Superlative Group, Inc., The v. WIHO, LLC
Filing
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MEMORANDUM AND ORDER denying 27 Defendant's Motion for Summary Judgment. Signed by District Judge John W. Lungstrum on 04/09/2014. (ses)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
THE SUPERLATIVE GROUP, INC.,
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Plaintiff,
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v.
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WIHO, L.L.C.,
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Defendant.
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_______________________________________)
Case No. 12-1468-JWL
MEMORANDUM AND ORDER
This diversity action comes before the Court on defendant’s motion for summary
judgment (Doc. # 27). For the reasons set forth below, the Court denies the motion.
I.
Background1
Plaintiff The Superlative Group, Inc. entered into a contract with Sedgwick
County, Kansas, by which plaintiff agreed to find lessees for suites in the County’s new
arena in exchange for commissions from the County. Defendant WIHO, L.L.C., who
does business as a professional hockey team named the Wichita Thunder, became a
tenant of the arena and began to play its games there. Between July 2008 and October
2009, plaintiff leased nine of the 17 available suites. As an express condition of the suite
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These facts are stipulated or are related in the light most favorable to plaintiff,
the non-moving party, in accordance with the applicable summary judgment standards.
leases, lessees agreed to purchase at least 12 regular season suite tickets for Thunder
games.
Plaintiff alleges that defendant promised and agreed that it would pay plaintiff a
20-percent commission on Thunder season tickets sold to lessees as a condition of a suite
lease. Plaintiff asserts claims under Kansas law for breach of contract, promissory
estoppel, and quantum meruit. On the first and third claims, plaintiff seeks damages in
the amount of the alleged commissions owed by defendant to plaintiff for season ticket
sales to suite lessees, in the alleged amount of $96,278.91. On its alternative promissory
estoppel claim, plaintiff seeks to recover damages to compensate for the loss of
commissions that it alleges it would have earned from the County if it had leased all the
suites without the season ticket requirement, in the total amount of $210,000.00.
II.
Summary Judgment Standards
Summary judgment is appropriate if the moving party demonstrates that there is
“no genuine dispute as to any material fact” and that it is “entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(a). In applying this standard, the court views the
evidence and all reasonable inferences therefrom in the light most favorable to the
nonmoving party. Burke v. Utah Transit Auth. & Local 382, 462 F.3d 1253, 1258 (10th
Cir. 2006). An issue of fact is “genuine” if “the evidence allows a reasonable jury to
resolve the issue either way.” Haynes v. Level 3 Communications, LLC, 456 F.3d 1215,
1219 (10th Cir. 2006). A fact is “material” when “it is essential to the proper disposition
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of the claim.” Id.
III.
Breach of Contract – Statute of Frauds
Plaintiff alleges that defendant breached an oral contract between the parties by
failing to pay commissions to plaintiff on season tickets sold to suite lessees. In seeking
summary judgment on that claim, defendant asserts that the Kansas statute of frauds,
K.S.A. § 33-106, bars enforcement of the alleged oral contract because it is an agreement
that could not be performed within one year of its alleged making in January or February
2008. See id. In opposing summary judgment, plaintiff has not responded to defendant’s
argument that, even if plaintiff could have performed within one year by leasing all of
the suites within that time, defendant could not have performed within a year by paying
commissions that, by plaintiff’s admission, were not due until defendant was paid
annually over the term of the suite leases (which ran for terms of at least five years).
Nevertheless, the Court concludes that the statute of frauds does not bar plaintiff’s
contract claim at this stage. The relevant Restatement section provides as follows:
“When one party to a contract has completed his performance, the one-year provision
of the Statute [of Frauds] does not prevent enforcement of the promises of other parties.”
See Restatement (Second) of Contracts § 130(2); see also Augusta Bank & Trust v.
Broomfield, 231 Kan. 52, 59 (1982) (citing comment to Restatement Section 130). The
Kansas Supreme Court has applied that principal that “[f]ull performance of an alleged
oral contract [by one party] relieves a cause of action thereon from the inhibitions of the
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statute of frauds.” See McCabe v. Hiatt, 201 Kan. 57, 62 (1968). In this case, the parties
have stipulated that plaintiff leased its last suite for the arena in 2009, and defendant has
not suggested that any aspect of performance by plaintiff remains lacking. Accordingly,
viewing the facts in the light most favorable to plaintiff, the Court concludes that
plaintiff has completed its performance of the alleged oral contract, and the statute of
frauds therefore does not apply. Defendant’s motion for summary judgment is denied
with respect to this claim.
IV.
Promissory Estoppel
In the alternative to its contract claim, plaintiff asserts a claim for promissory
estoppel, based on its allegation that it relied to its detriment on the promise by
defendant’s general manager that defendant would pay commissions to plaintiff on
tickets sold as a part of suite leases. As a part of that claim, plaintiff alleges that
defendant’s promise induced it to require season ticket purchases as a condition of the
suite leases, and plaintiff thus seeks to recover damages for the loss of commissions from
the County on the unleased suites, on the theory that plaintiff would have leased those
suites if defendant had not made the promise. To prevail on its claim of promissory
estoppel, plaintiff must prove the following: “(1) [t]he promisor reasonably expected the
promisee to act in reliance on the promise, (2) the promisee acted as could reasonably
be expected in relying on the promise, and (3) a refusal of the court to enforce the
promise would sanction the perpetration of fraud or result in other injustice.” See Mohr
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v. State Bank of Stanley, 244 Kan. 555, 574 (1989) (citing Berryman v. Kmoch, 221 Kan.
304, 307 (1977)).
In seeking summary judgment on this claim, defendant first argues that it made
no promise concerning commissions on unleased suites. Defendant, however, confuses
plaintiff’s damage theory with plaintiff’s substantive claim, which is based on a promise
by defendant that it would pay commissions on tickets sold in connection with suites
actually leased by plaintiff. Defendant concedes that a question of fact remains
concerning whether it made that promise. Defendant also concedes that a question of
fact remains concerning whether its general manager at least acted with apparent
authority in making any such promise. Therefore, any dispute about the making of the
promise at issue does not provide a basis for summary judgment.
Defendant next argues that plaintiff could not have reasonably relied on such a
promise as a matter of law. The Court rejects this argument, as it concludes that plaintiff
could reasonably have decided that the possibility of a 20-percent commission on the
tickets would make up for the loss of a commission from the County on suites that it was
unable to lease because of the additional requirement that lessees purchase season
tickets. In its reply brief, defendant also argues that plaintiff could not have reasonably
relied on the promise of a commission from defendant because a season-ticket-purchase
condition is standard within the industry for arena suite leases; plaintiff could have
recommended lower suite prices to the County to make up for the added difficulty of
leasing suites with the ticket-purchase condition; plaintiff conceded it had never received
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such a commission in its past work; and plaintiff conceded that it had not heard of such
a high commission. As noted above, however, the Court must view the evidence in
plaintiff’s favor at this stage, and the reasonableness of plaintiff’s actions presents a
question of fact for trial. See Bouton v. Byers, __ Kan. App. 2d __, 2014 WL 983133,
at *7 (Kan. Ct. App. Mar. 14, 2014) (“The reasonableness of a party’s actions, including
reliance on statements of another party, typically reflects a fact question reserved for the
factfinder.”) (citing, inter alia, Schmidt v. Farm Credit Servs., 977 F.2d 511, 516 (10th
Cir. 1992)).
Defendant makes the same arguments in arguing that plaintiff cannot satisfy the
injustice element as a matter of law. Again, however, the Court concludes, viewing the
evidence in the light most favorable to plaintiff, that a refusal to enforce this alleged
promise could work an injustice upon plaintiff under all of the circumstances. It will
require a full evaluation of the evidentiary record to enable the Court to make that
decision.
Finally, defendant argues that plaintiff may not pursue these particular damages
because they represent expectancy damages, which may not be recovered under a theory
of promissory estoppel. The Court rejects this argument for multiple reasons. First,
Section 90 of the Restatement, which Kansas courts consistently apply with respect to
claims of promissory estoppel, see Walker v. Ireton, 221 Kan. 314, 322 (1977); Bouton,
2014 WL 983133, at *5, provides that “[t]he remedy granted for breach may be limited
as justice requires.” See Restatement (Second) of Contracts § 90 (emphasis added). A
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comment to Section 90 notes that “[a] promise binding under this section is a contract,
and full-scale enforcement by normal remedies is often appropriate.” See id. cmt. d.
Thus, Section 90 does not prohibit—but in fact allows for—recovery of expectancy or
benefit-of-the-bargain damages for promissory estoppel (subject to limitation by the
court as justice requires). Defendant relies on a case from this district, Terra Venture,
Inc. v. JDN Real Estate-Overland Park, L.P., 340 F. Supp. 2d 1189 (D. Kan. 2004), but
in that case (which is not binding on this court), the court merely concluded that
expectancy damages could not be recovered under the particular facts before it. See id.
at 1202-03. The court did not hold that expectancy damages could never be recovered
for promissory estoppel; to the contrary, it noted that comment d. to the Restatement
indicates that “relief other than restitution may sometimes be appropriate.” See id. Thus,
the Court does not accept defendant’s premise that Kansas law never allows for a
recovery of expectancy damages on a claim for promissory estoppel. Cf. Bouton, 2014
WL 983133, at *6 (if promisor’s obligation is sufficiently definite, promisee may seek
to rely on equity to recover damages equivalent to the promised performance).
Second, defendant misconstrues plaintiff’s damage claim, as plaintiff does not
seek expectancy damages as a part of this cause of action. In this case, commissions on
the actual tickets sold to suite lessees would represent expectancy or benefit-of-the
bargain damages. See, e.g., Source Direct, Inc. v. Mantell, 19 Kan. App. 2d 399, 408
(1994) (“A party who seeks to recover his expectation interest in the contract is asking
to be given the benefit of his bargain by being put in as good a position as he would have
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been in had the contrct been performed.”). Indeed, plaintiff seeks such damages on his
contract and quantum meruit claims. Instead, in this claim, plaintiff seeks reliance
damages—damages to compensate for the alleged loss of commissions from the County
on unleased suites that resulted from plaintiff’s decision to require ticket purchases as
a condition for suite leases, which was made in reliance on defendant’s promise to pay
commissions on such ticket purchases. Just last month, the Kansas Court of Appeals
reversed a summary judgment and held that a plaintiff could pursue similar lostopportunity reliance damages under a promissory estoppel theory. See Bouton, 2014
WL 983133, at *7, 19. Accordingly, defendant is not entitled to summary judgment on
plaintiff’s promissory estoppel claim.
V.
Quantum Meruit
Plaintiff asserts a claim for quantum meruit, based on its allegations that it
conferred a benefit upon defendant by selling the tickets as a part of the suite leases, and
that it should be compensated by defendant for that benefit. The elements of a claim for
quantum meruit or unjust enrichment under Kansas law are as follows: “(1) a benefit
conferred upon the defendant by the plaintiff; (2) an appreciation or knowledge of the
benefit by the defendant; and (3) the acceptance or retention by the defendant of the
benefit under such circumstances as to make it inequitable for the defendant to retain the
benefit without payment of its value.” See Haz-Mat Response, Inc. v. Certified Waste
Servs., 259 Kan. 166, 177 (1996) (quoting J.W. Thompson Co. v. Welles Prods. Corp.,
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243 Kan. 503, 512 (1988)).
Defendant argues that it is entitled to summary judgment on this claim because
any benefit was conferred not by plaintiff but by the County, because it was the County’s
decision to require that suite lessees purchase season tickets.2 Whether or not the County
imposed that requirement, however, plaintiff performed the work by finding lessees who
purchased tickets; thus, if the evidence is viewed in its favor, plaintiff did confer a
benefit on defendant. Similarly, the Court rejects defendant’s argument based on
testimony that in leasing the suites, plaintiff did not spend extra time specifically selling
the tickets. Again, a question of fact remains whether plaintiff conferred a benefit on
defendant by securing leases that required a ticket purchase from defendant. Finally,
viewing the evidence in plaintiff’s favor, the Court cannot say as a matter of law that
plaintiff cannot show that equitable considerations make payment appropriate under
these circumstances. Accordingly, defendant is not entitled to summary judgment on
this claim.
2
In its initial brief in support of summary judgment, defendant made this argument
only with respect to plaintiff’s quantum meruit claim. In its reply brief, defendant also
referred to evidence of the County’s decision in arguing that plaintiff could not show
reasonable reliance in support of its promissory estoppel claim. Because defendant
raised this argument as it relates to promissory estoppel for the first time in its reply
brief, the Court has not addressed it. See, e.g., U.S. Fire Ins. Co. v. Bunge N. Am., Inc.,
2008 WL 3077074, at *9 n.7 (D. Kan. Aug. 4, 2008) (court will not consider issues
raised for first time in reply brief) (citing Minshall v. McGraw Hill Broadcasting Co.,
323 F.3d 1273, 1288 (10th Cir. 2003)). Of course, defendant is not precluded from
making such an argument at trial.
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VI.
Damages
Defendant also argues that plaintiff’s damage claims are too speculative as a
matter of law. With respect to plaintiff’s claim for lost commissions on ticket sales,
defendant argues that plaintiff has improperly assumed a yearly cost increase for the
tickets. With respect to plaintiff’s claim for lost commissions from the County,
defendant argues that plaintiff has improperly assumed that it would have leased all of
the remaining suites and that it would have received the maximum commission for each
suite.
The Court agrees that plaintiff may not recover damages that prove too
speculative, but it concludes that any such determination is best reserved for trial upon
consideration of the entirety of the evidence. Accordingly, the Court denies defendant’s
motion for summary judgment on plaintiff’s damage claims.
IT IS THEREFORE ORDERED BY THE COURT THAT defendant’s motion
for summary judgment (Doc. # 27) is hereby denied.
IT IS SO ORDERED.
Dated this 9th day of April, 2014, in Kansas City, Kansas.
s/ John W. Lungstrum
John W. Lungstrum
United States District Judge
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