Opinion
Nos. 106,690 106,691.
2012-09-7
RONALD L. JONES CHARITABLE TRUST, R.L. Jones, Trustee, Appellee, v. Fred C. SANDERS, Gloria J. Sanders, and Bahm Demolition, Inc., Appellees, v. Jerry L. Penner, Sr., Intervenor/Appellant.
Appeal from Shawnee District Court; Larry D. Hendricks, Judge. Christopher W. Sook, of Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C., of Topeka, for appellants. Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, for appellees Fred C. Sanders, Gloria J. Sanders, and Bahm Demolition.
Appeal from Shawnee District Court; Larry D. Hendricks, Judge.
Christopher W. Sook, of Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C., of Topeka, for appellants. Stephen P. Weir, of Stephen P. Weir, P.A., of Topeka, for appellees Fred C. Sanders, Gloria J. Sanders, and Bahm Demolition.
Joe Little, of Auburn, for appellee Ronald L. Jones Charitable Trust, R.L. Jones, Trustee.
Before PIERRON, P.J., BUSER and LEBEN, JJ.
MEMORANDUM OPINION
LEBEN, J.
This case involves four main parties, two lawsuits, one piece of land, and three claimed agreements to transfer that land. We'll start with a quick tour of the basic facts, the legal disputes over this piece of real estate, and our resolution of those disputes.
In 2006, Ronald Jones, as trustee for his trust, entered a contract to sell the property to Jerry Penner. But Fred Sanders (on behalf of himself and his wife) then filed an affidavit of equitable ownerships—based on an earlier 2002 contract with Jones. And Bahm Demolition, Inc., which claimed rights to the property under a contract to buy it from the Sanderses, filed a mechanic's lien against the property, claiming that Bahm Demolition had done work on the property. Those filings effectively prevented Jones from transferring the property to Penner since Jones no longer had clear title to it.
Jones filed an action for quiet title, i.e., a ruling that he, not the Sanderses or Bahm Demolition, had proper title to the land; Jones' suit also brought intentional-tort claims against the Sanderses and Bahm Demolition. Penner intervened in the lawsuit, seeking specific performance of his 2006 contract to buy the property and alleging his own tort claims against the Sanderses and Bahm Demolition. The Sanderses and Bahm Demolition filed counterclaims against Jones and Penner. In 2007, the district court granted summary judgment against all of the parties' tort claims and against Jones' claim for quiet title.
In 2008, after a settlement conference with all parties except Penner (whose tort claims had been dismissed), a mediator reported that a settlement agreement had been reached for Jones to sell the property to Bahm Demolition. Two days later, Penner filed a separate lawsuit seeking injunctive relief to prevent that sale and to order specific performance of his 2006 contract with Jones. In 2011, the district court ordered that the settlement agreement be enforced, lifted a temporary restraining order that prevented sales to anyone other than Penner, and dismissed Penner's lawsuit.
On appeal, Penner and Jones argue that the district court erred by its 2011 ruling enforcing the settlement agreement and by its 2007 ruling eliminating their tort claims. Jones argues that there was no meeting of the minds for a settlement, and Penner argues that the settlement agreement isn't enforceable because it wasn't in writing. Jones and Penner argue that granting summary judgment on their tort claims and Jones' claim for quiet title was premature because questions of material fact remained. Penner also argues that the district court erred by denying his motion for default judgment seeking specific performance against Jones because Jones had never filed a written answer to the petition.
We will briefly summarize our rulings, which are explained later in the opinion:
• The district court erred by ordering enforcement of the settlement agreement because a settlement agreement that includes an interest in land must be in writing to be enforceable under the statute of frauds.
• The district court erred in eliminating some of the tort claims because there were questions of fact remaining for a jury. There was evidence in the record, when viewed in the light most favorable to Penner and Jones, that could lead a reasonable juror to find in their favor on their claims for tortious interference with a contract and on Jones' claim for slander of title against the Sanderses and Bahm Demolition.
• Jones' claim for quiet title also should be reinstated because questions of fact remain to determine who has valid interests in the property.
• The district court didn't err by denying Penner's motion for default judgment because it was reasonable to wait to sort out the various claims to this property before granting the relief Penner's suit sought—specific performance requiring sale of the property to him.
We therefore reverse the district court's order to enforce the settlement agreement; the district court's grant of summary judgment on Jones' action for quiet title, his claims of tortious interference with a contract against the Sanderses and Bahm Demolition, and his claim of slander of title against the Sanderses and Bahm Demolition; and the district court's granting of summary judgment on Penner's claims for tortious interference with a contract against the Sanderses and Bahm. We affirm the granting of summary judgment for other tort claims and the district court's denial of Penner's motion for default judgment.
Factual Background
In 2002, Ronald Jones, as trustee for the Ronald L. Jones Charitable Trust, entered into a written contract with Fred and Gloria Sanders for the sale of one tract of commercial real estate located in Topeka. The contract provided that the transaction must be closed on or before November 5, 2002. One copy of the contract incorporated a handwritten Schedule B, which set out the purchase price and some conditions of the purchase. Those conditions provided that Fred Sanders would first find a renter and then pay $15,000 down, $500 a month for 36 months, and a balloon payment of $15,000 at the end for a total of $48,000. The Sanderses report that they entered into a contract to sell the property to Bahm Demolition, Inc. in 2005.
On February 27, 2006, Jones entered into another contract with Jerry Penner to sell the same property for $70,000. The next day, Fred Sanders came to Jones with a $50,000 check saying that he wanted to complete the sale agreed to in the 2002 contract. Jones declined to accept the check; he said that the 2002 contract had terminated because the sale from Jones to the Sanderses wasn't closed on November 5, 2002.
On March 2, 2006, Fred Sanders filed an affidavit of equitable interest in the property. On March 15, 2006, Bahm Demolition filed a mechanic's lien on the property. Those documents represented public claims of an interest in the real estate, effectively preventing transfer with a clear title.
In May 2006, Jones filed suit against the Sanderses and Bahm Demolition (case No. 06–C–777), seeking to quiet title ( i.e., to obtain a ruling that he has clear title and the Sanderses and Bahm Demolition had no valid interests) and alleging slander of title and tortious interference with his 2006 contract with Penner. Penner intervened, also alleging tortious interference with the real-estate sales contract against the Sanderses and Bahm Demolition. The Sanderses and Bahm Demolition filed counterclaims seeking a declaratory judgment affirming their interests and granting specific performance of the 2002 contract; they also asserted various tort claims.
In April 2007, the district court granted summary judgment against all of the tort claims, which included claims of tortious interference with a contract, slander of title, conspiracy to slander title, intentional infliction of emotional distress, tortious interference with a prospective business advantage or relationship, civil conspiracy, and misrepresentation (fraud). The district court also granted summary judgment in favor of the Sanderses and Bahm Demolition on Jones' quiet-title claim. The district court denied motions for summary judgment by Jones and Bahm Demolition on their underlying claims to the real estate and denied Jones' motion to amend his petition to include a claim for punitive damages. In July 2007, the district court permitted the Sanderses to amend their petition to change the claim for specific performance to a claim for breach of contract. In January 2008, the district court made a journal entry to clarify that Penner was dismissed as a party because all of his claims had been eliminated by the April 2007 order.
In April 2008, the three remaining parties participated in a settlement conference, after which the mediator—another district court judge—informed the district court through a docket entry that the case had been settled. Two days later, Penner filed a new lawsuit (case No. 08–C–550), seeking specific performance of the 2006 contract and injunctive relief against Jones to prevent the sale of the property to Bahm Demolition as the result of the settlement conference. Two weeks later, the district court issued a temporary restraining order to prevent Jones from selling the property.
The result of the 2008 settlement conference was never put down in a written document that all parties could agree upon. Instead, the parties exchanged correspondence disagreeing about the terms of their purported agreement. In March 2011, the district court granted a motion by the Sanderses and Bahm Demolition to enforce the settlement agreement and ordering that the property be sold to Bahm Demolition. The district court concluded that there was an enforceable settlement agreement and that the mediator could testify about the terms of the agreement.
In June 2011, Penner moved for default judgment against Jones, in case No. 08–C–550, a suit in which only Penner and Jones were parties. Penner sought specific performance of the 2006 contract, which would result in the property being sold to Penner, not Bahm Demolition.
On July 13, 2011, the district court lifted the temporary restraining order, denied Penner's motion for default judgment, and dismissed Penner's claim for specific performance in case No. 08–C–550. The district court ordered Jones to sell the property to Bahm Demolition. Penner appealed, but Jones cross-appealed various rulings that had been made against him. The Sanderses and Bahm Demolition did not file any cross-appeals of rulings made against them, and they contend on appeal that the district court ruled correctly on the issues raised here.
Penner filed a cash appeal bond, and the district court stayed enforcement of the settlement agreement pending this appeal.
Analysis
I. The District Court Erred in Enforcing the Settlement Agreement.
Penner and Jones, on cross-appeal, argue that the settlement agreement isn't enforceable because there was no meeting of the minds and because it wasn't reduced to writing. After the district court concluded the settlement agreement was binding, which meant the property would be sold to Bahm Demolition, the court dismissed Penner's suit, which sought to enforce his right to buy the property. Penner also appeals that ruling. The Sanderses and Bahm Demolition assert that the district court should be affirmed because a valid settlement agreement was reached.
The Sanderses and Bahm Demolition point to the standard rules governing lawsuit settlement agreements. Such agreements are a type of contract and are governed by contract law. Farm Bureau Mutual Insurance Co. v. Progressive Direct Insurance Co., 40 Kan.App.2d 123, 129, 190 P.3d 989 (2008). A settlement agreement substitutes contractual performance for what was previously claimed to be due in the underlying lawsuit, and the rights and liabilities of the parties become measured by the terms of the settlement agreement. Boos v. National Fed'n of State High School Ass'ns, 20 Kan.App.2d 517, 523, 889 P.2d 797 (1995). When parties agree to settle a dispute, neither party is permitted to repudiate the agreement. In re Estate of Hessenflow, 21 Kan.App.2d 761, 774, 909 P.2d 662 (1995), rev. denied 259 Kan. 928 (1996).
Penner points to the statute of frauds, which requires that certain agreements be in writing to be enforceable. In Kansas, the statute of frauds, adopted by our legislature as K.S.A. 33–106, provides that a contract for the sale of land cannot be enforced unless there's some document showing the terms of the agreement and signed by the party against whom someone is trying to enforce the agreement. Here, Bahm Demolition (supported by the Sanderses) is trying to enforce a settlement agreement requiring the sale of land, but there is no writing containing the terms of the agreement signed by Jones, the seller against whom they seek to enforce the agreement.
To the extent that this issue is decided by whether the statute of frauds applies, it's a question of statutory interpretation. Although we certainly give consideration to a district court's statutory interpretation, appellate courts must interpret statutes independently, without any required deference to the district court. See Scott v. Hughes, 294 Kan. 403, Syl. ¶ 3, 275 P.3d 890 (2012).
The statute of frauds is intended to eliminate concerns about the reliability of oral evidence. General Dynamics Corp. v. United States, 563 U.S. ––––, 131 S.Ct. 1900, 1908, 179 L.Ed.2d 957 (2011); Waddle v. Elrod, 367 S.W.3d 217, 223 (Tenn.2012) (“The Statute of Frauds also fosters certainty in transactions by ensuring that contract formation is not ‘based upon loose statements or innuendoes long after witnesses have become unavailable or when memories of the precise agreement have been dimmed by the passage of time.’ “ [Citation omitted.] ). Accordingly, oral agreements for the sale of real estate are generally unenforceable. Cooper v. Re–Max Wyandotte County Real Estate, Inc., 241 Kan. 281, 290, 736 P.2d 900 (1987); Ayalla v. Southridge Presbyterian Church, 37 Kan.App.2d 312, 316–17, 152 P.3d 670 (2007).
Here, the district court thought that this rule did not apply because this was a settlement agreement, concluding that “settlement agreements need not be in writing to be enforceable under Kansas case law,” quoting Lewis v. Gilbert, 14 Kan.App.2d 201, 203, 785 P.2d 1367 (1990). But elsewhere in Lewis, a case that didn't involve real estate, the court said: “ Unless required by statute or court rule, settlement agreements do not have to be reduced to writing to be valid.” (Emphasis added.) Lewis, 14 Kan.App.2d at 202 (citing 15A Am.Jur.2d, Compromise and Settlement § 10). And the statute of frauds is such a statute. See Blegen, What's Your Authority? And Other Issues in Oral Settlement Agreements, 69 J.K.B.A. 26, 31 (May 2000). As such, the Kansas Supreme Court has cited the statute of frauds in holding that a settlement agreement that includes an interest in land must be in writing to be enforceable. Dougan v. Rossville Drainage Dist., 270 Kan. 468, 488, 15 P.3d 338 (2000); see Kansas VIP, Inc. v. KDL, Inc., No. 103,852, 2011 WL 767860, at *6 (Kan.App.2011) (unpublished opinion) (noting that a settlement agreement to execute a lease must be in writing).
Here, the settlement agreement—in which Jones allegedly agreed to sell the land to Bahm Demolition for $72,000—was neither put in writing nor signed by Jones. The only document in the record reflecting such an agreement is a motion to enforce the settlement agreement filed by the Sanderses and Bahm Demolition. Exhibits attached to court filings reflect disagreement on terms but don't include any drafts of a proposed agreement, and there surely was never an agreement signed by Jones. Thus, the settlement agreement doesn't conform to the statute of frauds, which requires any agreement for the sale of land to be in writing.
This court has noted a judicial-admission exception that allows for the enforcement of an oral settlement agreement to transfer real property in very limited circumstances. Under that exception, “a signature is unnecessary when there is a court transcript providing the terms of the agreement and the oral assent of the party to be charged with the agreement that has been fairly stated on the record of that proceeding.” In re Takusagawa, 38 Kan.App.2d 401, 409, 166 P.3d 440,rev. denied 285 Kan. 1174 (2007). Thus, a wife's in-court statement agreeing to the terms of an oral separation agreement that included the transfer of real estate was a judicial admission that satisfied the statute of frauds. 38 Kan.App.2d at 411. But here, the terms of the settlement agreement never were articulated on the record of a hearing, there is no transcript of the settlement conference, and Jones didn't confirm in any recorded setting that he agreed to the terms. So the judicial-admission exception doesn't apply.
We note one other published case in which our court found that a settlement agreement including a provision to sell real estate was enforceable—though not signed by the parties—when it was incorporated into the court's order after a hearing. But in that case, Kopp v. Kopp, 44 Kan.App.2d 573, 239 P.3d 878 (2010), neither party challenged the validity of the contract, and neither party appealed from the district court's conclusion that a real-estate contract had been created. Thus, our court did not consider an argument on appeal that the settlement agreement was unenforceable under the statute of frauds. Even if it had—and even if the mere existence of a court journal entry containing the terms of the settlement were enough to make an agreement for the sale of real estate enforceable—that still wouldn't make the agreement in our case enforceable. The district court's August 2011 journal entry ordered that the property be conveyed according to the terms of the settlement agreement, but it didn't state what the terms were. And the March 2011 memorandum decision and order didn't include any terms of the settlement agreement either. The record doesn't include any court order that could be construed as creating or incorporating the terms of the settlement agreement.
Our conclusion that the claimed settlement agreement cannot be enforced is supported by the policy behind the statute of frauds. Had the settlement agreement been in writing and signed as required, there would be no need to hear testimony 4 years after the settlement conference about the terms claimed to have been agreed upon. The statute of frauds exists to eliminate concerns about the reliability of oral testimony. See General Dynamics, 131 S.Ct. at 1908. The district court erred in granting the motion to enforce the settlement agreement because it wasn't in writing and signed by Jones.
The court's ruling dismissing Penner's claim for specific performance against Jones was based on the conclusion that Jones' settlement agreement with Bahm Demolition was enforceable; that ruling is in error as well since the premise upon which it was based was legally incorrect. The district court's order dismissing Penner's claim is therefore reversed and the claim reinstated.
II. The District Court Erred by Granting Summary Judgment in Favor of the Sanderses and Bahm Demolition for Claims for Tortious Interference with a Contract and Quiet Title, and by Granting Bahm Demolition Summary Judgment on Jones' Claim for Slander of Title,
Penner and Jones are appealing several decisions made by the district court in 2007 in case No. 06–C–777. Penner argues that the district court erred by dismissing his claims against the Sanderses and Bahm Demolition for tortious interference with a contract. The Sanderses and Bahm Demolition argue that if we first reverse the district court's decision to enforce the settlement agreement (which we've now done), we should simply send the case back to the district court to sort out all the other questions on appeal because the case would no longer have a final judgment, which is normally a prerequisite to the right to appeal. The district court had granted Bahm Demolition's motion for summary judgment and had granted summary judgment on the court's own motion in favor of the Sanderses on Penner's claims for tortious interference with a contract.
Jones appeals the district court's granting of summary judgment in favor of Bahm Demolition and the Sanderses on Jones' claims to quiet title, for tortious interference with a contract, for slander of title, for conspiracy to slander title, and for intentional infliction of emotional distress. Jones also asserts that the district court should have granted his motion for summary judgment on these claims. The district court found that the claims were merely conclusory allegations and that no reasonable person could find in favor of any of the parties' tort claims, including Jones' claims for slander of title.
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. Osterhaus v. Toth, 291 Kan. 759, 768, 249 P.3d 888 (2011). When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. To preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence. 291 Kan. at 768. We review a summary-judgment ruling independently, without any required deference to the district court. See Kwchausen v. Tillman Partners, 291 Kan. 314, 318, 241 P.3d 75 (2010). But we must resolve all facts and inferences that may be reasonably drawn from the evidence in favor of the party against whom the ruling is sought. Osterhaus, 291 Kan. at 768.
We have concluded that the district court granted summary judgment to the Sanderses on the court's own motion. We should note that the Sanderses did file a response to the Bahm Demolition motion for summary judgment, and in it the Sanderses purported to “join in” the Bahm Demolition motion; the Sanderses also set out two pages of additional factual contentions. But this filing by the Sanderses came nearly 3 weeks after the court's deadline for summary-judgment motions, the district court made no mention of it in its ruling, and Bahm Demolition's motion—to which the Sanderses replied—did not seek summary judgment against the Sanderses. In addition, were we to treat the Sanderses' “reply” as its own summary-judgment motion, the district court ruled before the deadline for responding to a summary-judgment motion would have expired. We therefore have concluded that the court granted summary judgment to the Sanderses on its own motion.
Even so, the district court has the inherent power to dispose of litigation on its own motion if it is conclusive that there remains no genuine issue as to any material fact and that one of the parties is entitled to judgment as a matter of law. Montoy v. State, 275 Kan. 145, 151–52, 62 P.3d 228 (2003). When doing so, however, the district court must give the party against whom judgment might be entered notice of the potential summary-judgment ruling and an opportunity to present evidence that might show the existence of a material factual dispute or a legal issue precluding summary judgment. See Wright, Miller, Kane & Marcus, 10A Fed. Prac. & Proc. Civ. § 2719 at 314–15 & nn. 16–17 (3d ed.1998). If there is a genuine factual dispute as to a material fact, the district court's mere surmise or belief that a party can't prevail at trial doesn't justify summary judgment unless the dispute is a sham, frivolous, or so unsubstantial that it would be obviously futile to try it. Montoy, 275 Kan. at 152.
Before going further, we must address the argument made on appeal by the Sanderses and Bahm Demolition that this court shouldn't consider any other issues if it reverses the order to enforce the settlement agreement. We start with the provision found in K.S.A.2011 Supp. 60–2102(a)(4), which governs the rulings we may review on appeal: “In any appeal or cross appeal from a final decision, any act or ruling from the beginning of the proceedings shall be reviewable.” Here, the district court had entered a final judgment, and the parties properly raised the issues before us. Reversing one ruling of the district court doesn't make its other rulings in the case nonfinal for appellate purposes. By the plain language of the statute, this court has jurisdiction to review “any act or ruling from the beginning of the proceedings,” which includes the pretrial rulings under appeal here. a. The District Court Erred in Granting Summary Judgment Against the Claims Against the Sanderses for Tortious Interference with a Contract.
The district court dismissed claims by both Penner and Jones of tortious interference with a contract against the Sanderses and Bahm Demolition because it found that no reasonable person could find in favor of Penner or Jones. Specifically, the district court found that “no reasonable person could find the parties on either side acted wrongfully in asserting an interest in the Property” because the parties acted based on differing—but reasonable—interpretations of the 2002 contract between Jones and the Sanderses. As to the Sanderses, Penner argues that dismissal of his claims was premature because facts could be revealed at trial that could lead to the determination that the Sanderses had no interest in the property and that Fred Sanders' filing on their behalf of an affidavit of equitable interest was an act of tortious interference, designed only to stop Jones from carrying out the real-estate-sale contract with Penner.
We must first consider the legal basis for a tortious-interference-with-contract claim. A person who induces or causes a breach of contract, without justification, is answerable for any damages caused. Burcham v. Unison Bancorp, Inc., 276 Kan. 393, 423, 77 P.3d 130 (2003). The essential elements to show tortious interference with a contract are (1) a contract, (2) the wrongdoer's knowledge of the contract, (3) the intentional procurement of a breach of the contract, (4) the absence of justification, and (5) resulting damages. Burcham, 276 Kan. at 423;Byers v. Snyder, 44 Kan.App.2d 380, 394, 237 P.3d 1258 (2010); PIK Civ. 4th 124.91.
Tortious interference with a contract is based on malicious conduct by the defendant. Burcham, 276 Kan. at 425;Dickens v.. Snodgrass, Dunlap & Co., 255 Kan. 164, 169, 872 P.2d 252 (1994). Not all interference with a contractual relationship is tortious because a person may be privileged or justified to interference in certain situations. Burcham, 276 Kan. at 425;Dickens, 255 Kan. at 169. Generally, a defendant's act is justified when exercising a right equal or superior to that of the plaintiff, or in the pursuit of a lawful purpose, but only if the right is as broad as the act and covers the means used in addition to the motive and purpose. Dickens, 255 Kan. at 170. The justification defense is available for exceptional circumstances where there is no actual or legal malice and no tort committed. Turner v. Halliburton Co., 240 Kan. 1, 13, 722 P.2d 1106 (1986).
In some instances, a defendant may be able to show that he was privileged to interfere to further his own interests. See Turner, 240 Kan. at 13;Linden Place v. Stanley Bank, 38 Kan.App.2d 504, 513, 167 P.3d 374 (2007). In other words, a person using fair means in good faith and with justification may not be liable in damages for interfering with another's contractual rights in certain situations. Turner, 240 Kan. at 13.
The issues of a defendant's motive and the presence or absence of malicious conduct are typically questions for a jury. Burcham, 276 Kan. at 425;M West, Inc. v. Oak Park Mall, 44 Kan.App.2d 35, 56, 234 P.3d 833 (2010). Likewise, whether a defendant acted in good faith is a question of fact. St. Catherine Hospital of Garden City v. Rodriguez, 25 Kan.App.2d 763, 765, 971 P.2d 754 (1998). The following factors should be considered to determine whether a defendant's conduct is improper:
“ ‘(1) the nature of the defendant's conduct; (2) the defendant's motive; (3) the interests of the other with which the defendant's conduct interferes; (4) the interests sought to be advanced by the defendant; (5) the social interests in protecting the freedom of action of the defendant and the contractual interests of the other; (6) the proximity or remoteness of the defendant's conduct to the interference; and (7) the relations between the parties.’ “ Burcham, 276 Kan. at 425 (quoting Reebles, Inc. v. Bank of America, N.A., 29 Kan.App.2d 205, 212, 25 P.3d 871 [2001] ).
See PIK Civ. 4th 124.93.
Having reviewed the legal requirements, we return to the tortious-interference claims in our lawsuit. To avoid summary judgment on the tortious-interference claim, Penner and Jones must point to evidence in the record to support each of the tort's five essential elements. See Linden Place, 38 Kan.App.2d at 513. And Penner and Jones have the burden of showing some evidence that the conduct of the Sanderses was malicious—in other words, a showing that they intentionally acted to do a harmful act without reasonable justification or excuse. 38 Kan.App.2d at 513; PIK Civ. 4th 103.05 (“Malice is the intent to do harm without any reasonable justification or excuse.”).
Here, the Sanderses didn't move for summary judgment, so Penner and Jones didn't have the opportunity to point to evidence to support the five essential elements of a claim for tortious interference of a contract. Rather, the district court granted summary judgment in the Sanderses' favor on its own motion—without providing advance notice of the possibility that the court would grant summary judgment on its own motion. But whether on a motion filed by the Sanderses or on the court's own motion, the court was required to give Penner and Jones the benefit of all reasonable inferences that could have been drawn from the relevant facts. See Montoy, 275 Kan. at 152.
In this light, there is evidence in the record that shows that a contract existed between Jones and Penner. There is no dispute that Fred Sanders filed an affidavit of equitable interest, on behalf of himself and his wife, on March 2, 2006. The filing caused Jones to breach his real estate contract with Penner, resulting in damages to both. Reasonable minds could differ as to whether the Sanderses had knowledge of Jones' contract with Penner and whether Sanders' filing his affidavit was justified, but these are questions for a jury.
Let's consider the evidence on these questions. Fred Sanders testified in his deposition that he became aware of the Jones–Penner contract several months after the date on the contract, which was February 27, 2006. Sanders testified that he brought a $50,000 check to Jones on February 28 to close the 2002 contract. Sanders further testified: “And at that time he told me he was doing something different. He did not tell me he was—anything other than I'm doing something different.” But Sanders agreed that Jones had told him that he was talking to Penner. Jones testified that Sanders “got hot” when he told him a month earlier, in January, that he had talked to Penner about selling Penner the property. Jones testified that Sanders was aware of Penner's involvement when he brought the check February 28: “I had told Fred before I went to see Penner [and] that Penner has the money, says he has the money and he wants to buy it and Fred—I asked him then [in January], why don't you and Bahm go ahead and buy it.” Sanders testified that he “had figured out that [Jones] was not going to honor my contract.” Sanders testified that he filed the affidavit March 2 to protect his interest in his 2002 contract.
Taking the evidence in the light most favorable to Penner and Jones, a reasonable fact-finder could conclude that Fred Sanders knew about the Jones–Penner contract when he filed the affidavit of equitable interest. Knowledge of the precise terms of a contract isn't necessary to support a tortious-interference claim. Cohen v.. Battaglia, 41 Kan.App.2d 386, 395, 202 P.3d 87 (2009), rev. granted 289 Kan. 1277 (2010). It is sufficient that the defendant had facts that would lead a reasonable person to conclude that a contract existed. 41 Kan.App.2d at 395 (citing Kelly v. Galveston County, 520 S.W.2d 507, 513 [Tex. App, 1975] ). The timing of offering to pay $50,000 in a lump sum only 1 day after Jones entered into a contract with Penner, along with other circumstances, leads to a reasonable inference that Sanders was aware of the Jones–Penner contract. To be sure, this isn't conclusive from the evidence in the record. But especially given that the court did not provide advance notice of the possibility that it would grant summary judgment on its own motion—and Jones and Penner thus didn't have the opportunity to provide additional supportive evidence—the grant of summary judgment here was improper.
The district court may prove to be correct that Jones and Penner are unlikely to prevail at trial because the Sanderses' action was justified (by their reasonable belief that they still had contractual rights to the property), but such a belief doesn't justify granting summary judgment here. See Montoy, 275 Kan. at 152. After all, Jones testified that he and the Sanderses entered into the 2002 contract for the sole purpose of giving the Sanderses better standing to argue a land-use issue and that neither party intended to fulfill the contract. Jones testified that is why the contract required closing within 5 days. Jones testified that he intended for the contract to expire November 5, 2002, and that Schedule B, which specified payment terms that couldn't have been fulfilled within 5 days, was added to the contract without his knowledge.
So there is evidence in the record from which a reasonable juror could conclude that the 2002 contract wasn't valid after November 5, 2002, that the Sanderses knew this, and that the Sanderses weren't justified in filing the affidavit of equitable interest. We reverse the grant of summary judgment in favor of the Sanderses on Jones and Penner's claims of tortious interference with a contract because a question of fact for the jury remains in dispute. b. The District Court Erred in Granting Summary Judgment Against the Claims of Tortious Interference with a Contract Against Bahm Demolition.
In addition to granting summary judgment against the tortious-interference claim brought against the Sanderses, the district court also granted summary judgment against the tortious-interference claim brought against Bahm Demolition. But Penner and Jones appear to have a stronger claim against Bahm Demolition than against the Sanderses. There is evidence in the record that David Bahm knew about the Jones–Penner contract when he filed a mechanic's lien as the claimant on behalf of Bahm Demolition. In addition, there appears to have been no viable legal basis for Bahm Demolition to file a mechanic's lien against this property.
As to knowledge of the Jones–Penner contract, Bahm testified that Jones told him about the contract during a phone conversation, and Bahm's attorney confirmed that the conversation occurred March 15, “the same day the lien was filed.” Bahm later denied that he knew about the contract before he filed the lien. But Bahm testified that he received the phone call before filing the lien. Bahm said he filed the lien “[b]ecause of the phone call that he made to me earlier that morning telling me that I was no longer going to get the piece of property and that I was basically out.”
Bahm Demolition filed the mechanic's lien March 15, claiming that Jones owed Bahm Demolition $22,500 for professional fees, license and permit fees, and license and grant preparation. But a mechanic's lien is available only when someone furnishes labor, equipment, or materials for the improvement of real property under a contract with the owner (or, in some cases, the owner's contractor). See K.S.A. 60–1101, 60–1103. Bahm admitted that he never had an agreement to make improvements on the property or provide labor or materials to improve the property. And Jones didn't pay Bahm Demolition to release its lien, which was released in December 2006. So there surely is evidence in the record—when viewed in the light most favorable to Jones and Penner and giving them the benefit of all reasonable inferences that may be drawn from relevant facts—that makes it possible for a reasonable juror to conclude that Bahm Demolition filed the mechanic's lien without justification for the purpose of interfering with the Jones–Penner contract. The district court erred in granting summary judgment in favor of Bahm Development on Jones' and Penner's claims of tortious interference with a contract; its decision to do so is reversed and the claims are reinstated. c. The District Court Erred in Granting Summary Judgment on Jones' Claims of Slander of Title Against Bahm Demolition and the Sanderses.
Jones claimed slander of title against the Sanderses for filing an affidavit of equitable interest and against Bahm Demolition for filing a mechanic's lien. Slander of title is defined as a “ ‘false and malicious statement, oral or written, made in disparagement of a person's title to real or personal property, causing him injury.’ “ Saddlewood Downs v. Holland Corp., Inc., 33 Kan.App.2d 185, 198, 99 P.3d 640 (2004) (quoting Safety Federal Savings & Loan Ass'n v. Thurston, 8 Kan.App.2d 10, 13, 648 P.2d 267 [1982] ).
Filing a patently insufficient mechanic's lien with the requisite malicious intent constitutes actionable slander of title. See Comely–Neff Lumber Co. v. Ross, 190 Kan. 734, 740, 378 P.2d 178 (1963); Sahgal v. DMA Electric, Inc., No. 105,466, 2012 WL 718945, at *2 (Kan.App.2012) (unpublished opinion). But the mere filing of a defective mechanic's lien doesn't prove slander of title. Saddlewood Downs, 33 Kan.App.2d at 197–98.
So the key question is whether there's sufficient evidence of malicious intent in filing the mechanic's lien. In the context of a claim for slander of title, malice is defined “ ‘as a state of mind characterized by an intent to do a harmful act without a reasonable justification or excuse.’ “ Saddlewood Downs, 33 Kan.App.2d at 196 (quoting Werdann v. Mel Hambelton Ford, Inc., 32 Kan.App.2d 118, Syl. ¶ 14, 79 P.3d 1081 [2003] ). Whether malice exists ordinarily is a question of fact. 33 Kan.App.2d at 196.
Bahm Demolition filed a mechanic's lien against Jones for $22,500, but Bahm admitted that his company never had a contract with Jones, and Bahm Demolition didn't provide labor or materials to Jones to improve the property. Thus, the mechanic's lien was patently insufficient. Viewing the evidence in the light most favorable to Jones, it certainly is possible that a reasonable juror could conclude that Bahm attempted to disparage Jones' title by intentionally filing a patently insufficient mechanic's lien without a reasonable justification. See Bridgeplace Associates, LLC. v. Lazniarz, No. A04–2218, 2005 WL 1869657, at *7–10 (Minn.App.2005) (unpublished opinion) (affirming summary judgment in favor of plaintiff on slander-of-title claim where mechanic's lien was filed when claimant knew it hadn't performed work during the period listed on the lien statement). Because a question of fact remains, the entry of summary judgment in favor of Bahm Demolition on Jones' claim of slander of title is reversed.
We turn next to Jones' slander-of-title claim against the Sanderses. In the affidavit claiming an equitable interest in the property, Fred Sanders, on behalf of himself and his wife, said in 2006 that he had purchased and was purchasing the property: “That, by instrument dated November 1, 2002, we have purchased, and are purchasing from the Ronald J. Jones Charitable Trust, Ronald J. Jones Trustee, all that certain real property located in Shawnee County, Kansas, (commonly known as 417 S.E. 13th Street, Topeka, Kansas)....” The filing and recording of a false affidavit also constitutes actionable slander of title. Dwelle v. Home Realty & Inv. Co., 134 Kan. 520, 522, 7 P.2d 522 (1932).
Jones has presented evidence that would support the conclusion that Fred Sanders knew that his contractual right to purchase the property had expired in 2002. If Jones' testimony is true, the contract provided for closing by November 5, 2002, when the parties signed it, and it didn't include Schedule B. If a jury accepts Jones' testimony on these points, that would suggest a malicious intent by Sanders in filing the 2006 claim of interest (saying that he “had purchased” and “was [still] purchasing” the property) and in claiming that Schedule B was a part of the contract when the parties signed it. The district court based its interpretation of the 2002 contract in part on Schedule B, something that could not be done given the divergent testimony of Jones and Fred Sanders regarding the form of the contract itself.
Once again, factual questions preclude summary judgment. The district court's grant of summary judgment on the slander-of-title claim against the Sanderses is reversed. d. The District Court Erred in Granting Summary Judgment Against Jones' Claim for Quiet Title.
An action for quiet title may be brought by any person claiming title or interest in real property against any other person who claims an interest for the purpose of determining title in the property. K.S.A. 60–1002(a). Specifically, the statute authorizes a quiet-title action “for the purpose of determining such adverse claim.” K.S.A. 60–1002(a). Here, the district court granted summary judgment in favor of the Sanderses and Bahm Demolition and denied Jones' motion for summary judgment on Jones' quiet-title action, essentially dismissing the claim without explanation. Presumably the court did so because it had separately ruled that the property had to be sold to Bahm Demolition under the settlement agreement.
But Jones still has a valid action for quiet title for the property for the reasons we've already noted—if Jones' testimony is accepted, then the 2002 contract through which both the Sanderses and Bahm Demolition claim rights to the property had expired under its own terms in 2002. Jones claims title in the property and brought the action against the Sanderses, who claimed an interest in the property by filing an affidavit, and Bahm Demolition, which claimed an interest in the property by filing a mechanic's lien and by its contract to buy the property from Sanders.
Before the purported settlement agreement was reached, the district court had concluded that questions of fact remained to be determined on whether the Sanderses had a valid equitable interest in the property based on the 2002 contract. The court also had found that “questions of fact remain in order to determine whether Defendants Sanders and Defendant Bahm [Demolition] had valid interests in the Property.” Jones' claim for quiet title should have been left intact for the same reason. See LaBarge v. City of Concordia, 23 Kan.App.2d 8, 19–20, 927 P.2d 487 (1996) (reversing and remanding quiet-title action for trial because defendant had adverse claim and there was a genuine question of who owned property), rev. denied 261 Kan. 1085 (1997). We therefore reverse the district court grant of summary judgment in favor of the Sanderses and Bahm Demolition on Jones' claim to quiet title. e. The District Court Correctly Entered Summary Judgment in Favor of the Sanderses and Bahm Demolition on the Claims for Conspiracy to Slander Title and Intentional Infliction of Emotional Distress.
Jones also claimed that the Sanderses and Bahm Demolition “conspired to slander the title to the Jones property to prevent the sale of the Jones property.” But Jones doesn't allege or point to evidence that there was an agreement or meeting of the minds between the Sanderses and Bahm to slander Jones' title. Bahm testified that he told Sanders ahead of time he was going to file a lien on Jones' property and a parcel of the Sanderses' property and that Sanders didn't object. Bahm said Sanders replied, “Do whatever you got to do.” This evidence doesn't show an agreement between Sanders and Bahm and doesn't support a claim of conspiracy to slander title. Therefore, the district court's grant of summary judgment in favor of the Sanderses and Bahm Demolition on Jones' claim of conspiracy to slander title is affirmed.
Jones also appeals the grant of summary judgment in favor of the Sanderses and Bahm Demolition on his claim of intentional infliction of emotional distress. But Jones doesn't point to any evidence to support such a claim. The district court's grant of summary judgment in favor of the Sanderses and Bahm Demolition on Jones' claim of intentional infliction of emotional distress is affirmed.
Similarly, the district court was correct to deny Jones' motion for summary judgment on his quiet-title claim and his tort claims. As discussed, questions of material fact remain and Jones hasn't shown that he is entitled to judgment as a matter of law on any of his claims at the summary-judgment stage. See Osterhaus, 291 Kan. at 768. We affirm the district court's denial of Jones' motion for summary judgment. f. Jones' Motion to Amend His Petition to Add a Claim for Punitive Damages Is No Longer Moot, and We Remand It for Consideration.
Jones appeals the denial of his motion in case No. 06–C–777 to amend his petition to include a claim for punitive damages. The district court concluded that Jones' motion was moot because the court found no genuine issue of material fact on any of Jones' tort claims. We have reversed the granting of summary judgment in favor of the Sanderses and Bahm Demolition, so Jones' motion is no longer moot. See Wimbley v. State, 292 Kan. 796, 812, 275 P.3d 35 (2011) (remanding to resolve remaining issues after reversal renders issues no longer moot). We therefore remand that issue for consideration by the district court. g. The District Court Didn't Abuse Its Discretion in Allowing the Sanderses to Amend Their Petition to Include a Claim for Breach of Contract.
Jones appeals the granting of the Sanderses' motion to amend their petition after the December 2006 deadline established in a case-management order. A party may amend its pleading before trial with leave of the court, which the court should freely give when justice so requires. K.S.A.2011 Supp. 60–215(a)(2). A trial court has broad discretionary power under K.S.A.2011 Supp. 60–215 to permit an amendment of pleadings, and its decision won't be reversible error unless it affirmatively appears that the amendment allowed is so material that it unfairly affects the substantial rights of the adverse party. Klose v. Wood Valley Racquet Club, Inc., 267 Kan. 164, 173, 975 P.2d 1218(1999).
After the deadline to amend pleadings, the district court allowed the Sanderses to amend their counterclaim to change their claim for specific performance to a claim for breach of contract against Jones and to add a claim for quantum meruit (also called unjust enrichment). The district court found that the amendment wouldn't substantially prejudice other parties or cause undue delay. The court noted that the Sanderses requested the amendment because specific performance no longer appeared possible. Jones asserts that his substantial rights were affected but doesn't explain how, essentially arguing only that the Sanderses missed the deadline. Jones has not shown how the amendments were so material that they affected his substantial rights. Therefore, the district court didn't abuse it discretion in allowing the amendment, and we affirm its order.
III. Penner Wasn't Entitled to Default Judgment for Specific Performance.
Penner argues that the district court erred in denying his motion for default judgment in his action against Jones in case No. 08–C–550. Specifically, Penner asserts that the statute governing defaults, K.S.A. 60–255, mandates that the court should have granted Penner's motion seeking default judgment because Jones never filed a written answer to Penner's petition. Jones contends he wasn't subject to default judgment because he defended his position at a hearing. The district court denied Penner's motion for default judgment as part of its journal entry ordering Jones to convey the property to Bahm Demolition. Of course, granting Penner's motion would have resulted in the court's order that Jones sell the property to Penner.
Resolution of this issue requires interpreting K.S.A. 60–255, over which this court has unlimited review. Forer v. Perez–Lambkins, 42 Kan.App.2d 742, 743, 216 P.3d 718 (2009). K.S.A. 60–255 provides that the court “must” grant a default judgment upon a showing that the party “is entitled to” it:
“When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, the party is in default. On request and a showing that a party is entitled to a default judgment, the court must render judgment against the party in default for the remedy to which the requesting party is entitled.... If the party against whom a default judgment is sought has appeared personally, or by a representative, that party or its representative must be served with written notice of the request for judgment at least seven days before the hearing.” K.S.A.2011 Supp. 60–255(a).
Because the Kansas civil-procedure rules are based upon the federal rules, our courts have generally found federal precedents persuasive. See Rebarcheck v. Farmers Co-op Elevator & Mercantile Ass'n, 272 Kan. 546, 552, 35 P.3d 892 (2001). And those courts have long recognized that the trial judge must exercise sound discretion in deciding whether to enter a default judgment. See Wright, Miller, Kane & Marcus, 10A Fed. Prac. & Proc. Civ. § 2685 (3d ed. 1998 & Supp.2012). Thus, “the party making the request is not entitled to a default judgment as of right, even when defendant is technically in default....” 10A Fed. Prac. & Proc. Civ. § 2685 at 31–32. Indeed, the United States Court of Appeals for the Tenth Circuit has said that “[a] trial court is vested with broad discretion in deciding a default judgment question.” Grandbouche v. Clancy, 825 F.2d 1463, 1468 (10th Cir.1987). Federal trial courts look to a number of factors in deciding whether to enter a default judgment, including whether there are material factual disputes, whether the default is largely technical, and whether the grounds for default are clearly established or the default was caused by a good-faith mistake. 10A Fed. Prac. & Proc. Civ. § 2685 at 32–41. We review the district court's decision for abuse of discretion. Grandbouche, 825 F.2d at 1468.
Here, Penner filed suit in April 2008 against Jones in case No. 08–C–550, which sought a temporary restraining order and injunctions to keep Jones from selling to the Sanderses and specific performance of Penner's contract to buy the property from Jones. Two weeks later, the district court issued a temporary restraining order against Jones. In May 2008, Jones and counsel participated in a hearing in case No. 08–C–550, during which much of the discussion was about whether Penner had standing to make his new claims after he intervened and was dismissed from case No. 06–C–777. Jones asked the court to reconsider its April 2007 order in case No. 06–C–777 but didn't ask for Penner's restraining order to be rescinded when given the opportunity in case No. 08–C–550. In March 2011, the court found that Penner had standing to pursue his claims for an injunction and specific performance. In June 2011, Penner filed a motion for default judgment against Jones. The Sanderses, though not parties in case No. 08–C–550, responded by asking the court to deny Penner's motion and to enforce the settlement that had been reached in case No. 06–C–777. In July 2011, the court held a hearing on Penner's motion for default judgment. In August 2011, the court enforced the settlement agreement in case No. 06–C–777, denied Penner's motion for default judgment, lifted Penner's restraining order, and dismissed Penner's claim for specific performance in 08–C–550.
This was the context in which Penner's request for default judgment arose. K.S.A. 60–255 requires three things before judgment may be rendered against Jones: (1) default, (2) a request, and (3) a showing that Penner “is entitled to” default judgment. K.S.A.2011 Supp. 60–255(a). Even if Penner could show default, he hasn't shown he was entitled to specific performance. Penner filed his motion for default judgment 3 years after Jones apparently agreed to sell the property to Bahm Demolition as the result of a settlement conference. Based on his contract with Jones, Penner made an adequate showing that he was entitled to a temporary restraining order (which already had been granted) to prevent the sale to Bahm Demolition while litigation continued. But Penner wasn't entitled to specific performance for Jones to convey property that was the subject of another lawsuit in which, as we have made clear earlier in this opinion, contested factual issues precluded resolution of the suit as a matter of law. The district court wasn't required to render default judgment against Jones because Penner wasn't entitled to specific performance as a remedy.
The district court did not abuse its discretion when it denied Penner's motion for default judgment.
Conclusion
The district court entered final judgment in case No. 06–CV–777, granting summary judgment against all tort claims and dismissing Jones' quiet-title claim. We reverse the district court's judgment in case No. 06–C–777 as set forth above and remand for further proceedings consistent with this opinion.
The district court also had entered final judgment in case No. 08–C–550, ordering that the property at issue be sold by Jones to Bahm Demolition and otherwise dismissing the claims in the suit. We a reverse the district court's judgment in case No. 08–C–550 as set forth above and remand for further proceedings consistent with this opinion.