Opinion
No. 106,816.
2012-08-3
WESTERN CREDIT, INC., Appellant, v. H.T. PAUL COMPANY, INC., Appellee.
Appeal from Harvey District Court; Richard B. Walker, Judge. M. Kathryn Webb, of Wichita, for appellant. Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, for appellee.
Appeal from Harvey District Court; Richard B. Walker, Judge.
M. Kathryn Webb, of Wichita, for appellant. Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, for appellee.
Before MALONE, P.J., MARQUARDT, J., and KNUDSON, S.J.
MEMORANDUM OPINION
PER CURIAM:
Western Credit, Inc. (Western) and H.T. Paul Company, Inc. (H.T.Paul) signed a Lease Termination Agreement (Agreement) so that H.T. Paul could purchase the land from Dr. Bruce Albright free from Western's lease. Western sued H.T. Paul; however, the district court eventually granted summary judgment in favor of H.T. Paul. Western timely appeals.
In the fall of 2000, H.T. Paul wanted to acquire real property from Albright in order to construct a Walgreen's retail store on Albright's property. Albright's property had been leased to various tenants, including Western. Western had operated its business at that location since May 1, 1998.
The Agreement between H.T. Paul and Western was signed on February 2, 2001. One term in the Agreement was that H.T. Paul would pay Western $17,000 to enable Western to move its business to a different location. Western's lease with Albright was due to expire in April 2001. The Agreement also provided that it “shall expire on July 1, 2001, unless extended by the parties, in writing.”
Prior to the execution of the Agreement, H.T. Paul and Albright signed a real estate contract for H.T. Paul to purchase Albright's property. The contract specified that the property was being sold subject to the rights of Western's underlying lease with Albright.
Within 5 days of signing the Agreement with H.T. Paul, Western vacated the premises and moved to a different location. The court noted that Western understood that if H.T. Paul never purchased the property from Albright, it would not receive the $17,000.
The original closing date for the purchase of Albright's property was April 1, 2001; however, the closing was delayed several times. Because of the delays, four separate amendments to the real estate contract were executed. The closing on the real estate purchase finally occurred on December 26, 2001.
On May 30, 2002, Western filed a petition for judgment against H.T. Paul for $17,000 plus 10% annual interest. In June 2002, H.T. Paul filed a motion to dismiss, arguing Western stated no basis for the relief it requested. On May 10, 2004, Western filed a motion for summary judgment. On January 25, 2005, the district court denied H.T. Paul's motion. Then on February 28, 2005, H.T. Paul filed a response to Western's summary judgment motion and a cross-motion for summary judgment.
Other than various discovery motions, the case remained dormant until March 9, 2010, when the district court held a pretrial hearing. In its pretrial order, the district court summarized the parties' theories and stated that any amendments to the pending motions for summary judgment must be filed on or before April 1, 2010.
Western filed an amended motion for summary judgment on March 29, 2010. In the amended motion, Western argued that any ambiguities in the contract should be resolved in its favor. Western further argued that because it completed its contractual duty of relocating, it should be entitled to the $17,000.
H.T. Paul filed its supplemental motion for summary judgment on the same day that Western filed its amended motion for summary judgment. In its motion, H.T. Paul argued that “[s]ince discovery is now complete, [Western] has absolutely no excuse to avoid ‘coming forward’ as required by our summary judgment cases.” H.T. Paul asserted that there is no evidence to support Western's position.
On June 18, 2010, the district court sent a letter to the parties informing them of its decision to deny Western's motion and grant H.T. Paul's motion. The district court told the parties that a formal opinion would be distributed shortly.
On August 18, 2011, the district court issued its written decision granting summary judgment to H.T. Paul. The district court held that the Agreement “clearly expired by its own terms on July 1, 2001, and Western cannot be heard at this time to argue that it was somehow ambiguous.”
Western quickly sent correspondence to the district court, which the court construed as a motion for rehearing. On September 2, 2011, the district court issued a memorandum decision denying the motion for rehearing and informing the parties to “consider all matters in the case final with the filing of this Memorandum Decision.” Western timely appeals.
Our standard of review of a district court's grant or denial of summary judgment is well established.
“Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.” Miller v. Westport Ins. Corp., 288 Kan. 27, Syl. ¶ 1, 200 P.3d 419 (2009).
The purpose of summary judgment is to “obviate delay where there is no real issue of fact.” Secrist v. Turley, 196 Kan. 572, 575, 412 P.2d 976 (1966).
“The cardinal rule in contract interpretation is to ascertain the intention of the parties and to give effect to that intention. [Citations omitted.] Unless the contract is ambiguous, the intent of the parties is determined based on the contract alone, not on extrinsic or parol evidence. [Citation omitted.] In determining whether a contract is ambiguous, words should be given their natural and ordinary meaning. [Citation omitted.] A contract is ambiguous if its terms are reasonably open to more than one meaning, or the meaning of the language used is uncertain. [Citation omitted.] A contractual provision is not ambiguous merely because the parties disagree over its meaning.' [Citations omitted.]” ARY Jewelers v.. Krigel, 277 Kan. 27, 34–35, 82 P.3d 460 (2003).
When a contract is not ambiguous, extrinsic evidence of the parties' intent should not be considered. See Butts v. Lawrence, 22 Kan.App.2d 468, 472–73, 919 P.2d 363 (1996). Courts should not strain to create ambiguity where there is none. Newton v. Nicholas, 20 Kan.App.2d 335, Syl. ¶ 3, 887 P.2d 1158,rev. denied 257 Kan. 1093 (1995). To be ambiguous, “a contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language.” Catholic Diocese of Dodge City v. Raymer, 251 Kan. 689, 693, 840 P.2d 456 (1992).
If an agreement is unambiguous, it must be enforced according to its terms so as to give effect to the intent of the parties at the time they entered into the contract. City of Manhattan v. Galbraith, 24 Kan.App.2d 327, 332, 945 P.2d 10 (1997).
Western suggests that there are four issues on appeal; however, the only issue is whether the district court properly granted summary judgment to H.T. Paul. Western argues that summary judgment was improperly granted stating:
1. H.T. Paul breached the Agreement;
2. H.T. Paul was unjustly enriched and the district court should have imposed an implied contract;
3. H.T. Paul violated its duty of good faith and fair dealing inherent in the Agreement; and
4. H.T. Paul did not submit a proper and supported motion for summary judgment.
First, Western argues that the parties intended to set a specific date on which Western's leasehold interest would terminate—the date that H.T. Paul would close on all the properties. Western illustrates its point with the following Agreement language:
“WHEREAS, Purchaser wishes to terminate the Lease Agreement after Purchaser acquires fee simple title to the Property.
....
“1. Purchaser and Lessee agree that the Lease Agreement and leasehold interest of Lessee thereunder shall terminate upon Purchaser's closing on the purchase of and acquisition of fee simple title to the Property.
....
“4. The parties hereto, as of the date of closing on the Property, shall release each other of and from any form of liability or responsibility arising out of the Lease Agreement and Lessee shall further release any and ail rights to the Property and in the improvements thereon.”
Interestingly, Western fails to cite to the final term of the Agreement that states: “This Agreement shall expire on July 1, 2001, unless extended by the parties, in writing.” H.T. Paul asserts that because the Agreement expired on July 1, 2001, Western “no longer held any leasehold interest for [H.T. Paul] to buy from [Western] in December 2001 when all the sales finally closed.”
Western claims that it is being penalized for relocating its offices quickly. Western asserts:
“Under defendant's belated and distorted reading of the contract, defendant had Western Credit in a ‘Catch 22’ situation—do what's best for the business and relocate as soon as possible relying on defendant's contractual promise to pay $17,000.00 at the time of closing, or wait indefinitely until defendant and Albright close on the property, incur additional rental costs and hope that other suitable space is still available when the closing eventually occurs.”
Under the terms of the Agreement, Western had the option to extend the Agreement, but it took no action to do so. It is not the function of the court to make contracts, but to enforce them as made. Iron Mound v. Nueterra Healthcare Management, 44 Kan.App.2d 104, 113, 234 P.3d 39 (2010), rev. granted May 18, 2011. Parties have the right to enter a contract so long as the contract is not illegal or contrary to public policy. In the absence of fraud, mistake, or duress, a party who enters into such a contract is bound by its terms. Our Supreme Court has held this includes a provision for mutual termination of the contract. Augusta Medical Complex, Inc. v. Blue Cross, 227 Kan. 469, 475, 608 P.2d 890 (1980).
Western briefly suggests that interpreting the contract as written would result in forfeiture. While Western correctly argues that the court “abhors” forfeitures, a party should not benefit from its own forfeiture. See Vanderpool v. Higgs, 10 Kan.App.2d 1, 2–3, 690 P.2d 391 (1984). Further, the law does not abhor the terms of contracts where the parties have bound themselves to certain definite requirements in unambiguous terms. Galbraith, 24 Kan.App.2d at 333. Western has provided no evidence that H.T. Paul wrongly delayed closing on the purchase of the property. The only evidence presented was that Western failed to extend the Agreement past the mutually agreed upon expiration date.
Even though the district court concluded that the contract was unambiguous, Western continues to suggest that the contract is actually ambiguous and the court must construe it against H.T. Paul. Western, however, admits that “the intent of the parties appears clearly from the four corners of the contract.” Based on the ordinary meaning of the words in the Agreement, we concur that there is no ambiguity in the contract.
Next Western argues it should recover damages based on unjust enrichment theory. Western argues that “the court should impose an implied contract on the parties to supply whatever terms are necessary to fulfill that parties' intent.” Underlying a claim for unjust enrichment is a promise implied in law that one will restore to another that which in good conscious and equity belongs to him or her. Security Benefit Life Ins. Corp. v. Fleming Companies, Inc., 21 Kan.App.2d 833, Syl. ¶ 6, 908 P.2d 1315 (1995), rev. denied 259 Kan. 928 (1996). These claims have three elements:
“(I) a benefit conferred upon one person by another; (2) an appreciation or knowledge of the benefit received; and (3) the acceptance or retention of the benefit by the individual receiving the benefit under such circumstances as to make it inequitable for the individual to retain the benefit without payment of its value.” 21 Kan.App.2d 833, Syl. ¶ 5.
Western suggests the elements of unjust enrichment are met in this case because: (1) It conferred a benefit to H.T. Paul by vacating the premises in a timely manner; (2) H.T. Paul was aware of the benefit; and (3) it would be unfair to allow H.T. Paul to receive some enrichment. Western has, however, conferred no benefit to H.T. Paul since there was no lease or tenancy in existence at the time H.T. Paul purchased the property. Western's lease with Albright expired in April 2001. Finally, H.T. Paul did not breach the terms of the Agreement because it expired on July 1, 2001. No unjust enrichment issue was involved.
Western next argues that the district court erred in finding that H.T. Paul did not violate its duty of good faith and fair dealing inherent in the Agreement.
Kansas recognizes the duty of good faith and fair dealing in every contract, with the exception of employment-at-will contracts. While good faith and reasonableness are usually questions of fact, summary judgment may be appropriate if the facts are uncontroverted. Estate of Draper v. Bank of America, 288 Kan. 510, 528, 205 P.3d 698 (2009).
This duty provides that parties should not “ ‘intentionally and purposely do anything to prevent the other party from carrying out his part of the agreement, or do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.’ “ Bonanza, Inc. v. McLean, 242 Kan. 209, 222, 747 P.2d 792 (1987).
The district court found that the Agreement carried an implied duty of good faith and fair dealing but concluded that H.T. Paul did not breach its duty. Customarily, the duty of exercising good faith arises where there is an exercise of discretion in the performance under a contract. See The CIT Group v. E–Z Pay Used Cars, Inc., 29 Kan.App.2d 676, 680, 32 P.3d 1197,rev. denied 272 Kan. 1423 (2001). Here, there was no exercise of discretion in the performance of the Agreement.
This termination occurred by a specific date. When termination occurs on a date specified in the Agreement, issues of good faith and fair dealing become largely irrelevant. See St. Catherine Hospital of Garden City v. Rodriguez, 25 Kan.App.2d 763, 766–67, 971 P.2d 754 (1998). Here, the parties agreed that on July 1, 2001, the Agreement would terminate. No lease existed between Western and Albright on that date. The district court held: “[T]he doctrines of good faith and fair dealing simply do not apply when there [is] a hard and unamended termination date in the agreement.”
Western argues that the termination date did not “nullify” the duty of good faith and blames H.T. Paul for “fail[ing] to do anything to alert Western to its intent to renege on its promise to pay the $17,000.” Western, however, was in as good a position as H.T. Paul to know that the contract was expiring on July 1, 2001.
Western argues that it was H.T. Paul's duty to extend the contract and inform Western that the contract was terminating. Without citing authority, we find that the district court correctly held that H.T. Paul did not breach its duty of good faith and fair dealing.
Finally, Western claims that H.T. Paul did not submit a proper and supported motion for summary judgment. Specifically, Western suggests that H.T. Paul did not comply with K.S.A. 60–256 or Supreme Court Rule 141 (2011 Kan. Ct. R. Annot. 232). K.S.A.2011 Supp. 60–256(e)(2) states:
“When a motion for summary judgment is properly made and supported, an opposing party may not rely merely on allegations or denials in its own pleading; rather, its response must, by affidavits or by declarations pursuant to K.S.A. 53–601, and amendments thereto, or as otherwise provided in this section, set out specific facts showing a genuine issue for trial.”
Further, Supreme Court Rule 141(b) (2011 Kan. Ct. R. Annot. 233) orders the respondent to provide “a memorandum or brief setting forth in separately numbered paragraphs ... a statement whether each factual contention of movant is controverted, and if controverted, a concise summary of conflicting testimony or evidence, and any additional genuine issues of material fact which preclude summary judgment.”
Our Supreme Court has stated that “Rule 141 is not just fluff—it means what it says and serves a necessary purpose.” McCullough v. Bethany Med. Center, 235 Kan. 732, 736, 683 P.2d 1258 (1984). However, our Supreme Court has also stated that failure to comply with Rule 141 can constitute harmless error. See Rhoten v. Dickson, 290 Kan. 92, 104–05, 223 P.3d 786 (2010). Further, there is nothing inherently wrong with a trial court's decision to adopt a party's findings and conclusions “as long as they had been individually considered, but it is the sort of shorthand that would be susceptible to abuse. Thus, although not a practice to be encouraged, it is not, standing alone, a violation of Supreme Court Rule 165 or K.S.A. 60–252.” Stone v. City of Kiowa, 263 Kan. 502, 506, 950 P.2d 1305 (1997).
Western argues that H.T. Paul “completely failed” and “wholly failed” to properly set forth its responses to Western's summary judgment motions. A review of all of the pleadings shows that H.T. Paul substantially complied with Supreme Court Rule 141 and K.S.A.2011 Supp. 60–256(e)(2). H.T. Paul responded to each separate factual statement, set forth its own factual paragraph, properly keyed to the record, and provided caselaw where needed. H.T. Paul's motion for summary judgment was not lacking in any substantial way to show noncompliance with the statutory requirements or court rule. The district court did not err in granting H.T. Paul's motion for summary judgment.
Affirmed.