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Manning v. Lewis

Supreme Court of Kentucky

June 20, 2013

DEBORAH MANNING, ET AL. APPELLANTS
v.
ROBERT KNOX LEWIS APPELLEE

ON REVIEW FROM COURT OF APPEALS CASE NO. 2010-CA-002162-MR MAGOFFIN CIRCUIT COURT NO. 08-CI-00234

COUNSEL FOR APPELLANTS: Gordon B. Long

COUNSEL FOR APPELLEE: Ira Scott Kilburn

OPINION

SCOTT, JUSTICE

Appellee, Robert Lewis, sought to void or reform a deed resulting from a sale of property through Appellant[1] Deborah Manning's real estate company. Appellee filed suit claiming that the deed grossly misrepresented the amount of land he contracted to buy. The trial court ruled in favor of Appellants, finding that no fraud existed that would warrant reforming the deed, as Appellee was aware at the time of closing that the tract did not contain 300 acres of land. The Court of Appeals reversed and remanded for the trial court to decide whether to reform the deed and give Appellee a partial refund, or to void the deed altogether. Appellants now appeal to this Court, arguing that the Court of Appeals: 1) misapplied or misinterpreted the "10% Rule" and 2) went too far to protect Appellee from the unwise decision he made in purchasing the property. For the following reasons, we reverse and remand.

I. BACKGROUND

On May 24, 2007, Appellee entered into a contract to buy real estate from Appellants. The Deed's description called for 300 acres, but also established that the property was being sold by tract, not acreage. On the same day, Appellee signed two documents. The first document was the "Broker's Disclosure to Potential Buyers" which stated in pertinent part:

Furthermore, I am also disclosing that I am not warranting nor do not in any way guarantee the total amount of acreage included in this land. The property is being sold by the boundary description. The buyer is welcome to have the property surveyed at the buyer's expense.

The second document was the "Survey Waiver Form" which contained the following language:

The Seller(s) Buyer(s) hereby waive(s) our/his/her right to a property survey against the advice of his/her real estate agent and broker and agree(s) to hold harmless the real estate agents or brokers involved in this transaction for the amount of acreage, boundary lines, or anything that could have been uncovered or clarified by a survey of the property.

The closing occurred on October 15, 2007 at the office of attorney Jeffrey Scott, whom Appellee had hired to do a title search on the property. Prior to the closing, Appellee was provided with a copy of the Magoffin County PVA assessment that showed the acreage on the property to be 128 acres.

On the day of the closing, Appellee spent approximately two hours with a surveyor, named either Joe Curd or Joe Spradlin, [2] who informed him that the property did not consist of 300 acres. Furthermore, Appellee testified that just prior to the closing he met with Merle Williams who indicated that he owned 40 acres of the property in question.

Appellee arrived late to the closing, as he had been consulting with his attorney, and initially announced that he would not close because he had just been informed that there was not 300 acres of property. Appellee then made an offer to have the property surveyed and pay $300 per acre. Appellants did not agree to this proposition, as the property was to be sold as a tract and not acreage. Appellants also informed him that he did not have to purchase the property, and was free to walk away from the deal. However, Appellee insisted on closing even after he admitted that he was aware the tract of land did not contain 300 acres.

After closing, Appellee had a survey done which showed that the tract contained 44.329 acres. Appellee filed suit alleging fraud and requested rescission of the sale, claiming that he was unaware of the deficiency in the acreage. However, the trial court concluded that there was no fraud in the inducement committed ...


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