Opinion
No. 110,462.
2014-11-26
MIDDLECREEK CORPORATION, a Kansas Corporation, Appellee, v. DOO–IT PAVING, INC., Trevor McAdoo, Patricia L. McAdoo, Kevin McAdoo, and TNT Well Servicing, Inc., Appellants.
Appeal from Marion District Court; Steven L. Hornbaker, Judge.David A. Schatz, of Spencer Fane Britt & Browne LLP, of Kansas City, Missouri for appellant.Amy Fellows Cline, of Triplett, Woolf & Garretson, LLC, of Wichita, for appellee.
Appeal from Marion District Court; Steven L. Hornbaker, Judge.
David A. Schatz, of Spencer Fane Britt & Browne LLP, of Kansas City, Missouri for appellant. Amy Fellows Cline, of Triplett, Woolf & Garretson, LLC, of Wichita, for appellee.
Before GREEN, P.J., STEGALL, J., and HEBERT, S.J.
MEMORANDUM OPINION
PER CURIAM.
Middlecreek Corporation (“Middlecreek”) sued Doo–It Paving, Inc. (“Doo–It”) and its owners, Trevor, Kevin, and Patricia McAdoo (collectively “the McAdoos”), making numerous claims, including breach of contract and conversion. The district court granted summary judgment to Middlecreek on the question of liability and conducted a bench trial to determine damages. The defendants appeal the outcome and argue as follows: (1) The district court erred in striking the affidavit of Trevor McAdoo, leading to its conclusion that there was no material dispute of fact on the question of liability; (2) the evidence was not sufficient to support the district court's finding of damages on Middlecreek's conversion claim; (3) the district court erred in refusing to allow Doo–It to present evidence through a corporate representative during the damages trial; and (4) the district court erred as a matter of law when it held the defendants jointly and severally liable for the damages found on Middlecreek's breach of contract claims. Because we find that all of the defendants' arguments fail, we affirm the judgment of the district court.
The parties are familiar with the facts of this case and we see no need to repeat them in detail. In sum, in 2009 Middlecreek as general contractor and Doo–It as sub-contractor began working several jobs together. Doo–It's financial situation began to deteriorate, prompting Middlecreek to eventually hire the McAdoos and other Doo–It employees as Middlecreek employees. In March 2010, Middlecreek subcontracted with Doo–It for a job in Pratt, Kansas. As a result of the defendants' failure to perform, Middlecreek began to incur liquidated damages. Eventually, Middlecreek was forced to find another subcontractor to complete the job. After Middlecreek terminated the McAdoos' employment for fraudulently using Middlecreek's credit cards, the McAdoos went to the Pratt jobsite and Middlecreek's machine yard and removed tools and equipment, including a curb machine.
Middlecreek sued the defendants, seeking, in part, a restraining order prohibiting the defendants from concealing or otherwise disposing of the tools and equipment, including the curb machine. The district court agreed and entered an order requiring the defendants to deliver or allow Middlecreek to retrieve the curb machine after Middlecreek posted a bond. The day before Middlecreek was to take the curb machine, Trevor McAdoo informed Middlecreek that an individual named Bobby Hail claimed a security interest in the machine and was on his way to repossess it. Middlecreek then filed a police report alleging theft of the curb machine.
Discovery commenced on Middlecreek's claims, but the defendants' compliance with discovery rules and court imposed deadlines was virtually nonexistent. Middlecreek filed motions to compel, which were granted; however, the defendants continued to fail to comply with court orders concerning discovery. The district court began to impose discovery sanctions on the defendants, including denying them the opportunity to present any documentary evidence of the alleged security interest of Bobby Hail in the curb machine.
During this time, Trevor McAdoo was arrested on felony theft charges stemming from the removal of tools and equipment from Middlecreek's machine yard. At that time, the McAdoos' depositions in the civil action were still pending. The defendants filed a motion to stay the civil proceedings and quash the depositions pending the resolution of the criminal proceedings, but that motion was denied. The depositions of the McAdoos proceeded, and all three asserted their Fifth Amendment rights to avoid self-incriminating statements during the depositions. However, Trevor McAdoo did testify that while he had once been an executive officer of Doo–It, he no longer was, and that at that time Doo–It had no employees.
After Middlecreek filed for summary judgment on the question of liability, the defendants' filed a memorandum in opposition that was supported by the affidavit of Trevor McAdoo stating that he was an authorized agent and project manager for Doo–It. Along with the affidavit, the defendants also attached other documents. Aside from the affidavit and attached documents, the defendants did not attempt to dispute the material facts with any other evidence.
Middlecreek moved to strike the affidavit of Trevor McAdoo on the grounds that he should be barred from offering the affidavit because he had invoked his Fifth Amendment rights during his deposition or, in the alternative, because his affidavit was inconsistent with his deposition testimony. The district court granted both Middlecreek's motion to strike Trevor McAdoo's affidavit and Middlecreek's motion for summary judgment on the question of liability. The trial court reasoned that since Trevor McAdoo took the Fifth Amendment during his depositions, he was barred from presenting an affidavit to controvert Middlecreek's summary judgment motion. Also, the exhibits attached to Trevor's affidavit were disallowed as he had refused to answer questions about those documents during his deposition. Once the affidavit was stricken, the district court found Middlecreek's motion unopposed, granted summary judgment on liability, and set the matter for a trial to determine the amount of damages. The court further ruled that the defendants would be barred from testifying at the damages trial as they had invoked their Fifth Amendment rights during their depositions.
Following the damages trial, the district court found damages and entered judgment against the defendants. The district court found, in part, that Kevin and Trevor McAdoo had damaged Middlecreek in the amount of $57,875.86 for converting Middlecreek's curb machine and that Middlecreek had suffered damages in the amount of $136,583.23 caused by the Doo–It and McAdoos separate breaches of contract. As such, the district court found, in part, Doo–It and the McAdoos jointly and severally liable in the amount of $136,583.23. The district court made numerous other findings on Middlecreek's various claims; however, those findings have not been challenged on appeal.
Analysis
Summary Judgment
Review of a grant of summary judgment requires us to look to pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, to see if they 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. Waste Connections of Kansas, Inc. v. Ritchie Corp., 296 Kan. 943, 962, 298 P.3d 250 (2013). The parties do not dispute that Trevor McAdoo's affidavit, if admitted, would have created sufficient material disputes of fact to withstand Middlecreek's motion for summary judgment. Nor do the parties dispute that without the affidavit and attached documents, the defendants did not come forward with any evidence of a material dispute of fact. Thus, the question presented on appeal is whether the district court properly excluded the affidavit and attached documents.
The district court struck the affidavit on the grounds that a witness cannot invoke the Fifth Amendment privilege during discovery only to withdraw that invocation when the issues are presented to a fact finder. While the parties do not point to any Kansas appellate decisions on this question, we are guided by federal precedent. Kansas courts have often looked to federal caselaw for persuasive guidance as the Kansas Rules of Civil Procedure are patterned after the federal rules. See Back–Wenzel v. Williams, 279 Kan. 346, 349, 109 P.3d 1194 (2005). The rule prohibiting manipulation of the Fifth Amendment privilege in order to obtain an advantage in a civil lawsuit is well grounded in federal law. See, e.g., S.E.C. v. Smart, 678 F.3d 850, 855–56 (10th Cir.2012) (litigant may not use the Fifth Amendment privilege as both a sword and a shield); Davis–Lynch, Inc. v. Moreno, 667 F.3d 539, 547 (5th Cir.2012) (litigant cannot withdraw asserted fifth amendment privilege if trying to abuse, manipulate, or gain unfair strategic advantage); In re Edmond, 934 F.2d 1304, 1308 (4th Cir.1991) (Fifth Amendment cannot be invoked as a shield to oppose depositions and then discarded for the limited purpose of making statements to support a summary judgment motion.). We review denial of the attempted withdrawal of the privilege for abuse of discretion. Smart, 678 F.3d at 855.
In Smart, the 10th Circuit noted that the Fifth Amendment may be invoked in civil proceedings, but withdrawal of the privilege is reviewed under an abuse of discretion to prevent a party from “converting the Fifth Amendment privilege from its intended use as a shield against compulsory self-incrimination into an offensive sword.” Smart, 678 F.3d at 854–55. In determining whether withdrawal is permissible, the 10th Circuit adopted the logic of Davis–Lynch, Inc. v. 667 F.3d at 548. The Smart court noted that withdrawal is generally impermissible “when [a party] invoked the privilege throughout discovery and then sought to withdraw the privilege either to support or defend against a motion for summary judgment.” Smart, 678 F.3d at 855 (quoting Davis–Lynch, Inc., 667 F.3d at 547.) Factors considered in favor of allowing a party to withdraw the privilege are circumstances indicating that the litigant was not using the privilege in a tactical or abusive manner, and the opposing party would not experience undue prejudice. Davis–Lynch, Inc., 667 F.3d at 548.
Our review of the record convinces us that the defendants engaged in delay and obfuscation from the beginning. The defendants were assessed sanctions for failing to respond to discovery. The depositions of the McAdoos were rescheduled at least once because the defendants had failed to provide written discovery. All three of the McAdoos asserted their Fifth Amendment rights during the depositions. While the defendants attempt to fault Middlecreek for not carrying out a corporate deposition, counsel for the defendants informed counsel for Middlecreek that any person designated as a corporate representative would likewise claim the Fifth Amendment privilege. While Middlecreek did have the opportunity to question Trevor McAdoo at the bankruptcy creditor meetings, this was of little to no practical use for Middlecreek as the bankruptcy creditor meetings occurred nearly 2 months after Middlecreek had filed its summary judgment motion.
We find no abuse of discretion in the district court's decision to strike the affidavit and the attached documents. On appeal, the defendants make one final attempt to circumvent their Fifth Amendment problem by claiming that the affidavit was not executed in Trevor McAdoo's personal capacity but rather as the “Authorized Agent of Doo–It.” The defendants reason that because Doo–It never invoked the Fifth Amendment, the affidavit could not be a withdrawal of such an invocation. This argument is without merit. Trevor McAdoo's claim to have executed the affidavit as the authorized agent of Doo–It is fatally undermined by the little deposition testimony he did give. Kansas courts have long employed a rule that a district court has the discretion to refuse consideration of an affidavit that controverts earlier deposition testimony for the purposes of creating a question of fact to avoid summary judgment. See, e.g., Smith v. Kansas Orthopadic Center, 49 Kan.App.2d 812, 818, 316 P.3d 790 (2013); Gassman v. Evangelical Lutheran Good Samaritan Society Inc., 261 Kan. 725, 731, 933 P.2d 743 (1997); Mays v. Ciba–Geigy Corp., 233 Kan. 38, 41–45, 661 P.2d 348 (1983). This rule preserves the function of summary judgment “ ‘as a procedure for screening out sham issues of fact.’ “ Mays, 233 Kan. at 44 ( Quoting Perma Research & Development Co., 410 F 2d 572, 578 [2d Cir1969] ). Application of this rule is reviewed for an abuse of discretion. Smith, 49 Kan.App.2d at 818.
At his deposition, Trevor testified that Doo–It had no employees; that he currently had no employment association with Doo–It; and that while he was once a vice-president in the corporation, he was no longer an officer. The district court did not abuse its discretion in striking the affidavit, both because it contradicted Trevor McAdoo's earlier deposition testimony and because the attempted withdrawal of the Fifth Amendment privilege was simply a tactical maneuver to gain an unfair advantage.
Finally, the defendants argue that even if the affidavit is struck, the unsubstantiated documents attached to the affidavit, standing alone, create a question of disputed fact. The defendants cite no authority for this proposition. As they have not provided any authority for this argument, it is deemed abandoned, as failing to support a point with pertinent authority is akin to failing to brief the issue. State v. Tague, 296 Kan. 993, 1001, 298 P.3d 273 (2013).
Conversion
Next, the defendants claim that the district court's finding of damages for conversion of the curb machine was not supported by the evidence. However, the defendants make no argument concerning the damages evidence. Instead, they assert that the uncontroverted facts did not support the district court's conclusion that Middlecreek was entitled to judgment as a matter of law on its claim of liability for conversion. The defendants claim that Kevin and Trevor McAdoo cannot be liable for conversion because the undisputed evidence presented demonstrates that the curb machine was removed by Bobby Hail.
We review a grant of summary judgment by looking to the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, to determine whether they 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. Waste Connections of Kansas, Inc., 296 Kan. at 962. At the summary judgment stage, it was uncontroverted that Kevin and Trevor McAdoo removed the curb machine from Middlecreek's yard without permission. What may or may not have happened to the curb machine after that is irrelevant to the question of liability for conversion. As such, the district court did not err in finding that the uncontroverted facts established that Middlecreek was entitled to judgment as a matter of law on its claim against Kevin and Trevor McAdoo for liability for conversion of the curb machine.
Exclusion of Evidence at the Damages Trial
The defendants also claim that the district court erred in not allowing the corporate entity, Doo–It, to present evidence at the damages trial. In order to challenge the exclusion of evidence, a proffer of said evidence must be made at trial. State v. Krider, 41 Kan.App.2d 368, 374, 202 P.3d 722 (2009) rev. denied 289 Kan. 1283 (2010). K.S.A. 60–405 states:
“A verdict or finding shall not be set aside, nor shall the judgment or decision based thereon be reversed, by reason of the erroneous exclusion of evidence unless it appears of record that the proponent of the evidence either made known the substance of the evidence in a form and by a method approved by the judge, or indicated the substance of the expected evidence by questions indicating the desired answers.”
Here, while the defendants did make a contemporaneous objection at trial, they failed to make a proffer as to what evidence they would have submitted or who would have been able to testify as a corporate representative of Doo–It. As such, they have failed to preserve the issue for appellate review.
Joint and Several Liability
Finally, the defendants claim that the district court erred in finding the McAdoos and Doo–It jointly and severally liable for the breaches of contract associated with the Pratt job. The district court found that each of the individual McAdoos along with the corporation Doo–It had separate contracts to perform the same work for Middlecreek. The district court further found that all of the defendants had breached their contracts to perform that work. Finally, the district court found that as a result of that contracted for work not being performed by the defendants, Middlecreek suffered damages in the amount of $136,583.23.
When reviewing a remedy the trial court has fashioned to make the injured party whole, “the test on appellate review is not whether the remedy is the best remedy that could have been devised, but whether the remedy so fashioned is erroneous as a matter of law or constitutes a breach of trial court discretion.” In re Conservatorship of Huerta, 273 Kan. 97, 99–100, 41 P.3d 814 (2002). On appeal, the defendants do not dispute the district court's factual findings but, rather, argue that it is improper as a matter of law for the district court to hold the individual McAdoos jointly and severally liable with Doo–It when they had not made individual guarantees of Doo–It's performance and were not parties to the contract between Middlecreek and Doo–It. We exercise unlimited review over questions of law. In re Tax Exemption Applications of Kansas Christian Home, 268 Kan. 859, 865, 2 P.3d 168 (2000).
The defendants assert that joint and several liability is an available remedy only for intentional torts or “where created by the terms or a contract, note, or mortgage.” Yount v. Deibert, 282 Kan. 619, 634, 147 P.3d 1065 (2006). The McAdoos argue that because they never consented to be held jointly and severally liable for damages caused by Doo–It's breaches, and because this is not an intentional tort claim, the district court erred. The Yount court, however, did not address the factual scenario presented here. Here, the district court made factual findings unchallenged on appeal that there were multiple parties each with separate contracts to perform the same work. All of the contracts were breached, giving rise to a specific measure of damage suffered by Middlecreek. As such, there are multiple defendants who are each independently liable for the same damages. Because Middlecreek cannot recover the same damages more than once, and because each defendant is wholly and independently liable for the full amount of the damages, it was not improper for the district court to describe its judgment of damages against the defendants as “joint and several.”
Affirmed.