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LCL, LLC v. Falen

Court of Appeals of Kansas

February 17, 2017

LCL, LLC,
v.
James W. Falen, in his capacity as Sole Trustee of The James W. Falen Living Trust U/A dated April 30, 2007; Julie D. Falen; Gregory A. Falen; and Maryl M. Wesolowski (Defendants/Third-Party Plaintiffs), Appellants,
v.
Rice County Abstract & Title Co., Inc. (Third-Party Defendant), Appellee.

         SYLLABUS BY THE COURT

         1. The standard of review relating to summary judgment is discussed and applied.

         2. Any allegation that a plaintiff's claim is barred by the statute of limitations must be pled by a defendant as an affirmative defense.

         3. With limited exception, a tort action in Kansas is not deemed to accrue until the act giving rise to the cause of action first causes substantial injury, or if the fact of injury is not reasonably ascertainable until some time after the initial act, then the period of limitation shall not commence until the fact of injury becomes reasonably ascertainable to the injured party.

          4. In construing the statute of limitations for tort actions, the phrase "substantial injury" means "actionable injury." The true test to determine when an action accrues is that point in time at which plaintiff could first have filed and prosecuted an action to a successful conclusion.

         5. To state a claim for negligence upon which relief can be granted, a plaintiff must plead the following essential elements: (1) a legal duty owed by the defendant to the plaintiff; (2) a breach of that legal duty; (3) the breach of that legal duty caused plaintiff injury; and (4) the plaintiff sustained damages as a result of the injury.

         6. Because a cause of action does not accrue until all of the essential elements are satisfied, an injury allegedly caused by a defendant's negligence does not become actionable until the plaintiff sustains damages as a result of the injury.

         7. The phrase "reasonably ascertainable" requires application of an objective standard that takes into account all of the surrounding circumstances.

         Appeal from Rice District Court; Steven E. Johnson, judge. Affirmed in part, reversed in part, and remanded with directions.

          Gordon B. Stull and Josh V.C. Nicolay, of Stull, Beverlin, Nicolay & Haas, LLC, of Pratt, for appellants.

          Jeffrey C. Baker, William P. Denning, and Kaitlin M. Marsh-Blake, of Sanders Warren & Russell LLP, of Overland Park, for appellee.

          Before Malone, C.J., Standridge, J., and Hebert, S.J.

          STANDRIDGE, J.

         The question presented on appeal is whether the applicable statute of limitations precludes James W. Falen, in his capacity as Sole Trustee of The James W. Falen Living Trust U/A dated April 30, 2007; Julie D. Falen; Gregory A. Falen; and Maryl M. Wesolowski (the Falens) from pursuing claims of negligence, breach of implied contract, and breach of fiduciary duty against Rice County Abstract & Title Company, Inc. (RCAT). The district court answered this question in the affirmative and, accordingly, entered summary judgment in favor of RCAT. We agree with the district court with regard to the Falens' claim alleging breach of implied contract. But we find the statute of limitations does not prevent the Falens from pursuing their claims of negligence and breach of fiduciary duty. As such, we reverse the summary judgment in favor of RCAT on those two claims and remand so the case can proceed accordingly.

         Factual and Procedural Background

         Plaintiff LCL, LLC (LCL) originally filed this lawsuit against the Falens seeking to quiet title to an undivided one-half interest in mineral rights associated with 203.2 acres of surface farmland in Rice County, Kansas (the subject property). The Falens filed a counterclaim against LCL seeking to quiet title to those same mineral rights, but in their favor. The Falens also filed a third-party lawsuit against RCAT for negligence, breach of implied contract, and breach of fiduciary duty. The underlying suit and counterclaim seeking to quiet title ultimately settled. At that point, RCAT filed a motion for summary judgment in the third-party lawsuit based on the statute of limitations. After the motion was briefed, the court granted summary judgment to RCAT, ruling that the Falens were precluded from pursuing the claims alleged in the suit because the statute of limitations on each of them already had expired.

         Because the district court granted summary judgment based solely on procedural grounds-the applicable statute of limitation precludes each of the claims asserted-the underlying merits of the Falens' claims of negligence and breach of implied contract are not issues on appeal. Nevertheless, a brief chronology of relevant facts in the record is helpful to our analysis of the procedural issue presented for decision.

• In 1971, Mary Louise Falen and James C. Falen (husband and wife) granted to Mary Louise's brother, John Weber, an undivided one-half ownership interest to minerals associated with the subject property.
• In 1982, Mary Louise (now a single person) and John and Moralee Weber, each owning an undivided one-half interest to minerals associated with the subject property, signed an Oil and Gas Lease in favor of Bert J. Fisher. The 1982 Oil and Gas Lease granted Fisher the right to use the subject property to discover and extract minerals for a term of years in exchange for royalty payments in equal proportion to Mary Louise and John and Moralee consistent with their ownership rights to the minerals in the subject property.
• In 1992, Mary Louise created the Mary Louise Falen Trust (MLF Trust), naming Gregory A. Falen and Julie D. Falen as co-trustees. At some point between 1992 and 2007, Mary Louise transferred into the MLF Trust the entire surface of the subject property and an undivided one-half interest in the minerals.
• On June 1, 2007, the MLF Trust entered into a listing agreement with Farmer's National Company to sell the surface land of the subject property. The listing agreement provided that "'[a]ll minerals currently owned by the seller will be retained as long as minerals are produced and for a period of 20 years after production has ceased.'" An advertising brochure was produced for the property and ...

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