Court Opinion

ID: 7805973
Source: CourtListenerOpinion
Date Created: 2022-09-02 14:05:10.538252+00
Date Added: 2024-06-11T16:30:08.265849
License: Public Domain

RENDERED: AUGUST 26, 2022; 10:00 A.M.
                         NOT TO BE PUBLISHED

                 Commonwealth of Kentucky
                            Court of Appeals

                               NO. 2021-CA-0291-MR

IMANI BAPTIST CHURCH, INC.
D/B/A IMANI FAMILY LIFE
CENTER, INC.                                                             APPELLANT

                  APPEAL FROM FAYETTE CIRCUIT COURT
v.                HONORABLE THOMAS L. TRAVIS, JUDGE
                         ACTION NO. 20-CI-02699

FAYETTE COUNTY BOARD OF
EDUCATION AND LEXINGTON
CENTRAL BANK & TRUST
COMPANY                                                                   APPELLEES

                                      OPINION
                                     AFFIRMING

                                    ** ** ** ** **

BEFORE: CALDWELL, MCNEILL, AND TAYLOR, JUDGES.

CALDWELL, JUDGE: The Imani Baptist Church, Inc. d/b/a Imani Family Life

Center, Inc. appeals an order of the trial court granting dispositive relief to the

Appellees and dismissing the action filed in the Fayette Circuit Court. After
reviewing the order, the briefs of the parties, and the record below, we affirm the

trial court.

                                            FACTS

                A new religious organization was organized in Lexington in 1997 and

was incorporated as Imani Missionary Baptist Church, Inc. The next year, the

Church incorporated a new entity, the Imani Family Life Center, Inc., with the

intention of building a center which would become a beacon in the neighborhood

and would provide community building and recreational opportunities for its

members and the community at large.

                After raising funds and engaging supporters for this noble purpose,

the Church purchased twenty-two (22) acres of land on Georgetown Road in

Fayette County. In 2006, a large facility was built to house the ministries,

community activities, and programs of both entities – the Church and the Family

Life Center.

                As part of the funding required to allow the entities to pursue its

missions, in 2012 the incorporated entities signed a promissory note to Central

Bank in an original amount over $10 million. The entities soon defaulted on the

note and the Bank sued in 2016.1 After the Master Commissioner was appointed

as Receiver for the property, a new entity was incorporated, Imani Baptist Church,

1
    Fayette Circuit Court Action No. 16-CI-01925.

                                               -2-
Inc. This new entity executed a lease with the Master Commissioner as Receiver

to use part of the building. Imani Baptist Church did not appear on any deeds

related to the subject property.

             The circuit court ordered the parties – the Imani Missionary Baptist

Church (hereinafter “Old Church”), the Imani Family Life Center (hereinafter

“Imani Life”), Central Bank (hereinafter “the Bank”) and, in its capacity as lessee,

the Imani Baptist Church (hereinafter “New Church”) – to meet with the Master

Commissioner and attempt to settle the matter. A settlement agreement was

reached. Under the agreement, Old Church and Imani Life were given time to

secure funds from another lender to satisfy a reduced amount owed to the Bank.

An Agreed Judgment executed by the parties was to be retained by the Master

Commissioner and would be filed under seal only if Imani Life and Old Church

failed to secure funding to satisfy the Bank. Also required as part of the settlement

were executed Agreed Orders of Sale; an Agreed Order of Stipulation releasing all

claims against the Bank and others executed by Imani Life, Old Church, and New

Church (as a lessee); and a Non-Disturbance Agreement from the Bank for a Class

A tenant if Imani Life were to secure such a tenant. These were all to be retained

and would be effective only if the Agreed Judgment was made effective by the

failure to secure funding.

                                         -3-
             Old Church and Imani Life failed to secure a new lender. Therefore,

in 2017, the Master Commissioner entered the Agreed Judgment, and the

associated documents. The Agreed Judgment was in favor of the Bank in an

amount greater than $11 million. The property was sold by the Master

Commissioner pursuant to the Agreed Order of Sale in October of 2017 and the

Bank was the successful bidder. Ultimately, the Fayette County Board of

Education (the “Board”) obtained the property and utilized it for educational

purposes.

             Following the sale, Imani Life, Old Church, and New Church all

executed releases of liability in favor of the Bank. The litigation ended in early

2018. Imani Life and Old Church soon thereafter failed to file required documents

with the Kentucky Secretary of State’s office to remain ongoing entities and were

administratively dissolved in 2018.

             It was not until 2020 that the instant case was filed by New Church

against the Bank and the Board. New Church sought damages for detrimental

reliance, tortious interference with prospective business relations, and breach of

good faith and fair dealing. All of the claims stemmed from Old Church and Imani

Life’s allegation that the Bank and the Board conspired to obtain the property from

Old Church and Imani Life after there was an unsuccessful attempt to negotiate a

                                         -4-
lease in favor of the Board between the parties during the settlement negotiations

before the foreclosure action was filed.

                The Fayette Circuit Court considered all pending motions at a hearing

on November 13, 2020, held via Zoom due to the novel coronavirus pandemic,

which was then at its peak. The trial court granted the Board’s motion to dismiss

it, finding that the doctrine of sovereign immunity applied and, therefore, the court

had no jurisdiction over the matter. The court also found that the Bank was

entitled to summary judgment because the Plaintiff named in the suit – New

Church – was not the entity which had owned the subject property and because the

dispute had previously been litigated and the doctrine of res judicata precluded

revisiting the matter. The Plaintiff’s pending motion to file a third amended

complaint was denied, as was the Bank’s motion for sanctions under CR2 11. It is

from this order that the Appellant seeks relief. We affirm.

                                STANDARD OF REVIEW

                A trial court’s ruling on a motion pursuant to CR 12.02 involves pure

questions of law, and the standard of review is, therefore, de novo. Trial court

determinations on motions for summary judgment pursuant to CR 56 are reviewed

for “whether the trial court correctly found that there were no genuine issues as to

2
    Kentucky Rules of Civil Procedure.

                                           -5-
any material fact and that the moving party was entitled to judgment as a matter of

law.” Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996).

                                           ANALYSIS

                 At the outset we must address the Appellees’ contentions that New

Church has failed to file a brief which comports to the minimal requirements of CR

76.12(4), in that it contains not one citation to the record on appeal. Despite the

convoluted and factually dense history of this matter, Imani Life provides not one

citation to the record in its Statement of the Case, nor are there any citations to the

record in the Argument section of Imani Life’s brief. Placing documents from the

record in the Appendix to the brief and then citing to the Appendix is simply

insufficient.3

                 The rules of appellate procedure are necessary to the efficiency and

fairness of the system of justice and are not mere formalities. Fairness to all

litigants and advocates requires that we hold parties to the plain rules in filing

3
                 While appending items to the brief enables each member of this
                 Court to quickly review certain documents, it does not obviate the
                 specific language of the rule. Furthermore, an appellate court
                 cannot consider items that were not first presented to the trial
                 court. By citing us to the specific location of the item in the
                 record, we can confirm the document was presented to the trial
                 court and is properly before us. Substantial compliance with CR
                 76.12 is essential and mandatory.

Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012).

                                                 -6-
documents and require that they, at a minimum, make a cognizable attempt to

comply with the Rules.

             Were we not to hold the parties which appear before us to at least

attempting to comply with the requirements outlined in the Civil Rules, such would

be inconsistent with the prior holdings of this Court and the Kentucky Supreme

Court.

            Supporting factual assertions with pinpoint citations may,
            in fact, be the most substantial requirement of CR 76.12.
            Without pinpoint citations to the record, a court “must
            sift through a record to [find] the basis for a claim for
            relief.” Expeditious relief would cease to exist without
            this requirement. “It is well-settled that an appellate
            court will not sift through a voluminous record to try to
            ascertain facts when a party has failed to comply with its
            obligation under [our rules of procedure] . . . to provide
            specific references to the record.”

Commonwealth v. Roth, 567 S.W.3d 591, 595 (Ky. 2019) (citations omitted).

            Citing to where in the record a factual assertion is supported is no

mere formality, but ensures that this Court is reviewing errors which have an actual

factual predicate and are not hypothetical or which constitute hyperbole.

            The Court went on to provide detailed reasons for the
            procedural rules and concluding that “the rules are not
            only a matter of judicial convenience. They help assure
            the reviewing court that the arguments are intellectually
            and ethically honest.” [Hallis v. Hallis, 328 S.W.3d 694,
            697 (Ky. App. 2010)].

Mullins v. Ashland Oil, Inc., 389 S.W.3d 149, 153 (Ky. App. 2012).

                                        -7-
             When presented with an appellant’s brief which does not comport to

the plain and unambiguous requirements of the Rules, we have several options for

how we may proceed. We may: 1) ignore the deficiencies and proceed to review

the arguments presented; 2) strike the brief and dismiss the appeal; or 3) review the

matter for manifest injustice only. See Hallis, 328 S.W.3d at 695-96.4 As the

deficiencies presented to us presently are matters of formatting, and not related to

the preservation of the legal arguments below, reviewing for manifest injustice is

not appropriate. See Ford v. Commonwealth, 628 S.W.3d 147, 155 (Ky. 2021) (“A

review of both Hallis [supra] and Elwell [infra] make clear that the manifest

injustice standard of review is reserved only for errors in appellate briefing related

to the statement of preservation”). Therefore, we may either ignore the

deficiencies of the Appellant’s brief and move on to review the legal arguments

therein, or we may strike the brief and dismiss the appeal.

4
             At the outset, we note that Vaughn’s appellate brief deviates
             significantly from the format mandated by Kentucky Rule of Civil
             Procedure (CR) 76.12. In addition to a number of relatively minor
             omissions and improper formatting decisions we need not detail
             here, Vaughn’s brief includes no citations to the record and no
             statement of preservation of the issues he raises on appeal. Our
             options when 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, CR 76.12(8)(a); or (3) to
             review the issues raised in the brief for manifest injustice only,
             Elwell v. Stone, 799 S.W.2d 46, 47 (Ky. App. 1990).

                                              -8-
             Because this matter concerns the entry of orders granting dismissal

and summary judgment, we will review the arguments presented. However, we

emphatically caution counsel to ensure compliance with the Rules in presenting

filings to this Court and the Kentucky Supreme Court. Failure to do so could result

in dismissal of the appeal.

             Turning now to the matter before this Court, we will review the order

of the trial court dismissing the action by New Church, it being the only extant

entity, against the Board. We will then review the trial court’s ruling granting

summary judgment in favor of the Bank.

             a. The grant of dismissal in favor of the Board

             The trial court granted the Board’s motion to dismiss pursuant to CR

12.02, finding that the Board was entitled to sovereign immunity, which effectively

wrested jurisdiction from the court.5 We find this conclusion to be erroneous.

5
             Section 112(5) places original jurisdiction over a case in the circuit
             court; this means that all cases, not expressly designated by a rule
             of law to be heard by another court, must appear before the circuit
             court, the trial court of general jurisdiction. And recall that the
             circuit court “shall have original jurisdiction of all justiciable
             causes.” If a case is not justiciable, specifically because the
             plaintiff does not have the requisite standing to sue, then the circuit
             court cannot hear the case. And because both this Court and the
             Court of Appeals “shall have appellate jurisdiction only,” logically
             speaking, neither court can adjudicate a case on appeal that a
             circuit court cannot adjudicate because the exercise of appellate
             jurisdiction necessarily assumes that proper original jurisdiction
             has been established first at some point in the case.

                                              -9-
              In Yanero v. Davis, cited by the court, the Kentucky Supreme Court

made it clear that local boards of education are entitled to governmental immunity,

but are not entitled to sovereign immunity. 65 S.W.3d 510 (Ky. 2001). “The

absolute immunity from suit afforded to the state also extends to public officials

sued in their representative (official) capacities, when the state is the real party

against which relief in such cases is sought.” Id. at 518. In the present case, the

Commonwealth was not the real party in interest, rather the Fayette County Board

of Education was. Thus, the Board is not entitled to sovereign immunity, but rather

to governmental immunity, as an agency of the local government.

              “‘[G]overnmental immunity’ is the public policy, derived from the

traditional doctrine of sovereign immunity, that limits imposition of tort liability on

              Therefore, if a circuit court cannot maintain proper original
              jurisdiction over a case to decide its merits because the case is
              nonjusticiable due to the plaintiff’s failure to satisfy the
              constitutional standing requirement, the Court of Appeals and this
              Court are constitutionally precluded from exercising appellate
              jurisdiction over that case to decide its merits. This is so because
              the exercise of appellate jurisdiction to decide the merits of a case
              necessarily assumes that proper original jurisdiction in the circuit
              court first exists. Stated more simply, establishing the requisite
              ability to sue in circuit court is a necessary predicate for continuing
              that suit in appellate court. In this way, the justiciable cause
              requirement applies to cases at all levels of judicial relief.

Commonwealth, Cabinet for Health & Fam. Servs., Dep’t for Medicaid Servs. v. Sexton by &
through Appalachian Reg’l Healthcare, Inc., 566 S.W.3d 185, 196-97 (Ky. 2018) (emphasis in
original) (citations omitted).

                                               -10-
a government agency.” Id. at 519 (citing 57 AM.JUR.2d, Municipal, County,

School and State Tort Liability § 10 (2001)).

            Turning to the merits of the Board’s immunity claim, we
            note first that an agency of the state government enjoys
            what is termed “governmental immunity” from civil
            damages actions. Yanero v. Davis, 65 S.W.3d 510 (Ky.
            2001). Governmental immunity, as explained in Yanero,
            is a public policy, derived from the doctrine of sovereign
            immunity, which is premised on the notion “that courts
            should not be called upon to pass judgment on policy
            decisions made by members of coordinate branches of
            government in the context of tort actions, because such
            actions furnish an inadequate crucible for testing the
            merits of social, political or economic policy.” 65
            S.W.3d at 519. Given this underpinning, governmental
            immunity shields state agencies from liability for
            damages only for those acts which constitute
            governmental functions, i.e., public acts integral in some
            way to state government. Id. The immunity does not
            extend, however, to agency acts which serve merely
            proprietary ends, i.e., non-integral undertakings of a sort
            private persons or businesses might engage in for profit.
            Id. Under these rules, we have held that

                   [a] board of education is an agency of state
                   government and is cloaked with governmental
                   immunity; thus, it can only be sued in a judicial
                   court for damages caused by its tortious
                   performance of a proprietary function, but not its
                   tortious performance of a governmental function,
                   unless the General Assembly has waived its
                   immunity by statute.

Breathitt Cty. Bd. of Educ. v. Prater, 292 S.W.3d 883, 887 (Ky. 2009) (quoting

Grayson County Board of Education v. Casey, 157 S.W.3d 201, 201-03 (Ky.

2005)).

                                        -11-
             We hold that the Board was engaged in its governmental function of

furthering education when it sought to and did obtain the space in which to provide

educational opportunities to the students enrolled in schools administered by the

Board. Thus, although we find the court erroneously declared that sovereign

immunity applied here, we agree that it was appropriate to dismiss the suit against

the Board, but rather because of governmental immunity.

             b. The entry of summary judgment in favor of the Bank

             The trial court also granted the Bank’s motion for dismissal, treating it

as a motion for summary judgment pursuant to CR 56. The trial court held that the

entity which filed the suit, New Church, was not the same entity which had owned

the property. The court noted that New Church was not listed on any mortgage or

loan documents executed by the Bank. Therefore, the trial court determined that

New Church did not have standing to maintain the suit and entered summary

judgment.

             The plaintiff in the instant suit was named as “Imani Baptist Church,

Inc. d/b/a Imani Family Life Center, Inc.” (New Church). New Church is not the

entity which owned the subject property at the time the suit was filed and was not

the mortgagee. Rather, Old Church and Imani Life, though both administratively

dissolved for failure to timely file an Annual Report, were the maker and guarantor

of the mortgage and, therefore, the proper parties. New Church was only a lessee

                                        -12-
under a month-to-month lease with the Receiver after Old Church & Imani Life

defaulted on the mortgage and the foreclosure action was filed. Since the named

plaintiff in the underlying action to this matter did not have an ownership interest,

it could not maintain an action alleging damages for various torts it alleged were

committed by the Bank. We find the trial court properly entered summary

judgment because it was clear, due to lack of standing, that the named plaintiff

below could not establish that there were “genuine issue[s] as to any material fact”

and therefore the Bank was “entitled to judgment as a matter of law.” Steelvest,

Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480-81 (Ky. 1991).

             Likewise, we agree with the trial court’s determination that the

Agreed Order of Sale which was held in reserve by the Master Commissioner as

part of the settlement attempt between Old Church and Imani Life and the Bank,

which was entered after Old Church and Imani Life failed to secure financing to

stave off the foreclosure action, acts as a bar to this action.

             The doctrine of res judicata prohibits the re-litigation of those

controversies which have already been adjudicated by a court. However, New

Church answers this allegation by denying it is the same entity which was involved

                                          -13-
in the prior suit and suggesting that therefore the privity of parties required for the

application of res judicata is absent.6

              The Kentucky Supreme Court succinctly defined the theory of res

judicata and its application in Yeoman v. Commonwealth Health Policy Board:

              The rule of res judicata is an affirmative defense which
              operates to bar repetitious suits involving the same cause
              of action. The doctrine of res judicata is formed by two
              subparts: 1) claim preclusion and 2) issue preclusion.
              Claim preclusion bars a party from re-litigating a
              previously adjudicated cause of action and entirely bars a
              new lawsuit on the same cause of action. Allen v.
              McCurry, 449 U.S. 90, 101 S. Ct. 411, 66 L. Ed. 2d 308
              (1980); Worton v. Worton, 234 Cal.App.3d 1638, 286
              Cal.Rptr. 410 (2 Dist. 1991), rev. denied (Cal) 1992
              LEXIS 472; County of Rutherford by Child Support
              Enforcement Agency v. Whitener, 100 N.C. App. 70, 394
              S.E.2d 263 (1990); Vestal, The Constitution and
              Preclusion – Res Judicata, 62 Mich.L.Rev. 33. Issue
              preclusion bars the parties from relitigating any issue
              actually litigated and finally decided in an earlier action.
              The issues in the former and latter actions must be
              identical. The key inquiry in deciding whether the
              lawsuits concern the same controversy is whether they
              both arise from the same transactional nucleus of facts.
              If the two suits concern the same controversy, then the
              previous suit is deemed to have adjudicated every matter
              which was or could have been brought in support of the
              cause of action. Worton, 234 Cal.App.3d at 1638, 286
              Cal.Rptr. 410; Commonwealth, Dept. of Transp. v.
              Crawford, 121 Pa. Cmwlth. 613, 550 A.2d 1053 (1988).

              For claim preclusion to bar further litigation, certain
              elements must be present. First, there must be identity of

6
 It is not lost on us that by making such argument, New Church is all but admitting that they do
not have standing to maintain the suit, as we have already held.

                                              -14-
             the parties. Newman v. Newman, Ky., 451 S.W.2d 417,
             419 (1970). Second, there must be identity of the causes
             of action. Id. Third, the action must have been resolved
             on the merits. Id. The rule that issues which have been
             once litigated cannot be the subject matter of a later
             action is not only salutary, but necessary to the speedy
             and efficient administration of justice.

983 S.W.2d 459, 464-65 (Ky. 1998) (footnote omitted).

             It cannot be denied that this action concerns the same controversy

arising from the same transactional nucleus of facts as in the prior adjudicated

case. As pointed out by the Bank, New Church acknowledged having no interest

in the subject property, other than as lessee, in the former action which was

resolved by the settlement and eventual entry of the Agreed Orders of Judgment,

Sale, and Stipulation.

             We do agree with New Church that there is not privity of parties such

as is required for claim preclusion. The Appellant in this matter is not the same as

Plaintiff in the prior manner, thus there is not privity of parties. As we have

already held, New Church has no standing as they never held an ownership interest

in the subject property, nor was it a signatory on the mortgage. Rather, New

Church held only a leasehold interest with the Receiver. “Under the doctrine of

issue preclusion the parties do not have to be identical in each action.” Miller v.

Admin. Off. of Cts., 361 S.W.3d 867, 872 (Ky. 2011).

                                         -15-
                However, res judicata does not require that both subparts of issue

preclusion and claim preclusion apply to bar subsequent litigation. It is enough

that we hold issue preclusion applies here and thus we find that the trial court’s

finding that “the causes of action are otherwise barred by the doctrine of res

judicata” is not in error. We hold, more specifically, that it is the subpart of the

doctrine of res judicata known as issue preclusion which applies here and compels

this result. The former litigation established that New Church held no ownership

interest in the property but held only a leasehold interest. As that fact cannot be

relitigated, it is fatal to New Church’s claims, which are based upon ownership of

the property.

                Finally, the entity which filed the underlying action, New Church, was

also a party in the former case as lessee and expressly waived all claims against the

Bank in the Agreed Order of Stipulation. New Church must be held to that

agreement.

                                    CONCLUSION

                Thus, we hold the trial court was correct in dismissing the action

against the Board, but not because of sovereign immunity, but because

governmental immunity applies to bar the action. We further hold that the action

against the Bank was properly concluded summarily by the trial court in the

Bank’s favor as the theory of issue preclusion requires such, and because the

                                           -16-
named Appellant had no interest in the subject property such as to have standing.

And further, because they had previously stipulated to waiving any claims New

Church held against the Bank.

            We affirm.

            ALL CONCUR.

BRIEFS FOR APPELLANT:                     BRIEF FOR APPELLEE CENTRAL
                                          BANK & TRUST CO.:
Aubrey Williams
Louisville, Kentucky                      Tyler Powell
                                          Lexington, Kentucky

                                          BRIEF FOR APPELLEE FAYETTE
                                          COUNTY BOARD OF
                                          EDUCATION:

                                          Joshua M. Salsburey
                                          Donald C. Morgan
                                          Lexington, Kentucky

                                       -17-