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Outfront Media, LLC v. Lemaster

United States District Court, E.D. Kentucky, Southern Division, Pikeville

June 24, 2019

OUTFRONT MEDIA, LLC, et al., Plaintiffs,
v.
TERRI LEMASTER, et al., Defendants. TERRI LEMASTER, and PERFORMANCE MEDIA, LLC, Counterclaim and Third-Party Plaintiffs,
v.
OUTFRONT MEDIA, LLC, et al., Counterclaim Defendants, and RANDALL POWELL, and BRENDA POWELL, Third-Party Defendants.

          OPINION & ORDER

          ROBERT E. WIER UNITED STATES DISTRICT JUDGE.

         Outfront Media, LLC and Terri LeMaster[1] filed cross motions for summary judgment. DE 100 (Plaintiff's Motion); 101 (Defendant's Motion). Each responded. DE 120 (Plaintiff's Response); 121 (Defendant's Response). Each replied. DE 123 (Plaintiff's Reply); 126 (Defendant's Reply). For the following reasons and under the applicable standards, the Court GRANTS IN PART Plaintiff's motion, DE 100, and GRANTS IN PART Defendant's motion, DE 101.

         This case, involving a dispute about control of five billboards in Rockcastle County, is more one of title than tort. The record establishes that, in 2016, Outfront had five abated but valid leases that impressed the Powell land. LeMaster, ignorant of the leases, purported to buy the billboards from the Powells, with the plan to remove the static billboards and accrue credit toward a permit for an electronic billboard under a Kentucky highway billboard regulatory scheme. She took concrete steps to effectuate the plan, felling the billboards and seeking state credit. Outfront, itself seeking the credits, discovered those steps, resulting in this litigation.

         The Court, after full consideration of the record, finds Outfront the proper billboard owner (and thus, entitled to the electronic credits). LeMaster converted the billboards, and Outfront is entitled to a remedy, some of which the Court gives and some it reserves for a jury. The Court rejects the tortious interference claim. Obviously, LeMaster's inverse claim to relief, depending on a prevalent claim to the billboards, fails.

         I. BACKGROUND

         LeMaster and Outfront each want to build an electronic billboard. As relevant here, to secure the required permitting, the Kentucky Transportation Cabinet (“KYTC”)-the Commonwealth's billboard regulator-requires applicants to remove existing static billboards. Specifically, an administrative rule requires that a party remove six qualifying static billboards in exchange for a permit to erect one electronic billboard. 603 KAR 10:021 § 2(1); KRS 177.890 (requiring KYTC to promulgate administrative regulations to comply with the Highway Beautification Act under 32 U.S.C § 131). The parties do not dispute that the (already-removed) billboards at issue here qualify for the permit exchange. Indeed, KYTC already determined that it will award four credits, toward the required six, for the billboards' removal. See DE 100-18. However, the parties dispute whether those credits should go to LeMaster or Outfront. The answer turns on who owned the billboards when they were removed.

         In July 2016, LeMaster reached out to KYTC to determine whether removing the at-issue billboards would qualify for credits. DE 101-7 (KYTC Emails). KYTC advised that it could not discuss the billboards in detail without permission from the billboard owner. Id. at 12 (7/20/2016 Email). LeMaster submitted a permission letter and transfer of ownership forms, purporting to shift billboard title from the Powells to LeMaster, and KYTC subsequently indicated that it would grant credits[2] upon billboard removal. See DE 100-18 (7/22/2016 Letter). Several months later, Outfront contacted KYTC for like purposes, but Outfront discovered that the billboards had already been removed. See DE 100-13 (Watkins Depo.). Outfront initiated this suit after LeMaster refused to surrender the state credits. DE 1 (Compl.). KYTC is a party for purposes of credit disposition.

         Decades ago, Outfront's predecessors[3] erected billboards in Rockcastle County, Kentucky pursuant to leases with landowner Blanche Powell. DE 100-2 (1969 Lease & 1972 Lease). These initial leases were recorded with the Rockcastle County Clerk. Id. Years later, in 1983, Outfront and Blanche entered new leases, executing an independent lease for each of the five billboards. DE 100-3 (1983 Leases). Outfront recorded each 1983 lease with the Rockcastle County Clerk. Id. In 1998, Outfront “renegotiated three of the five 1983 Leases, leaving two of the 1983 leases in place ‘as is.'” DE 100 at 2; DE 120-1 ¶ 7. The 1998 leases were not recorded. DE 100-5 at 5-10; DE 100-4 (1998 Leases). Outfront explains this progression and renegotiation of each lease. DE 100 at 2-3; DE 100-13 & 120-1. LeMaster questions whether Outfront is a party to the leases and whether the leases were still enforceable in 2016, not the historical fact of the leases. Outfront does not explain why only three of the leases were renegotiated and does not attempt to establish which specific lease governed which specific billboard. However, such precise cataloging is unnecessary absent protest from LeMaster that the “leases in effect in 2016, ” DE 100-5, are not the apt paperwork for the four billboards supporting the KYTC awarded credits. In the Court's view, LeMaster tried to purchase rights to all 5 billboards, and the leases (from 1983 on two and 1998 on three) blanket those billboards. KYTC withheld credit on one, but LeMaster purported to buy them all, and she removed them all. Thus, all five lease documents pertain in the case.

         In 2010, Blanche Powell died, and title to her farm, as well as the billboard lease obligations, passed to her son and daughter, Randall and Brenda Powell. DE 100-12 (Brenda Powell Depo.). The Powells took via Blanche Powell's will, which went through probate. Another sibling was the Executrix. DE 100-12 at 22. No. one contests that the leases attached to the land and remained in effect against the Powell heirs. Well before 2010, however, Outfront started withholding payments under the rent abatement provisions of the leases, citing obstruction from vegetation overgrowth and failure to secure an advertiser. DE 100-6, 7, 8, 10 & 11 (Letters to Blanche Powell). From June 2002 on, Outfront abated payments on all five billboards. LeMaster scrutinizes Outfront's conduct during this time for evidence that Outfront no longer owned the billboards in 2016, when she removed them. Specifically, she contends the “billboard leases were subsequently abandoned due to prolonged abatement of rent payments, failure to maintain the signs causing dilapidation, failing to correspond with the lessors, and failing to permit the billboards.” DE 101 at 5. Outfront responds with evidence of its conduct consistent with lease continuance. See, e.g., DE 100-14 (Call Report).

         The Powell heir-LeMaster transaction has some mystery and dispute to it, and the versions differ. The Powells knew there had been leases and that payments had been abated since 2002. See DE 100-12 at 22; DE 100-24 at 29. They denied knowing any leases remained in effect, and they had no contact with Outfront since taking the land as Blanche Powell's heirs. See id. LeMaster did no due diligence in the Rockcastle County Clerk's Office. She assumed the Powells would not sell without title, and she assumed KYTC (which had no ownership record as to the aged billboards) would flag the matter if a contrary owner emerged. She may or may not have actually paid the Powells anything-the bill of sale references no consideration. LeMaster did take down the billboards. The disputed parts of the deal do not impact the Court's ruling.

         After discovering the billboard removal, Outfront asked KYTC to delay issuing LeMaster the related credits. DE 100-19 (Open Records Request & E-Mail to KYTC). Outfront then sent LeMaster a demand for the credits, offering to forgo litigation if LeMaster would “transfer[] the electronic device credits associated with the billboards . . . from her name to Outfront, ” subject to KYTC approval. Suit followed.

         II.STANDARD

         A court “shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A reviewing court must construe the evidence and draw all reasonable inferences from the underlying facts in favor of the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 106 S.Ct. 1348, 1356 (1986); Lindsay v. Yates, 578 F.3d 407, 414 (6th Cir. 2009). Additionally, the court may not “weigh the evidence and determine the truth of the matter” at the summary judgment stage. Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2511 (1986).

         The burden of establishing the absence of a genuine dispute of material fact initially rests with the moving party. Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2553 (1986) (requiring the moving party to set forth “the basis for its motion, and identify[] those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate an absence of a genuine issue of material fact”); Lindsay, 578 F.3d at 414 (“The party moving for summary judgment bears the initial burden of showing that there is no material issue in dispute.”). If the moving party meets its burden, the burden then shifts to the nonmoving party to produce “specific facts” showing a “genuine issue” for trial. Celotex Corp., 106. S.Ct. at 2253; Bass v. Robinson, 167 F.3d 1041, 1044 (6th Cir. 1999). However, “Rule 56(c) mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp., 106 S.Ct. at 2552; see also Id. at 2557 (Brennan, J., dissenting) (“If the burden of persuasion at trial would be on the non-moving party, the party moving for summary judgment may satisfy Rule 56's burden of production in either of two ways. First, the moving party may submit affirmative evidence that negates an essential element of the nonmoving party's claim. Second, the moving party may demonstrate to the Court that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim.” (emphasis in original)).

         A fact is “material” if the underlying substantive law identifies the fact as critical. Anderson, 106 S.Ct. at 2510. Thus, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.” Id. A “genuine” issue exists if “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. at 2511; Matsushita Elec. Indus. Co., 106 S.Ct. at 1356 (“Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'”) (citation omitted). Such evidence must be suitable for admission into evidence at trial. Salt Lick Bancorp v. FDIC, 187 Fed.Appx. 428, 444-45 (6th Cir. 2006).

         Outfront seeks to recover under theories of conversion and tortious interference with contract. See DE 1 (Compl.) at 7-8. LeMaster counters with a separate tort theory regarding Outfront's assertion of its rights with the KYTC and in this case. Each party seeks summary judgment defensively and offensively.[4] The Court issues the relief justified by the record under the Rule 56 rubric.

         III. ANALYSIS

         For Outfront to prevail, the leases must have remained in operation and LeMaster must not be entitled to bona fide purchaser protection. For LeMaster to prevail, the leases must have lapsed or otherwise been rendered unenforceable, the trade fixtures abandoned, and the Powell's transfer of ownership to LeMaster effectuated.[5] If the leases remained in place, the Powells had no right to sell and LeMaster no power to buy the billboards. Lease efficacy would mean LeMaster took Outfront's property-the billboards, destroyed, and resultant electronic credits-without right, thus that LeMaster converted the billboards.

         A. Conversion

         “Conversion is an intentional tort that involves the wrongful exercise of dominion and control over the property of another.” Jones v. Marquis Terminal, Inc., 454 S.W.3d 849, 853 (Ky. Ct. App. 2014). Kentucky requires these elements:

(1) the plaintiff had legal title to the converted property;
(2) the plaintiff had possession of the property or the right to possess it at the time of the conversion;
(3) the defendant exercised dominion over the property in a manner which denied the plaintiff's rights to use and enjoy the property and which was to the defendant's own use and beneficial enjoyment;
(4) the defendant intended to interfere with the plaintiff's possession;
(5) the plaintiff made some demand for the property's return which the defendant refused;
(6) the defendant's act was the legal cause of the plaintiff's loss of the property; and
(7) the plaintiff suffered damage by the loss of the property.

Jasper v. Blair, 492 S.W.3d 579, 583 (Ky. Ct. App. 2016); Ky. Ass'n of Cntys. All Lines Fund Trust v. McClendon, 157 S.W.3d 626, 632 n.12 (Ky. 2005). Per the Rule 56 standards, Outfront establishes the elements of its conversion claim as a matter of law.

         i. Legal Title to the Billboards and Possession Rights

         While Outfront's claim emerges as tortious conversion, it begins as a contract dispute. Outfront must demonstrate that it owned the billboards when LeMaster removed them to prevail on its conversion claim. Both Outfront and LeMaster have produced evidence purporting to show that each had legal title to the exclusion of the other. Outfront points to five leases it says were in effect and control the issue of ownership. DE 100-5. For her evidence, LeMaster offers a transfer of ownership form executed between Brenda Powell's heirs and LeMaster. DE 100-16 (Transfer Forms); 101-4 (Bill of Sale). For Outfront to have held legal title to the billboards when they were removed, the leases must control and render unenforceable the later purported transfer of ownership. For LeMaster to have held legal title to the billboards, the leases must have lapsed or ended, Outfront's subsequent failure to timely remove the billboards must have caused them to become abandoned trade fixtures (and thus Powell property), and the Powell-to-LeMaster transfer of ownership must be enforceable.

         Leases

         The Court first considers the leases. The five leases contain almost identical language, but divide into two versions: the 1983 Leases, DE 100-5 at 1-4, and the 1998 Leases, id. at 5-10. Both versions have terms regarding (1) automatic renewal; (2) termination; (3) assignability; (4) abatement; and, (5) trade fixtures. See DE 100-5. The two versions are materially like, except that the 1998 Leases were not registered with the Clerk, provided slightly more mutual termination rights, and included an additional provision addressing billboard abandonment.

         Both versions provided for an initial ten-year term that, absent termination, could renew for another ten years, and then automatically renew on a year-to year-basis. Id. The 1983 Leases triggered that initial ten-year renewal “at the option of the Lessee, ” while the 1998 Leases triggered ten-year renewal automatically, absent advance written notice of termination by either party. Id. Both versions gave both Outfront and the Powells equal termination rights once the leases had entered the automatic yearly renewal phase, though the 1983 Leases required sixty-days' advanced written notice where the 1998 Leases required ninety. Id. The 1998 Leases also required that any notice “[s]hall be by certified mail, return receipt requested.” Id.

         Both versions made the leases assignable and binding on future heirs, using slightly varied language. Id. The 1983 Leases provided the leases “shall inure to the benefit of and be binding upon the parties hereto and to their respective tenants, heirs, successors, personal representatives, executors, administrators, and assigns, ” while the 1998 Leases stated “[t]his lease is assignable by Lessor or Lessee and shall be binding upon the heirs, successors and assigns of both Lessor and Lessee . . . .” Id.

         Both versions anticipated that a variety of circumstances might arise to interfere with the billboards. If such a condition occurred, the lease gave Outlook the power to either terminate the lease with fifteen-days' notice or abate rent payments. Id. Should Outfront elect to either terminate or abate, the Powells were required to refund any advance payments for the relevant period. Id.

         The 1983 Leases[6] broadly outlined various triggering-conditions:

If at any time the highway view of the [billboards] is obstructed or obscured, or the advertising value of the displays is impaired or diminished, or the use or installation of such displays is prevented or restricted by law or by the Lessee's inability to obtain any necessary permits or licenses, or if the Lessee is unable, for any period of ninety (90) consecutive days or more, to secure and maintain a suitable advertising contract for the displays, or if there occurs a diversion of traffic from, or a change in the direction of traffic on highways leading past the Lessee's displays.

Id. The option to abate rent payment, rather than terminate the lease, follows, providing:

         If any of the [those conditions] shall at any time temporarily exist, then the Lessee may, at its option, instead of terminating this lease, be entitled to an abatement of rent payable here under ...


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