ACREE, CHIEF JUDGE.
At issue is whether the Clay Circuit Court erroneously concluded Appellant Energy Associates, Inc., fraudulently induced the Appellees, Randolph and Joanna Ruth, Alexandra and Tomsz Boruch, and Danielle and Shiran Kuranadasa
The matter involves four tracts of land (collectively, the "Ruth Property"). Three tracts are owned exclusively by Randolph and Joanna Ruth. The fourth tract is jointly owned by Randolph and his daughters, Alexandra and Danielle; Randolph owns an undivided one-half interest, and Alexandra and Danielle jointly own an undivided one-half interest.
On May 30, 2006, Appellant Energy Associates, Inc., entered into two oil and gas leases: the first with Randolph and Joanna for oil and gas exploration and development on their wholly-owned three tracts of land and on the fourth tract; and the second with the Alexandra and Danielle, for the same stated purpose, on the fourth tract.
Notably, the words "telephone," "telegraph," "power houses" and "stations" were struck through and deleted from both leases.
One year later, Energy Associates presented, and Randolph and Joanna signed, a "Pipeline and Metersite Easement Agreement" dated April 2, 2007; Danielle and Alexandra refused to sign this document. The agreement purported to grant Energy Associates an easement "for the purpose of constructing, operating, and maintaining a pipeline and meter site . . . with the rights of ingress and egress as . . . necessary to operate and maintain the pipelines, meters, tanks, separators, and associated equipment." The agreement then granted "the parties hereto . . . [a] permanent exclusive pipeline easement . . . thirty feet wide . . . starting at the Delta pipeline right of way and the country road and extending eastward along the country road seventy-five feet."
Two natural gas transmission lines, owned and operated by another company, Delta Natural Gas Company, Inc., also run through the Ruth Property (Delta Pipelines). An easement for the Delta Pipelines, granted by the Ruths' predecessors-in-interest, predates Energy Associates' leases and easement agreement (Delta Easement).
Energy Associates proceeded to drill two wells on the Ruth Property. Concomitantly, Energy Associates installed a meter station approximately one-fourth mile from Randolph and Joanna's residence. The meter station is surrounded by a chain link fence and includes 2 meters, a separator or dehydration unit, and a drip tank. The meter station is situated partly on the Delta Easement, partly on a county right-of-way, and partly on the fourth tract of the Ruth Property.
On January 23, 2008, the Ruths filed suit against Energy Associates claiming it fraudulently induced the Ruths to sign and enter into both the oil and gas leases and the easement agreement. In their complaint, the Ruths assert Energy Associates knowingly made the following false material misrepresentations, on which the Ruths detrimentally relied:
Energy Associates and the Ruths filed competing motions for summary judgment; the circuit court summarily denied both motions. On September 27, 2010, the circuit court held a bench trial. At trial, Randolph and Joanna admitted testimony and evidence in support of their fraud claim.
Both Randolph and Joanna testified they specifically told Energy Associates' representative, Tom Marr, that they did not want anything obtrusive, noisy, loud, large, or offensive placed on the property; Marr assured the Ruths that Energy Associates would respect their wishes. Randolph and Joanna claimed that without such assurances they would not have entered into the agreements. Randolph and Joanna also testified that, during negotiations, Marr took them to other sites on which Energy Associates was actively extracting natural gas and showed them existing gas wells accompanied by relatively small meter boxes; the Ruths testified Marr informed them this is what would be placed on their property. Joanna clarified they were told a meter was going to be placed on their property — similar to those shown on other property — not a meter station.
On January 10, 2011, the circuit court entered Findings of Fact, Conclusions of Law, and a Judgment. The circuit court concluded Energy Associates knowingly misrepresented that no large or conspicuous structures would be placed on the Ruths' property, thereby inducing the Ruths to sign both the oil and gas leases and the easement agreement. Energy Associates appealed.
Our review of a circuit court's findings of fact following a bench trial is to determine whether those findings are clearly erroneous. Kentucky Rules of Civil Procedure (CR) 52.01. Factual findings are clearly erroneous if unsupported by substantial evidence. Moore v. Asente, 110 S.W.3d 336, 354 (Ky. 2003). Substantial evidence is "some evidence of substance and relevant consequence, having fitness to induce conviction in the minds of reasonable people." Abel Verdon Const. v. Riveria, 348 S.W.3d 749, 753 (Ky. 2011). Our role as a reviewing court prohibits us from disturbing the circuit court's factual findings that are supported by substantial evidence, despite whether we would have reached a contrary conclusion. Moore, 110 S.W.3d at 354. Likewise, we afford substantial deference to the circuit court which had the opportunity to observe, scrutinize and assess the credibility of witnesses. CR 52.01; Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998).
Notwithstanding the deference due the circuit court's factual findings, its conclusions of law, reached after making its findings, are reviewed de novo. Hoskins v. Beatty, 343 S.W.3d 639, 641 (Ky. App. 2011).
To succeed on a fraudulent inducement claim, a plaintiff must prove, by clear and convincing evidence, the following elements of fraud: (a) a material representation; (b) which is false; (c) known to be false or made recklessly; (d) made with inducement to be acted upon; (e) acted in reliance thereon; and (f) causing injury. United Parcel Serv. Co. v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999) (citing Wahba v. Don Corlett Motors, Inc., 573 S.W.2d 357, 359 (Ky. 1978)); Yeager v. McLellan, 177 S.W.3d 807, 809 (Ky. 2005). Relevant to a finding of fraud is "the character of the testimony, the coherency of the entire case as well as the documents, circumstances and facts presented." Denzik v. Denzik, 197 S.W.3d 108, 110 (Ky. 2006).
Energy Associates raises no issue concerning the last three fraud elements specified in Rickert. Instead, Energy Associates avers the Ruths failed to prove that any known false material representations were made to them, and the circuit court erred in concluding otherwise. We disagree.
The circuit court concluded "Energy Associates, Inc. knew from the beginning that the plaintiffs did not want any large and conspicuous pieces of equipment on the property and represented to the [Ruths] that no such structures would be placed on their premises." The circuit court also found, "at the time of these representations [Energy Associates] knew that it would be placing a meter station upon the [Ruth Property] yet by the words and actions [Energy Associates] induced the [Ruths] to enter into the leases." The circuit court's findings are supported by Joanna and Randolph's trial testimony. As indicated, Randolph and Joanna testified that Marr, Energy Associates' representative, assured them nothing offensive, loud, obtrusive, or overbearing would be placed on the Ruth Property. Additionally, Marr illustrated what would be placed on the Ruth Property by showing Randolph and Joanna active existing wells with relatively small meter boxes. Randolph and Joanna reiterated their desire to preserve the beauty and tranquility of their property, and would not have signed the lease but for Marr's assurances.
Further, in support of its conclusion that Energy Associates made material representations "known to be false or made recklessly," the circuit court relied on the testimony presented by Energy Associates' own witnesses: J. Macklin Cox, a geologist and Energy Associates' Vice-President of Energy, and Michael P. Sanders, a consulting geologist. Specifically, Cox testified it was "absolutely necessary" to have the meter station because Energy Associates could not sell the natural gas extracted from the Ruth Property without it. Sanders confirmed the equipment contained within the chain link fence was "needed" and "necessary" for the production of natural gas from the Ruth Property. Both agreed the equipment's current location was reasonable and logical as it needed to be close to the Delta Pipelines. Based on this testimony, the circuit court reasonably concluded, and we agree, that Energy Associates, despite its assurances to the Ruths, intended from the outset to place a meter station on the Ruth Property.
Energy Associates vigorously disputes whether the meter station placed on the Ruth Property is, in fact, "loud, ugly, offensive, oppressive, and/or overbearing." Energy Associates suggests, even if Marr represented that loud, ugly, and offensive equipment would not be placed on the Ruth Property, the equipment so placed does not qualify as such, thereby negating the Ruths' position that Marr's material representations were, in fact, false.
At trial, the Ruths and Energy Associates both admitted into evidence pictures depicting the equipment placed on the Ruth Property. The pictures reveal a fairly large drip tank, a dehydrator/separator, an electric line, and two meters with housing, all enclosed by a chain link fence. Based on these pictures and the Ruths' testimony, the circuit court specifically found the equipment to be the type of large, loud and obtrusive equipment and meter "station" objected to by the Ruths, assured by Marr would not be placed on the Ruth Property, and specifically omitted from the oil and lease agreements.
In sum, we find substantial evidence supports the circuit court's factual findings; the court's conclusions of law based on those findings are legally sound. Therefore, we affirm the circuit court's conclusion that Energy Associates fraudulently induced the Ruths to enter into the oil and gas leases.
Energy Associates next argues that, even if this Court upholds the circuit court's finding of fraud as to Randolph and Joanna's oil and lease agreement, there is a complete absence of evidence that Energy Associates made any material representations, false or otherwise, to Alexandra and Danielle. Energy Associates asserts, and the Ruths do not dispute, that it never spoke directly to Danielle and Alexandra. Based on this, Energy Associates contends there are no fraudulent misrepresentations which possibly induced Danielle and Alexandra to sign the second oil and gas lease. Further, Energy Associates maintains that, because the meter station is located on the fourth tract, in which Danielle and Alexandra jointly hold an undivided one-half interest, Danielle and Alexandra's oil and gas lease, in and of itself, provides sufficient authority for and expressly permits Energy Associates to install and operate the meter station.
We know of no authority to support Energy Associates's argument to the effect that the fraud the court found it committed upon Randolph and Joanna, co-owners with their daughters of the subject property, is effectively negated by its interaction, or lack thereof, with the daughters. Energy Associates fails to cite any authority for that proposition. This alone is fatal for every argument raised by an appellant must be supported by some legal authority. Without such support, a reviewing court is left aimlessly adrift in the appellant's sea of fact, assertion, and postulate. We will not perform the advocacy research that an appellant or his attorney should have performed. Rather,
Hadley v. Citizens Deposit Bank, 186 S.W.3d 754, 759 (Ky. App. 2005) (citations and quotation marks omitted); Summe v. Gronotte, 357 S.W.3d 211, 215 (Ky. App. 2011) ("An appellant will not be heard to complain that the trial court failed to follow rules of law, unless he himself reasonably follows the rules of this Court."). We deem this argument waived. Hadley, 186 S.W.3d at 759.
Energy Associates also contends that, even if this Court upholds the circuit court's decision with respect to the oil and gas leases, the easement agreement remains in full force and effect. Energy Associates asserts that the easement agreement unquestionably "granted Energy the right to install, operate and maintain the pipelines, meters, tanks, separators, and associated equipment." (Appellant's Brief at 15). We are not persuaded by this argument either.
First, Energy Associates again fails to cite any legal authority in support of its argument. Consequently, this argument is not properly before us and we consider it waived. Hadley, 186 S.W.3d at 759.
Second, even if Energy Associates had not waived this argument, we would affirm because the fraud that spawned the oil and gas leases also yielded the easement agreement. The easement agreement is dependent upon and supplemental to the oil and gas leases. It lacks independent utility. Stated differently, in the absence of the oil and gas leases, the easement agreement serves no practical purpose for there is no logic in obtaining a pipeline and/or meter site easement if the energy company lacks authority to extract the oil and/or gas from the property. In fact, at trial, Energy Associates' Vice-President, J. Macklin Cox, testified the easement agreement simply "backed up" the oil and gas leases. To that end, the oil and gas leases and the easement agreement represent a continuing contractual relationship between the Ruths and Energy Associates. Accordingly, we find the false material representations which fraudulently induced the Ruths to enter into the oil and gas leases also induced the Ruths to enter into the easement agreement. See generally Veterans Service Club v. Sweeney, 252 S.W.2d 25, 27 (Ky. 1952) ("It is a stern but just maxim of law that fraud vitiates everything into which it enters.").
Finally, Energy Associates asserts the circuit court committed reversible error when it admitted parol testimony to vary the terms of the unambiguous oil and gas leases. In support, Energy Associates advances the well-established rule of law that extrinsic evidence is not admissible at trial to alter the terms of an unambiguous written agreement. Hoheimer v. Hoheimer, 30 S.W.3d 176, 178 (Ky. 2000); J. Walter Wright Lumber Co. v. Red Bird Timber Corp., 379 S.W.2d 721, 723 (Ky. 1964) ("Parol evidence will not operate to vary or contradict an unambiguous written contract."). There is an exception to this rule. This Court has explained:
Ferguson v. Cussins, 713 S.W.2d 5, 6 (Ky. App. 1986); Yeager, 177 S.W.3d at 809 (reiterating that "false and fraudulent misrepresentations do not merge" into a contract). For that reason, the circuit court did not err when it admitted at trial parol evidence to show that the oil and gas leases and easement agreement were procured by Energy Associates' false and fraudulent representations. Radioshack Corp. v. ComSmart, Inc., 222 S.W.3d 256, 261 (Ky. App. 2007) (explaining the rule prohibiting the admission of parol evidence "does not apply when there is an allegation of fraud in the inducement to a written agreement").
The Clay Circuit Court's January 10, 2011 Findings of Fact, Conclusions of Law, and Judgment are affirmed.
ALL CONCUR.
