Corinth Estates, Inc. v. Corinth Shore Estates, Inc.

RENDERED: JANUARY 20, 2023; 10:00 A.M.
NOT TO BE PUBLISHED

Commonwealth of Kentucky
Court of Appeals

NO. 2021-CA-0732-MR

CORINTH ESTATES, INC.; ALLEN
DOUGLAS; AND MABEL
MATTINGLY APPELLANTS

APPEAL FROM GRANT CIRCUIT COURT
v. HONORABLE R. LESLIE KNIGHT, JUDGE
ACTION NO. 19-CI-00373

CORINTH SHORE ESTATES, INC.;
GAYLE SCHWARTZ; JANET
WHITE; RICHARD MOORMAN;
RICHARD SCHWARTZ; AND
ROBERT LENNON APPELLEES

OPINION
AFFIRMING

** ** ** ** **

BEFORE: CALDWELL, MCNEILL, AND TAYLOR, JUDGES.

MCNEILL, JUDGE: Corinth Estates, Inc. (“Corinth Estates”), Allen Douglas

(“Douglas”), and Mabel Mattingly (“Mattingly”) (collectively, “Appellants”)

appeal from orders of the Grant Circuit Court dismissing their claims against
Corinth Shore Estates, Inc. (“Corinth Shore”), Robert Lennon, Richard Moorman,

Gayle Schwartz, Richard Schwartz, and Janet White (collectively, “Appellees”).

Finding no error, we affirm.

This case concerns a dispute between two nonprofit companies,

Corinth Estates and Corinth Shore, over which is entitled to collect fees and is

responsible for maintaining a private drive in the Corinth Estates subdivision.

According to the complaint, Corinth Estates was incorporated on May 27, 1970

and from 1970 to 2010, collected fees from the residents of the subdivision to

maintain the private road. On June 3, 2010, Corinth Shore was organized and

began collecting road fees in the place of Corinth Estates.1

On November 20, 2019, Corinth Estates filed a declaratory judgment

action in Grant Circuit Court seeking to be declared the sole entity entitled to

collect road fees and maintain the private road. Douglas and Mattingly, as

“officer[s] and director[s] of Plaintiff, Corinth Estates, Inc.,” were also identified

as plaintiffs in the action. The complaint asked for a declaration of rights, an

accounting, and asserted a claim for unjust enrichment.

Appellees filed a motion to dismiss, arguing that Appellants’ claims

were barred by statute of limitations. On June 24, 2020, the trial court entered an

1
Documents in the record from the Kentucky Secretary of State show that Corinth Estates was
administratively dissolved on November 1, 2002. The company was reinstated on February 19,
2019.

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order dismissing Appellants’ claims for unjust enrichment2 and an accounting. The

court reserved ruling on the declaration of rights claim, ordering the parties to

submit a copy of the subdivision’s current bylaws. Both parties submitted all the

documents in their possession and on May 24, 2021, the court entered an order

dismissing the declaratory judgment claim. The court held that “whatever claim

Corinth Estates, Inc. had to a declaratory judgment in its favor accrued in 2010

when Corinth Shore Estates, Inc. began collecting the road fees, and became time-

barred five years later.” The court went on to hold that even if the claim was not

barred by statute of limitations, it was barred by laches. This appeal followed.

A motion to dismiss, pursuant to CR3 12.02(f), for failure to state a

claim is a question of law, and we review the issue de novo. Fox v. Grayson, 317

S.W.3d 1, 7 (Ky. 2010). The pleadings must be liberally construed in a light most

favorable to the nonmoving party, and the allegations contained in the complaint

are taken as true. Id. The trial court should not grant the motion “unless it appears

the pleading party would not be entitled to relief under any set of facts which could

be proved in support of his claim.” James v. Wilson, 95 S.W.3d 875, 883 (Ky.

App. 2002) (citation omitted).

2
The court reasoned that Appellees’ claim was more akin to tortious interference with a
prospective business advantage but determined that either way the claim was barred by statute of
limitations.
3
Kentucky Rules of Civil Procedure.

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 Appellants make two arguments on appeal: (1) the trial court erred in

considering matters outside the pleadings in ruling on the motion to dismiss; and

(2) the trial court erred in ruling their complaint was barred by laches. As an initial

matter, we must address the deficiency of appellants’ brief. Their argument

section fails to make “reference to the record showing whether the issue was

properly preserved for review and, if so, in what manner” as required by

RAP4 32(A)(4). We require a statement of preservation:

so that we, the reviewing Court, can be confident the
issue was properly presented to the trial court and
therefore, is appropriate for our consideration. It also has
a bearing on whether we employ the recognized standard
of review, or in the case of an unpreserved error, whether
palpable error review is being requested and may be
granted.

Oakley v. Oakley, 391 S.W.3d 377, 380 (Ky. App. 2012).

“Our options when an appellate advocate fails to abide by the rules

are: (1) to ignore the deficiency and proceed with the review; (2) to strike the brief

or its offending portions, [RAP 31(H)(1)]; or (3) to review the issues raised in the

brief for manifest injustice only[.]” Hallis v. Hallis, 328 S.W.3d 694, 696 (Ky.

App. 2010) (citing Elwell v. Stone, 799 S.W.2d 46, 47 (Ky. App. 1990)). Because

the record is small, and we have been able to determine whether appellants’

4
Kentucky Rules of Appellate Procedure.

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arguments were properly preserved, we will ignore the deficiency and proceed

with the review.

Appellants first argue the trial court erred in considering matters

outside the pleadings when ruling on the motion to dismiss, however, Appellants

do not identify what matters the trial court supposedly considered. They further

argue that the trial court should have notified them of its intent to convert the

motion into one for summary judgment. They contend that had they known

summary judgment was under consideration, they “would have conducted

discovery and not merely relied on Defendants’ submissions to the Court.” There

are several problems with Appellants’ argument.

First, Appellants did not rely solely on Appellees’ submissions to the

trial court. Appellants filed an eleven page affidavit by Douglas, along with

seventy-five pages of exhibits, in response to the trial court’s order to submit

documents in support of their claims. They have not alleged what documents they

would have provided if given the opportunity, except for a default judgment from

1970 stating that Corinth Estates had the right to collect road fees at that time.

However, the issue on appeal is which entity was entitled to collect road fees from

2010 to the present. Thus, the information is irrelevant, and the Appellants cannot

show prejudice.

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 Second, and more importantly, the trial court did not rely on any of

the submissions in making its ruling and thus did not convert the motion to dismiss

into one for summary judgment. Generally, “reliance on matters outside the

pleadings by the court effectively converts a motion to dismiss into a motion for

summary judgment.” D.F. Bailey, Inc. v. GRW Engineers, Inc., 350 S.W.3d 818,

821 (Ky. App. 2011) (citations omitted). However, here, the trial court ruled that

Appellants’ claims were barred by statute of limitations, citing the fact that

Appellants knew that Corinth Shore was collecting the road fees as early as 2010, a

fact found in Appellants’ own complaint. Further, even if the documents

submitted by the parties had influenced the trial court’s ruling, these documents

were central to Appellants’ claims and did not convert the motion to dismiss into

one for summary judgment. Netherwood v. Fifth Third Bank, Inc., 514 S.W.3d

558, 563-64 (Ky. App. 2017).

Next, Appellants argue the trial court erred in finding their declaratory

judgment claim barred by laches. Specifically, they argue the trial court made no

particularized findings as to “unreasonable delay” and did not differentiate

between the claims of Corinth Estates and the individuals, Douglas and Mattingly.

Thus, they argue that neither Douglas’ nor Mattingly’s claim could be barred by

laches or statute of limitations because their claim accrued, at the earliest, three

years ago when they became property owners in the subdivision. First, we note

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that the trial court’s ruling that Appellants’ claims were barred by laches was an

alternative ruling. It initially held that their claims were barred by statute of

limitations. We need not consider Appellants’ laches arguments because we agree

with the trial court that, at least as to appellant Corinth Estates, its declaratory

judgment claim was barred by statute of limitations. Brewick v. Brewick, 121

S.W.3d 524, 527 (Ky. App. 2003) (“[A]n appellate court may affirm [the decision

of] a trial court for reasons . . . sustainable under the record[.]”).

Whether an action is barred by the statute of limitations is

a question of law, which an appellate court reviews de novo. Estate of Wittich By

& Through Wittich v. Flick, 519 S.W.3d 774, 776 (Ky. 2017) (citation omitted).

Our Supreme Court has held that the underlying theory of law asserted in the

petition determines what statute of limitations applies to declaratory judgment

actions. Million v. Raymer, 139 S.W.3d 914, 918 (Ky. 2004). Here, the

underlying theory of law asserted in complaint was unjust enrichment.5 Therefore,

the statute of limitations on the declaratory judgment action was five years. See

KRS 413.120(6); Norohna v. Zolkiewicz, 583 S.W.3d 42, 46 (Ky. App. 2018).

Here, Corinth Estates’ declaratory judgment claim accrued when Corinth Shore

5
The trial court construed Corinth Estates’ claim as one for tortious interference with a
prospective business advantage. Regardless, the statute of limitations is the same. See
KRS 413.120(6).

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began collecting road fees in 2010. Because Corinth Estates waited until 2019 to

file the declaratory judgment action, it is barred by statute of limitations.

Finally, as to Appellants’ argument that the trial court did not

differentiate between Corinth Estates’ claims and the individual claims of Douglas

and Mattingly, we note that this argument was not made to the trial court.

Therefore, we will not review it. Fischer v. Fischer, 348 S.W.3d 582, 588 (Ky.

2011), abrogated by Nami Res. Co., L.L.C. v. Asher Land & Min., Ltd., 554

S.W.3d 323 (Ky. 2018) (internal quotation marks and citations omitted) (“It has

long been this Court’s view that specific grounds not raised before the trial court,

but raised for the first time on appeal will not support a favorable ruling on appeal.

Most simply put, [a] new theory of error cannot be raised for the first time on

appeal.”).

For the foregoing reasons, the orders of the Grant Circuit Court

dismissing Appellants’ claims are affirmed.

ALL CONCUR.

BRIEFS FOR APPELLANTS: BRIEF FOR APPELLEES:

Randy J. Blankenship Pete W. Whaley
Erlanger, Kentucky Williamstown, Kentucky

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