WYCO/KCK v. TRANS WORLD

• Decision Date: 26 March 2010
• Docket Number: 732.,No. 101,101
• Citation: 227 P.3d 992
• Parties: The UNIFIED GOVERNMENT OF WYANDOTTE COUNTY/KANSAS CITY, KANSAS, Appellee, v. TRANS WORLD TRANSPORTATION SERVICES, L.L.C., Appellant.
• Court: Kansas Court of Appeals

227 P.3d 992

The UNIFIED GOVERNMENT OF WYANDOTTE COUNTY/KANSAS CITY, KANSAS, Appellee, v. TRANS WORLD TRANSPORTATION SERVICES, L.L.C., Appellant.

No. 101,732.

Court of Appeals of Kansas.

March 26, 2010.

COPYRIGHT MATERIAL OMITTED

Anthony L. Gosserand, of King Hershey, P.C., of Kansas City, Missouri, for appellant.

Timothy P. Orrick and Anthony J. Orrick, of Orrick & Associates, L.L.P., of Overland Park, for appellee.

Before McANANY, P.J., GREEN and MALONE, JJ.

McANANY, J.

Defendant, Trans World Transportation Services, L.L.C. (Trans World), appeals from the district court's order granting summary judgment to the Unified Government of Wyandotte County/Kansas City, Kansas (WyCo/KCK), on WyCo/KCK's claim for reformation of a deed on account of mutual mistake.

WyCo/KCK owned an 8.95-acre parcel of land at 400 Kindelberger Road which contained a 27,164 square-foot building in the northwest quadrant. In 1989, WyCo/KCK constructed a fire station occupying roughly 2.58 acres in the southwest quadrant of this 8.95-acre parcel. That fire station, which WyCo/KCK has operated since its construction, is located at 444 Kindelberger Road. The remaining 6.45-acre parcel was assigned a street address of 420 Kindelberger Road and a mailing address of 400 Kindelberger Road. Despite this change, the 8.95-acre parcel was never formally subdivided by deed or plat.

In December 1997, WyCo/KCK entered into a lease with Trans World which described the leased premises as: "One Building and Improved Grounds located at 420 Kindelberger Road, Kansas City, Kansas, consisting of a total of 280,962 square feet or 6.45 acres (+/-), with a 27,164 square feet building...."

The lease contained a survey showing the entire 8.95-acre parcel of land. It showed the two-story concrete fire station building and the 2.58-acre portion of the parcel upon which it is located in the southwest corner of the property. WyCo/KCK continued to operate the fire station at 444 Kindelberger Road while Trans World operated its business on the remainder of the parcel leased to it. Since execution of the lease in 1997, Trans World has never occupied the fire station property, and it was not part of the leased premises.

In 2004, WyCo/KCK sued Trans World over a lease dispute. Trans World never asserted any right or interest in the fire station property during the litigation.

In September 2007, the parties agreed to settle the lawsuit. WyCo/KCK agreed to sell Trans World the property and improvements that were the subject of the lease between the parties and were located generally at 400 Kindelberger Road. The settlement agreement made no reference to the fire station or the 2.58 acres on which it stands. The resolution of the WyCo/KCK commissioners authorized issuance of a deed conveying the property at 400 Kindelberger Road (the mailing address of the leased tract) to Trans World.

When WyCo/KCK ordered a title insurance commitment it mistakenly referred to the entire tract, not just the leased premises. The error was not caught before the closing, and the deed to Trans World conveyed the entire premises, including the fire station property.

Shortly thereafter, WyCo/KCK discovered the erroneous legal description and notified Trans World. Trans World refused to acknowledge that the mistake was mutual, and, in classic display of chutzpah, demanded that WyCo/KCK either negotiate a lease of the fire station or tell its firefighters to pack their bags and move out within 30 days. As a result, WyCo/KCK brought this action seeking, among other things, reformation of the deed on account of mutual mistake. The district court granted summary judgment to WyCo/KCK and ordered the filing of a deed containing the correct legal description. Trans World objected to WyCo/KCK's proposed deed, and the court settled the matter pursuant to Supreme Court Rule 170 (2009 Kan. Ct. R. Annot. 245).

Trans World now appeals the order of summary judgment as well as the order accepting WyCo/KCK's form of corrected deed. We review the district court's rulings de novo. In doing so, we apply the same summary judgment rules and standards applicable in the district court. Miller v. Westport Ins. Corp., 288 Kan. 27, 32, 200 P.3d 419 (2009).

"`Mere speculation is insufficient to avoid summary judgment.'" Seitz v. Lawrence Bank, 36 Kan.App.2d 283, 290, 138 P.3d 388, rev. denied 282 Kan. 791 (2006). Issues of fact are not material unless they have legal controlling force as to the controlling issue. Disputed questions of fact that are immaterial to the issue do not preclude summary judgment. Mitchell v. City of Wichita, 270 Kan. 56, 59, 12 P.3d 402 (2000).

Mutual Mistake—Elements

To prove mutual mistake concerning a written instrument, a party must show by clear and convincing evidence: (1) an antecedent agreement that the written instrument undertakes to evidence; (2) that a mistake occurred in drafting the instrument and not the antecedent agreement it undertakes to evidence; and (3) when there is no fraud or inequitable conduct by a party, that the mistake is mutual. See Sunfresh, Inc. v. Bean Acres, Inc., 180 F.Supp.2d 1224, 1230 (D.Kan.2001) (citing Northern Pac. Ry. Co. v. U.S., 277 F.2d 615 10th Cir.1960); and Foster v. Allen, 159 Kan. 116, 152 P.2d 818 (1944).

A mutual mistake in an instrument may be shown even if the parties did not carefully examine it to ascertain whether it expressed their agreement, as was the case in Schlatter v. Ibarra, 218 Kan. 67, 75, 542 P.2d 710 (1975) (citing Home Owners' Loan Corp. v. Oakson, 161 Kan. 755, 173 P.2d 257 1946; and Zuspann v. Roy, 102 Kan. 188, 170 P. 387 1918). Mere negligence in executing or accepting a written instrument is not a bar to reformation predicated upon mutual mistake. Schlatter, 218 Kan. at 75-76, 542 P.2d 710.

Antecedent Agreement

Here, the object of the deed was to effectuate the parties' antecedent settlement agreement. The settlement agreement repeatedly refers to the property to be conveyed as the property that was leased to Trans World, 400 Kindelberger Road. It makes no reference to the fire station or the 2.58 acres on which it is located. WyCo/KCK's commissioners authorized a deed conveying the property at 400 Kindelberger Road, the property leased to Trans World. It is clear that the antecedent agreement was to convey the leased property which did not include the fire station property.

Mistake In Deed

The mistake occurred in drafting the deed, not in drafting the settlement agreement. Here, the mistake arose when WyCo/ KCK mistakenly requested a title commitment using the legal description of the entire tract. That legal description was later used in the preparation of the deed conveying the property to Trans World. The warranty deed delivered to Trans World and placed of record erroneously described more property than what was leased to Trans World and described in the settlement agreement.

Trans World suggests that the fact that the full parcel was never formally subdivided by deed or plat is evidence that the original lease and settlement agreement intended to convey the entire 8.95 acres to Trans World. We reject this notion. Trans World never claimed an interest in the 2.58-acre fire station premises before the deed was delivered to it. The 2.58 acres was used as a fire station during the entirety of the Trans World lease. The lease describes the leased premises as "One Building and Improved Grounds located at 420...