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Herrmann v. Rain Link, Inc.

United States District Court, D. Kansas

April 24, 2014

WAYNE B. HERRMANN, Plaintiff,
v.
RAIN LINK, INC. a Kansas Corporation; DENNIS DIXON, individually and in his capacity as Officer, Director and shareholder in Rain Link, Inc. SHONDA CHAPA, individually and in her capacity as Officer, Director, and Shareholder in Rain Link, Inc. Defendants.

MEMORANDUM AND ORDER

RICHARD D. ROGERS, District Judge.

This case is what happens when a business relationship among several partners goes bad. Plaintiff Wayne Herrmann and defendants Dennis Dixon and Shondra Chapa were formerly partners in a sprinkler and irrigation business known as Rain Link, Inc. (RLI). Plaintiff was terminated from his employment with RLI in 2009. In this action, plaintiff asserts claims against RLI under the Americans with Disabilities Act (ADA), 42 U.S.C. § 12101 et seq. He alleges disability discrimination and retaliation under Title I and accommodation discrimination under Title III. Plaintiff asserts Kansas state law claims against RLI for unlawful employment practices under the Kansas Act Against Discrimination (KAAD), K.S.A. § 44-1001 et seq., and for willful violations of the Kansas Wage Payment Act (KWPA), K.S.A. § 44-312 et seq. Finally, plaintiff alleges Kansas common law claims against Dixon and Chapa for breach of fiduciary duty and oppression of his rights as a minority shareholder. This matter is presently before the court upon defendants' motion for summary judgment.

Some comments are in order before the court addresses the claims and arguments of the parties. The court is concerned by the delay that has taken place in this litigation. The court may be at fault for some of that delay, but the court believes that much of it is due to the over-litigation by the parties. The sheer number of pages that have been generated by the parties reflects this over-litigation. The conduct of the parties has unnecessarily consumed scarce judicial resources. In noting the over-litigation by the parties, the court also notes that parties have also failed to address certain issues and overlooked arguments raised by the opposing party. With that said, the court shall turn to the many claims, issues and arguments raised in this case.

II.

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The requirement of a genuine issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). Essentially, the inquiry is whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law. Id. at 251-52.

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be met by showing that there is a lack of evidence to support the nonmoving party's case. See Celotex Corp. v. Catrett , 477 U.S. 317, 325 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial. See Anderson , 477 U.S. at 256. A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of [its] pleading, but must set forth specific facts showing that there is a genuine issue for trial. Id . Therefore, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. See id.

When reviewing a motion for summary judgment, the court should keep in mind three principles. First, the court's role is not to weigh the evidence, but to assess the threshold issue whether a genuine issue exists as to material facts requiring a trial. See Anderson , 477 U.S. at 249. Second, the court must resolve all reasonable inferences and doubts in favor of the non-moving party and construe all evidence in the light most favorable to the non-moving party. See Hunt v. Cromartie , 526 U.S. 541, 550-55 (1999). Third, the court cannot decide any issues of credibility. See Anderson , 477 U.S. at 255.

The court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex , 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).

III.

The following facts are uncontroverted. Many other facts are disputed. The court shall consider some of the disputed facts as we consider the arguments raised by the parties.

RLI History and Background

RLI was incorporated in 2000. At the time of incorporation, the stockholders were Hermann, Dixon and Mark Marnell, each of whom was issued 100 shares of common stock. The Articles of Incorporation were filed with the Kansas Secretary of State on November 2, 2000. RLI was created to take over the operations of two businesses, Stan's Sprinkler Service, Inc. (Stan's) and Rain Pro Irrigation, Inc. (Rain Pro). Stan's was owned by Stan Garnett, Dixon and Earl Peters in 1994. Rain Pro was another company owned by Stan's. RLI continued to do business as Stan's after RLI was formed.

In 2002, Marnell was terminated as an employee of RLI. Marnell sold his stock to Herrmann pursuant to the terms of a buy-sell agreement between the parties. Marnell was fired when he stopped showing up for work on a regular basis. Dixon had to cover Marnell's work. Dixon, Chapa and Herrmann made the decision to terminate Marnell.

Herrmann and Dixon each have been the owners of one hundred shares of common stock from November 2, 2000 to the present. Chapa has been the owner of one hundred shares of common stock of RLI from January 1, 2002 to the present. Herrmann, Dixon and Chapa have been the only shareholders of RLI since Marnell sold his one hundred shares of common stock to Herrmann on January 20, 2005, and Herrmann assigned those shares to RLI on February 8, 2005. Dixon and Chapa have been directors and officers of RLI since at least October 6, 2003.

Dixon is the president of RLI. He also is the construction foreman/supervisor. He makes sure crews have what they need to do jobs. He supervises crews in the field. RLI's peak seasons are April to June and October to December. Dixon is in the field 99% of the time during those seasons. March and April 2009 were a busy time and he worked 16 hours per day.

Chapa was hired by Stan's in 1995 to handle all aspects of the office. When RLI was created, she assumed an active role in daily decision-making. She does not have a job title. She does accounting and accounts receivable.

When an RLI business decision needed to be made, Dixon, Chapa and Herrmann would get together in the office and make the decision. They made a lot of decisions without calling a formal directors meeting. They never had a shareholders meeting.

From at least January 2007 until approximately January 2009, RLI operated its business at 5817 N. Broadway Street, Wichita, Kansas 67219 ("Broadway Office"). In approximately January 2009, RLI moved its business operations to 3656 South West Street, Wichita, Kansas 67217 ("West Office").

RLI Buy-Sell Agreement

RLI, by its president Dixon, and Dixon, Marnell and Herrmann, individually, executed a Buy-Sell Agreement (the Agreement) on November 2, 2000.

Transfers of RLI stock are restricted by the provisions of the Agreement, Section III. Transfers, paragraphs A through G. The Agreement, Section III.D., provides for a sale of stock upon termination of a shareholder's employment with RLI:

Should a shareholder's full-time or substantially full-time employment with the Company terminate for any reason other than the death or disability of the Shareholder, such Shareholder shall, within 120 days after such termination, irrevocably offer (in a written instrument delivered to the Company) to sell all shares of Stock registered in such Shareholder's name to the Company for the price and on the terms and conditions specified in Article IV. The Company shall have 30 days after actual receipt of such offer within which to advise such Shareholder whether the Company will so purchase such shares of Stock. If the Company does not so elect to purchase all such shares of Stock, the Company shall offer such right to purchase all such shares of Stock not being purchased by the Company to the other Shareholders as provided in paragraph F of this Article III. If the Company and the other Shareholders decline to purchase all such shares of Stock in accordance with the provisions of this Paragraph F, the option to purchase such Stock under this Paragraph F shall terminate; provided, however, the Shareholder shall continue to be a party to this Agreement and shall continue to own such shares of Stock subject to the terms and provisions of this Agreement in all respects. Normal and customary vacations, sick leave or other permitted leaves of absence shall not constitute termination of employment hereunder.

Article IV, Section A, Sales Price, provides that if a sale of stock is to be made pursuant to any paragraph of Article III, except paragraphs A and G, the sales price shall be the current fair value for such shares determined by agreement of RLI with the selling shareholder or his representative, and if no such agreement can be made within thirty days, then at the current value as determined by three appraisers.

The Agreement was amended by the parties on January 1, 2002. 100 shares of common stock were issued to Chapa. Chapa agreed to the terms and conditions of the Agreement and became a party to the Agreement.

On February 26, 2009, Andrew Thengvall, attorney for Hermman, wrote Jerry Bogle, RLI's attorney, and requested RLI's stock ledger and RLI's financial statements for the past three fiscal years. The stated purpose of the request was to determine the fair value of plaintiff's RLI stock. The letter further stated that Hermann desired to sell his stock to either RLI, other shareholders or a third party. Herrmann did not expect he would remain an officer of RLI after he indicated a desire to sell his shares.

On August 28, 2009, plaintiff's attorney, Thengvall, sent a letter to RLI's attorney, Bogle, offering to sell plaintiff's stock to the company pursuant to Section III.D. the Agreement. On September 16, 2009, Bogle, writing on behalf of RLI, Dixon and Chapa, replied by letter to Thengvall, stating, "Responding to your letter of August 28, 2009, my clients would consider an offer of sale from your client."

On October 7, 2009, Thengvall wrote Bogle stating, "You requested that we propose a specific purchase price for Mr. Herrmann's stock in Rain Link, Inc. Mr. Herrmann would sell his stock back to Rain Link for a purchase price of $330, 000."

On February 9, 2010, Bogle wrote to Thengvall communicating an offer from RLI to Herrmann in which RLI agreed to relieve Herrmann of liability as a guarantor for RLI's debts in exchange for an assignment of Herrmann's stock to RLI. On March 24, 2010, Thengvall wrote to Bogle on behalf of Herrmann and stated that RLI's offer dated February 9, 2010 was not acceptable to Hermann. No further offers regarding the purchase of Herrmann's shares have been made by Herrmann, Dixon or Chapa.

Herrmann's Disability and Medical Issues

Herrmann has a permanent spinal cord injury. He is a C5-C6 quadriplegic. He has been a quadriplegic since an accident occurring on October 23, 1979. Herrmann is paralyzed from his chest down. He has no movement or feeling in his fingers. He is able to move his arms and hands. He wears a brace to write. He uses a computer keyboard and types with his left thumb.

Herrmann attended Wichita State University from 1991 to 1994 and graduated with a degree in business administration. During the times he was unemployed from 1979 to 1994, he received Social Security disability and had a medical card for his attendant care.

Herrmann began working at Stan's in May 1994. When he reached a certain salary at Stan's, Herrmann stopped receiving Social Security disability benefits and lost his medical card. From 1994 through 2008, Herrmann was self-sufficient earning an income and doing a full-time job.

Herrmann's Employment By RLI

Throughout his employment, Herrmann was an employee at-will. Herrmann was the task coordinator beginning in 1997. He was responsible for scheduling jobs and installations. He coordinated with general contractors and sub-contractors at project sites. He obtained permits and ordered One Call inspections. He communicated with customers regarding installations and prepared files for billing. He took estimates prepared by RLI salesmen, did pricing and drew up contracts for residential projects. He invoiced customers and gave the permanent file to Chapa, who input information into the accounting system. He also helped order and check out parts.

From the time Herrmann started at Stan's, he was provided a telephone with a headset and a desk that accommodated his wheelchair. He does not need any other special equipment.

After November 2008, Herrmann requested a wheelchair ramp at the West Office. No special preparations were made in March 2009 regarding a ramp when Herrmann said he was coming back. It would not impose an undue hardship on RLI to install a wheelchair ramp at the main entrance to its West Office.

Herrmann's Absence From Work

In the summer and fall of 2008, Herrmann was having trouble with decubitus ulcers. Decubitus ulcers are a complication of quadriplegia. They occurred on his pelvis, buttocks and elbow. He did not feel these wounds because of his paralysis.

Dr. Stephen Olson of the Wound Clinic treated his ulcers. Dr. Olson would debride the wounds and he prescribed a "wound VAC" machine 24 hours a day 7 days a week that sucked fluids out of the wounds.

Herrmann was hospitalized from November 3, 2008 to November 11, 2008. On November 29, 2008, Dr. Olson performed surgery to irrigate and drain the left elbow abscess and noted an infection, methicillin-resistant staphylococcus aureus. On December 3, 2008, Infectious Disease Consultants, P.A. wrote Dr. Olson and advised Herrmann had developed an infection, methicillin-resistant staphylococcus aureus (MRSA), in all of his wounds.

Herrmann was discharged on December 3, 2008 with a sacral decubitus ulcer state 4 with MRSA, a left elbow decubitus ulcer with MRSA, malnutrition, frequent urinary tract infection and a history of an intestinal infection, gastric ulcers and colonic polyps. He was released home for follow-up with an infectious disease specialist in one month and follow-up with Dr. Olson for his wounds.

Herrmann was back in the hospital on December 6, 2008 with a decreased level of consciousness due to his pain medications and all of the other pre-existing problems. He was discharged again on December 7, 2008 with ...


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