Bates v. Flemming
| Decision Date | 03 September 2019 |
| Docket Number | Case No. 19-1101-JWB |
| Parties | CRAIG A. BATES and KARLA R. BATES, Plaintiffs, v. GUY M. FLEMMING, GUYCAT, LLC, and PRATT COUNTY, KANSAS, Defendants. |
| Court | U.S. District Court — District of Kansas |
This case comes before the court on Defendant Guy Flemming's motion to dismiss Plaintiffs' amended complaint in part (Doc. 13). The motion has been fully briefed and is ripe for decision. (Docs. 14, 17, 19.) Defendants' motion is GRANTED IN PART AND DENIED IN PART for the reasons stated herein.
The following facts are taken from the allegations in Plaintiff's amended complaint. Plaintiffs Craig and Karla Bates are residents of Pratt County, Kansas. On April 15, 2011, Plaintiffs and Flemming entered into a contract for the purchase of real property located at 211 Austin, Pratt, Kansas. Flemming or his agent drafted the contract. As of January 30, 2006, and at the time of the contract, the owner of the property was Defendant GuyCat, LLC ("Guycat"). Guycat is a forfeited Kansas Limited Liability Company and its only member was Flemming.1At the time of the contract, the property was subject to a mortgage and the mortgagor was Flemming.
The terms of the contract stated that the total purchase price was $60,000. Plaintiffs had to put forth an initial deposit of $5,500.00 and perform $5,000.00 in improvements to the property. The contract stated that the "balance due [Flemming] by promissory note of the [Plaintiffs] subject to the requirements set forth in this contract is ...$49,500.00." (Doc. 11, Exh. A at 1.) The terms of the contract required Plaintiffs to pay monthly premiums for a fire insurance policy that was maintained by Flemming. The term of the contract stated that (Doc. 11, Exh. A at 1.) Plaintiffs allege that the parties understood and intended the property insurance to be for the benefit of the parties and to protect the interests of all parties. (Doc. 11 at 4.) Plaintiffs allege that the parties conduct during the performance of the contract supported this interpretation. For example, in 2017, there was a claim made to insurance due to damage to a shed on the property. The parties discussed and agreed as to how the proceeds would be spent as a result of the insurance payout.
Plaintiffs also had to pay the property taxes and make monthly installment payments at a rate of 14%. The monthly portion for property taxes and insurance was calculated to be $220.68 per month for the year 2011. That amount was to change depending on the current rate of taxes and insurance. The monthly payment in 2011 was $836.22 for principal, interest, property taxes, and insurance, for a term of 20 years. That amount was to be paid by Plaintiffs into Flemming's account at First State Bank in Pratt. Plaintiffs allege that these additional amounts for propertytaxes and insurance were to be placed in escrow. Flemming controlled the escrow account that held the funds for the payment of property taxes and insurance.
On January 25, 2018, the property was completely destroyed by fire. Five members of Plaintiffs' family also perished in the fire. At that time, Plaintiffs had made all monthly payments. Over the duration of the contract, Plaintiffs had made $55,000.00 in payments. After the fire, Flemming collected $260,000.00 from the insurance company.
Plaintiffs initially filed this action in Pratt County District Court against Flemming and Guycat. (Doc. 1.) The action was removed to this court. After removal, Flemming moved to dismiss the state court petition. (Doc. 6.) Plaintiffs then filed an amended complaint. (Doc. 11.) In the amended complaint, Plaintiffs bring several claims against Flemming and GuyCat, including breach of contract, breach of fiduciary duty, common law usury, unjust enrichment, breach of good faith, and violations of the Kansas Consumer Protection Act ("KCPA"). Plaintiffs also seek declaratory relief. (Doc. 11.) Additionally, Plaintiffs added Pratt County as a defendant. Flemming now moves to dismiss the vast majority of Plaintiffs' claims. Flemming does not seek dismissal of Plaintiffs' claims for declaratory relief under K.S.A. 16-207 and 60-1002. (Docs. 13; 14 at 16.) After a review of the amended complaint, the court entered a show cause order on July 3, 2019, regarding Plaintiffs' addition of Pratt County to this matter as Pratt County is a non-diverse defendant. (Doc. 18.) The parties have now addressed the issue raised by the court in the show cause order. (Docs. 22, 23, 25, 26, 27.)
In order to withstand a motion to dismiss for failure to state a claim, a complaint must contain enough allegations of fact to state a claim to relief that is plausible on its face. Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S.544, 127 S. Ct. 1955, 1974 (2007)). All well-pleaded facts and the reasonable inferences derived from those facts are viewed in the light most favorable to Plaintiffs. Archuleta v. Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008). Conclusory allegations, however, have no bearing upon the court's consideration. Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007). Rule 12(b)(6) "does not require that Plaintiff establish a prima facie case in her complaint, but rather requires only that the Plaintiff allege enough factual allegations in the complaint to set forth a plausible claim." Pueblo of Jemez v. United States, 790 F.3d 1143, 1171-72 (10th Cir. 2015) (internal citations omitted). In the end, the issue is not whether Plaintiffs will ultimately prevail, but whether Plaintiffs are entitled to offer evidence to support their claims. Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005).
As set forth in this court's order to show cause, after a case is removed from state court, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). "If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e). If a party is an indispensable party to the action, the court must remand the action. See Brooks v. UMB Bank, N.A., No. 12-2284-JAR-KGG, 2012 WL 4856983, at *2 (D. Kan. Oct. 12, 2012).
A party is indispensable if:
(1)(A) in that person's absence, the court cannot accord complete relief among existing parties, or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect theinterest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.
Flemming and Pratt County argue that Pratt County is not an indispensable party to this action as Pratt County's interest in the property will not be impaired by the outcome of this litigation. Plaintiffs argue that Pratt County is an indispensable party because it has an interest in the property due to the tax liens. Flemming argues that the tax lien against the property is not extinguished in the event that the property changes ownership, citing K.S.A. 79-1804. Moreover, a review of the amended complaint shows that Plaintiffs are not seeking any relief from Pratt County. The allegations regarding Pratt County merely state that Pratt County might claim some right to title. Plaintiffs do not, however, challenge the property tax levied against the property. Pratt County asserts that it has no interest in this action beyond its status as a taxing authority and that Plaintiff has not sought to invalidate the tax lien in this action.
Turning to Rule 19(a)(1)(A), a party is indispensable if complete relief cannot be awarded among the existing parties. Based on the allegations in the amended complaint, complete relief can be awarded. While Plaintiffs allege that they have paid the property taxes to Flemming, Plaintiffs do not seek that amount from Pratt County. Rather, Plaintiffs seek a declaration regarding the title to the property. As a tax lien would remain on this property and there is no challenge to that tax lien, complete relief can be awarded among the parties.2
Turning to Rule 19(a)(1)(B), a party is indispensable if it claims an interest in the subject matter of this action and that interest would be impaired or an existing party could incur inconsistent obligations. As discussed, Pratt County states that it has no interest beyond that of ataxing authority. That interest is not impaired by an outcome in this litigation as no party has challenged the propriety of the taxes. Although Plaintiffs generally cite authority regarding property interests in their brief, Plaintiffs do not cite any authority that would assert that a taxing authority is an indispensable party when the tax lien is not being challenged in a quiet title action.
Therefore, the court finds that Pratt County is not an indispensable party to this action. Alternatively, Plaintiffs seek a finding that they may join Pratt County as a permissible party under Rule 20. (Doc. 22 at 5.) The court declines to allow permissible joinder as that would destroy diversity jurisdiction in this matter.
As Pratt County is not an indispensable party to this action, the court denies joinder. Pratt County is dismissed from this action. See 28 U.S.C. § 1447(e); Fed. R. Civ. P. 21 (...
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