Opinion
NO. 2018-CA-001754-MR NO. 2018-CA-001755-MR
02-21-2020
KENNETH MOORE APPELLANT v. PCG CREDIT PARTNERS, LLC APPELLEE AND MONEE MOORE WILLIAMS APPELLANT v. PCG CREDIT PARTNERS, LLC APPELLEE
BRIEFS FOR APPELLANTS: Reginald L. Thomas Lexington, Kentucky BRIEF FOR APPELLEE: Martin B. Tucker Sarah S. Mattingly Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE KIMBERLY N. BUNNELL, JUDGE
ACTION NO. 16-CI-04210 OPINION
AFFIRMING
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BEFORE: CALDWELL, DIXON, AND MAZE, JUDGES. DIXON, JUDGE: Kenneth Moore and Monee Moore Williams appeal from the orders granting PCG Credit Partners, LLC, ("PCG") partial summary judgment against them and denying their motion to alter, amend, or vacate said judgment entered on September 19, 2018, and October 24, 2018, respectively, by the Fayette Circuit Court. Following review of the record, briefs, and law, we affirm.
The facts and background are complex and involve many parties; therefore, we choose to discuss only those relevant to the instant appeals.
On September 28, 2015, Lexington Hospitality Group, LLC ("LHG"), executed and delivered a Loan Agreement to borrow $6,150,000 for a period of fifteen months to PCG, as well as a Secured Promissory Note, to purchase a hotel and restaurant. The Hotel has been managed by Janee Hotel Corporation. At the time of the Loan Agreement, Moore was the president of Janee Hotel Corporation, and Moore and Williams were married. Pursuant to the terms of the Loan Agreement, both Moore and Williams personally executed and delivered to PCG a Guaranty Agreement and an All-Assets Security Agreement.
Although improvements were made to the subject property, certain bills went unpaid. On November 16, 2016, All Trades Services, Inc., filed the underlying complaint in this matter against LHG, PCG, and Dogwood Hotels, LLC, to recover monies owed to it.
On February 9, 2017, Moore entered into a Forbearance Agreement concerning the loan, admitting "the Loan is now in default and all amounts due and payable under the Note and other Loan Documents . . . are now due and payable in full[.]" By its terms, the Forbearance Agreement continued until no later than January 15, 2018. Also, on February 9, 2017, Moore, as president of Janee Hotel Corporation, executed an Addendum to the Operating Agreement of Lexington Hospitality Group, LLC, ("Addendum") with PCG. This Addendum also admitted "the Loan is now in default and all amounts due and payable under the Note and other Loan Documents . . . are now due and payable in full[.]" The Addendum acknowledged:
Lender has agreed to forbear temporarily from enforcing its remedies under the Loan documents, including, without limitation, the right to foreclose, sue on the Loan documents, and demand statutory attorneys' fees notwithstanding such defaults, subject to the terms and conditions of that certain Forbearance Agreement of even date herewith.
On January 5, 2018, the trial court entered an order appointing a receiver to protect, preserve, and manage the subject property. The forbearance period expired no later than January 15, 2018.
On February 28, 2018, PCG amended its answer and filed a counterclaim against multiple parties, including Moore and Williams, as well as its cross-claims. On June 18, 2018, PCG moved the trial court for a judgment and order of sale for the subject property, which was entered by the trial court on July 24, 2018. On August 21, 2018, PCG moved the trial court for partial summary judgment against Moore and Williams under the relevant contracts, which the trial court granted on September 19, 2018. On October 1, 2018, Moore and Williams moved the trial court to alter, amend, or vacate its orders of partial summary judgment against them, which the trial court denied on October 24, 2018. These appeals followed.
As an initial matter, in contravention of CR 76.12(4)(c)(v), neither Moore nor Williams states how they preserved any of their arguments in the trial court.
Kentucky Rules of Civil Procedure.
CR 76.12(4)(c)[(v)] in providing that an appellate brief's contents must contain at the beginning of each argument a reference to the record showing whether the issue was preserved for review and in what manner emphasizes the importance of the firmly established rule that the trial court should first be given the opportunity to rule on questions before they are available for appellate review. It is only to avert a manifest injustice that this court will entertain an argument not presented to the trial court.Elwell v. Stone, 799 S.W.2d 46, 48 (Ky. App. 1990) (citation omitted). We require a statement of preservation,
so that we, the reviewing Court, can be confident the issue was properly presented to the trial court and therefore, is appropriate for our consideration. It also has a bearing on whether we employ the recognized standard of review, or in the case of an unpreserved error, whether palpable error review is being requested and may be granted.Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012). Neither Moore's nor Williams's brief contains a statement of preservation for any issue raised.
Additionally, CR 76.12(4)(c)(iv), relating to the requirement of a concise statement of the facts and procedural history of an appeal, requires "ample references to the specific pages of the record, or tape and digital counter number in the case of untranscribed videotape or audiotape recordings . . . supporting each of the statements narrated in the summary." Similarly, CR 76.12(4)(c)(v), relating to arguments raised on appeal, requires "ample supportive references to the record and citations of authority pertinent to each issue of law[.]" Again, neither Moore's nor Williams's brief contains a single citation to the record.
We further note that neither Moore's nor Williams's brief complies with CR 76.12(4)(c)(vii) which requires the appellant to "place the judgment, opinion, or order under review immediately after the appendix list so that it is most readily available to the court." Neither order being appealed was included with the briefs submitted by Moore or Williams. This rule also provides that the index "shall set forth where the documents may be found in the record." The purpose of this rule is to ensure that only items in the record are appended to the brief and considered by our court during review. Both Moore and Williams failed to do this.
We have three options: "(1) to ignore the deficiency and proceed with the review; (2) to strike the brief or its offending portions, CR 76.12(8)(a); or (3) to review the issues raised in the brief for manifest injustice only, Elwell v. Stone, 799 S.W.2d 46, 47 (Ky. App. 1990)." Hallis v. Hallis, 328 S.W.3d 694, 696 (Ky. App. 2010). Because these errors were made by counsel, we will not punish Moore or Williams. We will review the alleged deficiencies as best we can, but will not scour the record in support of the appellants' arguments.
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." CR 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 Community Services, Inc., 210 S.W.3d 188, 189 (Ky. App. 2006) (citing Blevins v. Moran, 12 S.W.3d 698, 700 (Ky. App. 2000)). Both Moore and Williams admit that "[d]eterminations of whether a breach of contract occurred between parties is inherently a question of law" and "[b]ecause there were no factual disputes resolved by the trial court, the matters before the Court of Appeals are purely questions of law and the scope of review to be exercised is de novo."
On appeal, the first argument presented by Moore and Williams is that they did not default under the terms of the Loan Agreement with PCG. They begin their argument by citing to the definition of default under the Addendum. However, the Addendum itself acknowledged the loan was in default and that the period of forbearance would end on or before January 15, 2018.
Moore and Williams then cite to the Loan Agreement itself, to a provision concerning "Nature of Loan":
This Agreement is non-recourse to the following members of Borrower: Dubrs Investments Ltd. And [sic] Mitul Patel (the "Exempt Members"). All duties, obligations and liability of Borrower under this Agreement will be undertaken by the Managing Member only in its capacity as manager of the Borrower. The Lender will look primarily to the property to collect its debt and not sue the Exempt Members to seek to collect a deficiency judgement against the Exempt Members. Lender may pursue its remedies against the Guarantors pursuant to their Limited Guaranty Agreements or fully for and [sic] Bad Boy Violation. The limiting language of this subsection shall supersede any other language in
this Agreement and the Loan Documents that may be interpreted as contradictory.(Emphasis in original.) Moore and Williams contend that this provision states the Lender must look to the property first, and the limited remedy against the Guarantors is only for a "Bad Boy Violation." These contentions are contradicted by the plain language of the above-quoted provision. First, it states the Lender will look primarily to the property to collect its debt. This does not preclude an entry of partial summary judgment prior to completion of the sale of the property. Second, it states the Lender may pursue its remedies against the Guarantors pursuant to their Limited Guaranty Agreements. The pertinent sections of the Guaranty Agreements provide:
Section 1.1 Guaranty of Obligation. Guarantor hereby irrevocably and unconditionally guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, acceleration of maturity or otherwise, but Guarantor's guaranty is only for a maximum amount of $500,000.00. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is personally liable for a maximum amount of $500,000.00 for the Guaranteed Obligations as a primary obligor. Notwithstanding the foregoing, Guarantor shall be fully and personally liable upon the occurrence of a Bad Boy Violation.
Section 1.2 Definition of Guaranteed Obligations. As used herein, the term "Guaranteed Obligations" means (i) payment of the principal amount of the Loan, together with all interest and other sums which may now be or may hereafter become due and owing pursuant to the
Loan Documents, and (ii) the prompt payment of each and every obligation, and full and complete performance of each and every covenant, contained in the Environmental Indemnity Agreement dated the date hereof given by Borrower to Lender.(Emphasis in original.) In the absence of "Bad Boy Violations," and despite the fact that the amount of default greatly exceeds the original loan amount, pursuant to these Guaranty Agreements both Moore and Williams are liable for $500,000.00 owed to PCG. These amounts were owed prior to the Forbearance Agreement and Addendum, but PCG agreed in those documents not to collect until after another default, or after January 15, 2018, whichever occurred first. Per these agreements, PCG did not make Moore or Williams parties to this litigation until the period of forbearance lapsed. Thus, the trial court did not err in granting partial summary judgments against both Moore and Williams for these amounts.
It is alleged that as of January 4, 2018, the remaining principal of the loan was $6,502,471.26; the outstanding interest on the loan was $4,294,803.48; outstanding fees in connection with the loan were $1,698,497.09; outstanding costs in connection with the loan were $100,042.90; and reserves were $4,962.33. This totals a debt owed of $12,590,852.40.
Next, Moore and Williams argue that they were never provided documentation by the court-appointed receiver to adequately address any shortfalls in hotel revenues. However, the receiver was not appointed until well after the initial default occurred when Moore and Williams became liable for their maximum amounts owed under their Guaranty Agreements. Only ten days or less of the forbearance period remained when the receiver was appointed. Therefore, this argument is of little or no consequence, and in either event does not preclude the grant of summary judgment because the period of forbearance ended no later than January 15, 2018.
Finally, Moore and Williams argue that there are genuine issues of material fact relating to the validity of the Forbearance Agreement and the Addendum because neither is signed by all parties. However, KRS 371.010 only requires that contracts be "signed by the party to be charged therewith" to be enforceable. See also Green v. Elliott County Bd. of Educ., 244 Ky. 500, 51 S.W.2d 459 (1932); Cowden Mfg. Co., Inc. v. Systems Equipment Lessors, Inc., 608 S.W.2d 58 (Ky. App. 1980). Contrary to the assertions made by Moore and Williams, failure to produce copies of these documents that are signed by all parties does not preclude summary judgment.
Kentucky Revised Statutes. --------
Therefore, and for the foregoing reasons, the orders entered by the Fayette Circuit Court are AFFIRMED.
ALL CONCUR. BRIEFS FOR APPELLANTS: Reginald L. Thomas
Lexington, Kentucky BRIEF FOR APPELLEE: Martin B. Tucker
Sarah S. Mattingly
Lexington, Kentucky