Opinion
2023-CA-1026-MR
09-27-2024
THOMAS O. EIFLER, JR. APPELLANT v. ARDIS E. GREENAMYER, II APPELLEE
BRIEFS AND ORAL ARGUMENT FOR APPELLANT: Steven J. Mattingly Louisville, Kentucky BRIEF AND ORAL ARGUMENT FOR APPELLEE: Garry R. Adams A. Pete Lay Louisville, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE JENNIFER WILCOX, JUDGE ACTION NO. 09-CI-001166
BRIEFS AND ORAL ARGUMENT FOR APPELLANT: Steven J. Mattingly Louisville, Kentucky
BRIEF AND ORAL ARGUMENT FOR APPELLEE: Garry R. Adams A. Pete Lay Louisville, Kentucky
BEFORE: ACREE, EASTON, AND MCNEILL, JUDGES.
OPINION
EASTON, JUDGE
Appellant Thomas O. Eifler, Jr. ("Eifler, Jr.") appeals from a bench trial verdict in favor of Appellee Ardis Greenamyer, II ("Greenamyer") on Greenamyer's promissory estoppel and unjust enrichment claims. Eifler, Jr. asserts that the circuit court erred in applying promissory estoppel based on a promise by Eifler, Jr. to make Greenamyer a 50/50 partner in a hoist and crane business.
Eifler, Jr. claims also that the circuit court erred in determining the damages awarded for promissory estoppel and unjust enrichment. Upon review, we affirm.
FACTUAL AND PROCEDURAL HISTORY
Eifler, Jr. and Greenamyer were friends since high school. In 2005, they had an idea to start a tower crane and hoist business, which would lease the equipment for use at construction sites. They discussed the potential business into the next year.
In March 2006, several limited liability companies ("LLC") were created with Eifler, Jr. as the sole member of the "parent" LLC. We will refer to these entities collectively as "the Eifler Companies." Eifler, Jr. took out two life insurance policies on Greenamyer totaling $1,750,000 - for which he continued to pay premiums even after Greenamyer was later kicked out of the Eifler Companies' offices.
Around the March 2006 timeframe, Eifler, Jr. and Greenamyer traveled to Prague, where they negotiated the purchase of hoists from the Czech company, PEGA. In April 2006, Eifler, Jr. and Greenamyer took a ski trip to Utah. Greenamyer says that, during this later trip, he and Eifler, Jr. executed two virtually identical handwritten agreements (collectively "the Handwritten Agreement") which outlined the formation, ownership, and operation of a tower crane and hoist company. One of the copies of the Handwritten Agreement was written on a notepad obtained from PEGA. The other copy was written on the back of an envelope from Resorts International Unlimited addressed to Greenamyer. According to Greenamyer, Resorts International Unlimited was the time-share company he used to book the trip to Utah. Both copies of the Handwritten Agreement are dated April 9, 2006, and appear to be signed by both parties.
Under the terms of the Handwritten Agreement, Greenamyer and Eifler, Jr. supposedly agreed that Eifler, Jr. would maintain the books and records of the Eifler Companies, but both Eifler, Jr. and Greenamyer would "have equal authority in all decisions." Each of them was to have an equal "50/50" ownership of the Eifler Companies. The Handwritten Agreement stated Eifler, Jr. would place the Eifler Companies in a trust "to protect &isolate all company assets from possible litigation." Some evidence indicates that the trust was intended to protect both parties from litigation concerns connected with one of Greenamyer's former business partners and Eifler, Jr.'s anticipated divorce.
All the Eifler Companies were eventually put into the "Eifler, Jr. Family Delaware Dynasty Trust" (the "Dynasty Trust"). Eifler, Jr.'s father, Thomas O. Eifler, Sr. ("Eifler, Sr."), was Grantor of the Dynasty Trust. Eifler, Jr. was the Investment Adviser of the Dynasty Trust. Eifler, Jr.'s sister, Julie Eifler Corbett ("Corbett"), was the Trust Protector of the Dynasty Trust. Greenamyer is the only individual not a member of the Eifler family listed in the Dynasty Trust documents. Section 3.7 of the Dynasty Trust states:
During the lifetimes of Tom and his issue, JULIE EIFLER CORBETT (hereinafter the "Holder"), shall have an inter vivos special power of appointment to donate and appoint the principal of the Trust Estate to or for the benefit of TOM and/or TOM's issue, in such manner and in such proportions, whether outright, in trust or otherwise, as the Holder may desire.
Additionally, during the lifetime of TOM and his issue, the Holder shall have an inter vivos special power of appointment to donate and appoint the principal of the trust estate that consists of business assets to ARDIS EUGENE GREENAMYER ("ARDIS"). If he is not then living, then such business assets can be appointed to his spouse, his descendants, or his estate. The Holder shall only appoint additional assets to ARDIS such that his interests in any given business interest, whether via LLC, corporation or partnership or other entity, does not exceed 50% of the total equity ownership therein.
Initially the business asset of this trust is an interest in Eifler Tower Crane &Hoist Company, LLC; however, the power shall extend to any additional added business assets.
In that same spring of 2006, Greenamyer learned of an opportunity to provide two tower cranes and two construction hoists for a high-rise condominium project ("Panorama Project") in Las Vegas, Nevada. Later that same year, Greenamyer travelled to Bangkok where he negotiated the favorable purchase of two Kroll K-320 tower cranes ("Kroll cranes") for the total sum of $1,750,000. After securing the Kroll cranes, the Eifler Companies were awarded the crane and hoist contract for the Panorama Project.
By the beginning of 2008, the Eifler Companies were successful and profitable. Eifler, Jr. and Greenamyer had purchased a private airplane, had over $430,000 in cash on deposit awaiting the manufacture of additional hoists, had purchased certificates of deposit worth over $1,000,000 from company profits, and had approximately $400,000 in cash in their operating account.
In February 2008, Eifler, Jr. requested to be let out of the business relationship with Greenamyer. Greenamyer testified he was surprised by Eifler, Jr.'s wanting to leave, but they engaged in discussions throughout the rest of 2008 calculated to lead to Greenamyer's assumption of control and ownership of the Eifler Companies. Eifler, Jr. consulted with the companies' accountant, Nolen Allen, to value the companies. This valuation was apparently in the range of $6-$8 million.
Eifler, Jr. and Greenamyer exchanged multiple drafts of potential purchase agreements. The first (Draft 1) was written in May 2008. Under Draft 1 Greenamyer would pay the Dynasty Trust $4,700,000 in exchange for all interests in the Eifler Companies. Eifler, Jr. signed Draft 1, but Greenamyer did not.
In September 2008, another draft ("Draft 2") was created. Draft 2 provided that Greenamyer would pay Eifler, Jr. $3,800,000 with reference to certain indebtedness in about that amount. As with Draft 1, Eifler, Jr. signed Draft 2, but Greenamyer did not.
Around October 2008, Eifler, Sr. and Greenamyer got into an argument at the Eifler offices. Eifler, Sr. insisted Greenamyer leave the building. The parties' relationship continued to deteriorate. Greenamyer then partnered with William Inman ("Inman"), an accountant, and Patrick Fister ("Fister"), a business investor, to attempt to buy a 50% interest in the Eifler Companies. As a result, they formed Crane and Hoist Acquisition Company, LLC ("CHAC").
The third draft ("Draft 3") of a purchase agreement was created in November 2008. It included signature lines for Eifler, Jr., on his own behalf and on behalf of the Eifler Companies, and Fister, on behalf of CHAC. Draft 3 stated CHAC would "assume from Eifler all secured acquisition and/or purchase money indebtedness of the Eifler Companies collateralized by the Eifler Companies' assets (estimated as being $3,790,000)." Draft 3 was signed by Fister but not signed by Eifler, Jr. The last draft ("Draft 4"), signed by Eifler, Jr., stipulated that CHAC would "assume from Eifler Companies or refinance all existing indebtedness of Eifler Companies (estimated to be $3,798,255 as of the date hereof,)." Fister did not sign Draft 4.
In January 2009, Eifler, Jr. unilaterally sold the Kroll cranes for $700,000 (over $1 million less than what Greenamyer had paid for them). In February 2009, Eifler, Jr. filed for a writ of possession against Greenamyer to obtain parts to the Kroll Cranes that were on his property, as well as other items claimed to be property of the Eifler Companies. The writ was granted. The Jefferson County Sheriff's Office entered Greenamyer's property and seized equipment, including equipment belonging solely to Greenamyer. Greenamyer testified the value of the seized equipment was over $100,000 - for which he has not been reimbursed.
The seizure of property by Eifler, Jr. led to litigation which was a "procedural nightmare" and would involve courts in Kentucky and Louisiana, including a prior appeal to this court. Eifler Tower Crane Co., LLC v. Greenamyer, Case No. 2013-CA-001486-MR, 2014 WL 7013411 (Ky. App. Dec. 12, 2014).
Later in February 2009, Greenamyer filed a complaint (later amended) in Jefferson Circuit Court against Eifler, Jr., Eifler, Sr., and the Eifler Companies. Greenamyer's complaint sought a declaration of rights regarding his interest in the Eifler Companies, as well as damages based on a variety of claims.
A jury trial was held in June 2016. The following claims were submitted to the jury: (1) breach of contract against Eifler, Jr., (2) promissory estoppel against Eifler, Jr., (3) unjust enrichment against Eifler, Jr., (4) tortious interference with a contract against Eifler, Sr., (5) tortious interference with prospective contractual rights against Eifler, Sr., (6) fraudulent misrepresentation against Eifler, Jr., (7) aiding and abetting fraud against Eifler, Jr., (8) civil conspiracy against Eifler, Jr. and Eifler, Sr., and (9) punitive damages.
The jury awarded Greenamyer $5,660,000 in compensatory damages, as follows: (1) $2,800,000 against Eifler, Jr. for breach of contract; (2) $572,000 against Eifler, Sr. for tortious interference with a contract; (3) $572,000 against Eifler Sr. for tortious interference with prospective contractual rights; (4) $572,000 against Eifler, Jr. for fraudulent misrepresentation; (5) $572,000 against Eifler, Sr. for aiding and abetting fraud; and (6) $572,000 jointly against Eifler, Jr. and Eifler, Sr. for civil conspiracy. The jury also awarded Greenamyer $5,000,000 in punitive damages against Eifler, Jr. and $2,750,000 in punitive damages against Eifler, Sr. As the jury found for Greenamyer on his contract and fraud claims, the jury did not address the promissory estoppel or unjust enrichment claims. The circuit court had instructed the jury not to address these equitable claims if they found a breach of contract. The Eiflers appealed the 2016 jury verdict.
In June 2019, this Court rendered an Opinion affirming in part, reversing in part, and remanding with instructions to dismiss all of Greenamyer's claims, except promissory estoppel and unjust enrichment against Eifler, Jr. The Court held it was improper to submit Greenamyer's contractual claims to the jury as the Handwritten Agreement was too indefinite to be an enforceable contract. The Court also dismissed the fraud claims, the civil conspiracy claim, and the punitive damages award. The Court directed a "retrial" of the remaining claims.
Eifler v. Greenamyer, Case Nos. 2017-CA-000079-MR and 2017-CA-000434-MR, 2019 WL 2712618 (Ky. App. Jun. 28, 2019).
A jury trial on the remaining claims was scheduled for June 2023. By agreement of the parties, the jury trial was converted into a bench trial. The trial on the promissory estoppel and unjust enrichment claims was held from June 1215, 2023. Multiple witnesses were called. Having previously discussed some of the documentary evidence, we will summarize the pertinent testimony.
Greenamyer confirmed that he and Eifler, Jr. had known each other since high school. The two friends were later flying helicopter rescue missions together in New Orleans following Hurricane Katrina in 2005. The need for reconstruction of that city gave them the idea of a business venture involving a crane and hoist business. Greenamyer said he performed the lion's share of the work for the companies. There was evidence that Greenamyer worked 12-18 hour days, with his work billed by the Eifler Companies at different rates of $175 and $195 to as high as $275 per hour for overtime or Sunday hours.
Kelly Carstens ("Carstens") was recruited to oversee operations for the crane and hoist venture. She was initially paid through Greenamyer's personal company, Hi Rise Equipment, LLC ("Hi Rise"), but she was later hired by Eifler, Jr. as director of operations for the Eifler Companies. Eifler, Jr. assured her that he and Greenamyer were equal partners in the business. When she assisted Greenamyer in creating invoices to the Eifler companies for parts sold through Hi-Rise, there was no mark up on the prices.
Bill Fowler, a lifelong and close friend of both parties, said that Eifler, Jr. referred to Greenamyer as his "partner" in the crane and hoist business. M. L. Padden stated that Eifler, Jr. promised to place the Eifler Companies in trust to protect from the litigation concerns of both parties. Eifler, Jr. and Greenamyer discussed the Handwritten Agreement many times during her employment. Jana Miller was the bookkeeper for the Eifler Companies. Eifler, Jr. told her that a trust had been set up as a way for Greenamyer to gain an interest in the companies.
Diane Williamson ("Williamson") was recruited by Greenamyer to perform sales work for the Eifler Companies. Williamson asked Eifler, Jr. before coming to work for the companies about the strength of the commitment to the equal partnership Eifler, Jr. and Greenamyer had in the new venture. She received assurances from Eifler, Jr. about the strength of the partnership and that was the reason she came to work for the new venture.
The circuit court also heard the testimony of Inman, both as an expert and in his role of being part of the group that attempted to buyout Eifler, Jr. Inman provided a valuation of the Eifler Companies at $8 million at the end of 2008.
Finally, Eifler, Jr. testified. He confirmed his businesses were still cash positive in 2009. He also believed the businesses would have remained cash positive had Greenamyer not filed this suit. Eifler, Jr. acknowledged that, as of November 2008, Greenamyer was owed $27,500 in unreimbursed expenses.
After the trial, the parties tendered post-trial briefs. On July 14, 2023, the circuit court issued its written Judgment finding in favor of Greenamyer on both remaining claims. For the promissory estoppel claim, the court awarded damages to Greenamyer in the amount of $3,800,000 in lost economic value of 50% interest in the Eifler Companies. The court determined the damages by considering the $3,800,000 as effectively a purchase price for one-half of the Eifler Companies mentioned in Draft 2. The court placed significance on Draft 2 as it was the last proposed agreement before Greenamyer was kicked out by the Eifler companies. The court also awarded $27,500 to Greenamyer for his unjust enrichment claim.
Eifler, Jr. filed a post-trial motion seeking to alter, amend, or vacate the Judgment; for judgment notwithstanding the verdict; or a new trial. This motion was briefed by the parties. The circuit court denied the motion. This appeal followed.
STANDARD OF REVIEW
As the circuit court conducted a bench trial in this action, our review of the court's factual findings is based upon the clearly erroneous standard. Slone v. Calhoun, 386 S.W.3d 745, 747 (Ky. App. 2012). CR 52.01 states, in part: "Findings of fact[] shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." "Factual findings are not considered clearly erroneous if they are supported by substantial evidence. Appellate review of legal determinations and conclusions from a bench trial is de novo." Goshorn v. Wilson, 372 S.W.3d 436, 439 (Ky. App. 2012) (internal quotation marks and citations omitted).
Kentucky Rules of Civil Procedure.
ANALYSIS
PROMISSORY ESTOPPEL
Eifler, Jr. argues that the circuit court's Judgment on Greenamyer's promissory estoppel claim violates Kentucky law as there was no evidence of a definite promise. He contends the circuit court's reliance on the Handwritten Agreement as evidence to support a promissory estoppel judgment also requires reversal of the judgment. According to Eifler, Jr., this Court's prior ruling that the Handwritten Agreement was too indefinite to constitute an enforceable contract also bars a promissory estoppel claim.
In the circumstances of the prior appeal, this case must be resolved with reliance on the law of the case doctrine. The law of the case doctrine is "an iron rule, universally recognized, that an opinion or decision of an appellate court in the same cause is the law of the case for a subsequent trial or appeal[.]" TECO Mech. Contractor, Inc. v. Kentucky Lab. Cabinet, 474 S.W.3d 153, 158 (Ky. App. 2014) (citing Union Light, Heat &Power Co. v. Blackwell's Adm 'r, 291 S.W.2d 539, 542 (Ky. 1956)). A logical component of this doctrine is that the trial court must strictly follow the directions of the appellate court on remand. Buckley v. Wilson, 177 S.W.3d 778, 781 (Ky. 2005).
A claim of promissory estoppel arises from: "A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires." Sawyer v. Mills, 295 S.W.3d 79, 89 (Ky. 2009).
While this Court previously held that this case could not be based on a breach of a contract, we specifically recognized the viability of promissory estoppel on the evidence presented during the first trial. We directed a retrial, not a reassessment of whether the promissory estoppel claim could proceed. Further, when we consider the evidence of a promise and injustice which would follow a disregard of the promise made in this case, we hold the circuit correctly found for Greenamyer on the promissory estoppel claim as a result of the bench trial.
Eifler, Jr.'s insistence that the Handwritten Agreement was too indefinite to be considered an enforceable promise fails because we believe the prior appeal rejected that argument. Eifler, Jr. insists on a "contract theory" for promissory estoppel. But, at some point, there must be a distinction between an unenforceable contract and a promise sufficient to support estoppel. Otherwise, there would be no need for the equitable claim of promissory estoppel at all.
If we had chosen to reconsider the viability of the promissory estoppel claim for the retrial, we would find the cases cited by Eifler, Jr., unpersuasive. The cases are distinguishable. For example, Eifler, Jr.'s citation to UPS v. Rickert, 996 S.W.2d 464 (Ky. 1999), does not support his argument. In that case, promissory estoppel relief was granted based on less evidence (a vaguer promise with only oral evidence of the promise) than what was presented in the present case.
Eifler, Jr. then argues that the Handwritten Agreement does not satisfy the Statute of Frauds. Eifler, Jr. did not plead the affirmative defense of Statute of Frauds. It is not mentioned in his Answer or any other pleading. The failure to raise an affirmative defense in a responsive pleading generally constitutes a waiver of that defense. Headen v. Commonwealth, 87 S.W.3d 250, 254 (Ky. App. 2002).
Yet CR 15.02 states: "When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings." The Statute of Frauds defense arguably may have been tried by consent as Eifler, Jr., did raise the defense during the bench trial and in post-trial motions.
For completeness, we will address the Statute of Frauds. Codified under KRS 371.010, Kentucky's Statute of Frauds states, in relevant part:
Kentucky Revised Statutes.
No action shall be brought to charge any person:
....
(7) Upon any agreement that is not to be performed within one year from the making thereof;
....
unless the promise, contract, agreement, representation, assurance, or ratification, or some memorandum or note thereof, be in writing and signed by the party to be charged therewith, or by his authorized agent. It shall not be necessary to express the consideration in the writing, but it may be proved when necessary or disproved by parol or other evidence.(Emphasis added.) A claim of promissory estoppel without evidence of fraud does not excuse compliance with the Statute of Frauds. Scott v. Forcht Bank, NA, 521 S.W.3d 591, 596 (Ky. App. 2017) (citing Sawyer v. Mills, 295 S.W.3d 79, 89 (Ky. 2009)). The circuit court found Greenamyer and Eifler, Jr. made a promise to be 50/50 partners in their endeavor, and that this promise was memorialized in the Handwritten Agreement. The Statute clearly differentiates between claims based on contract and those based on promise. Any applicable requirement of the Statute of Frauds was satisfied in this case. The promise was in writing, even though the writing was not enough to be a contract.
In addition to the written documentation of the promise, there was substantial other evidence of the enforceable promise. Several witnesses testified of their knowledge of the promise and how it affected their actions. The Dynasty Trust also suggests Greenamyer was to be considered an equal partner.
As to the injustice of denying relief based on the promise, Greenamyer's efforts, including his work around the world, secured many projects for the Eifler Companies. Greenamyer worked uncounted hours in reliance on the promise. Much of the Eifler Companies' success was due to Greenamyer. The circuit court did not err in concluding that injustice could only be avoided if the promise was enforced.
DAMAGES
Eifler, Jr.'s other argument is about the damages awarded. Specifically, Eifler, Jr. believes the circuit court made an error in its factual finding by considering Draft 2 to calculate damages for the promissory estoppel claim. Consistent with Draft 2, the circuit court determined Greenamyer's 50% interest in the Eifler Companies was valued at $3,800,000. We note the circumstance that all the drafts appeared to be a buy-out of half the business, further evidence that Eifler, Jr. was aware of the promise for Greenamyer to start out as a half-owner.
Greenamyer offered the only expert testimony as to the valuation of the Eifler Companies during the relevant time. It was reasonable for the circuit court to rely on the sole expert witness on damages when it determined the promissory estoppel award.
We reject the contention that the number in Draft 2 really does not "add up" as to value of the companies because of the similar number for the debt Eifler, Jr. had guaranteed. The presence of this debt impacted the value of the companies. It is the overall value the circuit court had to determine. In doing so, that court reasonably considered a number (the one in Draft 2) which the parties also considered. Ultimately, the selection of the $3,800,000 was supported by the evidence as a whole and is not clearly erroneous.
Finally, Eifler, Jr. challenges the damage award on the unjust enrichment claim. He argues the circuit court committed a clear error of fact when it found there was $27,500 in unreimbursed expenses owed to Greenamyer as part of his unjust enrichment claim.
Recovery on an unjust enrichment claim requires a plaintiff to prove the following three elements: (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. Furlong Dev. Co., LLC v. Georgetown-Scott Cnty. Plan. &Zoning Comm'n, 504 S.W.3d 34, 40 (Ky. 2016) (citing Jones v. Sparks, 297 S.W.3d 73, 78 (Ky. App. 2009)). Eifler, Jr. did not actually appeal the court's judgment on unjust enrichment - conceding Greenamyer conferred a benefit upon Eifler, Jr. which was inequitably retained without payment to Greenamyer. We will then determine solely if the circuit court correctly assessed damages on that claim.
Evidence at trial showed that the Jefferson County Sheriff's Office seized equipment belonging solely to Greenamyer. He testified he has received no expense reimbursement for the property taken, which he estimated to be valued over $100,000. Draft 4 (signed by Eifler, Jr. but not Fister) attached a spreadsheet referred to as Exhibit B. The spreadsheet contains a ledger entitled "Transactions Before Sale" indicating a debt of $27,500.
Considering the aforementioned evidence, we cannot say the circuit court erred as to the damages awarded. An award of damages is a finding of fact that shall not be set aside unless clearly erroneous. The court's award of $27,500 on the unjust enrichment claim was not clearly erroneous as it was supported by substantial evidence. The amount awarded was within the permissible amounts claimed and proven.
CONCLUSION
The circuit court did not err when it found Eifler, Jr. made a promise to Greenamyer that he and Greenamyer would be 50/50 partners in their endeavors. The evidence and the law support the application of promissory estoppel in this case. The circuit court also did not err in determining damages for the promissory estoppel claim and the unjust enrichment claim. The Judgment of the Jefferson Circuit Court is AFFIRMED.
ALL CONCUR.