Waste Connections of Kansas, Inc. v. Ritchie Corp.
296 Kan. 943
| Kan. | 2013Background
- Dispute over Waste Connections' right of first refusal (ROFR) to purchase Ritchie’s Wichita transfer station as part of a package with an adjacent landfill.
- Escrow Agreement (Dec 29, 1998) granted BFI and later Waste Connections ROFR rights; price terms unspecified, to be set by third-party offer terms.
- Asset Purchase Agreement (June 22, 2007) between Ritchie and Cornejo allocated $4.95M total, with $2.0M attributed to the transfer station and $3.5M to the landfill, contingent on ROFR exercise.
- Ritchie and Cornejo exchanged communications (June–Sept 2007) showing willingness to allocate price differently (e.g., $1.45M transfer station in certain readings) and reservations by Waste Connections.
- Waste Connections exercised ROFR and paid $2.0M into escrow on Sept 13, 2007, reserving rights to challenge the correct price; later letters debated whether $2.0M or $1.45M was proper.
- District court granted summary judgment for Ritchie; Court of Appeals reversed, finding a presumptive bad faith due to price manipulation and awarding Waste Connections $550,000, remanding for attorney-fee reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Waste Connections preserved the right to challenge the price. | Waste Connections reserved rights and protested price in letters. | No binding price established; waivers/estoppel should bar challenge. | Remand needed; not resolved on summary judgment. |
| Whether the Escrow and Asset Purchase Agreements ambiguously set price for the transfer station when packaged with the landfill. | Price effectively $1.45M; package terms imply improper inflation to $2M. | Price was determined by the package; communications did not resolve price; ambiguity blocks judgment. | Ambiguity exists; requires remand for fact-finding. |
| Whether Ritchie breached the duty of good faith and fair dealing in the ROFR exercise. | Ritchie manipulated price allocation to inflate value and injure Waste Connections. | No bad faith; seller may pursue best price; good-faith standard not violated absent improper conduct. | Fact questions remain; breach could be found or denied depending on remand findings. |
| Whether summary declaratory judgment was appropriate given remaining factual disputes. | undisputed evidence of manipulation supported Waste Connections' breach claim. | Contract terms control; no clear breach shown; affidavits show ordinary negotiation. | Remand required; summary judgment improper for both parties. |
| What is the proper procedural posture for costs and appellate fees at this stage? | Ritchie should not recover costs; save for later determination. | Prevailing party entitled to costs; no prevailing party yet on remand. | Costs/fees awards premature; appellate fees denied pending district-court outcome. |
Key Cases Cited
- Uno Restaurants, Inc. v. Boston Kenmore Realty Group, 441 Mass. 376 (Mass. 2004) (right of first refusal pricing not automatically fixed by third-party offer)
- Pantry Pride Enterprises v. Stop & Shop Companies, 806 F.2d 1227 (4th Cir. 1986) (packaged deals; determine actual price offered for encumbered property)
- Anderson v. Armour & Co., 205 Kan. 801 (Kan. 1970) (pre-emption rights require offer when owner decides to sell; not an automatic sale)
- M & M Oil Co. v. Finch, 7 Kan. App. 2d 208 (Kan. App. 1982) (sellers' allocation under third-party offers; context for package deals)
- Mobile Acres, Inc. v. Kurata, 211 Kan. 833 (Kan. 1973) (contract interpretation; extrinsic evidence when ambiguity exists)
- Dougan v. Rossville Drainage Dist., 270 Kan. 468 (Kan. 2000) (contract formation requires certainty of essential terms)
- Barbara Oil Co. v. Kansas Gas Supply Corp., 250 Kan. 438 (Kan. 1992) (contract interpretation; extrinsic evidence when ambiguity present)
- Bonanza, Inc. v. McLean, 242 Kan. 209 (Kan. 1987) (duty of good faith includes not destroying the fruits of the contract)