Court Opinion

ID: 9946772
Source: CourtListenerOpinion
Date Created: 2024-03-01 15:15:33.005451+00
Date Added: 2024-06-11T14:23:41.532347
License: Public Domain

RENDERED: FEBRUARY 23, 2024; 10:00 A.M.
                  NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                  Court of Appeals
                     NO. 2022-CA-0340-MR

DR. JOHN D. RHODES III;
FINCASTLE GROUP, LLC; AND
RHODES FAMILY LIMITED
PARTNERSHIP                                          APPELLANTS

          APPEAL FROM JEFFERSON CIRCUIT COURT
v.       HONORABLE SUSAN SCHULTZ GIBSON, JUDGE
                  ACTION NO. 15-CI-005248

GEORGE T. UNDERHILL &
ASSOCIATES, LLC, D/B/A
UNDERHILL ASSOCIATES AND
GEORGE T. UNDERHILL, III                              APPELLEES

AND

                     NO. 2022-CA-0342-MR

GEORGE T. UNDERHILL &
ASSOCIATES, LLC, D/B/A
UNDERHILL ASSOCIATES AND
GEORGE T. UNDERHILL, III                   CROSS-APPELLANTS

        CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT
v.       HONORABLE SUSAN SCHULTZ GIBSON, JUDGE
                  ACTION NO. 15-CI-005248
DR. JOHN D. RHODES III;
FINCASTLE GROUP, LLC; AND
RHODES FAMILY LIMITED
PARTNERSHIP                                                CROSS-APPELLEES

                            OPINION
               AFFIRMING APPEAL NO. 2022-CA-0340-MR
                              AND
            AFFIRMING CROSS-APPEAL NO. 2022-CA-0342-MR

                                 ** ** ** ** **

BEFORE: ACREE, KAREM, AND TAYLOR, JUDGES.

TAYLOR, JUDGE: Dr. John D. Rhodes III, Fincastle Group, LLC, (Fincastle)

and Rhodes Family Limited Partnership (Rhodes Partnership) bring Appeal No.

2022-CA-0340-MR from a January 20, 2021, Findings of Fact, Conclusions of

Law, and Judgment which became final and appealable upon entry of a February

25, 2022, Memorandum and Order of the Jefferson Circuit Court. George T.

Underhill & Associates, LLC, d/b/a Underhill Associates, and George T.

Underhill, III, bring Cross-Appeal No. 2022-CA-0342-MR from the same

judgment and order. We affirm both Appeal No. 2022-CA-0340-MR and Cross-

Appeal No. 2022-CA-0342-MR.

            These appeals stem from complex business dealings between the

parties spanning some twenty years and involving several real estate ventures. Due

                                       -2-
to the complexity of the underlying facts, we will only recite those facts necessary

to our disposition of the two appeals.

             George T. Underhill, III, is an attorney, certified public accountant,

and real estate broker. Dr. John D. Rhodes, III, is a retired cardiologist. Underhill

and Rhodes started doing business together in the 1990’s and were involved in

several real estate projects throughout the years, including what became known as

the Glenview Property. The Glenview Property is located in Jefferson County and

was originally owned by Alexis Borden and David Borden. The Bordens sought to

sell the Glenview Property and agreed that a personal friend, James Ruch, would

assist them in locating a buyer. As compensation, the Bordens and Ruch agreed

that Ruch would receive a percentage of the sale of the Glenview Property, even

though Ruch was not licensed to sell real estate in Kentucky. Underhill was a

personal friend of Ruch and was aware that Rhodes and Fincastle were interested

in purchasing real property to build residential subdivisions. Their efforts proved

successful, and Glenview Property was ultimately sold to Rhodes and Fincastle.

             Before the sale, Rhodes and Fincastle entered into a September 25,

2007, Commission Agreement with Underhill Associates. Therein, Rhodes and

Fincastle agreed to pay Underhill Associates a commission of 2.9 percent as the

“Broker.” The 2.9 percent was to be paid upon the sale of each lot within the

subdivision to a third party. Two days later, on September 27, 2007, Underhill and

                                         -3-
Ruch executed an agreement (September 27, 2007, Fee Splitting Agreement),

wherein it was agreed that Ruch would receive 75 percent of the commission

payable to Underhill Associates from Rhodes and Fincastle. Eventually, the

residential subdivision lots were sold to third parties. Rhodes and Fincastle refused

to pay the 2.9 percent commission per the September 25, 2007, Commission

Agreement.

             Ultimately, on October 14, 2015, November 25, 2015, and February

26, 2018, Underhill, Underhill Associates, and Underhill on behalf of TR of

Montgomeryville, Inc. filed complaints and petitions for declaratory relief against,

inter alios, Rhodes, Fincastle, and the Rhodes Partnership. In relevant part, it was

alleged:

                   29. On September 25, 2007, Rhodes and
             Fincastle, collectively, as the “Developer,” entered into
             the Agreement with Underhill Associates as “Broker”
             attached hereto as Exhibit 2 (the “Glenview Park
             Agreement”).

                    30. Under a certain Contract of Purchase and
             Sale, Rhodes/Fincastle acquired real property (the
             “Property”) for the purposes of developing it into the
             subdivision that became known as Glenview Park.
             Pursuant to the Glenview Park Agreement, Underhill
             Associates agreed to defer its commission earned for its
             role in procuring and negotiating the Contract of
             Purchase and Sale.

                   31. In exchange for Underhill Associates’
             agreement to defer its commission, Rhodes/Fincastle
             agreed to pay Underhill Associates a 2.9% commission

                                         -4-
on the sale of any residential subdivision Lot developed
on the Property.

      32. Between May 31, 2012[,] and September 29,
2015, twenty-two lots eligible for commissions under the
Glenview Park Agreement were sold for a total of
$5,779,750.00.

     33. Rhodes/Fincastle have failed and refused to
pay Underhill Associates $122,090.00 in earned
commissions on these Lot sales.

       34. Twenty-eight additional sales are
anticipated, and Rhodes/Fincastle have likewise
manifested a refusal to pay Underhill Associates’ 2.9%
commission on these anticipated future sales.

      ....

      38. On or about November 11, 2009, Underhill
as “Borrower” and Rhodes Family L.P. as “Lender”
entered into a Promissory Note in the principal amount of
$594,454.00, attached hereto as Exhibit 4.

      39. The Promissory Note was structured as a
demand note bearing 7% interest per annum on the
unpaid principal balance. Under the terms of the
Promissory Note, Underhill was to make principal
payments of $3,467.65 for a period of two years
commencing December 10, 2009.

      40. No later than January 15, 2012, Rhodes and
Underhill agreed that the principal balance of the
Promissory Note had been reduced to $452,454.00, after
accounting for, inter alia, the performance fees . . . .
Rather than paying the entire performance fees to
Underhill in cash, Rhodes and Underhill had agreed that
$142,000.00 of the fees would be credited against the
principal balance of the Promissory Note.

                           -5-
       41. During the succeeding three-and-a-half
years, the principal balance of the Promissory Note was
reduced by payments and credits totaling approximately
$208,000.00.

       42. On or about June 11, 2015, Rhodes Family,
L.P. made demand upon Underhill for $956,633.78,
purporting to be the total amount of unpaid principal and
interest due under the Promissory Note. On or about
June 12, 2015, Rhodes Family, L.P. revised the demand
downward to $890,244.54.

       43. The payoff amount was apparently
calculated under the assumptions that the Promissory
Note was in default from inception; that both principal
and interest payments were due from inception; and that
penalty interest and late fees had been accruing since
inception. These assumptions are all erroneous and
contradict the terms of the Promissory Note. The
erroneous assumptions made by Rhodes Family L.P.
serve to artificially inflate the amount due under the
Promissory Note.

       44. The stated payoff amount was also inflated
by Rhodes Family L.P.’s failure, inter alia, to
acknowledge the $142,000.00 credits due to Underhill for
the aforementioned performance fees he had earned.

      45. Prior to June 2015, Rhodes Family L.P. had
not made any demand for payment of the Promissory
Note nor alleged the existence of any event of default.

       46. The actions of Rhodes Family L.P. have
made it impossible for Underhill to perform his
obligations under the Promissory Note because, even
were Rhodes Family L.P. to receive payment of the
actual amount owed, Rhodes Family L.P. would persist
in alleging that the Promissory Note is in default based
on the artificially inflated payoff amount. Underhill is
entitled to a declaration of the accurate payoff amount

                           -6-
            which, inter alia, includes the $142,000.00 credits
            presently disputed by Rhodes Family L.P., as well as any
            other payments and credits which have not been applied
            through the present time.

November 25, 2015, First Amended Complaint at 7-10. In response, Rhodes,

Fincastle, and Rhodes Partnership filed a document styled “Counterclaims, Answer

and Defenses.” In the answer, Rhodes, Fincastle, and Rhodes Partnership admitted

that certain lots were sold in the Glenview Park Subdivision and admitted that

“they have not paid Underhill Associates commissions that Underhill Associates

claims to be owed.” December 23, 2015, Rhodes Counterclaims, Answer and

Defenses at 18. For their counterclaims, Rhodes, Fincastle, and Rhodes

Partnership alleged that Underhill defaulted under the terms of a November 10,

2009, Promissory Note (2009 Promissory Note):

                  34. On November 10, 2009, Underhill executed
            and delivered to the Rhodes Family LP that certain
            promissory note in the original principal amount of
            $594,454.00 (the “Promissory Note”). Underhill, a
            current or former practicing attorney in Kentucky,
            drafted the Promissory Note. A true and correct copy of
            the Promissory Note is attached to the Complaint as
            Exhibit 2.

                  35. A substantial portion of the indebtedness
            evidenced by the Promissory Note relates to amounts
            loaned by Dr. Rhodes and the Rhodes Family LP to
            Underhill to fund Underhill’s share of principal
            reductions required by the lender on the Cape Coral
            Property.

                                        -7-
                    36. Pursuant to the Promissory Note, Underhill
             agreed to repay on demand the principal balance, plus
             interest at an initial rate of seven percent (7.00%) per
             annum compounded monthly on the unpaid principal
             balance. Underhill also agreed to make monthly
             principal payments beginning on December 10, 2009, in
             the amount of $3,467.65.

                   37. The Promissory Note provides that, upon
             any default and without notice, the interest rate could be
             increased by five percent (5.00%). Additionally, any
             payment made ten (10) or more days after the due date
             could be assessed a late charge equal to five percent
             (5.00%) of the regularly scheduled payment.

                   38. Underhill defaulted on the Promissory Note
             by, among other things, failing to pay in full the first
             monthly principal payment that was due on December
             10, 2009.

                   39. On June 12, 2015, the Rhodes Family LP
             formally demanded full payment of all outstanding
             amounts due under the Promissory Note.

                   40. As of the date hereof, Underhill has failed
             and refused to pay the amounts due under the Promissory
             Note.

December 23, 2015, Rhodes’ Counterclaims, Answer and Defenses at 9-10. Thus,

they sought damages and attorneys’ fees per the terms of the 2009 Promissory

Note.

             Rhodes and Fincastle eventually filed a motion for summary

judgment. They argued that the September 25, 2007, Commission Agreement was

unenforceable primarily under the doctrine of illegality due to the fee splitting

                                         -8-
agreement between Underhill and Ruch; thus, Underwood Associates was not

entitled to any commissions thereunder. Rhodes and Fincastle pointed out that a

Draft Commission Agreement, dated May 25, 2007, was considered by Rhodes,

Fincastle, Ruch, and Underhill. Under this May 25, 2007, Draft Commission

Agreement, Rhodes and Fincastle would agree to pay a 3 percent commission upon

the sale of individual lots to Ruch and Underhill. According to Rhodes and

Fincastle, the May 25, 2007, Draft Commission Agreement was not executed by

the parties but “reflect[s] the basic agreement of the parties.” Motion for summary

judgment at 3. Rhodes and Fincastle argued that under this agreement, Ruch

would receive a commission for the sale of the Glenview Property. However,

Rhodes and Fincastle refused to sign the agreement because Ruch was legally

barred from receiving a commission as he was not licensed to sell real estate in

Kentucky. For this reason, Rhodes and Fincastle maintained that the September

25, 2007, Commission Agreement was also an illegal contract because it would

result in payment of a commission to an unlicensed individual (Ruch), by way of

the fee splitting agreement entered into on September 27, 2007, between Ruch and

Underhill.

             By Memorandum and Order entered September 18, 2018, the circuit

court denied Rhodes and Fincastle’s motion for summary judgment. In so doing,

the court reasoned:

                                        -9-
[T]he record is undisputed that Plaintiffs and Defendants
began negotiating a contract in May 2007 and drafted the
May Draft Commission Agreement during those
negotiations. However, that contract was not finalized or
fully executed. Rather, Defendants and Underhill
Associates entered into the Glenview Commission
Agreement on September 25, 2007, wherein Defendants
agreed to pay Underhill Associates a commission of
2.9% upon the sale of individual lots in the Glenview
Property. The Glenview Commission Agreement is a
clear, unambiguous and duly executed writing. Todd
Underhill signed the Glenview Commission Agreement
in his capacity as manager of Underhill Associates; Dr.
Rhodes signed it in his individual capacity; and Canfield
signed it in his capacity as a member of Fincastle. There
is a presumption that the prior negotiations with respect
to commission fee splitting prior to the execution of the
Glenview Commission Agreement were abandoned in
the final written agreement.

       Todd Underhill and Mr. Ruch entered into the Fee
Splitting Agreement on September [27], 2007. The Fee
Splitting Agreement is also a clear, unambiguous and
duly executed writing. Neither Underhill Associates, Dr.
Rhodes nor Fincastle were parties to the Fee Splitting
Agreement. The document is signed only by Todd
Underhill and Mr. Ruch. The Glenview Commission
Agreement is not expressly referred to in the Fee
Splitting Agreement, but is only referred to, pertinently,
as a “separate agreement to receive all commissions
receivable under sale . . . .”

       The Fee Splitting Agreement is separate and apart
from the Glenview Commission Agreement. It involved
different parties and the Fee Splitting Agreement
expressly referred to the Glenview Commission
Agreement as a separate agreement. Likewise, there is
no reference to the Fee Splitting Agreement or
commissions to Mr. Ruch in the Glenview Commission
Agreement. Any illegality or unenforceability of the Fee

                           -10-
             Splitting Agreement due to the fact that Mr. Ruch was
             not a licensed real estate broker when it was executed has
             no effect upon the enforcement of the Glenview
             Commission Agreement as it pertains to Individual Lot
             Commissions owed to Underhill Associates for the
             Individual Lot Sales. Thus, Defendants cannot utilize
             any illegality or unenforceability of the Fee Splitting
             Agreement to invalidate the Glenview Commission
             Agreement as a matter of law.

Memorandum and Order at 8-10 (footnotes omitted).

             Ultimately, on September 1-2, 2020, the case was tried by the circuit

court without a jury pursuant to Kentucky Rules of Civil Procedure (CR) 52.01.

The circuit court rendered Findings of Fact, Conclusions of Law, and Judgment on

January 20, 2021. Relevant to this appeal, the circuit court again determined that

the September 27, 2007, Fee Splitting Agreement was enforceable and not an

illegal contract:

                    The evidence in the record reflects that the May
             Draft Commission Agreement was not finalized and was
             negotiated prior to the parties’ entering into the Glenview
             Commission Agreement. Thus, the May Draft
             Commission Agreement does not constitute an integrated
             contract. Nor are all the terms of the May Draft
             Commission Agreement comprised in the Glenview
             Commission Agreement. There is a presumption that the
             Glenview Commission Agreement is final and complete
             and that all prior negotiations between the parties have
             either been abandoned or incorporated into the final
             written instrument. [New Life Cleaners v. Tuttle, 292
             S.W.3d 318 (Ky. App. 2009)], supra; [Childers v. Lucas,
             192 S.W.2d 714 (Ky. 1946)], supra. The May Draft
             Commission Agreement, the Fee Splitting Agreement
             and the Glenview Commission Agreement are not part of

                                        -11-
the same transaction, as they were not negotiated
contemporaneously and involve different parties[.]
Likewise, the May Draft Commission Agreement and the
Fee Splitting Agreement do not constitute extrinsic
evidence of any illegality or similar defense that is
asserted against the formation of the Glenview
Commission Agreement.

       The fact that the Fee Splitting Agreement between
Mr. Underhill and Mr. Ruch was entered into two days
after the Glenview Commission Agreement does not
create a latent ambiguity in the Glenview Commission
Agreement. As noted earlier, the Glenview Commission
Agreement, entered into between Dr. Rhodes and
Fincastle, and Underhill Associates, contains no
reference to the Fee Splitting Agreement.

       The Fee Splitting Agreement is separate and apart
from the Glenview Commission Agreement. It involved
different parties and the Fee Splitting Agreement
expressly referred to the [agreement to receive all
commissions receivable under sale] as a “separate
agreement.” Likewise, there is no reference to the Fee
Splitting Agreement or commissions to Mr. Ruch in the
Glenview Commission Agreement. Any illegality or
unenforceability of the Fee Splitting Agreement because
Mr. Ruch was not a licensed real estate broker when it
was executed has no effect upon the enforceability of the
Glenview Commission Agreement as it pertains to
Individual Lot Commissions owed to Underhill
Associates for the individual Lot Sales.

      ....

However, the Rhodes Parties have no standing to
challenge the validity of the Fee Splitting Agreement
and, since any reference to any agreement to split fees in
the May Draft Commission Agreement was abandoned in
the final executed a [sic] draft of the Glenview
Commission Agreement, any illegality of the Fee

                           -12-
             Splitting Agreement will not invalidate the Glenview
             Commission Agreement as a matter of law.

January 20, 2021, Findings of Fact, Conclusions of Law, and Judgment at 42-44

(footnotes omitted).

             The circuit court also found that Underhill Associates timely disclosed

to Rhodes and Fincastle that it was acting as a dual broker for both the sellers (the

Borders) and for Rhodes and Fincastle as the buyer of the Glenview Property. As

a result, the circuit court found that Rhodes and Fincastle breached the September

25, 2007, Commission Agreement by their failure to pay Underhill Associates 2.9

percent commission upon the sale of individual lots to third parties. The circuit

court determined that $261,646.67 in commissions were due to Underhill

Associates under the September 25, 2007, Commission Agreement. The circuit

court also found that Underhill owed a total of $520,046.31 under the terms of the

2009 Promissory Note to the Rhodes Partnership. The court offset the $261,646.67

in commissions against the total indebtedness ($520,046.31) owed under the 2009

Promissory Note and rendered a judgment for $258,399.64 in favor of Rhodes,

Fincastle, and Rhodes Partnership. Lastly, the circuit court determined that the

Rhodes Partnership would be entitled to an award of reasonable attorneys’ fees per

the terms of the 2009 Promissory Note. The circuit court instructed counsel for

Rhodes Partnership to file a motion and affidavits establishing the amount of

attorneys’ fees.

                                         -13-
             All parties filed motions to alter, amend, or vacate the January 20,

2021, Judgment. In a February 12, 2021, order, the circuit court granted the

motion to vacate filed by Underhill Associates but denied the motion filed by

Rhodes, Fincastle, and Rhodes Partnership. The court recognized that the amount

of awarded commissions to Underhill Associates was in error and did not reflect

the parties’ trial stipulations. The court, therefore, determined that the

commissions due to Underhill Associates totaled $350,731.71, including interest.

The court then offset the $350,731.71 owed for commissions against the

$520,046.31 due under the 2009 Promissory Note and awarded a total judgment of

$169,314.60 to Rhodes, Fincastle, and Rhodes Partnership.

             Thereafter, Rhodes, Fincastle, and Rhodes Partnership filed a motion

for attorneys’ fees and sought $371,571.06 in attorneys’ fees and $10,276.30 in

costs.

             On September 17, 2021, the court rendered an order denying the

motion for attorneys’ fees. The court noted that this case involved multiple claims

and counterclaims. The court stressed that only those reasonable attorneys’ fees

incurred as a result of Underhill’s failure to pay or his breach of the 2009

Promissory Note were recoverable. The court concluded that the invoices of the

attorneys failed to adequately differentiate between time spent on claims related to

the 2009 Promissory Note and time spent on other claims, which were not

                                         -14-
recoverable. Thus, the court instructed that “counsel must provide a clarification

to the court by annotating and providing a summary of the invoices to the court to

clarify the attorneys’ fees owed for specific work executed to collect under the

Note, the hours worked to litigate the Note, and the applicable rate of attorneys’

fees that are attributable to the Note.” September 17, 2021, Order at 18.

             Subsequently, on October 26, 2021, Rhodes, Fincastle, and Rhodes

Partnership filed a renewed motion for attorneys’ fees. In the motion, the parties

attached annotated invoices and affidavit of counsel “consistent with the

[September 17, 2021] Order.” Renewed Motion for Attorneys’ Fees at 3. They

sought a total of $320,143.34 in attorneys’ fees and $10,526.07 in costs.

             In a February 25, 2022, order, the circuit court granted in part and

denied in part the renewed motion for attorneys’ fees. The court determined that

$30,004.00 of the total attorneys’ fees sought ($320,143.34) was not related to

work on the 2009 Promissory Note and were not recoverable. The court, thus,

awarded Rhodes, Fincastle, and Rhodes Partnership $290,139.34 in attorneys’ fees

and $10,526.07 in costs. The court also entered a monetary judgment for

$169,314.60 against Underhill for breach of the 2009 Promissory Note. These

appeals follow.

             Rhodes, Fincastle, and Rhodes Partnership (collectively referred to as

appellants) bring Appeal No. 2022-CA-0340-MR, and Underhill and Underhill

                                        -15-
Associates (collectively referred to as Underhill) bring Cross-Appeal No. 2022-

CA-0342-MR. We shall initially address Appeal No. 2022-CA-0340-MR and then

address Cross-Appeal No. 2022-CA-0342-MR.

             We begin our analysis by noting that findings of fact made by a circuit

court in a bench trial shall not be set aside unless clearly erroneous. CR 52.01.

Findings of fact are clearly erroneous if not supported by substantial evidence.

Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003). Substantial evidence is

evidence that “has sufficient probative value to induce conviction in the mind of a

reasonable person.” Bishop v. Brock, 610 S.W.3d 347, 350 (Ky. App. 2020). It is

within the sole province of the circuit court to observe and assess the credibility of

witnesses’ testimony. Id. Our review proceeds accordingly.

                          Appeal No. 2022-CA-0340-MR

             Appellants initially contend that the circuit court erred in concluding

that the September 25, 2007, Commission Agreement was a legal and enforceable

contract. Appellants argue that the circuit court failed to incorporate the terms of

the May 25, 2007, Draft Commission Agreement, the September 25, 2007,

Commission Agreement, and the September 27, 2007, Fee Splitting Agreement

together. When incorporated, appellants maintain that these three documents form

a single-unified contract. Appellants point out the provision in the September 27,

2007, Fee Splitting Agreement to pay Ruch a commission from the sale of the

                                         -16-
Glenview Property is violative of Kentucky law and renders the unified contract

illegal. Therefore, appellants maintain that since the September 25, 2007,

Commission Agreement is illegal, they owe no commission to Underhill under that

agreement.

             In Kentucky, it is well-settled that only a licensed real estate broker or

real estate agent may receive a commission on the sale of real property.

Kirkpatrick v. Lawrence, 908 S.W.2d 125, 128 (Ky. App. 1995); Kentucky

Revised Statutes (KRS) 324.020. In fact, Kentucky has adopted a “rigid rule”

precluding enforcement of an agreement to pay a commission upon the sale of real

property to an unlicensed individual. Kirkpatrick, 908 S.W.2d at 129.

             It is uncontroverted that Ruch was not licensed to sell real property in

Kentucky. Nevertheless, in the September 27, 2007, Fee Splitting Agreement,

Underhill agreed to pay Ruch 75 percent of the commissions he received from the

sale of the Glenview Property. However, neither Underhill nor Ruch is seeking

enforcement of the September 27, 2007, Fee Splitting Agreement in this appeal.

Rather, the underlying action was initiated by Underhill seeking to enforce the

September 25, 2007, Commission Agreement. Therein, Rhodes and Fincastle

agreed to pay Underhill a 2.9 percent commission for the sale of the Glenview

Property. Ruch was not a party to the September 25, 2007, Commission

Agreement. Standing alone, the September 25, 2007, Commission Agreement is

                                         -17-
an enforceable contract as Underhill is a licensed real-estate broker. But,

appellants argue that the terms of the September 25, 2007, Commission

Agreement, the September 27, 2007, Fee Splitting Agreement, and the May 25,

2007, Draft Commission Agreement should be merged into a single-unified

contract, which they argue is unenforceable under the doctrine of illegality.

              Under certain circumstances, a written agreement or writing may be

incorporated by reference into another written agreement or writing. To be so

incorporated, a written agreement or writing must expressly refer to the separate

written agreement or writing, and the parties must have clearly assented to and

intended the separate writings to be incorporated. Dixon v. Daymar Colleges

Group, LLC, 483 S.W.3d 332, 344 (Ky. 2015).1 The intention of the parties is key

to determining whether separate documents are incorporated and merged into one

unified contract. Id. at 346.

              As hereinbefore stated, it is undisputed that Rhodes, Fincastle,

Underhill, and Ruch initially considered entering into the May 25, 2007, Draft

Commission Agreement. Under its terms, Rhodes and Fincastle would have

1
  This Court notes that the Kentucky Supreme Court rendered University of Kentucky v. Regard,
670 S.W.3d 903 (2003) on June 15, 2023. Although it dealt with incorporation by reference as
to contracts, Regard, 670 S.W.3d 903 was a plurality opinion as a majority of the Supreme Court
could not agree upon the legal reasoning to support its decision. In such circumstances, the
Supreme Court has instructed that such opinion “has no stare decisis effect.” J.A.S. v.
Bushelman, 342 S.W.3d 850, 853 (Ky. 2011) (quoting Ware v. Commonwealth, 47 S.W.3d 333,
335 (Ky. 2001)); see also Hudson v. Commonwealth, 202 S.W.3d 17, 21-22 (Ky. 2006). As a
result, we do not rely upon Regard, 670 S.W.3d 903.

                                             -18-
agreed to pay a 3 percent commission, with Ruch receiving 75 percent and

Underhill receiving 25 percent of same. Nonetheless, the parties did not execute

the May 25, 2007, Draft Commission Agreement. Apparently, Stephen Canfield

informed Underhill that paying Ruch a commission, who was not licensed to sell

real property in Kentucky, violated Kentucky law;2 thus, the May 25, 2007, Draft

Commission Agreement was not executed because of its purported illegality.

              Thereafter, the September 25, 2007, Commission Agreement was

executed, whereby Rhodes and Fincastle agreed to pay Underhill a 2.9 percent

commission. Ruch was not a party to the September 25, 2007, Commission

Agreement. Two days later, Underhill and Ruch entered into the September 27,

2007, Fee Splitting Agreement. The agreement stated:

              Broker [Underhill], has agreed under separate agreement
              to receive all commissions receivable under the sale of
              approximately 34 acres known as the HARTHILL
              FARM [GLENVIEW PROPERTY]. RUCH shall
              receive 90% of the fee payable by Sellers. Additionally,
              RUCH shall receive 75% of the fee payable by virtue of
              the individual lot sale by Developer,
              FINCASTLE/HARTHILL.

September 27, 2007, Fee Splitting Agreement at 1.

              In the September 27, 2007, Fee Splitting Agreement, there is language

referencing the earlier agreement that paid Underhill a commission for the sale of

2
 Fincastle Group, LLC, was a limited liability company whose members included Dr. John D.
Rhodes, III, and Stephen Canfield.

                                           -19-
the Glenview Property, although neither the identity of the parties nor date of the

earlier agreement are specifically stated therein. However, there is no reference in

the September 25, 2007, Commission Agreement to some future agreement like

that entered into between Underhill and Ruch. And, there is absolutely no

evidence in the record that Underhill and Ruch intended to incorporate the terms of

the September 25, 2007, Commission Agreement into their fee splitting agreement.

We totally agree with the circuit court’s conclusion that the two agreements were

separate and did not involve the same parties. The legality of Underhill and

Ruch’s fee splitting agreement has no bearing on the enforcement of the September

25, 2007, Commission Agreement.

             Additionally, the facts and context surrounding the May 25, 2007,

Draft Commission Agreement, the September 25, 2007, Commission Agreement,

and the September 27, 2007, Fee Splitting Agreement do not support incorporation

of these documents into a unified contract. The May 25, 2007, Draft Commission

Agreement was not executed by the parties because of the purported illegality of

paying Ruch a commission. In the September 25, 2007, Commission Agreement,

the parties agreed to pay Underhill a 2.9 percent commission. It is patently clear

that the parties to the September 25, 2007, Commission Agreement intentionally

did not provide for the payment of a commission to Ruch. In fact, appellants admit

that the September 25, 2007, Commission Agreement and the September 27, 2007,

                                        -20-
Fee Splitting Agreement were intended to be separate agreements due to the

illegality of paying Ruch a commission. It is incongruous for appellants to now

argue that the September 25, 2007, Commission Agreement and the September 27,

2007, Fee Splitting Agreement were intended to be incorporated and merged into a

unified contract, especially given appellants were not a party to the September 27,

2007, Fee Splitting Agreement. Indeed, the context and particular facts

surrounding the execution of the September 27, 2007, Fee Splitting Agreement

reveals a contrary intention. Thus, we agree with the circuit court that there was no

unified agreement entered into by the parties to this appeal.

             Appellants next argue that the September 25, 2007, Commission

Agreement is illegal and unenforceable because Underhill failed to timely disclose

that he served as dual broker for the Bordens (sellers) and for appellants (buyers)

as to the sale of the Glenview Property. Appellants maintain that Underhill had a

duty to timely disclose such dual representation but failed to do so.

             In its Findings of Fact, Conclusions of Law, and Judgment, the circuit

court found that appellants were aware of Underhill’s dual representation:

             The evidence at trial showed that the commission was
             disclosed in two places on the Closing Statement for the
             sale of the property to Fincastle. . . . Canfield also
             testified that he had no recollection that Underhill
             Associates disclosed its dual role in any way prior to the
             commission agreement being executed in September
             2007; however, he recalls that it was disclosed months
             later at the closing in January 2008. (Id. at pp. 40-41).

                                        -21-
             At trial, Dr. Rhodes acknowledged that the Closing
             Statement shows the seller commission of $156,000 to
             Underhill Associates in two places – under Seller’s
             Expenses and under Disbursements. (Dr. Rhodes Trial
             Testimony, 09/01/2020, 05:03:25-05:04:10 PM). See,
             Underhill Exhibit 76, Glenview Closing Statement. Dr.
             Rhodes acknowledged that, although the commission to
             Underhill Associates is disclosed on the Glenview
             Closing Statement, the problem he had about the
             commission was that he did not know about it or was not
             aware of it prior to 2014 when he was shown the
             Glenview Closing Statement by Mark Page. (Id.,
             09/01/2020, 05:06:30-05:07:42 PM). Mr. Underhill
             testified that everyone had full adequate disclosure of the
             commission to Underhill Associates on the Glenview
             sales through the Glenview Closing Statement in two
             places, which was also in front of all parties to the
             transaction. (Underhill Trial Testimony, 09/02/2020,
             02:11:20-02:11:47 PM; 04:35:11-04:35:19 PM). During
             his deposition, Canfield testified that he was sure he
             knew about the commission from the Bordens by the
             time of the closing. (Canfield Dep. at p. 41). Dr. Rhodes
             admitted that Canfield was the managing member of their
             real estate venture, Fincastle. (Dr. Rhodes Trial
             Testimony, 09/01/2020, 10:49:47-10:50:54 AM). Since
             Canfield was on notice, Fincastle was also on notice.
             Any failure of Dr. Rhodes to pay attention or attend the
             closing does not change the fact that the commission was
             fully disclosed to all parties through the Closing
             Statement. . . .

Findings of Fact, Conclusions of Law, and Judgment at 45-46. The circuit court

found that Underhill’s dual representation was disclosed to appellants in the

closing statement for the sale of the property to Fincastle, and this finding is

supported by substantial evidence. Appellants claim that such disclosure was

                                         -22-
untimely as appellants believe that disclosure must have been made before

execution of the September 25, 2007, Commission Agreement. We disagree.

              Kentucky law only requires the seller and buyer be aware of the dual

representation by the real estate broker. Curtis v. Spadie, 399 S.W.2d 731, 733

(Ky. 1966); Stuart McKnight & Co. v. Monroe, 1 S.W.2d 1054, 1055 (Ky. 1928).

Here, the closing statement disclosed Underhill’s dual representation in two

separate places. We find no error in the circuit court’s analysis and finding that

Underhill’s dual representation was disclosed in the closing statement, and thus

reject appellants’ argument that the September 25, 2007, Commission Agreement

was illegal and unenforceable based on the purported nondisclosure.

              In summation, we agree with the circuit court that the two agreements

entered into by the parties were not a single unified incorporated agreement, but

rather two separate, stand alone enforceable agreements that were not barred by the

doctrine of illegality.

              We view any remaining contentions of error in the direct appeal as

moot or without merit.

                     CROSS-APPEAL NO. 2022-CA-0342-MR

              Appellees contend that the circuit court’s award of $290,139.34 in

attorneys’ fees was improper. Appellees argue that the awarded attorneys’ fees

were excessive and unreasonable. In support thereof, appellees maintain that

                                        -23-
appellants originally asserted that Underhill owed $956,633.78 upon the

promissory note, but the circuit court only awarded $169,314.60. Appellees argue

that the attorneys’ fees should have been discounted based upon appellants lack of

success or only partial success upon their claim of breach of the promissory note.

Moreover, appellees assert that legal counsels’ hourly rate was excessive and

unreasonable. Appellees point out that one of appellants’ counsel, Jay Geller,

charged $525 per hour in November 2020.

               It is well-established that attorney fees may be awarded when a

specific contractual provision provides for same.3 Superior Steel, Inc. v. Ascent at

Roebling’s Bridge, LLC, 540 S.W.3d 770, 787 (Ky. 2017). Generally, an award of

attorneys’ fees must be reasonable, and the determination of reasonableness is

within the sound discretion of the circuit court. Dawahare v. Cabinet for Health

3
  It is undisputed that the 2009 Promissory Note provided for an award of attorneys’ fees. It
read, in relevant part:

               ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay
               someone else to help collect the loan if I do not pay. I will pay
               Lender that amount. This includes, subject to any limits under
               applicable law, Lender’s reasonable attorneys’ fees and Lender’s
               legal expenses whether or not there is a lawsuit, including
               reasonable attorneys’ fees and legal expenses for bankruptcy
               proceedings (including efforts to modify or vacate any automatic
               stay or injunction), and appeals. If not prohibited by applicable
               law, I also will pay any court costs, in addition to all other sums
               provided by law.

2009 Promissory Note at 2.

                                               -24-
and Family Servs., 662 S.W.3d 745, 747 (Ky. 2023). When considering whether a

fee is reasonable, the circuit court should rely upon “its own expertise” and the

following factors:

             (a) Amount and character of services rendered.

             (b) Labor, time, and trouble involved.

             (c) Nature and importance of the litigation or business in
             which the services were rendered.

             (d) Responsibility imposed.

             (e) The amount of money or the value of property
             affected by the controversy, or involved in the
             employment.

             (f) Skill and experience called for in the performance of
             the services.

             (g) The professional character and standing of the
             attorneys.

             (h) The result secured.

Mo-Jack Distrib., LLC v. Tamarack Snacks, LLC, 476 S.W.3d 900, 910 (Ky. App.

2015) (quoting Axton v. Vance, 269 S.W. 534, 536-37 (Ky. 1925)).

             In its September 17, 2021, Memorandum and Order, the circuit court

found that the hourly rate of appellants’ counsel was reasonable:

                   The Rhodes Parties [appellants] presented
             evidence of comparable attorneys’ fees in the Louisville,
             Kentucky[,] area to show that their attorneys’ fees are
             reasonable. The Court finds that the rates charged by the
             Rhodes Parties’ counsel - $575 per hour for Mr. Geller

                                        -25-
             and $340 per hour for Mr. Fischer – are reasonable, given
             the expertise of the lawyers involved, the allocation of
             basic research and writing to attorneys who commanded
             a lower hourly rate, and the reputation and experience of
             counsel, especially in light of the evidence of the hourly
             wages of other attorneys in the Louisville, Kentucky[,]
             area with similar skill and experience for efforts taken in
             comparative actions. Thus, the Court finds that the
             hourly rates of Mr. Geller and Mr. Fischer are reasonable
             and allowable under applicable law. . . .

September 17, 2021, Memorandum and Order at 10-11 (footnote omitted).

             Based on the court’s analysis, it is clear that the circuit court

considered the hourly rate of other attorneys in the Louisville, Kentucky, area, the

expertise of appellants’ counsel, the reputation of appellants’ counsel, and the

experience of appellants’ counsel. The court also noted that appellants’ counsel

allocated more basic tasks to attorneys who charged a lower hourly rate. Upon the

whole, we are unable to conclude that the circuit court abused its discretion by

finding the hourly rate charged by appellants’ attorneys to be reasonable.

             As to appellees’ argument that the award of attorneys’ fees should be

reduced based upon appellants lack of success, we again conclude that the circuit

court did not abuse its discretion. Appellees maintain that appellants were only

awarded $169,314.60 in damages for breach of the terms of the 2009 Promissory

Note; however, such is not entirely accurate. In fact, the circuit court awarded

appellants $520,046.31 in principal and interest under the 2009 Promissory Note.

The court then offset the amount of real estate commission ($350,737.71) awarded

                                         -26-
to appellees against the $520,046.31 for a total award of $169,314.60 in damages.

Under these facts, we do not believe the circuit court abused its discretion by

failing to reduce the awarded attorneys’ fees because of appellants’ lack of success

on their promissory note claim.

             For the foregoing reasons, we affirm Appeal No. Appeal No. 2022-

CA-0340-MR and Cross-Appeal No. 2022-CA-0342-MR.

             ALL CONCUR.

BRIEFS FOR                                 BRIEF FOR APPELLEES/CROSS-
APPELLANTS/CROSS-                          APPELLANTS:
APPELLEES:
                                           David S. Kaplan
James W. Proud                             Louisville, Kentucky
John David Dyche
Louisville, Kentucky                       Christopher B. Rambicure
                                           Louisville, Kentucky
Jeremy R. Fischer, pro hac vice
Portland, Maine

Jay S. Geller, pro hac vice
Falmouth, Maine

                                        -27-