Steckline Commc'ns, Inc. v. Journal Broad. Grp. of Kan., Inc.

• Decision Date: 27 January 2017
• Docket Number: No. 111,651,111,651
• Citation: 388 P.3d 84
• Parties: Steckline Communications, Inc., Appellant, v. Journal Broadcast Group of Kansas, Inc., Appellee.
• Court: Kansas Supreme Court

388 P.3d 84

Steckline Communications, Inc., Appellant,

v.Journal Broadcast Group of Kansas, Inc., Appellee.

No. 111,651

Supreme Court of Kansas.

Opinion filed January 27, 2017

William P. Tretbar, of Fleeson, Gooing, Coulson & Kitch, LLC, of Wichita, argued the cause, and Adam R. Burrus, of the same office, was with him on the briefs for appellant.

Jay F. Fowler, of Foulston Siefkin LLP, of Wichita, argued the cause, and Amy S. Lemley and Alex W. Schulte, of the same office, were with him on the brief for appellee.

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

Steckline Communications, Inc. (SCI) appeals the Court of Appeals' decision affirming the district court's grant of Journal Broadcast Group of Kansas, Inc.'s (JBGK) motion to dismiss SCI's lawsuit for breach of contract on the grounds that SCI lacked standing because it was not a party to the contract. In 2003, Mid America Ag Network, Inc. (MAAN, Inc.) and JBGK entered into a settlement agreement that set forth terms governing the next 15 years of dealings between the companies. The agreement contained a clause that allowed for binding assignments but also stated that "neither party shall assign [the agreement] without the prior written consent of the other party, which consent shall not be unreasonably withheld." In 2005, MAAN, Inc. allegedly sold its business contracts, including the agreement, as well as the right to do business under the name Mid America Ag Network (MAAN) to SCI without JBGK's consent. Despite the lack of consent, SCI and JBGK continued to do business with each other pursuant to the agreement's terms until 2012 when the problems leading to the lawsuit arose.

During litigation, JBGK argued that the alleged assignment failed for lack of written consent, and therefore, SCI was not a party to the agreement and had no standing to sue for breach. SCI responded that JBGK was either estopped from or had waived its ability to enforce the written consent requirement. The district court granted JBGK's K.S.A. 2015 Supp. 60–212(b)(6) motion to dismiss for failure to state a claim, finding that SCI lacked standing to sue. The trial court did not, however, directly address the waiver or estoppel arguments. The Court of Appeals affirmed, adding that the agreement contained a provision that no future course of conduct shall be interpreted to amend or modify the agreement—thus eliminating the legal possibility of a waiver.

On these facts, and at this stage of the litigation, we find that it was error for the district court to grant JBGK's motion to dismiss. SCI has set forth a colorable claim that JBGK is equitably estopped from asserting SCI lacked standing on the grounds of an inadequate assignment. As such, we reverse and remand this case for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

In 1977, Larry Steckline formed Mid America Ag Network and later created MAAN, Inc. with the goal of producing market reports and other radio programming for those in the agricultural community. In 2003, JBGK entered into a settlement agreement with MAAN, Inc., which established the terms of the parties' ongoing business relationship for the next 15 years. The agreement generally states that MAAN, Inc. will provide radio programming to JBGK, which broadcasts the programming. Among the several provisions contained in the agreement, the following are relevant to this appeal:

"13. Termination of Prior Agreements; Entire Agreement. ... Effective August 1, 2003, this 2003 Agreement will represent the sole and entire agreement of the parties related to any radio station or other asset of JBGK and its affiliates or to [MAAN, Inc.] and its affiliates.

"14. Binding Effect; Assignment. This 2003 Agreement shall be binding upon and inure to the benefit of the successors, heirs and assigns of each party, provided, however, that [MAAN, Inc.] shall not assign this 2003 Agreement, or any interest therein, to any Wichita radio broadcast competitor of JBGK, without the prior written consent of Douglas G. Kiel or Steven J. Smith (or their respective successors), which consent may be withheld by them in their sole discretion; and (ii) neither party shall assign this 2003 Agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld.

....

"16. Amendment. This Agreement shall only be amended or altered through a written agreement signed by an authorized officer of each party. No future course of conduct shall be interpreted to amend or modify the express terms of this 2003 Agreement."

In 2005, SCI purchased various assets from MAAN, Inc., which included its tradenames—such as Mid America Ag Network (MAAN)—and its business contracts, including the agreement under which MAAN, Inc. and JBGK were operating. SCI concedes that there was no written consent obtained from JBGK regarding MAAN, Inc.'s purported assignment of the contract. Thereafter, JBGK changed the call letters associated with the AM station from KFTI to KLIO, and SCI provided broadcasting content for JBGK.

An incident occurred on June 29, 2012, in which inappropriate language was broadcast during the time slot provided for MAAN, Inc. The parties continue to dispute the unresolved facts of who was responsible for the incident and whether there were other prior ongoing problems between the parties. Following the incident, JBGK stopped broadcasting programming pursuant to the agreement.

In December 2012, SCI sued JBGK for breaching the agreement. The petition noted SCI's asset purchase, which it later showed occurred in 2005. JBGK asserted in its answer that it did not know of SCI's acquisition of assets from MAAN, Inc. and denied any business relationship with SCI. JBGK admitted, however, that it had changed the station's call letters from KFTI to KLIO. JBGK also asserted a counterclaim under the agreement's indemnification clause.

Following discovery, the district court issued a pretrial order superseding all pleadings. Among the several allegations set forth in the pretrial order was SCI's assertion that it had purchased "various assets" from MAAN, Inc., including trade names and the contract rights from the agreement. SCI further claimed that JBGK "was aware of this transfer, did not object to it and is estopped from denying that [SCI] is entitled to enforce [the agreement]." The pretrial order described JBGK's position that SCI is not "the proper party to make such a claim by having failed to provide [JBGK] notice of assignment of any rights under [the agreement] between [JBGK] and [MAAN, Inc.]"

Following the pretrial order, SCI moved for summary judgment on its breach of contract claim as well as on JBGK's counterclaim. The district court heard arguments relating to the motion on January 30, 2014. The district court's statements made during this hearing suggests that it was unsure about whether it was ruling on standing. Prior to hearing the parties' arguments, the court explained that its preliminary concern was that because there was no written assignment there could be no assignment. Yet, the district court also preliminarily opined that a contract existed because the parties "acted like there is a contract[,] [t]hey gave notice like there is a contract[, and] [t]hey complained like there was a contract."

Following the parties' arguments, the district court again noted that the written consent provision of the assignments clause was not met, saying "I agree clearly as far as suing on the original contract there is no standing." Even so, the court still opined that, given the years of dealings between the parties, there could be some sort of an "equitable contract" between SCI and JBGK. The court also discussed giving SCI 30 to 60 days to "tidy up the issue" so the district court would not have to dismiss it for lack of standing but then stated that it was "not going to do that." Immediately thereafter, defense counsel asked the district court to clarify its ruling, and the court stated:

"They're going to have to prove the terms of the contract. That's their problem. And if [SCI's counsel] wants to tie that up between now and then to amend the petition to show they gave notice, which would be a lot cleaner, he certainly has the option to do that."

Despite the statements in court, the journal entry of the order—which refers back to the "reasons more fully articulated from the bench"—does not clearly articulate these concerns. In the journal entry, the district court denied SCI's motion for summary judgment because there were disputed issues of material fact. The court found that there was no dispute of material fact relating to JBGK's counterclaim. The journal entry simply states that "[t]here is no contractual claim for costs and attorney fees." The order is unclear as to whether this is because the district court had held there was no contract between the parties—and therefore no indemnification clause—or because the district court had held the terms of the indemnification clause did not provide for the attorney fees JBGK was requesting.

Shortly before the journal entry was entered, JBGK filed a motion to dismiss pursuant to K.S.A. 2015 Supp. 60–212(b)(6), arguing that the district court had previously ruled during the January 30, 2014, hearing that SCI lacked standing to sue for breach of the agreement. SCI opposed the motion, arguing that there was a genuine issue of material fact as to whether JBGK waived the notice requirements in the assignment clause, which would result in SCI having standing to sue for breach. It further claimed that the issue of standing had not been properly presented to the court for resolution. The district court granted the motion to dismiss stating, "I think I have no choice but to dismiss it for lack of standing, period." While the parties and the court mentioned estoppel and waiver, the district court did not discuss these doctrines in detail.

Because the district court dismissed this case when it found that SCI...