Court Opinion

ID: 4655810
Source: CourtListenerOpinion
Date Created: 2021-01-29 15:06:36.611829+00
Date Added: 2024-06-11T08:00:30.918638
License: Public Domain

RENDERED: JANUARY 22, 2021; 10:00 A.M.
                        NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2019-CA-1582-MR

ALBERT GRUNEISEN III                                                 APPELLANT

                APPEAL FROM JEFFERSON CIRCUIT COURT
v.               HONORABLE AUDRA J. ECKERLE, JUDGE
                        ACTION NO. 18-CI-005276

JOHN HAYWOOD; POLY GROUP,                                            APPELLEES
LLC; ROBERT DOUGLAS
HAMILTON; AND V3 GROUP, LLC

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

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

GOODWINE, JUDGE: Albert Gruneisen III (“Gruneisen”) appeals from an order

of the Jefferson Circuit Court dismissing his claims against Appellees. After

careful review and finding no error, we affirm.
                                 BACKGROUND

             Gruneisen, John Haywood (“Haywood”), and Robert Douglas

Hamilton (“Hamilton”) were founding members of Poly Group, LLC (“Poly

Group”). The three men also founded V3 Group, LLC (“V3”) and each owned

one-third of the company. Both LLCs are Indiana entities with operating

agreements that require all claims be brought in Indiana and are subject to Indiana

law.

             In addition to his status as a member of Poly Group, Gruneisen was

Poly Group’s president from 2010 until 2013. In 2013, Gruneisen was removed

from his position as President. Gruneisen sued, and the parties agreed to settle the

claims by executing the Settlement Agreement and the subsequent

Acknowledgment of Member Dissociation and Transfer of Entire Interest

(“Acknowledgment”).

             Under the Settlement Agreement, Gruneisen agreed to (1) relinquish

his interest in V3; (2) release Poly Group from certain claims and causes of action

that could have been raised in the lawsuit; and (3) “cooperate and provide any

proxy necessary to vote to transfer all of his membership interest in V3 to Poly

Group or Poly Group’s designee.” Record (“R.”) at 10. In exchange, Poly Group

agreed to (1) pay Gruneisen $130,000 for his interest in V3; and (2) release

Gruneisen from any claims or causes of action that could have been asserted in the

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underlying lawsuit. Gruneisen and a representative and board member of Poly

Group, Glenn Hancock, signed the Settlement Agreement. Additionally, Haywood

and Hamilton signed the Settlement Agreement in their individual capacities,

acknowledging forgiveness of personal debts Gruneisen owed to them. The

Settlement Agreement contained Kentucky choice of venue and choice of law

provisions.

              Following the execution of the Settlement Agreement, Gruneisen

received his payment of $130,000. Thereafter, Gruneisen, Haywood, and

Hamilton executed the Acknowledgment to effectuate the terms of the Settlement

Agreement. The Acknowledgment contained Indiana choice of law and choice of

venue provisions. In pertinent part, the Acknowledgment provides:

              (1) Dissociating Member [Gruneisen] hereby transfers
              his entire interest in V3, in equal parts, to Remaining
              Members [Haywood and Hamilton], such that Remaining
              Members shall hold one-half, or 50 percent, of the
              interest in V3.

              ....

              (5) Dissociating Member [Gruneisen] acknowledges his
              prior agreement to provide any proxy necessary to effect
              the transfer of his interest in V3 to Poly Group, LLC, an
              Indiana Limited Liability Company, or Poly Group’s
              designee. By their signatures below, Remaining
              Members [Haywood and Gruneisen] represent that they
              have been duly designated by Poly Group, LLC to be the
              transferees of Dissociating Member’s interest in V3, and
              acknowledge Dissociating Member’s reliance on their
              representation. Remaining Members agree to indemnify

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            and hold harmless Dissociating Member from any
            liability proximately caused by a misrepresentation as to
            Poly Group’s designation or their authority to have
            effected the same.

            (6) This Acknowledgment contains no representations
            with respect to the status of any V3 Member’s Capital
            Account or Capital Contribution and is not intended to
            alter the Operating Agreement of V3 in any way, except,
            as to Exhibit A to the Operating Agreement of V3, to
            strike “Albert Gruneisen, III” as a listed member (along
            with his capital contribution and units), and amend the
            number of units held by John Haywood to “15” and
            amend the number of units held by Robert Douglas
            Hamilton to “15”.

R. at 230-31.

            Following execution of the Acknowledgment, Haywood and Hamilton

each became a fifty percent owner of V3 as dictated by paragraph 1. In 2018,

during a deposition in a separate matter, Gruneisen discovered his V3 shares,

which he transferred in 2013, had remained with Haywood and Hamilton, rather

than being transferred or assigned from Haywood and Hamilton to Poly Group.

Following this purported discovery, Gruneisen sent Haywood and Hamilton a

demand letter, complaining they did not transfer his shares in V3 to Poly Group

among other things. When they did not respond, Gruneisen filed the underlying

lawsuit.

            On September 11, 2018, Gruneisen filed the underlying complaint in

the Jefferson Circuit Court. The action arose due to Gruneisen’s interpretation of

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the Settlement Agreement provision requiring “transfer of all his membership and

interest in V3 to Poly Group or Poly Group’s designee.” R. at 10. Gruneisen

interpreted this provision to require Haywood and Hamilton to transfer

Gruneisen’s one-third share of V3 to Poly Group even though neither the

Settlement Agreement or the Acknowledgment contain language to that effect.

             The Defendants/Appellees moved to dismiss the complaint, and

Gruneisen responded by moving to disqualify Defendants’ counsel, alleging a

conflict of interest. To resolve the issue, each of the Defendants retained separate

counsel. Gruneisen then filed a verified amended complaint, attempting to cure the

defects described in Defendants’ motion to dismiss. In his amended complaint,

Gruneisen raised claims for breach of contract, conversion, fraudulent

misappropriation, tortious interference, and derivative claims on behalf of Poly

Group. The Defendants responded by filing separate motions to dismiss.

             On August 15, 2019, the circuit court entered an opinion and order,

granting in full each of the Defendants’ motions to dismiss. The circuit court

found: (1) the Settlement Agreement was not breached because all obligations had

been fulfilled; (2) to the extent the claims arose from the Settlement Agreement,

Gruneisen’s conversion, fraud, and tortious interference claims were not valid

because the Settlement Agreement had not been breached; and (3) his purported

derivative claims were not valid because he had not made a demand on the Board

                                         -5-
as required, and even if he had made a proper demand, the claims related to acts

that occurred after the Settlement Agreement had been fulfilled, so the proper

venue would have been Indiana.

             Gruneisen then moved the circuit court to reconsider, arguing the

circuit court, after dismissing his claim for breach of the Settlement Agreement,

should not have considered the merits in dismissing his other claims. Instead,

Gruneisen argues the circuit court should have only dismissed those claims for

improper venue. The circuit court denied Gruneisen’s motion, finding he failed to

state grounds for reconsideration and the opinion and order required no

clarification. This appeal followed.

             On appeal, Gruneisen argues the (1) circuit court erred in dismissing

the breach of contract claim; and (2) if it was error for the circuit court to dismiss

his breach of contract claim, then his remaining claims should not have been

dismissed. Alternatively, he argues if the circuit court did not err in dismissing the

breach of contract claim, the remaining claims should have been dismissed

immediately for improper venue.

                            STANDARD OF REVIEW

             Our standard of review of an order granting a motion to dismiss is as

follows:

             A motion to dismiss for failure to state a claim upon
             which relief may be granted admits as true the material

                                          -6-
             facts of the complaint. So a court should not grant such a
             motion unless it appears the pleading party would not be
             entitled to relief under any set of facts which could be
             proved. . . . Accordingly, the pleadings should be
             liberally construed in the light most favorable to the
             plaintiff, all allegations being taken as true. This
             exacting standard of review eliminates any need by the
             trial court to make findings of fact; rather, the question is
             purely a matter of law. Stated another way, the court
             must ask if the facts alleged in the complaint can be
             proved, would the plaintiff be entitled to relief? 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) (internal quotation marks and

citations omitted). Likewise, “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.” 3D Enterprises Contracting Corp. v. Louisville

and Jefferson County Metropolitan Sewer Dist., 174 S.W.3d 440, 448 (Ky. 2005)

(citation omitted).

                                    ANALYSIS

             First, Gruneisen argues the circuit court erred in dismissing his claim

for breach of the Settlement Agreement. “To prove a breach of contract, the

complainant must establish three things: 1) existence of a contract; 2) breach of

that contract; and 3) damages flowing from the breach of contract.” Metro

Louisville/Jefferson County Government v. Abma, 326 S.W.3d 1, 8 (Ky. App.

                                          -7-
2009) (citing Barnett v. Mercy Health Partners-Lourdes, Inc., 233 S.W.3d 723,

727 (Ky. App. 2007). Here, the parties do not dispute that the Settlement

Agreement is a valid contract. Gruneisen argues the Settlement Agreement was

breached when Haywood and Hamilton failed to meet both explicit and implicit

obligations in the Settlement Agreement. The Settlement Agreement explicitly

required Gruneisen to transfer his V3 units “to Poly Group or Poly Group’s

designee” in exchange for $130,000 from Poly Group. R. at 10. Gruneisen argues

the Settlement Agreement also implicitly required Poly Group to receive and take

possession of the transferred V3 units. Haywood and Hamilton retained

Gruneisen’s units of V3, so Gruneisen argues Poly Group breached the Settlement

Agreement by failing to take possession of the units. As such, Gruneisen argues he

was damaged because he expected to benefit, as a member of Poly Group, from

Poly Group’s acceptance of the units worth approximately $1,329,800.

              To reach the conclusion that Poly Group breached the Settlement

Agreement, Gruneisen argues the word “designee”1 should be given its plain

meaning, which denotes duty, office, and purpose. In this instance, he argues, the

designee had a duty and purpose to either transfer the V3 units to Poly Group or

1
 Designee is defined as “[s]omeone who has been designated to perform some duty or carry out
some specific role.” Designee, BLACK’S LAW DICTIONARY (11th ed. 2019).

                                             -8-
hold them for Poly Group. Alternatively, Gruneisen argues the proper

interpretation is at least ambiguous.

             The circuit court rejected these arguments, finding:

             Despite Gruneisen’s contentions, neither the Settlement
             Agreement nor the Acknowledgment contain any terms
             or reference any agreement for the V3 shares to
             ultimately be transferred from Haywood and Hamilton to
             Poly Group at any point. All parties in this litigation are
             sophisticated entities and business people who executed
             both the Settlement Agreement and Acknowledgment
             with assistance of counsel. The Court cannot read terms
             into either the Settlement Agreement or
             Acknowledgment that are neither expressly present, nor
             even implied.

R. at 374-75.

             We apply the following principles when interpreting a contract:

             “When no ambiguity exists in the contract, we look only
             as far as the four corners of the document to determine
             the parties’ intentions.” 3D Enterprises Contracting
             Corporation v. Louisville and Jefferson County
             Metropolitan Sewer District, 174 S.W.3d 440, 448 (Ky.
             2005) (citation omitted). If the language is ambiguous,
             the court’s primary objective is to effectuate the
             intentions of the parties. Cantrell Supply, Inc. v. Liberty
             Mutual Insurance Company, 94 S.W.3d 381, 384 (Ky.
             App. 2002). “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.” Abney v. Nationwide Mutual Insurance
             Company, 215 S.W.3d 699, 703 (Ky. 2006) (quoting
             Cantrell, 94 S.W.3d at 385).

                                         -9-
Kentucky Shakespeare Festival, Inc. v. Dunaway, 490 S.W.3d 691, 695 (Ky.

2016). Furthermore, “an otherwise unambiguous contract does not become

ambiguous when a party asserts—especially post hoc, and after detrimental

reliance by another party—that the terms of the agreement fail to state what it

intended.” Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 107 (Ky. 2003)

             Gruneisen’s argument is unsupported by the plain language of the

Settlement Agreement and Acknowledgment. The Settlement Agreement requires

Gruneisen to transfer his V3 units “to Poly Group or Poly Group’s designee.” R. at

10. The Acknowledgment expressly states that Haywood and Hamilton would

each hold fifty percent of the interest in V3 upon Gruneisen’s transfer of his

interest. Although the definition of designee includes performing a duty, neither of

the two contracts specify that the designee’s duty is to transfer Gruneisen’s interest

in V3 to Poly Group. The Acknowledgment makes clear that Haywood and

Hamilton would each retain fifty percent ownership of V3. The record makes clear

that all obligations in the Settlement Agreement and Acknowledgment were

satisfied. We will not read an alleged implicit requirement into the contracts or

find an ambiguity simply because Gruneisen argues one exists. As such, the circuit

court correctly concluded that there was no breach of contract.

             Second, Gruneisen argues if the circuit court erred in dismissing his

breach of contract claim, then his remaining claims should not have been

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dismissed. As we held there was no breach of contract, we need not address this

argument.

            Alternatively, Gruneisen argues if the circuit court properly dismissed

his breach of contract claim, then all remaining claims should have been dismissed

solely for improper venue instead of addressing the merits of each claim. The

circuit court made the following findings in dismissing Gruneisen’s claims for

conversion, fraudulent misappropriation, and tortious interference:

            [T]he Court finds Defendants’ arguments regarding the
            claims of conversion, fraudulent misappropriation, and
            tortious interference in the Verified Amended Complaint
            persuasive. As Gruneisen has not properly supported his
            breach of contract claim, he has also not properly
            supported his conversion, fraud, and tortious interference
            claims. The Exhibits attached to Gruneisen’s own
            Verified Amended Complaint indicate that the
            transactions were completed as contemplated by the
            Settlement Agreement and Acknowledgment. With no
            terms, explicit or implied, indicating that Haywood and
            Hamilton were to later transfer the V3 shares they
            received, the remaining claims are not viable in this
            Court.

                   Though Gruneisen has attempted to rely on the
            indemnification clause in the Acknowledgment as a basis
            for his claims, the clause, by its plain language, intended
            to protect Gruneisen from liability against any suit
            arising from Haywood and Hamilton’s representation
            that they were duly designated by Poly Group as
            transferees. No such claims have been made against
            Gruneisen, as contemplated by the Acknowledgment.
            Rather, Gruneisen himself is trying to create a cause of
            action based on that provision. The Court does not find
            such a claim to be proper, especially considering that the

                                       -11-
             Acknowledgment expressly contains a provision
             indicating that V3’s Operating Agreement, with an
             Indiana choice of venue provision, and Indiana law are to
             govern that agreement.

R. at 375-76.

             In sum, to the extent that Gruneisen’s conversion, fraud, and tortious

interference claims arose out of the Settlement Agreement, the circuit court found

that because there was no breach of contract, these additional claims had no merit.

To the extent these claims arose out of the Acknowledgment, the circuit court

declined to address the merits as Indiana was the proper venue.

             Additionally, the circuit court made the following findings in

dismissing Gruneisen’s derivative claims:

                   Gruneisen has not demonstrated that he did make a
             proper demand on the [Poly Group] Board for a
             derivative action.

                    Nonetheless, as Gruneisen’s other claims of action
             have not been properly supported, even if Gruneisen had
             made a proper demand on the Board, such action is
             subject to the choice of venue and choice of law
             provisions of Poly Group’s Operating Agreement. That
             Operating Agreement makes it clear that such actions are
             to be brought in Indiana and are subject to Indiana law.

R. at 377. In conclusion, the circuit court stated, “Gruneisen has failed to plead

any claims to which he is entitled to relief in Jefferson County, Kentucky, and any

viable claims he may have are not properly before this Court.” Id.

                                        -12-
             Haywood, Hamilton, and Poly Group argue the circuit court correctly

declined to make a preemptive determination that Gruneisen’s other claims were

barred by res judicata. Although the circuit court opined as to the probable

outcome on the merits of Gruneisen’s claims for conversion, fraud, tortious

interference, and derivative claims, ultimately the circuit court found these claims

were not properly before it because the proper venue was Indiana. As such, the

circuit court ultimately dismissed for lack of venue and did not err in doing so.

                                  CONCLUSION

             For the foregoing reasons, we affirm the judgment of the Jefferson

Circuit Court.

             ALL CONCUR.

                                        -13-
BRIEFS FOR APPELLANT:     BRIEF FOR APPELLEE
                          POLY GROUP, LLC:
Donald L. Cox
Louisville, Kentucky      Michael E. Gregory
                          Paul Hershberg
                          Louisville, Kentucky

                          BRIEF FOR APPELLEES
                          JOHN HAYWOOD AND
                          ROBERT DOUGLAS HAMILTON:

                          Melissa M. Bauer
                          Louisville, Kentucky

                          Zachary F. Stewart
                          Jeffersonville, Indiana

                          BRIEF FOR APPELLEE
                          V-3 GROUP, LLC:

                          L. Stanley Chauvin, III
                          Louisville, Kentucky

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