take

note of two significant and irregular procedural issues that should have been, but

were not, addressed in the first appeal from the Kentucky District Courts to the

Kentucky Circuit Courts. We first note that Kentucky Revised Statute (“KRS”)

383.255(1) contains a financial prerequisite to filing an appeal:

If either party conceive himself aggrieved by the judgment of the court, he may file an appeal within seven (7) days next after the finding aforesaid, and shall deposit with the circuit court clerk the amount of rent owing and due from the onset of the forcible entry and detainer proceedings as well as the amount of all future rents, as it becomes owing and due in each succeeding month during the pendency of the appeal. The rental moneys collected in this account shall be distributed by court order at the conclusion of an appeal.

The parties agree that Ashland did not pay past or future rents to the Circuit Court

Clerks as required by the statute. Based on the language of the statute, Ashland, as

the lessee, was required to make the rent payments into court, even though it is not

the “aggrieved party” bringing the appeal. This requirement is especially

significant here because Ashland continues to occupy the properties, but SuperAsh

refuses to accept any further rent payments as it considers the occupation unlawful.

-10- However, SuperAsh concedes that it did not demand from Ashland

payment of rents into court as it had the right to do, and thus that its failure to do so

has now operated to waive that requirement. This bond requirement is not

jurisdictional, as it may be waived, at least in cases of indigency. See Meinshausen

v. Friendship House of Louisville, Inc., 607 S.W.3d 199, 202 (Ky. App. 2020)

(citing Fickey v. Cross Creek Apartments, Ltd., 700 S.W.2d 807, 808 (Ky. App.

1985)). While we do not approve of the failure to address and follow this statute,

we do not conclude that it deprives this Court of jurisdiction to address the merits

of the appeal.

Second, we are compelled to note the somewhat unusual aspect of

litigating these cases before the respective District Courts on motions for summary

judgment. Forcible detainer actions are designed to be summary proceedings. In

general, the only issues are possession by the plaintiff and detainer by the

defendant. Shinkle v. Turner, 496 S.W.3d 418, 421 (Ky. 2016) (citing Baker v.

Ryan, 967 S.W.2d 591, 593 (Ky. App. 1997)). Because forcible detainer is a

special statutory proceeding, the statutory requirements displace any contrary

terms of the Rules of Civil Procedure. McCann v. Sullivan Univ. Sys., Inc., 528

S.W.3d 331, 333-34 (Ky. 2017). KRS 383.220-383.235 set out the summary

evidentiary process for resolving forcible detainer complaints. As a summary

-11- proceeding, forcible detainer proceedings will not usually be resolved by

dispositive motions for judgment.

That said, there may be circumstances in which there are no genuine

issues of material fact, and the matter can be resolved as a matter of law. See, e.g.,

Fraysur v. McAlpin, No. 2013-CA-000963-DG, 2014 WL 4524697, at *2 (Ky.

App. Sep. 12, 2014) (unpublished).4 Here, the parties submitted the cases to the

District Court on the agreed facts as found in the Ohio Court judgment. However,

the District Courts were still required to set forth the stipulated and agreed findings

of fact pertinent to their respective conclusions of law. And those conclusions of

law must ensue irrespective of the parties’ factual agreements. Had this litigation

commenced in Kentucky in the Circuit Court instead of the District Court, this

motion practice would likely have occurred because it is common at that level.

At a minimum, summary judgment was a poor procedural fit for these

cases, as was perhaps the District Court itself. Nevertheless, the parties do not

challenge the sufficiency of the Ohio Court’s factual findings, only the conclusions

of law. Therefore, while we do not necessarily endorse the District Courts’

reliance on summary judgment in this case, this issue does not affect our

jurisdiction to address the merits of the appeals. It does, however, add to the

complexities of the case.

4 This unpublished case is only cited pursuant to Kentucky Rule of Appellate Procedure (“RAP”) 41(A).

-12- It simply cannot be ignored that this litigation comes to us from a

highly unusual scenario that has complicated the basic issues that must be decided

as matters of law. It has already proceeded in at least two different states,

including three separate Kentucky District Courts and three separate Kentucky

Circuit Courts. These cases comprise significant disputes involving state and local

jurisdiction, vast sums of money, numerous real properties, several states, complex

and successive legal documents, teams of attorneys, and novel arguments and

rulings. And yet, judicial precedent on long-standing case law exists, and some of

it has been ignored by the parties and the lower courts.

Ashland and Speedway commenced the litigation in Ohio. SuperAsh

later brought suit in Kentucky District Courts about the same matters. The Ohio

litigation came to judgment first, although it is not final. In the subsequent

Kentucky District Court cases, Ashland and Speedway sought to rely on the earlier

judgment of the Ohio Court, which had specifically relied on equitable grounds as

a basis for relief. Under Kentucky law, District Courts are generally devoid of

equitable jurisdiction. Although SuperAsh objected to the equitable relief, it

consented to submitting the matters to the Kentucky District Courts on the factual

findings that had been made by the Ohio Court. As a result, the Kentucky Courts

have been presented with cases claiming another state’s findings, factual or

otherwise, were entitled to more deference than they should have been about real

-13- property located in Kentucky. Likewise, the parties’ practice of this case resulted

in asking the Kentucky District Courts to adjudicate matters that are not generally

within the scope of forcible detainer proceedings, and those Courts complied

without sufficient questioning and beyond their bounds. The Kentucky Circuit

Courts then accepted this atypical package of cases and practices on appeal without

further assessing the jurisdictional limitations squarely at issue here. This series of

convoluted events has now landed here. We are bound to sort it out as best as

possible and to offer some clear resolution as follows.

III. RES JUDICATA

We begin our analysis with the doctrine of res judicata, which has

been raised on two fronts, and yet it applies to neither. As explained succinctly in

Yeoman v. Commonwealth, Health Policy Board, 983 S.W.2d 459, 464-65 (Ky.

1998):

[t]he doctrine of res judicata is that an existing final judgment rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated, as to the parties and their privies, in all other actions in the same or any other judicial tribunal of concurrent jurisdiction.

Id. at 464 (quoting 46 AM. JUR. 2D Judgments § 514). See also Buis v. Elliott, 142

S.W.3d 137, 139-40 (Ky. 2004).

-14- The parties agreed to submit the matters to the Kentucky District

Courts on the factual findings made by the Ohio Court, although there was no

requirement that they do so. The parties and the lower courts have suggested

incorrectly that those findings had conclusive, res judicata effect, precluding

further review. However, the process described is not an application of the

doctrine of res judicata, but simply a stipulation of agreed facts.

Ashland and Speedway also contend mistakenly that res judicata

applies to the legal conclusions in Ohio because the same issues were fully

litigated in both Ohio and the Kentucky Fayette County Courts. First, as a matter

of law, the Ohio Court judgment is not entitled to preclusive effect because that

court has no jurisdiction over properties located in the Commonwealth of

Kentucky, particularly in the absence of explicit choice of law, conflicts laws, or

venue provisions in the controlling legal provisions of the Ground Leases and

Tolling Agreements. Second, as Section 24.16 of the Ground Leases specifies, it is

“governed by and construed pursuant to the internal laws (and not the conflicts

laws) of the state in which the Ground Leased property is located,” i.e., Kentucky

law. (Capitalization removed.)

Third, the Ohio Court expressly noted that it “has not attempted to

rule on the law applicable to these same facts in the four other states where

-15- convenience stores are operating.”5 Fourth, the Ohio Court addressed distinct

factual and legal issues in that state. Fifth, we could find no “honest mistake”

defense in Kentucky law to a forcible detainer action, and the parties did not direct

us to any case so finding. Thus, Kentucky Courts cannot accept as res judicata a

legal doctrine that we do not even have. And sixth, since the Ohio Court judgment

is still pending on appeal, it is not a final judgment on the merits. Therefore, the

Ohio Court’s judgment is not res judicata as a matter of law in any of the cases sub

judice.

Finally, the Jefferson Circuit Court’s ruling that the judgment of its

sister Fayette Circuit Court was res judicata as to the same issues before it is an

erroneous application of the doctrine. Whether the District Courts were courts of

competent jurisdiction in equity was an issue squarely before three different

Kentucky Circuit Courts on appeal from three different District Courts. These

Circuit Courts owe no deference to one another on questions of law concerning

determinations of equitable jurisdiction of the District Courts. These Courts of

equal footing may cite each other’s opinions as persuasive authority for their own

decisions, but the holdings of one Circuit Court on pure matters of law do not

operate as binding precedent on another. This persuasive authority cannot serve to

preclude other Circuit Courts from deciding differently and cannot control

5 Ashland Global Holdings, Inc. v. SuperAsh Remanderman Ltd, Partnership, supra p. 2.

-16- automatically the outcomes in other cases before courts of competent, individual

jurisdiction. Therefore, res judicata cannot apply on the issues sub judice to

preclude Kentucky Circuit Courts from rendering particular decisions within their

own jurisdiction. Even if all three Kentucky Circuit Courts accepted what were in

effect stipulations of fact, they could, and should, have made their own conclusions

of law as to whether the respective District Courts had jurisdiction to award

equitable relief and whether those District Courts correctly decided pure issues of

law on matters of which they did have jurisdiction. To be clear, Circuit Courts are

permitted to adopt the reasoning of other Circuit Courts, but they are not required

to do so.

IV. JURISDICTION AND POWERS OF DISTRICT COURT AS TO EQUITABLE REMEDIES IN FORCIBLE DETAINER PROCEEDINGS

Having dispensed with the preliminary issue of the lack of res

judicata effect and upheld the corresponding requirement that the Kentucky Courts

independently decide matters of jurisdiction and available remedies, we turn to the

primary, substantive question. The main issue on appeal now is the proper

exercise of jurisdiction by the Kentucky District Courts in forcible detainer actions

and the remedies available to them.

-17- A. DISTRICT COURTS ARE PRIMARILY COURTS OF LIMITED JURISDICTION OVER LEGAL ISSUES AND DO NOT HAVE GENERAL JURISDICTION OR EQUITABLE POWERS IN GENERAL

Sections 109 and 113 of the Kentucky Constitution establish the

District Court as a trial court of limited jurisdiction as may be prescribed by the

General Assembly. In KRS 24A.120(1), the Legislature assigned the District

Court exclusive jurisdiction in civil cases in which the amount in controversy does

not exceed $5,000.00, “except matters affecting title to real estate and matters of

equity[.]”

Thus, by its terms, the statute does not allow District Court to

entertain matters of equity. Kentucky Courts have long construed the statute to

mean further that forcible detainer is a special proceeding that a District Court may

hear, but only with further limitations on its jurisdiction. Shinkle, supra at 423. “A

forcible detainer action focuses upon and determines which party is entitled to

present possession of the property at the commencement of the action, not at some

later date.” Id. at 422 (emphasis in original) (citing Bledsoe v. Leonhart, 305 Ky.

707, 205 S.W.2d 483, 484 (1947)). As such, a District Court only has the authority

to order restitution of the premises and payment of costs expended by the

prevailing party. KRS 383.240. It has no other legislative mandate or

jurisdictional authority over matters in forcible detainer.

-18- The exact statutory language quoted above specifically excepts

jurisdiction from District Courts in determining matters of equity. In other words,

the District Court is not allowed to fashion other remedies in equity to render

parties whole or to address other claims such as fraud, estoppel, or acquiescence.

Ashland admits, as it must, that the District Courts do not have the

authority to grant equitable relief. However, contrary to the unambiguous statutory

directive, Ashland argues that District Courts retain the authority to consider all

equitable defenses that were available at common law. The District Courts agreed,

holding that equitable defenses are available in forcible detainer proceedings,

citing several older cases. Woodrum v. Pulliam, 453 S.W.2d 263, 265 (Ky. 1970)

and Rounds v. Owensboro Ferry Co., 253 Ky. 301, 69 S.W.2d 350, 355 (1934).

See also Paducah Home Oil Co. v. Paxton, 222 Ky. 778, 2 S.W.2d 650, 651 (1928)

(citing Edwards-Pickering Co. v. Rodes, 203 Ky. 96, 261 S.W. 884 (1924)). But

see Jones v. Commonwealth, 104 S.W. 782, 784 (Ky. 1907), holding that “[a]

defense available only in equity cannot be pleaded to an action of forcible entry

and detainer.” All of these cases pre-date the adoption of our current Judicial

Article in 1976 and thus are of questionable relevance and authority.

Ashland contends that the adoption of the current Judicial Article did

not deprive the District Court of jurisdiction to consider equitable defenses

available at common law. We disagree. KY. CONST. § 113(6) states that the

-19- “district court shall be a court of limited jurisdiction and shall exercise original

jurisdiction as may be provided by the General Assembly.” Likewise, a forcible

detainer complaint is a special proceeding requiring strict compliance with the

statutory requirements, which further limit the District Courts’ jurisdiction.

Shinkle, supra at 423. Thus, District Courts cannot generally consider equitable

As a general rule of statutory construction, the enumeration of a

particular thing demonstrates that the omission of another thing is an intentional

exclusion. This basic tenet of statutory construction is usually referred to by the

Latin phrase expressio unius est exclusio alterius. Fox v. Grayson, 317 S.W.3d 1,

8 (Ky. 2010). Although this maxim is not always applicable, we conclude that it is

here because the district courts may only exercise jurisdiction as explicitly granted

by the General Assembly. Except for the limited grant under KRS 383.675, the

General Assembly did not incorporate other equitable defenses into the forcible

detainer statutes under KRS Chapter 383. Thus, the Legislature by intentional

omission did not allow any or all other equitable defenses.

Here, the Ohio Court fashioned an equitable theory that an “honest

mistake” is a meritorious defense to a party’s failure to renew a lease on time. It

opined that such an unintentional error occurred here, and that Ashland’s admitted

failure to renew its lease pursuant to its own terms was excused. It then concluded

-20- that the contract was still in effect, and SuperAsh was required to continue to lease

the properties to Ashland.

That Court may have such equitable powers there, but Kentucky

District Courts do not have them here and cannot rewrite parties’ contracts

according to general, and inherently subjective, beliefs about fairness and justice.

Kentucky District Courts are confined to ruling upon existing Kentucky laws and

statutes. Accordingly, Kentucky District Courts do not have the authority to award

relief under Ohio’s equitable theory of an honest mistake because such a

supposition is without foundation in the specific jurisdictional limitations of

District Courts, and no Kentucky Court has adopted this theory. These decisions to

award equitable relief amount to abuses of discretion. Therefore, Kentucky Circuit

Courts’ opinions affirming on these grounds represent clear error. We are thus

compelled to reverse and remand these affirmations with instructions to reverse

and remand the District Courts’ grants of dismissal of the forcible detainer

complaints on this ground.

B. DISTRICT COURTS DO NOT GENERALLY HAVE THE EQUITABLE POWER TO RENEW A LEASE THAT HAS EXPIRED BY ITS OWN TERMS

As a Court of law with limited jurisdiction, District Courts do not

generally possess an equitable power to forge a legal renewal where a lease has

already expired pursuant to its own, agreed, and lawful terms. In the Ohio

-21- litigation, that Court found that according to its stated equity, it would not permit

SuperAsh to declare the leases terminated pursuant to their own legal terms. It also

found that SuperAsh would not suffer any prejudice from being forced to continue

a lease that it wanted to end. Our District Courts are simply not allowed to make

such rulings, and even if they were, they could not do so without making any

findings of lack of prejudice.

While the lower courts here relied – improperly – upon older cases

that pre-date the adoption of the 1976 Judicial Article to support their attempted

adoption of equitable principles, even those cases do not support the rulings made

in the cases sub judice. Woodrum and Rounds offer no solace to the lower courts

because both cases expressly note that neither law nor equity will provide a remedy

when notice to renew a lease is not timely given. Woodrum, 453 S.W.2d at 265;

Rounds, 69 S.W.2d at 355. Thus, both statutory and case law provide no general

support for a District Court to provide any relief when a party does not lawfully

renew its lease:

Where a lessee has a right of renewal provided he gives notice at or before a specified time to the lessor, of his intention to exercise the privilege of renewal, it is ordinarily held that the giving of the notice is a condition precedent which must be complied with within the stipulated time, and that, in the absence of special circumstances warranting a court of equity in granting relief, the right to a renewal is lost if the notice is not given in accordance with the provisions of the lease.

-22- Rounds, 69 S.W.2d at 356 (emphasis added).

The emphasized language in Rounds makes it abundantly clear that

such special circumstances are matters for a court of equity, which the District

Court plainly and simply is not. Furthermore, all statutory and binding case law

holds that a court of law like District Court cannot create mechanisms outside of

and directly contrary to specific contract provisions in order to avoid its terms,

particularly those regarding breach upon failure to renew timely. “Ordinarily a

provision in a lease requiring written notice to the lessor of the lessee’s election to

exercise his option to renew the lease must be strictly complied with, and the

notice must be given at the time and in the manner specified[.]” Deane v. Mitchell,

312 Ky. 389, 392, 227 S.W.2d 893, 894 (1950) (citing Rounds, supra).

Ashland also contends that the general limitation on the District

Court’s equitable jurisdiction in KRS 24A.120(1) does not apply to specific grants

of jurisdiction in forcible detainer under KRS 383.200 et seq. While we agree with

the premise that the General Assembly may grant jurisdiction to District Court to

consider specific equitable matters, we note that such a grant is narrowly

construed, and Courts will not infer or extend jurisdiction beyond its explicit terms.

See Peter v. Gibson, 336 S.W.3d 2, 6 (Ky. 2010)6 (in a limited District Court

6 SuperAsh’s counsel cited Peter v. Gibson, supra, for the first time on rebuttal during oral argument. We note that RAP 35(B) and 38(E) set forth specific requirements for granting leave to cite to supplemental authority that was not cited in a party’s brief. Nevertheless, this Court

-23- proceeding under the Uniform Transfer to Minors Act, which must be strictly

construed, even though accounting is generally an equitable remedy, District Court

is permitted to order an accounting of an existing custodianship but not an expired

custodianship). And Ashland’s argument that the statute only prohibits injunctions

seeking equitable relief and not the seeking of other equitable remedies and

defenses is belied by the statutory language itself and unsupported by any case law.

Although a lessor may waive the notice requirement for renewal, id.,

there is no allegation in this case that SuperAsh actually waived timely notice of

Ashland’s intent to renew. Indeed, the undisputed facts in all three cases

demonstrate the exact opposite: that SuperAsh provided notice to Ashland that it

considered Ashland’s lack of timely notice to renew to constitute an intention to let

the lease expire. Lower courts – District or Circuit – cannot fashion out of whole

cloth a contradictory, implied waiver.7 Nor can the District Courts forge the other

equitable defenses of estoppel, acquiescence, or fraud here because they received

no such evidence. An alleged “honest mistake” by Ashland causing it to fail to

renew and forfeit its lease is not a legal ground to allow it to overcome the express,

granted leave to Ashland to file a response to this citation following oral argument. This Court may consider uncited authority to the extent that it is controlling and relevant to a complete determination of the legal issues presented. In doing so, however, we do not excuse SuperAsh’s failure to comply with the applicable Rules, and we caution all parties to comply fully with the Rules in the future. 7 This notice-to-renew waiver issue is separate and distinct from an alleged waiver by accepting rent, infra.

-24- legal terms of the contract. And the District Court’s acceptance of this theory in

equity created by the Ohio Court is unsupported in Kentucky’s case law, and

regardless, is out of the bounds of the limited jurisdictional considerations

permitted to Kentucky District Courts.

Recently, in Kiwanis Club of Lagrange, Inc. v. Friends of Oldham

County Fair, Inc., No. 2016-CA-000489-DG, 2017 WL 4862406 (Ky. App. Oct.

27, 2017) (unpublished),8 this Court re-emphasized the authority of the District

Courts to address matters involving possession and present occupancy, and the

simultaneous lack of jurisdiction for those courts to address other equitable

matters. In Kiwanis, we addressed whether a District Court properly exercised

jurisdiction over a forcible detainer action that implicated an equitable interest in

improvements to the leased property. Importantly, in that case, a separate action

was brought in Circuit Court to determine which party had proper title to the

building and/or to the land, to decide matters relating to the compensation for the

equity in the building, and to reform the lease. Id. at *1. This Court reiterated the

statutory and case law holding that the District Court retained jurisdiction over the

propriety of the lessee’s continued occupancy and possession of the premises,

while the Circuit Court had jurisdiction to interpret the terms of the lease to

determine the equitable issues and ownership of the building. Id. at *2-3. While

8 We mention this case here pursuant to RAP 41(A), solely as persuasive authority.

-25- Kiwanis is unpublished (and perhaps points to a need for publication of this

opinion), its discussion is relevant to address the availability of equitable remedies

in forcible detainer proceedings.9 The Circuit Court is a court of general

jurisdiction, while the District Court is a court of limited jurisdiction that may be

exercised only under statutory limits and prescriptions. Hisle v. Lexington-Fayette

Urb. Cnty. Gov’t, 258 S.W.3d 422, 433 n.7 (Ky. App. 2008) (citing KY. CONST. §

109).

To reiterate, equitable defenses are not generally available in forcible

detainer proceedings to contravene established contracts, except where specifically

authorized by statute. Consequently, the District Courts in these cases did not have

jurisdiction to dismiss the forcible detainer complaints based on equitable grounds

when lack of legal notice to renew was unquestionably not provided. Thus, the

Circuit Courts should not have affirmed these dismissals. There is no dispute in

this case that Ashland failed to provide SuperAsh with timely notice of its decision

9 Ashland also cites to Lumax Realty Corporation v. Kroger Company, No. 2009-CA-002393- MR, 2011 WL 4632999 (Ky. App. Oct. 7, 2011) (unpublished), as allowing an equitable remedy for failure to provide timely notice of a lease renewal. However, Lumax Realty also involved an appeal from a declaratory judgment action brought in Circuit Court, which clearly has equitable powers. See also Lykins Enterprises, Inc. v. Felix, No. 2006-SC-000142-DG, 2007 WL 4139637 (Ky. Nov. 21, 2007) (unpublished), affirming a Circuit Court’s order concluding that a lessee was entitled to exercise a purchase option despite an untimely exercise of that option. Again, the jurisdiction of the District Court was not at issue. Likewise, Nation v. Paddock, No. 2023-CA- 0211-MR, 2024 WL 874593 (Ky. App. Mar. 1, 2024) (unpublished), arose from a Circuit Court judgment rejecting equitable defenses to statute of limitations. And, Mayo v. Century 21 Action Realtors, Inc., 823 S.W.2d 466 (Ky. 1992), cited at oral argument, was a Circuit Court matter about a commission from a real estate sale executed during a contract extension period for a showing made during an exclusive listing. None of these cases address the District Courts’ lack of equitable powers in forcible detainer proceedings.

-26- to renew the Ground Leases. There is also no dispute that SuperAsh rejected

Ashland’s untimely notice of renewal prior to the expiration of the lease period.

As a result, there was no basis for the District Courts in law (and certainly not in

equity) to find a waiver of this requirement. Since there was no timely renewal,

the Ground Leases naturally and legally expired by their own terms.

We note in passing that, having reached this conclusion, we need not

address whether Ashland would be entitled to equitable relief in a declaratory-

judgment action brought in Circuit Court because Ashland did not proceed in that

manner in Kentucky, but only in Ohio. And SuperAsh initiated the actions here in

the District Courts and not the Circuit Courts, where it could have sought a

declaratory judgment. We will also not comment upon whether the equities would

favor Ashland’s assertion of the terms of a 1990 lease upon parties in 2022.

C. DISTRICT COURTS HAVE THE POWER TO DETERMINE WHETHER ACCEPTANCE OF LATE PAYMENT OF RENT OPERATES AS A DEFENSE TO FORCIBLE DETAINER

Our holding here is that Kentucky District Courts do not generally

have equitable powers, and thus they are devoid of jurisdiction to create an

equitable defense of honest mistake and offer equitable remedies where a lease has

legally expired pursuant to its own terms. However, these two rulings alone do

not clear these muddied waters.

-27- Pertinent to this case, the General Assembly explicitly recognized that

acceptance of performance constitutes a waiver of the landlord’s right to terminate.

KRS 383.675.10 In so doing, the General Assembly specifically allowed the

District Courts to consider whether the acceptance of late rent is a defense to

forcible detainer. KRS 383.675 was enacted in 1984, eight years after the adoption

of the current procedures relating to forcible detainer proceedings in district court.

However, Courts in this Commonwealth have been ruling for over 100 years that

acceptance of late payment of rent waives default.

Here, the lower courts ruled that SuperAsh waived its defenses by

accepting rent payments. They were within their authority to do so. However,

their rulings were intertwined with their erroneous rulings that Ashland’s “honest

mistake” gave them equitable powers, and that SuperAsh was required to continue

to renew the leases and suffered no prejudice. Those Courts also appeared to adopt

the Ohio Court’s ruling on this issue without further analysis. Moreover, there is

no dispute that SuperAsh only accepted late rents for a short period of time.

The Fayette District Court concluded that SuperAsh’s acceptance of

rent after April 15, 2022, constituted a waiver of its right to terminate the lease. As

10 KRS 383.675 is part of the Uniform Residential Landlord and Tenant Act. For over a century, Kentucky Courts have applied this type of waiver to non-residential, commercial leases, such as this one. The Kentucky Supreme Court has not weighed in on the propriety of this now well-established practice that was not part of the act itself. We will not take it upon ourselves to do so now, as no party has raised it here, and it is not determinative of this particular holding. We pause here to note that we are aware of this discrepancy, and that it appears that this act has been adopted by Fayette and Jefferson Counties, but not by Harrison County.

-28- noted above, this conduct may properly constitute a defense to the forcible detainer

under KRS 383.675. However, the Fayette District Court adopted the conclusions

of the Ohio Court, which found waiver based on other equitable principles. As

discussed above, the legal and equitable conclusions of the Ohio Court are not res

judicata in these cases. On remand, the District Courts must determine whether

any waiver occurred based only upon the language in the Kentucky statute.

In making those determinations, the District Courts will need to

address, under Kentucky statutes and case law, whether the statutory defense of

waiver applies where the parties otherwise agree after a breach. KRS 383.675; see

also Pangallo v. Kentucky L. Enf’t Council, 106 S.W.3d 474, 479 (Ky. App. 2003)

(quoting Greathouse v. Shreve, 891 S.W.2d 387, 391 (Ky. 1995)). The Anti-

Waiver provisions in the Ground Leases may have a bearing on these issues.

Similarly, the Tolling Agreements have an impact on these issues, and the District

Courts here must first rule upon whether these later contracts operated to waive

rights under the Ground Leases before these issues may be addressed on appeal

here. The District Courts and Circuit Courts did not sufficiently address the

parties’ contracts. Thus, we must reverse and remand the Circuit Courts’ rulings of

affirmance on this issue, with instructions to reverse and remand to the District

Courts for further hearing. The District Courts must determine whether waiver can

occur in light of the language of the Ground Leases and the Tolling Agreements.

-29- They did not make any of these necessary findings originally, and the Circuit

Courts on appeal did not address them. The parties’ briefs and oral arguments did

not reach this point in detail, and we cannot analyze them for the first time on

appeal.

Moreover, and as part of this analysis, the District Courts must

designate the timing and amount of the late payments that SuperAsh accepted and

the impact of those payments upon the whole dispute. Given that the parties did

not waive the lack of required notice to renew the leases, as stated infra, accepting

some late rent for some months does not necessarily equate with the renewal of a

lease term. Rather, it may result in a month-to-month lease. The first three Tolling

Agreements had one-month terms. The parties will likely hotly dispute the effect

of late payments upon the time limits of an extension of the lease. This fight must

occur at the trial level and not here, and the District Courts need to make findings

on these issues.

Finally, we acknowledge that these types of findings are not generally

the province of the Kentucky District Courts. But the facts that present themselves

to us are that these suits were brought there, and not in the Circuit Courts. The

Legislature and the Courts have allowed this mechanism to be used by District

Courts to determine whether waiver by the acceptance of late rent exists in all

forcible detainer actions. This case may become the undoing of that principle.

-30- V. CONCLUSION

We must emphasize by reiteration that issues of jurisdiction are

always paramount matters that all Courts must address at the outset. Kentucky

District Courts are fundamentally Courts of limited jurisdiction. And even where

they have some jurisdiction, Kentucky District Courts have not been granted all

powers of relief, equitable and otherwise, that the Legislature specifically reserved

to Kentucky Circuit Courts, which are Courts of general jurisdiction. Except

where the Kentucky General Assembly has specifically granted such authority, the

District Courts lack jurisdiction to grant equitable relief or consider equitable

We conclude that the General Assembly has not given such specific

authority to consider the equitable defenses of honest mistake and lack of prejudice

raised by Ashland and Speedway. Therefore, the District Courts cannot hold that

SuperAsh has no power to terminate its leases pursuant to their express terms.

Accordingly, the District Courts erred by dismissing the forcible detainer

complaints on that basis, and the Circuit Courts erred by affirming them.

However, the District Courts are empowered to determine whether SuperAsh

waived forcible detainer by accepting late rents. They must take the Ground

Leases and Tolling Agreements into consideration when making these

determinations and must make findings as to any periods of extension of the leases.

-31- Accordingly, we must reverse the orders of the Fayette, Jefferson, and

Harrison Circuit Courts in the above-styled actions and remand with directions to

enter orders reversing and vacating the District Courts’ dismissal of the forcible

detainer complaints and remanding the cases back to the Fayette, Jefferson, and

Harrison District Courts respectively to reinstate for additional proceedings and

factual findings as set forth in this Opinion. Specifically, the District Courts are

not bound pursuant to res judicata to adopt the findings and conclusions of another

state court; but they can accept a stipulation of facts from the parties. Further, the

District Courts cannot act outside their jurisdiction to rule on matters of equity.

The District Courts cannot find that expired leases can nonetheless be construed as

having been renewed by implication by a party’s honest mistake or by the

terminating party’s lack of prejudice. However, the District Courts will need to

make individual findings and conclusions of law on the equitable defense of the

acceptance of some late rents. And they must determine whether SuperAsh waived

default in the face of the parties’ express Ground Leases and Tolling Agreements,

and if so, for how long.

ALL CONCUR.

-32- BRIEFS FOR APPELLANT: BRIEF FOR APPELLEE ASHLAND, LLC: Clark C. Johnson Michael T. Leigh Justin S. Fowles Burt A. “Chuck” Stinson Jason P. Renzelmann Louisville, Kentucky Nathaniel T. Fowler Louisville, Kentucky ORAL ARGUMENT FOR APPELLANT: BRIEF FOR APPELLEE SPEEDWAY, LLC: Clark C. Johnson Louisville, Kentucky Jeremy S. Young Columbus, Ohio

Tyler M. Jolley Robert W. Schrimpf Cincinnati, Ohio

ORAL ARGUMENT FOR APPELLEES:

Jason P. Renzelmann Robert W. Schrimpf Cincinnati, Ohio

-33-