Opinion
2023-CA-0526-MR
09-27-2024
STEPHEN BRAGG APPELLANT v. KATHLEEN BARBER APPELLEE
BRIEFS FOR APPELLANT: Stephen T. Porter Louisville, Kentucky. BRIEF FOR APPELLEE: Kathleen Barber, Pro Se Louisville, Kentucky.
NOT TO BE PUBLISHED
APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE CHARLES L. CUNNINGHAM, JR., JUDGE ACTION NO. 22-CI-000698.
BRIEFS FOR APPELLANT: Stephen T. Porter Louisville, Kentucky.
BRIEF FOR APPELLEE: Kathleen Barber, Pro Se Louisville, Kentucky.
BEFORE: CETRULO, LAMBERT, AND TAYLOR, JUDGES.
OPINION
TAYLOR, JUDGE
Stephen Bragg brings this appeal from a December 28, 2022, Order Granting Summary Judgment in favor of Kathleen Barber and awarding her $21,956.72 in damages from termite infestation. We affirm in part, reverse in part, and remand with directions.
BACKGROUND
In 2013, Bragg purchased a house in Jefferson County, Kentucky, which is the subject matter of this appeal. At the time he acquired the property, a termite inspection report revealed past "termite evidence" in the floor joist of the crawlspace of the house and active termite infestation in the detached garage. In 2021, Bragg listed the house for sale and particularly listed the detached garage to be sold as is. A prospective buyer contracted for a home inspection and a termite inspection, which was performed on March 26, 2021. According to the March 26, 2021, termite inspection, visible evidence of termites was discovered, which included "termite shelter tubes, shelter tube staining, [and] shelter tube scarring." As for damage, the March 26, 2021, termite inspection found visible damage from termites "in floor joist in crawlspace" and in the detached garage. The prospective buyer did not purchase the house.
In April of 2021, Barber became interested in purchasing Bragg's house, and Bragg provided Barber a Seller's Disclosure of Property Condition signed by Bragg. Therein, questions were posed to Bragg concerning whether Bragg knew of present or past wood infestation from termites in the house or whether Bragg was aware of damage due to wood infestation from termites in the house. Bragg answered the first question no and the second question unknown.
Bragg and Barber then entered into a Residential Sales Contract (Sales Contract). Under its terms, Bragg agreed to sell and Barber agreed to buy the house for $135,000. Bragg represented that the Disclosure of Property Condition was true and accurate. The Sales Contract also included an arbitration provision.
Eventually, the parties closed the sale of the property on May 18, 2021, thus transferring ownership by deed to Barber. At closing, Barber received another Seller's Disclosure of Property Condition signed by Bragg, which contained identical questions concerning whether Bragg was aware of current or past termite infestation to the house and damage to the house from current or past termite infestation. Again, Bragg answered the first question no and the second question unknown.
On February 11, 2022, Barber, proceeding pro se, filed a one paragraph complaint against Bragg in the Jefferson Circuit Court. Barber alleged that Bragg failed to disclose known defects in the house and, thereby, committed fraud. Barber sought rescission of the contract and an award of expenses related to the purchase as follows:
$1,000.00 earnest money deposit
$440.00 appraisal fee
$500.00 elevation survey and certificate
$799.00 flood insurance
$7,585.72 cash-to-close
$500.00 professional movers to house
$500.00 professional movers from house
$886.00 x 12 months = $10,632.00 new lease contract for an apartment
Total: $21,956.72Record at 1. Bragg, represented by counsel, filed an answer and denied the allegations in the complaint.
Barber then filed a motion for summary judgment on June 3, 2022. Therein, Barber did not make a specific prayer for relief, but rather attached as an exhibit a "restitution" list, presumably asserting damages in the amount of $24,056.07. Record at 13. The motion made no reference to rescission of the deed or underlying contract. Bragg failed to file a response to the motion. Nonetheless, the circuit court denied the motion by order entered on August 15, 2022.
The motion primarily addressed termite infestation and damages. However, Exhibit 8 to the motion was a letter dated June 19, 2021, from Kathleen Barber (Barber) to Stephen Bragg, giving notice of her rescinding the purchase of the house due to rat infestation. This letter appears to be the basis for the court's denial of the motion.
Thereafter, on October 21, 2022, Barber filed a second motion for summary judgment. In the second motion, Barber narrowed her claim to fraud regarding the termite damage. Barber particularly argued that Bragg knew the house had both a past termite infestation and termite damage but affirmatively represented to Barber that neither event had occurred. Barber alleged that Bragg committed fraud and sought some $36,272.07 in damages. As evidence, Barber attached the following items to her motion: (1) the Sales Contract; (2) the Disclosure of Property Condition signed by Bragg on February 25, 2021, in which he stated that he was unaware of any present or past termite infestation to the house and that it was unknown whether there was termite damage to the house; (3) a termite inspection report on the house dated July 23, 2013, performed for Bragg, which showed termite evidence on the floor joists of the house; (4) a termite inspection report performed for a potential buyer and dated March 26, 2021, which noted termite damage to the floor joists; and (5) an invoice for termite treatment paid for by Bragg dated April 26, 2021. There was no reference to rescission in the second motion. Again, Bragg failed to file a response to the motion for summary judgment notwithstanding that he was represented by counsel in the case.
By Order Granting Summary Judgment entered December 28, 2022, the circuit court rendered summary judgment in favor of Barber. The court noted that Bragg failed to file a response to either motion for summary judgment and, thus, failed to defend the claims. The court made no reference to rescinding the contract and awarded Barber $21,956.72 in damages.
Bragg then filed a Kentucky Rules of Civil Procedure (CR) 59.05 motion to alter, amend, or vacate the summary judgment and memorandum in support thereof. For the first time, Bragg asserted that the Sales Contract contained an arbitration provision requiring Barber to submit her claims to mediation and arbitration. As a result, Bragg maintained that the circuit court should declare the current action "void and vacated." Record at 142. Bragg also argued that the circuit court's findings were erroneous. By order entered April 11, 2023, the circuit court denied the motion to vacate and noted that Bragg failed to respond to the motions for summary judgment "even when given additional time to do so." Record at 261. This appeal follows.
PRELIMINARY MATTERS
To begin, upon review of both parties' briefs filed in this appeal, neither party has complied with the Kentucky Rules of Appellate Procedure (RAP). Bragg's statement of points and authorities fails to comply with RAP 32(A)(2). Bragg also failed to provide references to the specific location in the record which supports each of the statements set out in the statement of the case. RAP 32(A)(3). In Bragg's argument, he makes no reference to the record whatsoever, including the failure to state how the issues raised on appeal were properly preserved below for appellate review. RAP 32(A)(4). As for Barber, her brief has similar deficiencies in violation of RAP 32(B)(2)(3) and (4).
Frankly, this Court could strike both briefs and dismiss this appeal. RAP 10(B); RAP (32)(H); see also Commonwealth v. Roth, 567 S.W.3d 591, 59496 (Ky. 2019); Hamburger v. Plemmons, 654 S.W.3d 99, 101-02 (Ky. App. 2022). However, this is a review of a summary judgment. Given there are only ten docket entries in the record on appeal, and the Appendix exhibits attached to each parties' brief appear to be from the record below, we have elected at our discretion to consider the appeal based upon the record presented on appeal. However, we warn both parties and counsel that this Court may not be so lenient in the future if this case is brought before this Court again after remand.
We also note that the Appendix in the briefs submitted by both parties fails to comply with Kentucky Rules of Appellate Procedure 32(E)(1)(d).
STANDARD OF REVIEW
The Kentucky Supreme Court has recently detailed our standard of review for summary judgment as follows:
Summary judgment should only be granted when "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." Kentucky Rules of Civil Procedure (CR) 56.03. "[T]he proper function of summary judgment is to terminate litigation when, as a matter of law, it appears that it would be impossible for the respondent to produce evidence at the trial warranting a judgment in his favor." Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476, 480 (Ky. 1991). "Because summary judgment does not require findings of fact but only an examination of the record to determine whether material issues of fact exist, we generally review of summary judgment without deference to either the trial court's assessment of the record or its legal conclusions." Hammons v. Hammons, 327 S.W.3d 444, 448 (Ky. 2010). Our review therefore is de novo. Id.Ashland Hosp. Corp. v. Darwin Select Ins. Co., 664 S.W.3d 509, 515-16 (Ky. 2022). Our review proceeds accordingly.
ANALYSIS
Bragg raises two issues on appeal. First, the circuit court erred by not referring this case to arbitration, and second, the judgment is "clearly erroneous." As concerns arbitration, Bragg asserts that the Sales Contract contained an arbitration provision. Under the mediation/arbitration provision, Bragg argues that Barber was bound to initially mediate her claims within 365 days of knowing the existence of such claims, and if mediation proved unsuccessful, such claims then had to be submitted to binding arbitration. Bragg maintained that the arbitration provision was valid and that the circuit court erred as a matter of law by failing to declare the action void and vacated.
The mediation/arbitration clause is found in Paragraph 26 of the Residential Sales Contract (Sales Contract). Record at 111. Based on our interpretation of the Sales Contract, the mediation/arbitration provision survived the closing and was not extinguished upon execution of the deed conveying the property to Barber.
In Kentucky, it is well established that an arbitration provision contained in a written agreement is generally valid and enforceable and may only be invalidated upon those grounds available to invalidate or to revoke a contract. Kentucky Revised Statutes (KRS) 417.050; Wellcare Health Insurance Co. of Ky. Inc. v. Trigg County Hospital, Inc., 532 S.W.3d 163, 166 (Ky. App. 2017). Accordingly, an arbitration agreement may be rendered unenforceable upon waiver by a party. Jackson v. Mackin, 277 S.W.3d 626, 629 (Ky. App. 2009). A party's waiver of an agreement to arbitrate may be expressed or implied, and an implied waiver may be based upon a party's participation in litigation coupled with a party's failure to demand arbitration during such litigation. Jackson, 277 S.W.3d at 629 (citing Valley Construction Co., Inc. v. Perry Hosp. Mgmt. Co., Inc., 796 S.W.2d 365 (Ky. App. 1990)). However, waiver of an arbitration agreement "will not be inferred lightly." Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335, 344 (Ky. App. 2001).
It is clear from Barber's litigation conduct that she intended to waive her right to arbitration as set forth in the Sales Contract.
In this case, Bragg was served with Barber's complaint in February of 2022 and timely filed an answer. In the answer, Bragg generally denied Barber's claims but did not raise any issue related to arbitration. Later, Barber filed two motions for summary judgment. As noted by the circuit court, Bragg failed to file any type of response to either motion. So, Bragg again failed to reference the arbitration provision in the Sales Contract and/or to demand arbitration. Thereafter, the circuit court rendered summary judgment in favor of Barber. Bragg then filed a motion to alter, amend, or vacate the summary judgment in February of 2023. For the first time, Bragg cited to the circuit court the arbitration provision in the Sales Contract and argued that this action was barred and that the summary judgment was void as a matter of law.
Considering Bragg's actions below, we conclude that he waived any rights he may have had under the mediation/arbitration provision of the Sales Contract. Bragg failed to respond to two motions for summary judgment. By so doing, Bragg failed to argue to the court that the arbitration provision mandated mediation and arbitration. Thus, he failed to timely demand the action be mediated/arbitrated as provided in the Sales Contract. Rather, Bragg waited until after the summary judgment was entered to file his motion to alter, amend, or vacate. Therein, he argued for the first time that the action was void due to the arbitration provision. The law is clear that a party cannot use a motion to vacate under CR 59.05 "to raise arguments and to introduce evidence that should have been presented during the proceedings before the entry of judgment." Rumpel v. Rumpel, 438 S.W.3d 354, 366 (Ky. 2014) (quoting Gullion v. Gullion, 163 S.W.3d 888, 893 (Ky. 2005)).
Bragg also failed to comply with KRS 417.060 to timely compel arbitration. Based upon the totality of the circumstances below, Bragg's actions were inconsistent with an intent to exercise a right to arbitration and amounted to a waiver of arbitration. See Jackson, 277 S.W.3d at 629. Therefore, we are of the opinion that Bragg impliedly waived the right to arbitration by his litigation conduct.
As noted, Bragg's second argument is that the circuit court's judgment was clearly erroneous. Bragg argues that the court's findings of fact contained in the summary judgment are in error and are not supported by substantial evidence of a probative value.
Upon review of the judgment rendered below, at first blush it appears the circuit court engaged in fact finding which is not permitted under CR 56.03. Culp v. SI Select Basketball, 663 S.W.3d 451, 453 (Ky. App. 2023). Under CR 56.03, the Court's duty is to discover whether a genuine issue of material fact exists, not decide issues of fact. Culp, 663 S.W.3d at 453. However, based on the record before the circuit court, including the exhibits that were attached to the motion, the court could readily determine that there was termite damage or infestation in the house at the time of the sale and Bragg failed to properly disclose this information to Barber. Based on the record, these facts are not in dispute. Effectively, because Bragg failed to defend on this issue, the circuit court rendered a judgment by default for liability for failure to defend as is provided for in CR 55.01. Similarly, CR 56.03 clearly provides that the circuit court can render a summary judgment for liability, which again, is what effectively occurred below. Based on our de novo review of the record, we agree with the circuit court that there was no genuine issue of material fact as concerns Bragg's knowledge of termite damage or infestation in the house at the time of the sale and that he failed to properly disclose the same to Barber. Accordingly, we affirm the circuit court's summary judgment for liability against Bragg on this issue.
However, the award of damages is more problematic. First, the court failed to conduct an evidentiary hearing to determine what damages Barber had actually sustained. There was no sworn testimony provided through deposition or affidavit by Barber regarding her alleged damages. Similarly, as noted by the circuit court, the record contains no invoices or other documentary evidence to support how Barber's damages claim was computed. Even under CR 55.01, where a judgment has been rendered by default, an evidentiary hearing is required to determine the amount of damages and to establish the truth of allegations or evidence supporting the damage claim. See Deskins v. Estep, 314 S.W.3d 300, 304 (Ky. App. 2010).
CR 56.03 contemplates a similar hearing on damages where a genuine issue of material fact exists and the court has granted a partial summary judgment for liability. In this case, the circuit court failed to conduct an evidentiary hearing to obtain sworn testimony or receive documentary evidence to support the damage claims asserted by Barber. This constitutes an error of law which requires reversal of the damage award and a remand for an evidentiary hearing below.
On remand, the circuit court shall conduct an evidentiary hearing to determine Barber's damages in accordance with CR 52.01. See Deskins, 314 S.W.3d at 304. The provisions set out in CR 52.01 are mandatory and require the court to make specific findings of fact and conclusions of law before rendering a judgment. Brown v. Shelton, 156 S.W.3d 319, 321 (Ky. App. 2004).
As concerns the evidentiary hearing, we warn Bragg and his attorney that their failure to appear at the hearing will not preclude the circuit court from rendering a judgment for damages upon receiving sworn proof and documentary evidence to support the claim in accordance with CR 52.01. Similarly, going forward, we strongly encourage Barber to retain counsel. The damage claim asserted by Barber in this case is substantial. The perils of representing oneself in an evidentiary legal proceeding are many and the consequences can be dire. And, based on our directions on remand, Barber cannot expect a repeat of the previous errors below that required remanding this case for an evidentiary hearing on damages. Self-representation in complex litigation can often result in the entry of an adverse judgment regardless of the merits of one's argument. Failure to understand and correctly apply evidentiary and procedural rules during an evidentiary hearing can be a trap for even trained litigators. We emphasize the wisdom of the oft-quoted maxim in our legal system that "a man [or woman] who represents himself has a fool for a client and a fool for a lawyer[.]" Hummel v. Commonwealth, 306 S.W.3d 48, 52 (Ky. 2010).
While pro se litigants are sometimes held to less stringent standards than lawyers in drafting formal pleadings, such as the complaint filed by Barber in this case, Kentucky courts still require pro se litigants to follow the Kentucky Rules of Civil Procedure. Watkins v. Fannin, 278 S.W.3d 637, 642 (Ky. App. 2009). Going forward, if Barber continues to represent herself at the damages hearing, she shall be held to the same standards and court rules as any licensed attorney in Kentucky, including compliance with all procedural and evidentiary rules.
Finally, upon remand, we remind the circuit court that the remedy of rescission of the contract or deed was not raised in the summary judgment motion nor addressed in the court's judgment for liability. And, Barber did not challenge the judgment by way of a CR 59 motion or by cross-appeal to this Court from the judgment below. Accordingly, that remedy is no longer available for consideration by the circuit court upon remand. The evidentiary hearing shall be limited to Barber's damages only.
SUMMATION
In summation, for the reasons stated, the December 28, 2022, Order Granting Summary Judgment for Kathleen Barber is affirmed in part, reversed in part, and remanded for an evidentiary hearing on damages only, subject to the directions set out in this Opinion.
ALL CONCUR.