AEP Industries, Inc. v. B.G. Properties, Inc., 533 S.W.3d 674

Background

AEP Industries leased an industrial building from B.G. Properties (BG) with an option to purchase governed by a 2001 Consent and a 2010 Modification (the "Option Agreement").
The Agreement set a four-step appraisal process to fix purchase price: negotiation → BG appraisal → AEP appraisal → two appraisers pick a third whose valuation is final; appraisals must reflect "highest and best use" and special fixtures for AEP's manufacturing use. AEP had a seven-day right to withdraw after the final price.
AEP exercised the option in 2011. BG’s appraiser set value at $7.5M; AEP’s appraiser (CBRE) at $3.55M. BG rejected CBRE; BG refused to cooperate in selecting a third appraiser. The trial court found CBRE compliant and ordered selection of a neutral third appraiser, who appraised the property at $3,834,000.
The trial court ordered BG to convey at the third-appraiser price and awarded AEP a rent-credit offset, directing conveyance for net consideration of $3,426,012.63. BG prepared and delivered an unconditional general warranty deed, accepted the stated consideration, and AEP recorded the deed. BG did not post a supersedeas bond or seek a stay.
BG appealed; the Court of Appeals vacated and remanded, reasoning unresolved factual issues (e.g., whether AEP’s appraisal complied) barred specific performance. The Supreme Court granted review.
The Kentucky Supreme Court held BG’s unconditional conveyance and acceptance of consideration merged prior rights into the deed, mooting BG’s appellate challenges and barring further relief; it vacated the Court of Appeals and remanded with directions to dismiss BG’s counterclaims.

Issues

Issue	AEP's Argument	BG's Argument	Held
Whether BG can challenge specific performance after delivering an unconditional general warranty deed and accepting consideration	BG’s conveyance was final; AEP argued that delivery and acceptance foreclose further challenges	BG argued it preserved appellate rights despite conveying and accepting payment and that Dreamers allows paying judgment without forfeiting appeal rights	Held for AEP: BG’s unconditional deed and acceptance merged prior contract; BG’s failure to supersede or stay enforcement moots its appeals and bars relief
Whether errors in the appraisal process (CBRE or third appraiser) preclude specific performance	AEP argued appraisals complied and court ordered required appraisal process culminating in final price	BG argued AEP tendered noncompliant appraisals and breached conditions precedent, barring specific performance	Court concluded any error is rendered moot by BG’s unconditional conveyance and acceptance; appraisal disputes cannot revive relief after merger
Whether posting a supersedeas bond or seeking a stay was required to preserve appellate relief	AEP emphasized available remedies to preserve status quo were not used by BG; these remedies are appropriate when land is subject to transfer	BG argued paying/complying with judgment should not forfeit appeal rights (relying on Dreamers)	Held: For real property transfers, unlike fungible money judgments, a supersedeas or stay is necessary to preserve status quo pending appeal; BG failed to take available steps
Effect of the merger doctrine on post-conveyance contract remedies	AEP argued deed merges prior contract and extinguishes rights to relitigate price issues	BG argued appellate review remains available even after conveyance	Held: Merger doctrine applies; deed language establishes transfer as completed sale and extinguishes underlying contract claims absent clear reservations, which BG did not include

Key Cases Cited

Dreamers LLC v. Don's Lumber & Hardware, Inc., 366 S.W.3d 381 (Ky. 2011) (distinguishing money judgments from real‑property conveyances and discussing posting bond not required to appeal a money judgment)
Green Valley Environmental Corp. v. Clay, 798 S.W.2d 141 (Ky. 1990) (Court of Appeals may stay enforcement pending appeal to preserve status quo)
Rose v. Cox, 179 S.W.2d 871 (Ky. 1944) (judicial sale not voided by later reversal absent supersedeas; sale stands if not stayed)
Sedley v. Louisville Trust Co., 419 S.W.2d 531 (Ky. 1967) (failure to supersede prevents appellate relief when sale was not stayed)
Dahlin v. Amoco Oil Corp., 567 N.E.2d 806 (Ind. Ct. App. 1991) (seller’s voluntary conveyance consistent with judgment waives right to contest the judgment on appeal)
Schuppener v. Bruno, 395 So.2d 1234 (Fla. Dist. Ct. App. 1981) (seller’s acceptance of purchase price and recording mortgage during appeal rendered appellate issues moot)
Drees Co. v. Osburg, 144 S.W.3d 831 (Ky. Ct. App. 2003) (merger doctrine: acceptance of deed merges prior contract terms into deed and extinguishes the underlying agreement)