Appellate Decisions
| Publication year | 2009 |
| Pages | 40 |
| Citation | Vol. 78 No. 7 Pg. 40 |
July, 2009
Supreme Court
Civil
CONTRACTS AND LIQUIDATED DAMAGES CARROTHERS CONSTRUCTION CO. V. CITY OF SOUTH HUTCHINSON
RENO DISTRICT COURT — AFFIRMED COURT OF APPEALS — AFFIRMED
NO. 98,023 — MAY 22, 2009
FACTS: In 2002, Carrothers executed a contract with the city to construct a wastewater treatment facility for $5.618 million. The contract provided Carrothers should reach substantial completion of the project by July 15, 2003, and final completion by Aug. 14, 2003. The engineering company hired by the city, MKEC Engineering Consultants Inc. (MKEC), assisted in drafting the contract, which included a "time is of the essence" clause and a provision for liquidated damages. An MKEC employee, David Chase, performed the calculations for the liquidated damages provision. MKEC's manager of environmental engineering, Lynn Moore, discussed the calculations with Chase and approved the provision. Although several change orders extended the deadlines for about a week, Car-rothers did not reach substantial completion until Jan. 12, 2004. The city withheld $145,350 as liquidated damages. The district court granted summary judgment in favor of the city, finding the contract was unambiguous and the amount of liquidated damages was reasonable in relation to the potential injuries suffered by the city as a result of the delays in completing the wastewater treatment facility. The Court of Appeals agreed. Court of Appeals held that the amount of liquidated damages under the contract was reasonable when viewed prospectively and also when viewed in relation to the actual damages caused by the breach.
ISSUES: (1) Contract and (2) liquidated damages
HELD: Court held the district court and Court of Appeals did not err in determining July 26, 2003, was the date Carrothers was contractually required to substantially complete the project. In addition, Court found the district court and Court of Appeals correctly determined Jan. 12, 2004, was the date when substantial completion actually was achieved based on the undisputed facts in this case and the plain and unambiguous language in the agreement. Accordingly, it was not error to find Carrothers was 170 days late in substantially completing this project pursuant to these contract terms. Court also agreed the liquidated damage provision was not a penalty. Court stated it was clear from the facts the project engineer attempted as a part of the contract drafting process to calculate estimated damages if there were a breach. It also is clear a project with this level of complexity would present significant difficulties in trying to calculate actual damages. Under these circumstances, the parties legitimately could agree in the interests of necessity, economy, and convenience to set the damages level in advance, which is what they did. Court found the $850 per diem assessment for the one-day delay in achieving final completion was reasonable under the circumstances. Last, Court held liquidated damages may be authorized in a construction contract for completion delays occurring after the project owner had beneficial use of the facility.
STATUTE: K.S.A. 20-3018(b)
EASEMENTS
STRODA V. JOICE HOLDINGS DOUGLAS DISTRICT COURT — AFFIRMED
NO. 100,733 — MAY 1, 2009
FACTS: Case involves undisputed 1957 implied easement across SW 1/4 of farmland for access to NW 1/4 of farmland with unoccupied house. When Stroda sought to sell NW 1/4 in 2006 for use as single residence, Joice claimed easement was limited to agricultural purposes. Stroda filed action for judicial declaration that the easement across Joice's tract was for residential and agricultural purposes. Citing Restatement (Third) of Property, district court held that future use of the easement for residential purposes was appropriate, and that utility use was reasonable if installation of utilities was underground and within confines of area currently used for the access easement. Joice appealed both rulings. Appeal transferred to Supreme Court.
ISSUES: (1) Scope of implied easement and (2) utility access
HELD: Under undisputed facts of case, district court correctly ruled as matter of law that the implied easement allowed for residential access.
Under facts of case, after district court found scope of the easement allowed for residential access, it correctly held the implied easement allowed utility access because such use was necessary and reasonable.
STATUTE: K.S.A. 20-3018(c)
KANSAS RELOCATION ASSISTANCE FOR PERSONS DISPLACED BY ACQUISITION OF REAL PROPERTY ACT AND STANDARD OF REVIEW
FRICK V. CITY OF SALINA
SALINE DISTRICT COURT — REVERSED AND REMANDED WITH DIRECTIONS
NO. 99,791 — JUNE 5, 2009
FACTS: The city of Salina (city) acquired property from the Fricks through the power of eminent domain. The parties eventually agreed on just compensation for the property. The parties also began negotiations for relocation benefits under the Kansas Relocation Assistance for Persons Displaced by Acquisition of Real Property Act to relocate the Frick's various businesses. Dissatisfied with the amount paid by the city, the Frisks appealed to an independent hearing examiner for an administrative hearing. The hearing examiner upheld the award made by the city. The Fricks appealed to the district court where the parties disagreed about the standard of review. The district court applied a substantial competent evidence standard of review, but ruled the Fricks would be permitted to present additional evidence relevant to fair and reasonable relocation payments. After an evidentiary hearing, the district court found substantial competent evidence supported the decisions of the hearing examiner, denied additional relocation benefits to the Fricks, and incorporated by reference the examiner's decisions into the court's order.
ISSUES: (1) Kansas Relocation Assistance for Persons Displaced by Acquisition of Real Property Act and (2) standard of review
HELD: Court held under K.S.A. 58-3509(a), which provides for an appeal to district court of an administrative hearing examiner's determination of relocation benefits and states that any such appeal shall be a trial de novo only on the issue of relocation benefits, a district court should make independent findings of fact and conclusions of law regarding the question of relocation benefits based upon the record of proceedings before the hearing examiner.
CONCURRENCE: J. Johnson concurred in the majority's result of a trial de novo on the issue of relocation benefits. However, Johnson disagreed with the majority's limited reading of trial de novo and stated the Frisks should receive a new trial, not a trial on the record.
STATUTES: K.S.A. 8-259(a); K.S.A. 12-527; K.S.A. 26-501, -504, -505, -506, -508(a); K.S.A. 1967 Supp. 44-556; K.S.A. 44-1011(b); K.S.A. 58-3501, -3502, -3503, -3506, -3508, -3509(a); K.S.A. 75-5001; and K.S.A. 77-601, -602(a), (k), -603, -621(c)(7)
MUNICIPAL CORPORATIONS — STATUTES
RURAL WATER DISTRICT NO. 2 V. CITY OF LOUISBURG MIAMI DISTRICT COURT
REVERSED AND REMANDED
NO. 100,332 — MAY 29, 2009
FACTS: Rural water district appealed district court's decision affirming appraisers' award of $133.200 for territory annexed by the City of Louisburg. Appeal transferred to Supreme Court. Five issues identified: (1) Were the appraisers and the district judge required as matter of law to consider or award going concern value in arriving at award amount? (2) What was the appropriate procedure to be followed in district court action challenging appraisers' award under K.S.A. 12-527? (3) What standard of review or standard of proof applies to such an action in district court? (4) and (5) Whether proper review or standard of proof under K.S.A. 12-527 was sufficient to satisfy Fifth Amendment, and did Water District carry its burden of demonstrating the appraisers' award amount was unreasonable?
ISSUES: (1) Going concern value, (2) procedure in district court, (3) standard of review or standard of proof, and (4)/(5) Fifth Amendment and discharge of burden
HELD: K.S.A. 12-527 examined and interpreted throughout the opinion. Going concern value is a potential component of reasonable value, as that term is used in K.S.A. 12-527. Going concern value should be considered for inclusion in any appraiser's award and any reconsideration of same in district court.
Legislature's use of nonspecific "institute an action" language in K.S.A. 12-527 endows a party dissatisfied with appraisers' award with right to trial de novo in district court on issue of reasonableness of the award. Party challenging an appraisers' award under K.S.A. 12-527 bears burden of demonstrating it to be unreasonable. Because Water District was not permitted a trial de novo in district court, district court's decision is reversed and remanded for appropriate procedure to be employed.
District court factfinder, whether ultimately a judge or jury, must decide whether party challenging the award has carried its burden by a preponderance of the evidence, and if so, the correct reasonable value, based on all evidence presented in the district court proceeding.
Because case is reversed and remanded, there is no decision on Fifth Amendment requirements. Assuming arguendo the Fifth Amendment comes into play when a city annexes a territory served by a water district, the reasonable value contemplated by the statute is equivalent to just compensation under U.S. Constitution. Also no decision on whether Water District carried its burden of demonstrating the appraisers' award was unreasonable.
STATUTES: K.S.A. 2008 Supp. 26-508; K.S.A. 12-527, -527(a) (3); K.S.A. 21-4012, -4017; K.S.A. 26-508; K.S.A. 40-3619, -3627; K.S.A. 44-806a; K.S.A. 55-215; K.S.A. 58-3064; K.S.A. 60-4115, K.S.A. 65-1828; K.S.A...
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