Westfield Ins. Co. v. Harvest Constr. Gen. Contracting, Inc.

• Decision Date: 04 October 2013
• Docket Number: No. 109,327.,109,327.
• Citation: 310 P.3d 1078
• Parties: WESTFIELD INSURANCE COMPANY, Appellee, v. HARVEST CONSTRUCTION GENERAL CONTRACTING, INC., et al., Defendants, (Paul Mabe, Yvette Mabe, and Cedar Springs Management FLP), Appellants.
• Court: Kansas Court of Appeals

310 P.3d 1078

WESTFIELD INSURANCE COMPANY, Appellee,

v. HARVEST CONSTRUCTION GENERAL CONTRACTING, INC., et al., Defendants,(Paul Mabe, Yvette Mabe, and Cedar Springs Management FLP), Appellants.

No. 109,327.

Court of Appeals of Kansas.

Oct. 4, 2013.

Appeal from Johnson District Court; Kevin P. Moriarty, judge. Opinion filed October 4, 2013. Affirmed.

Keith J. Shuttleworth, of Shuttleworth Law Firm, LLC, of Overland Park, for appellants.

Heather F. Shore, Diane Hastings Lewis, and G. Steve Ruprecht, of Brown & Ruprecht, PC, of Kansas City, Missouri, for appellee.

Before MALONE, C.J., ATCHESON, J., and LARSON, S.J.

MEMORANDUM OPINION

PER CURIAM.

Defendants who fail to appeal a money judgment against them typically are bound by that judgment even if codefendants do appeal and successfully secure a reversal. To hold otherwise here would inject an unseemly and destructive element of gaming into the civil litigation process. Defendants Paul Mabe, Yvette Mabe, and Cedar Springs Management FLP invite us down that path. We decline and affirm the Johnson County District Court's ruling denying their motion to set aside a judgment under the catch-all provision in K.S.A. 60–260(b)(6).

As framed on appeal, the issue presents a legal question that we may review without any particular deference to the district court's determination. See Deeds v. Waddell & Reed Invst. Mgmt Co., 47 Kan.App.2d 499, 502, 280 P.3d 786 (2012) (questions of law subject to unlimited review on appeal). We perceive no factual disputes or evidentiary conflicts material to what we must decide. See Golden v. Den–Mat Corporation, 47 Kan.App.2d 450, 477, 276 P.3d 773 (2012) (In the absence of disputed facts, an appellate court may treat an issue as a question of law even if it otherwise would be reserved for the finder of fact.). Nonetheless, we may be extending to the appellants a more favorable standard than they ought to receive. See Bazine State Bank v. Pawnee Prod. Serv., Inc., 245 Kan. 490, 495, 781 P.2d 1077 (1989), cert. denied495 U.S. 932 (1990) (district court ruling on motion under K.S.A. 60–260(b) typically reviewed for abuse of discretion). What follows is a brief outline of the litigation with an emphasis on the procedural milestones bearing on the appeal. We then turn to the legal arguments.

Factual and Procedural History

Paul Mabe, Yvette Mabe, and Cedar Springs Management were among nine persons and entities signing an indemnity agreement with Plaintiff Westfield Insurance Company in 2008 to stand for losses Westfield might incur on a performance bond it underwrote on a project for Harvest Construction. Harvest was to serve as the general contractor on a construction project for a hotel in Oklahoma City, Oklahoma. The parties agreeing to indemnify Westfield were all affiliated with Harvest or its principals. For convenience, we refer to Paul Mabe, Yvette Mabe, and Cedar Springs Management as the Mabe defendants.

The hotel project tanked. Westfield stepped in to oversee the work and paid various subcontractors under the terms of the performance bond. Westfield then filed suit in Johnson County District Court against the parties to the indemnification agreement, including the Mabe defendants. The Mabe defendants were jointly represented by counsel in the district court and changed lawyers a couple of times. The other indemnitors had their own counsel. The district court granted Westfield's motion for summary judgment on liability and later held an evidentiary hearing or bench trial on damages. The parties have used both terms to describe the damages determination, but the terminology is of no significance for this appeal. The Mabe defendants, through their counsel, participated in those proceedings. The district court entered judgment for Westfield and against the indemnitors for about $2.5 million.

The Mabe defendants did not perfect appeals from the judgment. The remaining indemnitors did. In an unpublished decision, this court held that the district court erred in granting summary judgment because Westfield's papers failed to include evidence it had acted reasonably or in good faith while overseeing completion of the hotel project, an essential element of its claim to enforce the indemnification agreement. Westfield Ins. Co. v. Harvest Construction Gen'l Contracting, Inc., No. 105,855, 2012 WL 5519096, at *4–5 (Kan.App.2012) (unpublished decision) ( Westfield I ). This court reversed the judgment and remanded for further proceedings. 2012 WL 5519096, at *6–7. The decision clearly stated the relief applied only to those defendants perfecting appeals-that is, the Mabe defendants remained subject to the judgment, since they did not appeal. See 2012 WL 5519096, at *1, *7.

The Mabe defendants then filed a motion in the district court requesting relief from the judgment under K.S.A.2012 Supp. 60–260(b)(6). The statute sets out five specific grounds for challenging a judgment, including excusable neglect, new evidence, fraud, and release or discharge of the obligation. The last ground, on which the Mabe defendants relied, permits a court to act for “any other reason justifying relief from a final judgment. K.S.A.2012 Supp. 60–260(b)(6). The district court denied the motion, and the Mabe defendants have timely appealed that ruling.

Legal Analysis

1. General Rule Binds a Party by Its Failure to Appeal

The Kansas Supreme Court has recognized that 60–260(b) motions are not to be used as a substitute for appeals, and errors that would have been “readily correctable on appeal” should not furnish grounds for relief under that statute. Vogeler v. Owen, 243 Kan. 682, 685, 763 P.2d 600 (1988). The broad, anything-else language of K.S.A. 60–260(b)(6) operates no differently and does not confer authority on a court “to relieve a party from a free, calculated, and deliberate choice.” 243 Kan. at 685. The Kansas appellate courts often look to federal authority construing Federal Rule Civil Procedure 60(b), a legally indistinguishable provision, for guidance in applying K.S.A. 60–260. See Montez v. Tonkawa Village Apartments, 215 Kan. 59, 62–63, 523 P.2d 351 (1974) The United States Supreme Court has confined Rule 60(b)(6) to “ ‘extraordinary circumstances' “ warranting relief. Gonzalez v. Crosby, 545 U.S. 524, 535, 125 S.Ct. 2641, 162 L.Ed.2d 480 (2005). The Court also recognized that a party's failure to appeal cuts against a showing of extraordinary circumstances satisfying Rule 60(b)(6). 545 U.S. at 537–38. The caselaw generally outlining circumstances fitting within K.S.A. 60–260(b)(6) and the comparable federal rule point against affording the Mabe defendants much consideration.

More generally, courts commonly hold a civil defendant to the consequences of a decision to forgo an appeal of an adverse judgment even when a codefendant prevails on appeal. In Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 399 n. 4, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981), the United States Supreme Court quoted with favor National Association of Broadcasters v. FCC, 554 F.2d 1118, 1124 (D.C.Cir.1976), for the proposition: “ ‘It is the generally accepted rule in civil cases that where less than all of the several co-parties appeal from an adverse judgment, a reversal as to the parties appealing does not necessitate or justify a reversal as to the parties not appealing.’ “ See Floyd v. District of Columbia, 129 F.3d 152, 157 (D.C.Cir.1997) (“[P]arties failing to appeal are not usually entitled to the benefits of a reversal obtained by appealing co-parties.”); United States v. Lumbermens Mut. Cas. Co., Inc., 917 F.2d 654, 662 (1st Cir.1990) (judgment left intact against nonappealing party even though a party taking appeal demonstrated judgment to be legally deficient); Abatti v. C.I.R., 859 F.2d 115, 117–18 (9th Cir.1988) (recognizing rule); United States v. Rogan, 2012 WL 1107836, at *4 (N.D.Ill.2012) (recognizing rule). State courts take the same view. Hoang v. Hewitt Avenue, 177 Md.App. 562, 612–13, 936 A.2d 915 (2007); Duncan v. Duncan, 751 S.W.2d 763, 767 (Mo.App.1988); Hecht v. City of New York, 60 N.Y.2d 57, 61–62, 454 N.E.2d 527 (1983).

The rule, however, is not ironclad and, in exceptional circumstances, may yield to effectuate a fundamentally fair resolution of the legal dispute. See Abatti, 859 F.2d at 119 (rule may not apply when rights of nonappealing parties are “entangled” with those of the appealing parties, e.g., “cross claimants or multiple parties asserting rights against a stakeholder”); Duncan, 751 S.W.2d at 767. The Missouri Supreme Court noted the rule need not be applied if “ ‘the rights and interests of the parties are so intermingled and interdependent that the reversal in favor of one would injuriously affect the rights of [the nonappealing] coparties.’ “ In re Estate of Leonard, 467 S.W.2d 84, 88 (Mo.1971) (quoting 5B C.J.S., Appeal and Error § 1920, p. 414).

The Kansas Supreme Court has acknowledged both the rule and the exception without much elaboration. Shade v. Wheatcraft Industries, Inc., 248 Kan. 531, 542, 809 P.2d 538 (1991). This court appears to have been similarly laconic. See Harms v. Burt, 30 Kan.App.2d 263, 268, 40 P.3d 329,rev. denied 274 Kan. 1111 (2002).

2. Exceptions to General Rule Inapplicable

The Mabe defendants fashion several arguments to bring themselves within the exception on the grounds that their interests are so legally “interwoven” with the indemnitors who did appeal that separating them would be both intractable and unfair. We are unpersuaded by those arguments.

A. The Shade Decision Distinguished

The Mabe defendants' reliance on Shade is misplaced. In Shade, the court both overruled a 60–year–old decision giving the holder of an unrecorded purchase money mortgage priority over mechanics' lienholders and construed the governing statutes to afford priority to mechanics' lienholders—reversing the district court and this court. 248 Kan. 531, Syl. ¶ 1. In that case, only two of the four mechanics'...