Alicia England v. Ricardo Federico
2019 CA 001011
| Ky. Ct. App. | Jun 10, 2021Background
- In Aug. 2005 England (Buyer) and Ricardo & Karol Federico (Sellers) executed an installment land contract for land plus a mobile home. The contract’s first paragraph listed a $69,000 purchase price.
- Paragraph (a) of the contract set 276 monthly payments of $605 (totaling $166,980) but also expressly stated “No interest.” Sellers drafted the contract; neither party used counsel or a realtor.
- Sellers continued to pay substantial property taxes and insurance after Buyer took possession under the contract.
- After Buyer paid $69,000 she sued to enforce the contract and obtain a deed; Sellers argued the payment schedule controlled and produced a much larger total payable.
- The trial court found the contract ambiguous, concluded there was no meeting of the minds, declared the contract void ab initio, and did not resolve title, possession, or recoupment issues.
- The Court of Appeals affirmed the ambiguity/unenforceability ruling but remanded for the trial court to determine appropriate remedies (title, possession, recoupment/credits, or judgments for unpaid rent or refunds).
Issues
| Issue | Plaintiff's Argument (England) | Defendant's Argument (Federico) | Held |
|---|---|---|---|
| Whether the contract is ambiguous and enforceable | The contract’s stated $69,000 purchase price is controlling; Buyer seeks deed enforcement | The payment schedule (276 × $605 = $166,980) reflects the total owed and demonstrates intent to finance/pay over time | Court: Contract is ambiguous (conflict between purchase price, payment schedule, and “No interest”); affirmed as unenforceable |
| Whether the trial court erred by refusing to order Sellers to execute a deed | England: Court should enforce contract and order deed based on written purchase price and performance | Federicos: Contract terms are inconsistent; there was no meeting of the minds to warrant specific performance | Court: No; because contract ambiguous and factfinder resolved parol evidence against enforcement, specific performance not ordered |
| Appropriate remedy when a contract is void ab initio | Implicit: Buyer seeks enforcement or title; also may seek recoupment of payments | Federicos: May seek to retain payments as rent or be credited for unpaid obligations | Court: Remand for trial court to fashion remedies restoring parties to pre-transaction positions — consider title, possession, recoupment, credits for amounts paid, judgment for unpaid rent or refund for excess payments |
Key Cases Cited
- Cantrell Supply, Inc. v. Liberty Mutual Ins. Co., 94 S.W.3d 381 (Ky. Ct. App. 2002) (ambiguous contracts permit resort to parol/extrinsic evidence; interpretation then becomes fact question)
- Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99 (Ky. 2003) (court should, if possible, ascertain parties’ intent when resolving ambiguity)
- Withers v. Commonwealth, Dep’t of Transportation, 656 S.W.2d 747 (Ky. Ct. App. 1983) (primary objective in construing contract is to effectuate parties’ intentions)
- Majestic Oaks Homeowners Ass’n v. Majestic Oaks Farms, Inc., 530 S.W.3d 435 (Ky. 2017) (ambiguities and contradictions are construed against the drafter)
- City of Louisa v. Newland, 705 S.W.2d 916 (Ky. 1986) (a contract must be construed as a whole, giving effect to all parts if possible)
- Options Home Health of N. Fla., Inc. v. Nurses Registry & Home Health Corp., 946 F. Supp. 2d 664 (E.D. Ky. 2013) (when a contract is void ab initio, parties should be returned to pre-transaction positions)
- Gosney v. Glenn, 163 S.W.3d 894 (Ky. Ct. App. 2005) (standard of appellate review: factual findings after bench trial reviewed for clear error; legal conclusions de novo)