Court Opinion

ID: 6336303
Source: CourtListenerOpinion
Date Created: 2022-04-29 14:06:24.899631+00
Date Added: 2024-06-11T09:24:10.431817
License: Public Domain

RENDERED: APRIL 22, 2022; 10:00 A.M.
                           TO BE PUBLISHED

                 Commonwealth of Kentucky
                           Court of Appeals

                              NO. 2020-CA-1574-MR

EARLEY M. JOHNSON, II                                                  APPELLANT

                 APPEAL FROM BOURBON CIRCUIT COURT
v.               HONORABLE JEREMY M. MATTOX, JUDGE
                         ACTION NO. 15-CI-00065

KENTUCKY ENTERPRISES, LLC                                                APPELLEE

                                OPINION
                        REVERSING AND REMANDING

                                   ** ** ** ** **

BEFORE: COMBS, GOODWINE, AND LAMBERT, JUDGES.

LAMBERT, JUDGE: Earley M. Johnson, II, the defendant below, has appealed

from summary and final judgments of the Bourbon Circuit Court related to his

counterclaim against Kentucky Enterprises, LLC. Issues include the application of

the parol evidence rule and the statute of frauds to his breach of contract

counterclaim, whether Johnson was entitled to recover under a quantum meruit
theory, and whether the amount he recovered under his unjust enrichment claim

was proper. We reverse and remand.

            The underlying case began with the filing of a verified complaint by

Kentucky Enterprises, LLC, (KE) with the Bourbon Circuit Court on March 13,

2015. Johnson was the sole named defendant. KE alleged that on January 31,

2012, Johnson executed and delivered to it a promissory note in the amount of

$200,000.00. The promissory note stated:

                   FOR VALUE RECEIVED, the undersigned
            (Maker) does hereby promise to pay to the order of
            Kentucky Enterprises, LLC, 1800 South Main Street,
            Paris, Kentucky, the sum of Two Hundred Thousand
            Dollars ($200,000.00), with interest thereon at the rate of
            two and one half percent (2.5%) per annum on
            DEMAND but no earlier than February 1, 2013. Upon
            demand for payment being made and communicated to
            Maker in writing, the Maker shall then have twelve
            months to fully pay the entire remaining unpaid principal
            balance and accrued interest thereon at the rate set forth
            above. In the event of default of these terms of payment,
            the default rate of interest for both prejudgment and
            postjudgment amounts shall be four (4%) percent per
            annum[.]

                   All parties hereto, whether makers, endorsers,
            sureties, guarantors and otherwise hereby waive notice of
            dishonor, protest, notice of protest, and notice of non-
            payment of this obligation, and further waive all
            exemptions, whether Homestead or otherwise, to which
            they or any of them may now or hereafter be entitled
            under the laws of this state or any other state.

                  All notices to the Maker shall be provided in
            writing to the address set forth below.

                                        -2-
KE alleged that Johnson had subsequently defaulted on the note and owed the

entire sum of the note along with interest. Therefore, KE demanded a judgment

against Johnson for the amount of the note, plus interest, as well as court costs and

attorney fees.

             In response to the complaint, Johnson filed an answer and

counterclaim seeking a declaration of rights and damages. In the answer, Johnson

alleged several affirmative defenses, including that he was entitled to a set-off for

sums KE owed to him and that KE’s claims were barred by the doctrine of unjust

enrichment. In his counterclaim, Johnson alleged that in January 2012, he and KE

had entered into an oral agreement whereby he would provide or make available to

KE certain goods and services for its use and benefit, in exchange for the payment

of the goods and services. They agreed to address the value of the goods and

services at a subsequent date, when they would be able to determine the fair market

value. Johnson believed that the goods and services he provided were valued at an

amount in excess of the amounts KE claimed in its complaint. He also alleged that

he had fully performed under the oral agreement and had provided the goods and

services as promised. KE had failed to pay Johnson for any of the goods and

services provided and was, therefore, in default. Based upon these allegations,

Johnson alleged a claim for breach of contract and sought a declaration of rights

pursuant to Kentucky Revised Statutes (KRS) 418.040 that the value of the goods

                                          -3-
and services he provided to KE exceeded the amounts claimed by KE. In addition,

Johnson alleged claims under unjust enrichment and quantum meruit theories.

             In its answer, KE denied the allegations Johnson raised in his

counterclaim, and it specifically denied the existence of an oral agreement or that

there was an agreement to address the value of the goods and services at a later

date. It raised the affirmative defenses of waiver and estoppel, the statute of

frauds, the statute of limitations, laches, and fraud.

             In his answers to KE’s interrogatories, Johnson identified the specific

goods and services that he claimed were the subject of the alleged oral agreement

between him and KE:

             Goods and services include, but are not limited to the
             following: 1) Extensive and complicated backside
             building of website and development of web workings
             for gitguns.com; 2) guidance, advice, mentoring and
             assistance in getting established with distributors of guns
             and related accessories; 3) web tie-in to Gunbroker; 4)
             business set up and consulting including electronic bound
             book for firearms sales, POS [point of sale], federal-
             related compliance and licensing matters; 5) wholesaling
             to Gitguns and gitguns.com; 6) Five Kimber 45 caliber
             pistols at $2500 each.

As to the valuation technique to be used, Johnson stated:

             The value of the goods and services were to be
             determined based upon the costs incurred, the value of
             time and effort invested by Defendant and his agents and
             employees and by the overall value of the product
             produced. Such valuation would take into account
             categories of items and work outlined in Answer to

                                           -4-
             Interrogatory No. 2, above. At the time of the initial
             discussions and entering into the agreement, it was
             anticipated that the value of the goods and services to be
             provided by Defendant would be at least $200,000 and in
             all likelihood more because of the needs of Plaintiff and
             his agents and employees.

             On November 29, 2016, KE filed a motion for summary judgment on

its complaint and on Johnson’s counterclaim, stating that there were no genuine

issues of material fact to be decided and that it was entitled to a judgment as a

matter of law. As to its own complaint, KE stated that there had not been any

evidence presented that that promissory note was unenforceable, and Johnson

admitted in his response to KE’s requests for admissions that he had executed the

promissory note attached to the complaint and that a demand for payment had been

made. Further, Johnson admitted that he was not challenging the enforceability of

the promissory note in his response to a motion to compel. As to the counterclaim,

KE argued that Johnson failed to produce any documentary evidence to support his

allegations that an oral agreement existed; that the parol evidence rule would not

permit the introduction of any proffered evidence or testimony to vary the terms of

an unambiguous contract (the promissory note); that the statute of frauds had been

violated; and that Johnson failed to establish the essential elements of his case.

             In response, Johnson stated that summary judgment was not

appropriate as material issues of fact remained to be decided. While he had not

contested the authenticity of the note, Johnson argued that he had asserted a

                                          -5-
counterclaim and the right to set off the amount due under the promissory note.

The extent and the value of the goods and services that Johnson, along with his

agents and employees, provided to KE was an issue of fact to be decided. He also

disputed KE’s arguments related to the parol evidence rule and the statute of

frauds.

              The parties presented oral arguments to the court on their respective

positions, after which the court entered an order on October 12, 2018, granting in

part and denying in part the pending motion for summary judgment.1 First, it held

that, because the promissory note was not ambiguous but was an integrated

agreement, parol evidence of a contemporaneous agreement was inconsistent and

inadmissible. Second, it held that the alleged oral agreement violated the statute of

frauds, noting that neither party had addressed whether the oral agreement could

have been completed in less than one year. In addition, modifying the promissory

note to the extent that repayment would be set off by the provision of goods and

services would materially affect the terms of the written agreement and must be

reduced to writing to be enforceable and comply with the statute of frauds.

Therefore, the court granted summary judgment on KE’s verified complaint.

1
 The court also denied KE’s motion to dismiss Johnson’s counterclaim, which addressed
whether Johnson was the real party in interest.

                                            -6-
                As to Johnson’s counterclaim, the court granted summary judgment

on the breach of contract counterclaim as there was no contract, and on the

declaration of rights claim as Johnson failed to present any affirmative evidence

showing the value of the goods and services. It, however, denied summary

judgment on the unjust enrichment and quantum meruit claims.

                Rather than holding a trial, the parties agreed they would present their

witnesses via deposition and would orally argue their respective sides and follow

up with written arguments once additional depositions were completed. The

record contains the depositions of Cliff Shumate, the president of KE; Johnson,

who had been the owner of Security Safe Outlet (SSO), a gun store in Paris,

Kentucky; Jedidiah Reader, who worked for KE in tech support, networking, and

web development; Jennifer Arnett, who had been the vice president of SSO; and

Matthew Denninghoff, who worked as a web developer for SSO.

                Cliff Shumate testified by deposition on October 11, 2016. He and his

wife, Kim, are the sole members of KE, a limited liability company located in

Paris, Kentucky, that was formed to be a packaging and fulfillment center. KE

obtained a federal firearms license (FFL) in 2012 and began to distribute firearms

and sporting goods equipment related to hunting and fishing. KE sold merchandise

through internet orders as well as in a retail store, GitGuns, later called

GitOutfitted.

                                            -7-
            Shumate met Johnson when he was a partner with Bud Wells at Bud’s

Gun Shop, located in Paris (this became SSO). Shumate stopped in the store in

January 2012 to tell Johnson he planned to start his own firearms distribution

business, both retail and online, and that they would be competitors. He described

this as a “gentlemen’s discussion” as it was a small town. Shumate said Johnson

responded, “Why don’t you buy mine?” Shumate knew about litigation pending

between Bud and Johnson, as well as the other partners, and, therefore, declined

Johnson’s offer to purchase the business. Shumate described his understanding as

“I think it was the gentlemen’s agreement that we would try to help each other out

until the lawsuit was settled, and then open the discussion again. That was my

understanding.” The promissory note with Johnson was dated January 31, 2012.

His discussion with Johnson about money began following their first meeting in

early January when they discussed that Shumate would be opening his own

business. Johnson needed short-term capital and asked to borrow money from

him.

            Shumate detailed the gentlemen’s agreement between him and

Johnson as including: 1) Shumate’s providing office labor and shipping materials

for free; 2) Johnson’s providing guidance, advice, mentoring, and assistance in

getting KE established with gun distributors/related accessories; and 3) Johnson’s

offering to have Mr. Denninghoff assist KE’s IT person, Mr. Reader, in building

                                        -8-
the website to sell firearms and accessories. Shumate testified that, “based on

the . . . interactions, we were cooperating. I was helping him where I could pitch

in and help. He offered to pitch in and help wherever he could. There was no

contractual, no mutual agreements, and there were no cost sheets or price quotes.”

Shumate denied that there was an agreement to settle up at some point, and no

demand for payment was ever made. His belief was that the help each was

offering was provided for free. He went on to state that the deal with Johnson

unraveled quickly when distributors revoked Johnson’s credit. He also denied that

Johnson had helped with the electronic bound book for firearm sales, the POS

system, related federal compliance, or licensing matters.

             As to the promissory note, Shumate stated that Johnson presented it to

him in his (Johnson’s) office. KE’s finance director, Chris Sherman, notarized

Johnson’s signature. Shumate made his first demand on the promissory note in a

letter dated May 9, 2013, which was hand-delivered to Johnson on May 9th at

Johnson’s office. Shumate understood the promissory note to be outside of the

various services that were provided. There was never any discussion that these

were connected.

             Earley Johnson testified by deposition on December 8, 2016. He was

retired and living in Carson City, Nevada. In 2012, he was involved with SSO, a

retail establishment in Paris, Kentucky. Johnson was the sole owner of SSO,

                                        -9-
which was dissolved on December 28, 2013. Johnson admitted that he signed a

promissory note in January 2012, and he did not contest the legitimacy or

enforceability of the note. His version of the circumstances surrounding the

execution of the note is as follows:

                    Well, the note came by Clifton to me in early ‘12,
             maybe the end of 2011, and he told me that he was
             thinking about getting into the gun business, and that he
             would be a person that would be, you know, a
             competitor, and he just wanted to let me know. And I
             said thank you. I said, If there’s anything I can do to help
             you out, let me know. And I said, I’m in a little financial
             jam here. And I offered to sell him my store, and he said,
             well, he wasn’t interested in doing that right now. I said,
             Well, Security Safe Outlet needs some operating capital,
             and we have – my two associates, people that work for
             me, Jennifer Arnett and Matthew Denninghoff, we’ve
             been trying to figure out some way, besides selling the
             guns and having the retail, and the Internet business was
             to expand our activities.

                    So we had come up with a model to help level the
             playing field between small gun dealers and big gun
             dealers that have a large Internet presence. And the
             model would be one in which the problems with the
             small gun store was inventory, storing a lot of inventory
             on their premises, the cost of that inventory, and freight
             for the inventory to come in, the dollars it took to carry
             that inventory, and then their customer base, because
             most of their customer base was just walk-in traffic.

                    And so for the bigger gun dealers that had retail
             outlets and very large Internet presence, they were able to
             acquire the – what they could do was that – the
             manufacturers would sell guns to the distributor and the
             distributors then would distribute it to the dealers, to the
             small dealers. And for the big guys, what they could do,

                                        -10-
            that had the technology and the Internet IT guys to write
            the programs, what they could do was take the inventory
            of a distributor, however many thousands of guns they
            had, and then they could then put it on – write a program
            that then would take their inventory, once the distributor
            allowed them to do it. And they would take that
            inventory, and then they could put it on their computers
            in their store so that if a customer came in and said I want
            a gun, and he sees a gun laying in the cabinet, but I like
            that. But I really would like something else. What do
            you have? And the guy could go and show them their
            computer and say, oh, well, here’s a gun with a little
            different flavor, whatever. Are you interested in it? Yes.
            I want that one.

                   So then the customer – he would say it would take
            me a couple of days to get it. So then the customer
            would buy the gun, if they were interested, buy the gun.
            The dealer would have it shipped to him from his
            distributor, and then he would already have sold it to the
            customer.

Johnson told Shumate he could offer his expertise to him in setting up his own

store, and Shumate agreed.

            [S]o I said, If you’re interested, we can help you get set
            up, started. I have an operation that would compete with
            the big gun dealers. And he said, Let me think about
            that. So then he left, and we met back maybe a week
            later, whatever, and he said he would like to pursue that
            adventure. I said, That’s fine with me. I’ll get Jennifer
            and Nancy and use our IT guy working on that part of it.
            And I said that I could use some operating capital and he
            said how much? I said, Well, I don’t know how much
            this project is going to cost because we’re just putting it
            together. And I said, But I personally need some
            operating costs of 200,000. And he said, okay, I’ll loan
            you the money for that. I said, Well, then I’ll help you
            set up your Internet business and help you with your

                                       -11-
             store as much as – whatever you need, and contacts with
             the different distributors and buying groups, if he was
             interested in getting into some buying groups in order to
             get the product at the right price. And there was
             advantages to all of that.

             Johnson said that he asked his law firm to draft the promissory note.

He did not obtain any other documents from the law firm related to his dealings

with KE. SSO employee Matthew Denninghoff wrote the code for the computer

system; he had previously designed and written the code for a large internet gun

business. Johnson discussed the goods and services provided to KE pursuant to the

alleged verbal agreement between him and Shumate. He sold firearms to Shumate

at his costs, plus a dollar or two, as well as accessories, and he provided help with

distributors. Johnson stated that the value of Mr. Denninghoff’s involvement with

Shumate was $200,000.00, which was based on the knowledge and expertise he

brought to the program. He did not recall the cost to himself or SSO to build the

website. Johnson stated that Shumate sent two employees to help him at the store

with fulfilling orders; he considered this to be training for when Shumate opened

his own retail store.

             Shumate made a demand on the note in writing, but Johnson had

never made a payment on it. He told Shumate and his wife at a meeting at Billy’s

Barbeque that he did not have the money to repay the note as the bank had

foreclosed on the store, and he was trying to sell it. The mortgage note was

                                         -12-
between $350,000.00 and $375,000.00. He told Shumate that he could not pay the

note and that the only thing he could offer was his real estate: “[T]he best they can

do is give you this building for the mortgage, and then you could turn around and

sell it and make money because of the prime location of the building[.]” Johnson

valued the real estate he offered to sell at $700,000.00. He was still intending to

pay the note, and Shumate understood that. Johnson never told Shumate that he

did not owe the money; he did not think the timing was right to present to him that

the goods and services he provided were worth $200,000.00.

             On examination from his attorney, Johnson testified that he believed

that at the time he signed the promissory note, he and Shumate had a meeting of

the minds on the deal that Johnson and his employees would build the website for

Shumate and would advise and assist Shumate’s employees to get his gun business

started. He believed that the providing of goods and services, advice, consultation,

and assistance would be in exchange for some future payment. Johnson advised

Shumate on the basics of the gun business, including pricing, compliance, ATF

issues, licensing, the point of sale system, the bound book, and federal rules and

regulations. He did not know what the payment would be at the time because he

did not know the extent of goods and services that would be needed. He believed

Shumate understood this and that they would reconcile what he owed to Johnson at

some point. He believed the value of goods and services provided was in excess of

                                         -13-
$200,000.00. He believed the promissory note and the oral agreement about what

he would be providing were parts of the same transaction.

            Jedidiah Reader testified by deposition taken March 30, 2017. He

received a four-year degree in computer science from Morehead State University

in December 2008, and he began working for KE in September 2011 as a

programmer. He was also the IT liaison between KE and Bud’s Gun Shop. He

eventually worked with Matthew Denninghoff to set up KE’s website server,

which he said for the most part was installing programs and setting up accounts.

Mr. Reader had never done this before. They spent two weeks to set up the

website, and Mr. Reader spent another two weeks to set up any web front Shumate

wanted. The website went live in late March or early April 2012.

            Matthew Denninghoff testified by deposition on October 23, 2019.

He works in the computer programming and web development field. He began

working in web development and customizing at Bud’s Gun Shop in 2003. Mr.

Denninghoff began working for Johnson and SSO in 2010 when Johnson and Bud

split, and he continued to work there until 2013. He began working on GitGuns,

KE’s website, in early 2012. He remembered doing at least two months of work

for KE while he was employed and paid by Johnson. His website planning notes

begin on February 9, 2012, and end on July 12, 2012. He was told, “we’re

working with Cliff [Shumate]. I want you to do what you’ve done for us and make

                                       -14-
it work for him. He’s going to sell guns, too.” Mr. Denninghoff testified about the

cost involved in web development based upon his experience in designing,

programming, and maintaining KE’s website as well as his exposure to these types

of products in the area of business software development. He said his current

employer contracts its programmers out at $150.00 to $300.00 per hour to do work

similar to what he did to build KE’s website. The cost to hire a professional

company to build and maintain a similar website, licensing a year’s worth of

software code, and training on the use of the system could exceed $200,000.00.

Mr. Denninghoff spent one to two months training Mr. Reader on the system. He

said Mr. Reader did not contribute to the building, designing, or completion of the

website.

             Jennifer Arnett testified by deposition, also taken October 23, 2019.

She began working for SSO in 2000, and she worked there for 14 years until the

business closed. As to the relationship between Johnson and Shumate, Ms. Arnett

stated that Shumate approached SSO about setting up his own FFL and website to

sell firearms online, and they walked him through the process to get started. Based

on her experience in the business, she had the connections and infrastructure to

create a turnkey operation for Shumate and mentor him. There was no formal

agreement between the two sides. She described the relationship between her and

the Shumates as a friendship, and she wanted to help. Johnson/SSO was going to

                                        -15-
provide Shumate with Mr. Denninghoff to give him the back end of their website

so that KE would be able to tie into SSO’s inventory, which would permit KE to

sell firearms at a better cost. Shumate also sent his employees to SSO’s store to

help out. She was not in any meetings where Johnson and Shumate discussed the

underlying agreement that would permit her to provide any specific information

about it. She said there were no discussions about the value Johnson would be

bringing to the equation as far as the buying group price point and the website.

She said this was the first time they had tried to set up something like this. Her

view of the value of what Shumate received from having a turnkey business

handed to him to sell firearms online was a $1 million benefit from creating the

relationship with the distributors. Any buying benefit that Johnson could have

conferred ended when the business was shut down in 2014. She was aware of the

promissory note after it had been executed.

             In his pretrial brief, Johnson assessed the value of goods and services

provided to KE totaled between $1,414,000.00 and $1,724,000.00, and included:

   • $1,000,000.00 in buying power, advice, relationship, consulting, and turnkey

      operation.

   • $300,000.00 - $600,000.00 to build the website.

   • $64,000.00 to customize the website.

   • $50,000.00 - $60,000.00 for tutoring.

                                         -16-
Johnson requested that the court find the value of the goods and services he

provided to KE totaled $1,660,000.00 and enter a final judgment against KE in that

amount. The judgment, he stated, would serve to offset the prior ruling on KE’s

promissory note. In its brief, KE argued that there was no factual support for

Johnson’s unjust enrichment claim.

             On December 5, 2019, the court held a short bench trial and heard

testimony from Shumate as well as arguments from the parties. Shumate discussed

the testimony from the two depositions that had recently been taken, including

Jennifer Arnett’s reference to a “million dollars’ worth of value.” He denied ever

discussing or being promised such an opportunity, and it never materialized.

Shumate said KE began helping Johnson’s company around the time the

promissory note was signed at the end of January 2012, and they stopped assisting

each other in July 2012. Shumate discussed the fact that there was a lawsuit

Johnson’s company was involved in with an ex-partner. He did not know the

details of the lawsuit, but he did know that Johnson needed short term capital to

“stay alive” until the lawsuit ended, which was part of the promissory note.

Johnson’s business was struggling, and Shumate sent his employees to help out

once the creditors had closed Johnson’s line of credit. Shumate provided shipping

cartons, and KE’s employees answered the telephone and greeted customers.

Shumate never asked for compensation for their agreement had been to assist each

                                        -17-
other at arm’s length as best as possible. He understood that Johnson would

provide assistance to them and they would assist Johnson. There was no mutual

agreement, and there was never an invoice for any of the services between them.

             Regarding the website, Shumate stated that it had not been perfected

when his IT person, Mr. Reader, came in. It was a work in progress, and there

were many flaws to correct. Mr. Reader rewrote the whole program due to these

flaws. Shumate closed his operation in mid-2013. By the end of 2012, the losses

were so significant, he and the owners decided to wind the company down. It took

awhile to do this because they had inventory. Tax forms showed a $366,185.00

loss for 2012.

             Shumate testified that the agreement to assist each other had nothing

to do with the promissory note. There were no further written mutual agreements

between him and Johnson. Shumate understood that it was a gentlemen’s

agreement to help each other until Johnson could get through the lawsuit, when

they would then discuss further business ventures together. There were no written

agreements, and Johnson was rarely at the building to discuss anything. Shumate

took action to collect on the note when the term matured. Johnson had already

closed his business or it was in disarray. Shumate presented the demand to

Johnson in person in his office and followed up with other demand letters.

Johnson would make promises of payment, including installments, and said he had

                                        -18-
a deal in the works if Shumate could be patient. Johnson never followed up on his

promises to pay. There was never any discussion about offsets based on the work

and services Johnson provided until the counterclaim was filed. There were no

discussions of cost for the services.

             On January 14, 2021, the circuit court entered its findings of fact,

conclusions of law, and final judgment related to Johnson’s surviving

counterclaims for unjust enrichment and quantum meruit as well as to determine

the value of goods and services Johnson provided to KE. For the unjust

enrichment claim, the court determined that the only amount Johnson could

recover was his expense for the benefit conferred on KE, which was $3,666.67, the

monthly pay for Mr. Denninghoff’s services in creating the website. For the

quantum meruit claim, the court held that Johnson failed to satisfy the fourth

element of the theory; namely, that he did not reasonably notify KE that he

expected to be paid. Accordingly, Johnson could not recover under a quantum

meruit theory. The court entered a judgment dismissing the unjust enrichment

claim as to the goods and services provided, other than for the website, and ordered

that Johnson was entitled to recover $3,666.67. That amount would be applied to

                                        -19-
the amount Johnson owed to KE under the promissory note. It also dismissed

Johnson’s quantum meruit claim. This appeal now follows.2

               On appeal, Johnson argues that the circuit court erred in granting

summary judgment on his counterclaims for breach of contract and quantum

meruit, in holding that the benefits conferred on KE were not at Johnson’s expense,

and in finding that the value of the goods and services conferred on KE did not

exceed $3,667.67.

               We shall first consider whether the circuit court properly granted

summary judgment on Johnson’s counterclaim for breach of contract. Our

standard of review is set forth in Patton v. Bickford, 529 S.W.3d 717, 723 (Ky.

2016), as modified on denial of reh’g (Aug. 24, 2017):

                      Summary judgment is a remedy to be used
               sparingly, i.e. “when, as a matter of law, it appears that it
               would be impossible for the respondent to produce
               evidence at the trial warranting a judgment in his favor
               and against the movant.” Shelton v. Kentucky Easter
               Seals Society, Inc., 413 S.W.3d 901, 905 (Ky. 2013)
               (citations omitted). We frequently caution, however, the
               term “impossible” is to be used in a practical sense, not
               in an absolute sense. See id. (citing Perkins v.
               Hausladen, 828 S.W.2d 652, 654 (Ky. 1992)). The trial
               court’s primary directive in this context is to determine
               whether a genuine issue of material fact exists; if so,
               summary judgment is improper, Steelvest, Inc. v.
               Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky.

2
  Johnson originally filed a premature notice of appeal on December 3, 2020, prior to the date the
circuit court entered its final judgment. He filed an amended notice of appeal once the court
entered its final judgment on January 14, 2021.

                                              -20-
             1991). This requires that the facts be viewed through a
             lens most favorable to the party opposing summary
             judgment, here the Estate. Id. It is important to point out
             that “a party opposing a properly supported summary
             judgment motion cannot defeat it without presenting at
             least some affirmative evidence showing that there is a
             genuine issue of material fact for trial.” Id. at 482.

                   A motion for summary judgment presents only
             questions of law and “a determination of whether a
             disputed material issue of fact exists.” Shelton, 413
             S.W.3d at 905. Our review is de novo, and we afford no
             deference to the trial court’s decision.

             Johnson contends that multiple factual issues exist regarding whether

the parties entered into an oral contract whereby Johnson would provide goods and

services to KE in exchange for compensation in the amount of the goods and

services provided, which would preclude summary judgment. The court, he stated,

did not address whether any disputed issues of material fact remained but rather

held that his counterclaim was barred as a matter of law by application of the parol

evidence rule and the statute of frauds.

             We shall first address Johnson’s argument that the parol evidence rule

does not apply. In New Life Cleaners v. Tuttle, 292 S.W.3d 318 (Ky. App. 2009),

this Court explained the doctrine as follows:

             Parol evidence has been defined as oral evidence rather
             than written evidence. Black’s Law Dictionary 1006 (8th
             ed. 2004). Under the parol evidence rule, when parties
             reduce their agreement to a clear, unambiguous, and duly
             executed writing, all prior negotiations, understandings,
             and agreements merge into the instrument, and a contract

                                           -21-
as written cannot be modified or changed by prior parol
evidence, except in certain circumstances such as fraud
or mistake. Childers and Venters, Inc. v. Sowards, 460
S.W.2d 343, 345 (Ky. 1970). Only a mistake of fact will
affect the enforceability of a contract, not a mistake of
law. Raisor v. Burkett, 214 S.W.3d 895, 906 (Ky. App.
2006) (citations omitted). It is presumed that the written
agreement is final and complete and that all prior
negotiations between the parties have either been
abandoned or incorporated into the final written
instrument. See Childers v. Lucas, 301 Ky. 763, 192
S.W.2d 714 (1946). Kentucky courts have long
recognized that oral agreements made prior to a written
contract merge into the written contract. Prudential Life
Ins. Co. of America v. Bowling, 237 Ky. 290, 35 S.W.2d
322, 323 (1931).

       It is also well settled that, “[i]n the absence of
ambiguity a written instrument will be strictly enforced
according to its terms.” Mounts v. Roberts, 388 S.W.2d
117, 119 (Ky. 1965); O’Bryan v. Massey-Ferguson, Inc.,
413 S.W.2d 891, 893 (Ky. 1966). Further, “[a] contract
is ambiguous if a reasonable person would find it
susceptible to different or inconsistent, yet reasonable,
interpretations.” [Cantrell Supply, Inc. v. Liberty Mutual
Insurance Co., 94 S.W.3d 381, 385 (Ky. App. 2002)];
Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 105-106
(Ky. 2003). “[W]e are not permitted to create an
ambiguity where none exists even if doing so would
result in a more palatable outcome.” First
Commonwealth Bank of Prestonsburg v. West, 55 S.W.3d
829, 836 (Ky. App. 2000) [(]citing Friction Materials
Company, Inc. v. Stinson, 833 S.W.2d 388, 391 (Ky.
App. 1992)[)].

      Words are to be accorded their “ordinarily used
meaning unless the context requires otherwise.” Bays v.
Mahan, 362 S.W.2d 732, 733 (Ky. 1962). “As a cardinal
principle relating to the construction of a contract, it has
long been recognized and held in this and other

                            -22-
jurisdictions that where the instrument is so clear and free
of ambiguity as to be self-interpretive, it needs no
construction and will be performed or enforced in
accordance with its express terms.” Ex parte Walker’s
Ex’r, 253 Ky. 111, 68 S.W.2d 745, 747 (1933) (citations
omitted). The only purpose of judicial construction is to
remove ambiguity and doubt and to make certain that
which in itself is uncertain. Frear, 103 S.W.3d at 106.
While nothing can be added to or taken from a written
contract by prior parol evidence, it is the rule that
ambiguities may be explained by parol evidence.
Stubblefield v. Farmer, 291 Ky. 795, 165 S.W.2d 556,
557 (1942).

      Long ago, Kentucky courts adopted the legal
analysis of I. Greenleaf on Evidence, Section 275:

      When parties have deliberately put their
      engagements into writing, in such terms as
      import a legal obligation, without any
      uncertainty as to the object or extent of such
      engagement, it is conclusively presumed that
      the whole engagement of the parties, and the
      extent and manner of their undertaking, was
      reduced to writing, and all oral testimony of
      a previous colloquium between the parties or
      of conversation or declarations at the time
      when it was completed, or afterwards, as it
      would tend in many instances to substitute a
      new and different contract for the one which
      was really agreed upon, to the prejudice,
      possibly, of one of the parties, is rejected.

Russell v. Halteman’s Adm’x, 287 Ky. 404, 153 S.W.2d
899, 904 (1941) (citing J.I. Case Threshing Machine
Company v. Mattingly, 142 Ky. 581, 134 S.W. 1131,
1133 (1911)). In short, the import of the parol evidence
rule is “conclusively presumed” to extend to every
written contract, regardless of the presence of a merger or

                           -23-
             parol evidence clause, because it is a matter of
             substantive law.

New Life Cleaners, 292 S.W.3d at 322-23.

             Johnson cites to Texas Gas Transmission Corporation v. Kinslow, 461

S.W.2d 69, 71 (Ky. 1970), to argue that the oral agreement was a collateral

contract and thus not subject to the parol evidence rule:

             The basic rule applicable is thus stated in 30 Am.Jur.2d,
             Evidence, Section 1049, page 184:

                    ‘An exception to the parol evidence rule,
                    which is similar in many respects to that of
                    the doctrine of partial integration, is known
                    as the ‘doctrine of collateral contract.’
                    Under this doctrine, a prior or
                    contemporaneous oral contract which is
                    independent of, collateral to, and not
                    inconsistent with, the written contract, may
                    be proved by parol evidence. A collateral
                    oral agreement is allowed to be proved
                    because it is a thing apart from the one
                    represented by the writing.’

Johnson acknowledges that the promissory note was enforceable. The collateral

oral agreement, he argued, addressed a separate agreement that he would provide

assistance to KE in setting up its gun business and would be paid for this, which

would entitle him to a set-off.

             We agree with Johnson that the promissory note memorialized

Johnson’s obligation to repay the $200,000.00 loan. The alleged oral agreement,

Johnson argues, did nothing to vary or contradict the written promissory note.

                                         -24-
Rather, it provided Johnson with a right to a set-off of that loan amount due to

KE’s breach and the mutuality of their respective debts. See Traylor v. Lafayette

Nat. Bank, 158 Ind. App. 552, 558-59, 303 N.E.2d 672, 676 (1973) (citation

omitted) (“The above-mentioned general [parol evidence] rule is not, however,

violated by allowing testimony of a distinct collateral or contemporaneous oral

agreement which is not in conflict with the terms of the written instrument. A

collateral independent parol agreement between the parties which has been acted

upon prior to the time of the writing may be proven, even as against the written

obligation. To admit evidence of a preliminary or contemporaneous oral

agreement in an action on a contract or other written instrument, it must be

consistent with the instrument and must not tend to vary or contradict its terms, and

the terms of the oral agreement must be independent of those expressed in the

writing, even though it may relate to the same subject matter.”). We hold that the

circuit court erred in concluding that the parol evidence rule applied in this

instance to bar any evidence of an alleged, contemporaneous oral agreement.

             Next, we shall address whether the alleged oral agreement violates the

statute of frauds. KRS 371.010 provides, in relevant part, that:

             No action shall be brought to charge any person:

                    ....

                                         -25-
                   (7) Upon any agreement that is not to be
                   performed within one year from the making
                   thereof;

                   ....

             unless the promise, contract, agreement, representation,
             assurance, or ratification, or some memorandum or note
             thereof, be in writing and signed by the party to be
             charged therewith, or by his authorized agent. It shall not
             be necessary to express the consideration in the writing,
             but it may be proved when necessary or disproved by
             parol or other evidence.

The circuit court observed that neither party addressed whether the oral agreement

could have been completed in less than one year. However, it also observed that

Johnson testified that the services he provided to KE in 2012 were still being

presently used, apparently despite Johnson’s argument below that he had fully

performed his part of the oral agreement by providing goods and services. It

further held that modifying the promissory note to provide that its repayment could

be set off by the provision of goods and services by Johnson would materially

affect the terms of the note and would therefore need to be reduced to writing to be

enforceable and to comply with the statute of frauds.

             Johnson argues that the circuit court erred in three respects. First, it

improperly concluded that the alleged oral agreement was not to have been

performed in less than one year, and thus subject to the statute of frauds, because

KE continued to have the benefit of services Johnson provided to it in 2012. This,

                                         -26-
he asserts, was not the relevant inquiry. Instead, “[i]n construing the Statute of

Frauds, the general rule is that, if a contract may be performed within a year from

the making of it, the inhibition of the Statute does not apply, although its

performance may have extended over a greater period of time.” Williamson v.

Stafford, 301 Ky. 59, 62, 190 S.W.2d 859, 860 (1945). We agree with Johnson

that there is no indication the agreement to provide goods and services would

extend beyond a year.

             Second, Johnson contends that the circuit court misconstrued the

nature of the set-off when it stated that it would materially affect the terms of the

promissory note. Again, we agree with Johnson that the oral agreement did not

modify the promissory note in that there was no allegation that the parties had

agreed that the note would be forgiven or become unenforceable if the goods and

services were provided to KE.

             Third, Johnson argues that the circuit court failed to apply the rule that

once an oral agreement has been fully performed, the statute of frauds no longer

applies. He cites to Pilcher v. Stadler, 276 Ky. 450, 457, 124 S.W.2d 475, 479

(1939), for the statement of the law that “a contract is no longer executory, and [the

statute of frauds] has no application thereto, where it has been fully performed

upon one side and the other party by its terms has a longer time than one year in

which to perform his part thereof.” Johnson presented evidence that he had

                                         -27-
fulfilled his obligation under the oral agreement to provide goods and services to

KE; KE was still obligated to pay him for the value of those goods. We agree with

Johnson that the circuit court misapplied this rule as Johnson had established that

he had completed his obligation under the alleged oral agreement. The circuit

court’s statement that full performance was the repayment of the loan and interest

is incorrect. Therefore, the statute of frauds did not render the alleged oral

agreement unenforceable.

             The circuit court did not reach the question of whether an oral

agreement existed between the parties. But we agree with Johnson that there are

disputed issues of material fact as to whether there was an oral agreement between

KE/Shumate and Johnson and, if so, whether it was breached. Therefore, we hold

that the circuit court erred as a matter of law in granting summary judgment to KE

regarding Johnson’s counterclaim for breach of the oral agreement.

             Next, in the event that Johnson fails to establish the existence and

breach of an oral contract on remand, we shall address whether the circuit court

erred in granting summary judgment to KE on Johnson’s counterclaim seeking

recovery in quantum meruit.

                   Recovery under the theory of quantum meruit can
             be had regardless of the absence of an enforceable
             contract. Baker v. Shapero, 203 S.W.3d 697 (Ky. 2006).

                    A contract implied by law allows for
                    recovery quantum meruit for another’s

                                         -28-
                     unjust enrichment. It is not based upon a
                     contract but a legal fiction invented to
                     permit recovery where the law of natural
                     justice says there should be a recovery as if
                     promises were made. The courts supply the
                     fiction of the promise to permit the recovery.
                     Furthermore recovery quantum meruit may
                     be had irrespective of the intentions of the
                     parties, and sometimes even in violation of
                     them.

              Perkins v. Daugherty, 722 S.W.2d 907, 909 (Ky. App.
              1987) (citations omitted). However, merely because
              work was performed that benefited another does not
              necessarily warrant recovery.

                    The party proceeding under a quantum meruit
              theory must establish the following elements:

                     1. that valuable services were rendered, or
                     materials furnished;

                     2. to the person from whom recovery is
                     sought;

                     3. which services were accepted by that
                     person, or at least were received by that
                     person, or were rendered with the
                     knowledge and consent of that person; and

                     4. under such circumstances as reasonably
                     notified the person that the plaintiff expected
                     to be paid by that person.

              66 Am.Jur.2d Restitution and Implied Contracts § 38
              (2001).[3]

3
 The elements of a quantum meruit claim are now found in the current (2022) version of this
publication at § 34.

                                             -29-
Quadrille Business Systems v. Kentucky Cattlemen’s Association, Inc., 242 S.W.3d

359, 365-66 (Ky. App. 2007).

             The circuit court held that Johnson had satisfied the first three

elements of quantum meruit but failed to satisfy the fourth one, holding that

Johnson “did not reasonably notify Mr. Shumate that he expected to be paid.”

Johnson argues that he was not required to give any type of notice as to payment,

and we agree. In Quadrille, this Court observed:

             Where no compensation is agreed upon in advance for
             services requested by and performed for another, the
             presumption that compensation was intended is rebutted
             by circumstances which negative such an intention, and
             one of such circumstances is a strong self-interest in the
             outcome of the transaction by the person furnishing the
             services. Thus, the expectation of a future business
             advantage or opportunity cannot form the basis of a
             quantum meruit claim; a company cannot recover for the
             alleged services it renders in submitting a program to a
             second company where it is conclusively established as a
             matter of law that the alleged services were preliminary
             services performed without any thought of direct cash
             compensation but with a view to obtaining business
             through a hoped-for contract.

             The inference of a promise to pay for services is also
             negatived where the circumstances or conduct warrant a
             contrary inference or the person benefited has said or
             done nothing from which such a promise may be
             inferred, or where, at the time the services were rendered,
             it was intended, understood, or agreed that no payment
             should be made for them, or where the services were
             performed without authority, express or inferred.
             (footnotes omitted).

                                         -30-
Quadrille, 242 S.W.3d at 366-67 (citing 66 AM.JUR.2d Restitution and Implied

Contracts § 47 (2001)).4 In the present case, there is no indication that Johnson

provided the goods and services to obtain his own business advantage as they were

to be in direct competition and, thus, the presumption that compensation was

expected could not be rebutted under the circumstances. As Johnson states in his

brief, “there are no circumstances . . . to suggest that it was reasonable for Shumate

to assume that a competitor would provide him with a valuable and customized

website, guidance and advice on entering the gun business, and valuable

relationships with distributors for free.” Accordingly, the circuit court erred in

concluding that Johnson failed to satisfy the fourth element of his quantum meruit

claim.

                 We shall also address Johnson’s unjust enrichment argument, in

which he asserts that the circuit court erred in holding that the majority of the

benefits conferred on KE were not at Johnson’s expense and in limiting the value

of the goods and services to $3,666.67, which covered Mr. Denninghoff’s salary

for the time he was working on the website.

                        To recover on a claim of unjust enrichment a
                 plaintiff is required to “prove the following three
                 elements: ‘(1) benefit conferred upon defendant at
                 plaintiff’s expense; (2) a resulting appreciation of benefit
                 by defendant; and (3) inequitable retention of [that]
                 benefit without payment for its value.’”

4
    The current (2022) version of this topic is now found in § 41.

                                                 -31-
Superior Steel, Inc. v. Ascent at Roebling's Bridge, LLC, 540 S.W.3d 770, 777-78

(Ky. 2017), as corrected (Mar. 22, 2018) (citations omitted).

             Because the circuit court found that he was entitled to recover the

salary paid to Mr. Denninghoff, Johnson argues that, logically, he was entitled to

recover the value for all of the goods and services conferred upon KE. In support

of this assertion, Johnson cites to Northern Shipping Funds I, L.L.C. v. Icon

Capital Corporation, 998 F. Supp. 2d 301, 330 (S.D.N.Y. 2014), for the following

statement: “Unjust enrichment claims are not limited to tangible monetary

enrichment, but also include the receipt of an intangible benefit at the expense of

another.” Much of the services conferred upon KE were comprised of expertise

and relationship building, which was provided through the time and energy of

Johnson and his employees. This meets the definition of an intangible benefit

provided at Johnson’s expense, and the circuit court erred in not so holding.

             Based upon this holding, we need not address Johnson’s argument

that the circuit court erred in limiting the value of the goods and services conferred

on KE by Johnson to $3,666.67. If the court reaches this issue on remand, the

proper analysis would require the court to consider the overall value of the goods

and services provided, as appropriate.

                                         -32-
            For the foregoing reasons, the orders of the Bourbon Circuit Court are

reversed, and this matter is remanded for further proceedings in accordance with

this Opinion.

            ALL CONCUR.

BRIEFS FOR APPELLANT:                    BRIEF FOR APPELLEE:

Carroll M. Redford, III                  James Paul Brannon
Elizabeth C. Woodford                    Paris, Kentucky
Lexington, Kentucky

                                       -33-