ruling on a motion for judgment as a matter of law under
K.S.A. 2016 Supp. 60-250(a)(1), the court must resolve all
facts and inferences reasonably drawn from the evidence in
favor of the party against whom the ruling is sought. When
reasonable minds could reach different conclusions based on
the evidence, the court must deny the motion. The issue is
not whether there is literally no evidence supporting the
party against whom the motion is directed, but whether there
is evidence upon which the jury could properly find a verdict
for that party. An appellate court applies these same
standards in its de novo review.
Courts consider written documents jointly when they are
executed contemporaneously by the same parties. The fact that
complementary instruments do not refer to each other does not
necessarily detract from their significance as integral and
related parts of one contract. When a court construes
instruments together, the general purpose of the entire
court's purpose in construing a contract is to ascertain
the intent of the parties, and such intent best may be
determined by looking at the language employed and taking
into consideration all the circumstances and conditions which
confronted the parties when they made the contract.
a court is called on to interpret multiple interrelated
documents, not all of which were signed by the same parties,
the court can read and construe them together because of
their interrelated nature and because the true nature and
character of a document is not determined by the name
attached to it but by the intent of the parties as reflected
by its terms and content.
Under Supreme Court Rule 6.05 (2017 Kan. S.Ct. R. 36) an
appellant may not raise new issues in a reply brief.
Constructive fraud is the breach of a legal or equitable duty
which, irrespective of moral guilt, the law declares
fraudulent because of its tendency to deceive others or
violate a confidence. Neither actual dishonesty nor purpose
or intent to deceive is necessary to establish constructive
order to be successful on a claim of constructive fraud, the
plaintiff must show (1) a confidential relationship and (2) a
betrayal of a confidence or breach of a duty imposed by the
confidential or fiduciary relationship refers to any
relationship of blood, business, friendship, or association
in which one party reposes special trust and confidence in
the other party who is in a position to have and to exercise
influence over the first party.
9. As a
general rule, fiduciary relationships either are created by
contract or by formal legal proceedings or they are implied
in law due to the facts surrounding the transactions and the
relationship of the parties to the transactions.
fiduciary relationship is characterized by a peculiar
confidence placed by one individual in another. A fiduciary
is one who is in a position to have and exercise, and does
have and exercise, influence over another. A fiduciary
relationship implies a condition of superiority of one of the
parties over the other. Thus, a fiduciary relationship
generally implies that one party is weaker than the other,
either in business intelligence, knowledge of facts, or
mental strength, thereby giving the other party an advantage.
Generally, in a fiduciary relationship, the property,
interest, or authority of the other party is placed in the
charge of the fiduciary. Thus, a fiduciary has the duty to
act primarily for the benefit of the other party.
from Johnson District Court; James F. Vano, judge. Affirmed
in part and reversed in part.
R. Hertenstein, of Foland, Wickens, Eisfelder, Roper &
Hofer, P.C., of Kansas City, Missouri, for appellants.
Lerner, of The Lerner Law Firm, P.A., of Overland Park, for
Standridge, P.J., McAnany, J., and Hebert, S.J.
Lerner and Christopher Mnichowski were co-managers of Rail
Logistics, L.C., and Cold Train, L.L.C., but they had a
falling-out and decided to end their relationship. The
details of the steps they would take to end their
relationship and to divide the ownership of these companies
were memorialized in three written agreements: an exchange
agreement, a promissory note, and a pledge agreement. The end
result was that Lerner became the sole owner of Rail and
Mnichowski became the sole owner of Cold Train.
Rail brought this action against Cold Train and Mnichowski,
asserting claims that include breach of contract and
constructive fraud. Following a jury trial, judgment was
entered against Mnichowski for two counts of breach of
contract and for constructive fraud. Rail was awarded damages
of $375, 091. Mnichowski appeals, claiming there was
insufficient evidence to support these claims, that the court
erred in instructing the jury on them, and that the court
erred in not entering judgment as a matter of law on them.
conclude that the district court did not err in its rulings
or in its instructions on the contract claims, for which
there was sufficient evidence to support the jury's
findings, but that the court erred in allowing the claim of
constructive fraud to go to the jury because there was no
showing of a relationship of trust and confidence between the
and Mnichowski were joint owners and active co-managers of
Rail and Cold Train. Rail originally was formed as a limited
liability company in 1998, with Lerner as its sole managing
member. Rail's business was manufacturing special purpose
rail cars, leasing rail cars to third parties, and providing
logistic services to third parties with fleets of rail cars.
In 2009, Mnichowski became a co-managing member of Rail. At
that time, Lerner owned two-thirds and Mnichowski owned
one-third of Rail.
Train was formed as a limited liability company in 2009 with
Lerner and Mnichowski equal owners and co-managers of the
company. Cold Train is in the refrigerator intermodal
business. It transports refrigerated containers from trains
to its customers and then returns the refrigerated containers
to the trains.
2010, Mnichowski proposed to Lerner that they start their own
trucking company in order to provide Cold Train with better
trucking rates and to provide better service to customers.
Lerner was not interested, so Mnichowski formed the trucking
company, CT Cartage, and agreed with Lerner that the new
company would not do business with Cold Train.
fall of 2010, Lerner found out that CT Cartage was doing
business with Cold Train. As a result, he felt he could no
longer rely on Mnichowski, so he proposed that they divide up
the ownership of Rail and Cold Train with Lerner taking Rail
and Mnichowski taking Cold Train.
December 17, 2010, Lerner and Mnichowski entered into three
written agreements-an exchange agreement, a promissory note,
and a pledge agreement-to end their joint ownership of Rail
and Cold Train.
■ EXCHANGE AGREEMENT-Under the exchange agreement,
Mnichowski became the owner of Cold Train and Lerner became
the owner of Rail. The agreement provided that Mnichowski
relinquish to Lerner his interest in Rail, resign from all
positions with Rail, and agree to other related terms. In
exchange, Lerner relinquished to Mnichowski his interest in
Cold Train and resigned from all positions with Cold Train.
Rail had a contract with the Burlington Northern Santa Fe
Railroad (BNSF) it had entered into in 2009. (We will discuss
that contract below regarding the pledge agreement.) Rail
apparently had not engaged in the intermodal services
provided for in the contract. Under the exchange agreement
Rail agreed to assign the BNSF contract to Cold Train.
Rail agreed to loan Cold Train $320, 000 in the form of a
line of credit line for Cold Train's "working
capital, day-to-day needs, [and] cash needs." Cold Train
agreed to repay this credit line along with the promissory
note described below.
As part of the exchange agreement, Cold Train agreed that so
long as it remained indebted to Rail (see also the promissory
note below), it would provide monthly financial statements to
Rail, including a balance sheet and an income statement.
■ PROMISSORY NOTE-The 2-year promissory note (signed by
Cold Train but not personally by Mnichowski) was for $1, 413,
396.17. It was given to Rail and was secured by a pledge of
Cold Train's assets.
As of December 17, 2010, Cold Train owed Rail between $1.5
million and $2 million, an amount in excess of the value of
Cold Train's receivables. As a part of dividing the
ownership of these two companies, the parties agreed that
Rail would convert part of the debt into a 2-year loan
evidenced by this promissory note. The note covered (1) Cold
Train's obligations to Rail, accumulated during the time
Lerner and Mnichowski jointly owned Cold Train, (2) the
unpaid charges for refrigerated containers Cold Train leased
from Rail, and (3) certain start-up operating expenses Rail
paid for Cold Train.
Under the terms of the promissory note, Cold Train's
failure to perform any obligation under the exchange
agreement or the pledge agreement would constitute a default
of the note.
■ PLEDGE AGREEMENT-The pledge agreement, entered into
at the same time as the promissory note, prohibited
Mnichowski from taking any action which would impair the
position or interest of Rail in the pledged collateral
without obtaining Rail's prior written consent. Thus,
Mnichowski agreed not to sell, assign, transfer, pledge, or
otherwise encumber any of the collateral securing ...