Transactional Law

Taxes, Trusts, and Estates: Tax planning for businesses, organizations and transactions, and tax and estate planning for individuals, is an important aspect of our full-service representation of clients.

Real Estate: Assisting clients in purchasing and leasing real estate is a significant part of the legal services we provide. We provide title searches, title insurance, and closing services.

Commercial and Corporate: We represent clients in all manner of business transactions. The types of transactions in which we assist clients include business organizations and business acquisitions and sales, including an analysis of the tax and legal implications of the transactions.

Case Summaries

Ball Homes, Inc. & Lochmere Development Company v. Andover Golf & Country Club, Inc. and Whitaker Bank (2017-CA-885, 1038& 1047), Fayette Circuit Court 17-CI-640, 986 & 1360

ANDOVER GOLF & COUNTRY CLUB LITIGATION:   A flurry of litigation commenced April 2017 involving the foreclosure by Whitaker Bank of the Andover Golf Course property which includes the clubhouse and pool.  With the Andover entity apparently “handing over” the property to Whitaker in February 2017, Whitaker filed a foreclosure action (read the Complaint) in the Fayette Circuit Court (case #17-CI-640) on February 17, 2017, and quickly obtained an Order of Sale (read the Sale Order with disclosures for the sale).  Whitaker appears to be trying to strip off the restriction filed of record in the Fayette County Clerk’s office that requires the property to be continuously used for a golf course by way of a separate Declaration of Rights lawsuit it filed March 15, 2017.  (Read case # 17-CI-986) Declaration of Rights Complaint).  The original developers of the property (Ball Homes, Inc. and Lochmere Development Corporation/Troy Thompson) moved to intervene in the foreclosure case to protect the development and to enforce the requirement that the golf course be maintained and used as a golf course.    They challenged Whitaker’s efforts (see Motion to Dismiss) and filed a separate action, Fayette Circuit case # 17-CI-1360 (read the Complaint) to enforce the restrictions that require the property to continuously be used for a golf course that includes certain amenities of a clubhouse, restaurant and pool.

The Developers filed a motion for temporary injunction asking the court to order Andover Golf and Country Club and Whitaker Bank and any successors, assigns or purchasers to open, operate and properly maintain the golf course and club.  Read the April 26, 2017 Motion.  Numerous homeowners’ associations intervened in the cases by the time of the injunction hearing.

On June 6, 2017, the Fayette Circuit Court granted the request of the Developers for a Temporary Injunction to require Whitaker Bank to maintain the property as a golf course and to operate the course.  Read the Temporary Injunction.  In June 2017, the Developers filed a motion with the Court pof Appeals to challenge the $1 Million Bond set by the trial judge.  Whitaker filed a similar motion challenging the injunction and seeking to dissolve it.  Those motions remain pending with the Court of Appeals.

During the litigation the Developers issued letters to the Andover residents fully explaining their position and intent.  Read the April 25, 2017, Letter.  Read the July 25, 2017, Letter.

The homeowners’ associations then surprisingly challenged the standing of the Developers and argued that the Developers had no right to enforce the golf course restriction, nor any legal duty or obligation to enforce the restriction.  Whitaker joined in the standing challenge and further argued that the restriction of record is not enforceable.  As a result of the associations taking a position adverse to the Developers, several individual property owners intervened in the actions to express and protect their rights and position which is consistent with the position and arguments of the Developers.  In an Opinion and Order entered September 20, 2017, the trial court ruled that the Developers did not have standing to enforce the restriction even though the restriction is specifically for the benefit of and in the name of the Developers.  Read the Opinion.

 

September 30, 2017 Filed Under:   Litigation   Transactional Law

Behr Properties, LLC, The Beer Trappe, Inc. and Behr Enterprises, LLC v. Ashland Properties, et al. (2017-CA-1155, 17-CI-2156, Fayette Circuit Court)

The Behr entities filed an action against seeking an immediate injunction to validate its trespass through another business property.  The trial court denied the request and granted the property owner’s request by cross motion for injunction prohibiting the trespass.  Behr appealed the temporary injunction to the Court of Appeals under CR 65.07.  On September 20, 2017, the Court of Appeals denied Behr’s request to dissolve the injunction entered in favor of Ashland Properties and other defendants.  The injunction prohibits Behr and the other plaintiffs from trespassing on the defendants’ property.  See the Court of Appeals Order Denying Motion for Interlocutory Relief; and see the Fayette Circuit Court’s June 27, 2017, Temporary Injunction.

Ashland Properties is seeking sanctions against Behr based upon the failure to comply with the Court’s Temporary Injunction.

September 20, 2017 Filed Under:   Litigation   Transactional Law

Talley v. Paisley (2016-SC-92-DG, Fayette Circuit Court, 13-CI-1952)

On August 24, 2017, in a case concerning a cohabiting, unmarried couple, the Kentucky Supreme Court affirmed the Court of Appeals’ conclusion that a cotenant of real property, including one who holds as joint tenant with right of survivorship, is entitled to contribution from other cotenants with respect to his or her payments toward liens on the property in dividing equity from the sale of the property.  See the Opinion of the Court by Justice VanMeter.

August 24, 2017 Filed Under:   Litigation   Transactional Law

Lexington Herald Leader v. University of Kentucky

Update of the court’s rulings of June 27, 2017:  In an action brought by the Lexington Herald-Leader, the Fayette Circuit Court held that the University of Kentucky violated the Kentucky Open Records Act by refusing to disclose documents received and discussed by the University’s Board of Trustees during an ostensibly open “dinner meeting” for which it prepared no agenda, creating the misimpression that the dinner was merely a social event. Although the University attempted to invoke the attorney-client privilege as to a PowerPoint presentation made during that dinner meeting, the Court found that the Board’s decision to receive the report in an open meeting reflected a complete lack of any expectation of confidentiality. The documents pertained to the University’s evaluation of its billing issues that arose during its now severed relationship with the Appalachian Heart Center in Hazard, Kentucky.  See the Opinion and Order  and the Order to place records under seal.

HERALD LEADER OPEN RECORDS REQUEST TO UNIVERSITY OF KENTUCKY, DECEMBER 2016:  The New York Times published an article on December 2, 2016, addressing the pending litigation involving the Kentucky Kernal Open Records request.  See the article.

HERALD LEADER ATTORNEY GENERAL’S OPINION AUGUST 2016: In the newest round of efforts to shed light on the activities of UK, the Attorney General issued an August 31, 2016 (16-ORD-193), opinion addressing the refusal of UK to provide documents in response to a Herald Leader Open Records request for matters involving the Hazard cardiology practice acquired by UK and the expenses and fees paid by UK or KMSF to their lawyer and law firm Sheppard Mullin since 2013. The AG determined that UK’s refusal to provide records for in camera inspection by the AG to consider UK’s asserted exemptions violated the Open Records Act.

HERALD LEADER ATTORNEY GENERAL’S OPINION JULY 2016: We are pleased to have had the opportunity to assist the Herald-Leader in its commitment to the transparency in government that is protected by both the Open Meetings and Open Records Acts. The information presented at the Trustees’ dinner meeting directly concerned the University’s management of funds, and so is exactly the type of information that our legislature recognizes that the citizens of the Commonwealth must receive in order to hold their public entities accountable. Although we have not yet received a response to our request to the Attorney General for the documents presented during the meeting, we are optimistic that they will soon be provided to the Herald-Leader. We also believe that, because the University chose to have an open meeting, Kentucky’s Open Meetings Act requires that minutes be prepared for the meeting, and those minutes must now be provided. The Attorney General’s Opinion reflects his agreement. Read the article here. UK reports as of August 9, 2016, in the Lexington Herald Leader that it intends to appeal the AG’s decision.

 

June 27, 2017 Filed Under:   Litigation   Transactional Law

Bonvillain v. O’Bryan (2016-CA-357, Fayette Circuit Court, 15-CI-4186)

On June 23, 2017, the Court of Appeals affirmed the Fayette Circuit Court.  On a matter of first impression, the COA agreed with the attorneys at MGM that an assignment of a right to receive royalties from a copyright is not testamentary in nature, rather is a transfer of a contract right.    The formalities of a will are not required to validly transfer the royalty right to be effective at the death of the assignor.  Read the ruling.

June 23, 2017 Filed Under:   Litigation   Transactional Law

Lexington Rental Homes, LLC v. Saffery (2017-CA-1114, 16-CI-4242, Fayette Circuit Court)

On June 5, 2017, the trial court issued an opinion and order and granted summary judgment to the landlord over a lease dispute and amounts owed by the tenant.  The ruling included recovery of attorneys’ fees under KRS 383.660 due to the willful breach of the lease.  Read the ruling. In July 2017, the tenant appealed to the Court of Appeals.  The appeal remains pending.

June 5, 2017 Filed Under:   Litigation   Transactional Law

Sexton v. Bean (2015-CA-931, Fayette Circuit Court, 13-CI-705)

Former owner of real property sued to void the deed of conveyance from almost five (5) years earlier alleging that his and his wife’s signatures were forged. In deposition testimony both former owner and wife confirmed signatures were not forged on deed. Trial court granted summary judgment to current owner of real property and further awarded recovery of a portion of her attorneys’ fees and costs incurred in the defense of the action because Plaintiff’s allegations were contrary to his actual testimony. Plaintiff/former owner appealed.  The Court of Appeals issued its Opinion Affirming on May 12, 2017, in Sexton v. BeanRead the trial court’s Order and Judgment ›

Real Estate/fraud/void deed based on forged signatures

 

May 12, 2017 Filed Under:   Litigation   Transactional Law

Prime Finish, LLC and Cameo, LLC v. ITW Deltar IPAC (08-CV-438-GFVT USDC Eastern District of KY)

The Court entered its Memorandum Opinion & Order May 5, 2017.  In a contract dispute arising from the painting of plastic automotive parts, the United States District Court for the Eastern District of Kentucky found that an issue of fact existed as to whether an “early termination fee” provided in the contract constituted a true liquidated damages provision, such that the plaintiff’s recovery would be capped at the amount of the fee, or was intended as compensation solely for the damage caused by early termination. The Court denied the defendant’s motion for partial summary judgment on this basis, permitting the plaintiff to pursue its a claim for the early termination amount as well as actual damages before the jury. Read the Opinion.

May 5, 2017 Filed Under:   Litigation   Transactional Law

Gadd v. Hensley (2015-CA-1948 and 2016-CA-164, Garrard Circuit Court, 13-CI-308)

The Court of Appeals by Opinion issued March 24, 2017, held that the Garrard Circuit Court erred in holding that deed restrictions prohibited short-term rentals of residences.  The circuit court’s had held that inhabitants of short-term rentals of residential property were not “residents” and therefore the use of the property was not for “residential” purposes and was therefore the operation of a business in contravention of the deed’s language.  Arguments presented by the parties presented 3 unpublished Kentucky Court of Appeals cases which the circuit court relied upon in its ruling.  The Court of Appeals address each of the three unpublished cases but determined that upon review of published caselaw on the interpretation of deed restrictions, and in light of there being no prohibition in the restrictions for renting or leasing the property (for any period of time) and in fact the restrictions allow “for  advertising the sale or rental thereof,” and because any ambiguity is construed against the drafter and in favor of free use of the property, “the language of the deed does not prevent Gadd from renting his property on a short-term basis which is any amount of time.  On April 7, 2017, the Court of Appeals order the opinion to be published.  Read the Order.  Read the Opinion.  In late April, Hensley filed seeking discretionary review with The Kentucky Supreme Court granted discretionary review on August __, 2017, and Gadd thereafter filed a cross motion for discretionary review.

March 24, 2017 Filed Under:   Litigation   Transactional Law

Busch v. Wells Fargo Home Mortgage (16-CV-210-JMH, USDC at Lexington)

Busch and his wife filed their lawsuit in the Fayette Circuit Court which was removed by the Defendant to federal court.  Thereafter, the Defendant moved to dismissed the case.  The court held that the Busches did state a cause of action under the Fair Credit Reporting Act, 15 USC 1681, which provides for recovery of certain damages and attorneys’ fees.  Read the court’s January 9, 2017 Opinion.

January 9, 2017 Filed Under:   Litigation   Transactional Law

Caldwell v. Fussinger (14-CI-11, Bourbon Circuit Court)

Don Pisacano successfully tried a Landlord Tenant case in Bourbon County Circuit Court and obtained a defense verdict for the farm owner/landlord in a premises liability personal injury claim arising from a trip and fall on an alleged defective cattle guard. Plaintiff was seeking damages for a fractured ankle and subsequent infection (osteomyelitis) that occurred when he fell into/on an open and obvious cattle guard.  The jury found for the landowner and the Plaintiff was awarded nothing.  See a copy of the Jury Verdict.

January 3, 2017 Filed Under:   Litigation   Transactional Law   Insurance Defense

FEDERAL UPDATE: FEDERAL WAGE-AND-HOUR RULES CHANGES

December 2016:  On December 1, 2016, the DOL appealed the nationwide injunction.  The Fifth Circuit Court of Appeals issued an order on December 8, 2016, expediting the review of the nationwide injunction that prohibited the implementation of the DOL’s new regulations on overtime. It appears that briefing will be completed in January 2017 and the matter will be set for arguments promptly thereafter.

November 22, 2016:  A Texas District Judge granted an injunction that prohibited the implementation of the DOL’s new regulations expanding overtime saying it improperly created a de-facto salary test under the Fair Labor Standards Act.

October 28, 2016:  Twenty-one states, as well as numerous business groups, have sued the United States Department of Labor (“DOL”) in order to challenge new regulations that will broaden that the number of workers potentially eligible for overtime pay under the federal Fair Labor Standards Act (“FLSA”). The new regulations, effective beginning December 1, 2016, provide that full-time workers making a yearly salary of less than $47,476 cannot satisfy the “salary” portion of the test that governs whether an employee may be treated as “exempt” from overtime requirements. This means that an employee whose duties qualify as administrative or executive and who would otherwise qualify as exempt may nevertheless be entitled to overtime pay if they make more than $47,476 in a year. The lawsuits allege that the change exceeds the rule-making authority granted to the DOL. The states that have brought suit additionally argue that the DOL has violated the Tenth Amendment by interfering with the manner in which state government employees are paid. The plaintiffs have asked the Court for an injunction, which would prevent the new rule from going into effect until after the lawsuits are resolved. More information about the rule at issue in the lawsuits may be found at: https://www.dol.gov/featured/overtime

Background:  August 2016:  An important change in the federal wage-and-hour rules becomes effective on December 1, 2016. The new rule recently promulgated by the Department of Labor will increase the salary level from $455 per week ($23,660 annually) to $913 per week (or $47,476 annually). Additional changes were made to the salary rules applicable to the “highly compensated employee” exemption, and the rule provides for automatic updates to the salary and compensation levels every three years. No changes have been made to the “duties test.” Read more

January 1, 2017 Filed Under:   Litigation   Transactional Law   Employment Law

Robert Webb v. Dan Cummins Chevrolet-Buick, Inc. (2015-CA-938, Bourbon Circuit Court 15-CI-61)

MGM successfully defended an area car dealer.  Webb sued the dealer over his trade in of a vehicle that was more than 10 years old when he traded it in, and he had originally purchased it used.  Webb sued the car dealer alleging fraudulent misrepresentation based on statements during the negotiations of the trade in as to whether the vehicle had a “salvage” title.  He also sued under the Kentucky Consumer Protection Act (“CPA”). Upon an immediate motion to dismiss the case, the trial court dismissed Webb’s claims ruling that Webb could not show both “that the defendant made a false statement and did so knowingly or recklessly.” The Court of Appeals affirmed.  Opinion, p. 6. “On the contrary, all evidence in the record indicates that the [car dealer’s] representation was truthful.” Id. The Court of Appeals further held that any purported “reliance” could not have been “reasonable” because the CarFax report presented to Webb during the negotiations, a “public service” concerning Webb’s own vehicle, revealed the salvage title brand. “While there may be no duty to investigate public records, one entering into a contract must exercise ordinary care for his protection.” Id. at p. 8. Moreover, the car dealer’s statement as to the value of the trade-in was an opinion and was therefore not actionable as fraud. Id. at 8-9. Finally, the Court of Appeals held that there were no unfair, false, misleading or deceptive acts in the negotiations between the parties and therefore the claim under the CPA was properly dismissed. Id. at p. 9.  See the December 16, 2016 Opinion here.

December 1, 2016 Filed Under:   Litigation   Transactional Law

Papastefanou v. Kentucky Growers, et al (13-CI-1440, Warren Circuit Court)

On behalf of Kentucky Growers Insurance, Don Pisacano obtained summary judgment against a national mortgage company’s claim for proceeds arising from a foreclosure action and subsequent fire loss.  See the November 23, 2016 Order in Papastefanou v. Kentucky Growers, et al.

November 23, 2016 Filed Under:   Litigation   Transactional Law   Insurance Defense

Federal Employment Update:

FEDERAL WAGE-AND-HOUR RULES CHANGES – An important change in the federal wage-and-hour rules becomes effective on December 1, 2016. The new rule recently promulgated by the Department of Labor will increase the salary level from $455 per week ($23,660 annually) to $913 per week (or $47,476 annually). Additional changes were made to the salary rules applicable to the “highly compensated employee” exemption, and the rule provides for automatic updates to the salary and compensation levels every three years. No changes have been made to the “duties test.”  Read more.

October 4, 2016 Filed Under:   Litigation   Transactional Law   Employment Law

Federal Update

FEDERAL WAGE-AND-HOUR RULES CHANGES – An important change in the federal wage-and-hour rules becomes effective on December 1, 2016. The new rule recently promulgated by the Department of Labor will increase the salary level from $455 per week ($23,660 annually) to $913 per week (or $47,476 annually). Additional changes were made to the salary rules applicable to the “highly compensated employee” exemption, and the rule provides for automatic updates to the salary and compensation levels every three years. No changes have been made to the “duties test.” Read More

September 28, 2016 Filed Under:   Litigation   Transactional Law   Employment Law

Veithch v. Public Protection Cabinet

The Franklin Circuit Court again ruled in favor of John Veitch in his claims against the Kentucky Horse Racing Commission related to penalties imposed on him as Chief State Steward for his actions at the LIFE AT TEN race. In its August 23, 2016, Opinion and Order, the Court reverses and remands the most recent effort by KHRC to impose a 9 month suspension penalty because the penalty has not been justified by KHRC.

August 23, 2016 Filed Under:   Litigation   Transactional Law   Employment Law

Paul Miller Ford, Inc. v. Garrison, (2015-CA-38, Clay Circuit Court)

Car buyer demanded rescission of the purchase transaction but refused to return vehicle. Rather than returning the vehicle to implement the rescission request, buyer then filed suit in circuit court in her home county, not the county in which the dealership has its principal place of business, with a barebones complaint that did not take issue with the arbitration provision contained in the written purchase agreement. In response car dealer triggered the arbitration provision and moved the trial court to compel arbitration. The purchaser did not file a written response to the motion but the trial court still denied the motion in a one sentence order. Dealer appealed under KY’s Arbitration Act and the right to interlocutory appeal of a denial of a motion to compel arbitration. The court of appeals refused to rule on the merits opining that the trial court failed to make findings of fact such that the court could review its ruling that denied the demand for arbitration. The court of appeals further declared that findings of fact and conclusions of law are required in orders denying motions to compel arbitration. Dealer filed a petition for rehearing pointing out that neither KY’s Arbitration Act nor the Civil Rules require findings of fact for this requested relief and in fact the Civil Rules make clear that findings of fact are only required in specific enumerated situations, and a motion to compel arbitration is not one of them. The petition was denied by the Court of Appeals.  Dealer filed for discretionary review with the Kentucky Supreme Court.   That motion was denied in August 2016 so the case is remanded to the Clay Circuit Court to address the trial court’s failure to explain the ruling denying arbitration.

Arbitration/automobile purchase/KY Arbitration Act/KRS 417/jurisdiction

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March 1, 2016 Filed Under:   Litigation   Transactional Law

Robinson v. Robinson, (2015-CA-915, Fayette Circuit Court, Family Division)

A divorce action concluded over a decade earlier gave rise to an effort to hold ex-husband in contempt.  The claimed contempt arose from his conveyance of marital real property during the divorce as part of the redistribution of marital assets ordered by the Divorce Decree.  Ex-wife contended by motion practice initiated in the long-closed divorce action that ex-husband failed to convey the real property in proper condition.  However, the conveyance was by quitclaim deed and no issue had been raised for over a decade.  Ex-wife raised an issue because she now claimed that her recent sale of the property for several million dollars brought about $250,000 less than it should have based upon the property condition.  Ex-husband challenged the matter by arguing that the Family Court lacked subject matter jurisdiction over a property conveyance dispute that had taken place over a decade earlier which also raised statute of limitations issues.  The Family Court denied ex-husband’s challenges, further denied the motion to hold ex-husband in contempt (see Fayette Family Court Order of May 14, 2015) but awarded ex-wife approximately $3000 in fee recovery for her current efforts (see Fayette Family Court Order entered June 26, 2015).  Ex-wife appealed the denial of her requested relief of the $250,000 loss from the sales price of the real estate.  The matter remains pending before the Kentucky Court of Appeals.

Family court jurisdiction/subject matter jurisdiction/real estate dispute/divorce decree

January 1, 2016 Filed Under:   Litigation   Transactional Law   Family Law

Lexington Rental Homes, LLC v. Adams, et al., Fayette District Court 13-C-1073 (2016)

Landlord sued former tenants for failure to pay rent and related charges and for early termination of the written lease and physical damage to the property in excess of the security deposit.  As part of the claim, Landlord also sought recovery of attorneys’ fees under KRS 383.660 for the tenants’ willful breach of the lease.  The trial court granted a partial summary judgment on the unpaid rent and liquidated damages arising from the lease but set a bench trial to address the claim for recovery of physical damages and repair costs.  Following the bench trial the court issued an Opinion and Order (June 12, 2015) awarding the sums to the Landlord and further awarding attorneys’ fees under the statute.  The court directed for the fee recovery to be quantified that Landlord’s counsel file additional information documenting the fee claim.  Thereafter the Court entered an Amended Final Opinion and Judgment (January 15, 2016) awarding the total fees requested.

KRS 383.660/Landlord/tenant/willful breach of lease/fee recovery

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January 1, 2016 Filed Under:   Litigation   Transactional Law

Robinson v. Robinson, (2015-CA-915, Fayette Circuit Court, Family Division)

A divorce action concluded over a decade earlier gave rise to an effort to hold ex-husband in contempt.  The claimed contempt arose from his conveyance of marital real property during the divorce as part of the redistribution of marital assets ordered by the Divorce Decree.  Ex-wife contended by motion practice initiated in the long-closed divorce action that ex-husband failed to convey the real property in proper condition.  However, the conveyance was by quitclaim deed and no issue had been raised for over a decade.  Ex-wife raised an issue because she now claimed that her recent sale of the property for several million dollars brought about $250,000 less than it should have based upon the property condition.  Ex-husband challenged the matter by arguing that the Family Court lacked subject matter jurisdiction over a property conveyance dispute that had taken place over a decade earlier which also raised statute of limitations issues.  The Family Court denied ex-husband’s challenges, further denied the motion to hold ex-husband in contempt (see Fayette Family Court Order of May 14, 2015) but awarded ex-wife approximately $3000 in fee recovery for her current efforts (see Fayette Family Court Order entered June 26, 2015).  Ex-wife appealed the denial of her requested relief of the $250,000 loss from the sales price of the real estate.  The matter remains pending before the Kentucky Court of Appeals.

Family court jurisdiction/subject matter jurisdiction/real estate dispute/divorce decree

January 1, 2016 Filed Under:   Litigation   Transactional Law   Family Law

Sexton v Bean, (2015-CA-931 & 1073, Fayette Circuit Court)

Former owner of real property sued to void the deed of conveyance from almost five (5) years earlier alleging that his and his wife’s signatures were forged. In deposition testimony both former owner and wife confirmed signatures were not forged on deed. Trial court granted summary judgment to current owner of real property and further awarded recovery of a portion of her attorneys’ fees and costs incurred in the defense of the action because Plaintiff’s allegations were contrary to his actual testimony. Plaintiff/former owner appealed.  The Court of Appeals issued its Opinion Affirming on May 12, 2017, in Sexton v. Bean, 2015-CA-931.

Real Estate/fraud/void deed based on forged signatures

Read the trial court’s Order and Judgment ›

December 31, 2015 Filed Under:   Litigation   Transactional Law

Ruth Ann Sadler v. Barbara Lois Van Buskirk (2013-SC-000809-DG, December 17, 2015)

This case involved a conflict between the beneficiary listing on an IRA as compared to the Property Settlement Agreement terms entered into by the parties. In the divorce, Van Buskirk agreed that she would not receive an of the IRA funds upon the death of the IRA’s owner, her former husband.  However, when former husband passed away, he had not changed the IRA beneficiary form which still listed the ex-wife.  MGM argued the case of apparent first impression to the Kentucky Supreme Court in March 2015 and in its renderings in December 2015, the Court held in favor of Sadler to make clear that the Van Buskirk Property Settlement Agreement and Divorce Decree controlled over the stale IRA form.

Family law/IRA beneficiary/Divorce Decree/failure to comply with divorce decree

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December 17, 2015 Filed Under:   Litigation   Transactional Law   Family Law

Higgins v. BAC Home Loans, Servicing, LP et al., 14-6167/6168 USCA 6th Cir

In Higgins, et al. v. BAC Home Loans, et al., a case filed in the Fayette Circuit Court, Higgins and other property owners sought statutory damages under KRS 382.360 for the failure of their mortgage holders to file an assignment of them mortgages in the county clerk’s office.  The promissory notes held by the originating lenders were clearly transferred to others and monitored and serviced through the MERS system, but the defendants argued that the “transfer of the note” was not a transfer of the mortgage and therefore the statutory obligation to file an assignment was never triggered.  This position was inconsistent with the last 75 years of caselaw in Kentucky.  The various mortgage holder defendants (such as Bank of America, Chase, Wells Fargo and US Bank) argued that their actions were not subject to the statute because a transfer of the note is not a transfer of the mortgage — yet the mortgage is nothing without the note; it is merely the securitization of the note.  The defendants removed the case to federal court and filed motions to dismiss.  The US District Court for the Eastern District of Kentucky rendered a lengthy and learned opinion finding that not only that the defendants had no grounds for dismissal but that the statute did apply to their transfer of the notes.  See Doc 73, Opinion and Order.  USDC EDKy regarding US Bank, March 31, 2014. and Doc 74, Opinion and Order. USDC EDKy regarding FNMA FHFA, March 31, 2014, and Doc 75, Opinion and Order. USDC EDKy regarding BOA et al , March 31, 2014.

The defendants then filed an interlocutory appeal to the US Court of Appeals, a procedure that requires the permission of the district court and of the appellate court.  The United States Court of Appeals for the Sixth Circuit in its opinion simply “re-wrote” the Kentucky statute in question and made clear that the Kentucky law does not mean what it says.  Read the USCA 6th Circuit Opinion entered July 15, 2015.  See Doc 48-2 .  The Court of Appeals further directed the homeowners’ case dismissed yet the homeowners had plead others grounds for statutory violations by the defendants that were never addressed or appealed by the defendants.  The district court had no choice but to dismiss the balance of the homeowners’ case on remand given the language of the opinion from the Sixth Circuit and the homeowners appealed that dismissal.  In an opinion oozing with the arrogance that can only come from a federal appellate court, the dismissal was affirmed.  Thus, with a stroke of the pen, the federal court system has stricken from the Kentucky statutes what our state legislators presented, voted on and passed through the General Assembly in KRS 383.360 and some 75 years of Kentucky caselaw that held the transfer of the note takes with it the mortgage.

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July 15, 2015 Filed Under:   Litigation   Transactional Law

Wildcat Property Management, LLC v. Franzen, et al (Fayette Circuit Court 05-CI-5238, COA 2014-CA-964 July 10, 2015)

A basic landlord/tenant dispute has become a decade-long litigation matter. Tenants who were college students entered into a lease for residential property for the upcoming school year. Upon there arrival the tenants determined the property was not in the condition promised. Though the tenants moved in to begin the school semester, the parties never resolved their differences and the landlord evicted the tenants at the end of the semester, about 4 months into the 12 month lease. At the same time the Landlord filed a collections action against the tenants. The case made a first trip to the court of appeals over a dismissal for failure to prosecute which resulted in a reversal and return to the trial court. Over the next few years the case proceeded to conclusion with a trial judgment finding the lease was not enforceable as a matter of law and that the tenants owed any unpaid rent for the period of their occupancy. An evidentiary hearing was conducted which resulted in a ruling that they still owed about $3,000.00. A second appeal followed by the Landlord to challenge the ruling that the lease was unenforceable. In an Opinion to be published, the Court of Appeals again reversed the trial court, opined that Kentucky’s Landlord/Tenant Act controlled rather than the contract between the parties, and remanded the matter. The Tenants filed a Motion for Discretionary Review with the Kentucky Supreme Court which remains pending.

Landlord/tenant/breach of lease/ unenforceable/landlord maintenance obligations/reasonable rent owed/KY Landlord/Tenant Act

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July 10, 2015 Filed Under:   Litigation   Transactional Law

The Speaquess Group, LLC (d/b/a Jamba Juice) v. Fayette Mall SPE, LLC, (2014-CA-1508, Fayette District Court 2014)

A business in the mall was evicted based upon a repeated failure to timely pay rent. The district court in a forcible detainer proceeding noted that its jurisdiction was limited to nonpayment of rent (not other breach of contract claims) but proceeded with the eviction. The Circuit court sitting as the first level of appellate review summarily affirmed the district court.  See Jamba Juice v. Fayette Mall SPE, LLC, Fayette Circuit, 14-XX-17, August 20, 2014.  However, the Court of Appeals sitting as the second and discretionary level of appeal granted discretionary review.  See Jamba Juice v. Fayette Mall SPE, LLC, COA 2014-CA-1508, November 18, 2014.  Click here to see the Motion for Discretionary Review and here for the Response.

Forcible detainer/ jurisdiction

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November 15, 2014 Filed Under:   Litigation   Transactional Law

Sotingeanu v. Benton, COA 2013-CA-1060 (Whitley Circuit Court, October 24, 2014)

Parents who never married presented an issue of whether a trial court’s order directing and authorizing one parent to obtain a passport for their minor child was an enforceable order.  The mother argued that the order was a modification of the custody decree without proper findings of fact and conclusions of law.  On appeal the Court of Appeals affirmed the trial court that it followed the proper procedure in conjunction with the federal regulation (22 CFR 51.28) that governs issuance of a passport for a minor child.

Modification of custody decree/issuance of passport/22 CFR 51.28/CR 52/findings of fact/conclusions of law

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October 24, 2014 Filed Under:   Litigation   Transactional Law   Family Law

Gulf Coast Farms, LLC, et al. v. Fifth Third Bank Fayette Circuit Court 11-CI-88

Fifth Third Bank sought to enforce banking agreements that included pledges of equine collateral.  Gulf Coast attempted to prove that the terms of the agreement with the lender were different than contained within the documents executed by the parties.  The trial court ruled in favor of Fifth Third by Opinion and Partial Summary Judgment entered on July 30, 2013.  Gulf Coast appealed and the Kentucky Court of Appeals affirmed on April 19, 2013, in cases 2011-CA-965/1575/491, the trial court’s rulings in favor of Fifth Third.

In a related case, the US District Court ruled in favor of Fifth Third in its pursuit of proceeds generated from the sale of a share of a stallion, DISTORTED HUMOR that was pledged as collateral and the US Court of Appeals (case 13-6184) for the Sixth Circuit affirmed on July 23, 2014.

Equine collateral/four corners/ambiguity

July 23, 2014 Filed Under:   Equine Law   Litigation   Transactional Law

Anderson Park Lake v. Okolona Plumbing and MSD, (2013-CA-288 & 1034 and 1083, Jefferson Circuit Court)

Plumber installed new underground water supply to apartment buildings under renovation by new owner. After several years owner determined that the water line installation was defective as joints in the pipes burst from having been overtightened at installation. No visible evidence existed of the harm until a puddling of water in common area outside a building and repair efforts required digging to locate the source leak several feet underground. The trial court granted summary judgment to plumber and sewer district on all claims on the basis that owner should have known of an underground, nonvisible leak and therefore an installation defect based solely on the ‘excessive’ water bills owner received over time. Owner appealed and Court of Appeals reversed on certain issues and held that owner should be entitled to trial on its contract-based claims even though its negligence-based claims were barred by the statute of limitations and that Owner should have discovered those claims earlier. Owner petitioned for discretionary review on the discovery rule for statute of limitations purposes as there is no Kentucky case addressing it except in the context of medical malpractice.

Professional negligence/discovery of hidden defect/statute of limitations/damages

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July 1, 2014 Filed Under:   Litigation   Transactional Law

Charles T. Creech, Inc. v. Brown and Standlee, 433 S.W.2d 345 (Ky. 2014) (2012-SC-651-DG) (2011-CA-629)(09-CI-779) Fayette Circuit Court

In a case that traversed from trial court, to court of appeals, back to the trial court, back to the court of appeals and then to supreme court, Kentucky’s highest court changed the law on noncompetition agreements and the consideration required for an enforceable restrictive covenant.   Company sued former employee and his new employer to enforce a noncompete executed by employee after many years of service and without any additional compensation or consideration to the employee. After several hearings the trial court granted injunctive relief and applied the “blue pencil” doctrine to insert a reasonable area limitation on the noncompete ruling that the former employee could not act in violation of the contract. Read the trial court’s ruling and temporary injunction.

Former employee and his new employer then pursued emergency relief at the Court of Appeals under CR 65.07.  The Court of Appeals dissolved the injunction on the emergency appeal.  Read the CR 65.07 order dissolving the temporary injunction.   The supreme court declined review as to the interlocutory rulings.  The case was then remanded to the trial court to address the merits of the case without any injunctive relief being in place and the trial court granted Former Employee summary judgment and dismissed the balance of the Company’s case for protection based on the wording of the appellate court’s order.

Company then appealed and on full review the Court of Appeals agreed that the Company’s claims should not have been dismissed but significantly limited its damage claim and created a new “test” for enforceability of noncompetes. See the Opinion of the Court of Appeals

Company moved for discretionary review which was granted by the Supreme Court. The Supreme Court then used the case as a first review by the high court to consider noncompetes and held that 50+ years of law in Kentucky providing that continued employment is adequate consideration to enforce a noncompete is no longer applicable. They held that the noncompete in issue was unenforceable due to lack of consideration while also holding that the “blue pencil” doctrine is not available in Kentucky.  See the Opinion of the Kentucky Supreme Court

Noncompete/restrictive covenant/employment/consideration/CR 65 relief/blue pencil doctrine/issues on review/damages/adequate consideration/unenforceable

 

June 19, 2014 Filed Under:   Litigation   Transactional Law   Employment Law

Pannell v. Shannon, 425 S.W.2d 58 (Ky. March 20, 2014)

Landlord sued to enforce commercial lease against tenant. Tenant had allowed her limited liability company to be administratively dissolved and entered into an amended lease with landlord in her individual name. The parties did not use attorneys for the preparation or execution of the amended lease and merely struck through the price and square footage entries for their modification. The court of appeals affirmed holding that there was no evidence that tenant intended to enter into the agreement in her individual capacity (even though she prepared and presented a separate agreement to the landlord that absolved her of personal responsibility for debt arising prior to the amended agreement). There further existed inconsistent opinions from different panels on the issue. The supreme court granted discretionary review and affirmed by holding that reinstating a limited liability company provides protection from personal liability in effectively all circumstances.

Corporate/landlord-tenant/corporate shield/ reinstatement/personal liability

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March 20, 2014 Filed Under:   Litigation   Transactional Law

Sports South, LLC v. Earley M. Johson, II et al., USDC ED KY, 13-CV-266-JMH (February 27, 2014)

The trial court granted a motion for judgment on the pleadings because the personal guarantees were unenforceable as a matter of law as not complying with the requirements for a guaranty of indebtedness set out by Kentucky statute.

Personal guarantee/business debt/KRS 371.065/credit agreement/unenforceable/sophisticated business person

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February 27, 2014 Filed Under:   Litigation   Transactional Law

Sports South, LLC v. Earley M. Johson, II et al., USDC ED KY, 13-CV-266-JMH (February 27, 2014)

The trial court granted a motion for judgment on the pleadings because the personal guarantees were unenforceable as a matter of law as not complying with the requirements for a guaranty of indebtedness set out by Kentucky statute.

Personal guarantee/business debt/KRS 371.065/credit agreement/unenforceable/sophisticated business person

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February 27, 2014 Filed Under:   Litigation   Transactional Law

Liberty Corporate Capital Ltd v. Security Safe Outlet, 577 Fed.Appx 399 (USCA 6th 2014)

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January 1, 2014 Filed Under:   Litigation   Transactional Law

Baptist Physicians Lexington, Inc. v. The New Lexington Clinic, PSC, 2012-SC-242 (December 19, 2013)

The Kentucky Supreme Court clarified that the corporate fiduciary duty statute defined the duties of a director when acting in his official capacity on behalf of the corporation, but did not displace fiduciary duties when he was acting in his individual capacity and not in a corporate one. Thus, common law fiduciary duties survived enactment of statutes defining duties owed when acting on behalf of the corporation.

Fiduciary duties/corporations/ board member/officer/KRS 271B.8-300/pleading

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December 19, 2013 Filed Under:   Litigation   Transactional Law   Employment Law

Duru v. Louisville/Jefferson County Metro Government, et al., 13-CI-969 (Jefferson Circuit Div 13 Sept 2013)

Resident of Atlanta shipped item back to Atlanta by UPS while in Texas.  The package travelled through the UPS hub in Louisville, Kentucky.  While processing through the hub, Louisville Metro police used a drug sniffing dog as part of a task force to “smell out” probable cause.  Identifying the package as “suspicious” because it was shipped from Houston, Texas and because it had “H.V.” marking on the exterior of the package, Metro police then called in a drug sniffing dog.  The dog purported to “hit” on the package and Metro police directed UPS personnel to open the package without a warrant.  In the package there were no drugs or illegal contraband but there was cash.  Metro police then confiscated the money and filed a civil forfeiture action in Louisville even though there was no evidence of criminal activity, no evidence of proximity of the cash to controlled substances and no evidence (however slight) that the currency had been used or was intended to be used in a drug transaction.

Civil Forfeiture/KRS 218A.140/traceability/probable cause

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September 1, 2013 Filed Under:   Litigation   Transactional Law

In re Appalachian Fuels, LLC, 493 B.R. 1, 22(B.A.P. 6th Cir. 2013)

MGM represented the unsecured creditors committee of one of the sister companies that was a joint debtor in this case. This case concerned whether MGM’s client was liable for the environmental reclamation obligations of its sister company based on state law derivative liability or federal law substantive consolidation. The U.S. Bankruptcy Appellate Panel of the Sixth Circuit agreed with the bankruptcy court to find that the facts did not justify piercing of the corporate veil of a company so that it was liable for its sister company’s environmental obligations, and while the companies were jointly administered for procedural purposes, joint procedural administration was not the same as substantive consolidation.

Bankruptcy/piercing corporate veil/debt/related entities

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July 1, 2013 Filed Under:   Litigation   Transactional Law

Norton et al v. Perry et al., COA 2011-CA-2343/2394, Fayette Circuit 08-CI-6061 (2013)

Property owners in Fayette and Clark Counties in Kentucky learned of an effort to “nominate” their property to be listed on the National Historic Registry run by the National Park Service.  The properties involved totaled well over 10,000 acres and would be designated as a National Historic District.  Several property owners requested for their property to be removed from the effort.  Those individuals pushing for the listing refused.  The objectors then presented official objections to the nomination as the applicable federal regulations set forth.  As the objectors learned, once the process of the nomination is started — and it only takes one person to start the process — it may be impossible to stop it as the federal rules have been written to essentially make stopping the process an impossibility.  The objectors totaled more than 50% of the landowners by number and totally much more than 50% by acreage owned.  Yet the movants continued to press forward with the guidance and assistance of employees in the Kentucky Historical Council under the Department of Tourism.  The objectors filed an action in the trial court to stop the process.  The Court provided little assistance in stopping the process but ultimately found that and ruled that the process followed by the movants using the federal regulations was flawed and arbitrary.  On appeal to the Kentucky Court of Appeals, a 34 page published Opinion sets forth that the effort of the movants violated the property owners’ due process rights and that the property owners have a constitutional right to be left alone.  The movants sought discretionary review by the Kentucky Supreme Court which was denied.  This ruling is significant because it makes clear that the process to nominate real property to be listed on the National Historic Registry violates the due process rights of the property owner citizens of Kentucky and is arbitrary.

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January 13, 2013 Filed Under:   Litigation   Transactional Law

Norton Family Trust v. SJ Holdings, LLC and Tierney (2013-CA-1552, Clark Circuit Court)

Adjacent landowner sought to enforce deed restrictions against current property owner to prohibit the sale of used cars and repair of trucks on the premises. Current property owner planned to build a new car dealership on the site with the obvious related business of sale of used cars and truck repair being appurtenant to the new car franchise. The trial court ruled that even though the restriction clearly prohibited the specific uses of ‘used car sales’ and ‘truck repair’ because the restrictions did not prohibit the general use of a new car dealership, those operations appurtenant to a new car dealership would therefore not violate the restrictions. Landowner appealed arguing that Kentucky law did not support the trial court’s determination. The court of appeals affirmed the trial court and the supreme court denied discretionary review. Thus, in Kentucky it now appears that the failure to prohibit a general use (new car franchise which includes the sale and repair of new and used cars and trucks) in a deed restriction will allow a specific use even though the specific use was specifically prohibited (i.e., no used car sales and no truck repair) in the restriction.

Real estate/deed restrictions/prohibited use

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January 1, 2013 Filed Under:   Litigation   Transactional Law

Blue Skies Racing Stable, LLC v. O’Sullivan Farms, LLC and Vinery, Ltd., (2012-CA-2116-MR)

Blue Skies Racing Stable, LLC appealed a judgment of the Fayette Circuit Court dismissing appellee, O’Sullivan Farms, LLC from its declaratory action. The Court of Appeals reversed and remanded. The controversy centered over who was entitled to ownership of a thoroughbred stallion named LIMEHOUSE. Blue Skies contended that it had a valid and binding contract to purchase the controlling interest in the horse from appellee, Vinery, Ltd. and that Vinery breached the contract by purporting to sell that controlling interest to a third party, O’Sullivan Farms, LLC, instead. Blue Skies moved for a temporary injunction to prohibit Vinery and O’Sullivan Farms from removing the horse from Kentucky and taking it to West Virginia during the pendency of the litigation. Vinery and O’Sullivan Farms opposed the motion for temporary injunction and alternatively moved to dismiss. The Court identified several errors by the trial court. First, the trial court orally overruled the motion for temporary injunction at an August 30, 2012 hearing. However, the Court held that the Court did not effectively “deny Blue Skies’ motion for a temporary injunction” because a court may speak “only through written orders entered upon the official record,” and no written findings of fact and conclusions of law were entered. Id. at *6. Second, the Court found that the trial court had no authority “to render a nonbinding advisory opinion,” and that the trial court “could not properly have disposed of the underlying merits of this dispute when simply considering Blue Skies’ motion for temporary injunction.” Therefore, the trial court erred in justifying its dismissal of O’Sullivan Farms by citing its previous “denial” of Blue Skies’ motion for temporary injunction. Third, the trial court erred by foreclosing the possibility that specific performance was an appropriate remedy for Blue Skies under the circumstances. Finally, the trial court erred by indicating that it lacked authority to unwind O’Sullivan Farms’ purported purchase of LIMEHOUSE or otherwise exercise jurisdiction over LIMEHOUSE because the horse was, at the time of the hearing on the motion to dismiss, located in another state. “The circuit court undisputedly has personal jurisdiction over O’Sullivan Farms . . . the circuit court is fully authorized to compel O’Sullivan Farms to act in relation to any property not within its jurisdiction.” Id. at *8.

Equine/personal jurisdiction/rescission of purchase/stallion interest

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January 1, 2013 Filed Under:   Equine Law   Litigation   Transactional Law

Lexington Rental Homes, LLC v Elizabeth Gayle Bartilow, 12-XX-22 (Fayette Circuit Court, 4th Div. 2012) and USBC EDKY 13-50290 tnw 2013

What began as a landlord/tenant case with the landlord enforcing the terms of a residential lease that contained an early termination liquidated damage charge, ended up in bankruptcy court. The initial claim was that a few thousand dollars were owed because the tenant ‘walked out’ before the end of the lease. Tenant represented herself in the collections case filed in the district court. Both sides filed cross motions for summary judgment which were denied by the trial court requiring a trial. A bench trial was conducted and the court ruled in favor of landlord on the compensatory damage claim that was only a portion of the liquidated damages claimed and further denied recovery of interest or attorneys’ fees. Fee recovery was demanded under KRS 383.660 and the tenant’s willful breach of the lease. The inconsistent ruling was appealed to the circuit court. The Opinion and Order on appeal (entered November 5, 2012) resulted in the reversal of the trial courts ruling denying the interest claim and the fee recovery. The ruling resulted in the judgment going from a couple of thousand dollars to over ten thousand dollars. As a result, the tenant filed personal bankruptcy seeking to discharge the debt. Because the Landlord had filed a Notice of Judgment lien, Landlord was a secured creditor in the bankruptcy and this led to a effort to strip off the lien by the debtor to so that the debt would be discharged and the lien against the real property removed. After an evidentiary hearing before the bankruptcy court including expert appraiser testimony to determine whether there was equity in the real property and whether the debtor’s claimed exemption was impaired under bankruptcy law, the bankruptcy court determined that the lien would remain attached to the real property to the extent of $10,000.  See Bankruptcy Court’s Order entered November 22, 2013, in case 13-50290 USBC EDKy.

Landlord/tenant/willful breach/attorneys fees/bankruptcy/impair exemption/liquidated damages

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January 1, 2013 Filed Under:   Litigation   Transactional Law

Liberty Corporate Capital Ltd v. Security Safe Outlet, Inc., 937 FSupp2d 891 (EDKY 2013)

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January 1, 2013 Filed Under:   Litigation   Transactional Law

Hank Investments, Inc. v. Century Surety Company, (2013-CA-879, Fayette Circuit Court)

In a declaratory judgment action, business owning bar sought recovery of its costs from its general liability carrier of its defense in litigation in which it was successful in obtaining summary judgment. Insurance carrier had not only denied coverage but also denied a duty to defend. The denial of defense was based upon the wording of the complaint in which it was alleged a patron was overserved by employees of the bar. The evidence in the case revealed that there were no facts supporting the contention of overservice and bar was granted summary judgment. Given that allegations of the complaint were not proved, bar contended carrier owed the duty to defend and should have at least provided cost of defense as such a result was a possible outcome of the allegations. The court of appeals affirmed no coverage and the supreme court denied discretionary review.

Insurance coverage/duty to defend/dram shop liability

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January 1, 2013 Filed Under:   Litigation   Transactional Law   Insurance Defense

Hillyer v. Paul Miller Ford, Inc., 2010-CA-1819-MR (Fayette Circuit Court, November 16, 2012)

Hillyer purchased a new truck.  About two years later he asserted claims against the selling dealership for breach of contract, breach of warranty, fraud and violations of the Consumer Protection Act.  Hillyer did not initially name the manufacturer in the action because he had initiated his dispute against the manufacturer but lost in the arbitration proceeding conducted by the Better Business Bureau (called Auto Line).  The fundamental claim was that the vehicles frame was bent upon purchase and delivery.  The selling dealership defending arguing that it was not responsible for any manufacturing defects and that it had properly disclaimed any express or implied warranties at the time of sale.  The trial court granted summary judgment to the selling dealer.  On appeal the Court of Appeals affirmed the ruling and opined that the selling dealership had properly disclaimed warranties under KRS 355.2-316 and that there were no cognizable claims against the selling dealer under the federal Magnuson-Moss Warranty Act 15 USC 2301 or for fraud under KRS 190.071.

New vehicle sale/warranty disclaimer/Magnuson-Moss Warranty Act/KRS 190.071/KRS 355.2-316/Better Business Bureau

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November 16, 2012 Filed Under:   Litigation   Transactional Law

Budsgunshop.com, LLC v. Security Safe Outlet, Inc., USDC EDKy 1899851 (May 23, 2012)

Defendant sought leave to file an amended counterclaim to assert several significant claims related to the prior sale of the business.  The Court in a lengthy opinion and order granted leave to assert numerous additional claims, including conversion of the website and related data, breach of fiduciary duty, diversion of corporate opportunity, aiding and abetting breach of fiduciary duty, and misappropriation of trade secrets.  The opinion further held that a website is personal property.  Other circuits have since held websites are not personal property.

Breach of fiduciary duty/conversion/diversion of corporate opportunity/aiding and abetting/website/electronic date and customer lists

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May 23, 2012 Filed Under:   Litigation   Transactional Law

Cave Hill, LLC v Logan Asset (Fayette Circuit Court 2012)

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January 1, 2012 Filed Under:   Litigation   Transactional Law

Stephen Deese v Genscape, Inc., 12-CI-1784 (Jefferson Circuit Court 2012)

Employee work for over a decade for employer.  At some point post-employment, employer requested a non-compete be executed by the employee.  Some stock options were awarded as part of that agreement.  Years later employer sought to down-size and terminated employee under a reduction in force.  Employee sought out new employment and was provided a job offer by a Fortune 500 company which arguable did similar work as former employer.  Former employer communicated the existence of an enforceable noncompete to employer who offered job who then withdrew the job offer. The noncompete essentially restricted employee’s future work prospects by geographic area to only 1 of seven continents.  Employee file for a temporary restraining order and a declaration judgment action seeking a court ruling that the noncompete obtained post-employment was not enforceable as a result of the reduction in work force termination of employee and because the geographic restriction was so unreasonable.  The trial court denied the request for temporary restraining order holding that the employee had not shown that his rights were being or would be violated by employer, and after an extensive evidentiary hearing the trial court issued an opinion and order that held that employee could not establish that his rights are being or will be violated by the former employer as it had the right to seek to enforce its agreements with former employees.

January 1, 2012 Filed Under:   Litigation   Transactional Law   Employment Law

Hausman v. Denham & Bizzack, (2011-CA-687 & 627, Fayette Circuit Court)

Two individuals purchased a mostly-completed new house construction out of foreclosure. They finished the construction which involved items such as carpet and painting and not substantive construction work, and sold the house “as is”. Buyer subsequently discovered that the windows in the basement were not sufficient size to allow bedroom use of the basement rooms even though the house was marketed on MLS as having “bedrooms” in the basement. Buyers sued Sellers for damages (not rescission). The trial court initially ruled that Sellers were liable as “builders” under Kentucky law which carried with it a statutory provision for recovery of attorneys’ fees. Subsequently, the trial court changed its ruling and ruled that Sellers were not subject to the statute governing “builders,” and therefore no liable for the windows and in fact Sellers were not responsible as a matter of law for remediation to make the basement windows meet egress code given that a separate statute made clear that a builder is only responsible for what he builds and it was undisputed that the original builder (foreclosed on) had constructed most of the house, including the windows in issue. The trial court granted summary judgment to Seller.  The trial court also granted attorneys’ fee recovery to the Sellers based upon the real estate purchase contract with the Buyers.  Buyers appealed the trial court’s rulings in in favor of Sellers.  See Hausman, et al.  v Denham et al., COA 2011-CA-627 & 687 (September 7, 2011).

Construction/Builder/liability/statutory limitations on builders

January 1, 2012 Filed Under:   Litigation   Transactional Law

Blue Skies Racing Stable, LLC v. O’Sullivan Farms, LLC and Vinery, Ltd., (2012-CA-2116-MR)

Blue Skies Racing Stable, LLC appealed a judgment of the Fayette Circuit Court dismissing appellee, O’Sullivan Farms, LLC from its declaratory action. The Court of Appeals reversed and remanded. The controversy centered over who was entitled to ownership of a thoroughbred stallion named LIMEHOUSE. Blue Skies contended that it had a valid and binding contract to purchase the controlling interest in the horse from appellee, Vinery, Ltd. and that Vinery breached the contract by purporting to sell that controlling interest to a third party, O’Sullivan Farms, LLC, instead. Blue Skies moved for a temporary injunction to prohibit Vinery and O’Sullivan Farms from removing the horse from Kentucky and taking it to West Virginia during the pendency of the litigation. Vinery and O’Sullivan Farms opposed the motion for temporary injunction and alternatively moved to dismiss. The Court identified several errors by the trial court. First, the trial court orally overruled the motion for temporary injunction at an August 30, 2012 hearing. However, the Court held that the Court did not effectively “deny Blue Skies’ motion for a temporary injunction” because a court may speak “only through written orders entered upon the official record,” and no written findings of fact and conclusions of law were entered. Id. at *6. Second, the Court found that the trial court had no authority “to render a nonbinding advisory opinion,” and that the trial court “could not properly have disposed of the underlying merits of this dispute when simply considering Blue Skies’ motion for temporary injunction.” Therefore, the trial court erred in justifying its dismissal of O’Sullivan Farms by citing its previous “denial” of Blue Skies’ motion for temporary injunction. Third, the trial court erred by foreclosing the possibility that specific performance was an appropriate remedy for Blue Skies under the circumstances. Finally, the trial court erred by indicating that it lacked authority to unwind O’Sullivan Farms’ purported purchase of LIMEHOUSE or otherwise exercise jurisdiction over LIMEHOUSE because the horse was, at the time of the hearing on the motion to dismiss, located in another state. “The circuit court undisputedly has personal jurisdiction over O’Sullivan Farms . . . the circuit court is fully authorized to compel O’Sullivan Farms to act in relation to any property not within its jurisdiction.” Id. at *8.

Equine/personal jurisdiction/rescission of purchase/stallion interest

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January 1, 2012 Filed Under:   Equine Law   Litigation   Transactional Law

Brunswick Bowling & Billiards v. Ng-Cadlaon 2010-CA-1844 (Boyd Circuit Court November 4, 2011)

Customer executed a personal guarantee of business obligations.  Upon default, customer challenged the personal guarantee claiming it unenforceable under KRS 371.065.  The trial court agreed and the Kentucky Court of Appeals affirmed opining that the guarantee was not attached to the note, did not refer to the specific note nor did it make any references to particular sections of the note.

Personal guarantee/KRS 371.065

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November 4, 2011 Filed Under:   Litigation   Transactional Law

Owen v. DCR Mortg. III Sub I, LLC, 337 S.W.3d 652 (Ky. App. 2011)

MGM represented the mortgagee in this case. This case concerned the efforts of a mortgagee to collect in state court the amounts due from the personal guarantors of the loan after the property was sold during the mortgagor’s bankruptcy proceeding. The Kentucky Court of Appeals found that the fact that the personal guarantors were not listed as creditors in the mortgagor’s bankruptcy proceeding did not preclude the mortgagee from collecting the deficiency amounts due from them.

Bankruptcy/personal guarantee/collection/debt

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January 1, 2011 Filed Under:   Litigation   Transactional Law

Lexington Real Estate Company v. O’Rourke, Fayette Circuit Court, CA 2010-CA-108, 365 S.W.3d 584 (2011)

Landlord sought recovery of unpaid rent and costs to repair damage to the residence which was not returned in the condition that it was rented.  Trial court awarded recovery of all amounts including attorneys’ fees under KRS 363.660, tenant’s willful breach of the lease.  The Court of Appeals reversed on the attorneys’ fee issue holding that “leaving property in less than perfect condition did not render tenant’s noncompliance with rental agreement “willful”.  In what is surely to end up be the significance of the ruling, the Court of Appeals held that to properly plead for recovery of attorneys’ fees, it must be plead “in the body of the complaint” to provide adequate notice even under notice pleadings standards.  Making the claim for fee recovery only in the ad dandum clause is now insufficient.  (Note, the Court of Appeals erroneously included a final page to the opinion listing random attorneys who were not involved in the case which was picked up by Westlaw and remains in the published version.)

Landlord/tenant/KRS 363.660/attorneys’ fee recovery/willful breach/pleading fee recovery

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January 1, 2011 Filed Under:   Litigation   Transactional Law

Cummins v. Morita, et al. (No. 2007-CA-002101-MR & No. 2008-CA-000212-MR, KY Court of Appeals 2010)

Cummins v. Morita, et al. (No. 2007-CA-002101-MR & No. 2008-CA-000212-MR, KY Court of Appeals 2010)

A borrower obtained a mortgage loan and subsequently complained that he had been under a belief he was dealing with a specific lender. The borrower further claimed the mortgage broker who handled the transaction made misrepresentations about the loan. The borrower alleged over a dozen causes of action against the mortgage broker yet was satisfied with the underlying mortgage and terms. The case was promoted by the mortgage broker’s former employer and the plaintiffs were apparently represented for free by counsel connected to the former employer.  MGM defended the mortgage broker and the trial court entered a summary judgment in favor of the mortgage broker on all claims which was affirmed on appeal by the Kentucky Court of Appeals.

Mortgage broker/fraudulent inducement/employment at will/duty of disclosure/impact of execution of contract

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January 1, 2010 Filed Under:   Litigation   Transactional Law

Curtis Green & Clay Green, Inc. v. Clark (No. 2006-CA-000086-MR, Court of Appeals 2010)

MGM represented various businesses that participated in a workers’ compensation self insurance group called AIK. These groups are permitted by Kentucky statute for the purpose of diluting workers’ compensation liability by spreading out the risks to a large group of employers. Under the plan, all of the approximately 3,000 businesses are equally liable for any workers’ compensation claims brought against them. Unfortunately, due to alleged mismanagement by the group’s trustees their exposure to actual and future risks came into question, and the group was placed in rehabilitation by the circuit court. Shortly after the court’s action, the Governor entered an Executive Order for the purpose of transferring control of all self-insurance groups from the Department of Workers claims to the Kentucky Office of Insurance. The court-appointed rehabilitator began plans to force the group to cover their shortfalls of approximately $58.5 million, whereby all members would have to pay their proportionate share and the state’s authority to appoint a rehabilitator. The State Legislature passed emergency legislation ratifying the Executive Order. The new law applied retroactively to all self insurance groups and defined such groups as insurers. MGM challenged the new law, claiming that its retroactive application was unconstitutional and that it unlawfully targeted only the one group in question. In addition, they asserted that the members were not liable for the shortfalls, because the trustees had breached their contract by not obtaining adequate re-insurance.  (Update:  As recently as 2014-2105, the Receiver issued a new round of assessments to those former members to pay the continuing expenses and liability from the ‘run off’ of AIK.  Those subject to the assessment are those businesses who remain in business and who didn’t negotiate full and final settlements during their litigation.)

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January 1, 2010 Filed Under:   Litigation   Transactional Law

Sanders v. Victory Haven Training Ctr., LLC. (No. 2008-CA-002220-MR, Court of Appeals 2009)

MGM represented a horse training facility in recovering back rent owed by a trainer who breached her lease agreement. The trainer responded to the suit by filing a counterclaim seeking damages for an allegedly improper lien placed on the horses she trained but did not own. Judgment was granted on liability and a partial damage award entered. The trainer’s counterclaim was then addressed through discovery and a separate order entered dismissing that claim. An additional damage award was entered to quantify the damages accruing since the first award order. The trainer appealed the judgment and the Court of Appeals affirmed the trial court’s decision in favor of the training facility.

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January 1, 2009 Filed Under:   Equine Law   Litigation   Transactional Law

MPM Financial Group, Inc. v. Morton (No. 2007-SC-000652-DG, Supreme Court 2009)

MGM assisted a local small business group in obtaining a judgment against an individual former co-owner defendant for theft and embezzlement. After the judgment was entered, the defendant could not be found for more than a year. Once he was located, MGM sought to satisfy the judgment by serving a garnishment on an insurance company who paid monthly disability benefits to the defendant based upon a private disability policy. The defendant challenged the garnishment claiming that the policy was exempted by a Kentucky Statute (KRS 427.150) in combination with a Federal Bankruptcy Statute (11 USC §522(d)). He asserted his right to these exemptions even though he had not filed bankruptcy. The trial court held that his policy was not exempted under the Kentucky Statute but held that a different and recently changed Kentucky Statute (KRS 427.170) allowed him to exempt the policy from garnishment using the Federal Bankruptcy Statute. The Court of Appeals affirmed the decision. MGM along with the amicus support from the Kentucky Bankers Association sought review from the Supreme Court, which was granted. The brief provided by MGM persuaded the Court to resolve the statutory issues and reversed in favor of MGM’s client. The court held that the Kentucky Exemption Statute in issue only applied to those who had been adjudged bankrupt and was therefore inapplicable to the defendant.

Judgment/enforcement/statutory exemption/KRS 427/ 11 USC 522/bankruptcy

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January 1, 2009 Filed Under:   Litigation   Transactional Law   Employment Law

Lach v. Man O’ War, LLC (2005-SC-001014-DG, Supreme Court 2008)

A dispute arose in a limited partnership after the relationship between one of the general partners and a limited partner deteriorated. The limited partnership was formed for the purpose of leasing and developing shopping centers. The only other general partner was terminally ill with cancer and desperately tried to resolve the dispute for the benefit of the business before his death. He attempted to solve the matter by proposing the appointment of two new general partners who would replace him after his death. The disgruntled limited partner refused to agree to the proposal. The general partners decided the best course of action was to restructure the partnership. A new LLC was formed and the partnership transferred its interest to the LLC. After the transfer occurred, the original partnership was dissolved and its assets were transferred to the partners in the same proportion as their previous ownership. Not happy with the decision, the disgruntled limited partner refused to sign a document ratifying the restructuring and as result lost her voting right in the LLC. Her profit sharing interest remained the same but she could no longer vote on any management issues. Upset with the action taken by the majority of the owners she filed suit alleging invalid conversion and breach of fiduciary duties. MGM represented a general partner. Both the trial and appellate courts ruled in favor of the newly formed LLC and the general partners, finding that the restructuring did not amount to conversion and that the action taken by the majority of owners was actually carried out to preserve the best interest of all of the owners. The Court also found that no fiduciary duties had been breached and that the restructuring had been within the powers of the general partners. Ultimately, the Supreme Court reversed the ruling creating the first published law in Kentucky on limited liability companies.

LLC/limited liability company/fiduciary duty/partners/partnership/merger

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January 1, 2008 Filed Under:   Litigation   Transactional Law

Paul Miller Ford, Inc. v. Rutherford (No. 06-CI-01412, KY Court of Appeals 2007)

A customer purchased a used vehicle, took delivery and then almost immediately defaulted under the purchase contract terms by failing to pay. The vehicle was repossessed and then the customer filed a tort suit against the car dealership seeking damages for emotional distress and inconvenience that resulted from the repossession of the car. The purchase contract contained an arbitration provision designed and recommended by the Better Business Bureau. The trial court declined to enforce the arbitration provision and the appellate courts further refused to enforce it based upon public policy grounds.

Arbitration/Better Business Bureau/KY Arbitration Act/KRS 417/denial of arbitration

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January 1, 2007 Filed Under:   Litigation   Transactional Law

Ross v. Powell (2004-SC-0008-DG, Supreme Court 2006)

A homebuyer accepted an offer to purchase the home of a couple that was moving out of state. Due to the age of the house, the listing realtor suggested that a prelisting inspection, including a termite inspection, be conducted before listing the property. The sellers had the house professionally inspected. The inspection showed some evidence of termites, but they were assured that there was no evidence of damage. The sellers then listed the house for sale and signed a seller disclosure form pursuant to KRS 324.360. On the form they disclosed their knowledge of the condition of the house. Additionally, the sellers disclosed the evidence of termite infestation and no apparent damage on a disclosure form provided by the Lexington-Bluegrass Association of Realtors and indicated that an additional inspection was scheduled consistent with the disclosure form. Shortly thereafter, the home was professionally treated for the termites and the sellers moved out of state. The buyer had the house independently inspected twice and treated as part of the closing and closed on the house. Almost a year later the homebuyer filed an action for fraud against the seller in circuit court, alleging the seller had materially misrepresented the condition of the house. MGM successfully defended the sellers by obtaining a summary judgment, which was affirmed by the Court of Appeals and the Supreme Court of Kentucky.

Real estate/real estate disclosure form/adequate disclosures/termite damage/residential real estate/hidden defects

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January 1, 2006 Filed Under:   Litigation   Transactional Law

An Overview of Evidentiary Issues and Estate Disputes

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January 1, 2005 Filed Under:   Transactional Law

Elden Ginn Tobacco Warehouses, Inc. v. East Kentucky Power Coop., Inc. (No. 2004-CA-002339-MR, Mason Circuit Court

A large Kentucky utility company sought to condemn tracts of land pursuant to the Eminent Domain Act of Kentucky to construct power lines between two of their power production facilities. After landowners in the area raised numerous objections the Public Service Commission (PSC) mandated that a public hearing be held. The hearing determined that the project was necessary. Two of the landowners sought the help of MGM to defend against the taking of their land. The circuit court entered an interlocutory judgment in favor of the utility, without addressing the property rights of the landowners who would be affected by the order. the trial court gave the defendants only about 30 days to prepare for and conduct the trial on their challenges.  On appeal, it was argued that the trial court abused its discretion and erred as a matter of law.  The Court of Appeals  reversed by demonstrating the court’s misplaced reliance on the PSC’s findings and their failure to address the right of the landowners.

Condemnation/eminent domain/taking/constitution/abuse of discretion

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January 1, 2004 Filed Under:   Litigation   Transactional Law

Blevins v. Paul Miller Ford, Inc. (No. 2003-CA-000601-MR, Court of Appeals 2004)

A customer purchased a used SUV from a dealership and signed a disclaimer which stated that the vehicle was being sold in “as is” condition. The customer seemed satisfied with the SUV and did not make any attempt to contact previous owners or have it independently inspected. Not long after the purchase, his car developed mechanical problems. Rather than investigate the source of the problems he would simply fix them as they arose. More than five years and almost 50,000 miles later he had the car inspected by another dealer, who determined the SUV was in poor condition. The customer filed a suit alleging fraud in the sale of the SUV. MGM successfully obtained a summary judgment for the dealership, which was affirmed on appeal. Fraud claims must be filed with five years from when the fraud is discovered or it will be barred by the statute of limitations. The Court concluded that the immediate and persistent problems with the SUV should have been apparent to any reasonable owner and the limitation clock began to run and the customer was barred by the statute of limitations for waiting almost six years to bring his claim.

As is purchase/used car purchase/fraud/opportunity to inspect/executed contract terms and conditions

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January 1, 2004 Filed Under:   Litigation   Transactional Law

Lexington-Fayette Urban County Urban County Gov. v. Johnson (No 2001-CA-002245-MR, Court of Appeals, 2003)

The Fayette County Housing Authority sought to condemn a privately-owned apartment complex under the Kentucky Eminent Domain Act to build a low-income housing building for the elderly. MGM successfully defended the suit in circuit court, defeating the government’s effort. The Housing Authority appealed. The Court of Appeals affirmed the trial courts’ ruling, finding that the Housing Authority’s taking was not authorized by statute and that they had acted in bad faith and lacked justification in attempting to condemn the private properties where other better-suited properties were readily available. The trial court ultimately awarded recovery of attorneys’ fees because of the bad faith finding.

Condemnation/private property/commercial property/public purpose/pubic use/bad faith/attorneys fees

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January 1, 2003 Filed Under:   Litigation   Transactional Law

Berry v. Thomas (2000-CA-000670-MR, Court of Appeals 2001)

After an estate dispute arose, one of the decedent’s natural daughters who was born out of wedlock sought to have her father’s paternity established. The decedent’s widow (the second wife) and her children denied the daughter’s claim and rights to the estate. The Court held the daughter was in fact fathered by the decedent. The widow appealed the summary judgment of the trial court, and the Court of Appeals affirmed the decision. MGM helped to prove paternity through thorough deposition testimony, the law in effect at the time of the daughter’s birth, and the discovery of documents prepared by the widow which illustrated her knowledge that the daughter had been fathered by her husband.

Prenuptial agreement/probate/void prenuptial agreement/failure to adequately disclose assets/divorce revokes will/KRS 394.090/change in law

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January 1, 2002 Filed Under:   Litigation   Transactional Law

Mitan v. Huntington National Bank (No. 98-CI-01174, Boone Circuit Court 2002)

Huntington National Bank filed a foreclosure action against an automobile dealership after it defaulted on its mortgage payments. The bank sought to recover against the guarantor of a promissory note that was executed in their favor. The guarantor, an out-of-state businessman who owned an interest in the dealership, sought the help of Miller, Griffin & Marks to appeal a summary judgment entered against him by the trial court.

Summary Judgment/foreclosure/guarantee/guarantor

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January 1, 2002 Filed Under:   Litigation   Transactional Law

Orr v. Versailles-Midway-Woodford County Board of Adjustment (No. 2001-CA-000341-MR, Court of Appeals 2002)

Representatives of a local neighborhood association and the Huntertown Road Alliance (HRA) opposed a plan that had been submitted to the Woodford County Zoning Administrator to build a car dealership. The zoning in the area where the dealership was to be built had remained unchanged for more than twenty-five years and the proposed dealership was permissibly within the zoning scheme. After it was recommended that the plan be approved, the HRA appealed the recommendation to the County Board of Adjustments. The Board held a public hearing on the matter to consider reasons why the plan should be refused. However, the arguments presented by the HRA were unpersuasive, and the plan was approved by a unanimous vote. Shortly after, the Planning and Zoning Commission held a meeting and the development plan was again approved. The HRA was unsatisfied with the decision and filed a complaint in court alleging that the Board and Planning Commission had denied them due process in failing to consider their argument against the plan and that the Board had been biased towards approving the plan. A bench trial was granted to determine whether the Board had preconceived opinions concerning the development plan prior to the initial hearing. All of the claims were decided in favor of the defendants and the HRA appealed. The arguments presented by MGM showed that the Board and Planning Commission had not infringed on any rights of the HRA and had complied with all of the relevant statutory allowances in hearing their disagreements with the proposed plan. The Court of Appeals was persuaded by the arguments and the trial court’s ruling was affirmed.

Neighborhood association/zoning/Planning Commission

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January 1, 2002 Filed Under:   Litigation   Transactional Law

Mack v. Lochmere Dev. Corp. (No. 1998-CA-002892-MR, Court of Appeals 2000)

A couple living in the Andover Hills Subdivision submitted an application to the neighborhood association and the developer for a fence they wanted to build on their lot. All of the lots are subject to deed restrictions and covenants, and all proposed fences must first be approved the developer. The couple’s application was rejected because it violated several of the restrictions. Shortly after, the couple decided to build the fence anyway. The association and the developer sought the help of MGM, who obtained an injunction and an order to have the fence removed. The couple appealed the ruling, contending that they had not violated the restrictions and that they did not need the developer’s approval to build the fence. The Court of Appeal affirmed the summary judgment entered by the trial court, and the couple was ordered to pay MGM’s attorneys’ fees.

Deed restrictions/fence/covenants/developer approval/HOA approval/homeowners association/attorneys’ fees

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January 1, 2000 Filed Under:   Litigation   Transactional Law

Anderson v. Tiger (No. 96-CA-1914-MR, Court of Appeals, 1997)

In a completely separate suit, MGM represented a plaintiff who was awarded a judgment and order of sale of the defendant’s property to satisfy a judgment for money. By mistake, the court’s judgment had a numeral of the property address listed incorrectly which resulted in the address of the neighboring property being listed instead. The incorrect address number was listed in local newspapers announcing a foreclosure sale. However, the correct name of the defendant owner was used. The neighbor of the defendant whose address was printed in the ad was outraged by the mistake and filed a suit against the original plaintiff/judgment creditor alleging that the publication of his address was libelous and defamatory. The court held that the advertisement was not defamatory and could not reasonably have been said to refer to the plaintiff. The trial court dismissed the suit for failure to state a claim upon which relief can be granted, and its decision was affirmed by the Court of Appeals.

Enforcement of Judgment/Master Commissioner sale/defamation/slander/libel/court advertisement

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January 1, 1997 Filed Under:   Litigation   Transactional Law

Griffith v. Paul Miller Ford-Mazda-Isuzu, Inc. (No. 96-CA-000639-MR, Court of Appeals 1997)

Ford Motor Company sponsored a program where certain Ford models were eligible to be repainted free of charge. The owner of a Ford truck decided to participate in the program and delivered his truck to a prominent Lexington Ford dealership to be repainted. When the truck was returned the owner was dissatisfied with the result and filed suit alleging that the paint job had decreased the value of his truck. MGM successfully represented the dealership by obtaining a summary judgment that was affirmed by the Court of Appeals.  Criticism of the quality of a paint job requires an expert witness.

Manufacturing defect/automobile sale/new car warranty/Magnasson-Moss Warranty Act

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January 1, 1997 Filed Under:   Litigation   Transactional Law

Cohen v. North Ridge Farms, Inc., 712 F.Supp. 1265 (USDC ED Ky 1989)

The court held that sellers of horses have a duty to inspect and find defects in horses they are selling.  This case led to the creation of repositories at public auctions in Kentucky.

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January 1, 1989 Filed Under:   Equine Law   Litigation   Transactional Law

Chernick v. Fasig Tipton, 703 S.W.2d 885 (1986)

Sales companies have a duty to insure the accuracy of information supplied to buyers.  This case was later cited in the adoption of negligent misrepresentation as a cause of action in Kentucky.

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January 1, 1986 Filed Under:   Equine Law   Litigation   Transactional Law

Marsh v. Gentry, KY., 642 S.W.2d 574 (1982)

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January 1, 1982 Filed Under:   Equine Law   Litigation   Transactional Law