Opinion
No. 106,738.
2012-09-28
TOP CHOICE CONTRACTING, L.L.C, Appellee, v. CLAYMAN PROMOTIONAL GROUP, Appellant, v. Brandon Dockins, Appellee.
Appeal from Wyandotte District Court; Daniel A. Duncan, Judge. Patrick R. Miller, of Miller Law, LLC, of Overland Park, for appellant. Anthony Asher Stein, of The Stein Law Firm, of Kansas City, for appellees.
Appeal from Wyandotte District Court; Daniel A. Duncan, Judge.
Patrick R. Miller, of Miller Law, LLC, of Overland Park, for appellant. Anthony Asher Stein, of The Stein Law Firm, of Kansas City, for appellees.
Before GREEN, P.J., ATCHESON and BRUNS, JJ.
MEMORANDUM OPINION
PER CURIAM.
Clayman Promotional Group (CPG) appeals from a judgment rendered by the district court. The dispute arose out of work that Brandon Dockins, who did business as Top Choice Contracting, performed on a construction project for CPG. Following a bench trial, the district court found CPG to be in breach of contract and also that Dockins was liable for improperly installing the dock doors on the project. As such, the district court entered a judgment against CPG. For the reasons set forth in this opinion, we affirm in part, reverse in part, and remand with directions.
Facts
In 2008, CPG needed room for more office and warehouse space. As such, it decided to construct a new building to meet its needs. Ben Clayman, the president of CPG, was introduced by his father to Brandon Dockins, a sole proprietor doing business as Top Choice Contracting, dayman's father had worked with Dockins in the past. Subsequently, Dockins and a representative of Patterson & Associates accompanied Clayman to look at a possible site for the new building.
CPG purchased the land, which already had a small building on it, and began discussions with Dockins regarding what could be done with the land and the building. According to Clayman, he told Dockins that he had never been involved in commercial construction, so he needed someone who could make sure the project was properly done start to finish. Dockins and Clayman also discussed the cost of the project.
According to Dockins, he gave Clayman a rough estimate as to cost but advised him that the numbers could change once the blueprints were completed. It appears that Dockins suggested to Clayman that CPG could retain a contractor who would be fully accountable for designing and building the entire project. But Clayman refused this option because it was too costly.
Eventually, Clayman presented an estimate to a bank to obtain financing for the project. Although Dockins said he looked it over, he indicated that he was not the one who prepared the estimate. Nevertheless, both men took the estimate to the bank to discuss financing. Apparently, Dockins accompanied Clayman to the bank because he was knowledgeable about the construction of such projects. As the demolition phase began, the bank approved a construction loan.
CPG retained an architect for the project. Although Clayman said Dockins chose the architect, Dockins claims that Clayman picked him. Regardless, the architect drew up plans and specifications for the project and sent CPG the bill. According to Clayman, this surprised him because he thought that the cost of the architect was included in the total cost of the construction project, Clayman asked Dockins if the bill was fair, and he said it was. So, CPG paid for the professional services rendered by the architect.
Around this time, Patterson & Associates obtained two construction permits: one for remodeling the existing building, and another for constructing a new building. Patterson & Associates was listed as the contractor on both permits. During construction, the permits were posted on CPG's office door and eventually on the window to the conference room. According to Dockins, he had brought Patterson & Associates near the beginning of the project because he did not have a contractor's license.
During the project, Clayman had Dockins—rather than Patterson & Associates—make the draws on the bank loan. Dockins admitted that this was unusual, but he viewed his role as a liaison between the owner and the contractor. On the other hand, Clayman testified at trial that he believed that Dockins was the general contractor throughout the project.
In October 2009, Dockins and Clayman had a disagreement regarding the amount CPG owed Dockins for his services. At some point, they reached an oral agreement that the amount was $17,700. According to Clayman, CPG immediately started making payments to Dockins to satisfy this indebtedness.
The oral agreement was later memorialized in writing on November 17, 2009. The written agreement stated that CPG was to pay $1,500 a week, not to exceed $17,700 for the work already completed by Dockins. The written agreement also stated that CPG would pay up to $3,000 for a variety of additional punch-list services that Dockins would subsequently perform. Both Clayman and Dockins signed the agreement.
Dockins, who had previously worked as a sole proprietor doing business as Top Choice Contracting, reorganized as a limited liability company. On December 2, 2009, he registered Top Choice Contracting, LLC with the Kansas Secretary of State. The operating agreement provided that Dockins was the sole member and owner of Top Choice Contracting, LLC. Although Top Choice Contracting, LLC had not officially been registered until December, the written agreement entered into on November 17, 2009, was on Top Choice Contracting, LLC's letterhead. Furthermore, Dockins testified at trial that he assigned all of the rights to receive payment for the work performed by his sole proprietorship to Top Choice Contracting, LLC.
After making several $1,500 payments pursuant to the agreement, CPG refused to make any further payments. Top Choice Contracting, LLC filed suit against CPG on December 8, 2010, to collect the remaining balance on the parties' agreement. In response, CPG filed a counterclaim and a cross-petition against Dockins on December 28, 2010, alleging fraud and breach of contract. Specifically, CPG claimed that Dockins fraudulently represented that he was a qualified general contractor and further claimed that Dockins was responsible for a number of problems with the construction project.
The day before trial, CPG filed a motion to amend its answer to assert that Top Choice Contracting, LLC was not the real party in interest to bring this action. CPG argued the motion the day of the trial and claimed that it had recently found out that Top Choice Contracting, LLC was not a legal entity at the time of the agreement. After hearing the arguments of counsel, the district court denied the motion, stating that the day before trial is too late to file a motion to amend.
After hearing the evidence presented at the bench trial, the district court found that CPG owed Top Choice Contracting, LLC the sum of $10,200 pursuant to the payment agreement. Although the district court found that Dockins was not the general contractor responsible for the entire project and that CPG had failed to prove fraud, it found that Dockins was responsible for the installation of faulty dock doors. As such, the district court found that Dockins owed CPG the sum of $5,250, but the court denied the remaining claims asserted by CPG against Dockins. Thereafter, CPG timely appealed.
Analysis
Real Party in Interest/Assignment of Rights
CPG contends that because Top Choice Contracting, LLC did not exist as a legal entity at the time the parties entered into the oral agreement or at the time the agreement was reduced to writing, it had no interest in the agreement and could not be the real party in interest. This argument, however, is unpersuasive for several reasons.
As this court has previously held, when a defendant fails to timely raise a real party in interest defense, he or she waives it. See O'Donnell v. Fletcher, 9 Kan.App.2d 491, Syl. ¶ 3, 494, 681 P.2d 1074 (1984); Cory v. Straub Intern., No. 105,804, 2012 WL 98495, at *2 (Kan.App.2012) (unpublished opinion). Moreover, we review the denial of a motion to amend a pleading under an abuse of discretion standard. See Klose v. Wood Valley Racquet Club, Inc., 267 Kan. 164, 173, 975 P.2d 1218 (1999). “Judicial discretion is abused when judicial action is arbitrary, fanciful, or unreasonable. If reasonable persons could differ as to the propriety of the action taken by the trial court, then it cannot be said that the trial court abused its discretion. [Citation omitted.]” Unruh v. Purina Mills, 289 Kan. 1185, 1202,221 P.3d 1130 (2009).
Here, CPG filed a motion to amend its answer to assert the real party in interest defense the day before trial. This was more than 6 months after the lawsuit was filed and more than a year and a half since Top Choice Contracting, LLC had filed its articles of organization papers with the Secretary of State. Under K.S.A. 17–7679, the filing of the articles of organization on December 2, 2009, served as notice that Top Choice Contracting, LLC was a separate legal entity from its members. Thus, CPG's real party in interest defense was waived, and we do not find that the district court abused its discretion in denying a motion to amend the day before trial.
Additionally, even if CPG had timely raised the defense, K.S.A. 60–217(a)(3) requires a district court to give the plaintiff an opportunity to join the real party in interest before dismissing the case. This is because the purpose of the real party in interest rule is to ensure that the verdict fully disposes of the cause of action so as to protect the defendant from multiple suits from different parties. See Larson Operating Co. v. Petroleum, Inc., 32 Kan.App.2d 460, 465, 84 P.3d 626 (2004). Here, Dockins—the sole member of Top Choice Contracting, LLC who previously operated the company as a sole proprietorship—was also a party to the lawsuit. If he had any personal claims against CPG relating to the construction project, they would be barred because Dockins did not assert them in this case. See K.S.A. 60–213(a). Thus, all the necessary parties were “at the table” when the bench trial was conducted and CPG was not at risk of being exposed to multiple suits from different parties.
Furthermore, Dockins testified during the bench trial that he had assigned the right to payment under the parties' agreement to Top Choice Contracting, LLC and the district court found his testimony to be credible. In Kansas, it is well-settled that an assignment does not need to be in writing to be enforceable. See Lucky v. Rush, 121 Kan. 279, 246 P. 1004 (1926). Likewise, with limited exceptions that are not applicable to this case, all rights to bring actions to recover debts, money, or things are assignable. See Bolz v. State Farm Mut. Ins. Co., 274 Kan. 420, Syl. ¶ 1, 423, 52 P.3d 898 (2002); Roof–Techs Int'l., Inc. v. State, 30 Kan.App.2d 1184, 1202–03, 57 P.3d 538 (2002). Accordingly, we find that there is substantial evidence in the record to support the district court's conclusion that Dockins had assigned any right to payment he may have under the agreement to Top Choice Contracting, LLC.
Adequacy of Pleading
CPG next contends that it did not have proper notice of the claim against it because Top Choice Contracting, LLC failed to adequately plead that Dockins, doing business as Top Choice Contracting, had assigned the limited liability company his rights under the agreement. In Kansas, a petition is to include “a short and plain statement of the claim showing that the pleader is entitled to relief” and a demand for the relief sought. K.S.A. 60–208(a)(1)–(2). As such, a pleading must give the opposing party fair notice of the claim asserted and the grounds upon which it rests—the pleading does not have to thoroughly explain a party's theory of relief. See Turon State Bank v. Bozarth, 235 Kan. 786, 788, 684 P.2d 419 (1984).
Here, the petition indicated that Top Choice Contracting, LLC was suing on the written agreement entered into by CPG on November 17, 2009. As indicated above, the written agreement was on Top Choice Contracting, LLC's letterhead and was signed by Clayman. Hence, the petition placed CPG on notice that Top Choice Contracting, LLC was attempting to collect any money due and owing under the agreement. Thus, we conclude that the petition was adequate because it placed CPG on fair notice of the claim asserted, the grounds upon which the claim rested, and the relief sought.
Exclusion of Parol Evidence
CPG also contends that there was an oral agreement between the parties—entered into on or about October 14, 2009—in which it was agreed that CPG would pay Dockins d/b/a Top Choice Contracting the sum of $17,700 for the work done on the construction project prior to that time. According to CPG, the written agreement signed on November 17, 2009, simply memorialized the oral agreement. Moreover, CPG contends that it had already made payments on the $17,700 indebtedness prior to the written agreement being signed by the parties.
At trial, CPG attempted to enter into evidence some checks that it claimed were payments made to reduce the indebtedness prior to November 17, 2009. The district court, however, found that the checks were inadmissible as parol evidence. CPG argues that the district court erred in failing to admit the checks into evidence. We agree.
Although Top Choice Contracting, LLC, claims this issue should be reviewed under an abuse of discretion standard, the applicability of the parol evidence rule is an issue of substantive law. See Robertson v. McCune, 205 Kan. 696, 700, 472 P.2d 215 (1970). And this court has unlimited review over matters of law as well as the interpretation of contracts. See State v. Riojas, 288 Kan. 379, 388, 204 P.3d 578 (2009). When a contract is unambiguous, it is error to admit extrinsic evidence of intent; but if the written agreement is silent on a vital point, parol evidence is admissible to aid in construction of the agreement. See Barbara Oil Co. v. Kansas Gas Supply Corp., 250 Kan. 438, 452, 827 P.2d 24 (1992); Butts v. Lawrence, 22 Kan.App.2d 468, 473, 919 P.2d 363 (1996).
Here, the written agreement is silent on the specific amount due and owing by CPG to Dockins d/b/a Top Choice Contracting as of November 17, 2009. Even though the written agreement states that CPG is to pay Dockins d/b/a/ Top Choice Contracting the sum of $1,500 every Friday until the indebtedness is paid in full, nowhere does it indicate a specific date on which the payments were to start. Furthermore, the written agreement states that the amount due for the work already completed on the construction project is “ not to exceed $17,700.”
When a contract is silent as to a specific point (as opposed to ambiguous), parol evidence is admissible only when the point at issue is vital. See Quenzer v. Quenzer, 225 Kan. 83, 85–86, 587 P.2d 880 (1978); Ives v. McGannon, 37 Kan.App.2d 108, 118, 149 P.3d 880 (2007). In the present case, we find that it was vital for the district court to determine at what point in time the $17,700 was agreed upon by the parties. Moreover, we conclude that it was vital that the district court determine which of the payments CPG made were intended to reduce the indebtedness after the sum of $17,700 was agreed upon.
“There is wide distinction between an attempt to contradict the terms of a written instrument and to explain the circumstances and conditions under which it was executed and delivered.” Souder v. Tri–County Refrigeration Co., 190 Kan. 207, 212, 373 P.2d 155 (1962); see Central Natural Resources, Inc. v. Davis Operating Co., 288 Kan. 234, 244–45, 201 P.3d 680 (2009). Here, CPG does not dispute that it owed Dockins d/b/a/ Top Choice Contracting $17,700 for the work done on the construction project prior to the agreement of the parties. Rather, CPG simply seeks to be credited for the payments it made following the oral agreement. We, therefore, remand this case to the district court to hold a hearing to determine the date the parties agreed upon $17,700 as the amount due and owing, and—if appropriate based on the evidence presented—to recalculate the amount of damages.
District Court's Findings and Conclusions
CPG asserts that the district court was inconsistent in finding that Dockins d/b/a/ Top Choice was not the general contractor for the construction project while, at the same time, finding that Dockins failed to properly install the dock doors. Because this issue deals with the district court's factual findings and conclusions of law, we review the record to determine whether substantial competent evidence supports the district court's fact findings, and whether those facts support its conclusions of law. See Hodges v. Johnson, 288 Kan. 56, 65, 199 P.3d 1251 (2009). Here, based on our review of the record, we find no inconsistency between the damage award for Dockins' failure to properly install the dock doors and the finding that he was not the general contractor.
Simply because Dockins was not the general contractor on the construction project does not mean that there was no work that he performed for which he was personally liable. Clayman testified at trial that he paid Dockins extra so that trucks could pull right up to the dock doors and employees could unload the trailers with forklifts. But, according to Clayman, the doors were not properly installed and the truck trailers did not line up with the doors. Based on this evidence, as well as on Dockins' testimony regarding his personal involvement with the dock doors, the district court was convinced that Dockins had breached his contract by failing to properly install the doors. Thus, we conclude that there was substantial evidence presented at trial upon which a reasonable person could find that Dockins was not the general contractor on the project but that he was personally responsible for the faulty installation of the dock doors.
Quantum Meruit
Finally, CPG briefly argues that the district court could not award Top Choice Contracting, LLC quantum meruit damages because the limited liability company did not exist at the time the services were performed. But our review of the record reveals that the district court based its decision on breach of contract and not under a quantum meruit theory. On the one hand, the district court found that CPG had breached its contract to pay $17,700 for the work performed on the construction project, and on the other hand, it found that Dockins had personally breached the contract by failing to install the dock doors correctly. Accordingly, we do not find that the district court erred.
Affirmed in part, reversed in part, and remanded with directions.