Carnes v. Meadowbrook Executive Bldg. Corp.

• Decision Date: 07 August 1992
• Docket Number: No. 65882,65882
• Parties: Edward P. CARNES, Cheri E. Carnes, Michael D. Foster and Elena Wahbeh Foster, Appellants/Cross-Appellees, v. MEADOWBROOK EXECUTIVE BUILDING CORPORATION, Appellee/Cross-Appellant, Larry A. Smith, Carle Baker, Jr., and Michael G. Koontz, Appellees.
• Court: Kansas Court of Appeals

Page 1212

836 P.2d 1212

17 Kan.App.2d 292

Edward P. CARNES, Cheri E. Carnes, Michael D. Foster and Elena Wahbeh Foster, Appellants/Cross-Appellees, v. MEADOWBROOK EXECUTIVE BUILDING CORPORATION, Appellee/Cross-Appellant, Larry A. Smith, Carle Baker, Jr., and Michael G. Koontz, Appellees.

No. 65882.

Court of Appeals of Kansas.

Aug. 7, 1992.

Review Denied Sept. 29, 1992.

Syllabus by the Court

1. Acquiescence in a judgment generally cuts off any right to appellate review. An exception to the above rule occurs when the judgment consists of distinct or severable matters, demands, or issues. Acceptance of one or more of the burdens or benefits of severable matters does not preclude appellate review of the remaining matter.

2. Section 5 of the Kansas Constitution Bill of Rights and K.S.A. 60-238 ensure the right to a jury trial is inviolate. The right to a jury trial depends on whether the essential nature of the claim is legal or equitable. The issues presented in the pleadings, or as modified by the pretrial order, determine the essential nature of the claim.

3. In all but the simplest of cases, the trial court should hold a pretrial conference within a reasonable time in advance of trial and issue a pretrial order as provided by Rule 140 (1991 Kan.Ct.R.Annot. 115). The primary purposes of a pretrial conference are to reduce, if not completely remove, uncertainty from the trial; determine exactly what issues are involved; and establish what procedures are to be followed.

4. A court acting within its equitable powers is not required to give the specific relief requested but may tailor the relief as justice demands under all of the facts of the case.

5. A court, in applying equitable principles, may not override a statute if the legislature, by a statement of public policy, has prohibited the court from doing so.

6. When a court determines a contractual provision is void for public policy reasons, it should state the reason for doing so with specificity.

Randolph G. Willis and Jason R. Brown, of Watson, Ess, Marshall & Enggas, Olathe, for appellants/cross-appellees.

Laurence M. Jarvis, of Laurence M. Jarvis, Chartered, Kansas City, for appellee/cross-appellant.

Before GERNON, P.J., and BRAZIL and LEWIS, JJ.

BRAZIL, Judge:

Edward P. Carnes, Cheri E. Carnes, Michael D. Foster, and Elena Wahbeh Foster (plaintiffs) appeal the decision in favor of Meadowbrook Executive Building Corporation, Larry A. Smith, Carle Baker, Jr., and Michael G. Koontz (defendants) at the close of a bench trial on their claims of breach of fiduciary duty, fraud, outrage, intentional interference with a business relationship, and indemnification. Meadowbrook Executive Building Corporation cross-appeals certain aspects of the decision in its favor on its counterclaims and also has again moved this court to dismiss plaintiffs' appeal on grounds of acquiescence.

We agree with this court's denial of Meadowbrook Executive Building Corporation's motion to dismiss plaintiffs' appeal based on a claim that plaintiffs acquiesced in the judgment. We reverse the trial court and remand for a new trial to a jury.

At the center of the present litigation, and also in at least five previous lawsuits, is a 28-unit office building operated pursuant to a declaration of condominium under the title of Meadowbrook Executive Building Corporation (MEB), a nonprofit organization. Edward P. Carnes and Michael D. Foster controlled a majority of votes in MEB. They both had extensive background in the real estate business. Carnes had been involved in the development of MEB, including the preparation and execution of the declaration of condominium and the organization bylaws, as well as having managed the building's operations from 1983 to 1986. The other named defendants were owners of units in MEB.

Considering the amount of litigation involving these parties, they obviously agree on very little. However, it is undisputed that the underlying reason for this action is the acquisition of control of MEB by the other named defendants. Plaintiffs allege that the control of MEB was acquired through fraud and that their other causes of action (and damages) follow as a result. The parties are familiar with the history and the facts in this litigation, and it is unnecessary to repeat them here.

1. Acquiescence.

MEB filed a motion to dismiss based on its claim of acquiescence by plaintiffs in the lower court's judgment. This motion was denied with leave to reassert the issue in defendants' appellate brief. The judgment below, inter alia, stated the provision for late fees in the declaration of condominium was void as a matter of public policy. After the judgment, MEB filed a small claims suit to recover dues and late fees not paid by plaintiffs for a period of time that was not covered by the judgment. MEB won in small claims court, but plaintiffs appealed to the district court. Plaintiffs successfully prevailed on the issue of late fees by arguing the judgment in this case was res judicata on this issue of late fees. Defendants assert this is acquiescence.

"As a general rule, anything which savors of acquiescence in a judgment cuts off the right of appellate review." Tice v. Ebeling, 238 Kan. 704, 713, 715 P.2d 397 (1986). Although voluntary compliance with the judgment, i.e., using the judgment as an affirmative defense in subsequent litigation, could indicate acquiescence, there is an exception "where a judgment or decree involves distinct and severable matters, demands, or issues, [and there is] an acceptance of the burdens or benefits of one or more parts thereof." First Nat'l Bank in Wichita v. Fink, 241 Kan. 321, 324, 736 P.2d 909 (1987).

Acquiescence and the exception to the rule were discussed in McDaniel v. Jones, 235 Kan. 93, 95, 679 P.2d 682 (1984). McDaniel and Jones entered into an arrangement in the 1960s that transferred property owned by Jones to McDaniel, with Jones retaining possession and responsibility to make all payments on the existing mortgage, along with tax and insurance payments. After an agreement between McDaniel and Jones, that the court later ruled was an equitable mortgage, became controverted, McDaniel filed a quiet title action. The court ruled fee title belonged to Jones, subject to liens for monies expended by McDaniel and the federal tax liens that were subordinate to McDaniel's lien. 235 Kan. at 100, 679 P.2d 682.

Jones appealed from all adverse rulings. McDaniel appealed the failure to find that McDaniel had fee simple title. The United States appealed the subordinate priority assigned its lien. After judgment, McDaniel sought a foreclosure sale of the property. Jones filed an application to stay the sale pending the appeal. The United States opposed Jones' application. The court denied Jones' request, and the sale was consummated. Jones fought the confirmation of the sale, but the court approved it. Jones then redeemed the property. The court impounded the proceeds pending the outcome of the appeal. 235 Kan. at 100-01, 679 P.2d 682.

Jones asserted the action by McDaniel in pursuing the sale of the property, the action by the United States in opposing the stay of the sale proceeding, and both parties' opposition to the effort by Jones to have the court deny the confirmation was acquiescence. 235 Kan. at 101, 679 P.2d 682. The Kansas Supreme Court ruled McDaniel's action in pursuing the sale was an implied recognition of and acquiescence in the trial court's finding of an equitable mortgage. 235 Kan. at 102, 679 P.2d 682. McDaniel's right to appeal was therefore cut off. 235 Kan. at 103, 679 P.2d 682.

The United States, however, only contested the priority of liens assigned by the court. The Supreme Court felt this was a distinct and severable part of the judgment "involv[ing] only the respective rights of the United States and [McDaniel]." 235 Kan. at 104, 679 P.2d 682. The result on appeal of the issue of priority of liens would affect in no way the right to foreclose on the property to satisfy the judgment in favor of McDaniel or the United States. The appeal only determined who would get the proceeds of the sale. 235 Kan. at 104, 679 P.2d 682.

The denial of late fees is a distinct and severable part of the judgment below. Plaintiffs seek a new trial on the claims they raised below. The use by plaintiffs of the judgment as an affirmative defense falls within the exception recognized by Fink and McDaniel and does not bar the appeal.

2. Denial of jury trial.

Plaintiffs argue that the trial court erred in denying their request for a jury trial. The original petition, filed in August 1987, included both legal and equitable claims for relief, and plaintiffs did not ask for a jury trial. MEB filed an answer and then a counterclaim, respectively, and did not request a jury trial. In January 1988, plaintiffs added more legal claims by amending their petition and again did not request a jury trial. After being granted an extension to file their answers, each of the defendants filed an answer seeking a jury trial for "issues so triable."

At a hearing in July 1989, counsel for defendants, in discussing a "motion to align parties," stated the purpose of the motion was to "make it easier for a jury." The judge responded, "Just a moment. What makes you think this is a jury matter?" The court went on to state, "This is an equitable proceeding, starting out as a partnership accounting, and there is no jury trial." Plaintiffs assert they presented to the court and defendants' counsel, at that hearing, a pretrial questionnaire that included a request for jury trial. The record reflects this document was filed with the court in December 1989.

A journal entry purporting to be a pretrial order was also filed in December 1989. The order noted that meaningful discovery had been completed and set deadlines for submitting requests for admissions, filing motions for summary judgment, and exchange of witness and exhibit lists. It...