Feldt v. Kan-Du Constr. Corp.

LEONA FELDT, Plaintiff, v. KAN-DU CONSTRUCTION CORP., et al., Defendants.

CIVIL ACTION No. 12-1064-MLB

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

September 23, 2014

MEMORANDUM AND ORDER

This case comes before the court on defendants' motions for summary judgment. (Docs. 103, 105). The motions have been fully briefed and are ripe for decision. (Docs. 104, 106, 125, 126, 127, 128).¹

I. Facts²

Defendant Heritage Homes (Heritage) builds modular homes in Nebraska. The homes are then sold to distributors which, in turn, enter into a sales contract with the home buyer. Heritage delivers to the buyer's home site and the distributor completes the home by performing the site work. Site work consists of constructing the foundation, garage and porch, and installing siding.

In November 2010, Justin Lockhart, a sales representative for Heritage, met with defendant Marty Falconburg to discuss the possibility of defendant Kan-Du Construction (Kan-Du), a company owned by Falconburg, entering into a distributor agreement with Heritage. Falconburg had several years of construction experience but had not built a traditional or modular home. On January 26, 2011, Kan-Du entered into a distribution agreement with Heritage. The agreement states that Kan-Du is an independent contractor and that Kan-Du is not Heritage's agent.

Only three months later, on May 3, 2011, plaintiff Leona Feldt executed a purchase agreement with Kan-Du for the purchase of a Heritage modular home.³ Heritage was not a party to the agreement. The agreement was signed by Feldt and witnessed by Lockhart and Cindy Falconburg, Marty Falconburg's wife and an owner of Kan-Du. Lockhart prepared the agreement, including listing out Kan-Du's site workresponsibilities and pricing on the second page of the agreement. Over a period of several months, Feldt paid $317,700 due under the terms of the agreement. Feldt's checks were payable to Kan-Du.

The same day, Kan-Du and Falconburg signed a sales order with Heritage for the construction of Feldt's modular home. Falconburg paid Heritage $183,000 for the modular home. Heritage constructed the modular portion of the home ordered. After the home was completed by Heritage, it was delivered to Feldt's home site in Hoxie, Kansas. Falconburg performed some of the site work listed in the agreement. Heritage Homes did not perform any of the site work. Kan-Du failed to complete the site work for Feldt. Kan-Du also failed to pay various subcontractors that performed site work.

Feldt has brought state law tort claims and breach of contract claims against all defendants. Defendants move for summary judgment.

II. Summary Judgment Standards

The rules applicable to the resolution of this case, now at the summary judgment stage, are well-known and are only briefly outlined here. Federal Rule of Civil Procedure 56(c) directs the entry of summary judgment in favor of a party who "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). An issue is "genuine" if sufficient evidence exists so that a rational trier of fact could resolve the issue either way and an issue is "material" if under the substantive law it is essential to the proper disposition of the claim. Adamson v. Multi Community Diversified Svcs., Inc., 514 F.3d 1136, 1145 (10th Cir. 2008). When confronted with a fully briefed motion for summary judgment, the court mustultimately determine "whether there is the need for a trial-whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). If so, the court cannot grant summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

III. Analysis

A federal court sitting in diversity jurisdiction must apply the substantive law of the state in which it sits, including that state's choice-of-law rules. See ORI, Inc. v. Lanewala, 147 F. Supp.2d 1069, 1078 n. 9 (D. Kan. 2001). Feldt has alleged breach of contract claims and tort claims against defendants. Kansas courts apply the doctrine of lex loci delicti, which requires a court to evaluate a tort claim according to the law of the state where the tort occurred. See Ling v. Jan's Liquors, 237 Kan. 629, 703 P.2d 731, 735 (1985). A tort occurs where the injury occurs. Id. Because any injuries arising out of this claim occurred in Kansas, the court applies Kansas law.

A. Heritage Homes Motion for Summary Judgment

1. Breach of Contract

Feldt alleges in the pretrial order that Heritage breached an oral agreement to select an experienced and well-qualified construction contractor to build Feldt's home.⁴ In order to state aclaim for breach of contract under Kansas law, a plaintiff must establish the following elements: (1) the existence of a contract between the parties; (2) consideration; (3) the plaintiff's performance or willingness to perform in compliance with the contract; (4) defendant's breach of the contract; and (5) that plaintiff suffered damage caused by the breach. Britvic Soft Drinks, Ltd. v. ACSIS Techs., Inc., 265 F. Supp.2d 1179, 1187 (D. Kan. 2003).

Heritage contends that Feldt has not established the existence of an agreement. Feldt responds that there "certainly was a contract which was made by Heritage, acting through Justin Lockhart" in which Feldt "agreed (either explicitly or impliedly) with Justin Lockhart that he would perform this function." (Doc. 125 at 35). Feldt cites to her deposition testimony to support the existence of an agreement. The cited portions, however, do not support the existence of an agreement between Feldt and Heritage. Feldt's testimony states that Lockhart recommended Falconburg and that Feldt trusted in Lockhart.

Because Feldt has failed to identify any evidence to establish the existence of an agreement with Heritage, Heritage's motion for summary judgment is granted.

2. Fraud and Negligent Misrepresentation

Heritage contends that summary judgment is appropriate on Feldt's fraud and negligent misrepresentation claims because there is no evidence that Lockhart represented that Heritage had selected or would select a proper and able, experienced and well-qualified home builder. (Pretrial Order at 8).

Negligent Misrepresentation

Under Kansas law, the court must instruct a jury as follows withrespect to Feldt's claim of negligent misrepresentation:

One who, in the course of his business supplies false information for the guidance of another person in such other person's business transactions, is liable for damages suffered by such other person caused by reasonable reliance upon the false information if:

1. The person supplying the false information failed to exercise reasonable care or competence in obtaining or communicating the false information; and,

2. The person who relies upon the information is the person for whose benefit and guidance the information is supplied; and,

3. The damages are suffered in a transaction that the person supplying the information intends to influence.

PIK-Civil 4th 127.43; Mahler v. Keenan Real Estate, Inc., 255 Kan. 593, 605, 876 P.2d 609 (1994).

In its motion, Heritage contends that Feldt has no evidence to support a finding that Lockhart made the statements concerning Kan-Du and Falconburg which are set forth in the Pretrial Order, i.e. that Heritage would select a proper and able, experienced and well-qualified home builder. Feldt responds that Lockhart told Feldt that Kan-Du (and Falconburg) was a good company, would do a turnkey job, that they could complete the job and that they would complete the job. (Feldt Depo. at 35-44).

Although Lockhart's statements, as testified to by Feldt, do not word for word state the language in the pretrial order, the court finds that Feldt's testimony conveys that Heritage, through Lockhart, assured Feldt that Kan-Du and Falconburg were qualified to finish the site work on Feldt's home without any issues. See Kreekside Partners v. Nord Bitumi U.S., Inc., 963 F. Supp. 959, 966-67 (D. Kan. 1997) (evidence that defendant stated that he had not had any problems withthe contractor and that the contractor could get the job done was sufficient to raise a genuine issue of fact with respect as to whether defendant negligently misrepresented that a contractor was qualified and suitable for the job).

In its reply, Heritage responds that the statements identified by Feldt are non-actionable opinion and cannot be a basis for her claim. Generally, statements of opinion are not actionable because a Feldt can form her own opinion and would have no right to rely on a defendant's representation. Fisher v. Mr. Harold's Hair Lab, Inc., 215 Kan. 515, 523, 527 P.2d 1026 (1974). However, "where the terms of dealings are not equal, and the representor has superior knowledge of the subject, a statement which would otherwise be one of opinion will be regarded as one of fact." Id.

In this case, there is no evidence that Feldt had any way to determine if Kan-Du and/or Falconburg were competent and could complete the job. Feldt's testimony shows that she was depending on Lockhart and trusted in his decision in selecting Kan-Du to complete her home. Lockhart clearly was in a position to have superior knowledge about Kan-Du and Falconburg. While Falconburg had done construction work, he had no experience with modular homes. Falconburg's testimony states that Feldt's home was to be part of his training and that he would only be responsible for the basement. (Falconburg Depo. at 34-36). Falconburg testified that Lockhart told him that Lockhart's crews would complete the majority of the work while Falconburg observed and that Falconburg would complete a training in Nebraska at a later date. Therefore, Lockhart had superior knowledge regarding Kan-Du and Falconburg's constructionabilities and Lockhart's statements can be...