SC Realty Services, Inc. v. MTC Cleaning, Inc. f/k/a Magic Touch Cleaning, Inc. et al

Filing 52

MEMORANDUM AND ORDER denying 28 Motion for Order for Accounting. Signed by District Judge Carlos Murguia on 7/27/15. (kao)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
SC REALTY, INC.,
Plaintiff,
v.
MTC CLEANING, INC. f/k/a MAGIC
TOUCH CLEANING, INC., et al.,
Defendants.

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Case No. 15-2315

MEMORANDUM AND ORDER
Plaintiff SC Realty, Inc., filed a Verified Petition in the District Court of Johnson County,
Kansas on January 14, 2015, against defendants MTC Cleaning, Inc. f/k/a Magic Touch Cleaning, Inc.
(“Magic Touch”), Gary L. Walker, Patricia M. Walker, and Bullseye International SDVOB, Inc. This
removed lawsuit involves plaintiff’s purchase of the assets of Magic Touch, a commercial janitorial
service company. Plaintiff alleges that defendants have breached various agreements executed by the
parties, and defendants have filed counterclaims. The matter is before the court on defendants’ Motion
for Accounting (Doc. 28).
Defendants argue they are “entitled to an accounting to prepare a Preliminary Balance Sheet
and Fixed Asset Reconciliation, as well as an accounting of the books and records of SC Realty to
verify the accuracy of the Preliminary Balance Sheet and Fixed Asset Reconciliation.” (Id. ¶ 5.)
Defendants cite clauses from the Asset Purchase Agreement to support their argument that they are
contractually entitled to this accounting, and defendants explain they would like the books and records
during discovery for the purpose of conserving resources. (Id. at ¶¶ 2, 6.) The remedy defendants seek
is a court order to have plaintiff “make its books and records available to Defendants and/or their
accountant.” (Id. ¶ 7.)

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Defendants’ motion clearly states that it is a motion for accounting. An accounting is an equitable
form of relief whereby the court orders a third-party to reconcile certain financial records or itself
reconciles financial records after a hearing on the merits. See, e.g., Apple v. Smith, 106 Kan. 717, 727
(1920). An equitable claim for an accounting is not cognizable unless there is no adequate remedy at
law, or the accounts are so complicated that only a court of equity can satisfactorily unravel them.
Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962); Haynes Trane Serv. Agency, Inc. v. Am.
Standard, Inc., 51 Fed. App’x. 786, 800 (10th Cir. 2002) (finding that nearly 3,000 transactions
rendered the accounts so complicated that an equitable accounting was warranted). Defendants do not
argue they are entitled to an equitable accounting, and the court finds defendants have made no
showing that an equitable accounting is appropriate in these circumstances.
Defendants assert they are seeking to enforce a contractually-allowed accounting. However, an
action for accounting pursuant to the Asset Purchase Agreement is Count V of defendants’ Amended
Counterclaim. (Doc. 32 at 14–16.) None of the competing breach of contract claims has been decided,
including Count V of the Amended Counterclaim, nor have defendants presented any evidence to the
court that they are entitled to judgment as a matter of law on Count V. Whether defendants are
contractually entitled to an accounting under the parties’ agreement is one of many claims raised in this
lawsuit, and the meaning of the contract is ultimately a decision to be made by the fact finders in this
case, not the court at this time.
IT IS THEREFORE ORDERED that defendants’ Motion for Accounting (Doc. 28) is denied.
Dated this 27th day of July, 2015, at Kansas City, Kansas.
s/ Carlos Murguia
CARLOS MURGUIA
United States District Judge

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