Opinion
NO. 2012-CA-001914-MR
11-07-2014
SALLY BARR, AND HUSBAND RICHARD E. BARR; CLAYTON M. RAY; STANFORD BRUCE HENDRICKSON, AND HIS WIFE, SHEILA HENDRICKSON; JACQUELINE C. NICHOLSON; DOROTHY H. KIRBY, AND HER HUSBAND, NORMAN KEITH KIRBY; CAROLYN H. WILSON, AND HER HUSBAND, TERRY K. WILSON APPELLANTS v. BROTHER'S CONSTRUCTION, INC., AND BROTHER'S HARDWARE AND BUILDING SUPPLY, INC.; ESTATE OF GLADYS HOSKINS; AND JIMMY BLANTON APPELLEES
BRIEFS FOR APPELLANT: Otis Doan, Jr. Harlan, Kentucky BRIEF FOR APPELLEES, BROTHER'S CONSTRUCTION, INC., BROTHER'S HARDWARE AND BUILDING SUPPLY, INC., AND JIMMY BLANTON: Karen S. Davenport Harlan, Kentucky BRIEF FOR APPELLEE, ESTATE OF GLADYS HOSKINS: No brief filed.
NOT TO BE PUBLISHED APPEAL FROM HARLAN CIRCUIT COURT
HONORABLE JAMES L. BOWLING, JR., SPECIAL JUDGE
ACTION NO. 08-CI-00927
OPINION
AFFIRMING
BEFORE: MOORE, NICKELL, AND STUMBO, JUDGES. NICKELL, JUDGE: Sally Barr, Richard E. Barr, Clayton M. Ray, Stanford Bruce Hendrickson, Sheila Hendrickson, Jacqueline C. Nicholson, Dorothy H. Kirby, Norman Keith Kirby, Carolyn H. Wilson and Terry K. Wilson (collectively "Barr"), have appealed from the Harlan Circuit Court's entry of summary judgment in favor of Brother's Construction, Inc., Brother's Hardware and Building Supply, Inc., Jimmy Blanton (collectively "Brother's Construction") and the Estate of Gladys Hoskins. We affirm.
On April 1, 1981, Nola Myers and Delta Creech leased six tracts of property located in the Sunshine Addition to the City of Harlan, Kentucky, to Robert J. Hoskins for a period of ninety-nine years. Of particular interest in the present action, the lease expressly required written consent from Myers and Creech prior to Hoskins's assignment or transfer of his leasehold interest. Robert Hoskins subsequently passed away and his interest under the lease passed to his widow and sole heir, Gladys Hoskins. The appellants herein are the heirs at law of Nola Myers and Delta Creech.
On August 28, 1996, Ms. Hoskins transferred her interest in two tracts of the subject property to Blanton. No written consent was obtained from the Myers and Creech heirs. Approximately four months later, the sale agreement was rescinded. On October 10, 1996, Ms. Hoskins again transferred her interest in the two tracts she previously attempted to transfer to Blanton, this time to Brother's Construction, Inc. Several—but not all of the heirs—consented in writing to this later transaction, although these heirs would subsequently contend their authorization was obtained by fraudulent means.
In 1999, Barr filed suit in the Harlan Circuit Court alleging Ms. Hoskins breached the terms of four separate leases. Specifically Barr contended Ms. Hoskins breached the 1981 lease
by transferring, selling, conveying and assigning on October 10, 1996, to Brothers (sic) Construction, Inc., all of her right, title and interest in a portion of said leased premises, in violation of the Lease which prohibits any assignment or transfer without the written consent of the Lessors. All of the Plaintiffs did not consent to the above transfer and assignment. For the above breach, the aforesaid Lease is subject to termination.Barr also alleged Ms. Hoskins's failure to pay rentals as required constituted further cause to terminate the lease. By Agreed Order dated May 5, 2000, the 1999 civil action was dismissed with prejudice based on an agreement to modify the terms of payment under the four leases which were the subject of that suit. None of the leases were terminated or modified in any other manner.
Several years later, on December 22, 2008, Barr filed the instant suit seeking to set aside the transfer of the lease from Ms. Hoskins to Brother's Construction, Inc. It was again alleged the transfer was "in violation of the lease agreement and therefore should be set aside as the heirs of Nola Myers or Delta Creech have not signed any type of document in this matter." Although not raised in the complaint, Barr later attempted to set up claims of fraud and misrepresentation in relation to Blanton's procurement of consent from several of the Myers and Creech heirs to the transfer from Ms. Hoskins to Brother's Construction, Inc. Ms. Hoskins died testate on July 17, 2009, and her estate was properly substituted as a party defendant in her stead.
Following a lengthy period of discovery and two failed attempts at mediation, Brother's Construction and the Hoskins Estate each filed motions for summary judgment. In support of their motions, both argued Barr's claims were precluded under the theory of res judicata due to the entry of the Agreed Order dismissing the 1999 civil action concerning the same lease and purported transfer. In response, Barr argued res judicata was inapplicable because: 1) the 1999 suit concerned only a breach of the 1981 lease based on Ms. Hoskins's failure to pay rent; 2) new parties had been added to the instant suit, including Brother's Construction, Inc., Brother's Hardware and Building Supply, Inc., and Blanton; and 3) new allegations had been raised in the present suit, including fraud and misrepresentation.
On December 20, 2011, the trial court entered an order granting summary judgment in favor of the Hoskins Estate. Subsequent motions to alter, amend or vacate filed by Barr and Brother's Construction were denied. Barr's appeal to this Court was dismissed as it was not prosecuted from a final and appealable order. Following the dismissal of the appeal, additional proceedings in the trial court resulted in entry of a final judgment and order on October 2, 2012, granting summary judgment to Brother's Construction and the Hoskins Estate. This appeal followed.
On appeal, our standard of review is "whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996). Furthermore, because summary judgments do not involve fact-finding, our review is de novo. Pinkston v. Audubon Area Community Services, Inc., 210 S.W.3d 188, 189 (Ky. App. 2006). With these standards in mind, we turn to the allegations of error presented.
Resolution of this appeal requires an understanding of the doctrine of res judicata and the rule against splitting causes of action, both of which are intended to prevent multiplicity of suits.
The doctrine of res judicata "stands for the principle that once the rights of the parties have been finally determined, litigation should end." It is "an affirmative defense which operates to bar repetitious suits involving the same cause of action." The doctrine is comprised of two subparts: claim preclusion and issue preclusion.
. . . .
For further litigation to be barred by claim preclusion, three elements must be present: (1) identity of the parties, (2) identity of the causes of action, and (3) resolution on the merits. As in most cases involving claim preclusion, the only element in dispute in this case is the second—identity of the causes of action.
Closely related is the rule against splitting causes of action. The rule, "found in Restatement (Second) of Judgments, §§ 24 and 26, is an equitable rule, limiting all causes of action arising out of a single 'transaction' to a single procedure." It rests upon the concept that "parties are required to bring forward their whole case" and may not try it piecemeal. Therefore, it "applies not only to the
points upon which the court was required by the parties to form an opinion and pronounce judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."Coomer v. CSX Transp., Inc., 319 S.W.3d 366, 371 (Ky. 2010) (internal citations and footnotes omitted).
"The key inquiry in deciding whether the lawsuits concern the same controversy is whether they both arise from the same transactional nucleus of facts."
Barr first asserts her claims cannot be barred by res judicata or claim preclusion because there is no identity of parties between the 1999 and 2008 actions. Barr admits the plaintiffs in both cases were identical, but contends the addition of Brother's Construction, Inc., Brother's Hardware and Building Supply, Inc., and Blanton as defendants in the instant suit clearly renders a finding of the existence of the first element of claim preclusion improper. No additional argument is made and no citation is made to authority supportive of this allegation. Likewise, Barr makes a passing assertion that the 1999 action was not resolved on the merits without citation to authority.
Threadbare recitals of the elements of a legal theory, supported by mere conclusory statements, form an insufficient basis upon which this Court can grant relief. Barr's skeletal arguments are completely devoid of meat and we are not inclined to sua sponte attempt to render them otherwise. Suffice it to say, the parties in both actions were legally identical as Brother's Construction, Inc., Brother's Hardware and Building Supply, Inc., and Blanton—as purchasers of Ms. Hoskins's leasehold interest—were her privies and clearly would have been—and, in fact, were—bound by the judgment entered in the 1999 action. See Yeoman v. Commonwealth, Health Policy Bd., 983 S.W.2d 459, 464 (Ky. 1998) (final judgment binding as to parties and their privies). See also Harris v. Jackson, 192 S.W.3d 279, 303 (Ky. 2006) (quoting State Farm Mut. Auto. Ins. Co. v. Shelton, 368 S.W.2d 734, 737 (Ky. 1963) (privity extends to those who would be bound by judgment and creates an identity of interest)); Miller v. Administrative Office of the Courts, 361 S.W.3d. 867, 871-72 (Ky. 2011) (same).
Further, the Agreed Order entered in the 1999 action acted as an adjudication on the merits as it specifically dismissed the matter with prejudice, thereby adjudicating all pending matters and prohibiting the parties from relitigating the issues raised therein. Barr's contention may have been meritorious had the 1999 matter been dismissed "without prejudice" but it was not. See Edinger v. Miller, 295 Ky. 287, 174 S.W.2d 421 (1943) (where action is dismissed without prejudice, no determination of the merits of any controversy occurs and judgment has no res judicata effect)). Thus, we believe the first and third elements of claim preclusion are present.
As to the second element, Barr strongly advocates there is no identity of causes of action and argues the issues raised in the present suit arise from differing facts and actions than those complained of in the earlier action. We disagree.
A review of the record indicates both of the actions spring from the "same transactional nucleus of facts" which occurred with the challenged sale of Ms. Hoskins's leasehold interest to Brother's Construction on October 10, 1996. These are the facts pled by Barr in the initiating documents for each of the two lawsuits. Contrary to Barr's assertion, the 1999 action was not merely an action based on Ms. Hoskins's failure to pay rent. This can clearly be seen from a plain reading of the language of the 1999 complaint set out above. Indeed, both the 1999 and 2008 complaints alleged Ms. Hoskins breached the 1981 lease by virtue of the October 10, 1996, transfer of her interest to Brother's Construction. All documents and evidence relied upon in support of the instant action were in existence prior to the institution of the 1999 action, and most, if not all, were lodged for public record in the office of the Harlan County Court Clerk. Thus, it is clear Barr was aware of the transfer and the purported impropriety thereof and reasonably should have presented the current arguments in the earlier suit. Coomer, 319 S.W.3d at 371.
In addition to the presence of the "same transactional nucleus of facts," there can also be no doubt that the legal grounds upon which Barr couched the latest complaint were known, or in the exercise of reasonable diligence should have been known, during the pendency of the previous action. Indeed, the instant complaint seeks similar relief to that sought in the prior action, albeit couched in somewhat more specific terms.
Next, although Barr argues the current suit contains issues not previously raised—fraud and misrepresentation—our review of the 2008 complaint reveals the absence of any such allegations, nor does the record contain an amended complaint setting forth these issues. While certain deposition testimony suggested the possibility of fraudulent misrepresentation in the procurement of consent from the Myers and Creech heirs, Barr has advanced no claim for relief based on these legal theories. Thus, Barr's contention is without merit.
Finally, Barr asserts the trial court erred in considering the affirmative defense of res judicata in this case because Ms. Hoskins and Brother's Construction failed to raise such a defense in their first responsive pleadings as required pursuant to CR 8.03. Barr argues such a failure constitutes a waiver, thereby precluding the trial court from later considering such defensive arguments. However, a cursory review of the answers filed in this action clearly reveals the assertion by Ms. Hoskins and Brother's Construction of "any and all" affirmative defenses available under CR 8.03. Brother's Construction went one step further and specifically pled estoppel as an affirmative defense. These assertions were sufficient to preserve the defense of res judicata for later consideration.
Kentucky Rules of Civil Procedure.
Estoppel has been held to have the same meaning as issue preclusion. See Coomer, 319 S.W.3d at 374; Moore v. Commonwealth, 954 S.W.2d 317, 318 (Ky. 1997).
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For the foregoing reasons, the judgment of the Harlan Circuit Court is affirmed.
ALL CONCUR. BRIEFS FOR APPELLANT: Otis Doan, Jr.
Harlan, Kentucky
BRIEF FOR APPELLEES,
BROTHER'S CONSTRUCTION,
INC., BROTHER'S HARDWARE
AND BUILDING SUPPLY, INC.,
AND JIMMY BLANTON:
Karen S. Davenport
Harlan, Kentucky
BRIEF FOR APPELLEE, ESTATE
OF GLADYS HOSKINS:
No brief filed.