Opinion
No. 106,240.
2012-08-17
Clifford C. SPARKS, Sr., and Linda Rae Sparks, Appellants, v. PATE–CAMPBELL PROPERTIES, INC., et al., Appellees.
Appeal from Johnson District Court; Gerald T. Elliott, Judge. Douglas J. Patterson and Virginia L. Brady, of Property Law Firm, LLC, of Leawood, for appellants. Scott A. Wissel, of Lewis, Rice & Fingersh, L.C, of Kansas City, Missouri, for appellees.
Appeal from Johnson District Court; Gerald T. Elliott, Judge.
Douglas J. Patterson and Virginia L. Brady, of Property Law Firm, LLC, of Leawood, for appellants. Scott A. Wissel, of Lewis, Rice & Fingersh, L.C, of Kansas City, Missouri, for appellees.
Before PIERRON, P.J., GREEN and LEBEN, JJ.
MEMORANDUM OPINION
LEBEN, J.
When Clifford and Linda Sparks sold some acreage to Pate–Campbell Properties, Inc., the legal description of the land sold was drafted in error so that the deed signed by the Sparkses transferred 34.58 acres instead of the 15.6 acres that had been intended. Pate–Campbell Properties ultimately didn't pay anything extra for the additional land, and the Sparkses sued First American Title Insurance Company, which had prepared the faulty deed, for negligence.
A Kansas statute of limitations required that suit be brought within 2 years after the negligent act giving rise to the claim “first causes substantial injury.” K.S.A. 60–513(b). Here, a faulty legal description caused substantial injury, and the land was transferred more than 2 years before the suit was filed. While there's an exception to the 2–year time limit when “the fact of injury is not reasonable ascertainable,” K.S.A. 60–513(b), the deed was publicly recorded with the Register of Deeds and anyone could have determined from the legal description that the Sparkses had, indeed, transferred way more real estate than they had intended to. We therefore agree with the district court that the Sparkses' suit was barred by the statute of limitations.
Factual and Procedural Background
Clifford and Linda Sparks agreed in 2006 to sell some land in Johnson County to Pate–Campbell Properties, Inc. Under a contract amendment entered into in 2007, the Sparkses agreed to sell 151 acres for about $6.8 million, which would be accomplished in three stages, with the last to take place in 2008. The amended contract called for 15.6 acres to be transferred for $702,000 at the first closing.
But the deed for the first closing had a legal description that covered 34.58 acres. The deed was prepared by the title company handling the transaction for the parties, First American Title Insurance Company. The Sparkses signed the deed on March 8, 2007, and the deed was recorded with the Johnson County Register of Deeds on March 21, 2007.
A second transfer of 21.39 acres took place in May 2007. The parties' contract had called for 28.24 acres to be transferred at the second closing for $1,275,300. Pate–Campbell Properties paid the full amount, but got less acreage, because the parties had become aware that the first deed had transferred more property than intended. The Sparkses signed the deed for the second transfer on May 2, 2007, and the deed was recorded with the Johnson County Register of Deeds on May 8, 2007.
In addition to reducing the acreage for the second transfer, Pate–Campbell Properties agreed to pay the Sparkses $386,850 plus 5 percent interest from May 1, 2007, at the third closing to make up the difference caused by having gotten more acres than it paid for in the first transfer. But the third closing never took place.
In total, the contract between the Sparkses and Pate–Campbell Properties had called for the transfer of 43.84 acres in the first two closings, but nearly 60 acres were actually transferred. The overall contract price amounted to $45,000 per acre; using that price, Pate–Campbell Properties had only paid for 43.84 acres in the first two closings.
The Sparkses filed suit on July 16, 2009, against Pate–Campbell Properties for breach of contract and against First American Title Insurance Company for negligence. The district court granted summary judgment in favor of First American Title Insurance Company, finding that the Sparkses' claim was barred by the 2–year statute of limitations.
The Sparkses settled their claims against Pate–Campbell Properties, but they have appealed the ruling in favor of First American Title Insurance Company to our court. There are no factual disputes, and both parties agree that we must review the legal issues independently, without any required deference to the district court. See Kuxhausen v. Tillman Partners, 291 Kan. 314, 318, 241 P.3d 75 (2010).
Analysis
K.S.A. 60–513(a)(4) provides that an action for negligence must be brought within 2 years. K.S.A. 60–513(b) tells us when the 2–year time clock begins to run—when “the act giving rise to the cause of action first causes substantial injury” unless “the fact of injury is not reasonably ascertainable” until later, in which case the time period begins when “the fact of injury becomes reasonably ascertainable.” With undisputed facts, determining when substantial injury occurred and the limitations period began to run presents a question of law for our determination. See Whittenburg v. L.J. Holding Co., 830 F.Supp. 557, 562–63 (D.Kan.1993).
So we first ask when the claimed negligence of First American Title Insurance Company first caused substantial injury to the Sparkses. That has to have occurred at the first closing, when the Sparkses transferred 34.58 acres while intending only to transfer 15 .6 acres—all for the price that had been agreed upon for a transfer of 15.6 acres.
We then ask whether the fact of injury—that much more land had been transferred than intended or paid for—was reasonably ascertainable. We'll concede that most laypersons can't decipher the sort of legal description that went along with the deed in the first closing. Even most lawyers would have trouble with its metes and bounds description of the property transferred. But after finishing all of the parts that most of us can't understand, the legal description ended with something anyone could decipher: “containing 34.58 acres more or less.” A party expected to transfer 15.6 acres would surely know that something was amiss when the deed transfers a described tract “containing 34.58 acres more or less.”
And in considering whether the fact of injury was reasonably ascertainable, we must also consider that the deeds were recorded. K.S.A. 58–2222 provides that “[e]very ... instrument in writing” that is recorded “shall, from the time of the filing ... with the register of deeds for record, impart notice to all persons of the contents thereof; and all subsequent purchasers and mortgagees shall be deemed to purchase with notice.” (Emphasis added.)
So even if the Sparkses didn't read the legal description at closing (as seems likely), they were certainly on notice of its contents when it was filed with the Register of Deeds. Indeed, “all persons” were on notice of its contents upon filing. That's the purpose of public-recording statutes. (We do not mean to suggest that the Sparkses' rights are greater if they didn't read the deed they signed; that's not the case, either. See Albers v. Nelson, 248 Kan. 575, 578–79, 809 P.2d 1194 [1991] ).
The Sparkses argue that K.S.A. 58–2222 doesn't apply to anyone but later purchasers or mortgagees, noting the last line of the statute referencing such parties. But the statute clearly provides that recording a deed “impart[s] notice to all persons of the contents” of the deed. Our court has confirmed this meaning in prior cases, finding that K.S.A. 58–2222 provides for constructive notice to all parties, including a landowner or seller. See Wright v. Sourk, 45 Kan.App.2d 860, Syl. ¶ 11, 258 P.3d 981 (2011), rev. denied 293 Kan. –––– (2012); Harris v. Neill, No. 101,156, 2009 WL 3082642, at *5 (Kan.App.2009) (unpublished opinion), rev. denied 290 Kan. 1093 (2010).
For a negligence claim, which is what the Sparkses have brought against the title company, the statute of limitations starts to run when the negligent act causes injury if both the act and the resulting injury are reasonably ascertainable by the injured party. Roe v. Diefendorf, 236 Kan. 218, Syl. ¶ 1, 689 P.2d 855 (1984); Campbell v. Hubbard, No. 103,733, 2011 WL 4563075, at *8 (Kan.App.2011) (unpublished opinion), rev. denied 294 Kan. –––– (2012). Here, the negligent act was the use of a legal description covering 34.58 acres instead of 15.6 acres, something that was reasonably ascertainable from the face of the deed—and something that everyone was on notice of after the deed was recorded. From the vantage point of the Sparkses, that negligent act caused injury—they ended up transferring the land for far less per acre than had been agreed upon.
Even so, the Sparkses claim that they didn't suffer substantial injury until after Pate–Campbell Properties failed to go through with the third closing. It's true that the Sparkses tried to solve their problem by working with Pate–Campbell Properties. But the fact that the Sparkses tried nonjudicial remedies that could have fixed the problem doesn't mean that they hadn't already sustained substantial injury or that the statute of limitations wasn't running. See Friends University v. W.R. Grace & Co., 227 Kan. 559, 563, 608 P.2d 936 (1980) (“Fully cognizant that a severe problem existed, Friends elected to seek nonjudicial resolution of the controversy. Simply stated, Friends lost its right to a judicial determination of the dispute [through running of the statute of limitations] by its own delay and inactivity.”).
In sum, the Sparkses first sustained substantial injury when they transferred 34.58 acres—instead of 15.6 acres—while getting only the value agreed upon for the 15.6 acres. Their total injury from two closings that together transferred more land than intended had been sustained by the time the second deed was signed and recorded. And the fact of injury was reasonably ascertainable by reading the deeds at closing or upon the deeds' public recording. The second of the two deeds was recorded in May 2007, and the Sparkses didn't file suit within 2 years. The district court properly determined that the Sparkses' claim was barred by the 2–year statute of limitations.
The district court's judgment is affirmed.