JCM 082763, LLC v. Heinen Bros. Agra Services, Inc.

Filing 52

MEMORANDUM AND ORDER: Defendants motion for summary judgment (Dk. 45) is granted insofar as the plaintiff Jerry C. Meacham is dismissed without prejudice for lack of standing at this time, and is denied in all other respects. 50 Motion for Hearing is denied. Signed by U.S. District Senior Judge Sam A. Crow on 12/10/2013. (mb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
JCM, LLC (a Kansas Limited Liability
Company) and JERRY C. MEACHAM,
Plaintiffs
vs.

Case No. 12-1451-SAC

HEINEN BROS. AGRA SERVICES, INC.,
Defendant.
MEMORANDUM AND ORDER
The case comes before the court on the defendant Heinen Bros.
Agra Services, Inc.’s (“Heinen Bros.”) motion for summary judgment (Dk.
45) arguing that the plaintiffs lack standing to bring this action and that the
plaintiffs’ punitive damages claim lacks sufficient evidence to raise a genuine
issue of material fact. As the owner and operator of a hunting lodge and
outfitting business on property in Chautauqua County, Kansas, in June of
2011, the plaintiff JCM, LLC (“JCM”) brings this action alleging the Heinen
Bros. aerially applied a herbicide on abutting land so as either to spray
directly the plaintiff’s property or to allow drifting of the spray onto the
plaintiff’s property. The spray killed a large number of trees for which JCM is
seeking damages in excess of $100,000. After researching the issues and
reviewing the filings, the court denies the defendant’s motion finding that
the plaintiff JCM has standing and that there are genuine issues of material
fact to preclude summary judgment on the punitive damages claim.

STATEMENT OF UNCONTROVERTED MATERIAL FACTS
In June of 2011, Adam Way, an employee-pilot for Heinen Bros.,
aerially sprayed the herbicide Remedy Ultra to crop ground belonging to
Lynn Kelly in rural Chautauqua County, Kansas. Immediately south of this
ground was property used as a hunting preserve and owned by the plaintiff
JCM. This action was brought when trees on the plaintiff’s property were
damaged allegedly because of herbicide drift from this aerial spraying.
Sometime in July 2012, the Kansas business registration for JCM
was forfeited. By special warranty deed dated November 14, 2012, JCM
transferred its property to JCM 082763, a Florida limited liability company
registered on November 6, 2012. The plaintiff Jerry C. Meacham
(“Meacham”) is the member/manager of both limited liability companies.
This transfer of property between the companies did not include an express
transfer of money or any agreement regarding the damage, damage claim or
payment for damage, arising from the alleged event in June of 2011. On
December 5, 2012, JCM 082763 filed this suit, and on April 4, 2013, JCM’s
business registration with the State of Kansas was reinstated. The court
granted JCM 082763’s motion to substitute JCM and Meacham as the
plaintiffs in this action.
The Kansas Department of Agriculture (“KDA”) sent its
investigator, Brice Denton, to make investigatory findings about this
spraying incident. Adam Way, Heinen Bros.’s pilot, told Denton that he
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applied the herbicide when the winds were out of the northwest at a speed
of 5 mph. The weather data for nearby communities showed wind speeds
from 11.5 to 13.8 mph for the same time period. Denton testified that these
higher wind speeds would be consistent with the herbicide damage he
observed on the plaintiff’s property located three-quarters of a mile from the
spray site. For purposes of this motion, the defendant concedes to wind
speeds of between 11.8 to 13.8 mph.
Denton’s report summarized that Heinen Bros. aerially applied
Remedy Ultra to “157 acres of pasture on 6/15/11 immediately north of
Jerry Meacham’s property and that tree leaves were showing symptoms
consistent with phenoxy exposure.” (Dk. 49-3, p. 2). Denton inspected the
plaintiff’s property and took vegetation and soil samples. Denton recorded
his observation that, “[t]he north side of trees on Mr. Meacham’s property
where (sic) showing signs of herbicide injury for at least 3/4 of a mile to the
south of the target field.” Id. Denton’s report included the following taken
from herbicide’s label:
Label: Remedy Ultra EPA Reg# 62719-552 on page 2 under Avoiding
Injurious Spray Drift make applications only when there is little or no
hazard from spray drift. Small quantities of spray, which may not be
visible, may seriously injure susceptible plants. Do not spray when
wind is blowing toward susceptible crops or ornamental plants that are
near enough to be injured.
(Dk. 49-3, p. 3). Denton testified that this herbicide is more toxic than 2, 4D.

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Bert Hawkins monitors the plaintiff’s property and keeps some of
his cattle on this property. Living approximately one mile east of the
property, he recalls the spraying incident and has experience with using
herbicide to control weeds. Hawkins has averred “that it was way too windy
to be spraying that morning. I saw the cropduster doing the spraying and it
was drifting like crazy.” (Dk. 49-5, p. 3). Hawkins also states the wind
speeds that morning were at least between 11.5 and 13.8 mph.
STANDING
“[T]he party seeking to invoke federal jurisdiction bears the
burden of establishing standing.” Cressman v. Thompson, 719 F.3d 1139,
1144 (10th Cir. 2013) (internal quotation marks and citation omitted).
“Absent a plaintiff with constitutional standing, federal courts lack
jurisdiction.” Southern Utah Wilderness Alliance v. Palma, 707 F.3d 1143,
1153 (10th Cir. 2013) (internal citation omitted). “[S]tanding is determined
as of the date of the filing of the complaint.” Hill v. Vanderbilt Capital
Advisors, LLC, 702 F.3d 1220, 1224 (10th Cir. 2012) (internal quotation
marks and citation omitted). “To have Article III standing, the plaintiff must
show that the conduct of which he complains has caused him to suffer an
injury in fact that a favorable judgment will redress.” The Wilderness Soc. v.
Kane County, Utah, 632 F.3d 1162, 1168 (10th Cir. 2011) (internal
quotation marks and citation omitted).

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In arguing that JCM lacks standing, the defendant relies
principally on the following statement appearing in the Tenth Circuit decision
of Morsey v. Chevron, USA, Inc., 94 F.3d 1470, 1478 (10th Cir. 1996):
Assuming without deciding that Morsey acquired his leasehold by an
assignment broad enough to include his predecessors’ causes of action
as to Section 20, he cannot recover for injuries inflicted on the
leasehold before he acquired it. Any tort for damages done to the
leasehold before he acquired it belonged to his predecessors-ininterest and lapsed when they transferred it. In Kansas, tort claims
such as those in question are unassignable.
The defendant keys on the italicized language to argue that JCM’s tort action
lapsed in November of 2012 when it transferred all of its property to JCM
082763. The defendant contends that JCM 082763 filed this lawsuit in
December of 2012 as the owner of the property, that JCM has not had an
ownership interest in the property since before the lawsuit was filed, and
that Meacham has never had an ownership interest. Additionally, the
defendant argues that Meacham as a member/manager of these limited
liability companies does not own the company’s property and has no right to
sue on his own behalf.
The plaintiff Meacham, as the only shareholder in the limited
liability companies, concedes he was added as a personal party plaintiff only
out of an abundance of caution. Recognizing that Kansas law disallows the
assignment of tort actions, JCM contends this tort action for damages never
transferred to JCM 082763 in November of 2012 and always remained with
JCM. The plaintiff offers that there are no Kansas cases holding that a
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transferor necessarily loses the right of an action for property damage upon
transferring the property.
Other than quoting the italicized language from Morsey and
citing decisions that have quoted Morsey decision, the defendant does not
attempt to explain or defend the concept that an unassignable tort claim
“lapses” upon its transfer. This concept was not applied in Morsey, and it
stands as little more than dicta in that decision. The Morsey decision cites no
authority for this concept of lapsing, and none of the Kansas court decisions
cited in Morsey apply or support this concept. Indeed, the defendant does
not cite a single decision applying this lapsing concept.1
To have an injury that can be redressed, the plaintiff must
possess the substantive right being asserted. “The identify of this real party
in interest is determined by referring to the governing substantive law.”
Esposito v. U.S., 368 F.3d 1271, 1273 (10th Cir. 2004) (citations omitted).
The parties agree that tort claims are not assignable in Kansas. Stechschulte
The defendant cites the unpublished decision of Jenkins v. MTGLQ
Investors, 218 Fed. Appx. 719, 2007 WL 431498 (10th Cir. 2007), in which
a pro se plaintiff filed a quiet title action in Utah state district court asserting
he was an accommodation party by having pledged the real property as
security for a loan from the defendant’s predecessor. The defendant
removed this action to federal district court which eventually dismissed the
case for failure to state a claim. One of the grounds for dismissal for this
quiet title action was “that Mr. Jenkins lacked standing because he had sold
the property in question prior to filing suit and because he was not an
accommodation party under Utah law.” 218 Fed. Appx. at 722. The
defendant cites Jenkins without identifying it as a quiet title action and then
offers no analysis on how the issue of standing in a quiet title action parallels
the issue of standing in a tort action for property damage when the property
is transferred before filing suit.

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v. Jennings, 297 Kan. 2, 30, 298 P.3d 1083 (2013). Consequently, any
attempt to assign torts is “invalid” and the assignee acquires “no rights.”
Heinson v. Porter, 244 Kan. 667, 675, 772 P.2d 778 (1989), overruled on
other grounds, Glenn v. Fleming, 247 Kan. 296, 799 P.2d 79 (1990). Thus,
“if an assignment is invalid or incomplete, the assignor may still maintain a
suit in his or her own name.” 6 Am. Jur. 2d Assignments § 122 (2008); see,
e.g., Postal Instant Press v. Jackson, 658 F. Supp. 739, 741 (D. Colo. 1987)
(Colorado law); Davis v. Scott, 320 S.W.3d 87, 91-92 (Ky. 2010) (Kentucky
law) (citing Weiss v. Leatherberry, 863 So.2d 368, 373 (Fla. Dist. Ct. App.
2003); Botma v. Huser, 202 Ariz. 14, 39 P.3d 538, 542 (2002); Weston v.
Dowty, 163 Mich. App. 238, 414 N.W.2d 165, 167 (1987); Tate v. Gois, et
al., 24 S.W.3d 627, 635 (Tex. App. 2000)). Similarly, a court applying
Kansas law found the pro se plaintiff as the assignee of tort claims was not
the real party in interest, but it allowed the plaintiff later to add the assignor
as the real party. See, Patel v. Reddy, 2012 WL 602130 at *3 (D. Kan.
2012). Finally, the Kansas Supreme Court in Foster v. Capital Gas & Electric
Co., 125 Kan. 574, 265 Pac. 81 (1928), addressed a real party in interest
challenge against the plaintiffs who owned their home under contract but
were suing the gas company for an explosion that destroyed their home. The
Court found:
It is contended by the gas company that the plaintiffs cannot
recover because they are not the real parties in interest. It appears
that plaintiffs were purchasing the property in question from L.F.
Garlinghouse on an installment contract; that they had paid
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approximately $600, leaving a balance due of about $3,500. The home
having been destroyed, plaintiffs could no longer make payments to
Garlinghouse. They thereupon entered into a new contract with
Garlinghouse whereby they were relieved from further liability on the
old one upon payment by them to Garlinghouse of the sum of $3,500
when it was recovered from those liable for the explosion. It is argued
that this was such an annulment of the original contract of purchase
that the plaintiffs cannot recover. It is conceded that the tort is not
assignable, for which reason Garlinghouse cannot recover. The
defendant cites and relies upon the rule stated that, where a contract
for the sale of land is rescinded by mutual consent, the rights of the
parties thereunder are extinguished. 39 Cyc. 1355, 1358. We think the
rule has no application here. A cause of action existed between the
plaintiffs and Garlinghouse in which the defendants were in no way
interested. It is entirely separate and distinct from the cause of action
which arose in favor of the plaintiffs through destruction of their
property by negligence of the defendants. The supplemental
agreement between the plaintiffs and Garlinghouse constituted no
satisfaction or release of defendant’s liability. The contention cannot be
sustained.
125 Kan. at 82-83. Thus, the plaintiffs in Foster retained their tort cause of
action for property damage even though their ownership interest in the
property was later extinguished. Based on Foster and the generally
established rule that an invalid assignment does not preclude the assignor
from later suing in its name, the court rejects the defendant’s argument that
JCM’s existing tort action for property damage “lapsed” when the real
property was transferred to JCM 082763.
As for the standing of Jerry Meacham as the member/manager
of the limited liability companies, Kansas law is quite clear that “[a] limitedliability company may own property in its own name, and members have no
ownership interest in specific limited-liability company property.” In re Tax
Exemption, 44 Kan. App. 2d 467, 470, 239 P.3d 99 (2010) (citing K.S.A. 178

76,111). The plaintiff Meacham comes forward with no legal or factual basis
for ownership of this cause of action. Thus, the defendant’s motion to
dismiss Meacham is granted without prejudice.
PUNITIVE DAMAGES
Rule 56 authorizes a court to “grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.@ Fed. R. Civ. P. 56(a).
A fact is material if it would affect the outcome of a claim or defense under
the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A[T]he dispute about a material fact is >genuine,= . . ., if the evidence
is such that a reasonable jury could return a verdict for the nonmoving
party.@ Id. The essential inquiry is Awhether the evidence presents a
sufficient disagreement to require submission to the jury or whether the
evidence is so one-sided that one party must prevail as a matter of law.@
Anderson v. Liberty Lobby, 477 U.S. at 251B52. Put another way, A[w]here
the record taken as a whole could not lead a rational trier of fact to find for
the nonmoving party, there is no >genuine issue for trial.=@ Matsushita Elec.
Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); See Pinkerton
v. Colorado Dept. of Transp., 563 F.3d 1052, 1058 (10th Cir. 2009).
Kansas law, K.S.A. 60-3702(c), requires the plaintiff to prove his
claim for punitive damages “by clear and convincing evidence in the initial
phase of the trial, that the defendant acted toward the plaintiff with willful
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conduct, wanton conduct, fraud or malice.” Kansas law also limits the
punitive damage liability of Heinen Bros. for Adam Way’s conduct only if it
authorized or ratified Way’s conduct. K.S.A. 60-3702(d)(1); see Werdann v.
Mel Hambelton Ford, Inc., 32 Kan. App. 2d 118, 130, 79 P.3d 1081 (2003).
“[W]anton conduct . . . is defined as the reckless disregard for the rights of
others with a total indifference to the consequences.” Danisco Ingredients
USA, Inc. v. Kansas City Power & Light Co., 267 Kan. 760, 772, 986 P.2d
377 (1999) (citation omitted). For the plaintiff to establish wanton conduct,
it “must show that the act was performed with a realization of the
imminence of danger, and, second, that the act was performed with reckless
disregard or complete indifference to the probable consequences of the act.”
Adamson v. Bickness, 295 Kan. 879, 890, 287 P.3d 274 (2012) (internal
quotation marks and citation omitted). “Wantoness refers to the mental
attitude of the wrongdoer rather than a particular act of negligence.” Id. In
Adamson, the Kansas Supreme Court explained:
On a sliding scale, wanton behavior falls between negligent behavior
and willful or malicious misconduct. Wanton acts are those showing
that the defendant realized the imminence of injury to others and
refrained from taking steps to prevent injury because of indifference to
the ultimate outcome, not that the defendant lacked simple due care.
In other words, “the actor [must] have reason to believe his act may
injure another, and [commits the act anyway,] being indifferent to
whether or not it injures [another].” (Emphasis added.) Frazier v.
Cities Service Oil Co., 159 Kan. 655, 666, 157 P.2d 822 (1945); see
also Elliott v. Peters, 163 Kan. 631, 634, 185 P.2d 139 (1947)
(“[W]antonness involves a state of mind indicating indifference to
known circumstances.... There is a potent element of consciousness of
danger in wantonness.”).
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Id. at 890. Typically, it is a question of fact for the jury to decide whether
conduct is wanton, unless the question becomes one of law because no
reasonable persons could reach a different conclusion on wantonness from
the same evidence. Danaher v. Wild Oats Markets, Inc., 779 F. Supp. 2d
1198, 1213 (D. Kan. 2011) (citation omitted).
In its reply brief, the defendant concedes for purposes of its
summary judgment motion that on the morning in question the wind speed
was between 11.8 and 13.8 mph and that KDA investigator Denton observed
drift damage on the plaintiff’s property at least three-quarters of a mile from
the target field. It is also uncontroverted that the wind was blowing toward
the plaintiff’s hunting preserve at the time of spraying. The warning label on
the herbicide Ultra Remedy warns:
Make applications only when there is little or no hazard from spray
drift. Small quantities of spray, which may not be visible, may
seriously injure susceptible plants. Do not spray when wind is blowing
toward susceptible crops or ornamental plants that are near enough to
be injured.
(Dk. 49-1, p. 4). The warning label establishes that the pilot realized the
imminence of danger in aerially applying the herbicide when the wind was
blowing toward the plaintiff’s trees. The warning label includes
recommended measures for reducing drift including, “Drift potential is lowest
between wind speeds of 2 to 10 mph.” Id. at p. 5. Mr. Hawkins who
witnessed the spraying avers that herbicide “was drifting like crazy.” (Dk.
49-5, p. 3). He also opined the wind speeds that morning were at least
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between 11.5 and 13.8 mph. It is a credibility call for the jury to weigh this
evidence against the pilot Way’s written statement that he measured the
wind speed at 5 mph. The plaintiff responds that, “the wind speed on June
6th, which is the date Way indicates he sprayed the target property may
have been 5 mph; however, on the actual date of the spraying [June 15th]
the wind was at least 13.8 mph.” (Dk. 49, p. 3). A rational factfinder could
conclude from this evidence that the pilot acted with reckless disregard or
complete indifference to the probable consequences of applying the
herbicide under these conditions.
The current evidentiary record is enough for a rational jury to
find that the defendant ratified its pilot’s conduct. “Ratification, under the
punitive damages statute, may be either express or implied and may be
accomplished before, during, or after the employees' questioned conduct.”
Werdann v. Mel Hambelton Ford, Inc., 32 Kan. App. 2d at 131. “It may be
based on an express ratification or based on a course of conduct indicating
the approval, sanctioning, or confirmation of the questioned conduct.”
Smith v. Printup, 254 Kan. 315, 342, 866 P.2d 985 (1993). “Failure to
discipline an employee for wrongful conduct can be considered as evidence
of ratification by the employer.” Werdann, 32 Kan. App. 2d at 131 (citations
omitted).
Scott Heinen, the defendant’s representative, testified that the
pilot Way was not disciplined for this spraying incident. When asked if Way
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had done anything wrong in applying the spray, Heinen testified “no” and
then answered “yes” to whether he ratified everything the pilot did in this
regard. (Dk. 49, p. 13). As the defendant argues, the plaintiff did fail to
comply with D. Kan. Rule 56.1(b)(2) in its presentation of Heinen’s
testimony in this regard. A sanction of striking and disregarding Heinen’s
testimony from the plaintiff’s response is unreasonable under the
circumstances. This procedural non-compliance is overshadowed by the
defendant’s decision to seek summary judgment on this subject when its
corporate representative had already expressly ratified the employee’s
conduct. Summary judgment is denied on the claim of punitive damages.
IT IS THEREFORE ORDERED that the defendant’s motion for
summary judgment (Dk. 45) is granted insofar as the plaintiff Jerry C.
Meacham is dismissed without prejudice for lack of standing at this time,
and is denied in all other respects.
IT IS FURTHER ORDERED that the plaintiffs’ motion for hearing
(Dk. 50) on the summary judgment motion is denied.
Dated this 10th day of December, 2013, Topeka, Kansas.

s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge

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