Equitable Life Leasing Corp. v. Abbick

• Decision Date: 08 July 1988
• Docket Number: No. 61209,61209
• Citation: 243 Kan. 513,757 P.2d 304
• Parties: EQUITABLE LIFE LEASING CORPORATION, Plaintiff, v. Marion G. ABBICK, et al., Defendants and Third-Party Plaintiffs/Appellees v. MOORE BUSINESS SYSTEMS, INC., Third-Party Defendant/Appellant.
• Court: Kansas Supreme Court

Page 304

757 P.2d 304

243 Kan. 513

EQUITABLE LIFE LEASING CORPORATION, Plaintiff, v. Marion G. ABBICK, et al., Defendants and Third-Party Plaintiffs/Appellees v. MOORE BUSINESS SYSTEMS, INC., Third-Party Defendant/Appellant.

No. 61209.

Supreme Court of Kansas.

July 8, 1988.

Syllabus by the Court

1. No election of remedies is required unless claims are inconsistent.

2. Punitive damages are allowable if an independent tort of fraud is found in addition to actual damages for breach of contract.

3. Recovery under the Kansas Consumer Protection Act does not prevent an award of punitive damages for fraud.

4. Attorney fees may be granted under the Kansas Consumer Protection Act even though expenses of litigation were among the factors considered in an award of punitive damages for fraud.

Alan V. Johnson of Sloan, Listrom, Eisenbarth, Sloan & Glassman, Topeka, argued the cause and Michael E. Francis and Martha A. Peterson, of the same firm, were on the brief, for appellant.

Walter P. Robertson of Walter P. Robertson, Chartered, Junction City, argued the cause and was on the brief, for appellees.

HERD, Justice:

This is an action for violation of the Kansas Consumer Protection Act (KCPA) (K.S.A. 50-601 et seq.), breach of contract, and common-law fraud brought by Marion Abbick against Moore Business Systems (Moore).

The controversy arose out of the following stipulated facts. Abbick, a practicing dentist in Junction City, was approached by Moore in 1982 about purchasing a computer system. Moore represented it was experienced in the management of dental practices and it would survey Abbick's practice and recommend a system to fit his needs. Moore represented the purchase of a computer system would increase productivity and profits, produce accurate and timely financial records, and benefit Abbick in other ways. Abbick was appropriately skeptical. Moore overcame this by representing the computer system could be returned "if it did not work out."

In reliance on Moore's representations, Abbick made a down payment of $1,185.00 on a computer system. For financing purposes, the transaction ultimately was accomplished through a lease/purchase agreement with Moore as seller, Equitable Life Leasing Corporation (Equitable) as buyer/lessor, and Abbick as lessee. Numerous problems arose with the system, causing substantial disruption to Abbick's dental practice, loss of hundreds of hours, and confusion of financial records. Eventually, Abbick ceased making payments to Equitable and Equitable sued Abbick on the agreement. Abbick claimed the computer system failed to increase his profits or perform as represented, and that Moore refused to take back the system as promised. Abbick brought a third-party action against Moore for violation of the KCPA, breach of contract, and fraud. Equitable's claim against Abbick has been resolved, leaving only the third-party dispute for our resolution.

The parties are in some disagreement on the jury verdict because the verdict form is ambiguous. However, a careful reading of the form, coupled with the instructions, clearly establishes the intent of the jury and resolves the verdict's ambiguity. See State ex rel. Stephan v. GAF Corp., 242 Kan. 152, 160, 747 P.2d 1326 (1987).

The jury first considered whether Moore violated the Kansas Consumer Protection Act. K.S.A. 50-623 provides the KCPA is to be construed liberally to promote the objective, among others, of protecting consumers from suppliers who commit deceptive and unconscionable acts. K.S.A. 50-626(b) provides a non-exclusive list of examples of prohibited deceptive acts, including (b)(3): "the intentional failure to state a material fact, or the intentional concealment, suppression or omission of a material fact, whether or not any person has in fact been misled." The jury found that Moore had violated this provision by not intending to accept a return of the computer system as promised.

The jury found Moore had not breached any warranties in the sale of the computer system. However, it found Moore had breached the contract by refusing to take back the computer system as promised, awarding Abbick actual damages for this breach in the amount of $1,185. The trial court upheld the verdict, but imposed a civil penalty of $2,000.00 against Moore in lieu of the actual damages award of $1,185.00, pursuant to the KCPA, K.S.A. 50-634(b), and allowed Abbick attorney fees pursuant to K.S.A. 50-634(e).

The jury was given the standard instruction, PIK Civ.2d 14.41, regarding an independent common-law action for fraud, specifically the fraudulent promise of future events. Abbick had to prove not only that Moore intentionally made a promise it was not intending to keep (which alone would be enough for a violation of the KCPA), but also that the promise was not in fact kept, that the promise was made for the purpose of inducing Abbick to act upon the promise, and that Abbick relied on the promise and suffered damages due to this reliance. The jury found Moore had committed fraud, and awarded $15,000 in punitive damages.

The first issue is whether the trial court erred in refusing to require Abbick to elect his remedy. Moore contends since all three claims were based on the same course of conduct they were inconsistent and thus required an election. Moore misinterprets the doctrine of election of remedies. An election is required only when claims are inconsistent, such as where one claim alleges what the other denies, or the allegations are mutually repugnant. Griffith v. Stout Remodeling, Inc., 219 Kan. 408, 548 P.2d 1238 (1976).

Moore's argument that Abbick's claim under the KCPA and his claim for fraud are inconsistent is without merit. Moore states the KCPA claim was made under K.S.A. 50-627(b)(6), which provides it is unconscionable for a supplier to make a misleading statement of opinion on which the consumer was likely to rely to the consumer's detriment. Moore then contends this claim is inconsistent with a claim for fraud, since fraud is based on misrepresentation of fact. It is true Abbick's original claim was made under K.S.A. 50-627,...