Reardon v. King

• Decision Date: 15 November 2019
• Docket Number: No. 114,937,114,937
• Citation: 452 P.3d 849
• Parties: Kevin E. REARDON, Special Administrator, FOR the ESTATE OF Marilyn K. PARSONS, Appellee, v. Jon M. KING, Defendant, and The Trust Company of Kansas, Appellant.
• Court: Kansas Supreme Court

452 P.3d 849

Kevin E. REARDON, Special Administrator, FOR the ESTATE OF Marilyn K. PARSONS, Appellee,

v. Jon M. KING, Defendant,andThe Trust Company of Kansas, Appellant.

No. 114,937

Supreme Court of Kansas.

Opinion filed November 15, 2019.

Rachel N. Wetta, of Foulston Siefkin LLP, of Wichita, argued the cause, and Darrell L. Warta, of the same firm, was with her on the briefs for appellant.

Michael P. Crow, of Crow & Associates, of Leavenworth, argued the cause, and Peter C. Robertson and Dan Heinz, of the same firm, were with him on the brief for appellee Marilyn K. Parsons.

The opinion of the court was delivered by Stegall, J.:

The Trust Company of Kansas (TCK) employed Jon M. King, a Kansas-licensed attorney, as a trust officer. TCK had a policy prohibiting employees from practicing law during employment. Unbeknownst to TCK, King represented his TCK client—Marilyn K. Parsons—in legal matters before, during, and after his employment with TCK. In his capacity as a trust officer, King would transfer funds from Parsons' TCK account to her personal account to pay a flat rate legal fee of $5,000 per month. Once TCK learned about King's attorney-client relationship with Parsons, TCK filed a complaint of suspected elder abuse with the Kansas Department of Social and Rehabilitation Services and an ethics complaint with the Kansas Disciplinary Administrator's Office.

Further investigation by the Kansas Disciplinary Administrator's Office revealed that Parsons paid King approximately $250,271.50 in attorney fees during his employment at TCK. As a result, King voluntarily surrendered his license to practice law. See In re King , 297 Kan. 208, 300 P.3d 643 (2013). Soon after, Parsons filed a lawsuit against TCK and King, asserting various theories of liability. The case went to trial, and a jury found TCK liable for "negligent training" and King liable for breach of fiduciary duty. The Court of Appeals reversed the jury's verdict against TCK, finding the evidence insufficient. Accordingly, the panel remanded the case with instructions to enter judgment as a matter of law in favor of TCK.

On review, we conclude the district court's instructions failed to present the jury with an accurate statement of our negligence law and incorrectly separated Parsons' negligence claim against TCK into two causes of action. As a result of these errors, questions of fact remain. We reverse the Court of Appeals and remand this matter for a new trial decided on proper instructions.

PROCEDURAL BACKGROUND

At this stage of the litigation, the key facts are procedural and they are not in dispute. Parsons sued TCK and King seeking $250,271.50 in damages plus an additional $12,111.99 for loss of income and loss of investment appreciation. After Parsons amended her complaint several times and each party filed multiple pretrial questionnaires, the district court issued a pretrial order describing three separate claims against TCK: "(1) breach of contract, (2) breach of fiduciary duty, and (3) failure to properly supervise its employee, Jon King."

The case proceeded to a four-day jury trial. At the close of Parsons' case-in-chief, TCK moved for judgment as a matter of law on all claims against TCK. After hearing oral argument, the court granted TCK's motion for judgment as a matter of law on part of Parsons' breach of contract claim. The court then summarized Parsons' remaining claims as follows:

"What I have is—is the—the claims that plaintiff has asserted against TCK that survived is their breach of contract claim, partially, one of their specifications of breach of contract, I've ruled that there's not evidence to support there was a breach.

"[S]o, breach of contract, breach of fiduciary duty, negligent representation, and negligent supervision."

The district court proceeded to finalize its jury instructions and verdict form. The instructions included a claim of "negligent supervision and training" against TCK:

"INSTRUCTION NO. 18

"Negligent supervision and training claim against Trust Company of Kansas

"The plaintiff, Marilyn Kay Parsons, claims the defendant, Trust Company of Kansas, failed to adequately supervise and train Jon M. King by the following:

"(1) Failing to train and orient Jon M. King that he was prohibited from practicing law for TCK clients while employed by TCK

"(2) Failing to provide training regarding TCK company policies

"(3) Failing to provide training regarding fiduciary duties to TCK clients

"(4) Failing to verify that Jon M. King did not engage in the private practice of law while employed by TCK "The plaintiff must prove her claim for negligent supervision and training by a preponderance of the evidence.

"In response to this claim, the defendant, Trust Company of Kansas, denies that it failed to adequately supervise and train Jon M. King. It maintains that plaintiff's losses are not attributable to any failure of training and supervision on its part, but rather to the intentional wrongful acts of Jon M. King, of which it was not aware."

"INSTRUCTION NO. 25

"Negligent supervision and training

"In considering the plaintiff's claim against Trust Company of Kansas for negligent supervision and training, you should consider the following:

"1. An employer has a duty to supervise an employee it knows, or has reason to know, is unfit to undertake the responsibilities of his or her employment.

"2. Negligent supervision entails either inadequate oversight and review of an employee in the performance of his or her job duties or failing to control an employee with propensities that might pose a danger.

"3. A claim based on negligent training depends upon establishing facts showing that more or better training would have prevented the harm.

"The plaintiff must prove her claim for negligent supervision and training by a preponderance of the evidence."

But the verdict form separated the "claims" of negligent supervision and negligent training into two distinct causes of action:

"PLAINTIFF'S CLAIMS AGAINST THE DEFENDANT TRUST COMPANY OF KANSAS

....

"10. Do you find that plaintiff has proven by a preponderance of the evidence that the defendant Trust Company of Kansas negligently failed to supervise Jon M. King? ...

"11. Do you find that plaintiff has proven by a preponderance of the evidence that the defendant Trust Company of Kansas negligently failed to train Jon M. King?"

TCK then questioned the instructions and informed the court that "[t]he claim against us was stated negligent supervision and training claim. There was ‘and’ it was one claim with both supervision and training." But the court explained the separation was intentional because negligent supervision and negligent training had "different standard[s]." After this explanation, TCK had no further objection.

These instructions, along with the verdict form, were given to the jury. In the end, the case submitted to the jury included five claims against TCK: (1) breach of contract; (2) breach of fiduciary duty; (3) negligent misrepresentation; (4) negligent failure to supervise King; and (5) negligent failure to train King.

Ultimately, the jury found TCK liable for negligent training and King liable for breach of fiduciary duties. The jury returned a defendant's verdict on the remainder of Parsons' claims against TCK and King. The jury awarded damages of $125,135.75 plus interest of $6,055.99—half the amount claimed—jointly and severally against TCK and King.

TCK timely filed a renewed motion for judgment as a matter of law, or, in the alternative, a new trial. The district court denied the motion and TCK timely appealed. King did not appeal the jury's finding against him for breach of fiduciary duty, and Parsons did not cross-appeal.

At the Court of Appeals, TCK argued: (1) there was insufficient evidence to support the verdict; (2) the district court should have granted its motion for judgment as a matter of law; and (3) the jury instructions on Parsons' negligence claims were erroneous. Parsons v. King , No. 114,937, 2017 WL 1035190, at *1 (Kan. App. 2017) (unpublished opinion). The Court of Appeals reversed and remanded with instructions for the district court to enter judgment as a matter of law in favor of TCK. 2017 WL 1035190, at *5. The panel found the evidence could not support the jury verdict for negligent failure to train even when considering all the facts and inferences that could reasonably be drawn in Parsons' favor. 2017 WL 1035190, at *4. According to the panel, the evidence failed to show more or better training would have prevented Parsons' loss and that it "rather ... focused on whether TCK adequately supervised King." 2017 WL 1035190, at *4.

Parsons filed a petition for review arguing the Court of Appeals erred by finding TCK was entitled to judgment as a matter of law on Parsons' negligence claim. TCK responded to Parsons' petition, asking us to consider the district court's jury instructions on Parsons' negligence claim or claims. We granted Parsons' petition and review TCK's issue raised in its response to provide guidance on remand. See Supreme Court Rule 8.03(c)(3) (2017 Kan. S. Ct. R. 55) ("In a civil case, the response also may present for review adverse rulings or decisions of the district court that should be considered by the Supreme Court in the event of a new trial, provided that the respondent raised the issues in the Court of Appeals."); see also Puckett v. Mt. Carmel Regional Medical Center , 290 Kan. 406, 443, 228 P.3d 1048 (2010) (reviewing an issue raised in a response to petition for review under Supreme Court Rule 8.03 [c][3] ).

ANALYSIS

We take the unusual step of beginning with our conclusion. In short, we agree with both parties. The trial court's jury instructions on Parsons' negligence claim were erroneous. And as a direct result of this error, the Court of Appeals erred in granting judgment as a matter of law in favor of TCK. The instructions and verdict form in this case were so erroneous that an after-the-fact evaluation of the evidence is not possible. The...