Smith v. Perez

510 P.3d 15 (Table)

Jason SMITH, Appellee/Cross-appellant,

v.Rosalva PEREZ et al., Appellants/Cross-appellees.

No. 123,901

Court of Appeals of Kansas.

Opinion filed May 27, 2022.

Razmi M. Tahirkheli, of Tahirkheli & Premer-Chavez Law Office, L.L.C., of Kansas City, for appellants/cross-appellees.

Grant C. Shellenberger, of Shellenberger & Associates, P.A., of Manhattan, for appellee/cross-appellant.

Before Hurst, P.J., Gardner, J., and Patrick D. McAnany, S.J.

MEMORANDUM OPINION

Per Curiam

Jason Smith sued Rosalva Perez and Carlos Ernest Garcia in the magistrate court for breach of contract based on Perez and Garcia's failure to pay $5,000 owed on a truck. The magistrate court ruled in Smith's favor and later granted Smith's motion for expenses. On appeal, the district court found Smith's action was barred by the statute of limitations and dismissed it, but it affirmed the magistrate court's order awarding Smith expenses. Perez and Garcia appeal the order of expenses, and Smith cross appeals the district court's dismissal based on the statute of limitations. Based on the record, we affirm the appeal and the cross-appeal.

Factual and Procedural Background

Smith sued Perez and Garcia under Chapter 61 of the Kansas Code of Civil Procedure for Limited Actions ( K.S.A. 61-2801 et seq. ). Smith filed this action on June 17, 2019, arguing Perez and Garcia breached a contract to purchase his truck. That contract succinctly states:

"This regards to the purchase of a 2004 Freightliner Columbia VIN 1FUJA6CG04LM11425. Purchaser is putting $7000 down towards the purchase price of $15,000. Remaining balance will be paid in monthly payments of $1500 on the first day of the month beginning in September 2013, until the remaining balance is satisfied."

Basis of Smith's Petition and Pretrial Proceedings

A magistrate court judge not admitted to practice law in Kansas first presided over Smith's claim. Smith argued that the parties had entered into a written contract, that Perez and Garcia had made a $7,000 down payment toward the $15,000 purchase price in August 2013, a $1,500 payment in September 2013, and a final $1,500 payment in November 2013, so Perez and Garcia still owed him $5,000 for the truck.

Smith later amended his petition, adding a claim of fraud. He alleged that Perez and Garcia had fraudulently converted the truck's Oklahoma certificate of title to a Kansas title without his permission and without noting his lien on the truck.

Perez and Garcia moved to dismiss Smith's petition, arguing the statute of limitations had expired 10 months before Smith sued them. Perez and Garcia separately moved to dismiss Smith's petition for failing to state a claim. Perez and Garcia later moved to withdraw their motion to dismiss based on the statute of limitation as prematurely filed, conceding that a statute of limitations claim was an affirmative defense and discovery was ongoing.

Shortly before that, Smith moved to compel discovery, arguing that Perez and Garcia had refused to respond to his outstanding requests for admissions. A few weeks later, Perez and Garcia responded that they had been visiting family in another country and were thus unable to timely respond. Perez and Garcia also argued that no hearing was needed on discovery matters because they had complied with Smith's requests for production of documents and interrogatories.

The magistrate judge held a hearing, granted Perez and Garcia's motion to withdraw their motions to dismiss, granted Smith's motion to compel, and imposed a $300 sanction against Perez and Garcia.

Trial

At the beginning of trial, counsel for Perez and Garcia asked the magistrate court to transfer this case from Chapter 61 proceedings to Chapter 60. Perez and Garcia wanted to pursue a counterclaim for malicious prosecution against Smith, but the damages would exceed the limits allowed under a Chapter 61 small claims action. The magistrate court denied that motion.

Perez testified that in October and November 2013, Perez and Garcia had contacted Smith and told him the truck had several technical problems. He said that Smith then agreed to accept $10,000 instead of $15,000 for the truck.

Smith denied Perez' allegation of an oral modification to the written contract. He testified that he never agreed to sell the truck at a reduced price. Smith conceded that he had conversations with Perez and Garcia about late payments and at one point he had agreed Perez and Garcia could make one payment one week late in December. Smith also testified that he tried several times to contact Perez and Garcia in person and over the phone. Then he eventually cornered Perez as she was leaving work, but Perez refused to pay any more for the truck and said Smith would have to sue to get the rest of the money.

Smith also admitted copies of the contract and the truck's title. Smith testified that he had signed the title and sent it to Perez and Garcia, but he did not fill out the odometer reading or the $10,000 purchase price. He also elicited testimony from the person who had notarized Perez and Garcia's signatures on the title, but the notary explained that she had witnessed only Perez and Garcia's signatures—she did not know Smith and had not seen him sign the title.

In their closing arguments, the parties addressed the statute of limitations issue. The parties agreed that Smith filed his petition in June 2019. But Smith argued that his time to file did not begin to run until August or September 2014, when Perez told Smith Perez and Garcia would no longer pay for the truck and he would have to sue them. Counsel for Perez and Garcia argued that the statute of limitations began running in October or December 2013. Still, Perez and Garcia's counsel admitted that he had already withdrawn his motion to dismiss based on the statute of limitations claim, explaining that he had filed that motion prematurely because he "jumped the gun ... [and] was just trying [to] save [his] client time and all that money."

The parties also argued about Smith's claims. After a contentious back and forth between the attorneys, the magistrate court entered a credibility finding and judgment in Smith's favor. In its written order, filed November 23, 2020, the magistrate court rejected Perez and Garcia's defense that Smith agreed to modify the contract to a purchase price of $10,000 and held that per the terms of the written contract, Perez and Garcia owed Smith $5,000 plus accrued interest. The magistrate court also found Perez and Garcia had fraudulently converted the Oklahoma title. And ultimately, the magistrate court ordered Perez and Garcia to pay $10,061.46 on Smith's claim.

Appellate Proceedings in the District Court and Order for Expenses

Perez and Garcia filed a premature notice of appeal on October 28, 2020, from the magistrate court's verbal ruling then amended that appeal on November 25, 2020, after the court's written order. In between those two events, on November 3, 2020, the chief judge of the district court filed an order assigning the appeal to a district court judge. The following day, Smith filed a Kansas Supreme Court Rule 170(b)(2) (2022 Kan. S. Ct. R. at 236) notice and proposed order. Smith also moved for expenses under K.S.A. 2020 Supp. 60-211(c) (incorporated in Chapter 61 actions by K.S.A. 61-2908 ) and K.S.A. 61-3102. Smith alleged Perez and Garcia had improperly moved to dismiss and had failed to respond to his requests for admissions.

Perez and Garcia then responded to Smith's motion for expenses and filed their own motion for sanctions against Smith. The magistrate court held a hearing on November 18, 2020. Smith appeared at the hearing through his counsel, but Perez and Garcia did not appear. The magistrate court granted Smith's motion and ordered Perez and Garcia to pay $7,567.02 in attorney fees and other expenses.

Perez and Garcia filed a notice of appeal from that order and moved to set it aside, arguing the magistrate court lacked jurisdiction to make any rulings after they had appealed to the district court. Perez and Garcia also claimed that res judicata precluded Smith's motion for expenses.

Smith responded to Perez and Garcia's motion to set aside and cross appealed the magistrate court's order for expenses. Smith argued that the magistrate court erred in granting only some of his requested expenses.

District Court's Order Dismissing Smith's Claim but Affirming Order for Expenses

The parties each filed briefs in the district court before the district court entered its final ruling on their claims and crossclaims. In a footnote, Smith suggested the district court take judicial notice of case 2018 LM 001183, in which Smith allegedly filed but voluntarily dismissed his first lawsuit against Perez and Garcia in November 2018. Perez and Garcia's reply brief focused on the statute of limitations, arguing Smith's petition was untimely and his claim of fraud did not toll the time to file.

The district court's written decision dismissed Smith's petition as untimely but affirmed the magistrate court's order for sanctions. The district court applied K.S.A. 60-511, the five-year statute of limitations for breach of contract actions and found Smith had first filed his claim against Perez and Garcia in November 2018, as Smith footnoted in his brief. But the district court found the statute of limitations began to run on April 1, 2013, so his petition was untimely. The district court explained that after the parties entered their written agreement, Perez and Garcia made a $7,000 down payment and two $1,500 payments in September and November 2013. It then found that had Perez and Garcia made timely monthly payments as agreed, the contracted $15,000 sum would be paid in full by "April 1, 2013," although that date predates the formation of the contract.

In affirming the magistrate court's order for expenses, the district court found that motions to dismiss, presumably brought under K.S.A. 2020 Supp. 60-212(b)(6), are not allowed in Chapter 61 cases, and...