Opinion
NO. 2015-CA-001626-MR
05-04-2018
STEVEN ROUSE AND JULIE HOBBS APPELLANTS v. KIM FARMER AND COMMUNITY VENTURES CORP. APPELLEES
BRIEF FOR APPELLANTS: Steven Rouse, pro se Julie Hobbs, pro se Lexington, Kentucky BRIEF FOR APPELLEES, KIM FARMER AND COMMUNITY VENTURES: Barry M. Miller Christina L. Vessels Lexington, Kentucky
NOT TO BE PUBLISHED APPEAL FROM FAYETTE CIRCUIT COURT
HONORABLE JAMES D. ISHMAEL, JR., JUDGE
ACTION NO. 14-CI-02645 OPINION
AFFIRMING IN PART, REVERSING IN PART AND REMANDING
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BEFORE: COMBS, DIXON, AND NICKELL, JUDGES. NICKELL, JUDGE: Steven Rouse and Julie Hobbs ("homebuyers"), pro se, appeal from a Fayette Circuit Court's order granting a motion to dismiss filed by Community Ventures Corp. ("CVC") and its senior mortgage loan officer Kim Farmer ("Farmer"). We affirm the trial court's dismissal of all claims except breach of contract, which we remand with instruction for further proceedings.
Seeking to buy their first residence, homebuyers sought to obtain financing for the purchase of a home in June 2013. As part of a "live where you work" financial incentive program, homebuyers took an online video training course offered by CVC designed to educate them about purchasing a home. Homebuyers were required to visit CVC's offices to obtain certification of course completion. On June 12, 2013, homebuyers visited CVC and met with Farmer to obtain their certification. While there, they began discussing the homebuying process with Farmer.
Homebuyers met with Farmer again on July 11, 2013, to discuss home financing options. Homebuyers allege Farmer purported to "lock in" a guaranteed interest rate of 4.75% for 30 days to finance their purchase. Hours later, Farmer called homebuyers, telling them the interest rate would be higher unless they paid approximately $6,000 down. Subsequently, homebuyers obtained a home loan at a higher interest rate elsewhere.
Homebuyers sued CVC and Farmer on grounds of fraud, breach of contract, tortious interference with contract, tortious interference with business advantage, violation of Kentucky's Consumer Protection Act, and various federal claims. CVC petitioned for removal to federal court and moved to dismiss homebuyers' claims. After allowing homebuyers to make a more definite statement concerning their complaint, the federal court dismissed homebuyers' federal claims and remanded the state claims to the trial court. Rouse v. Farmer, 5:14-CV-331-KKC, 2015 WL 1179967 (E.D. Ky. Mar. 12, 2015).
Kentucky Revised Statutes (KRS) 367.110, et seq.
On remand, CVC moved the trial court to dismiss the remaining claims. The trial court allowed homebuyers to amend their complaint prior to ultimately dismissing their claims. Homebuyers appeal the trial court's Opinion and Order dismissing their claims, asserting it misconstrued representations made in the complaints. We hold, because homebuyers failed to adequately plead claims for fraud, tortious interference with a contract, tortious interference with a business advantage, and violation of the Consumer Protection Act, the trial court correctly dismissed those claims; however, because homebuyers sufficiently pled a cause of action for breach of contract, that claim alone is remanded for further proceedings.
At the outset, we address homebuyers' failure to comply with CR 76.12(4)(c)(v) requiring "citations of authority pertinent to each issue of law." Homebuyers' fifteen-page brief alleging five errors, cites one rule, one case, and two statutes. We decline to consider arguments with no supporting authority. Reinle v. Commonwealth, 170 S.W.3d 417, 419 (Ky. App. 2005); Cherry v. Augustus, 245 S.W.3d 766, 781 (Ky. App. 2006); Hadley v. Citizen Deposit Bank, 186 S.W.3d 754, 759 (Ky. App. 2005). Because "[i]t is not our function as an appellate court to research and construct a party's legal arguments," we will not do so for homebuyers. Hadley, 186 S.W.3d at 759. Moreover, homebuyers boldly note "no authorities beyond those cited by the Circuit Court's Opinion and Order were required for this brief." Homebuyers have failed to provide sufficient grounds for reversal of the trial court's dismissal of all of their claims, save one: breach of contract. As such, we must affirm in part, reverse in part, and remand for reasons discussed herein.
Kentucky Rules of Civil Procedure.
CR 76.12(4)(c)(v) further mandates a statement of preservation of alleged errors. Each argument must begin with "a statement with reference to the record showing whether the issue was properly preserved for review and, if so, in what manner." Id. Homebuyers' general statement of preservation for "all issues" at the beginning of their brief is inadequate. Contrary to their position, filing a notice of appeal does not preserve issues for our consideration; it transfers jurisdiction to the appellate court. CR 76.12. The purpose of CR 76.12(4)(c)(v) "is not so much to ensure that opposing counsel can find the point at which the argument is preserved, it is so that we, the reviewing Court, can be confident the issue was properly presented to the trial court." Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012). It is unclear whether the issues raised on appeal were properly presented, making it difficult to determine our standard of review. Homebuyers have not requested palpable error review.
Compliance with CR 76.12 is mandatory. CVC has asked us to dismiss this appeal or deem arguments waived where homebuyers failed to cite supporting authority.
It is a dangerous precedent to permit appellate advocates to ignore procedural rules. Procedural rules "do not exist for the mere sake of form and style. They are lights and buoys to mark the channels of safe passage and assure an expeditious voyage to the right destination. Their importance simply cannot be disdained or denigrated."Hallis v. Hallis, 328 S.W.3d 694, 696 (Ky. App. 2010) (quoting Louisville and Jefferson County Metropolitan Sewer Dist. v. Bischoff 248 S.W.3d 533, 536 (Ky. 2007)).
In these situations, the Court of Appeals has three options: "(1) to ignore the deficiency and proceed with the review; (2) to strike the brief or its offending portions; or (3) to review the issues raised in the brief for manifest injustice only." Id. (citing Elwell v. Stone, 799 S.W.2d 46, 47 (Ky. App. 1990)). In considering these options, we cannot disregard the procedural deficiencies contained in homebuyers' brief. "While pro se litigants are sometimes held to less stringent standards than lawyers in drafting formal pleadings, see Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972), Kentucky courts still require pro se litigants to follow the Kentucky Rules of Civil Procedure." Watkins v. Fannin, 278 S.W.3d 637, 643 (Ky. App. 2009). Rouse is not the typical pro se litigant. He has identified himself as a lawyer. As such, he should be familiar with court rules. Rouse being a lawyer, we are not inclined to grant him leniency. However, Hobbs has not indicated she is an attorney and appears to be a more traditional pro se litigant. Therefore, rather than dismiss the appeal, strike homebuyers' brief or disregard arguments, we choose to review the issues for manifest injustice, which occurs when "the error seriously affected the fairness, integrity, or public reputation of the proceeding." Wise v. Commonwealth, 422 S.W.3d 262, 276 (Ky. 2013) (citations omitted). Having reviewed the record, we ascertain error constituting manifest injustice concerning the dismissal of homebuyers' breach of contract claim. Their other claims, however, were properly dismissed.
Homebuyers' latest attempt to put forth a cause of action was a nineteen-page complaint containing one hundred thirty-seven numbered paragraphs, single-spaced. On appeal, they strongly suggest the trial court did not read their complaint. They further claim if we give their complaint a fair reading, we will reinstate the suit. They are largely mistaken. Despite homebuyers' verbosity, they failed to state an actionable claim on all but one count. We echo the words of our sister court:
[i]f ever a case showed the disadvantages of the scattershot, "kitchen sink" approach to pleading—for all parties concerned—this is it. The defendant's crossclaim here alleges fraud, breach of contract, and intentional interference with contractual relations, not to mention intentional interference with prospective contractual relations, and breach of good faith. Also alleged are violations of both the Federal Automobile Dealers' Day in Court Act and the Illinois Motor Vehicle Franchise Act, as well as claims of commercial unreasonableness, failure to seek value for insurance claims, automatic termination of franchise, failure to seek value for other intangibles, and failure to dispose of collateral in bulk. And oh yes: fraudulent disposition of assets.
It is not that such an approach is disallowed (except of course when the claims are frivolous). After all, a party
may state "as many separate claims . . . as the party has regardless of consistency and whether based on legal, equitable, or maritime grounds." Fed.R.Civ.P. 8(e)(2). But legality and advisability are two different things, and judges of some experience, confronted with a seemingly limitless number of alleged causes of action, usually get a creeping suspicion (eventually borne out by the evidence) that the complainant's lawyer relies on many arguments because they lack faith in any of them.Chrysler Credit Corp. v. Anthony Dodge, Inc., No. 92 C 5273, 1995 WL 493436, at *1 (N.D. Ill. Aug. 15, 1995) (emphasis added).
My point is not solely to complain, nor to chide, but to help lawyers (who have a stake in knowing how judges approach dispute resolution) understand that this lack of commitment lowers over their briefs like dense clouds. Quantity is a poor proxy for quality in court pleadings. Rarely, given the limitations of space, can the analysis in mega-multiple claim briefs be more than perfunctory and superficial; rarely are conclusions more than conclusory; rarely is there focus. Like wheat unseparated from chaff, the individual merits of these voluminous claims, if any, appear undistinguished.
The volume of issue presented by Anthony Dodge in its counterclaim here shows that in the fractious world of disputes less is often more, and more may be considerably less.
A trial court should only grant a motion to dismiss if "it appears the pleading party would not be entitled to relief under any set of facts which could be proved in support of his claim." Benningfield v. Petit Environmental, Inc., 183 S.W.3d 567, 570 (Ky. App. 2005). In considering the motion to dismiss, the truth of the allegations in the amended complaint is assumed and the pleadings are to be liberally construed in the light most favorable to the homebuyers. Id. This determination requires no factual findings and is purely a question of law. Id.
In causes of action for fraud, Kentucky law requires a showing of intent to deceive. Farmers Bank & Trust Co. of Georgetown, Kentucky v. Wilmott Hardwoods, Inc., 171 S.W.3d 4, 11 (Ky. 2005); Smith v. Barton, 266 S.W.2d 317 (Ky. 1954). Here, after close and careful review, we discern no allegation or proof of an intent to deceive by Farmer, CVC, or both to sustain an action for fraud. Homebuyers' allegation simply stating, "[i]ntent can be inferred from circumstances" is insufficient. As such, the trial court did not err in dismissing homeowners' fraud claim.
Homebuyers' second claim is for breach of contract. No written contract or agreement has been presented in this case. Nonetheless, Homebuyers allege they entered an oral agreement with Farmer to lock in a 4.75% interest rate for thirty days. The trial court stated:
[w]ithout a written contract regarding the sale of real estate, the Kentucky "Statute of Frauds" codified at KRS 371.010(6) prohibits this claim. Since the mortgage was a thirty (30) year payoff, KRS 371.010(7) also bars the claim as any agreement could not be performed within one year. Lastly, KRS 371.010(a) [sic] bars any claim "upon any promise . . . to loan money . . . or make any financial accommodation . . . to assist . . . to the purchase of realty or property." The second claim is barred by the foregoing "Statute of Frauds" coupled with a fair reading of the Closing Cost Worksheet and the pre-approval letter. There is no contract or agreement between the parties under Kentucky Law upon which the plaintiffs may pursue relief.Homebuyers assert the trial court's findings were erroneous because it considered the only agreement between the parties to be for the thirty-year mortgage rather than the thirty-day rate lock.
Homebuyers are correct. An oral rate lock agreement such as the one they allege occurred is not prohibited under the Statute of Frauds. An oral rate lock agreement as described between the parties, is not "for the sale of real estate," and, therefore, not prohibited under KRS 371.010(6). An oral rate lock agreement for thirty days was also not prohibited under KRS 371.010(7) because it could and was contemplated to be performed within one year. Similarly, such an oral rate lock agreement was not barred under KRS 371.010(9) because that provision concerns business enterprises and is inapplicable to homebuyers. See Davis v. Davis, 343 S.W.3d 610, 615 (Ky. App. 2011); Flinn v. R.M.D. Corp., No. 3:11-CV-386-H, 2011 WL 5025354, at *3 (W.D. Ky. Oct. 21, 2011).
Although an oral rate lock agreement was not barred under the Statute of Frauds, there is insufficient record to establish whether the trial court erred in dismissing homebuyers' breach of contract claim. To prove a breach of contract, the complainant must establish three things: 1) existence of a contract; 2) breach of that contract; and 3) damages flowing from the breach of contract. Metro Louisville/Jefferson Cty. Gov't v. Abma, 326 S.W.3d 1, 8 (Ky. App. 2009) (citing Barnett v. Mercy Health Partners-Lourdes, Inc., 233 S.W.3d 723, 727 (Ky. App. 2007)). The elements of a contract are: offer and acceptance, full and complete terms, and consideration. Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 384 (Ky. App. 2002). Homebuyers allege Farmer/CVC offered to lock in an interest rate of 4.75% for thirty days and they accepted those terms. Homebuyers allege the consideration by each party was foregoing potentially more beneficial interest rates due to market fluctuation to obtain rate certainty for the period. They further allege the contract was breached when CVC refused to honor the rate and they were damaged by having to pay a higher rate.
"Rate lock agreements have rarely been litigated . . . . Simply stated, given the virtual dearth of on-point authority, the Court can only try to apply the law as best as it can." Valley Forge Renaissance, L.P. v. Greystone Servicing Corp., No. 1:09-CV-00131-TWP, 2012 WL 1340802, at *15 (S.D. Ind. Apr. 18, 2012) (internal citations omitted). "The court does not discount entirely the possibility that these issues might be resolved in defendant's favor as a matter of law, but the current record is simply too sparse to allow the court to reach a conclusion with any confidence. Cf. Lalonde v. Textron, Inc., 369 F.3d 1, 6 (1st Cir. 2004) (reversing dismissal under Rule 12(b)(6) where field of law was "neither mature nor uniform" and court risked high risk of error by ruling on such sparse record)[.]" Greentree Real Estate, LLC v. Bridger Commercial Funding, LLC, No. 108CV0080DFH-DML, 2009 WL 1922086, at *5 (S.D. Ind. July 1, 2009).
It has not been proven whether an oral contract existed, what its terms were, whether it was breached, and the damages of said breach, if any. Nevertheless, homebuyers' allegations in their amended complaint, taken as true, state a sufficient cause of action on a breach of contract claim to survive the motion to dismiss. To avoid manifest injustice, we must remand for further proceedings on the breach of contract claim.
Homebuyers' third claim is tortious interference with a contract claim.
The Restatement (Second) of Torts § 766 (1979) correctly states the legal requirements to prevail upon a claim of intentional interference with an existing contract:
Harrodsburg Indus. Warehousing, Inc. v. MIGS, LLC, 182 S.W.3d 529, 533 (Ky. App. 2005). Homebuyers assert CVC and Farmer caused them to breach a contract with the home's seller. They do not allege CVC or Farmer caused the home's seller not to perform under the contract. As such, we hold the trial court correctly found homebuyers failed to state an actionable claim for tortious interference with a contract. Furthermore, homebuyers did, in fact, purchase the home.One who intentionally and improperly interferes with the performance of a contract (except a contract to marry) between another and a third person by inducing or otherwise causing the third person not to perform the contract, is subject to liability to the other for the pecuniary loss resulting to the other from the failure of the third person to perform the contract.
Homebuyers' fourth claim is CVC and Farmer tortiously interfered with homebuyers' business advantage. Homebuyers allege CVC's and/or Farmer's actions prevented them from renting the vacant home prior to closing and damaged their relationship with the home's seller.
Tortious interference with a prospective business advantage does not require the existence of a contract. Rather, Snow Pallet must prove: (1) the existence of a valid business relationship or expectancy; (2) that Monticello was aware of this relationship or expectancy; (3) that Monticello intentionally interfered; (4) that the motive behind the interference was improper; (5) causation; and (6) special damages. Monumental Life Ins. Co. v. Nationwide Retirement Solutions, Inc., 242 F.Supp.2d 438, 450 (W.D.Ky. 2003). This analysis turns primarily on motive. National Collegiate Athletic Ass'n By and Through Bellarmine College v. Hornung, 754 S.W.2d 855, 859 (Ky. 1988). To prevail under this theory of liability, the "party seeking recovery must show malice or some significantly wrongful conduct." Id.Snow Pallet, Inc. v. Monticello Banking Co., 367 S.W.3d 1, 6 (Ky. App. 2012). Homebuyers have not pled or proved the required elements for this cause of action. Specifically, homebuyers have failed to specifically plead CVC or Farmer: intentionally interfered with an actual and known business relationship or expectancy, acted with improper motivation while dealing with homebuyers, or caused damage to a business relationship or expectancy. Homebuyers' allegations consist of speculation, supposition, and inference and do not have sufficient factual or legal basis to support a judgment in their favor. Stripping away the speculative allegations in the complaints and assuming all facts pled therein are true, homebuyers have not alleged all requisite elements to properly plead a cause of action under this theory for which relief may be granted. As such, we hold the trial court did not err in dismissing this claim.
We do not find that Snow Pallet has raised a genuine issue of material fact with respect to these elements. Even if we were to assume that applying for a commercial loan creates a valid business expectancy, there is no evidence, other than mere speculation, that Leveridge interfered with such expectancy, or that such interference was improper. Further, there is also no evidence of record, other than mere speculation, that any alleged interference would have been taken while Leveridge was acting as an agent for Monticello.
Homebuyers' fifth and final argument is CVC and Farmer violated Kentucky's Consumer Protection Act. The Kentucky Court of Appeals has previously held:
we do not believe that the Kentucky Consumer Protection Act applies to real estate transactions by an individual homeowner. Aud v. Illinois Cent. R. Co., 955 F.Supp., 757 (W.D.Ky. 1997); Miles v. Shauntee, Ky., 664 S.W.2d 512 (Ky. 1983); and KRS 367.220(1) which applies to:
[a]ny person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by KRS 367.170 . . . . (emphasis added).
Craig v. Keene, 32 S.W.3d 90, 91 (Ky. App. 2000). The only good and/or service homebuyers allege they purchased from CVC and/or Farmer was an online video training course. Homebuyers have neither alleged nor proved the course violated the Kentucky Consumer Protection Act through "[u]nfair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce" where "unfair shall be construed to mean unconscionable." KRS 367.170. Thus, the trial court correctly dismissed this claim.
As of this date, we are unaware of any Kentucky case which has determined that the Kentucky Consumer Protection Act is applicable to single real estate transactions.
In conclusion, manifest justice would not occur were we to affirm the trial court's dismissal of homebuyers' claims, except the alleged breach of contract. For the foregoing reasons, we affirm, in part, the order of the Fayette Circuit Court and reverse only as to the breach of contract claim which we remand with instruction for further proceedings.
DIXON, JUDGE, CONCURS.
COMBS, JUDGE, DISSENTS AND FILES SEPARATE OPINION. COMBS, JUDGE, DISSENTING: I am persuaded that the Statute of Frauds does pertain to the claim for breach of contract. Because there was no writing affecting a clear sale of real estate, this cause of action should also be dismissed. I would affirm in toto. BRIEF FOR APPELLANTS: Steven Rouse, pro se
Julie Hobbs, pro se
Lexington, Kentucky BRIEF FOR APPELLEES, KIM
FARMER AND COMMUNITY
VENTURES: Barry M. Miller
Christina L. Vessels
Lexington, Kentucky