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Date: 11-15-2024
Case Style:
Louis B. Harper and Mark O. Biggs v. Robert E. Smith and Andronia Smith
Case Number: 11-CI-00208
Judge: Karen Lynn Wilson
Court: Circuit Court, Henderson County, Kentucky
Plaintiff's Attorney:
Defendant's Attorney:
Description:
Henderson, Kentucky civil litigation breach of contract lawyers represented the Plaintiffs and Defendants.
Robert E. Smith ("Robert") and Andronia Smith ("Ann") appeal an Order and Judgment of the Henderson Circuit Court entering a jury verdict in favor of their landlord for breach of contract, unjust enrichment, and self-help eviction, and for their landlord's representative on a claim of tortious interference with a contract. After review, we affirm.
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BACKGROUND
Appellee Lois B. Harper ("Harper") owned 1424 Adams Lane in Henderson, Kentucky ("Property"). On April 29, 2021, Harper entered into a contract ("April Contract") to sell her Property to Robert and Ann (together, the "Smiths") for $289,000. As part of the April Contract, the Smiths agreed to pay Harper $2,000 in earnest money, and Harper agreed to deliver clear title. The April Contract stated that closing would take place "by May 29, 2021 if possible or within thirty (45) [sic] days from the date hereof[.]" The closing did not occur as contracted.
On July 11, 2021, Harper and the Smiths entered into another contract to sell/purchase the Property ("July Contract"). This July Contract set the purchase price at $282,700; acknowledged that Harper received a $2,000 deposit; and again required Harper to deliver clear title. The "Closing" section of the July Contract stated, "[t]his transaction shall close within 45 days of the date of this agreement. This agreement may be extended, but must be done in writing signed by all parties hereto." The July Contract was also "fully contingent on the [Smiths] obtaining proper financing to purchase the [Property] at the agreed amount of $282,700."
In order for the Smiths to take immediate occupancy of the Property, Ann and Harper signed a rental contract with a narrow timeframe ("Limited Rental Agreement") on July 17, 2021. This Limited Rental Agreement specifically
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allowed the Smiths to rent the Property "until [their] latest closing date of 8/31/21." The Limited Rental Agreement allowed the Smiths to move into the Property immediately, put utilities into their names, take over homeowners' insurance, and "maintain the [Property] as if it is already [their] own[.]" The Limited Rental Agreement set rent for the last two weeks of July at $600 and the month of August at $1,200. The Limited Rental Agreement did not account for rent beyond August 31. On or about July 17, Ann paid Harper with a check for the prorated July rent and homeowners' insurance, but that check was returned for insufficient funds.
Again, the closing did not happen by August 25, i.e., within 45 days of the signing of the July Contract. The parties orally agreed to a month-to-month rental contract on the Property until the home sale closed. Sometime in early September, the Smiths paid that month's rent by check, but again that check was returned for insufficient funds. Relations between Harper and the Smiths fell apart, as did Harper's health. On September 30, 2021, Appellee Mark O. Biggs ("Biggs") texted the Smiths and instructed them to have no further contact with Harper. Biggs was unknown to the Smiths prior to that text, and they did not have prior knowledge of his connection with Harper.
On or about October 5, Harper served the Smiths with a Notice to Quit (an undated document). The Notice to Quit stated that the July Contract had
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expired; the Smiths had failed to secure financing for the Property; and they had failed to pay rent for September. As a result, the Notice to Quit stated that Harper was electing not to extend the July Contract and gave the Smiths seven days to vacate the Property. That same day, Ann deposited approximately 2 months of rent directly into Harper's mortgage account, but did not inform Harper of the payment at that time.
On October 8, Biggs drove to the Property with Harper to encourage the Smiths to vacate. Harper stayed in the vehicle while Biggs entered the Property without the Smiths' permission, removed the back entry door from its hinges, and removed a garage door keypad from the structure of the house. Then, Harper, Biggs, and the Smiths had a conversation in the Property's front yard. Harper believed she had not received September rent as of that time. However, the Smiths informed Harper that - although payment was late - they had recently deposited their past due rent directly into her mortgage account. The Smiths allege that this front yard meeting ended with an oral agreement to proceed with the home purchasing process, as evidenced by a letter received the next week.
Around October 12, the Smiths received a Notice of Termination by Landlord ("Extension Letter"). The Extension Letter is nearly illegible in parts, but appears to state that "[a]s per our agreement at our in-person meeting on 8 October 2021, you will have your financial institution (Old National Bank)
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confirm a closing date with [Biggs], Counsel for Landlord,[1] in a conference call no later than 15 October 2021 at 12:00 CST." Somewhat confusingly, the Extension Letter also stated that it "serves as notification of the Landlord's intention to terminate your Contract." Also adding to the confusion, the Extension Letter stated that if the Smiths' bank did not confirm financing as directed by October 15, the lease would be effectively terminated, and the Smiths should vacate the Property by noon that day (October 15). Harper signed this Extension Letter, and her signature was notarized. The Smiths did not sign the Extension Letter.
The parties have differing accounts regarding the events leading up to the Smiths' failed financing - to be discussed in more detail below - but as of October 15, the Smiths did not have financing for the Property and Harper retained counsel to proceed with a forcible detainer action against the Smiths. Harper evicted the Smiths in November 2021.
On April 21, 2022, the Smiths filed a complaint in Henderson Circuit Court against Harper for breach of contract, unjust enrichment, ouster/self-help eviction, and against Biggs for tortious interference with a contract. Simultaneously, the Smiths filed a lis pendens notice on the Property. The Smiths
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sought reimbursement for their $2,000 earnest money and for repair/improvement work they paid to have done on the Property while living there. With their complaint, the Smiths included invoices for repair/improvement work they paid to have done on the Property totaling $10,715.50 (the "invoices"). Harper counterclaimed for negligence (due to the Smiths negligently maintaining the Property so as to cause "substantial damage" to the Property), and slander of title (due to the lis pendens).
Upon request during discovery, the Smiths tendered bank records reflecting payments in the amount of the invoices. Under oath, the Smiths testified as to the validity of those invoices and bank statements, but counsel for Harper discovered that the Smiths falsified the tendered bank records. The court sanctioned the Smiths in the sum of $9,515.50. Litigation proceeded and in November 2023, the circuit court held a two-day jury trial.
At trial, all the parties testified, as did a former employee of the financial institution from which the Smiths attempted to get a loan ("Loan Officer"), an employee from a business that did work for the Smiths at the Property, a handyman employed by Harper who worked on the Property after the Smiths vacated the residence, and a banker at Robert's bank.[2] Not all are relevant to this appeal.
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Ann testified that the parties could not close pursuant to the April Contract because Harper could not provide clear title, not because the Smiths failed to attain financing. She testified that the parties could not close according to the July Contract and/or Extension Letter because the lender "retracted" their loan application on October 14 - one day before financing was due - after Biggs called the bank and informed it that Harper no longer wished to sell the Property to the Smiths and the purchase agreement had lapsed. Ann admitted that they (the Smiths) falsified the bank records because they paid the invoices in cash but thought they would not be believed without a paper record of those payments.
On cross, Ann could not explain how two of the invoices were nearly identical in appearance despite coming from different companies; nor could Ann explain why at depositions she stated that she had no familial relationship with any of the members of the companies supplying the invoices. However, at trial she admitted that one invoice came from a company associated with her ex-husband, and another invoice came from a company operated by her son.
The Loan Officer testified next, but she could not remember details from the Smiths' loan application nor any specific conversations she had with the parties. She testified she no longer worked for the bank, had not recently reviewed any bank records specific to the Smiths, and did not think she should or could speak on behalf of the bank. She did not know why the closing on the Property
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failed to occur or why the Smiths were or were not approved for a loan. Additionally, Harper entered a "notice of incomplete application" letter from the Smiths' bank that stated as of September 6, 2021, the Smiths' loan application was deficient.
Biggs testified and admitted he took the door off the hinges and removed the garage door key pad from the Property on October 8. He admitted there were liens on the Property, but the last lien was cleared between October 8 and 11. He admitted to calling the Smiths' bank to inquire about their financing for the Property, but stated he did not block or cancel the Smiths' lending application.
At the close of evidence, both parties moved for directed verdicts on all issues. The court granted the Smiths' motion for a directed verdict with respect to the slander of title claim because the Smiths were permitted to file a lis pendens when they filed that action. The court denied the motions for directed verdict on the remaining claims. The jury found in favor of Harper and Biggs on breach of contract, unjust enrichment, and ouster/self-help eviction claims, but did not award any punitive damages. As the jury found for Harper on the breach of contract claim, it did not address the tortious interference with a contract claim against Biggs. The Smiths appealed.
Smith v. Harper, 2024-CA-0032-MR (Ky. Ct. App. Nov 15, 2024)
Outcome: Affirmed
Plaintiff's Experts:
Defendant's Experts:
Comments: