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Curo Enterprises, LLC v. Dunes Residential Services, Inc.

Court of Appeals of Kansas

January 2, 2015

CURO ENTERPRISES, LLC, Appellant,
v.
DUNES RESIDENTIAL SERVICES, INC., Appellee

Page 949

[Copyrighted Material Omitted]

Page 950

Appeal from Johnson District Court; THOMAS M. SUTHERLAND, judge.

Reversed and remanded.

SYLLABUS

BY THE COURT

1. The legal effect of a written instrument is a question of law. The written instrument may be construed and its legal effect determined by the appellate court regardless of the construction made by the district court.

2. What constitutes a principal/agent relationship and whether there is competent evidence reasonably tending to prove such relationship is also a question of law. An express agency exists if the principal has delegated authority to the agent by words which expressly authorize the agent to do a delegable act. An implied agency may exist if it appears from the statements and conduct of the parties and other relevant circumstances that the intention was to clothe the agent with such an appearance of authority that when the agency was exercised it would normally and naturally lead others to rely on the person's acts as being authorized by the principal.

3. An action must be prosecuted in the name of the real party in interest, but a suit does not have to be dismissed if the real party in interest is not joined. The purpose of the real party in interest rule is to protect a defendant from being repeatedly harassed by a multiplicity of suits for the same cause of action so that if a judgment be obtained it is a full, final, and conclusive adjudication of the rights in controversy that may be pleaded in bar to any further suit instituted by any other party. If the defendant is aware of the real party in interest, then the suit may proceed.

4. In Kansas, a court may not award attorney fees absent statutory authority or an agreement by the parties. Whether a court has the authority to award attorney fees is a question of law over which appellate review is unlimited.

5. When a contract provides that either party who brings a claim under the contract is entitled to its attorney fees when it is the prevailing party, and when that same contract gives specific authority to a nonsignatory third party to enforce the agreement on behalf of a signatory, then such nonsignatory third party can collect its attorney fees if it is the prevailing party.

6. A prevailing party is the party to a suit who successfully prosecutes the action or successfully defends against it, prevailing on the main issue, even though not necessarily to the extent of his or her original contention. The prevailing party is one in whose favor the decision or verdict is rendered and judgment entered. With respect to the specific question of attorney fees, it has been stated a prevailing party is the person who has an affirmative judgment rendered in his or her favor at the conclusion of the entire case.

7. When interpreting contractual prevailing party language, a court should employ a flexible and reasoned approach that allows room for common sense to guide a court's decision. This is particularly true in the context of a settlement.

8. A consent decree is essentially a settlement agreement subject to continued judicial policing, supervision, and enforcement.

J. Eugene Balloun and Zach Chaffee-McClure, of Shook, Hardy & Bacon L.L.P., of Kansas City, Missouri, for appellant.

Robert W. Tormohlen, Scott A. Wissel, and Daniel R. Luppino, of Lewis, Rice & Fingersh, L.C., of Kansas City, Missouri, for appellee.

Before POWELL, P.J., LEBEN, J., and HEBERT, S.J.

OPINION

Page 951

Powell, J.

This dispute involves the efforts of the asset manager for the owner of an apartment complex to terminate the services of the property manager for that apartment complex. Curo Enterprises, LLC (Curo), the asset manager, brought an action in Johnson County District Court to remove Dunes Residential Services, Inc. (Dunes) as the property manager. The parties ultimately settled the case, but Curo appeals from the district court's order denying its request for attorney fees pursuant to a fee-shifting provision in the management agreement between the owner of the apartment complex and Dunes. Curo argues the district court erred by finding Curo was not the owner's agent under the terms of the management agreement and was neither a " party" nor a " prevailing party" under the fee-shifting provision. Curo argues it filed suit as the owner's agent and, when the district court approved and incorporated the parties' settlement agreement into an order, the district court qualified Curo as a prevailing party entitled to attorney fees.

Because we agree Curo was acting as the owner's agent when it sought to terminate Dunes as the apartment complex property manager under the terms of the management agreement and because we find Curo qualified as both a party and a prevailing party under the fee-shifting provisions of the management agreement, we reverse the district court and remand to determine attorney fees and costs to which Curo is entitled under the management agreement as the prevailing party.

Facts

The Lenexa, Kansas, apartment complex at issue is owned by Dunes Point West Associates, L.L.C. (DPW). Originally, three entities--one of which owns 10% and is the managing member--invested to create DPW. Later, a group of investors acquired the remaining 90% interest and serve as nonmanaging members. A separate entity, NDC Capital Partners (NDC), was appointed the asset manager to oversee the financial aspects of the apartment complex for the benefit of the nonmanaging members.

Page 952

In 2006, DPW entered into a management agreement with Dunes to manage the apartment complex. Dunes was in charge of day-to-day functions such as leasing, rent collection, and property maintenance. Section 6 of the management agreement provided that either DPW or Dunes could terminate the agreement by giving the other party 30 days advance written notice, with or without cause. Section 14 of the management agreement stated: " This Agreement shall be enforceable by NDC Capital Partners on behalf of [DPW] without any action or consent necessary from the Managing Member of [DPW]." The agreement was signed by the managing member of DPW and by Dunes. Effective June 30, 2012, NDC assigned its interest as the asset manager to Curo Properties, LLC, which, in turn, assigned its interest to Curo.

The dispute began on February 22, 2013, when Curo, as asset manager, notified Dunes by letter of its intent to terminate the management agreement between DPW and Dunes. Dunes responded on March 8, 2013, challenging and rejecting Curo's right to terminate the management agreement. Curo filed suit on March 21, 2013, seeking: (1) a declaratory judgment that Dunes was no longer manager of the property; (2) an order compelling Dunes to step down as property manager; and (3) an order awarding Curo attorney fees and costs pursuant to a fee-shifting provision in the management agreement.

The trial was scheduled to begin September 12, 2013, but on September 7, 2013, Dunes submitted a notice of termination of the management agreement. According to the district court, Dunes' notice claimed to terminate the management agreement without admitting liability or making concessions. Based on this notice, on September 26, 2013, the court ordered the following: (1) another property manager could enter into a management agreement to assume the property management functions and obligations; (2) Dunes must turn over all books, records, files, keys, contracts, agreements, tenant records, financial data, and any other tangible property required to facilitate the transition of all property ...


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