Court Opinion

ID: 4696898
Source: CourtListenerOpinion
Date Created: 2021-06-18 14:06:03.209135+00
Date Added: 2024-06-11T08:05:43.134733
License: Public Domain

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                         NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                           Court of Appeals

                              NO. 2020-CA-0014-MR

TIMOTHY BRADLEY YATES, JR.,
AS EXECUTOR FOR AND ON BEHALF
OF THE ESTATE OF DOROTHY J. YATES                                    APPELLANT

                APPEAL FROM JEFFERSON CIRCUIT COURT
v.                HONORABLE AUDRA ECKERLE, JUDGE
                        ACTION NO. 19-CI-005340

BLUEGRASS LAND TITLE, LLC                                              APPELLEE

                                    OPINION
                                   AFFIRMING

                                   ** ** ** ** **

BEFORE: JONES, MAZE, AND TAYLOR, JUDGES.

MAZE, JUDGE: Appellant Timothy Yates challenges an order dismissing his

complaint against appellee Bluegrass Land Title, LLC for failure to state a claim

upon which relief can be granted. Having considered appellant Yates’ arguments

for reversal in light of established caselaw, we affirm the order granting Bluegrass
Title’s CR1 12.02(2) motion to dismiss Yates’ claim of tortious interference with

contract.

                                           FACTS

                In August 2019, appellant Timothy Yates, in his capacity as executor

of the estate of Dorothy Yates,2 filed a complaint against Bluegrass Title and others

based upon an agreement between Dorothy and Bernita Miller. The complaint

alleged that the June 28, 2018, agreement between Dorothy and Miller dictated the

terms of a sale of a residence they owned jointly with right of survivorship.

Among other things, the agreement provided: 1) that the parties agreed to sell the

subject real estate; 2) that the net proceeds from the sale would be divided equally

between Dorothy and Miller; and 3) that the terms and conditions of the agreement

would survive the death of either Dorothy or Miller, the joint survivorship owners.

On July 12, 2018, Dorothy and Miller entered into a residential sales contract to

sell the subject property to Latonia Estes. After Dorothy died on August 12, 2018,

the subject property was in fact sold to Ms. Estes on September 6, 2018, for

$130,000, with Bluegrass Title performing the closing services.

1
    Kentucky Rule of Civil Procedure.
2
 Because the appellant and his decedent share the same last name, for purposes of clarity, we
will refer to the decedent Dorothy Yates as “Dorothy.”

                                              -2-
                Of particular pertinence to this appeal, the complaint alleged that

despite having been provided a signed copy of the proceeds-splitting3 agreement

prior to the closing, Bluegrass Title nevertheless disbursed the entire sale proceeds

to Miller without notice to counsel, Dorothy’s representatives, or the real estate

agent who had been engaged to sell the property. Based upon these facts, the

complaint asserted claims of breach of contract and tortious interference with

contractual relations against Bluegrass Title.

                In lieu of an answer, Bluegrass Title filed a CR 12.02 motion to

dismiss the claims against it for failure to state a claim upon which relief could be

granted. With respect to the breach of contract claim, Bluegrass Title alleged that

it failed as a matter of law in that: 1) it was not in privity with either party to the

agreement; and 2) because it had not signed the proceeds-splitting agreement

concerning the sale of real property, an allegation that it breached the agreement

would run afoul of the statute of frauds set out in KRS4 371.010. Bluegrass Title

also asserted that the tortious interference claim failed as a matter of law because

there was no allegation that it induced or otherwise caused Miller to fail to perform

3
  As an initial matter, we note that throughout his brief Yates refers to the agreement between
Dorothy and Miller as a partition agreement. It was not. After setting forth their agreement to
sell the subject property and list it with a specific realtor, the contract provides for a 50/50
division of the proceeds after sale, nothing more. The contract makes no mention of an
agreement to partition the subject real property and nothing in the language employed to effect
the division of proceeds can in any way be construed as an attempt to partition the property.
4
    Kentucky Revised Statute.

                                               -3-
the proceeds-splitting contract with Dorothy’s estate. After the trial court granted

the motion to dismiss the claims against Bluegrass Title and subsequently made its

order final and appealable, Yates prosecuted this appeal as to the dismissal of the

tortious interference with contract claim.5

                                 STANDARD OF REVIEW

               “It is well settled in this jurisdiction when considering a motion to

dismiss under [CR 12.02], that the pleadings should be liberally construed in a

light most favorable to the plaintiff and all allegations taken in the complaint to be

true.” Mims v. Western-Southern Agency, Inc., 226 S.W.3d 833, 835 (Ky. App.

2007) (citing Gall v. Scroggy, 725 S.W.2d 867, 869 (Ky. App. 1987)). “Since a

motion to dismiss for failure to state a claim upon which relief may be granted is a

pure question of law, a reviewing court owes no deference to a trial court’s

determination; instead, an appellate court reviews the issue de novo.” Fox v.

Grayson, 317 S.W.3d 1, 7 (Ky. 2010) (citing Morgan v. Bird, 289 S.W.3d 222, 226

(Ky. App. 2009)). Finally, this Court made clear in James v. Wilson that “[t]he

court should not grant the motion unless it appears the pleading party would not be

entitled to relief under any set of facts which could be proved in support of his

claim.” 95 S.W.3d 875, 883-84 (Ky. App. 2002) (citations omitted). Accordingly,

5
 Yates states in his brief that the breach of contract claim was asserted against Miller, not
Bluegrass Title. Thus, dismissal of the breach of contract claim against Bluegrass Title is not
addressed in this appeal.

                                               -4-
the critical inquiry is whether “if the facts alleged in the complaint can be proved,

would the plaintiff be entitled to relief?” Id. at 884. With these principles in mind,

we turn to an analysis of Yates’ arguments for reversal.

                                     ANALYSIS

             The Restatement (Second) of Torts § 766 (1979), adopted by our

Supreme Court in National Collegiate Athletic Association By & Through

Bellarmine College v. Hornung, 754 S.W.2d 855, 858 (Ky. 1988), sets forth the

legal requirements to prevail upon a claim of intentional interference with an

existing contract:

             One who intentionally and improperly interferes with
             the performance of a contract (except a contract to marry)
             between another and a third person by inducing or
             otherwise causing the third person not to perform the
             contract, is subject to liability to the other for the
             pecuniary loss resulting to the other from the failure of
             the third person to perform the contract.

RESTATEMENT (SECOND) OF TORTS § 766 (1979) (emphasis added). Yates argues

in this appeal that Bluegrass distributed all of the net proceeds from the sale of the

residence to Miller, in direct contravention of her agreement to equally split the

sale proceeds. In so doing, Yates contends that Bluegrass improperly interfered

with Dorothy’s rights under the agreement and induced or otherwise caused Miller

to breach their agreement as to the allocation of the sales proceeds.

                                          -5-
             Relying upon Harrodsburg Industrial Warehousing, Inc. v. MIGS,

LLC, Yates insists that the facts alleged in the complaint were sufficient to

withstand the CR 12.02 motion by satisfying the elements necessary to establish a

tortious interference claim:

             In determining whether “interference” should be
             considered improper, we are guided by the factors of
             Restatement (Second) of Torts § 767 (1979):

             (a) the nature of the actor’s conduct,

             (b) the actor’s motive,

             (c) the interests of the other with which the actor’s
             conduct interferes,

             (d) the interests sought to be advanced by the actor,

             (e) the social interests in protecting the freedom of action
             of the actor and the contractual interests of the other,

             (f) the proximity or remoteness of the actor’s conduct to
             the interference and

             (g) the relations between the parties.

182 S.W.3d 529, 534 (Ky. App. 2005). Accepting the allegations set out in the

complaint as true, and applying these factors to those allegations, we conclude as a

matter of law that Bluegrass’s act of distributing the sale proceeds to the sole

surviving joint tenant did not constitute interference with the contract to equally

divide the net proceeds.

                                         -6-
             As this Court’s opinion in Harrodsburg Industrial Warehousing

makes clear, in order to demonstrate improper interference Yates must assert facts

which if true, demonstrate that Bluegrass acted maliciously or engaged in wrongful

conduct. Id. Like the trial court, we find nothing in the complaint which satisfies

that requirement. The complaint contains no allegation that Bluegrass intended to

cause Miller to breach the agreement to divide the proceeds with Dorothy; no

allegation that Bluegrass acted with malice in distributing the sales proceeds to

Miller, the sole owner at the time of closing; and no allegation that the distribution

of the sale proceeds to the sole owner actually caused Miller to subsequently

breach her agreement to divide the proceeds with Dorothy. Under the facts

alleged, we find no interference with Dorothy’s contractual relations with Miller,

let alone improper interference.

             Further, as the Supreme Court emphasized in Hornung:

             it is clear that to prevail a party seeking recovery must
             show malice or some significantly wrongful conduct.
             In Prosser and Keeton on Torts § 130 (W.P. Keeton ed.
             5th ed.1984), this is stated as follows:

                 [T]he [interference] cases have turned almost
                 entirely upon the defendant’s motive or purpose,
                 and the means by which he has sought to
                 accomplish it . . . .

             [S]ome element of ill will is seldom absent from
             intentional interference; and if the defendant has a
             legitimate interest to protect, the addition of a spite

                                          -7-
             motive usually is not regarded as sufficient to result in
             liability.

754 S.W.2d at 859 (emphases added). Bluegrass Title had a legitimate interest in

performing the closing according to law of this Commonwealth regarding

survivorship interests in real property and in distributing the sale proceeds in

accord with its good faith assessment of the requirements of the deed and chain of

title.

             The unrecorded proceeds-splitting agreement between Dorothy and

Miller does not alter the fact that, upon Dorothy’s death, title to the property vested

in Miller alone. Bluegrass Title was therefore obliged to distribute the proceeds

from the sale of the property according to the dictates of the deed which provided:

                    That for valuable consideration paid in the
             amount of $149,000.00 to the party of the first part, the
             receipt of which is hereby acknowledged, the party of
             the first part hereby conveys with covenant of
             GENERAL WARRANTY, unto the parties of the
             second part [Dorothy Y. Yates, David Wohner, Jr., and
             Bernita Miller], for their joint lives, remainder in fee
             simple to the survivor of them, the following
             described real estate. . . .

(Emphasis added.) Mere knowledge of the existence of a proceeds-splitting

agreement, extraneous to the chain of title, did not authorize Bluegrass Title to

withhold sale proceeds from the fee simple title holder. Nor did it require

Bluegrass Title to interpret and insure Miller’s performance of her agreement with

Dorothy.

                                          -8-
             Finally, as Bluegrass Title asserts, Yates attempts to inject into this

appeal issues of fiduciary duty which were not presented to the trial court. Yates

alleges that Bluegrass Title had a fiduciary duty to Dorothy because she was a

party to the sales agreement. Suffice it to say that had Dorothy survived to the date

of closing, Bluegrass Title would have been obliged to divide the proceeds equally

among the joint owners. However, that is not the case before us.

             In sum, nothing alleged in the complaint, even if proven, would entitle

Yates to relief against Bluegrass Title. Proof of payment of sale proceeds to the

record title holder would not support a finding that Bluegrass Title enabled or

induced Miller to breach her separate agreement to split the proceeds with

Dorothy, nor could a good-faith performance of its closing duties be construed to

be improper or malicious.

             Accordingly, the order of the Jefferson Circuit Court dismissing the

complaint against Bluegrass Title is affirmed.

             JONES, JUDGE, CONCURS.

        TAYLOR, JUDGE, DISSENTS AND DOES NOT FILE A
SEPARATE OPINION.

                                          -9-
BRIEFS AND ORAL ARGUMENT     BRIEF AND ORAL ARGUMENT
FOR APPELLANT:               FOR APPELLEE:

J. Gregory Joyner            Parker M. Wornall
Louisville, Kentucky         Jonathan H. Matthews
                             Louisville, Kentucky

                           -10-