Opinion
CIVIL ACTION No. 02-2015-CM
June 25, 2003
MEMORANDUM AND ORDER
Plaintiff has sued defendant alleging breach of contract. Defendant contends that plaintiff's claim is barred by the statute of limitations. This matter comes before the court on defendant's Motion for Summary Judgment (Doc. 15).
The court construes the facts in the light most favorable to plaintiff as the nonmoving party pursuant to Fed.R.Civ.P. 56.
Defendant is in the lumber supply business. RMR Industries, Inc., and Maple Leaf Management Company (referred to collectively as "RMR-Maple Leaf") are in the lumber installation business. On March 18, 1997, defendant entered into a written contract with RMR-Maple Leaf ("Defendant/RMR-Maple Leaf Agreement"). The purpose of the Defendant/RMR-Maple Leaf Agreement was to sell the building of commercial restaurants, hotels, and assisted living facilities as an "installed package" to general contractors through the use of pre-fabricated wall panels. The Defendant/RMR-Maple Leaf Agreement states that RMR-Maple Leaf "will be subcontracting under this Agreement to provide certain services and/or products for which Wickes is responsible under the Wickes/Customer contract."
In April 1997, the Rau Construction Company ("Rau") entered into a contract with defendant ("Rau/Defendant Contract"), wherein defendant agreed to provide labor and materials in connection with the construction of a Fairfield Suites Hotel in Overland Park, Kansas. Then, on June 13, 1997, RMR-Maple Leaf entered into a written contract with plaintiff ("RMR-Maple Leaf/Plaintiff Agreement"), wherein RMR-Maple Leaf subcontracted plaintiff in connection with the installation of the wall panels for the Fairfield Suites Hotel. Thus, the relationship of the relevant parties was as follows: Rau was the general contractor for the construction of the Fairfield Suites Hotel. Rau, in turn, subcontracted defendant (pursuant to the Rau/Defendant Contract), which in turn subcontracted RMR/Maple Leaf (pursuant to the Defendant/RMR-Maple Leaf Agreement), which in turn subcontracted plaintiff (pursuant to the RMR-Maple Leaf/Plaintiff Agreement).
Notably, there is no written agreement between plaintiff and defendant, yet plaintiff's theory of recovery against defendant is breach of contract. Essentially, plaintiff claims that RMR-Maple Leaf breached the RMR-Maple-Leaf/Plaintiff Agreement and that, as a result of that breach, defendant is jointly and severally liable as RMR-Maple Leaf's partner under the Defendant/RMR-Maple Leaf Agreement. Plaintiff contends that the Defendant/RMR-Maple Leaf Agreement created a partnership/joint venture relationship between defendant and RMR-Maple Leaf. Defendant denies that any partnership relationship ever existed between it and RMR-Maple Leaf.
II. Summary Judgment Standards
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut"; rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
III. Discussion
The issue in dispute is whether Kansas' three-or five-year statute of limitations applies. Defendant argues that plaintiff's claim is time-barred pursuant to the three-year statute of limitations set forth in Kan. Stat. Ann. § 60-512, which states that "all actions upon contracts, obligations or liabilities express or implied but not in writing" shall be brought within three years. Kan. Stat. Ann. § 60-512(1). Plaintiff contends that the five-year statute of limitations set forth in Kan. Stat. Ann. § 60-511 applies. Section 60-511 states that "an action upon any agreement, contract or promise in writing" shall be brought within five years. Plaintiff's cause of action accrued on November 12, 1997. Plaintiff filed the instant lawsuit on January 14, 2002. Thus, if § 60-512(1)'s three-year statute of limitation applies, plaintiff's cause of action is time-barred.
Defendant contends that plaintiff's cause of action relies on the enforcement of an alleged implied obligation-the partnership between defendant and RMR-Maple Leaf. Defendant correctly points out that the Defendant/RMR-Maple Leaf Agreement appears to create an independent contractor relationship rather than a partnership, with defendant as the contractor and RMR-Maple Leaf as the subcontractor. To establish a partnership relationship, plaintiff would therefore have to present extrinsic evidence to establish a material term of that contract. Defendant asserts that, as a result, any alleged partnership relationship between defendant and RMR-Maple Leaf exists, if at all, pursuant to an obligation or liability that is expressed or implied, but not in writing. As such, defendant asserts, plaintiff's cause of action is subject to the three-year statute of limitations.
The court is guided by Hoelting Enters. v. Nelson, 23 Kan. App. 2d 228, 929 P.2d 183 (1997). Hoelting involved a mortgage and promissory note executed by Trailridge Investors, L.P. (Trailridge) in favor of the plaintiff. The individual partners of Trailridge did not sign the mortgage or promissory note. Trailridge defaulted on the mortgage, and thereafter filed for bankruptcy. Plaintiff then filed an action against the individual partners of Trailridge. The partners contended that the plaintiff's action was barred by the three-year statute of limitations. The court of appeals held that the claim was not time-barred because the five-year statute of limitations applied. In so holding, the court stated:
The nature of [plaintiff's] action is for the enforcement of secured property agreements, which are written contracts. The contractual nature of the action is not altered by the fact [plaintiff] seeks to enforce the partnership contract against the partners personally.Id. at 232, 929 P.2d at 186. In support of its holding, the Hoelting court cited Barnes v. McLendon, 128 Wn.2d 563, 572-73, 910 P.2d 469 (1996), and further stated:
In [ Barnes], the court held the statute of limitations for written contracts applied to an action to enforce a partnership contract against the partners personally. The court explained that although the liability of the partners on the contract was imposed by law due to their agency relationship with the partnership, the partners' liability nonetheless "grew out of the written contract" so the statute of limitations for written contracts governed the case.Hoelting, 23 Kan. App. 2d at 232, 929 P.2d at 186 (citations omitted).
The court is persuaded by the court's rationale in Hoelting. Plaintiff's cause of action in this case seeks to hold defendant jointly and severally liable for breach of a written contract (the RMR-Maple-Leaf/Plaintiff Agreement) entered into by defendant's purported partner and plaintiff. Thus, the nature of plaintiff's cause of action is an alleged breach of a written contract. The contractual nature of plaintiff's action is not altered by the fact that plaintiff seeks to enforce a partnership agreement which defendant disputes exists.
Defendant attempts to distinguish Hoelting by pointing out that the written contract at issue was executed on behalf of the partnership, Trailridge., However, the court finds this distinction immaterial. In so finding, the court looks to Kansas' general partnership law.
Kansas has adopted the Revised Uniform Partnership Act (RUPA). Kan. Stat. Ann. § 56a-101 et seq. The RUPA employs a broad definition of "partnership," which includes both the relation created by express agreement or that implied from the conduct of the parties. For example, a "partnership" is defined as "an association of two or more persons to carry on as co-owners a business for profit," and a "partnership agreement" means the agreement among the partners concerning the partnership, "whether written, oral, or implied." Id. § 56a-101(f) (g). Under the RUPA, there is no distinction between a partnership that is either expressly or impliedly formed.
Thus, the fact that the purported partnership is implied has no bearing on the defendant's obligations under the terms of the written contract. In other words, even if the purported partnership is implied by the conduct of the parties and is not pursuant to any express written agreement, and even if extrinsic evidence would be required to prove the existence of the purported implied partnership, these facts do not change the purported partner's liability on the underlying written contract. To hold otherwise would limit an implied partner's obligations on a written contract to three years, yet require an express partner to be liable on that same written contract for five years. The court does not construe Kansas partnership law as permitting such a distinction. Therefore, if defendant was a partner at the time of the execution of the underlying written contract, defendant is liable for five years on that written contract. The fact that defendant in this case may have become a partner impliedly does not change the true nature of plaintiff's cause of action, which is a suit alleging breach of the RMR-Maple-Leaf/Plaintiff Agreement.
The court holds that the five-year statute of limitations applies to plaintiff's breach of contract claim. Accordingly, plaintiff's action is not time-barred. IT IS THEREFORE ORDERED that defendant's Motion for Summary Judgment (Doc. 15) is denied.
Defendant did not move for summary judgment on the issue of whether there in fact existed an implied partnership at the time the RMR-Maple-Leaf/Plaintiff Agreement was executed. As such, the court expressly declines to render any decision on that issue.