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Albers Finishing & Solutions, LLC v. RK Inc.

United States District Court, D. Kansas

December 4, 2018

ALBERS FINISHING & SOLUTIONS, LLC, Plaintiffs,
v.
RK INC, Defendant.

          MEMORANDUM AND ORDER

          JOHN W. BROOMES UNITED STATES DISTRICT JUDGE

         This case comes before the court on Plaintiff Albers Finishing & Solutions' motion to dismiss Defendant RK Inc.'s counterclaims. (Doc. 25.) The motion has been fully briefed and is ripe for decision. (Docs. 26, 27, 28, 29.) The motion is DENIED for the reasons set forth herein.

         I. Procedural History and Relevant Facts[1]

         Albers Finishing & Solutions, LLC ("AFS") is a Kansas limited liability company with all members being citizens of Kansas. (Doc. 20.) AFS's principal place of business is in Cheney, Kansas. Defendant RK Inc. ("RK") is a Missouri corporation with its principal place of business in West Plains, Missouri. AFS is in the business of painting and finishing metallic parts for use in the aerospace and agriculture industries. RK is in the business of manufacturing, installing and servicing complete surface finishing and processing equipment. (Doc. 1, Exh. 1 at 2.)

         In February 2016, RK issued quotes to AFS for the manufacture and installation of the Zinc Plate Process ("Zinc Line") and manufacture and installation of the Anodize System ("Anodize Line"). In November 2016, AFS issued purchase orders to RK for the purchase of a Zinc Line and purchase of the Anodize Line in accordance with the quotes. The purchase prices were $626, 000 and $900, 000, respectively. AFS made a payment to RK of $200, 000. (Doc. 1, Exh. 1 at 3.)

         AFS alleges that RK then agreed to complete the Zinc Line by December 2017 and the Anodize Line by January 2018. RK disputes these allegations. AFS further alleges RK also agreed to provide and install additional items, which would be paid for by AFS. AFS makes further allegations regarding advance payments but those allegations are also denied by RK. (Id. at 4-5; Doc. 8 at 2-3.)

         RK performed the manufacturing work in Missouri and all components for the two lines were developed, manufactured, processed and shipped from Missouri. RK does not own any real or personal property in Kansas and does not maintain an office in Kansas. RK does not maintain any bank accounts in Kansas. (Doc. 22 at 2.)

         RK delivered and installed the Zink and Anodize Lines at AFS's facility in Kansas. RK's president, Kevin Beauchamp, made multiple visits to the AFS facility in Kansas. RK's employees were sent to Kansas in order to install, test and service the equipment. RK also provided training to AFS's employees in Kansas on multiple occasions. (Id.)

         AFS alleges that RK breached the contracts by failing to meet the deadlines, failing to complete both lines, and failing to provide additional items due under the contracts. AFS alleges that the Anodize Line has never been operational and that AFS has had to acquire replacement software for the Line. The Zinc Line is allegedly running at a loss because RK has failed to deliver the barrels, zinc chiller and other items that were ordered under the original contract. (Doc. 1, Exh. 1 at 4-6.)

         RK denies most of the allegations set forth in AFS's complaint. RK alleges that AFS failed to make payments and is in default, voiding any deadlines, warranties and liquidated damages. RK alleges that it has fully performed under the agreement or has been prevented from performing due to AFS's actions. RK also alleges that the last act taken to bind the parties occurred in West Plains, Missouri. RK has asserted counterclaims of breach of contract and unjust enrichment against AFS due to AFS's alleged failure to pay amounts owed under the contract. (Doc. 8 at 7-14.)

         AFS now moves to dismiss RK's counterclaims on the basis that RK does not have the capacity to bring an action against AFS in Kansas as RK was doing business in Kansas without authorization by the Kansas Secretary of State.

         II. Analysis

         Foreign corporations, such as RK, are subject to various statutory provisions under Kansas law. A foreign corporation can be barred from bringing an action in Kansas. SeeK.S.A. 17-7307. The relevant statutory provision provides as follows:

(a) A foreign corporation which is required to comply with the provisions of K.S.A. 17-7302 and K.S.A. 17-7930 through 17-7934, and amendments thereto, and which has done business in this state without authority shall not maintain any action or special proceeding in this state, unless and until such corporation has been authorized to do business in this state and has paid to the state all taxes, fees and penalties which would have been due for the years or parts thereof during which it did business in ...

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