Law v. Law Co. Building Associates
289 P.3d 1066
| Kan. | 2012Background
- Law filed breach, good faith, reformation, and declaratory judgment claims regarding a financing agreement over a Wichita building.
- The dispute centers on an equity participation and its discharge when LCBA’s term extended beyond 2004.
- Law’s reformation claim alleges a mutual mistake omitted Paragraph 4(e) from the Financing Agreement.
- The district court granted summary judgment, holding the 5-year statute of limitations applied to the reformation claim and barred it.
- Court of Appeals reversed on accrual but remanded; Kansas Supreme Court holds accrual is at the time of the mistake, not discovery.
- This decision reaffirms that timing of accrual does not depend on execution vs. executory status and remands remaining claims for district court consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accrual date for contract reformation based on mutual mistake | Law argues discovery rule should apply | Beams/Klepper line supports accrual at execution | Accrual occurs at the time of the mistake (execution); discovery rule not applied |
| Applicability of discovery rule under K.S.A. 60-513(3) to mutual mistake | Discovery rule should apply since claim based on contract language | Discovery rule limited to fraud-based actions | Discovery rule does not apply to reformation based on mutual mistake |
| Effect of executory vs. executed contract on accrual | Rule should differ for executory contracts | Accrual rule should be uniform | Accrual rule applies irrespective of executory vs. executed status |
Key Cases Cited
- Railway Co. v. Grain Co., 68 Kan. 585 (1904) (accrual at breach; no discovery exception for contract actions)
- Beams v. Werth, 200 Kan. 532 (1968) (reformation of deed; five-year limit; Beams foundation for accrual rule)
- Regier v. Amerada Petroleum Corp., 139 Kan. 177 (1934) (accrual rule; deeds; rejects discovery tolling in general for contract actions)
- Klepper v. Stover, 193 Kan. 219 (1964) (estoppel tolling; dicta cited for discovery principles in some contexts)
- Kopper Ferrell v. Ferrell, 11 Kan. App. 2d 228 (1986) (discusses accrual and tolling; applied to deeds; Court of Appeals misread as accrual rule)
- Keller v. McKay, 140 Kan. 276 (1934) (establishment of original accrual principles (Railway Co. lineage))