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Reardon v. King

Supreme Court of Kansas

November 15, 2019

Kevin E. Reardon, Special Administrator, for the Estate of Marilyn K. Parsons, Appellee,
v.
Jon M. King, Defendant, and The Trust Company of Kansas, Appellant.

         SYLLABUS

         In Kansas, an employer owes a duty of reasonable care under the circumstances to prevent harm to third parties caused by its employees when those employees are acting within the scope of their employment. More particularized articulations of this duty are disapproved.

         Review of the judgment of the Court of Appeals in an unpublished opinion filed March 17, 2017.

          Appeal from Leavenworth District Court; David J. King, judge. Judgment of the Court of Appeals reversing the district court is reversed. Judgment of the district court is reversed and the case is remanded with directions.

          Rachel N. Wetta, of Foulston Siefkin LLP, of Wichita, argued the cause, and Darrell L. Warta, of the same firm, was with her on the briefs for appellant.

          Michael P. Crow, of Crow & Associates, of Leavenworth, argued the cause, and Peter C. Robertson and Dan Heinz, of the same firm, were with him on the brief for appellee Marilyn K. Parsons.

          OPINION

          Stegall, J.

         The Trust Company of Kansas (TCK) employed Jon M. King, a Kansas-licensed attorney, as a trust officer. TCK had a policy prohibiting employees from practicing law during employment. Unbeknownst to TCK, King represented his TCK client-Marilyn K. Parsons-in legal matters before, during, and after his employment with TCK. In his capacity as a trust officer, King would transfer funds from Parsons' TCK account to her personal account to pay a flat rate legal fee of $5, 000 per month. Once TCK learned about King's attorney-client relationship with Parsons, TCK filed a complaint of suspected elder abuse with the Kansas Department of Social and Rehabilitation Services and an ethics complaint with the Kansas Disciplinary Administrator's Office.

         Further investigation by the Kansas Disciplinary Administrator's Office revealed that Parsons paid King approximately $250, 271.50 in attorney fees during his employment at TCK. As a result, King voluntarily surrendered his license to practice law. See In re King, 297 Kan. 208, 300 P.3d 643 (2013). Soon after, Parsons filed a lawsuit against TCK and King, asserting various theories of liability. The case went to trial, and a jury found TCK liable for "negligent training" and King liable for breach of fiduciary duty. The Court of Appeals reversed the jury's verdict against TCK, finding the evidence insufficient. Accordingly, the panel remanded the case with instructions to enter judgment as a matter of law in favor of TCK.

         On review, we conclude the district court's instructions failed to present the jury with an accurate statement of our negligence law and incorrectly separated Parsons' negligence claim against TCK into two causes of action. As a result of these errors, questions of fact remain. We reverse the Court of Appeals and remand this matter for a new trial decided on proper instructions.

         Procedural Background

         At this stage of the litigation, the key facts are procedural and they are not in dispute. Parsons sued TCK and King seeking $250, 271.50 in damages plus an additional $12, 111.99 for loss of income and loss of investment appreciation. After Parsons amended her complaint several times and each party filed multiple pretrial questionnaires, the district court issued a pretrial order describing three separate claims against TCK: "(1) breach of contract, (2) breach of fiduciary duty, and (3) failure to properly supervise its employee, Jon King."

         The case proceeded to a four-day jury trial. At the close of Parsons' case-in-chief, TCK moved for judgment as a matter of law on all claims against TCK. After hearing oral argument, the court granted TCK's motion for judgment as a matter of law on part of Parsons' breach of contract claim. The court then summarized Parsons' remaining claims as follows:

"What I have is-is the-the claims that plaintiff has asserted against TCK that survived is their breach of contract claim, partially, one of their specifications of breach of contract, I've ruled that there's not evidence to support there was a breach.
"[S]o, breach of contract, breach of fiduciary duty, negligent representation, and negligent supervision."

         The district court proceeded to finalize its jury instructions and verdict form. The instructions included a claim of "negligent supervision and training" against TCK:

"INSTRUCTION NO. 18
"Negligent supervision and training claim against Trust Company of Kansas
"The plaintiff, Marilyn Kay Parsons, claims the defendant, Trust Company of Kansas, failed to adequately supervise and train Jon M. King by the following:
"(1) Failing to train and orient Jon M. King that he was prohibited from practicing law for TCK clients while ...

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