Noel v. Pizza Hut, Inc.

• Decision Date: 15 February 1991
• Docket Number: No. 65019,65019
• Citation: 805 P.2d 1244,15 Kan.App.2d 225
• Parties: Wallace R. NOEL, Larry D. Noel, Michael L. Noel, and Cathy R. Noel, Plaintiffs/Appellants/Cross-Appellees, v. PIZZA HUT, INC., and Pepsico, Inc., Defendants, and Pizza Management, Inc., and Arturo G. Torres, Defendants/Appellees/Cross-Appellants.
• Court: Kansas Court of Appeals

Page 1244

805 P.2d 1244

15 Kan.App.2d 225

Wallace R. NOEL, Larry D. Noel, Michael L. Noel, and Cathy R. Noel, Plaintiffs/Appellants/Cross-Appellees, v. PIZZA HUT, INC., and Pepsico, Inc., Defendants and Pizza Management, Inc., and Arturo G. Torres Defendants/Appellees/Cross-Appellants.

No. 65019.

Court of Appeals of Kansas.

Feb. 15, 1991.

Review Denied April 23, 1991.

Syllabus by the Court

1. When a motion to dismiss under K.S.A.1990 Supp. 60-212(b)(6) raises an issue concerning the legal sufficiency of a claim, the question must be decided from the well-pleaded facts of the plaintiff's petition. The motion in such case may be treated as the modern equivalent of a demurrer.

2. In considering a motion to dismiss for failure of the petition to state a claim for relief, a court must accept as true the plaintiff's description of that which occurred.

3. It is not necessary to spell out a legal theory for relief so long as an opponent is apprised of the facts that entitle plaintiff to relief. The court is under a duty to examine the petition to determine whether its allegations state a claim for relief under any possible theory.

4. There is no absolute prohibition against the beneficiary of a third-party beneficiary agreement suing the promisee of that agreement for its breach.

5. When a petition alleges that the promisee of a third-party beneficiary agreement entered into that agreement to gain a concession or benefit from the plaintiff and then, after gaining such concession or benefit, the promisee jointly or individually causes the agreement to be abrogated, such petition states a claim for relief against said promisee.

6. When a nonresident of this state enters into an agreement with a Kansas resident to be performed in whole or in part by either party in this state, such non-resident is subject to the jurisdiction of the courts of this state under K.S.A.1990 Supp. 60-308(b).

7. The signing of an agreement to be performed in whole or in part by either party in this state by a nonresident of this state, as a guarantor of a corporation, subjects such nonresident, under the facts of this case, to the jurisdiction of the Kansas courts in his personal capacity.

Robert Martin and J. Michael Riehn, of Martin, Pringle, Oliver, Wallace & Swartz, Wichita, for plaintiffs/appellants/cross-appellees.

Ron D. Beal, of Klenda, Mitchell, Austerman & Zuercher, Wichita, for defendants/appellees/cross-appellants.

Before LEWIS, P.J., and PIERRON, J., and RICHARD B. WALKER, District Judge, assigned.

LEWIS, Presiding Judge:

This is an action for the breach of a third-party beneficiary agreement. The trial court sustained a motion to dismiss on the grounds that the petition failed to state a claim upon which relief could be granted. The trial court also dismissed the action as to the defendant Arturo G. Torres on jurisdictional grounds. The plaintiffs (Wallace Noel and his children Larry, Michael, and Cathy Noel) appeal both rulings. The defendants Pizza Management, Inc., (PMI) and Torres cross-appeal the refusal of the court to award attorney fees, and PMI cross-appeals the court's decision that PMI is subject to Kansas jurisdiction.

After careful review, we reverse those rulings of the trial court adverse to the plaintiffs and remand.

There are basically three issues on this appeal, and we will approach and deal with each issue separately.

DID THE PETITION OF PLAINTIFFS STATE A CLAIM ON WHICH RELIEF COULD BE GRANTED?

The question before this court is whether the second amended petition states a claim for relief against PMI and Torres. In examining the petition, we note that there are three claims for relief set forth. The third claim seeks relief only from the defendant PepsiCo, Inc., (PepsiCo) which is no longer a party to this litigation. As a result, only the first two claims for relief remain relevant and will be considered in this opinion. The facts stated in the opinion are taken from allegations of the petition. The petition will be summarized where possible while the key paragraphs will be restated verbatim.

The petition alleges that all of the plaintiffs (Noels) are owners of common stock in PMI. Wallace Noel owns some 386,448 shares of common stock in PMI, while his children each own 2,500 shares in that corporation.

PMI is a Texas corporation, which has its principal office and place of business in San Antonio, Texas. The defendant Torres is a resident of Texas and the president, CEO, director, and majority stockholder of PMI. Both PMI and Torres are alleged to be transacting business in Kansas and to have subjected themselves to the jurisdiction of the Kansas courts.

Prior to February 1, 1977, Wallace Noel was the owner and operator of a number of Pizza Hut franchise restaurants and related franchise territories and locations. In the fall of 1976, Noel was approached by PMI with a proposal wherein he would sell his restaurants, locations, and franchise rights to PMI in exchange for PMI stock. In addition:

"[i]t was represented by PMI and Torres that the company and the shareholders of PMI held special contract rights granted by Pizza Hut which would permit PMI and its shareholders to register, make a public offering and sale of stock without any restrictions by Pizza Hut, notwithstanding any terms or limitations of the Pizza Hut franchise agreements."

The agreement alleges specific breaches of contract, as are hereinafter set forth, and alleges that, by reason of those breaches of contract, the plaintiffs had been damaged in the amount of $5 to $11 million.

The petition alleges the following:

"11. Plaintiff refused to agree to transfer his Pizza Hut restaurants and franchise rights to PMI for several months until the representations as to the registration and public offering were confirmed. In 1976, Noel was provided with a copy of a signed contract between Pizza Hut, PMI and Torres ('the 1976 agreement') which contained the following provision:

" 'PMI may issue and/or sell or otherwise lawfully issue additional shares of its stock from time to time and the shareholders of PMI other than Torres may sell, assign or transfer their PMI shares without any restrictions imposed by Pizza Hut, and PMI may register its shares under the provisions of the Texas Securities Act, subject to the restriction that Torres agrees that at all times he will take any and all actions necessary to cause him to remain the record and beneficial owner of at least fifty-one percent (51%) of the issued and outstanding shares of stock of PMI; provided, however, that in the event that the stock of PMI shall be sold in an underwritten public offering registered under the Securities Act of 1933, as amended, the foregoing restriction on ownership by Torres shall no longer apply, so long as Pizza Hut is given thirty (30) days prior written notice of such offering and approves the Prospectus and Registration Statement, and all amendments thereto, insofar as the same refers to Pizza Hut, its relationship to PMI and Pizza Hut's registered trademarks and tradenames, which approval will not be unreasonably withheld. PMI and Torres agree that such stock will not be offered by use of the name "Pizza Hut" except to reference the fact that PMI is a franchisee of Pizza Hut.'

"Upon being satisfied that the written agreement, in the terms set out above, had been executed by the requisite parties (defendants Pizza Hut, PMI and Torres), Noel agreed to transfer his Pizza Hut franchise restaurants and the related franchise rights to PMI in exchange for shares of common stock on February 1, 1977 ....

"13. In 1981, Pizza Hut prepared a new form of franchise agreement titled Superseding Franchise Agreement, which all Pizza Hut franchisees were requested to sign. PMI executed the Superseding Franchise Agreement under date of July 20, 1981, but concurrently, there was prepared and executed a separate written agreement of even date titled Blanket Amendment To Superseding Franchise Agreement ('Blanket Amendment'), which was executed by the parties to ratify, confirm and extend the rights of PMI and its shareholders to register, make a public offering and sell shares of stock in PMI without any restriction or interference from the franchisor, Pizza Hut, as provided in the 1976 agreement. These rights were expressed and confirmed in a paragraph identical to that set out in paragraph 11 of this Second Amended Petition.

"14. Plaintiffs are and were intended to be third-party beneficiaries of the 1976 agreement and the 1981 Blanket Amendment, insofar as they provided for and confirmed the unrestricted right of PMI and its shareholders to register and sell shares of PMI through an underwriting and public offering. Plaintiffs relied upon the agreements and were entitled to rely upon them and would not have entered into the 1977 transaction with PMI and would not have become shareholders in PMI absent the signed 1976 agreement.

"15. PMI and Torres are parties to the written agreements out of which plaintiffs' claims for relief arise and are therefore proper parties to this action.

"16. At all times material, plaintiffs were not officers, directors, or employees of PMI and had no control over the business or affairs of PMI. Plaintiffs believed that the 1976 agreement and the 1981 Blanket Amendment were valid and enforceable contracts, made for their benefit as shareholders in PMI, and that those contracts would be honored and performed according to their terms.

"17. In the spring of 1986, PMI developed plans for a registration, underwriting and public offering of PMI stock and pursuant thereto negotiated a commitment from Shearson Lehman Brothers to serve as managing underwriter for the public offering of PMI stock. A prospectus and a registration statement were prepared and proper written notice was given to Pizza Hut of the proposed public offering.

"18. Defendants Torres, PMI and Pizza Hut, and each of them, as parties to the 1976 and 198...