Lake Cumberland Resort, Inc. v. Melvin J. Buckland ( 2023 )

RENDERED: MAY 5, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2017-CA-1801-MR
LAKE CUMBERLAND RESORT,
INC.; ANTHONY DEL SPINA; AND
ANTHONY DEL SPINA, IN HIS
CAPACITY AS EXECUTOR OF THE
ESTATE OF FRANCES DEL SPINA APPELLANTS
APPEAL FROM PULASKI CIRCUIT COURT
v. HONORABLE JEFFREY T. BURDETTE, JUDGE
ACTION NO. 07-CI-00884
MELVIN J. BUCKLAND
AND LINDA BUCKLAND APPELLEES
AND
NO. 2017-CA-1888-MR
MELVIN J. BUCKLAND
AND LINDA BUCKLAND APPELLANTS
CROSS-APPEAL FROM PULASKI CIRCUIT COURT
v. HONORABLE JEFFREY T. BURDETTE, JUDGE
ACTION NO. 07-CI-00884
ANTHONY DEL SPINA; ANTHONY
DEL SPINA, IN HIS CAPACITY AS
EXECUTOR OF THE ESTATE OF
FRANCES DEL SPINA; AND LAKE
CUMBERLAND RESORT, INC. APPELLEES
AND
NO. 2018-CA-0240-MR
MELVIN J. BUCKLAND
AND LINDA BUCKLAND APPELLANTS
APPEAL FROM PULASKI CIRCUIT COURT
v. HONORABLE JEFFREY T. BURDETTE, JUDGE
ACTION NO. 07-CI-00884
ANTHONY DEL SPINA; ANTHONY
DEL SPINA, IN HIS CAPACITY AS
EXECUTOR OF THE ESTATE OF
FRANCES DEL SPINA; AND LAKE
CUMBERLAND RESORT, INC. APPELLEES
OPINION
AFFIRMING APPEAL NO. 2017-CA-1801-MR AND
CROSS-APPEAL NO. 2017-CA-1888-MR AND
REVERSING AND REMANDING WITH DIRECTIONS
APPEAL NO. 2018-CA-0240-MR
** ** ** ** **
BEFORE: ECKERLE, JONES, AND TAYLOR, JUDGES.
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TAYLOR, JUDGE: Lake Cumberland Resort, Inc., Anthony Del Spina, and
Anthony Del Spina, in his capacity as executor of the Estate of Frances Del Spina,1
bring Appeal No. 2017-CA-1801-MR from a September 29, 2017, Trial Order and
Judgment of the Pulaski Circuit Court. Melvin J. Buckland and Linda Buckland
bring Cross-Appeal No. 2017-CA-1888-MR also from the September 29, 2017,
Trial Order and Judgment. Melvin J. Buckland and Linda Buckland bring Appeal
No. 2018-CA-0240-MR from a January 19, 2018, Order of the Pulaski Circuit
Court granting a Kentucky Rules of Civil Procedure (CR) 60.02 motion. These
appeals were consolidated by order entered May 12, 2021. We affirm Appeal No.
2017-CA-1801-MR and Cross Appeal No. 2017-CA-1888-MR, and we reverse and
remand with directions Appeal No. 2018-CA-0240-MR.
Lake Cumberland Resort, Inc. (Resort) is a planned community
located in the hills around Lake Cumberland in Pulaski County. It was developed
by Anthony Del Spina and his wife, Frances Del Spina (hereinafter referred to as
either Frances or Estate). Anthony is president of the Resort, and Frances was
secretary and sole shareholder. It is uncontroverted that some of the land that
compromises the Resort is situated upon a geological formation of sedimentary
rock known as Pennington shale formation. Pennington shale can break apart
1
Frances Del Spina died on March 12, 2022, during the pendency of this appeal. Anthony Del
Spina, in his capacity as executor of the Estate of Frances Del Spina was substituted for Frances
as a party to the appeal by Order entered February 17, 2023.
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causing the ground beneath structures built thereon to shift or cause landslides that
result in substantial damage to the structures.
This case has a long and convoluted history in the court below. The
controversy on appeal centers upon Melvin J. and Linda Buckland’s (Buckland)
purchase and construction of a home upon Lot 6 and purchase of Lot 5 in the
Resort. On December 14, 2005, the Bucklands initially purchased Lot 6 from the
Resort for $125,000.2 Some four months later, on April 5, 2006, the Bucklands
purchased Lot 5 from Frances for $123,000.3 The Bucklands intended to build
their house on one lot and to build a house on the other lot for resale.
While the Bucklands engaged a contractor to build the majority of the
house on Lot 6, the Bucklands also entered into a contract with the Resort to
construct the foundation for the house and to construct septic sewer systems for
both Lots 5 and 6. Shortly after construction of the Bucklands’ house on Lot 6, a
large crack developed in the concrete floor of the basement and significant portions
of the septic sewer system for Lot 6 slid down a hill. As a result, the septic sewer
system was rendered useless.
2
In 2005, Melvin J. Buckland and Linda Buckland and Anthony Del Spina and Frances Del
Spina were residents of Florida.
3
The record reveals that Frances Del Spina solely owned Lot 5; however, Anthony Del Spina
was included in the deed as a grantor to ostensibly release his curtesy rights.
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On July 2, 2007, the Bucklands filed a complaint against the Resort,
Anthony, and Frances. In pertinent part, the Bucklands claimed that they
purchased Lots 5 and 6 in the Resort and that the Resort, Anthony, and/or Frances
committed fraud by their false statements and/or failure to disclose defects as to the
lots. Anthony and Frances filed answers and denied the claims. The Resort filed
an answer and counterclaim. In the counterclaim, the Resort asserted that the
Bucklands received 90 truckloads of dirt and failed to pay the Resort. So, the
Resort sought $3,600 in compensatory damages.
The Bucklands and the Resort filed motions for summary judgment.
In the Bucklands’ motion, they claimed that Anthony, Frances, and/or the Resort
failed to inform the Bucklands that Lots 5 and 6 were prone to landslides because
of the Pennington shale formation under their land which was unsuitable for home
construction. The Bucklands pointed out that the septic sewer system for their
home on Lot 6 succumbed to a landslide and was no longer functional. They also
asserted that Anthony, Frances, and/or the Resort knew of the Pennington shale
and its dangers as evidenced by engineering reports commissioned by them. The
Bucklands maintained that Anthony, Frances, and/or the Resort committed fraud in
the sale of Lots 5 and 6 by failing to disclose the Pennington shale beneath their
land and its concomitant propensity for landslides. Consequently, the Bucklands
believed that they were entitled to summary judgment as a matter of law.
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In the Resort’s motion for summary judgment, the Resort pointed out
that the Bucklands filed for bankruptcy in Florida while the current action was
pending. In their bankruptcy filings, the Resort maintained that the Bucklands
listed the current action as an asset but assigned no value thereto. As a result, they
argued that the Bucklands admitted that the fraud claim had no value; thus, it
should be dismissed by the court.
The circuit court ultimately denied the motions for summary
judgment. The circuit court concluded that genuine issues of material fact existed
and that a trial was necessary. After the passing of almost ten years, a jury trial
was conducted on September 25-27, 2017. Anthony and Melvin testified, as well
as numerous experts. The pertinent jury instructions and findings were as follows:
INSTRUCTION NO. 4
You will find for the Plaintiffs, Melvin J. Buckland
and Linda Buckland, on the issue of Fraud in the
Inducement through Fraud by Omission if, and only if,
you are satisfied from clear and convincing evidence as
follows:
(1) That the Defendants, Anthony Del Spina and
Frances Del Spina, had a duty to disclose a material fact
regarding the property located at Lot 5 (also known as
5e) on Majestic Drive in Pulaski County, Kentucky,
relating to its fitness for installation and approval for a
proper septic system, and/or for the safe and stable
construction of a home on this lot;
(2) That the Defendants, Anthony Del Spina and
Frances Del Spina, failed to disclose that material fact;
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(3) That the failure to disclose a material fact induced
the Plaintiffs, Melvin J. Buckland and Linda Buckland, to
act as a consequence; and
(4) That the Plaintiffs, Melvin J. Buckland and Linda
Buckland, suffered actual damages.
INTERROGATORY NO. 2
Do you, the jury, find for the Plaintiffs, Melvin J.
Buckland and Linda Buckland, on the issue of Fraud in
the Inducement through Fraud by Omission as it relates
to the property located at Lot 5 (also known as 5e) on
Majestic Drive in Pulaski County, Kentucky?
YES __X___ NO______
....
INSTRUCTION NO. 6
You will find for the Plaintiffs, Melvin J. Buckland
and Linda Buckland, on the issue of Fraud in the
Inducement through Fraud by Omission if, and only if,
you are satisfied from clear and convincing evidence as
follows:
(1) That the Defendants, Anthony Del Spina and
Frances Del Spina, agents of Lake Cumberland Resort,
Inc., had a duty to disclose a material fact regarding the
property located at Lot 6 (also known as 6e) on Majestic
Drive in Pulaski County, Kentucky, relating to its fitness
for installation and approval for a proper septic system,
and/or for the safe and stable construction of a home on
this lot;
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(2) That the Defendants, Anthony Del Spina and
Frances Del Spina, agents of Lake Cumberland Resort,
Inc., failed to disclose that material fact;
(3) That the failure to disclose a material fact induced
the Plaintiffs, Melvin J. Buckland and Linda Buckland, to
act as a consequence; and
(4) That the Plaintiffs, Melvin J. Buckland and Linda
Buckland, suffered actual damages.
INTERROGATORY NO. 4
Do you, the jury, find for the Plaintiffs, Melvin J.
Buckland and Linda Buckland, on the issue of Fraud in
the Inducement through Fraud by Omission as it relates
to the property located at Lot 6 (also known as 6e) on
Majestic Drive in Pulaski County, Kentucky?
YES __X___ NO______
INTERROGATORY NO. 5
AWARD OF COMPENSATORY DAMAGES
If you found for the Plaintiffs, Melvin J. Buckland
and Linda Buckland, and against Anthony Del Spina and
Frances Del Spina under Interrogatory No. 1 or
Interrogatory No. 2, you will determine from the
evidence and award a sum of money that will fairly and
reasonably compensate them from the difference between
the fair market value of the property with and without the
disclosure, not to exceed $123,000.00.
(A) Monetary damages for loss of Plaintiff’s [sic]
property located at Lot 5 (also knowns as 5e) on Majestic
Drive in Pulaski County, Kentucky: $ 90,000.
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INTERROGATORY NO. 6
AWARD OF COMPENSATORY DAMAGES
If you found for the Plaintiffs, Melvin J. Buckland
and Linda Buckland, and against Anthony Del Spina and
Frances Del Spina, agents of Lake Cumberland Resort,
Inc., under Interrogatory No. 3 or Interrogatory No. 4,
you will determine from the evidence and award a sum of
money that will fairly and reasonably compensate them
from the difference between the fair market value of the
property with and without the disclosure, not to exceed
$425,000.00
(A) Monetary damages for loss of Plaintiff’s [sic]
property located at Lot 6 (also known as 6e) on
Majestic Drive in Pulaski County, Kentucky:
$ 400,000.
September 27, 2017, Jury Instructions at 5, 6, 9-12.
By a September 29, 2017, Trial Order and Judgment, the circuit court
awarded the Bucklands a total of $490,000 in damages against Anthony, Frances,
and the Resort, jointly and severally.4
Anthony, Frances, and the Resort filed a notice of appeal (Appeal No.
2017-CA-1801-MR) from the September 29, 2017, Trial Order and Judgment. The
Bucklands also filed a notice of appeal (Cross-Appeal No. 2017-CA-1888-MR)
from the September 29, 2017, Trial Order and Judgment.
4
The jury found in favor of Anthony Del Spina, Frances Del Spina, and Lake Cumberland
Resort, Inc., upon the claim of fraudulent misrepresentation. The jury also declined to award any
punitive damages against Anthony, Frances, or the Resort.
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Thereafter, on December 8, 2017, Anthony, Frances, and the Resort
filed a CR 60.02 motion to vacate the September 29, 2017, Trial Order and
Judgment. They specifically argued:
3. Interrogatory No. 5 is styled “Award of Compensatory
Damages,” and states:
If you found for the Plaintiffs, Melvin J. Buckland
and Linda Buckland, and against Anthony Del
Spina and Frances Del Spina under Interrogatory
No. 1 or Interrogatory No. 2, you will determine
from the evidence and award a sum of money that
will fairly and reasonably compensate them from
the difference between the fair market value of the
property with and without the disclosure, not to
exceed $123,000. [emphasis supplied]
4. The jury answered the Interrogatory by finding
$90,000 in compensatory damages against Mr. and Mrs.
Del Spina. This Interrogatory was very clear that it
applied ONLY to Mr. and Mrs. Spina individually.
5. Interrogatory No. 6 is also styled “Award of
Compensatory Damages.” It states:
If you found for the Plaintiffs, Melvin J. Buckland and
Linda Buckland, and against Anthony Del Spina and
Frances Del Spina, agents of Lake Cumberland
Resort, Inc., under Interrogatory No. 3 or Interrogatory
No. 4, you will determine from the evidence and award a
sum of money that will fairly and reasonably compensate
them from the difference between the fair market value
of the property with and without the disclosure, not to
exceed $425,000. [emphasis supplied]
6. The jury answered this Interrogatory by finding
$400,000 in compensatory damages. However, this
interrogatory is equally clear that its finding is ONLY
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against Mr. and Mrs. Del Spina as agents of Lake
Cumberland Resort, Inc. Under Kentucky law, a claim
against a person in the capacity of agent is a claim
against the principal, not the agent. Spees v. Kentucky
Legal Aid, 274 S.W.3d 447, 448 (Ky. 2009). . . .
....
9. Here, all acts that the Del Spinas took as agents for the
Resort, including binding it to the contract to sell Tract 6
to the Plaintiffs, were entirely authorized, and meant to
bind the Resort, not the Del Spinas individually. The Del
Spinas sold Tract 5 to the Plaintiffs directly, and are
obviously bound by the Contract. However, the Resort
sold them Tract 6, and therefore is the only entity liable
for the alleged breach of that contract, or for damages for
fraud in the inducement of it. The Plaintiffs’ true claim,
if they have one, is against the Resort, not the Del Spinas
individually, as to Tract 6, purchased from the Resort,
NOT from the Del Spinas. This is reflected in the
damage interrogatories . . . .
10. Because the final judgment entered by the Court is
not in conformity with the verdict entered by the jury, or
the prayer for relief in the Complaint, this Court should
relieve the Del Spinas from such portion of the judgment
as adjudges them jointly and severally liable with the
Resort for claims made against the Resort[.]
Motion to Vacate at 2-4.
By order entered January 19, 2018, the circuit court granted the CR
60.02 motion. The court reasoned:
8. The Del Spinas and the Resort have moved that
this Court grant them relief from the final judgment
herein on the ground that the judgment is not in
conformity with the jury verdict entered at trial or with
the prayer for relief in the Complaint because it awards
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all damages jointly and severally against the individual
defendants, Mr. and Mrs. Del Spina, and the corporation,
the Resort.
9. This case was tried to a jury, which entered a
verdict consisting of the jurors’ answers to specific
interrogatories. Interrogatories No. 1-4 asked the jury
whether it would “find for the Plaintiffs, Melvin J.
Buckland and Linda Buckland,” on each issue
concerning each tract of property at issue in the case.
However, none of these Interrogatories specify against
which Defendant the finding is to be made. The specific
interrogatories addressed to the amount of damages to be
awarded do specify the party against whom the finding is
made.
10. Interrogatory No. 5 is styled “Award of
Compensatory Damages,” and states:
If you found for the Plaintiffs, Melvin J. Buckland
and Linda Buckland and against Anthony Del
Spina and Frances Del Spina under Interrogatory
No. 1 or Interrogatory No. 2, you will determine
from the evidence and award a sum of money that
will fairly and reasonably compensate them from
the difference between the fair market value of the
property with and without the disclosure, not to
exceed $123,000. [emphasis supplied]
11. The jury answered the Interrogatory by
finding $90,000 in compensatory damages against Mr.
and Mrs. Del Spina. This Interrogatory was very clear
that it applied ONLY to Mr. and Mrs. Del Spina
individually.
12. Interrogatory No. 6 is also styled “Award of
Compensatory Damages.” It states:
If you found for the Plaintiffs, Melvin J. Buckland
and Linda Buckland, and against Anthony Del
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Spina and Frances Del Spina, agents of Lake
Cumberland Resort, Inc., under Interrogatory
No. 3 or Interrogatory No. 4, you will determine
from the evidence and award a sum of money that
will fairly and reasonably compensate them from
the difference between the fair market value of the
property with and without the disclosure, not to
exceed $425,000. [emphasis supplied]
13. The jury answered this interrogatory by
finding $400,000 in compensatory damages. However,
this interrogatory is equally clear that its finding is
ONLY against Mr. and Mrs. Del Spina as agents of Lake
Cumberland Resort, Inc. This Court holds that the
instruction does not authorize individual liability against
Mr. and Mrs. Del Spina, because they acted solely on
behalf of the corporation, and the jury was not asked to
determine whether they had committed any act which
would subject them to individual liability.
....
15. All acts that the Del Spinas took as agents
for the Resort, including binding it to the contract to sell
Tract 6 to the Plaintiffs, were entirely authorized, and
meant to bind the Resort, not the Del Spinas individually.
The Del Spinas sold Tract 5 to the Plaintiffs directly, and
are obviously bound by that Contract. However, the
Resort sold them Tract 6, and therefore is the only entity
liable for the alleged breach of that contract, or for
damages for fraud in the inducement of it.
16. The September 29, 2017, Judgment is
defective in that it is not in conformity with the jury’s
verdict. This constitutes a mistake, correctable under
subsection (a) of the Rule, or it constitutes an
extraordinary reason for relieving the Defendants of the
judgment under subsection (f). Therefore, the Court
hereby relieves the Del Spinas and the Resort from the
September 29, 2017, judgment to the extent that it awards
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the Bucklands damages against all defendants jointly and
severally, and hereby AMENDS the paragraph on p. 7 of
the Final Judgment that pronounces the judgment of the
Court to provide:
Pursuant to the jury’s verdict, and the Orders
of this Court concerning the Defendant’s
Counterclaim, Plaintiffs Melvin J. Buckland
and Linda Buckland are hereby awarded
compensatory damages in the sum of
$90,000 against Anthony Del Spina and
Frances Del Spina individually. Plaintiffs
Melvin J. Buckland and Linda Buckland are
further awarded compensatory damages in
the sum of $400,000 against Lake
Cumberland Resort, Inc., each judgment to
bear interest at the judgment rate from
September 29, 2017, until paid, plus the
Plaintiffs’ costs herein.
January 19, 2018, Order at 4-6.
The Bucklands filed a notice of appeal (Appeal No. 2018-CA-0240-
MR) from the January 19, 2018, order. As noted, the three appeals were
consolidated for review by this Court. Frances passed away during the pendency
of the appeals in 2022, and upon motion, this Court substituted Anthony Del Spina,
in his capacity as executor of the Estate of Frances Del Spina.
We shall initially address Appeal No. 2017-CA-1801-MR, then Cross-
Appeal No. 2017-CA-1888-MR, and finally Appeal No. 2018-CA-0240-MR.
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APPEAL NO. 2017-CA-1801-MR
The Resort and Anthony (collectively referred to as appellants)
contend that the circuit court committed reversible error by excluding the
testimony of their expert witness, James Westenhoefer. Appellants point out that
Westenhoefer is an attorney and a panel trustee for the United States Bankruptcy
Court for the Eastern District of Kentucky. Westenhoefer had no involvement in
the Bucklands’ bankruptcy. Appellants sought to introduce evidence of the
Bucklands’ bankruptcy proceedings and the discharge of their indebtedness as to
Lot 5 and as to their home on Lot 6. Appellants argue that Westenhoefer’s
testimony was relevant to demonstrate that the Bucklands’ debts were discharged;
consequently, their actual damages “were for far less than they claimed.” October
23, 2020, Appellants’ Brief at 16. The trial court concluded that Westenhoefer’s
testimony was irrelevant and if relevant, its probative value was outweighed by the
prejudicial effect of the testimony. Appellants submit the trial court erred as a
matter of law in excluding this testimony.
Under Kentucky Rules of Evidence 401, relevant evidence is defined
as:
[E]vidence having any tendency to make the existence of
any fact that is of consequence to the determination of
the action more probable or less probable than it would
be without the evidence.
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In this case, the Bucklands claimed that appellants committed fraud in
connection to the sale of Lot 5 and Lot 6. The jury was specifically instructed
upon the claims of fraudulent misrepresentation and fraud by omission. As to
damages, the jury was instructed to determine the fair market value of the property
with and without the disclosure of material facts regarding the condition of the
lots.5
We agree that Westenhoefer’s testimony concerning the Bucklands’
discharge of their indebtedness in bankruptcy upon Lot 5 and Lot 6 has no
relevance to the fair market value of either lot. The bankruptcy schedules filed in
the Florida bankruptcy court reflect that lien claims encumbered both lots totaling
$551,000.6 The lien claims survived the bankruptcy, and the trustee assigned to the
case in Florida abandoned the property, finding it burdensome to the bankruptcy
estate. Accordingly, there was no probative value in Westenhoefer’s testimony as
an expert witness since the Florida trustee had also abandoned the lawsuit to the
Bucklands pursuant to 11 United States Code § 554(c). See Tuttle v. Perry, 82
S.W.3d 920, 922 (Ky. 2002). As set forth in the jury instructions, the measure of
5
Anthony Del Spina, Frances Del Spina, and Lake Cumberland Resort, Inc., have not raised any
contentions of error related to the jury instructions.
6
We take judicial notice of the bankruptcy petition and schedules filed in Case No. 9:12-bk-
04228-BSS in the United States Bankruptcy Court for the Middle District of Florida. See Doe v.
Golden & Walters, PLLC, 173 S.W.3d 260, 264-65 (Ky. App. 2005).
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damages was the fair market value of the properties with and without disclosure by
appellants. Therefore, we conclude that the circuit court did not abuse its
discretion by excluding Westenhoefer’s testimony. See Porter v. Allen, 611
S.W.3d 290, 294 (Ky. App. 2020).
Appellants next assert that the circuit court committed reversible error
by admitting certain testimony from the Bucklands’ expert witnesses, Samuel Ford
and Chuck Walton. Appellants argue that Ford and Walton improperly testified
that a seller of real property possessed a duty to disclose latent defects. Appellants
maintain that a witness’s testimony regarding a legal standard is improper.
Moreover, appellants state that neither Ford’s testimony nor Walton’s testimony
“included the requirement that a buyer exercise reasonable care in the examination
and purchase of real estate.” October 23, 2020, Appellant’s Brief at 20.
As an appellate court, we must initially determine whether the circuit
court abused its discretion in admitting or excluding the evidence. Porter, 611
S.W.3d at 294. If error was committed, it must then be determined whether the
error was reversible – i.e., whether a reasonable possibility exists that the jury
verdict would have been different absent the error. Id. Our review proceeds
accordingly.
The law is well settled that a seller of real property must disclose
latent defects known by the seller and unknown to the buyer:
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In the sale of real estate the intentional suppression of
facts known to the seller and unknown to the purchaser is
ground for an action for deceit if the purchaser was
damaged by reason of the fraudulent concealment.
Where there is a latent defect known to the seller and he
remains silent with the knowledge that the buyer is acting
on the assumption that no defect exists, the buyer has a
cause of action against the seller for an intentional
omission to disclose such latent defect.
Waldridge v. Homeservices of Ky. Inc., 384 S.W.3d 165, 171 (Ky. App. 2011)
(quoting Bryant v. Troutman, 287 S.W.2d 918, 920-21 (Ky. 1956)). So, the
testimony of Ford and Walton substantially adhered to the law upon latent defects
in real property. Moreover, even if the circuit court erroneously admitted Ford’s
and Walton’s testimony concerning disclosure of latent defects, we cannot
conclude that such constituted reversible error.
There was substantial and compelling evidence introduced at trial that
appellants failed to disclose a latent defect to the Bucklands. It was uncontroverted
that appellants knew Lots 5 and 6 were subject to landslides because of the
Pennington shale rock formation beneath the land. Melvin Buckland testified that
appellants never disclosed to him the risk of landslides on the lots. There was also
testimony from a former landowner in the Resort who testified that Anthony told
him that Lot 6 could not be built upon because it was unstable. Considering the
whole, we simply cannot conclude that absent the objectionable portions of Ford’s
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and Walton’s testimony, a reasonable possibility exists that the jury’s verdict
would have been different. See Porter, 611 S.W.3d at 294.
We view any remaining contentions of error by appellants as moot or
without merit.
CROSS-APPEAL NO. 2017-CA-1888-MR
The Bucklands argue that the circuit court erred by denying their
motion for a summary judgment and their motion for directed verdict upon fraud.
The Bucklands maintain it was undisputed that appellants sold them Lots 5 and 6
with the knowledge that the lots were prone to landslides and failed to disclose
such latent defect to the Bucklands.
As the jury found in favor of the Bucklands upon their claim of fraud
by omission, we believe these arguments are moot.
APPEAL NO. 2018-CA-0240-MR
The Bucklands maintain that the circuit court erroneously granted
appellants’ CR 60.02 motion in its order entered January 19, 2018. The Bucklands
argue that the circuit court improperly concluded that the September 29, 2017,
Trial Order and Judgment had incorrectly recited that Anthony and Frances were
liable for $400,000 in damages awarded to the Bucklands based upon fraud in
connection with the sale of Lot 6. The Bucklands contend that Anthony and
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Frances are liable for their own fraudulent conduct in relation to the sale of Lot 6,
and the circuit court erred by concluding otherwise.
Under the jury instructions for fraud in the omission as to the sale of
Lot 6, the circuit court viewed as pivotal the language “Plaintiffs, Melvin J.
Buckland and Linda Buckland, and against Anthony Del Spina and Frances Del
Spina, agents of Lake Cumberland Resort, Inc.” The circuit court believed that
these instructions only permitted damages against Anthony and Frances as agents
for the Resort and not personally. The circuit court also concluded that Anthony
and Frances were shielded from tort liability because their actions were authorized
for and on behalf of the Resort.
In Kentucky, it is generally acknowledged that an officer or agent of a
corporation is not personally liable for his or her actions on behalf of the
corporation. Young v. Vista Homes, Inc., 243 S.W.3d 352, 363 (Ky. App. 2007).
However, an exception to this general rule exists. Thereunder, a corporate officer
or agent “is personally liable for a tort committed by him although he was acting
for the corporation.” Henkin, Inc. v. Berea Bank & Trust Co., 566 S.W.2d 420,
425 (Ky. App. 1978); Young, 243 S.W.3d at 363; 19 C.J.S. Corporations § 632
(2023).
In this case, the jury found that Anthony and Frances, while acting as
agents for the Resort, failed to disclose a material fact concerning Lot 6 and
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committed the tort of fraud by omission. Although Anthony and Frances were
agents and acting on behalf of the Resort when they committed the fraud, they are,
nonetheless, personally liable and responsible for damages stemming from their
fraudulent actions in relation to the sale of Lot 6. See Young, 243 S.W.3d at 364;
Henkin, 566 S.W.2d at 425. Accordingly, we are of the opinion that the circuit
court improperly granted Anthony, Frances, and the Resort’s CR 60.02 motion and
reverse same.
For the foregoing reasons, we affirm Appeal No. 2017-CA-1801-MR
and Cross Appeal No. 2017-CA-1888-MR and reverse and remand Appeal No.
2018-CA-0240-MR with directions that the circuit court reinstate the $490,000
judgment against Anthony, the Estate, and the Resort, jointly and severally.
ALL CONCUR.
BRIEFS FOR BRIEFS FOR APPELLEES/CROSS-
APPELLANTS/CROSS- APPELLANTS:
APPELLEES, LAKE
CUMBERLAND RESORT, INC.; Heidi Weatherly
FRANCES DEL SPINA; ANTHONY Mt. Vernon, Kentucky
DEL SPINA; AND ANTHONY DEL
SPINA, IN HIS CAPACITY AS
EXECUTOR OF THE ESTATE OF
FRANCES DEL SPINA:
D. Bruce Orwin
Somerset, Kentucky
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