RENDERED: DECEMBER 23, 2020; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2018-CA-1870-MR

R.J. CORMAN RAILROAD 

COMPANY/CAROLINA 

LINES, LLC APPELLANT

APPEAL FROM JESSAMINE CIRCUIT COURT

v. HONORABLE HUNTER DAUGHERTY, JUDGE

ACTION NO. 18-CI-00532

GLOBAL BIO RESOURCES, INC. APPELLEE

OPINION

VACATING AND REMANDING

**   **  **

BEFORE: DIXON, GOODWINE, AND TAYLOR, JUDGES.

TAYLOR, JUDGE: R.J. Corman Railroad Company/Carolina Lines, LLC (R.J. 

Corman) brings this appeal from a November 28, 2018, Order of the Jessamine 

Circuit Court dismissing its complaint and petition for declaratory judgment. We 

vacate and remand. 
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R.J. Corman is a limited liability company incorporated in South 

Carolina, and Global Bio Resources, Inc. (Global Bio) is a corporation 

incorporated in Wyoming.1 R.J. Corman owned real property located in 

Whiteville, North Carolina, and Global Bio sought to purchase said real property 

from R.J. Corman. In furtherance thereof, the parties executed a letter of intent 

(LOI) on May 14, 2018. Therein, R.J. Corman agreed to sell and Global Bio 

agreed to purchase the real property for $2,146,196.62 provided the terms of the 

LOI were satisfied. Relevant to this appeal, paragraph 6 of the LOI required 

Global Bio to obtain financing for the purchase price, with proof thereof to be in a 

form reasonably acceptable to R.J. Corman. Per the LOI, the failure of Global Bio 

to obtain a reasonably acceptable form of financing gave R.J. Corman the right to 

terminate the LOI. 

Global Bio tendered proof of financing to R.J. Corman. However,

R.J. Corman viewed the financing obtained by Global Bio as not reasonably 

acceptable, and by email dated June 14, 2018, R.J. Corman gave Global Bio notice 

of termination of the LOI.

Nevertheless, the parties continued negotiations and eventually 

executed a Mutual Non-Disclosure and Non-Solicitation Agreement (Agreement) 

on July 12, 2018. One purpose for the Agreement was to set forth the conditions 

 

1 R.J. Corman’s parent company is a Kentucky Limited Liability Company located in 

Nicholasville, Kentucky.
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by which the parties would exchange confidential information concerning the 

possible sale of the real property. Also, the Agreement was more limited than the 

LOI and did not bind the parties to sell or to purchase the subject real property. 

Rather, the Agreement was merely executed “in connection with the evaluation of 

one or more possible business transactions including the sale and purchase” of the 

subject real property. Ultimately, by email dated August 20, 2018, R.J. Corman 

terminated the Agreement, as permitted thereunder, upon thirty days written notice.

By letter dated September 7, 2018, Global Bio informed R.J. Corman that R.J. 

Corman had breached the LOI and that such breach caused damages to Global Bio.

Three days later, on September 10, 2018, R.J. Corman filed a 

complaint and petition for declaratory judgment against Global Bio in the 

Jessamine Circuit Court. Therein, R.J. Corman sought a declaratory judgment that 

it possessed no contractual obligation to sell the real property to Global Bio. R.J. 

Corman asserted that it properly terminated negotiations with Global Bio pursuant 

to the Agreement. R.J. Corman also stated that its principal office was located in 

Nicholasville, Kentucky.

On November 16, 2018, Global Bio filed a motion to dismiss. Global 

Bio sought dismissal based upon lack of personal jurisdiction, improper venue, and 

failure to state a claim upon which relief could be granted. As to the improper 

venue argument, Global Bio particularly reasoned:
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The language set forth in Paragraph 15 of the LOI was 

expressly negotiated by the parties and was included in 

the final version of that agreement as executed by the 

parties. That the parties would require any disputes 

about the sale of the Property (located in North Carolina) 

to be brought in a North Carolina court is both reasonable 

and to be expected. A party should not be permitted to 

avoid its plain contractual obligations simply by later 

cleverly omitting reference to them in filings with the 

Court. The Court should not condone this type of artful 

pleading and should instead dismiss this action so that it 

may be pursued in the forum contractually agreed upon 

by the parties.

November 16, 2018, Motion to Dismiss at 15. According to Global Bio, R.J. 

Corman’s contractual obligation to sell the real property arose under the LOI, and 

R.J. Corman breached the LOI by refusing to accept Global Bio’s proof of 

financing. As such, Global Bio believed the LOI’s forum selection provision 

controlled; thus, the action must be filed in North Carolina.

By Order entered November 28, 2018, the circuit court dismissed R.J. 

Corman’s complaint and petition for declaratory judgment. The court specifically 

concluded that the “forum selection clause in the parties’ LOI survived any 

subsequent agreement and the proper venue for the present dispute between the 

parties is the State Courts of North Carolina.” This appeal follows.

To begin, the circuit court rendered its order dismissing R.J. Corman’s 

petition under Kentucky Rules of Civil Procedure (CR) 12.02. However, it is clear 

that matters outside of the pleadings were presented to and not excluded by the 
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circuit court in reaching its decision. As a consequence, we are bound to consider 

the order as a summary judgment. CR 12.03; Collins v. KCEOC Cmty. Action 

P’ship, Inc., 455 S.W.3d 421, 423 (Ky. App. 2015). Summary judgment is proper 

where there exists no material issue of fact and movant is entitled to judgment as a 

matter of law. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 

(Ky. 1991). Our review proceeds accordingly.

R.J. Corman contends the circuit court erred by concluding that 

Kentucky was not the proper forum to adjudicate its petition for declaration of 

rights. In particular, R.J. Corman argues that the circuit court improperly relied 

upon the forum selection clause set forth in the LOI. R.J. Corman argues that the 

LOI was merged into the Agreement by a merger clause contained in the latter. As 

a result, R.J. Corman maintains that the LOI was extinguished by the merger 

clause, including the LOI’s forum selection clause, and the circuit court erred by 

concluding otherwise.

It is generally stated that merger “refers to the extinguishment of one 

contract by its absorption into another contract.” 17A C.J.S. Contracts § 580 

(2020); Energy Home, Div. of S. Energy Homes, Inc. v. Peay, 406 S.W.3d 828, 834 

(Ky. 2013). Merger may be effectuated by a merger clause in a new contract 
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whereby all prior statements or prior contractual agreements are extinguished by 

execution of the new contract.2

In the Agreement, a merger clause was set forth in Section 13:

This Agreement constitutes the entire agreement of the 

Parties with respect to the subject matter hereof and 

supersedes any and all existing or prior agreements and 

communications, whether written or oral, relating to the 

subject matter hereof. . . .

Agreement at 4. The above merger clause is unambiguous. It clearly provides that 

existing or prior agreements are superseded or extinguished, and the terms of the 

Agreement constitute “the entire Agreement.” Agreement at 4. However, we do 

not believe the merger clause in the Agreement operated to extinguish the LOI. 

It is uncontroverted that R.J. Corman expressly terminated the LOI by 

email dated June 14, 2018. In the email, R.J. Corman stated that it was terminating 

the LOI pursuant to Section 5 and based upon Global Bio’s failure to obtain 

reasonably acceptable financing to purchase the real property.3

 

2 To be effective, a merger of a prior contract into a new contract generally can only occur

between the same parties and upon the same subject matter.

3 The Letter of Intent provided, in relevant part:

5. Seller may terminate this Letter if the Purchaser shall fail to 

obtain proof of financing in the manner and by the date prescribed 

in Paragraph 6 hereof. . . .

6. The consummation of the Transaction by Purchaser will be 

subject to (i) Purchaser’s ability to obtain financing for the 

Purchase Price of the Property, which proof of financing (e.g., a 
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The legal effect of a party terminating a contract is to dissolve the contract:

When a contract is terminated, even wrongfully, there is 

no longer a contract, and therefore no duty to perform 

and no right to demand performance, unless specific 

performance is sought. The parties to an agreement are 

relieved of their mutual obligations upon termination of

the agreement, and neither party is liable after 

termination for further transactions thereunder. 

However, the exercise of a reserved power of termination 

will usually have prospective operation only, and it will 

discharge both parties from their contractual duty to 

perform promises that are still wholly executory, but will 

not discharge the duty to make reparation for breaches 

that have already occurred. Thus, obligations that have 

already accrued ordinarily are not affected, and there is 

no forfeiture of any right to recover damages for a prior 

breach of the contract by the other party. 

17B C.J.S. Contracts § 616 (2020) (footnotes omitted).

As R.J. Corman terminated the LOI, the Agreement’s merger clause 

did not merge the LOI as the LOI was dissolved prior thereto and did not exist at 

that time. Simply stated, no contractual obligations under the LOI existed at the 

time of execution of the Agreement because the LOI was terminated before the 

Agreement’s execution. Nonetheless, Global Bio may, of course, bring an action 

for breach of the LOI based upon the alleged wrongful rejection of Global Bio’s

proof of financing. 

 

loan commitment or pre-approval letter), in a form deemed 

reasonably acceptable by Seller[.] . . .
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In its petition for declaratory judgment, R.J. Corman sought a 

declaration that it owed no contractual duty to sell the real property to Global Bio. 

The parties agree that no such contractual duty existed in the Agreement. If a 

contractual duty existed, it must be found in the LOI that Global Bio believes was 

wrongfully terminated by R.J. Corman. The LOI contained the following forum 

selection clause:

15. Any action or proceeding seeking to enforce any 

provision of, or based on any right arising out of, this 

Letter may only be brought against any of the Parties in 

the courts of the State of North Carolina[.] . . .

LOI at 6. The above forum selection clause is clear and unambiguous. Under this 

clause, the parties agreed that an action relating to rights under the LOI would be 

brought in North Carolina.4 Consequently, we agree with the circuit court that the 

forum selection clause in the LOI “survived any subsequent agreement.” Order at 

1.

However, the court’s review of the enforceability of the forum 

selection clause does not end there. R.J. Corman argues on appeal that the forum 

selection clause in the LOI is unreasonable and, thus, unenforceable. R.J. Corman 

maintains that the circuit court committed error by failing to conduct an 

 

4

It appears that R.J. Corman Railroad Company/Carolina Lines, LLC, has also filed a similar 

action in North Carolina alleging it owed no contractual duty to sell the real property to Global 

Bio Resources, Inc., and Global Bio also has filed an action in North Carolina asserting breach of 

contract against R.J. Corman.
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evidentiary hearing upon the issue of whether the forum selection clause in the LOI 

was reasonable.5 

As to the enforceability of a forum selection clause, our courts have

adopted Section 80 of the Restatement (Second) of Conflicts of Laws (1971), which 

provides:

The parties’ agreement as to the place of the action 

cannot oust a state of judicial jurisdiction, but such an 

agreement will be given effect unless it is unfair or 

unreasonable.

Prudential Res. Corp. v. Plunkett, 583 S.W.2d 97, 99 (Ky. App. 1979). So, a 

forum selection clause in a contract is enforceable unless the clause is 

unreasonable. Id. Several factors are considered in determining the 

reasonableness of a forum selection clause, including disparity of bargaining 

power, inconvenience of holding trial in the specified forum, law governing 

formation of contract, place of execution of contract, and the location of parties 

and witnesses. Aries Entm’t, LLC v. Puerto Rican Ass’n for Hispanic Affairs, Inc., 

 

5 Global Bio argues that this issue was not properly preserved nor argued before the circuit court 

below. Global Bio also makes this argument in a motion to strike R.J. Corman’s brief, which has 

been denied by separate order. Based upon our review of the record and the transcript of the 

hearing conducted on November 20, 2018, issues regarding venue and the convenience of the 

forum were specifically discussed and argued below. However, the court’s order does not 

address the enforceability of the forum selection clause. Thus, the issue on appeal looks to the 

application of the proper legal authority regarding the enforcement of a forum selection clause. 

Applicable legal authority can be resorted to at any stage of a legal proceeding, regardless of 

whether cited by the litigants. Burton v. Foster Wheeler Corp., 72 S.W.3d 925, 930 (Ky. 2002). 

Likewise, as long as an appellate court confines its review to the record on appeal, no rule of 

court or constitutional provision prevents the court from deciding an issue not presented on 

appeal by the parties. Priestly v. Priestly, 949 S.W.2d 594, 596 (Ky. 1997). See also Cmty. Fin. 

Servs. Bank v. Stamper, 586 S.W.3d 737, 740-41 (Ky. 2019). 
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591 S.W.3d 850, 856 (Ky. App. 2019); Prezocki v. Bullock Garages, Inc., 938 

S.W.2d 888, 889 (Ky. 1997). And, the circuit court is required to have a sufficient 

factual record upon which to base its findings of fact as to the reasonableness of 

the forum selection clause. Prezocki, 938 S.W.2d at 889. 

In its order dismissing R.J. Corman’s petition for declaration of rights, 

the circuit court merely concluded that the forum selection clause in the LOI 

“survived any subsequent agreement” and that North Carolina was the proper 

forum. The circuit court did not address whether the forum selection clause in the 

LOI was reasonable. Moreover, the record on appeal in this case is limited and 

does not provide a sufficient basis for findings of fact as to the reasonableness of 

the forum selection clause. See Prezocki, 938 S.W.2d at 889.

Although R.J. Corman possesses the burden of demonstrating the 

unreasonableness of the forum selection clause, the circuit court is, nevertheless, 

obligated to follow precedent and to specifically determine the reasonableness of 

the forum selection clause. Therefore, we vacate the circuit court’s order wherein 

it concluded that the proper forum for the current action was North Carolina. Upon 

remand, the circuit court shall conduct an evidentiary hearing to determine whether 

R.J. Corman can demonstrate that the forum selection clause in the LOI is

unreasonable and thus should not be enforced. As noted, R.J. Corman carries the 

burden of proving same. After the hearing, the circuit court shall render an order 
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that includes separate findings of fact and conclusions of law in accordance with 

CR 52.01.

We view any remaining contentions of error to be moot or without 

merit.

For the foregoing reasons, the Order of the Jessamine Circuit Court

dismissing this action is vacated and remanded for proceedings consistent with this 

Opinion.

ALL CONCUR.

BRIEFS FOR APPELLANT:

David R. Irvin

Catherine S. Wright

Nicholasville, Kentucky

BRIEF FOR APPELLEE:

Richard A. Getty

Matthew W. English 

Lexington, Kentucky