Bd. of Trs. of Johnson Cnty. Cmty. Coll. v. Mission Co.

Decision Date10 October 2014
Docket Number110,017.
Citation337 P.3d 71 (Table)
PartiesBOARD OF TRUSTEES OF JOHNSON COUNTY COMMUNITY COLLEGE, Appellee, v. MISSION CO., Mission Developers, LLC, et al., Defendants, and The Gateway Developers, LLC, Appellant.
CourtKansas Court of Appeals

Kevin J. Breer and Brett C. Randol, of Polsinelli PC, of Kansas City, Missouri, for appellant.

Eldon J. Shields and Steven R. Smith, of Gates, Shields & Ferguson, P.A., of Overland Park, for appellee.

Before STANDRIDGE, P.J., GREEN and ATCHESON, JJ.

MEMORANDUM OPINION

PER CURIAM.

The Gateway Developers, LLC (Gateway), acquired the Mission Center Mall and with it a 5–year commercial lease with Johnson County Community College (JCCC). A rider attached to the lease provided that the landlord could terminate the lease by giving JCCC 300 days' notice and paying JCCC for a portion of what it spent remodeling the space to make it suitable for college classes. Gateway later learned that it would have to tear down the mall and enlarge underground culverts in order for the City of Mission (City) to approve any redevelopment plans. Gateway terminated the lease with JCCC before the 5–year term ended, without giving a full 300 days' notice. Accordingly, JCCC moved its classes to a former junior high school owned by the Bishop Miege High School Foundation (Bishop Miege).

JCCC filed suit against Gateway, and the trial court found in favor of the community college on its breach of contract, wrongful eviction, and promissory estoppel claims. As damages, the court awarded JCCC the construction expenses related to making the Bishop Miege property a suitable space to hold classes and a pro rata amount of the money JCCC spent remodeling the mall space right before it moved in. The court found no merit to JCCC's claim for tortious interference with a business advantage.

Gateway appeals, arguing that the trial court erred (1) by awarding a pro rata amount of what JCCC originally spent remodeling the mall before it moved in and (2) by permitting JCCC to present a summary of expenses itemizing construction costs associated with converting the Bishop Miege property into a suitable space to hold classes. JCCC cross-appeals, arguing that the trial court (1) abused its discretion by denying JCCC's motion to amend the petition to add a claim for punitive damages and (2) erred in finding insufficient evidence of lost-profit damages.

For the reasons stated below, we find no merit to the claims or counterclaims presented by the parties and, therefore, affirm the trial court's decision in all respects.

Facts

On August 13, 2002, Mission Company and JCCC entered into a 5–year (plus partial-year) commercial lease. Mission Company agreed to lease approximately 7,543 square feet in the Mission Center Mall in Mission, Kansas. Under the lease, JCCC was responsible for all improvements necessary to make the space suitable for classrooms, including store fronts, ceilings, walls, paint, floors, plumbing, electrical work, HVAC exhaust and make-up air systems, and telephones.

A rider attached to the lease contained termination clauses. The owner's termination clause indicated that the landlord could terminate the lease by giving JCCC 300 days' notice and paying JCCC a portion of the cost of JCCC's remodeling work, which would be based on the amount of time left in the lease.

In the summer of 2004, Tom Valenti met with the City on behalf of Mission Developers, which is now Gateway, to discuss Gateway's possible acquisition of the mall. Valenti initially intended to improve the mall without tearing it down. Citing to changes in the floodplain maps, however, the City advised Valenti that Gateway would have to tear the existing mall down and enlarge underground culverts for the City to approve redevelopment plans.

In the summer of 2005, Gateway acquired the note and mortgage held by Mission Company's lender and accepted a deed in lieu of foreclosure from Mission Company. On September 25, 2005, the mall's property manager sent notice to JCCC indicating that Gateway intended to close the mall on January 31, 2006. Valenti also sent a letter to JCCC, requesting that it vacate the mall premises on or before January 31, 2006, and proposing that it become a tenant when a new mall was built.

In anticipation of the mall's closing, JCCC moved out of the mall in December 2005 and entered into a lease with Bishop Miege on December 22, 2005. JCCC leased Old Mission Junior High School in Roeland Park, which was less than a mile from the mall. JCCC began construction on the Bishop Miege property in December 2005 in order to make the space suitable for its classes before the spring semester started. JCCC ultimately held spring classes at the new site as scheduled in mid-January 2006. The mall was torn down before JCCC's lease expired.

On September 21, 2010, JCCC filed suit against Gateway and other defendants, alleging breach of contract, wrongful eviction, tortious interference with prospective business advantage, and promissory estoppel. JCCC later filed a motion to amend the petition to add a claim for punitive damages, which the court denied.

The case was tried to the court in September 2012. At trial, Dr. Terry Calaway, the president of JCCC since June 2007, testified that JCCC had spent about $100,000 on improvements to the Mission Mall:

“Q. [Defense counsel:] During your testimony, you described, and I think testified, that you believe that the tenant improvement expenses at the old mall location were about $100,000?
“A. [Dr. Calaway:] Yes, sir.
“Q. [Defense counsel:] And that you were asking the Court to award you damages for either all or some portion of that $100,000, correct?
“A. [Dr. Calaway:] Yes, sir.”

As further proof of money expended to improve the mall site, JCCC introduced into evidence a proposed settlement letter that was sent from JCCC's attorney to Valenti in January 2006. The letter indicated that the value of the improvements exceeded $100,000.

Dr. Calaway also testified that after JCCC was evicted from the mall, he told Valenti that JCCC experienced decreased enrollment and that Valenti offered him “a pretty good deal”—to rent JCCC space in the future mall for about $15 per square foot—if JCCC would wait until the new mall was finished. Dr. Calaway stated that Valenti continually misled him about the status of the mall project over approximately a 4–year period by repeatedly telling him that construction was just about to commence.

Rex Hayes, JCCC's Executive Director of Campus Services, testified that his office kept records of all construction work performed for JCCC. Hayes said that, based on the records in his office, Exhibit 35 listed the total outside construction costs expended on the Bishop Miege property—$208,707.79. He stated that he and his assistant prepared the list of expenses in Exhibit 35. Based on his examination of the records kept by his office, Hayes testified JCCC's internal expenditures allocated to construction and maintenance on the Bishop Miege property was $10,000. Hayes testified that Exhibit 36, which his assistant prepared under his supervision, itemized the internal costs associated with this construction and maintenance.

Gateway objected to the admission of Exhibits 35 and 36 and Hayes' corresponding testimony about them, arguing that the exhibits were mere lists of numbers and that the underlying invoices that proved the actual costs of construction had not been produced during discovery. The court overruled the objection and considered the exhibits as evidence, noting that Hayes testified that the costs listed in the documents were the exact breakdown of expenses to renovate the junior high school and that the underlying invoices were available at trial.

Loralee Stevens, Assistant Dean of Community Outreach at JCCC, testified about JCCC's various locations. But after Gateway objected on the bases of speculation, foundation, and hearsay, the trial court did not permit her to testify as to why JCCC's student enrollment decreased when classes were moved from the mall to the Bishop Miege property. Stevens' affidavit, however, stated that it was her job to monitor student attendance and that based on the evidence she had gathered, enrollment decreased at the Bishop Miege site because it was an inferior facility with less accessibility and visibility than the mall.

After hearing the evidence and arguments of counsel, the trial court granted judgment to JCCC on its breach of contract, wrongful eviction, and promissory estoppel claims. The court held JCCC's failure to produce evidence of intentional misconduct or malice on Gateway's part prevented JCCC from prevailing on its claim of tortious interference. The court awarded JCCC damages, including $38,330 in unrecovered amortization costs (a pro-rata amount of the $100,000 spent on mall construction); $208,707.79 in outside-construction expenses for the junior high school; and $10,000 in in-house construction expenses for the junior high school. It also awarded JCCC $82,442.92 in attorneys' fees. The court declined to award damages for lost profits based on lost student enrollment at the Bishop Miege property because there was insufficient evidence to establish that the new location caused the drop in enrollment.

Gateway filed a motion to reconsider, arguing in part that the $100,000 in damages to compensate JCCC for remodeling the mall was not supported by evidence in the record. At a hearing on the motion, the trial court made a finding of fact that JCCC spent $100,000 remodeling the mall. The finding was based on the fact that Dr. Calaway testified that JCCC spent $100,000 on the mall remodel and that JCCC's demand letters stated that it had spent $100,000 remodeling the mall and Gateway's responses did not dispute that amount.

Gateway appeals the court's damages award, and JCCC cross-appeals the trial court's refusal to consider its punitive damages claim and finding that JCCC failed to prove that it lost students because it moved its classes to the Bishop...

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