Knowles v. Fleetwood Motorhomes of Cal.

• Citation: 194 P.3d 38
• Decision Date: 17 October 2008
• Docket Number: No. 98,325.,98,325.
• Parties: Robert and Kathleen KNOWLES, Appellants, v. FLEETWOOD MOTORHOMES OF CALIFORNIA, INC., Appellee.
• Court: Kansas Court of Appeals

194 P.3d 38

Robert and Kathleen KNOWLES, Appellants, v. FLEETWOOD MOTORHOMES OF CALIFORNIA, INC., Appellee.

No. 98,325.

Court of Appeals of Kansas.

October 17, 2008.

Lee H. Woodard and Deborah K. Mitchell, of Woodard, Hernandez, Roth & Day, L.L.C., of Wichita, for appellants.

Eldon L. Boisseau, of Law Offices of Eldon L. Boisseau, L.L.C., of Wichita, for appellee.

Before HILL, P.J., ELLIOTT and McANANY, JJ.

HILL, J.

Because a crack formed in the side wall of their new motor home, Robert and Kathleen Knowles sued Fleetwood Motorhomes of California, Inc. But, because the Knowles had previously sued Fleetwood about that motor home, the district court by summary judgment swept away the Knowles' lawsuit by broadly ruling the doctrine of res judicata barred their warranty and consumer claims. This doctrine is sometimes called claim preclusion, a precept based on the need for final judgments, especially after a party has had an opportunity to litigate a matter in a prior action in a court of competent jurisdiction. We hold the doctrine of claim preclusion does not apply in this case because Fleetwood's actions in the prior lawsuit, preventing litigation of these claims arising from the crack in the side wall, amount to a waiver of the defense of res judicata. We reverse and remand for trial.

We discuss the details of the first lawsuit.

On January 17, 2003, Robert and Kathleen Knowles bought a 2003 Fleetwood "Bounder" motor home for $88,363.63. The Knowles experienced many problems with their Bounder; the most serious problem was a persistent leak in the bedroom slide-out area. The manufacturer's warranty for the Bounder expired on July 17, 2004, and its structural warranty expired on January 17, 2006.

Because these problems had not been repaired to their satisfaction under the warranty, the Knowles filed a lawsuit in May 2004 against Fleetwood. They made a claim of breach of warranty and a claim for deceptive acts and practices under the Kansas Consumer Protection Act, K.S.A. 50-623 et. seq.

The side-wall crack appeared after the Knowles filed their first lawsuit.

In July or August 2004, the Knowles noticed that a crack had developed in the Bounder's side wall. Knowledge of this problem came up first in the Knowles' September 2004 depositions. Robert Knowles thought the crack "looked like a stress crack" from the leak's water damages. But, the Knowles did not seek to amend their petition to include the cost of repairs for the crack. Instead, the Knowles raised this issue during settlement negotiations, in the pretrial order, and at the jury trial.

• Settlement Talks

During settlement negotiations, the parties reached a tentative agreement about the side-wall crack in November 2004. Fleetwood agreed to transport the Bounder to its Indiana plant for repairs, while the parties continued to negotiate the Knowles' other requests, such as attorney fees. Fleetwood later said it could not bring back the Bounder until January 2005. The Knowles agreed to the new date.

In January 2005, however, Fleetwood changed its position and did not bring back the Bounder. Instead, Fleetwood flew its dispute resolution coordinator to the Bounder's location for inspection. Fleetwood decided the crack could be repaired by any body shop that does fiberglass repairs. This was unacceptable to the Knowles because their expert had thought the proper repairs required replacement of the entire side wall, not just a patch on the outside.

• Pretrial Order

The Knowles made this claim in the pretrial order:

"The leak into the plaintiff's Bounder caused the wood paneling, which is part of the side wall of the Bounder, to deteriorate, thereby decreasing the strength of the side wall. This resulted in a crack developing in the exterior side wall of the Bounder at the front corner of the bedroom slide-out." (Emphasis added.)

In response, Fleetwood filed a motion in limine asking the district court to exclude evidence about the side-wall crack. Fleetwood argued the Knowles failed to assert properly the damages claim for the crack because they had made no request to Fleetwood for repairs of the crack under their warranty:

"For purposes here today, Your Honor, we're entitled under all the warranty laws, we're entitled to have the opportunity to repair or fix anything they contend is a workmanship defect or something to that nature. And none of this was ever presented to the dealer or to Fleetwood for any purposeful repair or replacement in any way.

. . . .

"So this particular item, which is one of some other items, is nothing that was ever presented to us, nothing that we've ever been given an opportunity to repair and correct, if it was in fact something that we did or caused. I don't see how it gets to part of the lawsuit that they're complaining that we failed to meet some warranty requirement or we failed, we did something deceptively or performed some unconscionable act, if you will, when we've never had any opportunity to work on it."

The court ruled it would allow evidence of the crack but only because of water infiltration.

• Jury Trial

Later, at the jury trial, the court elaborated on its ruling on the motion in limine.

"Fixing the crack is irrelevant because you never asked for it to be fixed in the past." (Emphasis added.)

Because of this ruling, the Knowles did not further question their expert about the crack or the costs to repair the crack. During cross-examination, however, Fleetwood challenged the expert's value assessment of the Bounder, which led to further discussion of the district court's ruling.

"[Fleetwood:] Isn't it true that you are considering some repair issue concerning the crack to get that twenty to $25,000 number. Is that a fact?

"[Knowles' expert:] Yes. That would be.

"[Fleetwood:] So, I would move to strike his previous answer, Your Honor, on the basis of the Court's previous rulings about the issue of the crack because he has contemplated that and considered that in his testimony."

The district court sustained Fleetwood's objection.

In this lawsuit, the parties agreed in the claims of uncontroverted facts that the district court's ruling was:

"14. The judge in the previous litigation ruled in a motion in limine that the plaintiffs could not discuss the existence of the crack at trial because they had never presented the crack to Fleetwood to be repaired. The judge did rule that the plaintiffs could mention the crack as an element of damages but could not ask for damages for the crack itself." (Emphasis added.)

We find this ruling contradictory and confusing.

After the district court excluded the cost to repair the side-wall crack, the Knowles' expert assessed the value of the Bounder with the remaining problems at $68,000, rather than his prior assessment of $60,000. Based on this evidence, the jury returned a verdict in favor for the Knowles only for their breach of warranty claim. For that claim, the jury awarded damages of $20,363.63. The Knowles did not appeal this decision.

We turn to the second lawsuit.

Fleetwood's warranty on the motor home states that "[w]ritten notice of defects must be given to the selling dealer or manufacturer not later than ten (10) days after the expiration of the warranty period." Within that 10 days (the warranty expired on January 17, 2006) on January 23, 2006, the Knowles made a written request to Fleetwood to repair the crack in the side-wall under the Bounder's 3-year structural warranty. Fleetwood denied their request on May 10, 2006. This lawsuit followed. Fleetwood filed for summary judgment, which the court granted based on res judicata.

In this appeal, the Knowles contend res judicata does not bar their breach of warranty claim for three reasons. First, they agree their claim did not exist when they filed their first lawsuit against Fleetwood. Second, they contend Fleetwood waived the defense of res judicata by arguing this claim should be excluded in the prior action. Finally, it is the Knowles' belief that this is a separate claim distinct from their prior breach of warranty claim.

On their Kansas Consumer Protection Act claim, the Knowles make two similar arguments. First, the side-wall crack was not in existence when the first claim was made, so res judicata cannot apply; and second, this is a separate and distinct claim from the first, and res judicata cannot bar its presentation.

We give our standard of review and set out some principles of law on res judicata.

Where there is no factual dispute, appellate review of an order granting summary judgment is de novo. Cooke v. Gillespie, 285 Kan. 748, 754, 176 P.3d 144 (2008). Also, whether res judicata applies is a question of law; thus, this court's review over this issue is also de novo. O'Keefe v. Merrill Lynch & Co., 32 Kan.App.2d 474, 479, 84 P.3d 613, rev. denied 278 Kan. 846 (2004).

"Res judicata encompasses both issue preclusion and claim preclusion. Issue preclusion (collateral estoppel) precludes relitigation of issues previously determined. Claim preclusion precludes relitigation of a claim that has been finally adjudicated in a court of competent jurisdiction. [Citation omitted.]" In re Marriage of Ormsbee, 39 Kan.App.2d 715, ___, 186 P.3d 806 (2008).

Here, the district court does not distinguish between issue and claim preclusion in its res judicata ruling. But it is clear from the facts the district court intended claim preclusion to apply. See Migra v. Warren City School Dist. Bd. of Ed., 465 U.S. 75, 77 n. 1, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984) (explaining that the preclusive effects of former adjudication are collectively referred to as the doctrine of res judicata, but when the term res judicata is used in a narrow sense, it has become almost synonymous with "claim preclusion").

Claim preclusion is based on the need for finality in judgments. "It is founded on the principle that the party, or some other party in privity, has litigated or had an opportunity to...