Court Opinion

ID: 4696907
Source: CourtListenerOpinion
Date Created: 2021-06-18 14:06:09.494634+00
Date Added: 2024-06-11T08:05:43.129003
License: Public Domain

RENDERED: JUNE 11, 2021; 10:00 A.M.
                         NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2019-CA-1011-MR

ALICIA ENGLAND                                                       APPELLANT

                   APPEAL FROM LOGAN CIRCUIT COURT
v.                  HONORABLE TYLER L. GILL, JUDGE
                         ACTION NO. 16-CI-00023

RICARDO FEDERICO AND KAROL                                            APPELLEES
FEDERICO

                                   OPINION
                              AFFIRMING IN PART
                               AND REMANDING

                                  ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; KRAMER AND McNEILL, JUDGES.

McNEILL, JUDGE: The appellant, Alicia England (hereafter “Buyer”), and

appellees, Ricardo and Karol Federico (hereafter the “Sellers”), entered into an

installment land contract for the sale of land and a mobile home located on the

property in August of 2005. Although the “purchase price” was stated as

$69,000.00, the contract also contained the following provision:
             (a) Balance payable in (276) monthly installments
                 of six-hundred five dollars ($605.00) each, with
                 the first installment being due and payable on
                 the 1st day of September, 2005 and a like
                 payment on the first day of each month
                 thereafter until the 1st day of September, 2028,
                 when the final payment shall be due. No
                 interest.
(Emphasis in original.)

             It is undisputed that the Sellers drafted the contract. Neither party

hired an attorney or realtor prior to completing the transaction. It is also

undisputed that the Sellers continued to pay a significant amount of property taxes

and insurance premiums for the property after Buyer took possession pursuant to

the contract. After Buyer paid the $69,000.00 purchase price, she filed suit in

Logan Circuit Court to enforce the contract and for an order granting her title to the

property. Sellers responded by arguing that the total sum payable under the terms

of provision (a) of the contract was 276 multiplied by $605.00, which equates to

$166,980.00. According to the trial court’s interim findings of fact and tentative

conclusions of law, the Sellers argued that the difference in the payment amounts

served as profit for the Sellers.

             After a bench trial, the trial court determined that the contract was

ambiguous. In its final judgment incorporating its interim order by reference, the

court concluded that “there was no meeting of the minds concerning interest,

financing, or what the monthly payments represented.” The court ultimately held

                                          -2-
that the contract was void and unenforceable from the beginning. The court did

not discuss title, possession, or recoupment of payments made by either party.

Buyer appealed to this Court as a matter of right. For the following reasons, we

affirm the trial court in part and remand for further proceedings.

                                I. STANDARD OF REVIEW

                Our standard of review of findings of fact made by the trial court after

a bench trial is whether they are clearly erroneous. CR1 52.01. The trial court’s

conclusions of law are subject to a de novo review. Gosney v. Glenn, 163 S.W.3d

894, 898 (Ky. App. 2005).

                                         II.   ANALYSIS

                Buyer’s argument on appeal is that the trial court erred in its

interpretation of the contract at issue and by refusing to order the Sellers to execute

a deed in favor of Buyer. We begin by noting that neither party has cited to the

video record of the bench trial or any other relevant hearing in this case.

Therefore, either the parties have failed to comply with CR 76.12(4)(c), or they do

not believe that any of the video proceedings before the trial court are relevant for

our determination. In any event, we elect to proceed to addressing the merits. See

Hallis v. Hallis, 328 S.W.3d 694, 696 (Ky. App. 2010) (citation omitted). The

relevant law determinative of the present issue is as follows:

1
    Kentucky Rules of Civil Procedure.

                                               -3-
            Where a contract is ambiguous or silent on a vital matter,
            a court may consider parol and extrinsic evidence
            involving the circumstances surrounding execution of the
            contract, the subject matter of the contract, the objects to
            be accomplished, and the conduct of the parties. Absent
            an ambiguity in the contract, the parties’ intentions must
            be discerned from the four corners of the instrument
            without resort to extrinsic evidence. A contract is
            ambiguous if a reasonable person would find it
            susceptible to different or inconsistent interpretations.
            The fact that one party may have intended different
            results, however, is insufficient to construe a contract at
            variance with its plain and unambiguous terms.
            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. 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 become subject to resolution by the fact-finder.

Cantrell Supply, Inc. v. Liberty Mutual Ins. Co., 94 S.W.3d 381, 385 (Ky. App.

2002) (citations omitted). Accordingly, “[t]he primary object in construing a

contract or compromise settlement agreement is to effectuate the intentions of the

parties.” Id. at 384 (citing Withers v. Commonwealth, Dep’t of Transportation,

656 S.W.2d 747, 749 (Ky. App. 1983)). Also, it is well-established that

contractual contradictions and ambiguities are typically construed against the

drafter. Majestic Oaks Homeowners Ass’n, Inc. v. Majestic Oaks Farms, Inc., 530

S.W.3d 435, 441 (Ky. 2017) (citation omitted).

            We agree with the trial court that the contract is ambiguous. It states a

purchase price of $69,000.00 in the first paragraph of the agreement. The very

                                        -4-
next paragraph, paragraph (a), provides a payment schedule which, if totaled,

equates to $166,980.00. While it is rational to infer that the amount in excess of

the purchase price constitutes interest to the benefit of the Sellers, the very last

sentence of the payment schedule paragraph (a) states: “No interest.” (Emphasis in

original.) This creates an internal conflict within paragraph (a) and also creates

conflict when read in concert with the purchase price paragraph. See City of

Louisa v. Newland, 705 S.W.2d 916, 919 (Ky. 1986) (“Any contract or agreement

must be construed as a whole, giving effect to all parts and every word in it if

possible.”).

               It is axiomatic that financing terms are critical components of real

estate purchase agreements. Therefore, it is reasonable to find ambiguity when

such an agreement expressly states “No interest” but in the very same paragraph

provides for a payment schedule the product of which is significantly in excess of

the purchase price. We also note that “interest” is defined broadly as “[t]he object

of any human desire; esp., advantage or profit of a financial nature[.]” Interest,

BLACK’S LAW DICTIONARY (11th ed. 2019) (emphasis added). Therefore, a

disclaimer of “No interest” may reasonably be interpreted as “no profit.”

Accordingly, the material provisions at issue here are inconsistent enough to

support a finding of ambiguity as a matter of law.

                                           -5-
             As previously cited, “once a court determines that a contract

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

and construction of the contract become subject to resolution by the fact-finder.”

Cantrell Supply, Inc., 94 S.W.3d at 385. After considering the parol evidence,

including the parties’ testimony, the trial court in the present case concluded that

the contract could not be enforced. See Frear v. P.T.A. Industries, Inc., 103

S.W.3d 99, 106 (Ky. 2003) (in resolving ambiguity, “the court will gather, if

possible, the intention of the parties[.]”) (emphasis added and citation omitted).

Accordingly, the court ultimately determined that the contract was void ab initio.

Having considered the applicable law and the record presented, we cannot

conclude that the court’s factual findings constitute clear error or that it erred as a

matter of law. Therefore, we affirm the trial court’s judgment to the extent it

determined that the contract is ambiguous and unenforceable.

             However, we must remand the present case to the trial court for

consideration of remedies. In general, where a contract is void ab initio, the parties

are to be returned to the position each held prior to the transaction. See Options

Home Health of N. Fla., Inc. v. Nurses Registry & Home Health Corp., 946 F.

Supp. 2d 664, 675 (E.D. Ky. 2013). Therefore, we remand for the trial court to

consider any appropriate legal or equitable remedies including, but not limited to,

title, possession, and recoupment of payments. As to the latter, the court may

                                           -6-
impose a credit against the amounts paid by Buyer and award Sellers a judgment

for any unpaid rent or, in the alternative, enter a judgment in favor of Buyer for

any excess amounts paid.

                                III. CONCLUSION

             For the foregoing reasons, we hereby affirm in part the judgment of

the Logan Circuit Court and remand for further proceedings consistent with this

Opinion.

             ALL CONCUR.

BRIEF FOR APPELLANT:                       BRIEF FOR APPELLEE:

Matthew J. Baker                           Scott Bachert
Bowling Green, Kentucky                    Bowling Green, Kentucky

                                         -7-