Smithfield Farms, LLC v. Riverside Developers, LLC
566 S.W.3d 566
Ky. Ct. App.2018Background
- Smithfield Farms and Riverside signed a written agreement dated Jan. 20, 2011 for a "one-year project" to grow soybeans and split profits 50/50; both parties continued the arrangement in subsequent years without a new written lease.
- Parties operated under the same terms in 2012–2014; no new written contract was executed.
- In Feb. 2015 negotiations for a price-per-acre lease failed; Riverside notified Smithfield on Mar. 26, 2015 that it accepted another offer.
- Smithfield sued for breach, asserting the 2014 lease expired Nov. 1, 2014 (industry crop-year practice) and that, under KRS 383.160(1), it was a holdover tenant entitled to remain through Nov. 1, 2015.
- The trial court granted summary judgment for Riverside, holding the written agreement unambiguous (one-year term beginning Jan. 20, 2011), that successive one-year holdover tenancies ran Jan. 20–Jan. 20, and Riverside terminated within the 90-day window after the 2014 lease expired on Jan. 20, 2015.
Issues
| Issue | Smithfield's Argument | Riverside's Argument | Held |
|---|---|---|---|
| Contract term/ambiguity | "One-year project" meant a crop year ending Nov. 1; contract ambiguous so parol evidence allowed | Phrase is plain: one year = calendar year from Jan. 20, 2011; unambiguous | Court: Unambiguous; one-year term from Jan. 20, 2011 to Jan. 20, 2012; no parol evidence allowed |
| Application of KRS 383.160(1) (holdover) | 2014 lease expired Nov. 1, 2014; Smithfield held over >90 days and thus obtained a one-year tenancy into 2015 | 2014 lease expired Jan. 20, 2015; negotiations and notice to vacate occurred within 90 days, so no statutory one-year holdover arose | Court: 2014 lease ran Jan. 20, 2014–Jan. 20, 2015; Riverside acted within 90 days, so Smithfield was not protected as a statutory holdover tenant |
| Use of extrinsic/industry evidence | Industry custom (crop-year practice) explains "one-year project" and creates a factual dispute | Extrinsic evidence cannot vary clear written terms; contract speaks for itself | Court: Extrinsic evidence not admissible because contract unambiguous |
| Appropriateness of summary judgment | Material factual dispute exists about lease end date and holdover status | Facts undisputed as to contract text, dates, and Riverside's March 26 notice; Riverside entitled to judgment as a matter of law | Court: Summary judgment affirmed — no genuine issue of material fact |
Key Cases Cited
- Harstad v. Whiteman, 338 S.W.3d 804 (Ky. App. 2011) (standard of appellate review for summary judgment)
- Scifres v. Kraft, 916 S.W.2d 779 (Ky. App. 1996) (summary judgment standard)
- City of Florence v. Chipman, 38 S.W.3d 387 (Ky. 2001) (opposing party must present affirmative evidence to create genuine factual issue)
- Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99 (Ky. 2003) (unambiguous written contracts are enforced from their four corners; extrinsic evidence disallowed)
- Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381 (Ky. App. 2002) (contract ambiguous only if reasonably susceptible to more than one interpretation)
- Cook United, Inc. v. Waits, 512 S.W.2d 493 (Ky. 1974) (issues of contractual ambiguity are material for trial if ambiguity exists)