Opinion
Case No. 02-1286-JTM
November 3, 2003
MEMORANDUM AND ORDER
Two dispositive motions are before the court in this action by plaintiffs Howard, Glenda, and Robert Wright against Doonan Truck Equipment of Wichita and Paccar Financial Corporation. The Wrights bought a 2000 Peterbilt semi-tractor from Doonan. The purchase was partly financed by a Retail Installment Contract. That contract was subsequently assigned to Paccar Financial.
Paccar has filed a motion to dismiss or for summary judgment seeking a determination that, as simply a holder of the financing note of the Wrights, it is not liable to them for any damages; Paccar contends only its co-defendant, Doonan Truck Equipment, is liable. The court finds that the motion to dismiss should be granted. None of the allegations advanced in the Wrights' complaint advances any cause of action against Paccar, which provided financing for the sale and holds the note on the truck. While various claims are asserted against Doonan Truck and Equipment, there is no allegation that Paccar breached the contract of sale, that it breached any warranty, violated the Kansas Consumer Protection Act, or was negligent. The only justification offered for the inclusion of Paccar in this action is the plaintiffs' declaratory judgment claim. However, the court finds that this claim does not warrant maintenance of the action here against Paccar.
In the declaratory judgment claim, the Wrights seek a determination that they have a lien against the subject truck pursuant to K.S.A. § 84-2-711, and that their lien is superior to Paccar's lien. The court finds that this claim should be dismissed pursuant to State Farm Fire Casualty v. Mhoon, 31 F.3d 979 (10th Cir. 1994). In deciding whether to dismiss a declaratory judgment claim, the court may consider:
(1) whether a declaratory action would settle the controversy; (2) whether it would serve a useful purpose in clarifying the legal relations at issue; (3) whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race to res judicata"; (4) whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and (5) whether there is an alternative remedy which is better or more effective.Mhoon, 31 F.3d at 983 (quoting Allstate Ins. v. Green, 825 F.2d 1061, 1063 (6th Cir. 1987)). See also Buchanan v. Greene, No. 97-2569-KHV, 1998 WL 184448, at *2 (D.Kan. March 12, 1998).
These factors support dismissal here. There is no existing controversy between the Wrights and Paccar. Further, even a finding that the Wrights had a lien would not resolve potential breach of contract or action on the promissory note by Paccar. Thus, resolution of the Wrights' lien claim would not materially clarify the legal relations in issue. There is no indication that the Wrights have attempted a race to res judicata. However, Paccar's potential claims against the Wrights, who have continued to make the required payments under the note, are not yet ripe; maintaining the action now would seriously disadvantage the defendant Paccar. Finally, an alternative remedy clearly exists. After the Wrights' claims against Doonan are resolved, and any judgment unsatisfied, their potential state lien claim can then be advanced; at the same time, Paccar could assert any claim it might have for breach of contract or breach of the promissory note. Dismissal is appropriate.
Turning to the motion for summary judgment by Doonan, such a motion is proper where the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must examine all evidence in a light most favorable to the opposing party. McKenzie v. Mercy Hospital, 854 F.2d 365, 367 (10th Cir. 1988). The party moving for summary judgment must demonstrate its entitlement to summary judgment beyond a reasonable doubt. Ellis v. El Paso Natural Gas Co., 754 F.2d 884, 885 (10th Cir. 1985). The moving party need not disprove plaintiff's claim; it need only establish that the factual allegations have no legal significance. Dayton Hudson Corp. v. Macerich Real Estate Co., 812 F.2d 1319, 1323 (10th Cir. 1987).
In resisting a motion for summary judgment, the opposing party may not rely upon mere allegations or denials contained in its pleadings or briefs. Rather, the nonmoving party must come forward with specific facts showing the presence of a genuine issue of material fact for trial and significant probative evidence supporting the allegation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256(1986). Once the moving party has carried its burden under Rule 56(c), the party opposing summary judgment must do more than simply show there is some metaphysical doubt as to the material facts. "In the language of the Rule, the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis in Matsushita). One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett, 477 U.S. 317 (1986).
Defendant Doonan has moved for summary judgment on the basis of the release signed by the Wrights. With respect to this motion, the court makes the following findings of fact.
In addition to the two dispositive motions before the court, the Wrights have moved to strike the affidavit of Ken Doonan attached to defendant Doonan Truck and Equipment's brief in support of the summary judgment motion. The Wrights' Motion to Strike will be denied. The court finds that Doonan's experience and background in the trucking industry renders him competent to testify to the issues addressed in his affidavit. Further, the court notes that in the Wrights' response to the summary judgment motion, some uncontroverted facts of the defendant are "denied," but no itemized reference to the evidentiary record is cited in support of the denial as required by D. Kan. Rule 56.1(b)(1). The challenged facts are deemed admitted.
The Wrights first learned of the availability of the 2000 Peterbilt truck when they saw it posted on the internet as a vehicle Doonan had for sale at its Wichita, Kansas lot with the 120" sleeper already installed. They were told by Doonan employees that the factory-built sleeper was removed and the 120" sleeper was constructed and installed by Doonan personnel. The Wrights were unaware at the time of sale that the Doonan workers constructed the sleeper unit simply as they saw fit. None of the workers had any engineering or structural science background. The Wrights had no prior experience in buying a truck with an after-market sleeper constructed by dealership personnel.
Howard and Glenda Wright bought the truck on April 13, 2000. Robert Wright's name appears on all documents because Howard and Glenda Wright's credit was not good. At the time of the sale, the truck had 649 miles on it.
Kenneth Doonan is the President of Doonan Truck Equipment of Wichita, Inc. He has been engaged in the business of selling Peterbilt heavy trucks and repairing all makes of heavy trucks since 1970.
The Wrights first encountered a problem with the sleeper when the air conditioning would not cool, and later in September, 2000 when, while stopped in seven-below freezing weather in Wyoming, they observed the sleeper unit was unbearably cold inside and that the interior froze up and later thawed, leaving the sleeper interior wet and dank. They contacted Ken Doonan about this and other problems with the sleeper.
Doonan agreed to repair the sleeper, and wanted to send the truck to True Custom Specialty Sleepers Interiors, 1500 So. 351st, Federal Way, Washington. He believed the repairs would take about a week. He offered to provide a replacement truck for the Wrights if they took the truck to True Custom Specialty Sleepers Interiors in Washington.
There is a fact dispute as to why the truck was not repaired in Washington. The Wrights contend that Doonan told them the company in Washington never returned his calls; Doonan states he never told the Wrights that the Washington company refused to return his calls.
The truck instead went to Tennessee. The Wrights wanted the work to be performed at A I Collision in Tennessee because they had a friend there, Tim Davis, who had satisfactorily worked on their truck in Illinois.
Before the truck went to A I, Doonan received a bid on the work. The bid included itemizations for 25.5 hours of work, and an additional four items listed as "open" or "will advise," meaning that A I would advise on parts and labor involved, as this work was under way and those items could be properly evaluated at that later time. The "open" items were: (a) replacement of carpet due to shower leaks, (b) checking, and possibly replacing, the water heater, (c) repairing the torn bunk upholstery, and (d) removing a panel and fixing a seam seal. In his experience, Doonan does not believe any of the "open" items would need much time or material to correct. He believed the total time to fix the sleeper unit would be about 40 hours. He believed that the cost of all of the repairs, including the "open" items, would be about $5,000.00.
The Wrights chose to take the vehicle to A I in late December of 2000 or January of 2001 because their hauling business was down at that time, thus limiting their lost earnings. They thought the repair would take about three weeks.
The Wrights arrived in Tennessee at A I Collision on December 24, 2000, and repairs began immediately. In the next several weeks, the Wrights saw that A I Collision worked expeditiously on the repairs. Both the Wrights and Davis saw, when the sleeper was taken apart, that (a) no thermal insulation in the sleeper's exterior had been installed, (b) the roof was not reinforced to support the air conditioning unit, (c) electrical wires were run through bare metal sheeting without insulation or protective sheathing to protect from rubbing, pinching, and shorting out the metal sheeting, (d) the panels were leaking water, and (e) the roof was very thin.
Since they could not live in the sleeper, the Wrights had to rent a motel room in Memphis, and had to eat out at restaurants. They earned some $3,100.00 in income doing part-time work at A I, but spent $4,800.00 on housing and food.
During this time, the Wrights sold a new lien-free pick up truck and a used Peterbilt tractor worth approximately $42,000.00 for $15,000.00 to raise funds. They had no other liquid assets or cash deposits on which to draw. The Wrights' only remaining asset after the sale of the two vehicles was their home in Texas and household furnishings. The Wrights were unable to make one "full" truck payment during that time and paid interest accrued on that one payment.
The plaintiffs found out in March, 2001 that A I had fired Davis. A new supervisor, a Mr. Griffin, refused to complete the repairs for the estimate of $5,000.00 and told the Wrights to remove the truck unless either they or Doonan would agree to pay more.
The Wrights called Ken Doonan about the new demand of A I Collision. At the request of Glenda Wright, Kenneth Doonan contacted Richard Griffin at A I. Griffin sent Doonan a bill for work done through February 14, 2003 in the amount of $17,000.00. Neither A I nor the Wrights contacted Doonan to obtain the agreement of Doonan Truck to pay for any work beyond the work listed in the original bid. Doonan made arrangements to fly to Memphis, Tennessee on February 21, 2003.
On February 21, 2003, Kenneth Doonan met with Howard and Glenda Wright and Richard Griffin of A I. The parties ultimately entered into a written agreement. Wrights agreed that Doonan Truck Equipment would pay A I and the Wrights $5,853.94 on repairs (including repairs to the generator). The parties further agreed that Doonan would pay the Wrights $1,889.31 to compensate them for the downtime during the repairs. Some repair items were itemized and left for later. Doonan made out checks in both amounts, and told the Wrights not to endorse the check to A I unless they were satisfied with the repairs. This agreement and the payments were intended to settle all claims of Howard and Glenda Wright with respect to the 2000 Peterbilt.
The language of the agreement is as follows:
This agreement between Bud Glenda Wright, an agent for Robert Wright, and Kenneth Doonan of Doonan Truck Equipment of Wichita, Inc. Doonan agrees to pay the repairs on the generator, send a check for $1889.31 to settle any all claims on Robert Wright's 2000 PB w/Doonan sleeper. This is full final settlement except items attached named 1, 2, 3, 4, 5, 14 which Doonan will repair at no charge within 6 months of this settlement agreement in Wichita, Kansas.
(Def. Doonan Exh. C, ¶ 40).
Doonan states that he never threatened to withhold payment if the Wrights refused to sign the agreement. The Wrights never communicated to Doonan an unconditional revocation of acceptance of the 2000 Peterbilt prior to the filing of this lawsuit. The Wrights never made appropriate arrangements to have the remaining items listed in Exhibit C repaired.
The security agreement and installment agreement under which the Wrights bring their claims contains an express choice of law provision whereby the parties' rights and obligations under the contract are governed by Kansas law.
The Wrights state that they felt they had no real alternative or bargaining power or leverage with A I or Doonan to insist on further completion of repairs under the circumstances. This was because the vehicle would not be released to them free of any repairman's lien until A I was paid, which only Ken Doonan could provide.
The court finds that summary judgment should be granted on behalf of defendant Doonan Truck and Equipment because the settlement agreement bars this action under the law of Kansas. Kansas law favors settlement. See International Motor Rebuilding Co. v. United Motor Exchange, 193 Kan. 497, 500-01, 393 P.2d 992 (1964). Agreements in settlement are to be enforced absent fraud or bad faith. Krantz v. University of Kansas, 271 Kan. 234, 241-42, 21 P.3d 561 (2001).
Doonan asserts, and the Wrights agree, that Kansas law controls in the present action.
Here, the Wrights advance essentially one argument against enforcement of the settlement agreement. They contend that because of their financial circumstances they were subject to "economic duress" or "economic compulsion." This argument fails.
In addition to its defense based on the settlement agreement, defendant Doonan argues that the Wrights waived any further claims against it by endorsing the check to A I, and cashing the check to themselves for $1,889.31. It argues that because the Wrights used the checks after representing they would do so only in connection with the settlement, they have waived any other claims or are estopped from asserting them. The Wrights do not respond to this argument, but the court need not resolve the matter in light of the court's resolution of the primary argument of the defendant, that the current action is barred by the settlement agreement.
Here, the Wrights and Doonan entered into a compromise and settlement agreement in Memphis. The Kansas Supreme Court has defined duress in Motor Equipment Co. v. McLaughlin, 156 Kan. 158, Syl. para.1, 133 P.2d 149 (1943). The court wrote:
To constitute duress by threats the actor's manifestation must be made for the purpose of coercing the other; must have for its object the securing of undue advantage with respect to the other; must be of such a character that it is adapted to overpower the will of the other and is reasonably adequate for the purpose; must in fact deprive the other of free exercise of will; and must cause the other to act to his detriment.
First, proof of financial difficulty alone is not sufficient to establish the defense of duress. International Motor Rebuilding Co. v. United Motor Exchange, 193 Kan. 497, 500-501, 393 P.2d 992 (1964).
Second, even if it were, the Wrights have failed to meet their burden of showing substantial financial duress. The evidence is that the Wrights had in excess of $17,900.00 available to them (from their sale of other property) to cover their living expenses of $4,800.00 during the time in Memphis.
Third, and now assuming the plaintiffs had shown the existence of severe financial hardship, their argument fails because they can point to no wrongful conduct on the part of Doonan with respect to the settlement.
Some jurisdictions outside Kansas permit a defense of economic duress if there is evidence of a wrongful act by the opposing party, which overcomes the will of the other party, who has no adequate legal remedy. See Refusal to Pay Debt as Economic Duress or Business Compulsion Avoiding Compromise or Release, 9 ALR 4th 942 (1981).
The Wrights chose where the truck was repaired, A I, in Tennessee. Doonan agreed to pay for itemized repairs, which he expected would take about a week and cost $5,000.00. At A I, the Wrights authorized additional repairs which had not been approved by Doonan. After eight weeks, he was notified that A I wanted $17,000.00 to finish the truck. He immediately flew at his own expense to Tennessee, where he negotiated an agreement among all the parties. He arranged to pay A I some $5,800.00 to complete the repairs which were originally authorized, so that the truck could be returned to the Wrights. He paid the Wrights $1,889.31 to compensate them for their expenses during the repairs. The evidentiary record is devoid of any wrongful act by Doonan, while in Tennessee or elsewhere, which could have so coerced the Wrights that it might be said to have overpowered their will.
The settlement agreement signed by the Wrights is enforceable, and bars their claims advanced against Doonan Truck and Equipment.
IT IS ACCORDINGLY ORDERED this 3d day of November, 2003, that the plaintiffs' Motion to Strike (Dkt. No. 47) is denied; defendant Paccar's Motion to Dismiss (Dkt. No. 36) and defendant Doonan Truck and Equipment's Motion for Summary Judgment (Dkt. No. 38) are granted as provided herein; defendant Paccar's Motion for Extension (Dkt. No. 46) is granted.