Harder v. Foster

• Citation: 401 P.3d 1032
• Decision Date: 28 July 2017
• Docket Number: Nos. 116,117, 116,543.,s. 116,117, 116,543.
• Parties: Evelyn HARDER, Appellant, v. Ronald H. FOSTER, et al., Appellees.
• Court: Court of Appeals of Kansas

401 P.3d 1032

Evelyn HARDER, Appellant,

v.Ronald H. FOSTER, et al., Appellees.

Nos. 116,117, 116,543.

Court of Appeals of Kansas.

Opinion filed July 28, 2017

Kurt S. Brack, of Overland Park, for appellant.

Gary A. Nelson, of Leavenworth, for appellee Estate of Ronald Foster.

William E. Pray, of Leavenworth, for appellee Terrie Foster.

Before Arnold–Burger, C.J., Green and McAnany, JJ.

Arnold–Burger, C.J.:

Evelyn Harder bought property with a house, dam, and lake from Ronald Foster. Shortly thereafter, Harder discovered that the dam, which Foster had assured her did not have any problems, was in fact illegal and would need extensive repairs. Harder filed suit against Foster, and the jury found Foster guilty of negligent misrepresentation, intentional misrepresentation, and breach of contract. The parties' Residential Real Estate Contract provided that the party who breached the contract would pay any attorney fees the nonbreaching party incurred "in connection with the default," so Harder filed a motion requesting attorney fees incurred up through the verdict. The court granted her motion for attorney fees, but the issue took months to litigate. Harder filed a second motion for attorney fees requesting compensation for the fees generated while litigating the first motion. The district court denied her motion, holding that the fees incurred defending the first award of attorney fees were not generated "in connection with the default." Foster appealed.

After the trial and the first motion for attorney fees, Harder filed a second lawsuit against Foster, three of his children, and his son-in-law. Her petition alleged that Foster had fraudulently transferred all of the proceeds of the property sale to his family members for no consideration, leaving him unable to satisfy the judgment. She asked "to have the transfers avoided, set aside, and held for naught; for an attachment of the assets transferred; for execution on the transferred assets; and for injunctive relief prohibiting further disposition of the transferred assets." She later asked the court for leave to amend her petition to add a claim for punitive damages. Foster died a few months later, and his estate was substituted as a party. The estate then paid the judgment from the first case in full and filed a motion for summary judgment on Harder's second lawsuit. The district court granted the motion, holding that payment of the judgment extinguished Harder's fraudulent conveyance claim. Foster appealed the district court's grant of summary judgment to Foster and the denial of her request to amend her petition. Both cases were consolidated on appeal.

We find that the district court erred when it held that attorney fees generated defending the verdict and first award of attorney fees were not generated "in connection with the default." Harder is allowed to recover attorney fees generated in defending against attacks on the verdict and her first award of attorney fees. We further find that the district court erred when it granted Foster's motion for summary judgment in the second case because, while the judgment was satisfied, Harder still had a potential claim against Foster's estate under the Uniform Fraudulent Transfer Act (UFTA) for attorney fees under the third-party litigation exception if she can prove it applies. Finally, because a party cannot recover punitive damages from a deceased wrongdoer, the district court decision denying the punitive damages claim was correct and is affirmed. Both cases are reversed solely as to the issue of attorney fees. Both cases are remanded to the district court for consideration of an award of attorney fees against Foster's estate.

FACTUAL AND PROCEDURAL HISTORY

Harder was searching for a house to purchase when she saw an advertisement for a property owned by Foster in Easton, Kansas. She visited the property in 2012. A house, lake, and dam sat on the 31.2 acre property. Harder and Foster entered into a Residential Real Estate Sale Contract. Foster executed a Seller's Disclosure and Condition of Property Addendum the same day, which required Foster to disclose to Harder "all material defects, conditions and facts [known to Foster] which may materially affect the value of the Property." Foster's disclosure stated that there were no problems with the land, no environmental issues, no legal issues, and no problems with the property in general. The price for the property was $405,000 and closing was scheduled for July 6, 2012.

Before closing, Harder discovered a 2007 letter from the State to Foster informing him that the dam on the property was illegal and needed repairs. Prior to finalizing the purchase, Harder asked for reassurance from the county that the dam was fixed to the State's satisfaction. Foster told Harder that, to the best of his knowledge, the dam had been fixed and did not need further repairs. Harder purchased the property in 2012.

In 2013, the State informed Harder that the dam was illegal because it lacked a permit, and obtaining a permit would require extensive repairs to the dam. Harder filed suit against Foster in August 2013 (the 2013 case). Harder's petition alleged negligent misrepresentation, intentional misrepresentation, violation of the Kansas Consumer Protection Act, and breach of contract. The district court dismissed the Kansas Consumer Protection Act claim before trial on Foster's motion for summary judgment. After trial, the jury found that Foster was guilty of negligent misrepresentation, intentional misrepresentation, and breach of contract. The jury awarded Harder $225,116 in actual damages but found that she was not entitled to punitive damages. The journal entry of the verdict was filed on December 10, 2014.

After trial, Foster filed a motion to alter, amend, and set aside and for judgment as a matter of law. Harder filed a motion for attorney fees, a motion for imposition of a constructive trust, and a motion to amend the pretrial order. The court denied Foster's motion to alter, amend, and set aside the judgment, and the court also denied Harder's motion for imposition of constructive trust.

Then, the district court addressed Harder's motion for attorney fees. The parties' Residential Real Estate Sale Contract required the defaulting party to reimburse the nondefaulting party for attorney fees, court costs, and other legal expenses incurred "in connection with the default." Harder's claim for attorney fees was not included on the pretrial order, which is why she also filed the motion to amend the pretrial order. Harder's request for attorney fees did appear on her pretrial questionnaire. Foster opposed Harder's request for attorney fees because she did not include the request in her petition or present evidence on attorney fees at trial. Foster also noted that the request was not in the pretrial order. The district judge stated that he recalled a discussion, possibly at the pretrial conference, that the parties agreed to decide the attorney fees issue after the jury returned a verdict. Harder's attorney remembered a similar discussion. The district judge stated that he "relied upon the pretrial questionnaires in formulation of the pretrial order" and that he did not have an explanation for why he failed to include the attorney fees issue from Harder's pretrial questionnaire in the pretrial order. Based on his recollection that the parties agreed to deal with the issue after the trial, the judge granted Harder's request to amend the pretrial order. The judge also granted Harder's request for attorney fees, ordering Foster to pay Harder $51,862 in attorney fees and $13,871.34 in legal expenses and court costs.

In March 2015, Foster filed a motion to alter, amend, and set aside the district court's order amending the pretrial order and judgment for attorney fees and costs. The district court heard arguments on this motion on October 30, 2015. Foster's attorney began by reminding the district judge that his decision to allow an amendment to the pretrial order was based on the judge's recollection of the parties' agreement. Foster's attorney had gone back and listened to the proceedings and did not find a record of any conversation in which the parties agreed to deal with the attorney fees issue after trial. The judge agreed that he had looked through the record and had not found evidence of the agreement that he had recollected at the previous hearing. Instead of ruling on the motion that day, the judge continued the hearing to give Harder's attorney an opportunity to search the record for evidence that the parties actually agreed to defer the attorney fees issue until after the trial. The parties reconvened on December 1, 2015. Harder's attorney admitted that he had not found anything in the record to substantiate the recollection that the parties had agreed to submit that attorney fees issue to the judge after trial as opposed to the jury. However, the district judge upheld his prior order amending the pretrial order and granting Harder attorney fees, stating that he was "persuaded that it was not error to handle the attorney's fees as it was handled in this case ...."

Harder filed a second motion for attorney fees on March 10, 2016. The district court's first award of attorney fees compensated Harder for fees generated through December 16, 2014. However, Harder continued to generate attorney fees after that date because she had to defend against Foster's motion to alter, amend, and set aside and for judgment as a matter of law and Foster's challenges to the district court's granting of Harder's first motion for attorney fees.

The district court heard the motion on May 4, 2016. Harder began by noting that after the first award of attorney fees Foster filed motions attempting to set aside the verdict and the court's award of attorney fees. Then, Harder reminded the court that the Residential Real Estate Sale Contract required the defaulting party to reimburse the nondefaulting party for all...