Court Opinion

ID: 9378408
Source: CourtListenerOpinion
Date Created: 2023-03-10 15:04:33.515286+00
Date Added: 2024-06-11T17:17:20.939472
License: Public Domain

RENDERED: MARCH 3, 2023; 10:00 A.M.
                 NOT TO BE PUBLISHED

          Commonwealth of Kentucky
                 Court of Appeals

                    NO. 2021-CA-1436-MR

LEIGHANN BLANTON AND                              APPELLANTS
KATHLEEN P. WILSON

          APPEAL FROM JEFFERSON CIRCUIT COURT
v.           HONORABLE MITCH PERRY, JUDGE
                  ACTION NO. 15-CI-002223

JACQUES WIGGINTON                                   APPELLEE

                           AND

                    NO. 2021-CA-1472-MR

JACQUES WIGGINTON                          CROSS-APPELLANT

       CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT
v.           HONORABLE MITCH PERRY, JUDGE
                 ACTION NO. 15-CI-002223

LEIGHANN BLANTON AND                        CROSS-APPELLEES
KATHLEEN WILSON
                     OPINION AFFIRMING IN PART
               AND REVERSING AND REMANDING IN PART

                                  ** ** ** ** **

BEFORE: ECKERLE, KAREM, AND MCNEILL, JUDGES.

KAREM, JUDGE: Leighann Blanton (“Blanton”) and Kathleen Wilson

(“Wilson”) (collectively, “Appellants”) appeal from a Jefferson Circuit Court

judgment in their favor following a jury trial in a contract dispute between them

and Jacques Wigginton (“Wigginton”). Among other things, Appellants take issue

with the amount of damages they were ultimately awarded under the judgment.

Additionally, Wigginton cross-appeals alleging various errors. We affirm in part

and reverse and remand in part.

              FACTUAL AND PROCEDURAL BACKGROUND

             On September 12, 2003, Appellants formed a Kentucky limited

liability company named Tree House Day Care, LLC (the “LLC”). On December

27, 2005, the LLC entered into a “Contract for Deed” with H. Joseph and Betty

Schutte for the real property where the daycare would operate. The “Purchaser”

under the Contract for Deed was the LLC, and Appellants signed the Contract for

Deed as Members of the LLC.

             Under the Contract for Deed, the LLC would begin paying $2,085.78

per month on January 1, 2006, and every month thereafter until or before January

1, 2011, at which time the remaining balance of the sales price would be due.

                                        -2-
Upon full payment of the purchase price and any applicable interest, the Sellers

would convey to the LLC a fee simple title to the property. The LLC subsequently

fell on hard financial times and ultimately defaulted on the payments due under the

Contract for Deed.

             At some point before June of 2010, Wilson and Wigginton had an ill-

fated meeting as passengers seated next to each other on a flight bound for

Lexington, Kentucky from St. Petersburg, Florida. During that flight the parties

naturally engaged in conversation regarding themselves. Wigginton represented

himself as a graduate from the “University College of Law” who was currently a

practicing paralegal. Wilson, in discussing herself, explained that she and her

daughter, Appellant Blanton, owned a daycare which was in dire financial straits to

which Wigginton mentioned he had always wanted to own a daycare.

             Subsequently, on June 19, 2010, Appellants and Wigginton signed an

“Entity Sale Agreement” (the “Agreement”) which stated its purpose as “a distress

entity sale of the [LLC] assets and business.” In the Agreement, Appellants agreed

to “assign to [Wigginton] all of their interest in [the LLC’s] business and assets,

subject to all of the liabilities of [the LLC].” The stated consideration was

Wigginton’s agreement “to assume responsibility for the prior obligations and

debts of the LLC” and to pay Appellants one dollar at closing. For and in

consideration of the transfer of the business and assets of the Partnership,

                                         -3-
[Wigginton] agrees not only to assume responsibility for the prior obligations and

debts of the Partnership, but to pay and deliver to [Appellants] at closing one

dollar. Wigginton further agreed that upon

             receipt of [Appellants’] assets, [Wigginton] will look to
             assume, pay, satisfy, perform, discharge, and indemnify
             and hold [Appellants] harmless against any loss, cost,
             claim, or demand of any kind arising out of or resulting
             from the debts, obligations, agreements, and liabilities of
             [Appellants’] of every kind and description as the same
             exist on the closing date[.]

Additionally, the Agreement stated, “[w]ith regard to taxes, it is recognized that

there may be outstanding tax balance[s] for the [LLC] for years of 2007, 2008, and

2009.” Finally, the Agreement specified that Blanton would “remain with the

business” as an employee “[a]t least until the requisite agreement between

landowner and Buyer . . . is signed and effectuated[.]”

             Of note, Wigginton maintains he entered into the contract as a

Trustee. The actual agreement reads,

             This agreement is made on Saturday, June 19, 2010, by
             in between Kathleen P. Wilson and Leighann Blanton,
             individually and doing business as Tree House Daycare,
             LLC, a Kentucky general partnership, referred to in this
             Agreement “Sellers,” and Jacques Wigginton, a trustee,
             referred to in this agreement as “Buyer.”

However, Wigginton signed the document as buyer using his name with no

reference to any trust. And, most notably, never produced any evidence of the

existence of a trust. Only three months later, on September 21, 2010, Wigginton

                                         -4-
sent letters to the daycare’s parents informing them that the business would be

closing on September 24, 2010.

             On May 11, 2015, Appellants filed a complaint alleging three counts

of breach of contract against Wigginton. Appellants filed the complaint

individually and did not name the LLC as a plaintiff. Count One alleged breach of

contract due to Wigginton’s closure of the business; Count Two alleged breach of

contract due to Appellants “being subjected to governmental demands for the taxes

and other obligations assumed by [Wigginton], totaling over $57,000”; and Count

Three alleged breach of contract for Wigginton’s failure to pay Blanton for fifteen

(15) weeks of work.

             Procedurally, the case was filled with delays and mishaps. At one

point, Wigginton was held in contempt which was ultimately held in abeyance

pending mediation. Additionally, an unfortunate clerical error occurred wherein

the trial judge incorrectly entered an order dismissing for failure to prosecute. This

error was rectified, and the court’s Kentucky Rule of Civil Procedure (“CR”) 70.02

order was vacated. Ultimately, the trial court held a four-day trial beginning on

November 8, 2021.

             When the time for jury instructions arrived, the trial court allowed the

jury to consider only those taxes for which the Appellants could show payments

had been made. Because the only documentary evidence Appellants produced

                                         -5-
supporting the amount of damages were receipts of tax payments amounting to

$520, the trial court capped the amount of damages in the jury instructions at $520

for any outstanding tax obligations Wigginton may owe. Moreover, the trial court

limited any award for Wigginton’s failure to pay Blanton’s salary to $6,000.

             The jury ultimately found the existence of a valid contract between

Appellants and Wigginton; Wigginton had materially breached the contract by

failing to assume all the liabilities, obligations, and debts under the contract and

failing to pay Blanton’s wages; Appellants did not materially breach the contract

prior to Wigginton’s breach; and Appellants had incurred damages from

Wigginton’s breach. Accordingly, the jury awarded Appellants $520 for the

outstanding tax obligations, the maximum allowed per the jury instructions,

and $800 for the failure to pay Blanton’s salary. Notably, the jury, prior to

returning a verdict, sent two questions to the trial judge inquiring about the alleged

$57,000 tax obligation. On November 16, 2021, the trial court entered a judgment

for Appellants in conformance with the jury’s verdict. Appellants appealed, and

Wigginton cross-appealed.

             We will discuss further facts as they become relevant.

                                          -6-
                                    ANALYSIS

   a. Trial Court’s Order Vacating Order of Dismissal Was Not Error or
      Abuse of Discretion

             Because of its procedural nature and capacity for making all other

issues moot, we will first address an argument from Wigginton’s cross-appeal. By

way of background, Appellants filed their complaint on May 11, 2015. On

November 30, 2016, the trial court held a hearing on Appellants’ motion to compel

Wigginton to answer interrogatories and requests for admissions. In August 2017,

Appellants filed a motion requesting that the trial court hold Wigginton in

contempt for failure to cooperate with court-ordered mediation. The trial court

entered a contempt order on September 11, 2017.

             Only a few months later, on December 1, 2017, the trial court issued a

sua sponte order under CR 77.02(2), dismissing the case without prejudice for

failure to prosecute for more than one year. Neither party responded to the order

until May 25, 2018, when Appellants moved the trial court to vacate its order

dismissing the case for lack of action. Appellants stated that they had not received

notice of the trial court’s intention to dismiss the case, which is why they had not

filed a timely response. Appellants also indicated their desire to move the case

forward to trial.

             Thereafter, the trial court entered an order vacating its previous order

dismissing the case for lack of action. The trial court noted that it was doing so

                                         -7-
pursuant to CR 60.02 and indicated that there had been activity in the case within

the past year.

             Wigginton asserts in his cross-appeal that all actions by the trial court

after it dismissed the action without prejudice in December 2017 were outside of

the trial court’s jurisdiction because the trial court’s order dismissing the case had

become final. Thus, he argues that the trial court’s judgment against Wigginton

should be declared void, and this appeal should be dismissed.

             As the Kentucky Supreme Court explained, “[t]he rule upon which the

trial court acted, CR 60.02, is a safety valve, error correcting device for trial

courts.” Kurtsinger v. Board of Trustees of Kentucky Retirement Systems, 90

S.W.3d 454, 456 (Ky. 2002). Under CR 60.02, “[o]n motion a court may, upon

such terms as are just, relieve a party or his legal representative from its final

judgment, order, or proceeding . . . [for] . . . (a) mistake, inadvertence, surprise or

excusable neglect; . . . or (f) any other reason of an extraordinary nature justifying

relief.” Indeed, “[t]he rule is designed to allow trial courts a measure of flexibility

to achieve just results and thereby provides the trial court with extensive power to

correct a judgment.” Kurtsinger, 90 S.W.3d at 456 (internal quotation marks

omitted). Thus, “CR 60.02 addresses itself to the broad discretion of the trial court

and for that reason, decisions rendered thereon are not disturbed unless the trial

judge abused his/her discretion.” Id. “The test for abuse of discretion is whether

                                           -8-
the trial judge’s decision was arbitrary, unreasonable, unfair, or unsupported by

sound legal principles.” Goodyear Tire and Rubber Co. v. Thompson, 11 S.W.3d

575, 581 (Ky. 2000) (citation omitted).

             As to the applicability of CR 60.02 to the facts presented here, we

discern no abuse of the trial court’s discretion. Although Appellants’ motion did

not specifically cite CR 60.02, the motion requested that the trial court vacate its

order dismissing the case. Moreover, Appellants filed the motion only five months

after the trial court’s order dismissing the case. The trial court believed a mistake

had been made, as activity had occurred in the case in the past year, and in our

view, CR 60.02 was adopted for such circumstances. Thus, we can discern no

abuse of the trial court’s considerable discretion.

   b. Appellants’ Direct Appeal

             1. Contract Interpretation and Breach of Contract

             Appellants first make numerous arguments concerning the trial court’s

alleged errors in interpreting the Agreement, including that the trial court should

have enforced the Agreement according to its plain language because it was

unambiguous. Indeed, under Kentucky law, an unambiguous written contract must

be strictly enforced according to the plain meaning of its express terms and without

resorting to extrinsic evidence. Allen v. Lawyers Mut. Ins. Co. of Kentucky, 216

S.W.3d 657, 659 (Ky. App. 2007).

                                          -9-
             Alternatively, where a contract is ambiguous or silent on a vital

matter, a court may consider parol and extrinsic evidence involving the

circumstances surrounding the execution of the contract, the contract’s subject

matter, the objects to be accomplished, and the parties’ conduct. Reynolds Metals

Co. v. Barker, 256 S.W.2d 17, 19 (Ky. 1953). By definition, “[a]n ambiguous

contract is one capable of more than one different, reasonable interpretation.”

Central Bank & Trust Co. v. Kincaid, 617 S.W.2d 32, 33 (Ky. 1981). See also

Transport Ins. Co. v. Ford, 886 S.W.2d 901, 905 (Ky. App. 1994) (“To determine

that an ambiguity exists, the court must first determine that the contract provision

is susceptible to inconsistent interpretations.”).

             Generally, the interpretation of a contract, including determining

whether a contract is ambiguous, is a question of law for the courts and is subject

to de novo review. First Commonwealth Bank of Prestonsburg v. West, 55 S.W.3d

829, 835-36 (Ky. App. 2000). However, once a court determines that a contract is

ambiguous, areas of dispute concerning the extrinsic evidence are factual issues

and construction of the contract becomes subject to resolution by the factfinder.

Cook United, Inc. v. Waits, 512 S.W.2d 493, 495 (Ky. 1974).

             Here, Appellants argue that the Agreement was wholly unambiguous.

We disagree. The Agreement, in this case, was replete with ambiguities,

vagueness, and confusion. For example, the LLC is incorrectly referred to as a

                                          -10-
“Kentucky general partnership,” and it is unclear whether the refences to and

signatures of Appellants are as individuals or representatives of the LLC. While a

seemingly small mistake, Kentucky Revised Statute (“KRS”) 275.010(2) states

unequivocally that “a limited liability company is a legal entity distinct from its

members.” As the Kentucky Supreme Court further stated, “an LLC is not a legal

coat that one slips on to protect the owner from liability but then discards or

ignores altogether when it is time to pursue a damage claim.” Turner v. Andrew,

413 S.W.3d 272, 276 (Ky. 2013).

             Moreover, it is unclear whether Appellants’ improperly retained

employee tax withholding payments could be characterized as a tax obligation or

liability of the LLC that Wigginton could even lawfully assume under the

Agreement. The Agreement provides no direction as to any distinctions between

the liabilities of the LLC versus the liabilities of Appellants as individuals.

Further, the following language regarding tax liabilities is unclear: “[w]ith regard

to taxes, it is recognized that there may be outstanding tax balance [sic] for the

Partnership [sic] for years of 2007, 2008, and 2009.” Additional ambiguous

language includes that Wigginton would “look to” assuming or paying off the

“Seller’s” assets. Therefore, one could not discern the parties’ intentions based

solely on the writings. We thus find the Agreement ambiguous and see no error in

                                          -11-
the trial court’s submission of factual issues concerning the Agreement’s

construction.

             Moreover, we see no error in the trial court’s submission to the jury

on whether Wigginton breached the Agreement. “Whether under the evidence

there has been a breach of the contract as interpreted by the court is a question for

the jury.” Harlan Fuel Co. v. Wiggington, 203 Ky. 546, 262 S.W. 957, 958 (1924)

(citation omitted).

             2. Equipment and Furnishings

             Appellants further argue that they are entitled under the “duress,

fraud, or bad faith” doctrine to recover the amounts of the business assets, such as

equipment and furnishings, which were transferred under the Agreement.

             Fraud must be pleaded with particularity. CR 9.02 provides, “[i]n all

averments of fraud or mistake, the circumstances constituting fraud or mistake

shall be stated with particularity.” See Turner Elkhorn Coal Co. v. Smith, 239 Ky.

428, 39 S.W.2d 649, 650 (1931) (“If he seeks to recover upon his original contract,

he must plead the fraud, and must amend his answer and counterclaim and set out

what he did and furnished thereunder and was to be paid therefor with as much

particularity as if he were suing thereon originally.”). See also Curry v. Stewart,

301 Ky. 645, 192 S.W.2d 739, 741 (1945) (“[F]raud must be pleaded and clearly

proven in any case where it is relied on.”). Absent these requirements, it is

                                         -12-
impossible to establish the elements from which a cause of action for fraud might

arise. Id.

             In this case, Appellants did not specifically plead the allegation of

fraud in the complaint. Likewise, Appellants do not point anywhere else in the

record to where they brought the fraud issue to the trial court’s attention. “[A]

party may not raise an issue for the first time on appeal.” Sunrise Children’s

Services, Inc. v. Kentucky Unemployment Insurance Commission, 515 S.W.3d 186,

192 (Ky. App. 2016). We thus affirm as to this issue.

             3. Damages

             Appellants argue that the trial court erred in its decision as to what

evidence the jury could consider for an award of damages. The proper standard of

review of a trial court’s evidentiary rulings is abuse of discretion. Thompson, 11

S.W.3d at 577. Throughout the litigation of this case, Appellants argued at every

turn that Wigginton was contractually responsible for $57,000 in taxes owed by

Appellants. In fact, the parties’ very first conversation while sitting next to each

other on a plane consisted of dialogue wherein Appellants bemoaned the fact that

they could not pay such a large amount of money. At trial however, the court ruled

that damages would be limited to the amount which Appellants had actually paid

toward the back taxes and then only those for which there was documentary

evidence. The trial court did an excellent job with what would be considered

                                         -13-
confusing testimony and presentation of evidence over a four-day trial. However,

the amount to be awarded was a factual determination for the jury to make based

on the evidence presented at trial and should not have been capped by the trial

court. Appellants should have been allowed to present evidence of their tax

obligation unrestricted by the amount they had paid. Clearly, the jury was

interested in considering the evidence in relation to the alleged tax liability as

illustrated by the questions sent to the judge prior to the verdict being rendered.

             In an action for breach of contract, the measure of damages “is that

sum which will put the injured party into the same position he would have been in

had the contract been performed.” Perkins Motors, Inc. v. Autotruck Federal

Credit Union, 607 S.W.2d 429, 430 (Ky. App. 1980) (citation omitted). Indeed,

“[c]ontract damages serve to compensate the injured party” and “must always be

proven with reasonable certainty.” Ford Contracting, Inc. v. Kentucky Transp.

Cabinet, 429 S.W.3d 397, 407 (Ky. App. 2014). “[U]ncertain, contingent, and

speculative damages” are not recoverable. Spencer v. Woods, 282 S.W.2d 851,

852 (Ky. 1955) (citations omitted). However, “where it is reasonably certain that

damage has resulted, mere uncertainty as to the amount does not preclude one’s

right of recovery or prevent a jury decision awarding damages.” Curry v. Bennett,

301 S.W.3d 502, 506 (Ky. App. 2009) (citing Roadway Exp., Inc. v. Don Stohlman

& Associates, Inc., 436 S.W.2d 63, 65 (Ky. 1968)). In this case, the limitations

                                          -14-
placed on the Appellants for damages were too restrictive and the judgment of the

trial court is reversed as an abuse of discretion and remanded for a new trial on

damages only as they relate to the tax liability owed by Appellants.

              Wigginton’s Cross-Appeal

              As a preliminary matter, Appellants argue that Wigginton’s cross-

appellant’s brief does not contain appropriate citations to the relevant authority or a

statement as to how he preserved his arguments for appellate review. Thus,

Appellants argue that his brief should be stricken, and his cross-appeal dismissed.

Kentucky Rule of Appellate Procedure (“RAP”) 34(4), formerly CR

76.12(4)(c)(v), requires “citations of authority pertinent to each issue of law” and

“a statement with reference to the record showing whether the issue was properly

preserved for review and, if so, in what manner.”

              Our options if an appellate advocate fails to abide by the rules are:

“(1) to ignore the deficiency and proceed with the review; (2) to strike the brief or

its offending portions . . . ; or (3) to review the issues raised in the brief for

manifest injustice only[.] Hallis v. Hallis, 328 S.W.3d 694, 696 (Ky. App. 2010)

(citations omitted). In this case, any shortcomings in Wigginton’s brief do not

warrant striking his brief or reviewing the appeal solely for manifest injustice.

Thus, we have elected not to impose the more severe options permitted under

Hallis and RAP 34 and will proceed with a review of the matter.

                                           -15-
             1. Wigginton as Trustee

             Wigginton argues that he signed the Agreement as a trustee. Thus, he

alleges that the trial court erred in allowing Appellants to proceed against him

individually and not requiring them to name the trust as a party defendant.

             In Pannell v. Shannon, the Kentucky Supreme Court stated the

general rule that “if the body of [a] contract states that the agreement is with a

corporation or other entity, then the officer or agent signing the agreement has not

signed in her individual capacity and cannot be held personally liable solely

because of her signature.” 425 S.W.3d 58, 65 (Ky. 2014).

             However, in this case, the Agreement did not name a trust as the

Buyer. The only Buyer was Wigginton “as trustee” of an unnamed and never-

described trust. Moreover, the alleged trust acquired no interest in the LLC’s

business or assets under the Agreement. Thus, the rule stated in Pannell is not

applicable because it applies to corporations or other entities who have entered into

agreements with other parties, i.e., where an agreement is with a corporation or

other entity. Thus, we discern no error.

             2. Failure to Add LLC as Plaintiff

             Wigginton next argues that the trial court erred in allowing Appellants

to assert their claims against Wigginton as individuals without adding the LLC as a

party to the complaint. However, Wigginton failed to bring this specific argument

                                           -16-
to the trial court. While he listed possible issues in a trial memorandum as

Appellants not having the authority to sell the LLC and the LLC never having been

sold under the Agreement, Wigginton never argued that the trial court erred

because Appellants did not have standing to assert a valid claim.

             As stated by a panel of this Court, “[i]t is well-settled that a trial court

must be given the opportunity to rule in order for an issue to be considered on

appeal, and the failure of a litigant to bring an alleged error to the trial court’s

attention is fatal to that argument on appeal.” Baker v. Weinberg, 266 S.W.3d 827,

835 (Ky. App. 2008) (citation omitted). As such, Wigginton did not properly

preserve this issue for our review.

             Additionally, Wigginton does not point this Court to where in the

record he preserved his argument concerning the trial court’s alleged error in

allowing Appellants to introduce evidence after the close of their proof. Thus, we

decline to review.

                                    CONCLUSION

             For the foregoing reasons, we affirm the Jefferson Circuit Court’s

judgment in part and reverse and remand in part.

             ALL CONCUR.

                                          -17-
BRIEFS FOR APPELLANT/CROSS-     BRIEFS FOR APPELLEE/CROSS
APPELLEE:                       APPELLANT:

Michael R. Slaughter            Todd S. Page
Westport, Kentucky              Lexington, Kentucky

                              -18-