Court Opinion

ID: 9963856
Source: CourtListenerOpinion
Date Created: 2024-04-26 14:05:36.263717+00
Date Added: 2024-06-11T08:25:02.735231
License: Public Domain

RENDERED: APRIL 19, 2024; 10:00 A.M.
                        NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2023-CA-0302-MR

BRENDA SHARPE                                                      APPELLANT

                APPEAL FROM JEFFERSON CIRCUIT COURT
v.                HONORABLE TRACY E. DAVIS, JUDGE
                        ACTION NO. 21-CI-006364

LAURA WALTERS, IN HER CAPACITY
AS EXECUTRIX OF THE ESTATE OF
JOHN A. SHARPE                                                       APPELLEE

                                   OPINION
                                  AFFIRMING

                                  ** ** ** ** **

BEFORE: CETRULO, JONES, AND KAREM, JUDGES.

JONES, JUDGE: Brenda Sharpe appeals a December 13, 2022, order of the

Jefferson Circuit Court dismissing her breach of contract claim against the above-

captioned appellee (hereinafter, the “Estate”). Upon review, we affirm.
                                      I. BACKGROUND

               We limit our discussion of the background facts to those most

pertinent to the issues directly before us.1 On November 9, 2021, Brenda filed suit

in Jefferson Circuit Court against the Estate of her deceased husband, John Sharpe,

for breach of contract. The relevant allegations of her claim, following an

amendment to her complaint, were as follows:

               7. On or about May 19, 2017, Brenda Sharpe (then
               “Brenda J. Burton”) and John A. Sharpe agreed to and
               signed a Prenuptial Agreement.

               8. Brenda Sharpe and John A. Sharpe shared 401 Village
               Lake Drive as their residence.

               9. John A. Sharpe promised, via the Prenuptial
               Agreement, that Brenda Sharpe “may remain in the
               residence for the rest of her life or until she should
               choose to move.”

               10. On or about August 18, 2021, Laura Walters was
               appointed as Executrix of John A. Sharpe’s Estate in
               Jefferson District Court.

               11. Following John A. Sharpe’s death, Defendant,
               through counsel, informed Plaintiff that the Estate would
               not be honoring John A. Sharpe’s contractual obligations
               under the Prenuptial Agreement.

               12. On or about August 30, 2021, Laura Walters in her
               capacity as Executrix of John A. Sharpe’s Estate, through
               counsel, informed Brenda Sharpe that the mortgage

1
 The parties were also involved in parallel probate proceedings that were appealed to the circuit
court and ultimately consolidated with the underlying matter at that level. The circuit court’s
disposition of that appeal is not at issue before this Court.

                                               -2-
            payments were no longer being made and that a
            foreclosure action was expected to be initiated soon.

            13. Defendant informed Brenda Sharpe that she would
            not be permitted to remain in the residence for the rest of
            her life.

            14. Laura Walters, in her capacity as Executrix of John
            A. Sharpe’s Estate did stop making mortgage payments
            for 401 Village Lake Drive following John A. Sharpe’s
            death.

            15. Brenda Sharpe continued to pay for utilities,
            maintenance, and assessments as she promised under the
            Prenuptial Agreement.

            ...

            22. Laura Walters, in her capacity as Executrix of John
            A. Sharpe’s Estate, had a contractual obligation to
            provide Brenda Sharpe with the option to “remain in the
            residence for the rest of her life.”

            23. Defendant informed Brenda Sharpe, through counsel,
            that the Estate would not provide the option to remain in
            the residence unless Brenda Sharpe paid additional funds
            not referenced in the Prenuptial Agreement.

            24. Laura Walters, in her capacity as Executrix of John
            A. Sharpe’s Estate, breached the Estate’s contractual
            duties when she informed the Plaintiff, through counsel,
            that the mortgage payments for 401 Village Lake Drive
            would no longer be made and that the property would go
            to foreclosure.

            Brenda attached the two legal instruments referenced in her

allegations – John Sharpe’s Will and the Prenuptial Agreement – as exhibits to her

                                        -3-
complaint. Rather than answering, the Estate responded with a CR2 12.02 motion

to dismiss, contending the Prenuptial Agreement did not support the thesis of

Brenda’s claim, i.e., that it “breached” the Prenuptial Agreement by refusing to

make the mortgage payments on 401 Village Lake Drive (hereinafter the “condo”).

The circuit court ultimately agreed with the Estate and accordingly dismissed

Brenda’s claim. This appeal followed. Additional relevant facts will be discussed

below in our analysis.

                                 II. STANDARD OF REVIEW

                There appears to be some confusion as to the civil rule the circuit

court effectively utilized in its order of dismissal, and the kind of arguments we are

now at liberty to review in this appeal. Regarding the first point, the circuit court

stated in the last order it entered below (i.e., its February 14, 2023 order denying

Brenda’s motion for reconsideration) that because it had relied upon John Sharpe’s

Will and the Prenuptial Agreement in dismissing Brenda’s claim, its dismissal had

relied on “matters outside the pleading” and thus qualified as a “summary

judgment.” But that is incorrect. When a court considers matters outside the

pleadings, a motion to dismiss is converted to a motion for summary judgment.

See CR 12.02. However, when the “matters” in question are documents or exhibits

central to the issues raised in a plaintiff’s complaint and referenced therein, even if

2
    Kentucky Rule of Civil Procedure.

                                            -4-
not incorporated by reference or attached to the complaint, “the records are subject

to consideration without having to convert the motion under review to a summary

judgment motion.” Netherwood v. Fifth Third Bank, Inc., 514 S.W.3d 558, 564

(Ky. App. 2017). Here, Brenda referenced John Sharpe’s Will and the Prenuptial

Agreement in her complaint; she attached those documents to her complaint as

exhibits. Since the documents were part of Brenda’s complaint the circuit court

did not need to convert the motion to dismiss into one for summary judgment.

             As to the second point, among the Estate’s appellate arguments are its

contentions that: (1) Brenda falsely alleged in paragraph 15 of her complaint that

she “continued to pay for utilities, maintenance, and assessments as she promised

under the Prenuptial Agreement”; and that (2) res judicata (based on the result of a

forcible detainer action before a different court) and waiver (based on Brenda’s

purported abandonment of the condo) bar her breach of contract action. However,

our standard of review does not permit us to assume the falsity of Brenda’s

allegations. Nor does it permit us to consider the Estate’s contentions of res

judicata or waiver, which are affirmative defenses not patently supported by the

face of Brenda’s complaint.

             To be clear, our standard of review is as follows:

                   A motion to dismiss for failure to state a claim
             upon which relief may be granted “admits as true the
             material facts of the complaint.” Fox v. Grayson, 317
             S.W.3d 1, 7 (Ky. 2010) (quoting Upchurch v. Clinton

                                         -5-
             Cnty., 330 S.W.2d 428, 429-30 (Ky. 1959)). The trial
             court should deny the motion “unless it appears the
             pleading party would not be entitled to relief under any
             set of facts which could be proved[.]” Pari-Mutuel
             Clerks’ Union of Ky., Local 541 v. Ky. Jockey Club, 551
             S.W.2d 801, 803 (Ky. 1977). Accordingly, “the
             pleadings should be liberally construed in the light most
             favorable to the plaintiff, all allegations being taken as
             true.” Fox, 317 S.W.3d at 7 (quoting Morgan v. Bird,
             289 S.W.3d 222, 226 (Ky. App. 2009)). This exacting
             standard of review means that the trial court is not
             required 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?’” Fox,
             317 S.W.3d at 7 (quoting James v. Wilson, 95 S.W.3d
             875, 884 (Ky. App. 2002)). Since a motion to dismiss
             under CR 12.02 presents 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, 317 S.W.3d at 7.

Browne v. Poole, 680 S.W.3d 810, 812 (Ky. 2023). Also pertinent to this appeal,

we review de novo the circuit court’s interpretation of wills, contracts, and other

legal instruments. Benjamin v. JP Morgan Chase Bank, N.A., 305 S.W.3d 446,

451 (Ky. App. 2010) (citations omitted).

                                   III. ANALYSIS

             We begin with a procedural issue. The Estate asserts in its appellee

brief that we should strike Brenda’s appellate brief because, in violation of

Kentucky Rules of Appellate Procedure (“RAP”) 32(A)(3) and (4), her brief

contains insufficient citations to the record supporting her factual allegations and

                                         -6-
otherwise indicating that her appellate arguments are preserved. It is unnecessary

to discuss this point in more depth, however, because in her subsequent reply brief

Brenda responded to the Estate’s motion by providing citations that we deem

adequate. See, e.g., Hollingsworth v. Hollingsworth, 798 S.W.2d 145, 147 (Ky.

App. 1990) (explaining if the required citation is not included in the brief for

appellant, the omission may be cured by providing the citation in the reply brief for

appellant). Therefore, we decline to strike Brenda’s brief.

               We now proceed to the substance of this appeal. To demonstrate

entitlement to relief on her claim, Brenda was required to establish: (1) the

existence of a valid contract with John and his Estate; (2) a breach of that contract;

and (3) that she sustained damages flowing from the breach of contract. See

Barnett v. Mercy Health Partners-Lourdes, Inc., 233 S.W.3d 723, 727 (Ky. App.

2007). As to the first of these elements, there is no dispute that Brenda entered

into an enforceable contract3 with John and binding upon his Estate on May 19,

3
  While not contesting the validity of the Prenuptial Agreement, Brenda tangentially questions
whether it could have effectively granted her a “life estate” because the Prenuptial Agreement
does not qualify as a “deed” or (at least in her estimation) a “will.” See Kentucky Revised
Statute (“KRS”) 382.010. However, the Prenuptial Agreement unquestionably fulfilled the legal
requisites of KRS 394.540 and accordingly qualified as a “contract to make a . . . devise”
pursuant to that statute. See, e.g., Herren v. Cochran, 697 S.W.2d 149, 151 (Ky. App. 1985)
(explaining parties validly executed and fully-performed antenuptial agreement, which provided
the wife with a home for life and one-fourth of the husband’s property in exchange for her
release of dower rights, qualified as a contract to make a will and was enforceable against
husband’s estate). Thus, even if the parties validly executed and fully-performed Prenuptial
Agreement did not operate to convey Brenda a life estate upon John’s death, it at least imposed a
contractual trust upon John’s Estate in favor of Brenda representing her agreed-upon “life
estate,” enforceable through specific performance. See Wides v. Wides’ Ex’r, 299 Ky. 103, 108-

                                               -7-
2017. In their agreement, Brenda and John expressed they were contemplating

entering a contract of marriage and desired to settle their property rights in the

event they did marry. At issue are the following three provisions:

              2. Principal Residence

              At the time of this Agreement the parties are living
              together at 401 Village Lake Drive, Louisville,
              Kentucky, 40045, which is owned individually by
              [John4]. It is agreed that this property shall be the
              principal residence of [John] and Brenda during their
              marriage. Should [John] predecease Brenda, it is
              specifically agreed that Brenda may remain in the
              residence for the rest of her life or until she should
              choose to move. Brenda shall be responsible to [sic]
              utilities, maintenance, assessments, and taxes during
              such period. Brenda’s absence from the residence for
              sixty (60) consecutive days – other than for hospital or
              residential treatment – shall be deemed abandonment of
              the residence. Except for the life estate granted to
              Brenda herein, the residence shall remain the sole
              property of [John] and shall become part of his estate
              upon death, free from any claim of the other party by
              inheritance, descent, dower, curtesy, or maintenance.

              ...

              5. Separate Property and Descent

              It is hereby mutually agreed by the parties that each have
              property, money, and credits of his or her own to which
              they must devote much personal attention, that each shall

09, 184 S.W.2d 579, 581-82 (1944). In any event, the Estate has never contested Brenda’s right
to the “life estate” set forth in the agreement.
4
 The Prenuptial Agreement referred to John A. Sharpe by his nickname, “Jack.” For
consistency and clarity, we have replaced each instance of “Jack” with “John.”

                                              -8-
             retain absolute ownership of such property, money and
             credits of whatsoever kind and wheresoever located
             together with all rents, profits, and increases thereon as
             his or her separate property, and that at no time shall
             either party have or claim any interest in any property,
             money or credit of the other, whether or not any rents,
             profits, or increases thereon are a direct result of the
             personal efforts, skills, or services of the party owning
             them. Upon the death of either party his or her separate
             property, money or credits shall pass to his or her
             children or their heirs, or as the parties may otherwise
             direct by Will, unless otherwise specifically provided
             herein.

             6. Release of Marital Rights

             Each party shall have no rights or interest in the separate
             property of the other brought to this marriage other than
             those interests specifically described herein, and each
             waives and releases all claims by inheritance, descent,
             dower, curtesy, maintenance or marital property rights in
             such separate property that he or she might otherwise
             have or obtain, and on the death of either party, the
             decedent’s separate property shall pass by will or
             intestate succession to the decedent’s heirs as if the
             marriage between the parties had never occurred, except
             where otherwise specifically agreed herein.

(Emphasis added.)

             As indicated, the focus is upon the second element of Brenda’s claim

– whether this contract was breached. According to Brenda, following John’s

death, all that was required of her to receive and continue enjoying the “life estate”

contemplated in Paragraph 2 of the Prenuptial Agreement was her payment of

“utilities, maintenance, assessments, and taxes during such period.” She notes the

                                         -9-
Prenuptial Agreement does not explicitly specify that she would also be liable for

paying all or part of any outstanding loan, secured by a mortgage on the condo,

that John may have taken prior to his death. She also notes that nonpayment of

that loan could result in foreclosure proceedings and effectively eviscerate her “life

estate.” As such, she reasons, the Prenuptial Agreement rendered John’s Estate

liable for the mortgage payments to preserve her life estate; and the Estate

accordingly breached the Prenuptial Agreement by refusing to make those

payments.

                Conversely, however, nothing in the Prenuptial Agreement explicitly

specifies John or his Estate were required to make those mortgage payments,

either. The Prenuptial Agreement is wholly silent regarding the mortgage.

Moreover, the Prenuptial Agreement did not explicitly prohibit John, by and

through his undisputedly valid last will and testament, from – as here – devising

the condo to his children but directing his estate not to pay the mortgage. And that,

in turn, leads to the legal underpinning of Brenda’s claim of breach: In her view,

an implied covenant in the Prenuptial Agreement required the Estate to make the

mortgage payments. Seizing upon the doctrine of “expressio unius est exclusio

alterius” (e.g., “that the mention of one thing implies the exclusion of another”5),

Brenda contends that because the Prenuptial Agreement listed “utilities,

5
    Jefferson County v. Gray, 198 Ky. 600, 249 S.W. 771, 772 (1923).

                                               -10-
maintenance, assessments, and taxes” as her responsibility during her life tenancy,

but omitted “mortgages” from that list, it should be implied that the parties

intended and contracted for the Estate, and not her, to pay the mortgage.

             We disagree. The applicable law regarding implied covenants is as

follows:

                     An implied covenant is one which may reasonably
             be inferred from the whole agreement and the
             circumstances attending its execution. A covenant is
             viewed as implied in nature when its existence is inferred
             by legal construction from the use of certain words and
             phrases. There is no limitation upon the form or general
             character of the words which may lay the basis for the
             existence of an implied covenant. The primary concern
             in this connection is the intention of the parties to the
             instrument rather than the manner of its expression.
             However, implied covenants are not favored in the law.
             Such covenants can arise only where is no expression on
             the subject. The courts will declare implied covenants to
             exist only when there is a satisfactory basis in the express
             contract of the parties which makes it necessary to imply
             certain duties and obligations in order to [a]ffect the
             purposes of the parties to the contract made. Such
             covenants can be justified only upon the ground of legal
             necessity arising from the terms of a contract or the
             substance thereof. The implication from the words must
             be such as will clearly authorize the inference or an
             imputation in law of the creation of a covenant. It is not
             enough to say that it is necessary to make the contract
             fair, that it ought to have contained a stipulation which is
             not found in it, or that without such covenant it would be
             improvident, unwise, or operate unjustly. The covenants
             raised by law from the use of particular words in an
             instrument are only intended to be operative when the
             parties themselves have omitted to insert covenants. But
             when a party clearly indicates to what extent he intends

                                        -11-
             to warrant or obligate himself, that is the limit of his
             covenant and the law will not hold him beyond it. 14
             Am.Jur., Covenants, Section 14, page 490.

Anderson v. Britt, 375 S.W.2d 258, 260-61 (Ky. 1963).

             The doctrine of expressio unius est exclusio alterius is merely a rule

of construction, not substantive law, and it merely assists in arriving at intent, not

defeating it. See Fox, 317 S.W.3d at 9. “[W]e must use it only when . . . that

which is expressed is so set over by way of strong contrast to that which is omitted

that the contrast enforces the affirmative inference that that which is omitted must

be intended to have opposite and contrary treatment.” Id. (internal quotation marks

and citation omitted). With that said, applying it here to achieve the result urged

by Brenda would defeat the intention of the Prenuptial Agreement because it

would repeal by implication the language emphasized above in Paragraphs 5 and 6

of the Prenuptial Agreement: It would effectively give Brenda the contractual

right to force John’s Estate to expend its funds for her benefit – a right not

“otherwise specifically provided” by or “agreed” to in the Prenuptial Agreement.

             Moreover, providing Brenda an unencumbered life estate is not

“necessary . . . in order to effect the purposes of the parties to the contract made.”

Anderson, 375 S.W.2d at 261. The Prenuptial Agreement did not specify that

Brenda’s life estate in the condo would be unencumbered; no legal authority

prevented John or his Estate from granting Brenda a life estate in otherwise

                                         -12-
encumbered property; thus, it is not “necessary to imply” that John or his Estate

had a duty or obligation to pay all or any portion of the mortgage. Id.

             As for what the parties intended by granting Brenda a “life estate”

through the Prenuptial Agreement, that phrase is a legal term of art; Brenda and

John are presumed to have known the law at the time they made their agreement;

and, “[i]t is an accepted principle that included in the terms of contracts are the

laws which subsist at the time and place of the making of the contract, and where it

is to be performed, as if they were expressly incorporated in its terms[.]” City of

Covington v. Sanitation Dist. No. 1 of Campbell and Kenton Counties, 301 S.W.2d

885, 888 (Ky. 1957).

             With respect to “life estates” in Kentucky, the law provides that the

life tenant has a duty to maintain and manage the estate for the benefit of the

remaindermen. See Adams v. Adams, 371 S.W.2d 637, 638 (Ky. 1963). To that

end, the life tenant is generally bound to pay taxes, maintain insurance, and make

repairs and improvements, and cannot charge them against the remaindermen. Id.

Included with this duty is also the obligation “to pay interest on an indebtedness

against the estate” during the tenure of the life tenancy. Stavros v. Bradley, 313

Ky. 676, 680, 232 S.W.2d 1004, 1006 (1950) (citation omitted). Consequently,

absent an explicit condition to the contrary, the life tenant must pay the interest on

an outstanding mortgage obligation “at least to the extent of the income or rental

                                         -13-
value of the property.” Todd’s Ex’r v. First Nat. Bank, 173 Ky. 60, 190 S.W. 468,

471 (1917) (citations omitted). Furthermore, the life tenant has no unqualified

right to compel the devisees of the remainder interest to pay a share of a

preexisting mortgage on real property they have all respectively inherited; a life

tenant merely has a right of subrogation that only comes into being after he or she

pays the remaindermen’s properly apportioned share of the principal debt. Id.; see

also Parrish v. Ross, 103 Ky. 33, 44 S.W. 134, 135 (1898).

             Accordingly, the law which subsisted at the time and place of the

making of the Prenuptial Agreement, which was presumptively included in its

terms, gave Brenda no contractual right to compel the Estate or John’s children

(e.g., the remaindermen under the circumstances) to pay the mortgage. At most, it

provided Brenda only an equitable right of reimbursement to the extent that she

paid any portion of their share of it. There is no allegation in Brenda’s complaint

that she paid any portion of their share and, indeed, the theory of Brenda’s claim

was that the Estate breached the Prenuptial Agreement by failing to pay the

mortgage in its entirety.

             In sum, Brenda’s assertion that the Prenuptial Agreement implicitly

required the Estate to pay the outstanding mortgage lacks merit because any such

covenant was: (1) disfavored in the law; (2) unnecessary to effectuate the

agreement; and (3) contrary to the parties’ intent – as expressed by the entirety of

                                        -14-
their agreement’s language, as well as by what they were presumed to know

according to the existing law. Taken in that light, and boiled to its essence,

Brenda’s claim against the Estate is simply that the Estate should pay the mortgage

because “it is necessary to make the contract fair, that it ought to have contained a

stipulation which is not found in it, or that without such covenant it would be

improvident, unwise, or operate unjustly[.]” Anderson, 375 S.W.2d at 261. For

purposes of a claim alleging the breach of an implied covenant, that is not enough.

Id.

                                 IV. CONCLUSION

             Considering the foregoing, we AFFIRM.

             ALL CONCUR.

 BRIEFS FOR APPELLANT:                     BRIEF FOR APPELLEE:

 Daniel H. Schoenbaechler                  David B. Mour
 Louisville, Kentucky                      Louisville, Kentucky

                                         -15-