Court Opinion

ID: 9963846
Source: CourtListenerOpinion
Date Created: 2024-04-26 14:05:28.066982+00
Date Added: 2024-06-11T08:25:02.741520
License: Public Domain

RENDERED: APRIL 19, 2024; 10:00 A.M.
                        NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals
                            NO. 2022-CA-1106-MR

KENDALL E. HANSEN, M.D.;
KENDALL E. HANSEN, M.D., PLC;
AND CRESTVIEW HILLS SURGERY
CENTER, PLLC                                                      APPELLANTS

                 APPEAL FROM KENTON CIRCUIT COURT
v.              HONORABLE PATRICIA M. SUMME, JUDGE
                        ACTION NO. 21-CI-01008

CHARLES A. ROBERTS, M.D.                                             APPELLEE

                                   OPINION
                                  AFFIRMING

                                 ** ** ** ** **

BEFORE: CALDWELL, GOODWINE, AND LAMBERT, JUDGES.

LAMBERT, JUDGE: Kendall E. Hansen, M.D.; Kendall E. Hansen, M.D., PLC;

and Crestview Hills Surgery Center, PLLC, (collectively, the Defendants or the

Appellants) have appealed from the August 23, 2022, judgment and final order of

the Kenton Circuit Court granting a judgment to Charles A. Roberts, M.D., based
upon its earlier declaration that the April 7, 2021, Redemption and Settlement

Agreement was valid and its holding that the Defendants had not performed their

obligations under it and were therefore in breach. We affirm.

                 Dr. Roberts and Dr. Hansen are both physicians who specialize in

interventional pain medicine and pain management. Kendall E. Hansen, M.D.,

PLC, is a Kentucky professional limited liability company that operates under the

assumed name of Interventional Pain Specialists, PLC (IPS), in which Dr. Hansen

had an ownership and membership interest. Crestview Hills Surgery Center,

PLLC, (Crestview) is also a Kentucky professional limited liability company. Dr.

Hansen is the registered agent for both companies. In October 2015, Dr. Roberts

entered into a Physician Services Agreement (PSA) with IPS to provide

professional medical services, and in January 2017 he acquired an ownership and

membership interest in IPS. In September 2018, Dr. Roberts and Dr. Hansen

acquired equal ownership and membership interests in Crestview.1

                 Dr. Roberts decided to terminate his PSA in May 2020, and he

stopped providing services to IPS and was no longer consulted about decisions for

IPS or Crestview as of July 2020. This decision led to disputes between the parties

regarding their respective contractual rights. By February 2021, the parties had

reached a mediated agreement to settle these disputes, and, according to Dr.

1
    Dr. Roberts’ father later acquired a minority ownership interest in that company.

                                                 -2-
Roberts, had reached a full and final agreement on the written terms of the

settlement agreement, which included a large payment2 to Dr. Roberts from the

Defendants in exchange for his interests in IPS and Crestview. The acceptance of

the draft agreement, Dr. Roberts asserted, happened via an email dated April 7,

2021 (the April draft). However, the Defendants refused to execute the agreement

or abide by its terms, which led to the filing of the underlying action.

              On June 24, 2021, Dr. Roberts filed a complaint with the Kenton

Circuit Court against the Defendants seeking a declaratory judgment pursuant to

Kentucky Revised Statutes (KRS) 418.040 that the settlement agreement was a

valid, effective, and enforceable contract. He also pled a cause of action for breach

of contract based upon the Defendants’ refusal to execute and perform under the

settlement agreement. Dr. Roberts sought specific performance of the settlement

agreement as well as the costs of the action, including reasonable attorney fees.

              On July 23, 2021, the Defendants filed a counterclaim based upon the

operating agreement and the PSA for IPS, and they alleged claims for breach of

contract, fiduciary duty, and contribution. The same day, the Defendants moved to

dismiss Dr. Roberts’ complaint pursuant to Kentucky Rules of Civil Procedure

(CR) 12.02(f). They argued that Dr. Roberts could not establish that a contract

2
 The agreement provided that the Defendants would pay Dr. Roberts $2M, half of which was
due immediately, and the second half was to be paid in monthly installments between January
2022 and December 2023.

                                             -3-
existed and could not present a signed document that would satisfy the statute of

frauds. Dr. Roberts disputed these arguments in response.

            On August 24, 2021, Dr. Roberts filed a motion seeking a declaratory

judgment as to the validity of the settlement agreement, including an argument that

the Defendants should be estopped from relying upon the statute of frauds defense.

In a separate motion filed the same day, Dr. Roberts moved the court to dismiss the

Defendants’ counterclaim, noting that the court would need to first decide the

threshold issue of whether the settlement agreement was valid and enforceable. He

argued that the claims made in the counterclaim were waived and released by the

settlement agreement. The Defendants objected.

            The court heard arguments on the pending motions from the parties in

September, and on May 4, 2022, it entered a declaratory judgment, rejecting the

Defendants’ statute of frauds defense and concluding that the settlement agreement

was valid and enforceable as of April 7, 2021. At that time, Dr. Roberts was no

longer a member or owner of IPS or Crestview, and the parties became obligated to

perform the terms of the agreement.

            The Defendants moved the court to alter, amend, or vacate the

declaratory judgment pursuant to CR 59.05 asserting that the circuit court had

misapplied the applicable law. Dr. Roberts objected to their motion and moved the

court for the entry of a judgment and final order addressing the pending motions

                                        -4-
and a final judgment on his breach of contract claim in order to effectuate the terms

of the settlement agreement and mutual releases.

             On August 23, 2022, after hearing arguments from the parties, the

court entered a final order denying the Defendants’ motions to alter, amend, or

vacate and to dismiss, granting Dr. Roberts’ motion to dismiss the counterclaim,

and entering a judgment for Dr. Roberts, which included the payment of money

under the terms of the settlement agreement, pre- and post-judgment interest,

attorney fees, and costs. This appeal, in which the Defendants (now Appellants)

assert that a valid and enforceable contract does not exist, now follows.

             The applicable standard of review is disputed. Citing Foreman v.

Auto Club Property-Casualty Insurance Company, 617 S.W.3d 345, 349 (Ky.

2021), the Appellants contend that the circuit court’s decision should be treated as

a summary judgment since the court disposed of the merits based on the briefing

and accompanying evidence without holding a trial. Thus, they argue, our review

should be de novo. On the other hand, Dr. Roberts asserts that we should apply the

abuse of discretion standard, citing the statutory language of KRS 418.040 and

KRS 418.065 (a court may make a declaration of rights or refuse to exercise that

power) as well as this Court’s opinion in Gwaltney v. Board of Social Work, 644

S.W.3d 270, 273 (Ky. App. 2022) (“While we agree that the trial court’s

interpretation of legal authority is subject to de novo review, the trial court’s

                                          -5-
refusal to issue a declaratory judgment here also represents its exercise of

discretion under KRS 418.065[.]”).

             We agree with the Appellants that, because there was no trial or

hearing and the circuit court based its decision on the evidence filed in the record

and legal arguments of counsel, the appropriate standard of review is the summary

judgment standard as set out in Foreman, supra:

                     A party seeking a declaratory judgment may, at
             any time move with or without supporting affidavits for a
             summary judgment in his favor. In cases in which the
             trial court has granted summary judgment in a
             declaratory judgment action and no bench trial is held,
             we use the appellate standard of review for summary
             judgments.

                     When reviewing a trial court’s grant of summary
             judgment, we determine whether the record supports the
             trial court’s conclusion that there is no genuine issue as
             to any material fact and the moving party is entitled to
             judgment as a matter of law. Because summary
             judgment does not require findings of fact but only an
             examination of the record to determine whether material
             issues of fact exist, we generally review the grant of
             summary judgment without deference to the trial court’s
             assessment of the record or its legal conclusions.

617 S.W.3d at 349 (internal quotation marks, ellipses, and citations in footnotes

omitted). See also Ladd v. Ladd, 323 S.W.3d 772, 776 (Ky. App. 2010) (“In cases

where a summary judgment has been granted in a declaratory judgment action and

no bench trial held, the standard of review for summary judgments is utilized.”).

                                         -6-
             Although neither the court nor the parties used the term “summary

judgment,” we hold that the declaratory judgment (declaring that the settlement

agreement was a valid and enforceable contract) and the judgment and final order

(finding that the Appellants breached the settlement agreement and entering a

judgment for Dr. Roberts) are in effect a summary judgment. Collectively, the

judgments determined the rights of the parties and decided the merits of the action

without a trial or evidentiary hearing.

             The legal issue we must decide in this case is whether the circuit court

properly decided that a valid and enforceable contract existed between the parties.

“An agreement to settle legal claims is essentially a contract subject to the rules of

contract interpretation. It is valid if it satisfies the requirements associated with

contracts generally, i.e., offer and acceptance, full and complete terms, and

consideration.” Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 384

(Ky. App. 2002). An oral settlement agreement may also be “binding and

enforceable.” Spot-A-Pot, Inc. v. State Res. Corp., 278 S.W.3d 158, 161 (Ky. App.

2009).

             [A] contract may be “based on a promise which may be
             inferred from the conduct of the parties.” Kellum v.
             Browning’s Adm’r, 231 Ky. 308, 21 S.W.2d 459, 463
             (1929). “To constitute such a contract there must, of
             course, be a mutual assent by the parties – a meeting of
             minds – and also an intentional manifestation of such
             assent. Such manifestation may consist wholly or partly
             of acts, other than written or spoken words.” Id. (citing

                                           -7-
              Springfield Fire & Marine Ins. Co. v. Snowden, 173 Ky.
              664, 191 S.W. 439 (1917)).

Kincaid v. Johnson, True & Guarnieri, LLP, 538 S.W.3d 901, 911 (Ky. App.

2017). “The construction and interpretation of a contract is a matter of law for the

court. Our review of the trial court’s decision is de novo without deference to the

trial court’s interpretation.” Spot-A-Pot, Inc., 278 S.W.3d at 161 (citations

omitted).

              For their first argument, the Appellants asserts that the April draft was

not a valid and enforceable contract for various reasons, including that it was

labeled as a draft, it was a counteroffer from Dr. Roberts that the Appellants had

not accepted, and its terms were not full and complete. The circuit court ruled that

it was valid, stating:

              The email from then counsel for [Dr. Roberts] to counsel
              for [the Appellants] dated April 7, 2021, accepted the
              offer of the draft agreement with no additional
              substantive changes: at that point, there was a meeting of
              the minds and, therefore, a contract. The terms of the
              agreement as set forth in the written document are full
              and complete. [Dr. Roberts] performed his part of the
              agreement in consideration of [the Appellants’]
              agreement of payment, so there was ample consideration.

Having reviewed the record, we agree that the communication between the parties

along with the draft of the settlement agreement establish the necessary elements to

form a binding contract, including a meeting of the minds. And we find no merit

in the Appellants’ argument that labeling the settlement agreement as a draft makes

                                          -8-
it otherwise invalid under the circumstances of this case. We have reviewed the

cases cited by the Appellants and agree with Dr. Roberts that these citations

provide no support for their position. Accordingly, we find no error in the circuit

court’s conclusion that a valid contract existed.

             Next, the Appellants argue that the statute of frauds applies in this

case to invalidate the settlement agreement because it was not signed and could not

be performed within one year (half of the monetary payment was to be made in

installments over a two-year period), bringing it under KRS 371.010(7):

             No action shall be brought to charge any person . . .
             [u]pon any agreement that is not to be performed within
             one year from the making thereof . . . unless the promise,
             contract, agreement, representation, assurance, or
             ratification, or some memorandum or note thereof, be in
             writing and signed by the party to be charged therewith,
             or by his authorized agent.

Dr. Roberts, in turn, argues that the statute of frauds does not apply to settlement

agreements and that it is otherwise inapplicable because he was required to (and

did) perform under the agreement within one year of its execution.

             The circuit court agreed with Dr. Roberts, relying upon the holding in

United Parcel Service Company v. Rickert, 996 S.W.2d 464, 471 (Ky. 1999), in

which the Supreme Court of Kentucky recognized that “[i]f an agreement is

capable of being performed within a year, then it does not fall within the statute of

frauds.” In concluding that the statute of frauds did not apply, the Supreme Court

                                         -9-
stated that “Rickert fully performed his part of the bargain with UPS by continuing

to fly for Orion and UPS during the transition time. . . . Although the transition

period was more than a year, UPS was capable of hiring Rickert at any time and

thereby performing its part of the bargain.” Id. In the present case, the circuit

court agreed that the statute of frauds did not apply in the present case, stating:

             [Dr. Roberts] here performed immediately by ceasing to
             work with defendants or exercise any control over their
             business and the defendants then immediately owed him
             two million dollars; merely allowing for a payment plan
             longer than a year is not sufficient to trigger the
             application of the statute if the payment could have been
             made within the year.

Dr. Roberts also directs this Court to the holding of the former Court of Appeals

that “[the statute of frauds] applies only to contracts which are not to be performed

upon either side within a year, and not to agreements which are to be performed or

have been performed by one or either of the parties within that time.” Botkin v.

Middlesborough Town & Land Co., 139 Ky. 677, 66 S.W. 747, 747-48 (1902).

We find no error in the circuit court’s conclusion that the statute of frauds does not

apply in this case because Dr. Roberts had performed under the agreement.

             While we need not reach this issue, we also find merit in Dr. Roberts’

citation to Moore Prop. Inv., LLC v. Fulkerson, No. 2018-CA-000577-MR, 2020

                                         -10-
WL 4515418, at *3 (Ky. App. Jul. 2, 2020), in which this Court stated:3

                     The statute of frauds does not apply to settlement
              agreements. Our courts have said that such agreements
              need not even be in writing to be enforceable. Motorists
              Mut. Ins. Co. v. Glass, 996 S.W.2d 437, 445 (Ky. 1997)
              (“It has long been the law of this Commonwealth that the
              fact that a compromise agreement is verbal and not yet
              reduced to writing does not make it any less binding.”).

(Footnote omitted.) Because this matter concerns a settlement agreement, the

statute of frauds would not apply regardless of when it could be performed.

              And finally, while we again need to reach this issue, we find no merit

in the Appellants’ argument that Dr. Roberts is not entitled to an equitable remedy

as to the application of the statute of frauds. Rather, we agree with the circuit

court’s conclusion:

              Here [the defendants] acknowledged that they had a
              completed agreement, and that [they] needed to pay [Dr.
              Roberts], in numerous messages to plaintiff – until [Dr.
              Hansen’s] circumstances changed and he could no longer
              afford to make the agreed-upon payment and then
              refused to sign and claimed that they had not reached a
              final agreement. Plaintiff acted in justifiable reliance
              upon the contract by ceasing to act as an owner of the
              business and defendant[s] also acted as if plaintiff were
              no longer an owner, not consulting him on decisions or
              paying him any distributions. Equity is on the side of
              plaintiff and defendants should be estopped from
              claiming the contract is invalid merely because of [Dr.
              Hansen’s] subsequent unilateral decision that it was no
              longer a good deal for him and his refusal to sign it.

3
 This unpublished case is cited as persuasive authority pursuant to Kentucky Rules of Appellate
Procedure (RAP) 41.

                                             -11-
            For the foregoing reasons, the judgment of the Kenton Circuit Court is

affirmed.

            ALL CONCUR.

BRIEFS FOR APPELLANTS:                   BRIEF FOR APPELLEE:

Aaron M. Herzig                          Alice A. Jones
Chad R. Ziepfel                          Cincinnati, Ohio
Kenneth A. Foisy
Covington, Kentucky

                                      -12-