RENDERED: JUNE 11, 2021; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2020-CA-0014-MR
TIMOTHY BRADLEY YATES, JR., AS EXECUTOR FOR AND ON BEHALF OF THE ESTATE OF DOROTHY J. YATES APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE AUDRA ECKERLE, JUDGE ACTION NO. 19-CI-005340
BLUEGRASS LAND TITLE, LLC APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.
MAZE, JUDGE: Appellant Timothy Yates challenges an order dismissing his
complaint against appellee Bluegrass Land Title, LLC for failure to state a claim
upon which relief can be granted. Having considered appellant Yates’ arguments
for reversal in light of established caselaw, we affirm the order granting Bluegrass Title’s CR1 12.02(2) motion to dismiss Yates’ claim of tortious interference with
contract.
FACTS
In August 2019, appellant Timothy Yates, in his capacity as executor
of the estate of Dorothy Yates,2 filed a complaint against Bluegrass Title and others
based upon an agreement between Dorothy and Bernita Miller. The complaint
alleged that the June 28, 2018, agreement between Dorothy and Miller dictated the
terms of a sale of a residence they owned jointly with right of survivorship.
Among other things, the agreement provided: 1) that the parties agreed to sell the
subject real estate; 2) that the net proceeds from the sale would be divided equally
between Dorothy and Miller; and 3) that the terms and conditions of the agreement
would survive the death of either Dorothy or Miller, the joint survivorship owners.
On July 12, 2018, Dorothy and Miller entered into a residential sales contract to
sell the subject property to Latonia Estes. After Dorothy died on August 12, 2018,
the subject property was in fact sold to Ms. Estes on September 6, 2018, for
$130,000, with Bluegrass Title performing the closing services.
1 Kentucky Rule of Civil Procedure. 2 Because the appellant and his decedent share the same last name, for purposes of clarity, we will refer to the decedent Dorothy Yates as “Dorothy.”
-2- Of particular pertinence to this appeal, the complaint alleged that
despite having been provided a signed copy of the proceeds-splitting3 agreement
prior to the closing, Bluegrass Title nevertheless disbursed the entire sale proceeds
to Miller without notice to counsel, Dorothy’s representatives, or the real estate
agent who had been engaged to sell the property. Based upon these facts, the
complaint asserted claims of breach of contract and tortious interference with
contractual relations against Bluegrass Title.
In lieu of an answer, Bluegrass Title filed a CR 12.02 motion to
dismiss the claims against it for failure to state a claim upon which relief could be
granted. With respect to the breach of contract claim, Bluegrass Title alleged that
it failed as a matter of law in that: 1) it was not in privity with either party to the
agreement; and 2) because it had not signed the proceeds-splitting agreement
concerning the sale of real property, an allegation that it breached the agreement
would run afoul of the statute of frauds set out in KRS4 371.010. Bluegrass Title
also asserted that the tortious interference claim failed as a matter of law because
there was no allegation that it induced or otherwise caused Miller to fail to perform
3 As an initial matter, we note that throughout his brief Yates refers to the agreement between Dorothy and Miller as a partition agreement. It was not. After setting forth their agreement to sell the subject property and list it with a specific realtor, the contract provides for a 50/50 division of the proceeds after sale, nothing more. The contract makes no mention of an agreement to partition the subject real property and nothing in the language employed to effect the division of proceeds can in any way be construed as an attempt to partition the property. 4 Kentucky Revised Statute.
-3- the proceeds-splitting contract with Dorothy’s estate. After the trial court granted
the motion to dismiss the claims against Bluegrass Title and subsequently made its
order final and appealable, Yates prosecuted this appeal as to the dismissal of the
tortious interference with contract claim.5
STANDARD OF REVIEW
“It is well settled in this jurisdiction when considering a motion to
dismiss under [CR 12.02], that the pleadings should be liberally construed in a
light most favorable to the plaintiff and all allegations taken in the complaint to be
true.” Mims v. Western-Southern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App.
2007) (citing Gall v. Scroggy, 725 S.W.2d 867, 869 (Ky. App. 1987)). “Since a
motion to dismiss for failure to state a claim upon which relief may be granted is a
pure question of law, a reviewing court owes no deference to a trial court’s
determination; instead, an appellate court reviews the issue de novo.” Fox v.
Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (citing Morgan v. Bird, 289 S.W.3d 222, 226
(Ky. App. 2009)). Finally, this Court made clear in James v. Wilson that “[t]he
court should not grant the motion unless it appears the pleading party would not be
entitled to relief under any set of facts which could be proved in support of his
claim.” 95 S.W.3d 875, 883-84 (Ky. App. 2002) (citations omitted). Accordingly,
5 Yates states in his brief that the breach of contract claim was asserted against Miller, not Bluegrass Title. Thus, dismissal of the breach of contract claim against Bluegrass Title is not addressed in this appeal.
-4- the critical inquiry is whether “if the facts alleged in the complaint can be proved,
would the plaintiff be entitled to relief?” Id. at 884. With these principles in mind,
we turn to an analysis of Yates’ arguments for reversal.
ANALYSIS
The Restatement (Second) of Torts § 766 (1979), adopted by our
Supreme Court in National Collegiate Athletic Association By & Through
Bellarmine College v. Hornung, 754 S.W.2d 855, 858 (Ky. 1988), sets forth the
legal requirements to prevail upon a claim of intentional interference with an
existing contract:
One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.
RESTATEMENT (SECOND) OF TORTS § 766 (1979) (emphasis added). Yates argues
in this appeal that Bluegrass distributed all of the net proceeds from the sale of the
residence to Miller, in direct contravention of her agreement to equally split the
sale proceeds. In so doing, Yates contends that Bluegrass improperly interfered
with Dorothy’s rights under the agreement and induced or otherwise caused Miller
to breach their agreement as to the allocation of the sales proceeds.
-5- Relying upon Harrodsburg Industrial Warehousing, Inc. v. MIGS,
Free access — add to your briefcase to read the full text and ask questions with AI
RENDERED: JUNE 11, 2021; 10:00 A.M. NOT TO BE PUBLISHED
Commonwealth of Kentucky Court of Appeals
NO. 2020-CA-0014-MR
TIMOTHY BRADLEY YATES, JR., AS EXECUTOR FOR AND ON BEHALF OF THE ESTATE OF DOROTHY J. YATES APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT v. HONORABLE AUDRA ECKERLE, JUDGE ACTION NO. 19-CI-005340
BLUEGRASS LAND TITLE, LLC APPELLEE
OPINION AFFIRMING
** ** ** ** **
BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.
MAZE, JUDGE: Appellant Timothy Yates challenges an order dismissing his
complaint against appellee Bluegrass Land Title, LLC for failure to state a claim
upon which relief can be granted. Having considered appellant Yates’ arguments
for reversal in light of established caselaw, we affirm the order granting Bluegrass Title’s CR1 12.02(2) motion to dismiss Yates’ claim of tortious interference with
contract.
FACTS
In August 2019, appellant Timothy Yates, in his capacity as executor
of the estate of Dorothy Yates,2 filed a complaint against Bluegrass Title and others
based upon an agreement between Dorothy and Bernita Miller. The complaint
alleged that the June 28, 2018, agreement between Dorothy and Miller dictated the
terms of a sale of a residence they owned jointly with right of survivorship.
Among other things, the agreement provided: 1) that the parties agreed to sell the
subject real estate; 2) that the net proceeds from the sale would be divided equally
between Dorothy and Miller; and 3) that the terms and conditions of the agreement
would survive the death of either Dorothy or Miller, the joint survivorship owners.
On July 12, 2018, Dorothy and Miller entered into a residential sales contract to
sell the subject property to Latonia Estes. After Dorothy died on August 12, 2018,
the subject property was in fact sold to Ms. Estes on September 6, 2018, for
$130,000, with Bluegrass Title performing the closing services.
1 Kentucky Rule of Civil Procedure. 2 Because the appellant and his decedent share the same last name, for purposes of clarity, we will refer to the decedent Dorothy Yates as “Dorothy.”
-2- Of particular pertinence to this appeal, the complaint alleged that
despite having been provided a signed copy of the proceeds-splitting3 agreement
prior to the closing, Bluegrass Title nevertheless disbursed the entire sale proceeds
to Miller without notice to counsel, Dorothy’s representatives, or the real estate
agent who had been engaged to sell the property. Based upon these facts, the
complaint asserted claims of breach of contract and tortious interference with
contractual relations against Bluegrass Title.
In lieu of an answer, Bluegrass Title filed a CR 12.02 motion to
dismiss the claims against it for failure to state a claim upon which relief could be
granted. With respect to the breach of contract claim, Bluegrass Title alleged that
it failed as a matter of law in that: 1) it was not in privity with either party to the
agreement; and 2) because it had not signed the proceeds-splitting agreement
concerning the sale of real property, an allegation that it breached the agreement
would run afoul of the statute of frauds set out in KRS4 371.010. Bluegrass Title
also asserted that the tortious interference claim failed as a matter of law because
there was no allegation that it induced or otherwise caused Miller to fail to perform
3 As an initial matter, we note that throughout his brief Yates refers to the agreement between Dorothy and Miller as a partition agreement. It was not. After setting forth their agreement to sell the subject property and list it with a specific realtor, the contract provides for a 50/50 division of the proceeds after sale, nothing more. The contract makes no mention of an agreement to partition the subject real property and nothing in the language employed to effect the division of proceeds can in any way be construed as an attempt to partition the property. 4 Kentucky Revised Statute.
-3- the proceeds-splitting contract with Dorothy’s estate. After the trial court granted
the motion to dismiss the claims against Bluegrass Title and subsequently made its
order final and appealable, Yates prosecuted this appeal as to the dismissal of the
tortious interference with contract claim.5
STANDARD OF REVIEW
“It is well settled in this jurisdiction when considering a motion to
dismiss under [CR 12.02], that the pleadings should be liberally construed in a
light most favorable to the plaintiff and all allegations taken in the complaint to be
true.” Mims v. Western-Southern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App.
2007) (citing Gall v. Scroggy, 725 S.W.2d 867, 869 (Ky. App. 1987)). “Since a
motion to dismiss for failure to state a claim upon which relief may be granted is a
pure question of law, a reviewing court owes no deference to a trial court’s
determination; instead, an appellate court reviews the issue de novo.” Fox v.
Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (citing Morgan v. Bird, 289 S.W.3d 222, 226
(Ky. App. 2009)). Finally, this Court made clear in James v. Wilson that “[t]he
court should not grant the motion unless it appears the pleading party would not be
entitled to relief under any set of facts which could be proved in support of his
claim.” 95 S.W.3d 875, 883-84 (Ky. App. 2002) (citations omitted). Accordingly,
5 Yates states in his brief that the breach of contract claim was asserted against Miller, not Bluegrass Title. Thus, dismissal of the breach of contract claim against Bluegrass Title is not addressed in this appeal.
-4- the critical inquiry is whether “if the facts alleged in the complaint can be proved,
would the plaintiff be entitled to relief?” Id. at 884. With these principles in mind,
we turn to an analysis of Yates’ arguments for reversal.
ANALYSIS
The Restatement (Second) of Torts § 766 (1979), adopted by our
Supreme Court in National Collegiate Athletic Association By & Through
Bellarmine College v. Hornung, 754 S.W.2d 855, 858 (Ky. 1988), sets forth the
legal requirements to prevail upon a claim of intentional interference with an
existing contract:
One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.
RESTATEMENT (SECOND) OF TORTS § 766 (1979) (emphasis added). Yates argues
in this appeal that Bluegrass distributed all of the net proceeds from the sale of the
residence to Miller, in direct contravention of her agreement to equally split the
sale proceeds. In so doing, Yates contends that Bluegrass improperly interfered
with Dorothy’s rights under the agreement and induced or otherwise caused Miller
to breach their agreement as to the allocation of the sales proceeds.
-5- Relying upon Harrodsburg Industrial Warehousing, Inc. v. MIGS,
LLC, Yates insists that the facts alleged in the complaint were sufficient to
withstand the CR 12.02 motion by satisfying the elements necessary to establish a
tortious interference claim:
In determining whether “interference” should be considered improper, we are guided by the factors of Restatement (Second) of Torts § 767 (1979):
(a) the nature of the actor’s conduct,
(b) the actor’s motive,
(c) the interests of the other with which the actor’s conduct interferes,
(d) the interests sought to be advanced by the actor,
(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
(f) the proximity or remoteness of the actor’s conduct to the interference and
(g) the relations between the parties.
182 S.W.3d 529, 534 (Ky. App. 2005). Accepting the allegations set out in the
complaint as true, and applying these factors to those allegations, we conclude as a
matter of law that Bluegrass’s act of distributing the sale proceeds to the sole
surviving joint tenant did not constitute interference with the contract to equally
divide the net proceeds.
-6- As this Court’s opinion in Harrodsburg Industrial Warehousing
makes clear, in order to demonstrate improper interference Yates must assert facts
which if true, demonstrate that Bluegrass acted maliciously or engaged in wrongful
conduct. Id. Like the trial court, we find nothing in the complaint which satisfies
that requirement. The complaint contains no allegation that Bluegrass intended to
cause Miller to breach the agreement to divide the proceeds with Dorothy; no
allegation that Bluegrass acted with malice in distributing the sales proceeds to
Miller, the sole owner at the time of closing; and no allegation that the distribution
of the sale proceeds to the sole owner actually caused Miller to subsequently
breach her agreement to divide the proceeds with Dorothy. Under the facts
alleged, we find no interference with Dorothy’s contractual relations with Miller,
let alone improper interference.
Further, as the Supreme Court emphasized in Hornung:
it is clear that to prevail a party seeking recovery must show malice or some significantly wrongful conduct. In Prosser and Keeton on Torts § 130 (W.P. Keeton ed. 5th ed.1984), this is stated as follows:
[T]he [interference] cases have turned almost entirely upon the defendant’s motive or purpose, and the means by which he has sought to accomplish it . . . .
[S]ome element of ill will is seldom absent from intentional interference; and if the defendant has a legitimate interest to protect, the addition of a spite
-7- motive usually is not regarded as sufficient to result in liability.
754 S.W.2d at 859 (emphases added). Bluegrass Title had a legitimate interest in
performing the closing according to law of this Commonwealth regarding
survivorship interests in real property and in distributing the sale proceeds in
accord with its good faith assessment of the requirements of the deed and chain of
title.
The unrecorded proceeds-splitting agreement between Dorothy and
Miller does not alter the fact that, upon Dorothy’s death, title to the property vested
in Miller alone. Bluegrass Title was therefore obliged to distribute the proceeds
from the sale of the property according to the dictates of the deed which provided:
That for valuable consideration paid in the amount of $149,000.00 to the party of the first part, the receipt of which is hereby acknowledged, the party of the first part hereby conveys with covenant of GENERAL WARRANTY, unto the parties of the second part [Dorothy Y. Yates, David Wohner, Jr., and Bernita Miller], for their joint lives, remainder in fee simple to the survivor of them, the following described real estate. . . .
(Emphasis added.) Mere knowledge of the existence of a proceeds-splitting
agreement, extraneous to the chain of title, did not authorize Bluegrass Title to
withhold sale proceeds from the fee simple title holder. Nor did it require
Bluegrass Title to interpret and insure Miller’s performance of her agreement with
Dorothy.
-8- Finally, as Bluegrass Title asserts, Yates attempts to inject into this
appeal issues of fiduciary duty which were not presented to the trial court. Yates
alleges that Bluegrass Title had a fiduciary duty to Dorothy because she was a
party to the sales agreement. Suffice it to say that had Dorothy survived to the date
of closing, Bluegrass Title would have been obliged to divide the proceeds equally
among the joint owners. However, that is not the case before us.
In sum, nothing alleged in the complaint, even if proven, would entitle
Yates to relief against Bluegrass Title. Proof of payment of sale proceeds to the
record title holder would not support a finding that Bluegrass Title enabled or
induced Miller to breach her separate agreement to split the proceeds with
Dorothy, nor could a good-faith performance of its closing duties be construed to
be improper or malicious.
Accordingly, the order of the Jefferson Circuit Court dismissing the
complaint against Bluegrass Title is affirmed.
JONES, JUDGE, CONCURS.
TAYLOR, JUDGE, DISSENTS AND DOES NOT FILE A SEPARATE OPINION.
-9- BRIEFS AND ORAL ARGUMENT BRIEF AND ORAL ARGUMENT FOR APPELLANT: FOR APPELLEE:
J. Gregory Joyner Parker M. Wornall Louisville, Kentucky Jonathan H. Matthews Louisville, Kentucky
-10-