Court Opinion

ID: 9402180
Source: CourtListenerOpinion
Date Created: 2023-06-15 15:07:44.858251+00
Date Added: 2024-06-11T17:19:58.197564
License: Public Domain

RENDERED: JUNE 15, 2023
                                                          TO BE PUBLISHED

                 Supreme Court of Kentucky
                                 2022-SC-0056-DG

GUY FERRILL, III, AS EXECUTOR OF THE                              APPELLANTS
ESTATE OF WILLENA T. FERRILL;
WILLENA FERRILL; AND G & W LAND
ENTERPRISES, LLC THROUGH WILLENA T.
FERRILL, GUY FERRILL, III AND VICTOR
CURTIS FERRILL

                     ON REVIEW FROM COURT OF APPEALS
V.                    NOS. 2019-CA-0531 & 2019-CA-0532
                    NELSON CIRCUIT COURT NO. 13-CI-00107

STOCK YARDS BANK AND TRUST                                         APPELLEES
COMPANY, TRUSTEE UNDER THE WILL OF
MAY T. DOTY, DECEASED; AMY CASSADY;
FRANK B. CHUMLEY, JR.; JILL WALTON
PUCKETT; LYNN SHIPLEY; AND MIKE
WALTON

           OPINION OF THE COURT BY CHIEF JUSTICE VANMETER

                 AFFIRMING IN PART AND REVERSING IN PART

      Under Kentucky law, a life tenant who commits waste against the corpus

of an estate, “shall lose the thing wasted and pay treble the amount at which

the waste is assessed.” KRS1 381.350. Historically, our courts have recognized

a distinction between voluntary waste and permissive waste and found that our

      1   Kentucky Revised Statutes.
waste statute—and its attendant statute of limitations—applies only to

voluntary waste. See Fisher’s Ex’r v. Haney, 180 Ky. 257, 202 S.W. 495, 496-

97 (1918). Because the statutory language supports such a distinction, we re-

affirm our long-standing case law and hold KRS 381.350 is applicable only in

instances in which a party has pled voluntary waste. Accordingly, we reverse

the Court of Appeals opinion insofar as it holds otherwise.

             I.     FACTUAL AND PROCEDURAL BACKGROUND

      Mary T. Doty died testate in 1989. Her will contained a provision

bequeathing to Willena Ferrill and her husband, Guy “Allison” Ferrill, a life

estate upon property, real and moveable, situated in Nelson County owned by

Doty during her life. Upon the death of Willena and her husband, the property

became part of the residuary estate to be bequeathed in one-third portions to

three groups of individuals.2 These three shares were placed into trusts over

which Stock Yards Bank (“SYB”) was appointed executor and trustee.

      Following receipt of the life estate, the Ferrills engaged in a number of

transactions that allegedly invaded and depleted the corpus of the estate.

Because the precise nature of these transactions has no bearing on the

outcome of this appeal, we do not address them here beyond noting that these

transactions occurred at various times between the late 1990s and 2011. SYB

apparently became concerned over the administration of the life estate as early

as 1998 and subsequently sought semi-regular accountings from the Ferrills,

      2 Willena Ferrill passed away during the pendency of this matter on September

14, 2021.

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with varying success. Ultimately, SYB and the remaindermen brought this

action in 2013, asserting claims of waste, fraud, conversion, and breach of

fiduciary duties against Willena and others (collectively “the Ferrills”) connected

to sales of estate property.

      In 2015, SYB sought summary judgment and the parties then engaged in

extensive discovery. The Ferrills similarly sought summary judgment. By

order entered September 5, 2018, the trial court granted summary judgment in

favor of the Ferrills on counts 1, 2, 3, and 5, which included claims based upon

waste, fraud, and breach of fiduciary duty. In large part, those claims were

dismissed for failure to comply with their respective statute of limitations.

Specifically, as to waste, the trial court applied the five-year statute of

limitations to voluntary waste as applied in Fisher’s Ex’r and held that because

the claims all accrued at the time of their commission, the waste claims were

barred by the statute of limitations. Following motions to alter, amend or

vacate, the trial court subsequently entered an order vacating parts of the

September 5 order and supplementing with an amended order which varied

little from the original except in addressing a claim that had been missed and

altering some of the damage awards. The parties then partially resolved the

litigation by agreed order. This order made final and appealable the claims

granted and dismissed in the previous orders and otherwise dismissed the

remaining claims for conversion and attorney’s fees.

      The parties subsequently appealed. The Court of Appeals reversed the

trial court as to any claims dismissed as untimely filed under the statute of

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limitations. Relying upon Superior Oil Corp. v. Alcorn, 242 Ky. 814, 47 S.W.2d

973 (1930), the Court of Appeals held that the statute of limitations on the

various claims brought by SYB did not begin to run until Willena’s death in

2021. Accordingly, such claims were timely brought and their dismissal was

error.3

      The Ferrills moved for discretionary review pursuant to CR4 76.20,5

which this Court granted.

                           II.    STANDARD OF REVIEW

      Upon review of a trial court’s grant of a motion for summary judgment,

this Court must ask,

      whether the record, when examined in its entirety, shows there is
      no genuine issue as to any material fact and the moving party is
      entitled to a judgment as a matter of law. The trial judge must
      view the evidence in a light most favorable to the nonmoving party,
      resolving all doubts in its favor. Because summary judgment does
      not require findings of fact but only an examination of the record
      to determine whether material issues of fact exist, we generally
      review the grant of summary judgment without deference to either
      the trial court's assessment of the record or its legal conclusions.

Hammons v. Hammons, 327 S.W.3d 444, 448 (Ky. 2010) (internal citations and

quotation marks omitted). Here, because the question presented is purely one

of law, we need not defer to the trial court and our review of the issue is de

novo. Seeger v. Lanham, 542 S.W.3d 286, 296 (Ky. 2018).

       3 The Court of Appeals did not address the quandary of how the trial court was

to dispose of the claims when its order was entered in 2019, two years prior to
Willena’s death.
      4   Kentucky Rules of Civil Procedure.
       5 The provisions of CR 76.20 are now contained in Rule of Appellate Procedure

(RAP) 44.

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                                  III.   ANALYSIS

       The primary issue presented by this matter is when the statute of

limitations began on the claims brought by SYB. Key to resolving this question

is an analysis of the concept of “waste” as it exists within Kentucky law.

Black’s Law Dictionary defines “waste” as “[p]ermanent harm to real property

committed by a tenant (for life or for years) to the prejudice of the heir, the

reversioner, or the remainderman.” Waste, Black’s Law Dictionary (11th ed.

2019). Traditionally, Kentucky case law has recognized two classes of waste:

voluntary and permissive.

       ‘Voluntary waste’ consists of the willful destruction or carrying
       away of something that is attached to the freehold, as for example
       trees or stone, or coal or other mineral substances; while
       ‘permissive waste’ is the failure to take reasonable care of the
       premises by neglecting for example to keep the buildings and
       fencing in such a state of repair as would be considered reasonably
       sufficient under the circumstances.

Fisher’s Ex’r, 202 S.W. at 496. Although this distinction has sometimes been

questioned,6 no opinion of this Court has ever collapsed the two classes into

one.

       Waste by a tenant for life or years is addressed in our statutes as follows:

       If any tenant for life or years commits waste during his estate or
       term, of anything belonging to the tenement so held, without
       special written permission to do so, he shall be subject to an action

       6Springfield v. Springfield, No. 2021-CA-0358-MR, 2022 WL 16841998, at *4
(Ky. App. Nov. 10, 2022) (“[W]e question whether there remains a basis to distinguish
between the legal remedies afforded for voluntary waste under KRS 381.350 and the
equitable remedies afforded for permissive waste[]”).

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      of waste, shall lose the thing wasted, and pay treble the amount at
      which the waste is assessed.

KRS 381.350 (emphasis added). This statute has been in existence

substantially since 1798 but has its roots in the English Statute of Gloucester

enacted in 1278. The 1798 enactment not only expanded “waste” to include

waste committed by holders of a life estate, but also provided for treble

damages and forfeiture of “the thing he hath wasted.” Salyer’s Guardian v.

Keeton, 214 Ky. 643, 283 S.W. 1015, 1018 (1926); Alva A. Hollon, Meridith v.

Ingram: A Failure to Shed the Shackles of Stare Decisis, 62 Ky. L. J. 856, 857

(1974). The similarities between the Statute of Gloucester and the language of

our own statute—present and past—has led the courts to conclude that our

waste statute is to be construed consistently with its English forebear. Keeton,

283 S.W. at 1018. Although construction of such a longstanding statute has

been by no means consistent, see Hollon, supra, at 857-58, Kentucky cases

have adopted the reasoning of English courts and held that our waste statute

referred solely to an action for voluntary waste. See, e.g., Collins v. Security

Trust Co., 206 Ky. 30, 266 S.W. 910 (1924) (“[i]t is thoroughly established that

our Statutes on the subject of waste relate only to voluntary waste, and that in

enacting them the Legislature conferred upon courts of equity exclusive

jurisdiction of all cases involving permissive waste[]”); Fisher’s Ex’r, 202 S.W. at

496 (“[t]he right to maintain the statutory action . . . applies only to voluntary

waste”); Smith v. Mattingly, 96 Ky. 228, 28 S.W. 503 (1894) (“[t]here is an

obvious and well–recognized distinction between voluntary waste . . . and

permissive waste . . . and that the statute quoted was intended to authorize an
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action for voluntary waste only, not for permissive waste, is made by the

language used too clear for discussion[]”).

      The effect of this distinction, that an action for voluntary waste lay in law

while an action for permissive waste lay in equity, led to a recognition that the

cause of action accrued, and the statute of limitations began to run, at

different times for the respective class of waste. The statute of limitations for

permissive waste does not begin to run until the death of the life tenant. See

Meredith v. Ingram, 495 S.W.2d 171, 172 (Ky. 1973) (holding “[the

remainderman’s] cause of action [for permissive waste] does not accrue, for

limitation purposes, until the death of the life tenant[]”) (citing Prescott v .

Grimes, 143 Ky. 191, 136 S.W. 206 (1911); Collins, 266 S.W. 910)). By

contrast, the limitation period on an action for voluntary waste begins “from

the time when the voluntary waste complained of was committed.” Fisher’s

Ex’r, 202 S.W. at 496. Further, the limitation period for voluntary waste has

been determined to be five years as prescribed in Ky. Stat. § 2515, the

predecessor to our current KRS 413.120. Id.

      This jurisprudence underlies the issues presented by SYB and the

Ferrills. To resolve this matter, we are faced with two options: affirm our

longstanding distinction between voluntary and permissive waste or overrule

the decisions of our predecessor courts and collapse the two categories into

simply “waste.”

      Ultimately, SYB is correct that the resolution is most readily found in the

language of the statute itself. Crucially, KRS 381.350 applies to any tenant

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who “commits waste during his estate”. (Emphasis added). “Commit” denotes

a purposeful action and, as Merriam-Webster indicates, it can be defined as “to

carry into action deliberately.” Commit, Merriam-Webster Dictionary Online,

https://www.merriam-webster.com/dictionary/commit. Similarly, the 1828

edition of Webster’s Dictionary defined “commit” in relevant part as “to do; to

effect or perpetrate[.]” Commit, Webster’s Dictionary 1828,

https://webstersdictionary1828.com/Dictionary/Commit. Our predecessor

court observed “an obvious and well–recognized distinction between voluntary

waste, which consists in the commission of some destructive act, and

permissive waste, consisting in omission by a tenant for life or years to keep the

land and tenements in proper repair[.]” Smith, 28 S.W. at 503 (emphasis

added). Thus, the plain language of the statute bears out the assertion in

Smith that the predecessor statute, containing largely similar language, was

meant to apply to voluntary waste alone “by [] language [] too clear for

discussion.” Id.

      This conclusion is further supported by the analysis of the Court of

Appeals of Ohio in Reams v. Henney, 97 N.E.2d 37 (Ohio Ct. App. 1950). The

Ohio court was called upon to determine the proper statute of limitations for

permissive waste. The court addressed Ohio’s equivalent to KRS 381.350

which stated,

      A tenant for life in real property, who commits or suffers waste
      thereto, shall forfeit that part of the real property of which such
      waste is committed or suffered, to the person having the immediate
      estate in reversion or remainder. Such tenant also will be liable in

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      damages to the person having the immediate estate in reversion or
      remainder for the waste committed or suffered thereto.

Id. at 410-11. Contrasting the Ohio provision with Kentucky’s, the court wrote,

      [T]he Kentucky statute authorizes an action to be brought for
      voluntary waste. It does not authorize an action to be brought for
      permissive waste. It is apparent that the provisions of the statute
      in Ohio and the statute in Kentucky are dissimilar in that the Ohio
      statute covers both voluntary and permissive waste, whereas the
      Kentucky statute only covers voluntary waste.

Id. at 414. The basis for that conclusion turned on the language of the

respective statutes: “The word ‘committed’ refers to voluntary waste, and the

word ‘suffered’ refers to permissive waste.” Id. at 411. While Ohio’s statute

addressed waste “commit[ted] or suffer[ered]”, Kentucky’s statute only applied

to waste “commit[ted]”. Compare Ohio Rev. Code § 2105.20, with KRS

381.350. As recently as 2015, the Court of Appeals of Ohio has cited to Reams

and affirmed its reasoning as well as recognized the distinction between

voluntary and permissive waste.

      Given the language of the statute and the fact that a number of

jurisdictions retain the two categories of waste (at least in the realm of life

estates),7 we hold Fisher’s Ex’r and such related cases continue to be accurate

statements of the law of waste as it exists in Kentucky. Accordingly, KRS

381.350 continues to apply only to claims of voluntary waste.

      7 See, e.g., Estate of Johnson v. Director, Division of Taxation, No. 010286-2015,
2018 WL 3018883, at *5 (N.J. Tax Ct. June. 15, 2018) (“New Jersey Courts have
recognized two main varieties of waste, voluntary and permissive[]”); Kennedy v.
Meech, 961 N.E.2d 164 (Mass. App. Ct. 2012) (Noting, “the line between voluntary
and permissive waste is often not an easy one to draw”); Wells Fargo Bank Minn., N.A.
v. Diamond Point Plaza, L.P., 908 A.2d 684 (Md. Ct. Spec. App. 2006) (“There are
principally two different types of waste: voluntary and permissive waste[]”).

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      We further re-affirm that the five-year statute of limitations for voluntary

waste claims begins when the waste is committed.8 Although we acknowledge

that the reasoning in Fisher’s Ex’r for beginning the limitations period upon

commission was scant at best, compelling reasons exist to adhere to that

holding. Aside from the doctrine of stare decisis—“the means by which we

ensure that the law will not merely change erratically, but will develop in a

principled and intelligible fashion[]”9—placing the accrual point at the death of

the life tenant would render superfluous one provision of KRS 381.350: that

the life tenant “shall lose the thing wasted.” By this, the statute directs that in

instances of voluntary waste the life estate, or a portion of it, shall be forfeited

by the tenant to the reversioner. Salyer’s Guardian, 283 S.W. at 1018. Should

an action for voluntary waste accrue only at the death of the life tenant, no

need would exist for this remedy as the estate would already have passed to

the remaindermen, thus rendering a portion of the statute unnecessary

surplusage.

      Further, practical considerations militate against beginning the

limitations period at the death of the life tenant. Primarily, this Court is

concerned that the treble damages of KRS 381.350 would incentivize

remaindermen to sit on their rights as the corpus of the estate is despoiled so

      8  We need not address whether the statute of limitations would be tolled
pending discovery of the waste by the remaindermen. In each of the counts dismissed
by the trial court, dismissal would have been appropriate either from the date of
occurrence or from the date of discovery.
      9   Vasquez v. Hillery, 474 U.S. 254, 265 (1986).

                                           10
that they may later realize a three-fold recovery. Given the present state of our

jurisprudence on permissive waste, which SYB asks us to apply to voluntary

waste claims, malfeasance committed by the life tenant against the estate at

any point would be actionable upon his or her death, with treble damages

being the reward.10 Finally, we note that our approach to permissive waste is

similarly not universally followed,11 and our present rule is less harsh than

that articulated in Reams by the Ohio Supreme Court which limits actions for

both voluntary and permissive waste to events occurring up to four years prior

to the action. Reams, 91 N.E.2d at 416. Voluntary waste is not the result of a

life tenant merely taking a lackadaisical approach to maintaining the estate;

rather, such waste is active, deliberate intrusions committed upon the estate.

In that instance, to allow the remaindermen to sit idly by while such

malfeasance occurs seem to us to be the less desirable option.

      Those matters resolved, we return to the case at hand to resolve one final

contention by SYB. It argues that regardless of our ruling on the voluntary

waste question, its complaint never explicitly asserted a claim for voluntary

waste and can thus reasonably be construed as an action for either voluntary

or permissive waste. This argument is without merit. SYB, in its First

Amended Complaint avers that the Ferrills’ conduct “constitutes waste for

which the Plaintiff is entitled to treble damages . . . pursuant to KRS 381.350.

      10 Deliberate destruction of the estate occurring decades prior to the running of
the statute of limitations could potentially become the subject of litigation.
      11   See Hollon, supra, at 864-65

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(Emphasis added). The waste claim was clearly pled pursuant to the statute,

and the law of Kentucky for over 100 years has been that KRS 381.350 applies

only to claims for voluntary waste. Accordingly, the trial court was correct that

SYB stated claims for voluntary waste.

      As to the fraud and breach of fiduciary duty claims, also dismissed by

the trial court pursuant to the statute of limitations, our law is clear that those

claims were time-barred. Fraud claims accrue within five years of the

discovery of the fraud, with a ten-year limit on discovery from the time the

fraud was committed. KRS 413.130. The parties at the trial level agreed as to

the statute of limitations for breach of fiduciary duty, but SYB now argues

such claims should not accrue until the termination of the life estate.

Nonetheless, an action for breach of fiduciary duty has been held to accrue

upon the commission of the breach. Middleton v. Sampey, 522 S.W.3d 875,

878-79 (Ky. App. 2017). We see little justification to carve out an exception for

fraud or breach of fiduciary duty committed as to a life estate, particularly in

light of our previous discussion of voluntary waste. Accordingly, those claims

were properly dismissed.

                               IV.   CONCLUSION

      For the foregoing reasons, the holding of the Court of Appeals is reversed

in part and affirmed in part. To be clear, we affirm in full the Nelson Circuit

Court’s Order granting summary judgment in favor of the Ferrills, as modified

in its December 14, 2018 Order as well as all other issues determined by the

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trial court and do not disturb any issues resolved by the parties’ March 4, 2019

Agreed Order.

      All sitting. All concur.

COUNSEL FOR APPELLANTS:

Matthew Creighton Hess
Bell Hess & Van Zant P.L.C.

COUNSEL FOR APPELLEES:

David Brandeis Tachau
Tachau Meek P.L.C.

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