Court Opinion

ID: 4568586
Source: CourtListenerOpinion
Date Created: 2020-09-22 23:06:33.764359+00
Date Added: 2024-06-11T13:28:10.179556
License: Public Domain

RENDERED: SEPTEMBER 4, 2020; 10:00 A.M.
                       NOT TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                            NO. 2019-CA-000898-MR

GARY ALLEN AND
GARY ALLEN CONSTRUCTION, INC.                                     APPELLANTS

                 APPEAL FROM KNOX CIRCUIT COURT
v.             HONORABLE MICHAEL O. CAPERTON, JUDGE
                      ACTION NO. 13-CI-00497

HOMETOWN BANK OF CORBIN, INC.                                        APPELLEE

                                   OPINION
                                  AFFIRMING

                                  ** ** ** ** **

BEFORE: CALDWELL, DIXON, AND L. THOMPSON, JUDGES.

DIXON, JUDGE: Gary Allen and Gary Allen Construction, Inc. (collectively

“Allen”) appeal from the orders of the Knox Circuit Court granting partial

summary judgment against them entered on November 3, 2014; denying their

motion to alter, amend, or vacate said order entered on October 23, 2018; denying

their motion to amend answer and counterclaim entered on October 23, 2018; and
granting summary judgment against them and denying their second motion to

amend counterclaim entered on May 14, 2019. Following review of the record,

briefs, and law, we affirm.

                   FACTS AND PROCEDURAL BACKGROUND

               In June 2013, Gary Allen—accompanied by his friend Charles Kent—

purchased an RV from East Gate Auto/RV Sales Center, LLC (“East Gate”). He

traded in his fifth-wheel camper against the purchase price and wrote a check for

$114,000 to pay the difference.1 At least one repair was made to the RV while

Allen waited and before he left the lot with it. According to Allen, at the time of

purchase, East Gate promised to perform further repairs on a few specified items.

However, no application for title was made and the RV’s title never transferred to

Allen.

               Within a few weeks after purchase, East Gate called Allen and told

him they needed to pick up the RV to obtain certain information from it for the

bank—Hometown Bank of Corbin, Inc. (“Hometown Bank”)—which had a

secured interest in the RV. East Gate picked up the RV, held it on their lot for a

period of time, and returned it to Allen with additional damages, as opposed to

1
  Allen testified he took out a $200,000 line of credit against his house to pay for the RV via a
$114,000 cashier’s check, and his construction company later paid off the line of credit.

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repairs. Allen later contacted East Gate requesting that repairs be made and that he

be given a certificate of title to allow him to insure the RV.

             On or about July 14, 2013, a resale or refund—for the purposes of this

appeal it matters not which—occurred with Allen returning the RV in exchange for

his fifth-wheel camper and a Hometown Bank check from East Gate for $114,000.

Daniel Day, the owner of East Gate, requested Allen wait until July 24, 2013, to

cash the check. Allen called Hometown Bank several times to see if there were

sufficient funds available to cash the check and was repeatedly informed there

were not.

             On July 24, 2013, Allen and Kent went to East Gate and obtained the

keys to the RV. Kent began driving the RV toward Allen’s home in Tennessee

while Allen went to Hometown Bank to see if he could get the title to the RV or

cash the $114,000 check. When Allen presented the check to Hometown Bank, he

was informed there were still insufficient funds to cash the check. Don Ashley,

Executive Vice President of Hometown Bank, spoke with Allen and suggested

they meet with Day at East Gate. According to Allen, Day informed him that he

should not take the RV over the state line because he could be subject to criminal

prosecution since he did not hold title to the RV. Consequently, Allen called Kent

and had him return to East Gate with the RV. The four gentlemen convened at

East Gate, and the RV was placed in storage.

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                On November 5, 2013, Hometown Bank sued East Gate, Allen, and

others. On January 7, 2014, Allen answered and counterclaimed against

Hometown Bank, alleging fraud, intentional infliction of emotional distress (IIED),

the tort of outrage, a claim for punitive damages, conversion, and violation of the

Kentucky Consumer Protection Act (KCPA).2 Written discovery was propounded,

but Day refused to respond and ultimately passed away.3 On April 21, 2016,

Allen, Kent, and Ashley4 were deposed.

                Hometown Bank moved for summary judgment. On November 3,

2014, the court granted partial summary judgment against Allen on his IIED (as

well as, presumably, his tort of outrage), conversion, and KCPA claims and found

summary judgment premature for his fraud and punitive damages claims. Allen

moved the court to alter, amend, or vacate this order, but the motion was denied.

Allen also moved for summary judgment, which was denied as well.

                On April 28, 2017, Allen moved the court to amend his answer and

counterclaim to clarify his fraud claims and to add claims for unjust enrichment.

This motion was denied. Allen then moved the court a second time to amend his

2
    Kentucky Revised Statutes (KRS) 367.110 et seq.
3
    Day died on August 19, 2018.
4
    Ashley died on December 4, 2018.

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counterclaim, but the court deemed the motion untimely and futile. On May 14,

2019, the court entered summary judgment against Allen, and this appeal followed.

                                STANDARD OF REVIEW

                Summary judgment is appropriate “if the pleadings, depositions,

answers to interrogatories, stipulations, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of law.” CR5 56.03. An

appellate court’s role in reviewing a summary judgment is to determine whether

the trial court erred in finding no genuine issue of material fact exists and the

moving party was entitled to judgment as a matter of law. Scifres v. Kraft, 916
S.W.2d 779, 781 (Ky. App. 1996). A grant of summary judgment is reviewed de

novo because factual findings are not at issue. Pinkston v. Audubon Area Cmty.

Servs., Inc., 210 S.W.3d 188, 189 (Ky. App. 2006) (citing Blevins v. Moran, 12
S.W.3d 698, 700 (Ky. App. 2000)).

                Denial of a motion to amend under CR 15.01 is reviewed for an abuse

of discretion. Graves v. Winer, 351 S.W.2d 193, 197 (Ky. 1961). Abuse of

discretion occurs when the trial court’s ruling is “arbitrary, unreasonable, unfair, or

unsupported by sound legal principles.” Commonwealth v. English, 993 S.W.2d
941, 945 (Ky. 1999) (citations omitted).

5
    Kentucky Rules of Civil Procedure.

                                           -5-
                          NO PROOF OF OWNERSHIP

             On appeal, Allen contends the trial court erred by dismissing his

conversion claims. In order to prevail on a conversion claim, one must show that:

             (1) the plaintiff had legal title to the converted property;

             (2) the plaintiff had possession of the property or
             the right to possess it at the time of the conversion;

             (3) the defendant exercised dominion over
             the property in a manner which denied the plaintiff’s
             rights to use and enjoy the property and which was to
             the defendant’s own use and beneficial enjoyment;

             (4) the defendant intended to interfere with
             the plaintiff’s possession;

             (5) the plaintiff made some demand for the property’s
             return which the defendant refused;

             (6) the defendant’s act was the legal cause of the
             plaintiff’s loss of the property; and

             (7) the plaintiff suffered damage by the loss of the
             property.

Jasper v. Blair, 492 S.W.3d 579, 582 (Ky. App. 2016) (citation omitted).

             Allen argues he was the “owner” of the RV, which pursuant to KRS

186.010(7)(a) is “a person who holds the legal title of a vehicle or a person who

pursuant to a bona fide sale has received physical possession of the vehicle subject

to any applicable security interest.” Unfortunately for Allen, he never held legal

title to the vehicle; he only briefly possessed the RV and no longer had physical

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possession of it at the time of the alleged conversion, or during this lawsuit; and

the RV was subject to a security interest held by Hometown Bank. Therefore,

Allen was not the legal or statutory “owner” of the RV at the time of the alleged

conversion or at any time during which this action was initiated. See Auto

Acceptance Corp. v. T.I.G. Ins. Co., 89 S.W.3d 398 (Ky. 2002); Motorists Mut.

Ins. Co. v. Hammond, 355 F.3d 593, 597 (6th Cir. 2004).

             The court correctly dismissed Allen’s conversion claims because he

never held legal title to the RV. Without establishing this first essential element,

Allen could not prevail on his conversion claim as a matter of law; therefore,

summary judgment was proper on this claim.

                                       FRAUD

             Allen next argues that the trial court erroneously dismissed his fraud

claims. To succeed on a fraud claim, proof of the following by clear and

convincing evidence is required:

             (1) that the declarant made a material representation to the
             plaintiff, (2) that this representation was false, (3) that the
             declarant knew the representation was false or made it
             recklessly, (4) that the declarant induced the plaintiff to act
             upon the misrepresentation, (5) that the plaintiff relied
             upon the misrepresentation, and (6) that the
             misrepresentation caused injury to the plaintiff. The
             plaintiffs [sic] reliance, of course, must be reasonable . . . .
             The misrepresentation, moreover, must relate to a past
             or present material fact. “A mere statement of opinion
             or prediction may not be the basis of an action.” This
             means, as the Court of Appeals held, that forward-looking

                                          -7-
             opinions about investment prospects or future sales
             performance such as those involved in this case generally
             cannot be the basis for a fraud claim.

Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544, 549 (Ky. 2009) (emphasis added)

(citations omitted).

             The basic allegations of Allen’s fraud claims concern Ashley’s

statements regarding criminal prosecution if Allen were to transport the RV across

the state line, as well as his assurances that the matter would be resolved.

However, under Flegles, these “forward-looking” statements do not constitute

fraud. Neither of these alleged fraudulent statements concerned past or present

facts, but rather future actions. Consequently, Allen’s fraud claims fail as a matter

of law, and the trial court did not err in granting summary judgment.

                        AMENDMENT TO PLEADINGS

             Allen further argues the trial court erred by denying his motions to

amend his counterclaim to add allegations of unjust enrichment against Hometown

Bank. CR 15.01 governs amended pleadings, stating “a party may amend his

pleading only by leave of court or by written consent of the adverse party; and

leave shall be freely given when justice so requires.” Another panel of our Court

has held:

             In determining whether to grant a motion to amend a
             party’s complaint, a circuit court “may consider such
             factors as the failure to cure deficiencies by amendment
             or the futility of the amendment itself.” First National

                                         -8-
              Bank of Cincinnati v. Hartman, 747 S.W.2d 614, 616
              (Ky. App. 1988). Other factors include whether
              amendment would prejudice the opposing party or would
              work an injustice. See Shah v. American Synthetic
              Rubber Corp., 655 S.W.2d 489, 493 (Ky. 1983).
              Ultimately, whether a party may amend his complaint is
              discretionary with the circuit court, and we will not
              disturb its ruling unless it has abused its discretion.[6]
              Lambert v. Franklin Real Estate Co., 37 S.W.3d 770, 779
              (Ky. App. 2000).

Kenney v. Hanger Prosthetics & Orthotics, Inc., 269 S.W.3d 866, 869-70 (Ky.

App. 2007) (footnote added).

              For unjust enrichment, a plaintiff must prove: “(1) benefit conferred

upon defendant at plaintiff’s expense; (2) a resulting appreciation of benefit by

defendant; and (3) inequitable retention of benefit without payment for its value.”

Jones v. Sparks, 297 S.W.3d 73, 78 (Ky. App. 2009) (citation omitted). Allen

points out “[t]he problem is that the same circumstances that proved ownership for

the conversion claim also prove ownership here.” While his logic is correct, his

conclusion, once again, is incorrect. For the reasons previously discussed, Allen

did not own the RV at the time he alleges Hometown Bank took possession of it.

Thus, amendment would be futile to Allen’s success. Therefore, his unjust

6
  “The refusal of the chancellor to permit the filing of the amended answer and cross-petition,
which was tendered after he had announced judgment in favor of appellees, was not an abuse of
sound discretion.” Perros v. Stone’s Adm’r, 305 Ky. 142, 146, 202 S.W.2d 160, 162 (1947).

                                              -9-
enrichment claims must fail as a matter of law, and the court did not err in denying

Allen’s request to amend his counterclaim.

                                 CONCLUSION

             Therefore, and for the foregoing reasons, the orders entered by the

Knox Circuit Court are AFFIRMED.

             THOMPSON, L., JUDGE, CONCURS.

             CALDWELL, JUDGE, CONCURS IN RESULT ONLY.

BRIEFS FOR APPELLANTS:                    BRIEF FOR APPELLEE:

Bryan K. Sergent                          Mickey T. Webster
Manchester, Kentucky                      Thomas E. Travis
                                          Lexington, Kentucky

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