RENDERED: NOVEMBER 4, 2022; 10:00 A.M.

NOT TO BE PUBLISHED

Commonwealth of Kentucky

Court of Appeals

NO. 2021-CA-0202-MR

DOUGLAS WAIN AND ELISA WAIN APPELLANT

APPEAL FROM FAYETTE CIRCUIT COURT

v. HONORABLE KIMBERLY N. BUNNELL, JUDGE

ACTION NO. 19-CI-00812

CENTRAL BANK AND

TRUST COMPANY; DITECH FINANCIAL,

LLC; NEWREZ, LLC, D/B/A SHELLPOINT

MORTGAGE SERVICING, ASSIGNEE OF

DITECH FINANCIAL, LLC APPELLEES

OPINION

AFFRIMING

**   **  **

BEFORE: ACREE, JONES, AND MAZE, JUDGES.

MAZE, JUDGE: Douglas and Eliza Wain (collectively, the Wains) appeal from a 

judgment and order of sale entered by the Fayette Circuit Court in favor of Central 

Bank & Trust Company (Central Bank). The Wains argue that there were genuine 
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issues of material fact on their defense of unclean hands that precluded summary 

judgment. We agree with the trial court that the Wains failed to identify any facts 

which would have precluded Central Bank from foreclosing on the property. 

Hence, we affirm.

On June 28, 2006, the Wains and Central Bank executed a “Gold Line 

Equity Agreement” (the Agreement) in the principal amount of $350,000.00. The 

Agreement was secured by a second mortgage on their residence in Lexington. 

Beginning in August 2018, the Wains fell behind in their payments on the account. 

The parties agree that they engaged in discussions about options to bring the 

account current, but they disagree as to the content of those discussions. 

The Wains point to correspondence between Douglas Wain and 

Central Bank employees Ashleigh Holden and Steve Hall. The Wains contend that 

they repeatedly asked for reconciliation statements showing the past-due amounts, 

but they did not receive a reply until November 2018. However, Central Bank 

points out that the Wains accessed their account online during this period and had 

ready access to the current information regarding the amounts due. The Wains 

also made several partial payments on the past due amounts through the online 

system.

On January 31, 2019, Hall sent a demand letter, advising the Wains 

that Central Bank had elected to accelerate payment and declare the entire loan 
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amount then due and owing. Douglas Wain sent a reply on February 11, 

acknowledging receipt of the demand letter but disputing the interest rate and 

credit for payments previously made. The Wains also requested that Central Bank 

reinstate the loan. On February 22, Hall responded that Central Bank would only 

allow reinstatement of the loan under certain conditions and directed the Wains to 

respond to the offer by March 1. Prior to that date, Douglas Wain responded to 

Hall and expressed an interest in getting current on the loan. However, he did not 

accept Central Bank’s condition of accepting an agreed judgment.

Thereafter, on March 6, 2019, Central Bank filed the current action 

against the Wains for breach of contract and foreclosure on the encumbered 

property.1 The Wains filed an answer and counterclaim, asserting an affirmative 

defense of unclean hands on the part of Central Bank. Specifically, the Wains 

alleged that Central Bank failed to negotiate in good faith. The Wains also 

asserted claims for breach of contract, fraud, violation of the Truth-in-Lending Act 

(TILA), 15 U.S.C.2 § 1666a, and the Kentucky Consumer Protection Act, KRS3

367.110 et seq.

1 Subsequently, Central Bank filed an amended complaint naming the first mortgage-holder.

 

2 United States Code.

3 Kentucky Revised Statutes.
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Following a period of discovery, Central Bank moved for partial 

summary judgment, judgment on the pleadings, and an order of sale. In support of 

the motion, Central Bank pointed to the following facts to which the Wains had 

admitted or were otherwise unrefuted:

• The Wains executed and delivered the Agreement, 

secured by a Mortgage, to Central Bank in June 2006;

• The Wains had access, at all relevant times, to their 

account information, including their outstanding 

balance and payment due, via Monthly Statements 

and Central Bank’s online system, CardManager;

• The Wains accessed CardManager many times and 

used it to submit partial payments;

• The Wains have defaulted in payments on the 

Agreement;

• The amount owed on the Agreement is $380,684.43, 

with interest thereon at a variable rate as provided in 

the Agreement, currently at $31.13 per diem from 

July 8, 2020, until paid, and such other costs, 

expenses including collection costs, taxes and 

damages that may be incurred or to be incurred by 

Central Bank; and

• The Agreement is secured by the Mortgage, which is 

valid and enforceable to secure payment of the 

Agreement.

The trial court conducted a hearing on the motion on December 11, 

2020. After considering the briefs and arguments of counsel, and after noting the 

undisputed facts set forth above, the trial court granted summary judgment and an 
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order of sale on January 20, 2021. The trial court found that Central Bank had a 

valid and enforceable second mortgage on the Wains’ property to which it was 

entitled to foreclose. The judgment awarded Central Bank $358,412.72, plus 

interest from March 6, 2019, plus costs and attorney fees. The order of sale 

directed the Master Commissioner to sell the property and apply the proceeds 

among the lienholders. The trial court subsequently entered an order confirming 

the Commissioner’s Report of Sale. Following the sale but prior to the 

confirmation of the Commissioner’s Report, the Wains filed their current appeal.4

The sole question presented on appeal is whether Central Bank was 

entitled to summary judgment as a matter of law. “The proper function of 

summary judgment is to terminate litigation when, as a matter of law, it appears 

that it would be impossible for the respondent to produce evidence at the trial 

warranting a judgment in his favor.” Steelvest, Inc. v. Scansteel Service Center, 

Inc., 807 S.W.2d 476, 480 (Ky. 1991). Summary judgment is appropriate “if the 

pleadings, depositions, answers to interrogatories, stipulations, and admissions on 

file, together with the affidavits, if any, show that there is no genuine issue as to 

any material fact and that the moving party is entitled to a judgment as a matter of 

law.” CR5 56.03. The record must be viewed in a light most favorable to the party 

4 The Wains did not file a supersedeas bond or seek to stay the Commissioner’s Sale.

5 Kentucky Rules of Civil Procedure.
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opposing the motion for summary judgment and all doubts are to be resolved in his 

favor. Steelvest, 807 S.W.2d at 480. The trial court must examine the evidence, 

not to decide any issue of fact, but to discover if a real issue exists. Id. Since a 

summary judgment involves no fact-finding, this Court’s review is de novo, in the 

sense that we owe no deference to the conclusions of the trial court. Scifres v. 

Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996).

As discussed above, the Wains admitted that there was a valid 

mortgage on their property and that they were in default under the terms of the 

Agreement. However, the Wains argue that there were genuine issues of material 

fact which precluded summary judgment on their defense of unclean hands. The 

unclean hands doctrine is a rule of equity that forecloses relief to a party who has 

engaged in fraudulent, illegal, or unconscionable conduct but does not operate to 

“repel all sinners from courts of equity.” Dunscombe v. Amfot Oil Co., 201 Ky. 

290, 256 S.W. 427, 429 (1923). “The transaction with respect to which there was 

misconduct must be connected with the matter in litigation in order for the doctrine 

of unclean hands to apply.” Eline Realty Co. v. Foeman, 252 S.W.2d 15, 19 (Ky. 

1952). See Suter v. Mazyck, 226 S.W.3d 837, 843 (Ky. App. 2007). 

“In a long and unbroken line of cases this court has refused relief to 

one, who has created by his fraudulent acts the situation from which he asks to be 

extricated.” Asher v. Asher, 278 Ky. 802, 129 S.W.2d 552, 553 (1939). A trial 
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court’s decision to invoke the equitable defense of the unclean hands doctrine rests 

within its sound discretion. See Petroleum Exploration v. Pub. Serv. Comm’n of 

Kentucky, 304 U.S. 209, 218, 58 S. Ct. 834, 839, 82 L. Ed. 1294 (1938). The 

doctrine will not be applied to all misconduct, as when “the plaintiff has engaged 

in conduct less offensive than that of the defendant.” Suter, 226 S.W.3d at 843. 

See also Mullins v. Picklesimer, 317 S.W.3d 569, 577 (Ky. 2010). 

The Wains cite two cases in support of their contention that the 

doctrine of unclean hands is a fact-specific matter on which summary judgment is 

usually inappropriate. In Memorial Hall Museum, Inc. v. Cunningham, 455 F. 

Supp. 3d 347, 361 (W.D. Ky. 2020), a museum sued to recover two stolen Civil 

War uniforms that were in the possession of the defendant. The defendant argued 

that the museum’s claim was barred by laches, but the museum argued that the 

defendant had unclean hands because he was aware that the uniforms had been 

stolen. Applying Kentucky law, the federal district court concluded that there were 

disputed issues of material fact regarding both parties’ equitable claims. Id. at 362. 

In Cabot Turfway Ridge Defendants v. U.S. Bank National 

Association, No. 2015-CA-001199-MR, 2017 WL 2211082, (Ky. App. May 12, 

2017), a group of investors signed a promissory note and mortgage, but then turned 

over management of the encumbered property to their partners and tenants. When 

the Bank sought to foreclose on real property after a default, the investors argued 
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the Bank’s action was precluded by laches and unclean hands. The investors 

argued that the Bank was aware of the tenants’ misconduct and failed to require a 

timely cure to the tenants’ defaults. This Court agreed that summary judgment was 

appropriate because the investors had not produced any evidence that the Bank 

aided in the tenants’ fraud or that it knew of the improper conduct by the tenants. 

Id. at *7.

It is well-established that a party opposing a properly supported 

summary judgment motion cannot defeat it without presenting at least some 

affirmative evidence showing that there is a genuine issue of material fact for trial. 

Steelvest, 807 S.W.2d at 481. The facts and procedural posture of the current case 

are closer to those presented in Cabot Turfway than Memorial Hall Museum. The 

Wains contend that Central Bank failed to properly acknowledge their partial 

payments made in October 2018 but acknowledge that they remained in default 

under the Agreement. The Wains further assert that Hall misrepresented Central 

Bank’s willingness to negotiate a resolution of their default without proceeding to 

foreclosure. 

However, all of the conduct involving those negotiations occurred 

after Hall advised the Wains that Central Bank had elected to accelerate the 

balance due on the Agreement. Furthermore, Hall’s February 22, 2019, email 

expressly conditioned any settlement on the Wains’ agreement to pay all past due 
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amounts by March 15 and to execute an agreed judgment. The email also required 

the Wains’ acceptance of these conditions by March 1. Douglas Wain’s response 

did not clearly accept all of these conditions. 

In any event, the negotiations did not involve the validity of the 

underlying loan or Central Bank’s obligations involving that loan. Rather, the 

negotiations only concerned the Wains’ efforts to seek Central Bank’s forbearance 

on collection and foreclosure. Although Central Bank could have handled these 

matters differently, there is no showing that Hall’s representations induced the 

Wains to act or fail to act to make a timely cure of their default. Under the 

circumstances, we agree with the trial court that there was no fraudulent, illegal, or 

unconscionable conduct that would preclude Central Bank from exercising its 

rights under the Agreement.

Accordingly, we affirm the summary judgment and order of sale 

entered by the Fayette Circuit Court.

ALL CONCUR. 
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BRIEF FOR APPELLANTS:

David W. Hemminger

Louisville, Kentucky

BRIEF FOR APPELLEE CENTRAL 

BANK AND TRUST COMPANY:

Gregory D. Pavey

Timothy R. Wiseman

Lexington, Kentucky