U.S. Transport, Inc. et al v. Torley et al
MEMORANDUM AND ORDER granting in part and denying in part 66 Motion for Summary Judgment; granting 68 Motion for Summary Judgment. Signed by District Judge Monti L. Belot on 8/23/2011. (rs)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
U.S. TRANSPORT, INC., et al.,
RANDOLPH TORLEY and
R A TRANSPORT, LLC.,
MEMORANDUM AND ORDER
This case comes before the court on defendants’ motion for
summary judgment (Doc. 68) and plaintiffs’ motion for summary judgment
on defendants’ counterclaims (Doc. 66).
The motions have been fully
briefed and are ripe for decision. (Docs. 67, 69, 74, 77, 79, 81, 83,
Defendants’ motion is granted and plaintiffs’ motion is granted
in part and denied in part for the reasons set forth herein.
Summary Judgment Standards
The usual and primary purpose of the summary judgment rule is
to isolate and dispose of factually unsupported claims or defenses.
See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).
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."
An issue is “genuine” if sufficient evidence
exists on each side “so that a rational trier of fact could resolve
the issue either way” and “[a]n issue is ‘material’ if under the
substantive law it is essential to the proper disposition of the
Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.
1998) (citations omitted); see also Adams v. Am. Guarantee & Liab.
Ins. Co., 233 F.3d 1242, 1246 (10th Cir. 2000) (citing Adler).
mere existence of some factual dispute will not defeat an otherwise
properly supported motion for summary judgment because the factual
dispute must be material.
See Renfro v. City of Emporia, 948 F.2d
1529, 1533 (10th Cir. 1991).
A defendant initially must show both an absence of a genuine
issue of material fact and entitlement to judgment as a matter of law.
See Adler, 144 F.3d at 670.
Because a plaintiff bears the burden of
proof at trial, a defendant need not "support [its] motion with
affidavits or other similar materials negating [a plaintiff’s]” claims
Celotex, 477 U.S. at 323 (emphasis in original).
Rather, a defendant can satisfy its obligation simply by pointing out
the absence of evidence on an essential element of a plaintiff’s
See Adler, 144 F.3d at 671 (citing Celotex, 477 U.S. at 325).
If the defendant properly supports its motion, the burden then
shifts to the plaintiff, who may not rest upon the mere allegation or
denials of its pleading, but must set forth specific facts showing
that there is a genuine issue for trial.
See Mitchell v. City of
Moore, Okla., 218 F.3d 1190, 1197-98 (10th Cir. 2000).
forward these specific facts, the plaintiff must identify the facts
“by reference to affidavits, deposition transcripts, or specific
exhibits incorporated therein.”
Adler, 144 F.3d at 671.
evidence offered in opposition to summary judgment is merely colorable
or is not significantly probative, summary judgment may be granted.
See Cone v. Longmont United Hosp. Ass’n, 14 F.3d 526, 533 (10th Cir.
speculation, or on suspicion, and may not escape summary judgment in
the mere hope that something will turn up at trial.”
Smith, 853 F.2d 789, 793 (10th Cir. 1988).
Put simply, the plaintiff
must “do more than simply show there is some metaphysical doubt as to
the material facts.”
Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986).
Certain local rules further govern the presentation of facts and
Local Rule 56.1 requires the movant to set forth a concise
statement of material facts.
D. Kan. Rule 56.1.
Each fact must
appear in a separately numbered paragraph and each paragraph must
refer with particularity to the portion of the record upon which the
similar statement of facts.
The opposing memorandum must contain a
The plaintiff must number each fact in
dispute, refer with particularity to those portions of the record upon
which he or she relies and, if applicable, state the number of the
defendant’s fact that he or she disputes.
The court may, but is not
obligated to, search for and consider evidence in the record that
would rebut the defendant’s evidence, but that the plaintiff has
failed to cite.
See Mitchell, 218 F.3d at 1199; Adler, 144 F.3d at
All material facts set forth in the statement of the defendant
shall be deemed admitted for the purpose of summary judgment unless
specifically controverted by the statement of the plaintiff. See id.;
Gullickson v. Sw. Airlines Pilots’ Ass’n, 87 F.3d 1176, 1183 (10th
Cir. 1996) (applying local rules of District of Utah).
The parties need not present evidence in a form that would be
admissible at trial, but the content or substance of the evidence must
See Thomas v. Int’l Bus. Machs., 48 F.3d 478, 485
(10th Cir. 1995) (internal quotations and citations omitted).
example, hearsay testimony that would be inadmissible at trial may not
See Adams, 233 F.3d at 1246.
Similarly, the court will
disregard conclusory statements and statements not based on personal
knowledge. See Cole v. Ruidoso Mun. Schs., 43 F.3d 1373, 1382 (10th
Cir. 1994) (regarding conclusory statements); Gross v. Burggraf
Constr. Co., 53 F.3d 1531, 1541 (10th Cir. 1995) (requiring personal
Finally, the court may disregard facts supported only by
references to documents unless the parties have stipulated to the
authenticated by and attached to an affidavit meeting the requirements
of Rule 56(e).
See FED. R. CIV. P. 56(e); D. Kan. Rule 56.1; 10A
Charles Alan Wright, et al., Federal Practice and Procedure § 2722 (2d
ed. 1983) (footnotes omitted).
In the end, when confronted with a fully briefed motion for
summary judgment, the court must 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."
v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
evidence exists on which a trier of fact could reasonably find for the
plaintiff, summary judgment is inappropriate. See Prenalta Corp. v.
Colo. Interstate Gas Co., 944 F.2d 677, 684 (10th Cir. 1991).
Statements made in either parties’ memoranda that are not
supported with citations to the record have not been included in the
court’s recitation of the facts.
See D. Kan. Local R. 7.6 (“Each
statement of fact should be supported by reference to the record in
the case.”); 56.1(a) (“facts . . . shall refer with particularity to
those portions of the record upon which the movant relies”); 56.1(b)
(same requirement for opposing memorandum).
In addition, statements made in the parties’ memoranda that are
supported only by reference to an unauthenticated exhibit have not
been included in the recitation of facts.
See D. Kan. Local R.
56.1(d) (“All facts on which a motion or opposition is based shall be
presented by affidavit, declaration under penalty of perjury, and/or
relevant portions of pleadings, depositions, answer to interrogatories
and responses to requests for admissions.”).
As a result of the court’s standing order, the argument of the
parties that is included within the parties’ factual statements has
been wholly ignored.
See Revised Standing Order, available at
http://www.ksd.circ10.dcn/chambers/showjudge.php?juegeid=13 (click on
“Standing Order”), at ¶ 1.E. (“Statements of uncontroverted fact shall
cite only facts. Responses to statements of uncontroverted fact shall
cite only controverting facts. Argument and the drawing of inferences
shall be reserved for the authorities and argument section of the
identical affidavits of Mike and Steve Nelligan which are almost
entirely conclusory, lacking in personal knowledge and unsupported
See paragraphs 2, 5-18, 20, 21 and 23 of each
General Factual Background
Plaintiffs and defendant RA Transport are trucking companies.
employment with plaintiff DW Transport.1
Torley’s job title was Vice
President and General Manager. Torley’s salary was $82,000 but he did
not receive his full salary amount during the years he was employed
In October 2004, Torley executed a Stock Purchase
Agreement in which Torley agreed to sell his 11,000 shares of company
stock for $22,330.
Torley, however, did not immediately receive
payment for selling the shares.
In December 2005, Steven Nelligan,
CEO of plaintiff U.S. Transport, sent Torley a letter in which he
stated that Torley would be required to sign a Settlement and General
Release Agreement prior to payment being issued.
Torley did execute
the release on May 10, 2006, after being told that he would not
receive a payment under the stock purchase agreement unless he did so.
On October 31, 2006, Torley ended his employment with plaintiffs
and began operating a trucking company out of his home.
purchased a truck and began contacting potential clients.
contracted with Tyson Fresh Meats, a client of plaintiffs, to deliver
a load on November 30, 2006.
On December 7, Torley contacted Feed
Mercantile, Inc., one of plaintiffs’ clients, in order to obtain a
contract for a load.
During his initial weeks in business, Torley
contacted Danny Starr, who was employed as head dispatcher for
plaintiffs, to request contact information for plaintiffs’ clients,
although no one can recall which client information was sought by
Plaintiffs are successors in interest to Don Ward Transport,
Starr gave Torley that information and also gave out that
information to several other truckers who were in competition with
Starr’s practice was to give out the name of the
individual to contact but not the actual contact numbers.
not recall if he gave contact information to Torley for Tyson or Feed
Torley ultimately hired several employees who had previously
worked for plaintiffs.
late 2006, Ronald Rowlands, one of
plaintiffs’ employees, spoke with Torley about operating a truck for
plaintiffs held a Christmas party for their employees.
attended the party even though he was not invited and no longer an
At that party, Rowlands submitted his resignation.
early 2007, both Starr and Jonell Niles left plaintiffs’ employment
to work for RA Transport.
With the exception of one employee, all of
plaintiffs’ employees were at-will and did not have written employment
Arnie Johnson had a lease contract with plaintiffs;
however, the agreement could be terminated at-will by either party.
As Torley expanded his business, he was in direct competition
with plaintiffs for customers.
Due to Torley’s prior position with
plaintiffs, he was aware of the rates that had been previously paid
to plaintiffs by its customers. Danny Starr was also was aware of the
customer contacts and rates.
In determining rates for trucking
routes, however, the customers usually set the rates they would pay
significantly declined and they sustained heavy losses.
business declined by more than $1.4 million in Kansas during the years
2007 and 2008.
Torley’s business was increasing and he continued to
hire more employees away from plaintiffs.
closed their business in March 2008.
tortiously interfered with their contractual agreements and business
Torely filed a counterclaim for breach of contract and
a claim under the Kansas Wage Payment Act, K.S.A. 44-314.
move for summary judgment on Torely’s counterclaims and defendants
move for summary judgment on plaintiffs’ claims.
A federal court sitting in diversity jurisdiction must apply the
substantive law of the state in which it sits, including that state’s
See ORI, Inc. v. Lanewala, 147 F. Supp.2d 1069,
1078 n. 9 (D. Kan. 2001). Plaintiffs have alleged tort claims against
The Kansas Supreme Court has held that the law of the
state where the tort occurs controls.
See Lemons v. Lewis, 963 F.
Supp. 1038, 1050 (D. Kan. 1997)(citing Ling v. Jan’s Liquors, 237 Kan.
629, 635, 703 P.2d 731, 735 (1985)). All of the tortious acts alleged
by plaintiffs occurred in the state of Kansas.
law controls plaintiffs’ claims.
The breach of contract counterclaim
alleged by defendant Torley is controlled by Colorado law because the
underlying contract sets forth a choice of law provision and no party
has asserted that the clause is invalid.
Defendants’ Motion for Summary Judgment (Doc. 68)
Tortious Interference with a Contract
Plaintiffs assert that defendants interfered with the contracts
they had entered into with both their employees and their customers.
“The essential elements of a claim for tortious interference with
contract are: (1) the contract; (2) the wrongdoer's knowledge thereof;
(3) his intentional procurement of its breach; (4) the absence of
justification; and (5) damages resulting therefrom.”
Unison Bancorp, Inc., 276 Kan. 393, 423, 77 P.3d 130 (2003).
Defendants argue that this claim must fail because plaintiffs are
customers and all of their previous employees.
Plaintiffs do not
directly respond to this allegation nor do they submit any contracts
as exhibits to their filings.
Instead, and without any citation to
interfered with and that such a relationship can be the subject of a
tortious interference with prospective advantage or contract claim.
(Doc. 77 at 19).
A claim for tortious interference of a contract
Plaintiffs have failed to establish both the existence of a contract
and that there was a breach of that contract.
Moreover, they have
additionally failed to show that defendants had knowledge of the
contracts, even if they existed.
Because plaintiffs have not established a genuine issue of
material fact with respect to the first three elements, defendants are
interference with contract.
Sunlight Saunas, Inc. v. Sundance Sauna,
Inc., 427 F. Supp.2d 1032, 1070 (D. Kan. 2006).
Tortious Interference with Prospective Business Advantage
Next, plaintiffs allege that defendants interfered with the
relationships with their customers. The essential elements of a claim
for tortious interference with prospective business expectancy are:
(1) the existence of a business relationship or expectancy with the
probability of future economic benefit to plaintiffs; (2) knowledge
of the relationship or expectancy by defendants; (3) that, except for
the conduct of defendants, plaintiffs were reasonably certain to have
continued the relationship or realized the expectancy; (4) intentional
misconduct by defendants; and (5) damages suffered by plaintiffs as
a direct or proximate cause of defendants’ misconduct.
Kan. at 424.
Both parties spend the majority of their briefing on the fourth
element, which requires intentional misconduct by defendants, and may
evil-mindedness or specific intent to injure.”
Triple-I Corp. v.
Hudson Assocs. Consulting, Inc., 713 F. Supp.2d 1267, 1287 (D. Kan.
Generally, the court looks to Restatement (Second) of Torts
§ 767 to determine if a party's intentional interference is improper.
However, when a plaintiff and defendant are competitors, as in this
case, the court must look to the factors set forth in Restatement
(Second) of Torts § 768 to determine the propriety of a business
competitor's interference with a prospective business relationship.
DP-Tek, Inc. v. AT&T Global Info. Solutions Co., 100 F.3d 828, 832
(10th Cir. 1996)2.
Under section 768, a party that intentionally
The Kansas Supreme Court has not been faced with the issue of
whether to apply section 768 in competitor cases. The Tenth Circuit,
in DP-Tek, came to the conclusion that the Kansas Supreme Court would
apply section 768. After noticing that neither party discussed the
DP-Tek case in their briefing, the court advised the parties of the
authority and asked for supplemental briefing. (Doc. 82). Defendants
addressed the Tenth Circuit authority and asserted that the court was
correct in applying the section 768 factors. Plaintiffs, however,
causes a third person not to enter into a prospective contractual
relation with another who is his competitor does not interfere
improperly with the other's relation if:
(a) the relation concerns a matter involved in the
competition between the actor and the other;
(b) the actor does not employ wrongful means;
(c) his action does not create or continue an unlawful
restraint of trade; and
(d) his purpose is at least in part to advance his interest
in competing with the other.
Restatement (Second) of Torts § 768.
Defendants contend that plaintiffs are unable to show that
defendants employed wrongful means.
In DP-Tek, the Tenth Circuit
interpreted the wrongful means element of subsection b to require
independently actionable conduct. 100 F.3d at 832.
conduct which is neither illegal nor independently actionable does not
become actionable because it interferes with another's prospective
In their supplemental briefing, plaintiffs have only identified
one independent action which they could bring against Torley trespass.
This “trespass” was allegedly committed when
Torley arrived at the Christmas party uninvited.
Even if plaintiffs
were to establish that Torley committed trespass, they have failed to
show that except for the “trespass,” they “were reasonably certain to
have continued the relationship [with their clients] or realized the
disagreed and urge the court to use the factors set forth by the
Kansas Court of Appeals in Noller v. GMD3, 13 Kan. App.2d 13 (1988).
(Doc. 84). That opinion is not persuasive, however, primarily because
it did not concern competitors and was decided eight years prior to
DP-Tek. Moreover, and most importantly, this court is bound by the
decisions of the Tenth Circuit, especially when, as here, the case
involves Kansas law. Plaintiffs not only fail to distinguish DP-Tek,
they do not even cite it. (Doc. 84).
expectancy” as required under Kansas law.
Burcham, 276 Kan. at 424.
Plaintiffs did not lose their business to Torley because he went to
their Christmas party uninvited.
Plaintiffs further assert that a variety of actions by defendants
were wrongful; however, they have not clearly identified how that
conduct was independently actionable.
Plaintiffs primarily focus on
how Torley accessed its customer contacts and rate information.
Starr gave that information to Torley but he
also disclosed that information to other truckers.
is no evidence that plaintiffs’ customer contact information was
confidential. Moreover, plaintiffs have also failed to establish that
Because plaintiffs have not submitted any evidence which
would support a finding that their rate information is confidential,
these allegations cannot support a finding that defendants’ actions
in obtaining the information is independently actionable. See DP-Tek,
100 F.3d at 835-36 (“The record does not support DP-Tek's allegations”
that the prices were confidential because the competitors ask the
clients to disclose the other prices.)
Plaintiffs also assert that Torley bad mouthed their company to
their clients and employees.
Plaintiffs, however, have failed to
Admittedly, Torley was aware of pricing information due to his
position with plaintiffs. Plaintiffs, however, have not identified
how Torley’s use of that information is independently actionable
conduct. The court is under no obligation to create arguments on
plaintiffs’ behalf. See Phillips v. Hillcrest Med. Ctr., 244 F.3d
790, 800 (10th Cir. 2001).
Moreover, the court should not raise
issues sua sponte. Hardiman v. Reynolds, 971 F.2d 500, 502 (10th Cir.
plaintiffs have not indicated how this conduct would be independently
Because plaintiffs cannot identify wrongful conduct by defendants
Wichita Clinic, P.A. v. Columbia/HCA Healthcare
Corp., 45 F. Supp.2d 1164, 1209 (D. Kan. 1999).
for summary judgment on this claim is therefore granted.
Plaintiffs’ Motion for Summary Judgment (Doc. 66)
Plaintiffs move for summary judgment on Torley’s counterclaims
for breach of contract and a claim for payment under the KWPA.
Plaintiffs assert that Torley’s claims are barred under the applicable
statute of limitations and as a result of the general release of
claims Torley signed in May 2006.
Torely’s counterclaims seek payment for wages due under his
counterclaims have a three year statute of limitations.
Rev. Stat. 13-80-101(a); K.S.A. 60-512.
Torley acknowledges that the
statute of limitations prevents him from prevailing on his claims for
the years 1999, 2000, 2001, 2002, 2003, 2004 and the majority of 2005.
Torley, however, asserts that the statute of limitations on his claims
should be tolled from the time that plaintiffs filed their initial
complaint on December 22, 2008.
Therefore, any claims prior to
December 22, 2005, would be barred.
Plaintiffs respond that any
claims prior to May 11, 2006, three years prior to the filing of the
counterclaims, are barred by the statute.
Torley cites Full Draw Prods. v. Easton Sports, 85 F. Supp.2d
1001 (D. Colo. 2000) to support his position.4
Full Draw states that
Colorado law allows for the statute of limitations to toll on
compulsory counterclaims only.
See Colo. Rev. Stat. 13-80-109.
Therefore, the court must first determine whether Torley’s claims are
compulsory or permissive.
Compulsory counterclaims “arise[ ] out of
the same transaction or occurrence that is the subject matter of the
opposing party's claim.” Fed. R. Civ. P. 13(a)(1)(A). Any counterclaim
which does not arise out of the same transaction or occurrence as the
opposing claim is a permissive counterclaim. Rule 13(b).
The Tenth Circuit has adopted four factors in determining whether
a counterclaim “arises out of the same transaction or occurrence” as
the opposing party's claim. See Fox v. Maulding, 112 F.3d 453, 457
(10th Cir. 1997). Specifically, a counterclaim is compulsory if: “(1)
the issues of fact and law raised by the principal claim and the
counterclaim are largely the same; (2) res judicata [i.e., claim
preclusion] would bar a subsequent suit on defendant's claim; (3) the
counterclaim; and, (4) there is a logical relationship between the
claim and counterclaim.”
Berrey v. Asarco Inc., 439 F.3d 636, 645
(10th Cir. 2006).
In this case, Torley’s counterclaims are permissive.
do not raise the same issues of fact and law, res judicata would not
bar Torley’s claims, and the evidence to support Torley’s claims is
In Full Draw, the court applies Colorado law.
however, does not allow for the tolling of the statute of limitations
on counterclaims. See Hatfield v. Burlington N. R. Co., 747 F. Supp.
634 (D. Kan. 1990). Therefore, Torley’s claim under the KWPA can only
include damages for underpayment after May 11, 2006. All damages
prior to that date are barred by the statute of limitations.
entirely separate from the evidence needed to support plaintiffs’ tort
claims. Finally, the only logical relation between plaintiffs’ claims
and Torley's counterclaims is that the claims stemmed from the prior
A prior employment relationship is not
enough to establish that the claims are compulsory. Adamson v. Dataco
Derex, Inc., 178 F.R.D. 562, 566 (D. Kan. 1998).
Because Torley’s counterclaims are permissive, the statute of
limitations is not tolled by the filing of plaintiffs’ complaint.
Therefore, the date of the filing of the counterclaim controls.
Colo. Rev. Stat. 13-80-109.
Torley filed his counterclaim on May 11,
2009. All damages for the alleged breach of contract prior to May 11,
2006, are accordingly barred by the statute of limitations.5
Plaintiffs do not put forth any argument concerning Torley’s
damages on his counterclaims from May 11, 2006, until his termination
counterclaims will proceed to trial.
Defendants’ motion for summary judgment (Doc. 68) is granted.
Plaintiffs’ motion for summary judgment (Doc. 66) is granted in part
and denied in part. The clerk is directed to set this case for trial.
A motion for reconsideration of this order pursuant to this
court's Rule 7.3 is not encouraged.
The standards governing motions
to reconsider are well established.
A motion to reconsider is
Plaintiffs’ alternative argument - that Torley’s claims are
waived because of the general release - is moot. Torley signed the
general release on May 10, 2006. The release only applied to claims
prior to the date of the release. Therefore, Torley did not release
any future claims against plaintiffs.
appropriate where the court has obviously misapprehended a party's
position or the facts or applicable law, or where the party produces
new evidence that could not have been obtained through the exercise
of reasonable diligence.
Revisiting the issues already addressed is
not the purpose of a motion to reconsider and advancing new arguments
or supporting facts which were otherwise available for presentation
when the original motion was briefed or argued is inappropriate.
Comeau v. Rupp, 810 F. Supp. 1172 (D. Kan. 1992).
Any such motion
shall not exceed five pages and shall strictly comply with the
standards enunciated by this court in Comeau v. Rupp.
to any motion for reconsideration shall not exceed five pages.
reply shall be filed.
IT IS SO ORDERED.
day of August 2011, at Wichita, Kansas.
s/ Monti Belot
Monti L. Belot
UNITED STATES DISTRICT JUDGE
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