Bailey, et al. v. Estate of Kemp, et al.
| Docket Number: | 2005-CA-01468-SCT Linked Case(s): 2005-CA-01468-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 03-22-2007 Opinion Author: DIAZ, J. Holding: Affirmed in part; Reversed and Rendered in part |
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| Additional Case Information: |
Topic: Contract - Validity of contract - Statute of limitations - Section 15-1-49 - Remedy - Transfer of property - Attorney’s fees Judge(s) Concurring: SMITH, C.J., WALLER, P.J., CARLSON, GRAVES, DICKINSON AND RANDOLPH, JJ. Judge(s) Concurring Separately: EASLEY, J. Non Participating Judge(s): COBB, P.J. Dissenting Author : EASLEY, J. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 07-15-2005 Appealed from: MARSHALL COUNTY CHANCERY COURT Judge: Timothy E. Ervin Disposition: Found in favor of Appellee Case Number: 98-0304 |
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| Note: | On Cross Appeal: Affirmed | |
| Party Name: | Attorney Name: | |||
| Appellant: | BRIAN A. BAILEY AND JANET M. BAILEY LAPP |
JOHN H. FREELAND
MICHAEL REED MARTZ
JOHN TAYLOR MOSES |
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| Appellee: | THE ESTATE OF WILLIAM G. KEMP, DECEASED, JOE KARR, EXECUTOR, ANDREW T. MOSES, JR. AND MARTHA KEMP | WILLIAM K. DUKE THOMAS J. SUSZEK JONATHAN MASTERS LYNN CHAIN COOPER |
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| Topic: | Contract - Validity of contract - Statute of limitations - Section 15-1-49 - Remedy - Transfer of property - Attorney’s fees |
| Summary of the Facts: | Brian Bailey and his wife Lynn, Janet Bailey Lapp (Bailey’s mother), William Kemp (an attorney), and Andrew Moses (a specialist in distressed real estate properties) signed a contract agreeing that Kemp and Moses would negotiate the legal and financial complexities of the sale of two pieces of properties in Indiana and Florida in return for a cut of the proceeds. Janet Bailey Lapp would recoup her investment with interest, and the remaining amount would be split equally among Bailey, Kemp, and Moses. Nearly all the properties were sold and the money was disbursed in accordance with the contract: Janet Bailey Lapp received $225,000 plus interest due her, and Bailey, Moses, and Kemp each received roughly $109,000. There was also $19,623.89 left over from the various transactions, which was stored in the First State Bank in Holly Springs. The Florida property remained and over the course of the next decades it increased in value to nearly eight hundred thousand dollars (it had originally been purchased for $91,000). When Kemp passed away in 1998, his estate filed a declaratory judgment action against Brian Bailey, Bailey’s ex-wife, his mother, and Andrew Moses, seeking to formally establish that Kemp possessed a one-third interest in the Florida property, as well as a one-third interest in the $19,623.89. Bailey and his mother then filed a complaint against the Estate of Kemp and Moses, among others, asking in pertinent part that any purported interest in the Florida property asserted by Kemp and Moses be set aside; that Kemp and Moses provide the Bailey family a full accounting for all funds handled over the years on their behalf; and alluding to professional negligence by Kemp and Moses. The case was consolidated with the ongoing declaratory judgment action. The court found that the claims by the Baileys against Kemp and Moses and their efforts to exclude them from the contract were barred by laches and the general statute of limitations for tort actions. The $19,623.89 left in the bank was ordered divided in one-thirds among Brian Bailey, the Estate of Kemp, and Moses. The Florida property was ordered to be sold and the proceeds split in the same fashion. The Baileys appeal. |
| Summary of Opinion Analysis: | Issue 1: Validity of contract The Baileys argue that the contract entered into with Kemp and Moses is invalid because of breach of fiduciary duty, duress, fraudulent concealment, and lack of adequate consideration. Estoppel forbids one from both gaining a benefit under a contract and then avoiding the obligations of that same contract. The Baileys cannot profit under this contract and also seek to have it declared invalid where their obligations under the contract are concerned. In addition, the Baileys cannot now complain of the fee arrangement which they entered into freely and benefited from. Issue 2: Statute of limitations The chancellor found that the general three-year statute of limitations applied and that laches barred any equitable claim. Section 15-1-49, which has been applied to actions upon contracts, requires that one must commence an action within three years of its accrual. The chancellor determined that the last activity under the contract occurred in 1993, and that the three-year statute had run in August of 1996. The Baileys’ complaint was filed on June 29, 2000. Such factfinding is well within the purview of the trial court, and there was no evidence, despite the claims of the Baileys, of any fraud or concealment on behalf of Moses and Kemp. Accordingly, the claims of the Baileys are barred by the statute of limitations. In addition, there is nothing in the record to suggest that the chancellor abused his discretion in determining that laches applied to bar any claims against Kemp or the Estate of Moses. The Baileys argue that by filing for declaratory judgment in 1998, Moses and the Estate of Kemp simply waited too long to assert their rights to the Florida property under the contract. The family argues that the last service rendered under the contract by Kemp and Moses was in 1987, and so any lawsuit would have had to be filed by 1990. Because a component of the contract remains to be fulfilled, the sale of the Florida property, the statute of limitations has not begun to run. Issue 3: Remedy The chancellor originally ordered the sale of the Florida property, mandating distribution of the net proceeds to the three parties. Later, the judgment was modified to provide two alternate solutions: Bailey could first purchase the one-third shares of Moses and Kemp after an appraisal of the property to ascertain their value or Bailey could judicially partition the property. The use of the term “contingent” in the contract and the express and plain language of the contract requiring the sale of all the properties, indicate that two events are conditions precedent to Kemp and Moses receiving further fees. First, the Florida property must be sold. Second, the sale must be effected by Moses and Kemp for them to receive their portion of the fees. From the findings of the trial court it is clear that neither of these conditions have been satisfied. Therefore, the court committed an abuse of discretion in ordering the sale or partition of the Florida property. Issue 4: Transfer of property The Baileys argue that the chancellor erred by finding that the transfer of Janet Bailey Lapp’s former Holly Springs home to her attorney, Mr. Kemp, was valid. This gift occurred in 1994, and for the four years until his death Kemp paid Janet Bailey Lapp a small amount each month. The record also demonstrated that she allowed the Estate of Kemp to pay off the existing mortgage on the house, roughly $10,000, and the house was not actually transferred to Kemp’s name until after his death. There is no evidence that chancellor committed error in allowing the transfer of the property. Issue 5: Attorney’s fees Moses argues that he should be awarded attorneys’ fees because the case against him was wholly without merit. Ultimately, the declaratory judgment action brought by the Estate of Kemp was joined by and benefited Moses, as it supported his claim to a one-third share in the proceeds from any sale of the Florida property. Therefore, the chancery court did not abuse its discretion in declining to grant attorneys’ fees to Moses. |
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