Louisburg Building & Dеvelopment Company, L.L.C. (“Louisburg Building”) began building a home for Troy and Kris Albright that had several deficiencies. The district court found Louisburg Building liable to the Albrights based on breach of contract and violations of the Kansas Consumer Protection Act (KCPA). The court found that Louisburg Building failed to construct the Albrights’ home in a workmanlike manner and that Louisburg Building committed KCPA violations by failing to keep the Albrights informed about exceeding the budget during construction. As a result of these violations, the district court awarded breach-of-contract damages and civil penalties under the KCPA, although the district court did not agree with the Albrights’ damage calculation. The Albrights added two other parties to the lawsuit: Louisburg Building’s owner, Damon Williams, and a subcontractor in which Williams had an ownership interest, Carson Group, Inc., d/b/a The Homeowner’s Helper (“Carson Group”). The Albrights attempted to hold Williams and Carson Group liable for Louisburg Building’s debts on the basis that Williams and Carson Group were the alter egos of Louisburg Building, but the district court disagreed. The Albrights also asserted fraud-in-the-inducement claims against Louisburg Building and Williams, but the district court dismissed those claims.
There are many issues on appeal, so we will provide a brief summary here before discussing each issue in detail. The Albrights
Louisburg Building argues two issues on cross-appeal, but neither has merit: (1) The district court did not err in finding that Louisburg Building’s failure to notify the Albrights of budget problems was unconscionable as this conduct involved both deception and an imbalance of power between the parties; and (2) the district court did not err in awarding the Albrights both breach-of-contract damages and civil penalties under the KCPA because the KCPA’s election-of-remedies provision only requires a choice between civil penalties and damages under the KCPA, not damages awarded generally under other legal claims.
Factual and Procedural Background
The Albrights purchased land in Louisburg, Kansas, from Damon Williams around 2002. The Albrights wanted to build a new home on the land, and Williams, as operating manager and 50% owner of Louisburg Building, offered to build it for them. Before buying the land, the Albrights put considerable thought into the
Williams referred the Albrights to George Holton, an architect whom Williams had worked with several times in the past. Based on the materials provided by the Albrights, Holton designed a set of plans, and based on those plans, Williams prepared a construction bid for roughly $650,000. That price was too high for the Albrights’ $550,000 budget, so they directed Holton to reduce-the square footаge of the plans but not to deviate from the high-quality finish. The Albrights provided the second plans to Williams, reiterating that the finish was to- remain high quality, and Williams came back with a proposal to build the house for $545,668. The proposal included the price estimates for various categories of work, but it stated: “If additional work is required over and above the estimated, quoted, bid or proposed work, an EXTRA charge will be assessed.”
Louisburg Building began construction on the Albrights’ home in November 2003, several months before the execution of a “cost plus fixed fee” construction contract on January 6, 2004. The contract incorporated several attachments, including the plans developed by Holton and a bid sheet with the prices from Williams’ proposal with the word “estimates” above the price column. Under the terms of the contract, Louisburg Building would pay for the construction costs by drawing from a construction loan secured by the Albrights, and the contract prohibited the Albrights from personally drawing on the account. The contract required that Louisburg Building “supervise, direct and coordinate the construction of the Residence . . . substantially in accordance with the Plans, in a good and workmanlike manner in accordance with standard residential construction practices in tire area.” In exchange for these services, Louisburg Building would be paid 15% of the total construction cost, which included any costs incurred directly by the Albrights to pay for items not included in the bid sheet.
Roughly 10 months into the building process, after noticing an abnormally high draw request for some deck work, Troy Albright requested a meeting with Williams to discuss budget and quality-of-work concerns. Albright emphasized to Williams that, moving forward, he wanted to know about any costs not specifically called for in the budget. Shortly after this meeting, in September 2004, Williams provided Albright with a budget update that showed certain costs had already exceeded their initial estimate. Albright testified that this was the first time he learned that construction was over budget. Albright then denied Louisburg Building’s next two draw requests. Williams provided Albright with another budget update in October 2004; it showed the project to be $69,701.44 over budget. At this point, Albright testified that he thought the project was only 30 to 40% complete.
Because Albright felt that the concerns he raised in the September meeting had not been addressed, Albright’s attorney sent a letter to Williams on October 28, 2004, which notified Williams that he was in default of the contract and that he would be given opportunity to cure. Louisburg Building’s lawyers sent a letter back to Albright, claiming the Albrights were in default of the contract, and the Albrights then terminated the contract. The Albrights
Louisburg Building brought suit against the Albrights for breach of contract and quantum meruit, which is essentially a demand to be paid a fair amount for services provided. Initially, the Albrights filed counterclaims solely against Louisburg Building for breach of contract, negligence, fraud, and violations of the KCPA. The Alb-rights later filed a second amended counterclaim, adding claims for fraud in the inducement against Louisburg Building and Williams and claims for KCPA violations against both Williams and Carson Group. Since the statute of limitations was a concern for the amended claims, the Albrights proceeded on the theory that Williams and Carson Group were the alter egos of Louisburg Building. The trial was bifurcated so that the district court could first answer the alter-ego question and then determine the parties’ liability. The district court determined that Williams and Carson Group were not the alter egos of Louisburg Building and thus dismissed the Albrights’ claims against those two parties. During the liability phase, the district court determined that Louisburg Building breached its contract with the Albrights and committed nine violations of the KCPA. The court awarded tire Albrights damages in the amount of $33,306.54 for their breach-of-contract claims and assessed $90,000 in civil penalties against Louisburg Building for violations of the KCPA.
The Albrights appeal the judgment of the district court, and Louisburg Building cross-appeals. More factual and procedural history is set out below as needed to resolve particular issues.
Issues Raised by Appellants Troy and Kris Albright
I. We Do Not Consider Whether Williams Violated the KCPA in His Personal Capacity Because that Theory of Liability Was Not Raised to the District Court.
On appeal, the Albrights seek to hold Williams personally hable for the KCPA violations on the theory that a member of a limited-liability company is personally hable for any of the company’s KCPA violations. But the Albrights concede that they never sought
Before trial, Williams and Carson Group filed a motiоn for summary judgment on the Albrights’ KCPA claims, arguing that the statute of limitations barred them. The Albrights clarified that they were not suing Williams and Carson Group in their individual capacities, but only as the alter egos of Louisburg Budding. Thus, the Albrights’ amended counterclaims adding Williams and Carson Group should relate back to the initial filing of the lawsuit against Louisburg Building. Even if the claims did not relate back, the Albrights argued that their additional KCPA claims were not barred under the 3-year statute of limitations: the conduct that the Albrights alleged constituted Williams and Carson Group’s violations did not occur until October 2004, and they filed their second amended counterclaim on April 18, 2007.
The trial court denied Williams’ motion for summary judgment on the grounds that if Williams or Carson Group were found to be the same party as Louisburg Building under the alter-ego theory, then the amended KCPA claims would be timely. The court cautioned, however, that the statute of limitations for claims against Williams and Carson started running when the allegedly unconscionable conduct occurred. It implied that there may be a statute-of-limitations problem if the alter-ego theory was unsuccessful. But at this point, the Albrights had not alleged specific dates for the conduct they pled was in violation of the KCPA, so the trial court could not rule specifically as to what the consequences would be if the alter-ego theory failed.
After summary judgment was denied, Williams and Carson made a motion in limine asking the court to prohibit the Albrights from presenting any evidence or claiming any liability on the theory diat either party was individually liable under the KCPA. Williams and Carson Group also requested a bifurcated trial, allowing the court to hear the evidence on the alter-ego theory first, so that if either party were found not to be the alter ego of Louisburg Build
As the alter-ego trial progressed, much of the evidence focused on Williams’ alleged wrongs during the construction process itself. Williams testified that he was aware that certain changes requested by the Albrights had affected the cost of the house, including architectural changes and changes in the quality of windows. Williams testified that he was aware of the Albrights’ $550,000 budget but that he did not provide any written change orders or suggest that the Albrights sign any change orders; he did not recall whether he notified the Albrights of the cost of any materials or if the Alb-rights ever requested information about cost overruns. Further, Troy Albright téstified that the' first time he received notice from Williams that the construction was over budget was in September 2004, roughly 10 months into the project.
Both Williams’ counsel and the trial court seemed somewhat perplexed by this line of evidence, which did not clearly relate to the alter-ego theory. Williams’ counsel objected early on to the relevance of this type of information, and the trial court reiterated twice that evidence of this nature was best left for the second portion of trial, dealing with liability. At the conclusion of the alter-ego trial, the court dismissed with prejudice the Albrights’ KCPA claims against Williams and Carson Group because it found that neither was the alter ego of Louisburg Building.
On appeal, the Albrights argue that the trial court erred in dismissing their claims against Williams under the KCPA solely on the finding that Williams was not the alter ego of Louisburg Building. The Albrights argue that their claims against Williams in his personal capacity are not dependent on the alter-ego theory because the KCPA should be interpreted to hold the members of a limited-liability company hable for the company’s violations. Presumably, the Albrights are arguing that Williams should be held hable for engaging in unconscionable acts or practices in connection with a consumer transaction under K.S.A. 50-627, as that was
Williams argues that the Albrights did not raise this separate theory of liability at the trial level, so they are prevented from raising it on appeal. Williams notes that the Albrights conceded several times during trial that their only theory of liability against Williams was the alter-ego theory. Further, Williams argues that the alter-ego theory was the only reason that the Albrights’ claims against Williams survived summaiy judgment, as any KCPA claims against Williams were barred by die statute of hmitations.
In reply, the Albrights concede that they are raising this theory of liability for the first time on appeal, but they argue the applicability of two exceptions to the general rule against considering new theories on appeal. The Albrights further argue that, despite their failure to assert this theory of liability at trial, Wilhams will not be prejudiced by this court’s decision to find him hable based on facts admitted during the trial of the alter-ego theory. And the Albrights posit that this separate theory of liability would not have been barred by the KCPA’s 3-year statute of hmitations because 3 years had not yet elapsed since Williams’ violations of the KCPA ended by the time the Albrights added personal claims against Wilhams in their second amended counterclaim.
At the outset, it must be noted that the Albrights, in requesting review of the trial court’s “dismissal,” have shghtly mischaracterized the nature of the question they are calling upon this court to review. The district court only dismissed the claim that Wilhams should be held hable for Louisburg Building’s violations of the KCPA as Louisburg Building’s alter ego. The Albrights are now claiming Wilhams individually violated the KCPA — as the Albrights concede, this claim was never before the district court, and thus the district court could not have dismissed it. Essentially, the Alb-rights are asking this court to rule on a new theory of liability based upon facts presented in the trial of a completely different theory of liability.
As a general rule, legal theories not asserted at trial will not be сonsidered on appeal.
In re Care & Treatment of Miller,
We have found no civil case in which one of these exceptions has been applied in the context of an attempt to raise an entirely new theory of. liability on appeal. The exceptions are usually considered in the context of a newly raised argument dr defense that merely relates to a theory of liability asserted in the court below. E.g.,
In re Estate of Broderick,
Even if these exceptions may be applied when a completely new theory is asserted for the first time on appeal, neither fits our case. The Albrights argue the question is purely legal and finally determinative of the case. They contend that Williams admitted key factors in the first part of the trial that the trial court relied on to find Louisburg Building liable in the second part of the trial. This argument is incorrect for two reasons. First, the Albrights’ claim involves unresolved factual questions relating to the statute of limitations for KCPA violations. The KCPA has a 3-year statute of limitations, which starts running with the occurrence of the alleged conduct constituting the violation, not the discovery of the violations. See
Campbell v. Hubbard,
But an amendment adding new
claims
may relate back to earlier pleadings when the claims arose out of the same conduct, transaction, or occurrence set out in the earlier pleading. K.S.A. 60-215(c)(2). Assuming that we may characterize the Albrights’ appellate brief as an “amendment” to their pleadings — as the Albrights have — it seems the newly asserted theory would relate back to the Albrights’ second amended counterclaim filed April 18, 2007. Yet, when a claimant amends its pleadings to add new parties to a lawsuit, the claims against those added parties do not relate back to earlier pleadings asserted against a different party.
Schmidt v. Nauman,
Considering the nature of the Albrights’ new claims against the April 2007 filing date, the record does not contain sufficient facts to determine whether the Albrights’ claims are timely. The Alb-rights now argue that Williams should be found guilty of the same KCPA violations that Louisburg Building was found guilty of — the failure to inform, the Albrights of cost overruns in nine budget categories — because Williams admitted to participating in these same failures, during the alter-ego trial. Williams began construction on the Albrights home in November 2003, and he left the jobsite in October 2004. Since the filing date was April 18, 2007, the claims would not be .timely as to any of Williams’ failures to inform of cost overruns that occurred prior to April 18, 2004— roughly halfway through Williams’ work on the job. The parties did not admit any evidence during either phase of the trial that pinpointed exactly when certain budget categories were first overrun, and thus it is impossible for this court to determine whether the Albrights’ KCPA claims against Williams are barred by the statute of limitations, as some or all of these overruns could have occurred before April 18, 2004.
The second exception to the general rule is also inapplicable. In support of it, the Albrights argue that “[sjince none of the facts that establish Louisburg [Buildingj’s KCPA violations or Williams’ participation in those violations are legitimately disputed, it would be unjust to deny the Albrights from asserting this theory on appeal.” While these facts may not have been disputed, if Williams had been aware that his personal liability was at stake, he might have presented an entirely different case, contradicting the evidence now relied on by the Albrights. If anything, consideration of these claims for the first time on appeal would create an injustice— not prevent one — as it would allow the Albrights, having lulled Williams to sleep at trial with their unflagging loyalty to the alter-ego theory, to ambush Williams on appeal with claims regarding his personal actions. In addition, considering these claims would be unjust to the extent that we would be deciding сlaims potentially barred by the statute of limitations.
Because the Albrights failed to raise this theory of liability in the district court and there are no applicable exceptions to the rule against considering newly raised issues, we do not reach the merits of the Albrights’ KCPA claims against Williams’ in his individual capacity.
II. The Trial Court Was Correct in Finding that Williams Was Not the Alter Ego of Louisburg Building Because the Albrights Failed to Present Evidence that Williams Used Louisburg Building’s Corporate Form to Perpetrate Fraud or Injustice.
The Albrights sought liability against Williams on the basis that he was the alter ego of the corporation, Louisburg Building. The district court concluded that they had failed to meet their burden of proof on this issue. (The Albrights also sought to have Williams found to be the alter ego of Carson Group, but they have not appealed the district court’s adverse decision on that point.)
Whether a corporation’s owner is properly considered the alter ego of his or her corporation is question of fact.
Emprise Bank v. Rumisek,
Generally, the owners of a corporation arе not personally liable for the corporation’s debts. But the corporate entity may be disregarded, and the owners may be held hable for the corporation’s debts.
Amoco Chemicals Corporation. v. Bach,
“ ‘(1) Undercapitalization of a one-man corporation, (2) failure to observe corporate formalities, (3) nonpayment of dividends, (4) siphoning of corporate funds by the dominant stockholder, (5) nonfunctioning of other officers or directors, (6) absence of corporate records, (7) the use of the corporation as a facade for operations of the dominant stockholder or stockholders, and (8) the use of the corporate entity in promoting injustice or fraud.’ ” State ex rel. Graeber v. Marion County Landfill, Inc.,276 Kan. 328 , 355,76 P.3d 1000 (2003).
Not all of the factors must be present, and the presence of any one factor could be enough to justify disregarding the corporate entity. See
State ex rel. Graeber,
Williams defended against the Albrights’ alter-ego theory by presenting testimony from certified professional accountant Mark Hauber, who prepared taxes and annual reports for Louisburg Building from 2002 to 2005. Hauber had total access to Louisburg Building’s financial information, and he testified that Louisburg Building had assets totaling $318,109 at the end of the 2003 and $334,051 at the end of 2004. Hauber testified that, during those years, Williams shared ownership of Louisburg Building on an equal basis with Dave Motley. Hauber also filed federal-income-tax returns, Kansas partnership-income-tax returns, and annual reports with the Kansas Secretary of State on behalf of Louisburg Building in the years 2003 and 2004. Hauber testified that Louis-burg Building’s members were receiving payments from Louisburg Building’s profits, as is customary for limited-liаbility companies.
The Albrights did not try to rebut any of this testimony but instead focused on the relationship between Carson Group and Louisburg Building — they shared the same office space, telephone system, computer network, and occasionally one employee. Also, at the time of trial, Williams had become the sole owner of Louisburg Building and was also the sole owner of Carson Group.
At the conclusion of the alter-ego trial, the court determined that the Albrights failed to meet their burden of proving that Williams and Carson were the alter ego of Louisburg Building as they did not show any of the relevant factors: Louisburg Building was properly capitalized; Louisburg Building maintained the proper corporate formalities; the Albrights failed to show that Louisburg Building was not making customary payments to its members for a hmited-liability company; the Albrights failed to show that Williams siphoned funds out of Louisburg Building; the Albrights failed to show that Louisburg Building had nonfunctioning officers or directors; the Albrights failed to show that Louisburg Building did not keep corporate records; the Albrights failed to show that Williams used Louisburg Building as a facade for his personal dealings; and most importantly, the Albrights failed to show what fraud or injustice would result from honoring the legal fiction that Louisburg Building was an entity separate from Williams. Because the Albrights failed to prove Williams or Carson Group was the alter ego of Louisburg Building, the trial court dismissed the Albrights’ claims against both with prejudice.
On appeal, the Albrights try to shift the basis of their claim for Williams’ personal liability. Rather than argue that the trial court erred in failing to find Williams’ hable as the alter ego of Louisburg Building, they now note that the “overriding consideration” in applying the alter-ego analysis is “whether injustice or an inequitable result would occur if the fiction of separate legal entities wаs upheld.” The Albrights posit that such injustice and inequity exists in this case because “Williams, individually and through his legal fic
The Albrights are correct that there is a secondary basis under individual liability that may be imposed: A corporate entity may also be disregarded upon a general showing that the interests of justice require it. See
Kilpatrick Bros., Inc. v. Poynter,
205 Kan.
787;
Syl. ¶ 4,
The arguments on appeal focus exclusively on fraud or injustice and whether the corporation was used as a facade. The evidence the Albrights rely on seems aimed at whether Carson Group’s corporate form — as opposed to Louisburg Building’s — was used to perpetrate some fraud or injustice on the Albrights. Williams’ failure to tell the Albrights that he owned Carson Group and his alleged use of Carson Group employees to run up the cost of construction could suggest that either Louisburg Building or Williams was using Carson Group as a facade. But even if such use were present, it would not prove the claim the Albrights made below, i.e., that Williams used Louisburg Building as an alter ego.
Nor does it support a finding of personal liability against Williams under the general interests-of-justice approach. The Alb-rights have no judgment against Carson Group, so disregarding Carson Group’s corporate status to hold Williams hable for the company’s debts would gain nothing for the Albrights. Moreover,
Even under the interests-of-justice theory, there must be some showing drat it would be inequitable or unjust to uphold the legal fiction of separate entities. Merely showing that some kind of injustice occurred is not sufficient — to disregard the corporate entity under this theory, it must be “necessary to achieve equity.”
Service Iron Foundry, Inc. v. M.A. Bell Co.,
III. The Trial Court Erred in Calculating the Damages from Louisburg Buildings’ Breach of Contract Because the Amount Awarded Did Not Place the Albrights in the Position They Would Have Been Had the Contract Been Fully Performed.
The district court found that Louisburg Building breached the construction contract in two respects. First, Louisburg Building breached its obligation to construct the residence in a “workmanlike manner” by hiring Carson Group, whose shortcomings included “[inadequate deck construction, defective installation of windows, defective installation of doors, defective installation of finished beams, and improper attempts to install flooring.” The district court found that Louisburg Building also breached its obligation to construct die home in accordance with standard residential construction practices in the area by “failing to create written indicia of change orders which were impacting the total cost of the project.” The court determined that such standard practices required Louisburg Building to “prepare a writing describing the change and indicating any associated cost modification” prior to a
The district court also found that the Albrights partially breached the contract by using $30,000 from the construction account to pay for items purchased in Mexico and then failing to pay Louisburg Building $4,500 for the 15% cost-of-construction fee that was allocable to those items.
The Albrights sought breach-of-contract damages for $183,153.24. The Albrights calculated this figure by taking the total cost of constructing their home, $874,426.18, and then subtracting the price of their contract with Louisburg Building, the cost of additional construction not contemplated by their original contract, and the actual costs that were not supported by the evidence presented at trial.
The district court disagreed with the Albrights’ calculations and instead awarded damages in the amount of $33,306.54. The district court reached this number by adopting the Albrights’ methodology but made three adjustments to the calculation. First, because of the district court’s concern that architectural defects — rather than Louisburg Building’s breach — were responsible for some of the increased construction costs, it used $780,000 as a starting figure for its damages calculation, the amount that the Albrights’ expert witness testified it should have cost to build the home the Albrights had originally envisioned. Second, the trial court determined that cost overruns in the “Steel I beams & Post & Set” and “Lumber, Rough Framing Etc.” catеgories were due to architectural defects as well and subtracted $20,920.15 from the Albrights’ suggested calculation. Third, the trial court subtracted another $34,500 for the Albrights’ partial breach in purchasing items in Mexico.
The Albrights argue drat the trial court erred in making all three adjustments to their suggested damages calculation. First, the Al-brights contend that, by adjusting downward the starting figure for the calculations, the district court failed to return the Albrights to the position they would have been in had the contract been fully
Louisburg Building replies that substantial evidence supported the district court’s findings of fact in relation to damages and that this court should therefore uphold the district court’s findings.
The Albrights’ challenges to the district court’s first and third adjustments — changing the starting figure and awarding Louisburg Building off-setting damages for tibe Albrights’ breach — both implicate whether the court correctly applied the proper measure of damages, raising a question of law over which this court has unlimited review.
Burgess v. Shampooch Pet Industries, Inc.,
The basic goal in awarding contract damages is to put the non-breaching party in the pоsition the party would have been in had the breach never occurred, without allowing that party a windfall.
State ex rel. Stovall v. Reliance Ins. Co.,
Expectation damages are usually determined by taking the difference in value between the performance contracted for and the defective performance that was given. Restatement (Second) of Contracts § 347(a) (1979). But in the context of a construction contract, where the breaching contractor leaves a project incomplete and the owner pays to have the project completed by someone else, awarding the owner the cost of completing construction is one way to protect the owner’s expectation interest. Restatement (Second) of Contracts § 348, comment c (1979); see
State ex rel. Stovall,
The Albrights’ first claim is that their own measure of damages protects their expectation interest, while the district court’s measure with thе adjusted starting figure does not. Upon first glance, it seems that the basic premise of the Albrights’ formula will- successfully determine expectation damages in this context as it mirrors the Restatement’s approach. The Albrights’ formula subtracts the contract price that the Albrights expected to pay from the total cost of construction, leaving only the unexpected cost of completion; similarly, the Restatement’s formula subtracts the portion of the contract price that the Albrights expected to pay, but avoided, from the cost of finishing construction after Louisburg Building left the project, again, leaving only the unexpected cost of comple
The question then becomes whether the Albrights’ expectation interest is better protected by using the amount that the Albrights actually incurred to complete the home or by using the amount that an expert witness said that the Albrights should have incurred. Given that parties may not recover damages not proximately related to the breach, the district court’s wariness that some of the ultimate cost of completion was due to architectural defects may have been a valid justification for its adjustment. This is especially true considering the burden of proof is on the party seeking damages. Yet, the district court’s adjustment was purely speculative: it is not clear why the roughly $90,000 reduction in the starting figure is at all indicative of how much added cost was allocable to architectural defects.
But this court need not decide between these two starting figures because the application of the formula to these facts suffers from a much more basic problem: the formula’s ability to put the parties back in their expected positions is dependent on the existence of a fixed-price contract, and here, there was no fixed price. In a case like this, where the district court found that cost-plus contracts, by nature, anticipate cost overruns, this formula breaks down. Because the cost of construction is subject to change, the contract price can no longer be used as a measuring stick for the parties’ expectations as the formula contemplates — the parties do not have an expectation capable of protection, at least not with respect to the ultimate cost of construction. To put it another way, using this formula incorrectly assumes that any cost greater than the original contract estimate is attributable to Louisburg Building’s breach. In fact, some of those costs could be due to the reality that the high-quality design of the Albrights’ home could not be built for tire initially estimated price. This conclusion is furthered by the expert testimony that the house contemplated by the original contract should have cost $780,000, not $545,000.
At the heart of tire Albrights’ formula — and their grievance with Louisburg Building — is their fundamental misunderstanding that the contract guaranteed them their dream home for the price es
Of course, the Albrights were never given a chance to approve or disapprove the costs that exceeded the contract estimate, as Louisburg Building also breached the contract by fading to submit change orders notifying the Albrights of any cost overruns. But this second breach should not malee Louisburg Building responsible for covering the difference between its estimate and the amount it actually cost to build the Albrights’ home in the situation here, in which the district court found that this was a cost-plus contract. Given the nature of this breach, it seems the Albrights are currently in the same position they would have been had this particular obligation been fully performed because even if the Albrights knew in advance that construction costs were exceeding the original estimate, this knowledge would have done nothing to lower the ultimate, actual cost of construction. In other words, the district court’s formula attempts to put the Albrights in a position that they never would have found themselves in: if Louisburg Building notified the Albrights of these cost overruns, the Albrights either would have approved the costs, and paid more money in an effort to stay true to their original wishes, or they would have modified their desires and stayed under budget. Thé district court’s formula attempts to provide the best of both worlds — the Albrights would be in the anomalous position of having the home that they originally contracted for (or something close to it) — but for a price that was never possible, nor guaranteed by contract.
In this cost-plus scenario, where the contract does not contemplate a fixed price, the proper method of calculating damages— and returning the Albrights to their expected position — should aim
Similarly, the district court’s adjustment regarding the Albrights’ breach failed to return the parties to their rightful positions. Although the evidence supported the finding that Troy Albright breached the contract by withdrawing money from the construction account, giving this money to Louisburg Building failed to place Louisburg Building in the position it would have been but for Albright’s breach. Under the terms of the contract, Louisburg Building did not have an unconditional right to all of the money in the construction account; rather, it was meant to compensate Louisburg Building for the cost of construction. There was no evidence that Louisburg Building was left uncompensated for some construction cost as a result of Albright using this money to purchase items in Mexico, so there is no reason that the court should have awarded this money to Louisburg Building as damages. In other words, even if Albright had not committed this breach, Louisburg Building would not have ended up with the $30,000.
The Albrights also challenged the district court’s second adjustment, based on its finding that architectural defects were responsible for the cost overruns in the steel and lumber categories. This factual finding was supported by substantial evidence in the form of testimony from multiple witnesses: Aycock, Troy Albright, and Williams all expressed uncertainty as to whether lumber and steel budget overruns were in fact caused by Louisburg Building, not architectural defects. In light of the preceding discussion, though,
Because the trial court’s formula did not put the Albrights in the position they would have been had the contract been fully performed, we remand the case to the district court for a recalculation of damages focusing on the Albrights’ unexpected costs incurred in repairing or redoing Louisburg Building’s defective work. See
Lindemuth,
IV. The Trial Court’s Findings that Louisburg Building and Williams’ Use of Carson Group Was Not Unconscionable Under the KCPA Was Not in Error.
The Albrights argue that the trial court should have found that both Louisburg Building and Williams violated the KCPA simply by using Carson Group, a company solely owned-by Williams, as a subcontractor. We review the district court’s conclusion on unconscionability under the KCPA with a hybrid standard of review. Theoretically, we have unlimited review because it is a legal conclusion, but our Supreme Court has clarified that our review must be “tempered” by die notion that a finding of unconscionability is best “ left to the sound discretion of the trial court to be determined under the peculiar circumstances of each case.’ [Citation omitted.]”
State ex rel. Stovall v. DVM Enterprises, Inc.,
The district court concluded that merely using the Carson Group as a subcontractor while fading to disclose Wdliams’ ownership of
The Albrights argue that the trial court erred by failing to find that the amount Louisburg Building billed the Albrights for Carson Group’s work was unconscionable, and thus in violation of the KCPA. The trial court found that “Carson [Group] billed [Louis-burg Building] for work done on the Albrights’ home on an hourly basis, with no bids given for their work or restrictions as to how long the work could take or at what cost.” The trial court also determined that “Carson’s employees were inexperienced in the construction of new homes, and one of the employees admitted to Troy Albright that he had never performed this type of work before. One of the billings from Carson included time for the Carson supervisor to correct an employee on the project.” The trial court found that these “practices resulted in [Louisburg Building] billing the Albrights for cost over-runs.” On appeal, the Albrights do not point to any additional facts from the record that help prove any claimed KCPA violations but instead contend that the trial court’s ruling contravened its own findings of fact.
The Albrights argue that these findings prove that Louisburg Building violated the KCPA because Louisburg Building hired Carson Group, which employed incompetent workers who made many mistakes during construction and overbilled for work, which in turn allowed Louisburg Building to collect a greater 15% cost-of-construction fee. The Albrights argue that Louisburg Building’s hiring of Carson Group was a conflict of interest because Williams, a 50% member in Louisburg Building, was also the sole owner of Carson Group.
Louisburg Building replies that the Albrights failed to assert this theory of liability in the pretrial order and therefore “failed to preserve this issue for trial,” thus implying that the issue may not be considered on appeal. The Albrights reply that the pretrial order specifically alleges all of the facts necessary to form the KCPA violations in question and that the order expressly reflects that they characterized each of these allegations as constituting KCPA violations.
The KCPA prohibits suppliers from engaging in unconscionable acts or practices in connection with consumer transactions. K.S.A. 50-627. In making the unconscionability determination, the statute directs the district court to consider whether the supplier knew or had reason to know of certain circumstances, including these:
“(1) The supplier took advantage of the inability of the consumer reasonably to protect the consumer’s interests because of the consumer’s physical infirmity, ignorance, illiteracy, inability to understand the language of an agreement or similar factor;
“(3) the consumer was unable to receive a material benefit from the subject of the transaction;
"(6) the supplier made a misleading statement of opinion on which the consumer was likely to rely to the consumer’s detriment.” K.S.A. 50-627(b)(l), (3), (6).
These are the only statutory examples that might possibly apply to Louisburg Building’s use of Carson Group and are the only ones relied on by the Albrights on appeal. But the statutory list is not exclusive, so the Albrights’ claims should not stand or fall based solely on the presence or absence of these statutory circumstances. See
State ex rel. Stovall v. ConfiMed.com,
In ConfiMed.com, the Kansas Supreme Court carefully considered the question of unconscionability under the KCPA. The court first turned to the 1973 legislative comments to shed more light on the type of conduct that the statutory examples sought to prohibit:
“ ‘Subsection (b)(1) includes such conduct as selling an English-language encyclopedia set for personal use to a Spanish American bachelor laborer who doesnot read English, or using legal verbiage in a manner winch cannot be readily comprehended by a low-income consumer who both reads and speaks English.
“ ‘Subsection (b)(3) includes such conduct as the sale of two expensive vacuum cleaners to two poor families whom the salesman knows, or has reason to know, share the same apartment and the same rug.
“ ‘Subsection (b)(6) applies to misleading subjective expressions of opinion on which a supplier should reasonably expect a consumer to rely to his detriment. For example, a violation of this subsection would occur if a prospective purchaser asked a supplier what the useful life of a paint job was and the supplier, with reason to know that repainting would be necessary within two years, responded, “in my opinion the paint will wear like iron.” ’ ” ConfiMed.com,272 Kan. at 1318-19 (quoting K.S.A. 50-627, Kansas Comment, 1973).
The comments also suggested that the KCPA’s prohibition on unconscionable conduct traditionally applied to advertising techniques, contract terms, debt collection practices, and limitations on implied warranties.
ConfiMed.com,
“deceptive or oppressive practices, overreaching, intentional misstatements, or concealment of facts,” there is no claim under the KCPA.’ [Citations omitted.]”
ConfiMed.com,
In this case, Louisburg Building’s use of Carson Group as a subcontractor may have been unfair, but the district court could still find that it did not rise to the level of unconscionable conduct. First, Louisburg Building’s use of Carson does not seem to impli
First, the Albrights argue that Louisburg Building took advantage of the Albrights’ inability to protect their own interests because the Albrights had no way of knowing that Carson Group’s employees consisted of inexperienced workers. In making this argument, the Albrights construe subsection (b)(1) as necessarily applying to the situation where the buyer is merely unfamiliar with the supplier’s services. To the contrary, the language of the statute and the 1973 comments suggest that the primary application of this provision is to a situation where the buyer is incapable of comprehending contractual terms due to some language barrier, mental incapacity, or the prevalence of legal jargon. There was no barrier that prevented the Albrights from looking into Louisburg Building or Carson Group’s track record with greater detail, had they wished. One might characterize the Albrights’ argument as suggesting that their lack of familiarity with the construction industry was so substantial that they were incapable of determining whether Carson Group’s work was defective and that Louisburg Building took advantage of that lack of familiarity. But requiring a finding of unconscionability on this basis would likely render all construction contracts unconscionable due to this common disparity in knowledge. In any case, the district court had substantial evidence before it that the Albrights did not suffer from this lack of knowledge as they had previously built a home, conducted years of research on the home they desired, and were able to successfully discern when Carson Group’s work was defective. '
The Albrights also rely on subsection (b)(6), arguing that, by hiring Carson Group and billing the Albrights for Carson Group’s work, Louisburg Building was “expressing” its opinion that Carson Group was qualified to build the Albrights’ home and that the Albrights would rely'on this “statement” to their detriment. There are two problems with this argument. First, assuming that the act of hiring and billing for Carson Group expressed anything at all, it is not clear that it was even possible for the Albrights to rely on
Second, interpreting the KCPA so broadly as to prohibit actions that have the potential to mislead by implication could create an absurd result. In essence, the Albrights would like to construe subsection (b)(6) as sweeping in any supplier’s request for payment under a contract on the grounds that such a request implicitly represents that the contract was (or is being) properly performed. Such an interpretation would create a violation of the KCPA for every payment request made by a party that was later determined to be in breach of the contract. Statutes should be construed to avoid such unreasonable results.
Pieren-Abbott v. Kansas Dept. of Revenue,
The Albrights’ argument under subsection (b)(3) is more substantial. The Albrights argue that they were unable to rеceive a material benefit from their construction contract with Louisburg Building because Carson employees “were incompetent and made repeated and costly mistakes throughout the construction.” In hindsight, it appears that much of Carson’s work had to be redone by Taylor Aycock, the contractor that the Albrights hired to finish their home. To that extent, the Albrights arguably did not receive any material benefit from Louisburg Building’s use of Carson Group. One could argue that, due to Carson Group’s inexperience, Louisburg Building “should have known” that Carson Group’s work would need to be redone and that the Albrights would not receive any material benefit from the work done by Carson. See K.S.A. 50-627(b).
In addition, once again, the facts of the Albrights’ case are certainly substantially different from the primary situation the legislature had in mind under subsection (b)(3). As the 1973 comments demonstrate, the provision seems aimed at the situation where it is factually impossible for the buyer to derive any benefit from the product or service,
e.g.,
where a second vacuum will not get the rug any cleaner than the first. See
Dodson v. U-Needa Self Storage,
The unconscionability inquiry does not end with these specific statutory factors, which are not exclusive. The Albrights have also suggested it was uncоnscionable for Louisburg Budding to allow Carson Group to bill on an open-ended, hourly basis, ultimately increasing Louisburg Building’s total fee. The Albrights argue the unconscionability of this scheme was furthered because Louisburg Building’s half owner, Williams, was also the sole owner of Carson Group. But as the Kansas Supreme Court has previously stated, there must be some evidence of both deceptive behavior and unequal power between the parties to prove a violation of the KCPA’s prohibition on unconscionable conduct. Relying only on the district court’s findings of fact, the Albrights have not pointed to any evidence that suggests that Williams — acting on behalf of Louisburg Budding — actively concealed his ownership in Carson Group or did not truthfully answer the Albrights when they asked Williams about who owned Carson. In fact, the record suggests that Wdliams regularly referred to Carson Group employees as “his men” in front
Although Louisburg Building did not offer up that it would be using a subcontractor wholly owned by Williams, Kansas caselaw generally suggests that one must be under a duty to disclose a fact before the mere omission of that fact can rise to the level of deception. See
Williamson v. Amrani,
To be sure, Louisburg Building and the Albrights were not on equal footing with respect to the decision to use Carson: the contract gave Louisburg Building the sole power to choose subcontractors. But whether Louisburg Building could have used this position of power in an unconscionable manner is purely hypothetical because the Albrights never asked Louisburg Building to quit using Carson Group before the Albrights terminated the contract with Louisburg Building altogether.
Unconscionable behavior generally requires both deceptive conduct as well as unequal bargaining power amongst the parties.
ConfiMed.com,
V. The Trial Court Did Not Abuse Its Discretion in Denying the Albrights’ Request for Attorney Fees under the KCPA.
Given their successful KCPA claims, the Albrights requested attorney fees, which may be awarded in KCPA cases. See K.S.A. 50-634(e). The trial court denied this request for three reasons: (1) Kansas Rule of Professional Conduct 1.5 (2010 Kan. Ct. R. Annot. 458) suggested that the award of fees was not justified in this case; (2) the Albrights pursued multiple theories of recovery, some of which do not permit the award of attorney fees; and (3) the Alb-rights asserted 127 KCPA violations but were only successful on 9 of them, so Louisburg Budding prevailed in the vast majority of KCPA issues raised.
The Albrights argue that the trial court erred by not awarding them attorney fees, and they seek an award of all of their fees, not just a portion. They contend that all of their claims were so interrelated that their prosecution required proof of essentially the same facts; thus, all fees incurred on all claims should be awarded. Despite Louisburg Building’s successful defense of 118 out of 127 KCPA claims, the Albrights argue that 9 violations is a “substantial number” and that they only needed to prevail on 1 violation to merit a fee award. Louisburg Building replies that the district court’s decision to deny fees was not an abuse of discretion because the award of attorney fees is permissive, not mandatory, under the KCPA.
We review the district court’s refusal to award attorney fees under the KCPA under an abuse of discretion standard, so we may reverse only if no reasonable person would agree with the district court.
Dodson,
Whatever the outer boundaries of this discretion may be, the district court did not abuse it here. Our cases provide little guidance on whether there are some cases in which a fee award must be made. When .a fee award is made, our court has looked to the factors set out in Kansas Rule of Professional Conduct 1.5(a)' to determine the reasonable amount of the award. See
DeSpiegelaere v. Killion,
The Albrights argue, however, that even a single violation of the KCPA merits a fee award. In one sense, their argument carries weight because “any violation of the KCPA by a supplier constitutes grounds for attorney fees.”
Unruh v. Purina Mills,
. We must note that the district court may have made one legal error in its analysis of the fee-award issue. The district court’s journal entry of judgment was not explicit on whether the court con1 sidered the potential that the Albrights’ KCPA claims were inseparable from their other claims. In such a case, an award of fees may cover the entire amount of fees incurred even though some claims were lost if the claims were so intertwined as to essentially be inseparable.
DeSpiegelaere,
But the existence of multiple theories was only one reason that the district court denied fees, and the district court could have denied fees solely-based on the Albrights’ lack of success on the majority of their KCPA claims. In sum, our record does not clearly demonstrate that the district court misinterpreted the law regard
VI. The District Court Properly Granted Judgment on the Alb-rights’ Fraud-in-the-inducement Claims Against Both Louisburg and Williams.
■The Albrights brought fraud-in-the-inducement actions against both Louisburg Building and Williams'. Louisburg Building and Williams moved to dismiss the claims, arguing that the 2-year statute of limitations barred the claim against Williams and that the economic-loss doctrine barred both claims. The district court granted the motion as to both рarties. Although the district court did not explain its reasoning, the district court’s previous journal entry — dismissing an earlier fraudulent misrepresentation claim— suggests that the district court dismissed the fraud-in-the-inducement claims based on the economic-loss doctrine. The Albrights foreshadowed their fraud-in-the-inducement argument in attempting to save their original fraud claim, but the court dismissed their claim based on the economic-loss doctrine.
On appeal, tire Albrights argue that the district court erred in dismissing their claims against Louisburg Building and Williams because the economic-loss doctrine does not apply to claims for fraud in the inducement. According to the Albrights, their claim for fraud in the inducement “focuses on the deception utilized by Williams and Louisburg Building to con tire Albrights into allowing Louisburg Building to build their house,” and the “actual damages suffered by the Albrights in this regard are the hundreds of thousands in additional costs to construct their house.”
Although the district court branded its decision to terminate the Albrights’ claims a “dismissal,” its action is more appropriately characterized as a judgment on the pleadings. The district court did not find that the Albrights had failed to state a claim. It instead found that, based on the pleadings, the Albrights were not entitled
A. The District Court Correctly Granted Judgment to Louisburg on the Albrights’ Fraud-in-the-inducement Claim Based on the Economic-Loss Doctrine.
The district court correctly relied оn the economic-loss doctrine to grant Louisburg judgment on the pleadings, because the Alb-rights’ fraud-in-the-inducement claim merely duplicates their claim for breach of contract. The economic-loss doctrine prohibits the assertion of such duplicative claims to prevent the unnecessary complexity that would result from allowing every breach of contract to give rise to a tort. A review of the economic-loss doctrine’s histoiy and purposes makes this conclusion evident.
The economic-loss doctrine originated in products-liability law, preventing purchasers from suing in tort where the damages claimed were purely economic — stemming from product-repair costs, product-replacement costs, inadequate product value, or lost profits resulting from product defects.
Robinson Helicopter Co., Inc. v. Dana Corp.,
The doctrine has since expanded to serve as the dividing line between contract and the broader array of tort claims, including claims for negligence and strict liability.
Giles v. General Motors Acceptance Corp.,
In the context of claims for fraud in the inducement, the economic-loss doctrine has produced exceptional inconsistency. On one hand, a majority of states have held that the economic-loss doctrine never applies to fraud-in-the-inducement claims. See Anzivino,
The Fraud in the Inducement Exception to the Economic Loss Doctrine,
90 Marq. L. Rev. 921, 931-32 & nn. 66-67 (2007) (listing the states). These states seen; motivated by two concerns. First, when one party lies about its intention to perform the contract, this party has not bargained fairly, and its contractual expectation of limited liability is not worthy of protection.
E. g., Robinson Helicopter,
On the other hand, a minority of states have applied the economic-loss doctrine to fraud-in-the-inducement claims that merely attempt to recover damages resulting from unfulfilled contractual promises. See,
e.g., Hotels of Key Largo, Inc. v. RHI Hotels,
In this case, the Albrights’ fraud-in-the-inducement claim against Louisburg Building merely duplicates their claim for breach of contract. The Albrights alleged that they were induced to enter the contract by Louisburg’s fraudulent misrepresentations relating to their ability to build the house properly and for a certain price and that these misrepresentations damaged them in the form of “hundreds of thousands in additional costs to construct their house.” In other words, Louisburg Building’s fraud deprived the Albrights of the benefit of their contractual bargain. The Albrights have not argued that the terms of their contract have unfairly limited them from recovering some form of damage — they are simply trying to enforce contract terms through a fraud claim. Given that
We have yet to address, however, the majority’s second concern, regarding punishment and deterrence of fraudulent conduct. Even if a party’s injuries are sufficiently redressed by a breach of contract claim, it is not clear why that party should not also be able to recover punitive damages (recoverable in fraud cases) in order to punish the fraud and deter the other party from committing fraud in the future. Courts adopting the minority approach have not addressed this specific point. But in discussing the economic-loss doctrine’s application to intentional fraud, Judge Richard Posner has suggested that imposing punitive damages is not the most efficient method of dealing with fraudulent conduct: “It is true that, in principle, the cheapest way to prevent fraud is to punish the fraudfeasor; but in practice, owing to the ever-present possibility of legal error, the really cheapest way in some cases may be to place a burden of taking precautions on the potential victim.”
All-Tech Telecom,
Beyond identifying these competing concerns, Judge Posner did not offer any firm guidance in striking a balance between them because he was able to dispose of the case before his court on other grounds.
All-Tech Telecom,
The Kansas Supreme Court has previously taken a similar viewpoint with respect to imposing punitive damages, stating that the “exception to .the rule of unavailability of punitive damages in breach of contract actions is recognized when some independent tort or wrong results in
additional
injury which justifies the assessment of punitive damages by way of punishment of the wrongdoer.”
Guarantee Abstract & Title Co. v. Interstate Fire and Cas. Co.,
Based on Guarantee Abstract, Heller, and Judge Posner’s analysis, we see no persuasive reason to impose punitive damages against a defendant who has failed to fulfill a contractual bargain when a claimed fraud has not caused any additional injury beyond the breach-of-contract damages. We see no reason to treat a fraudulent inducement that does not cause additional damage any differently. We do not consider Equitable Life controlling here: our Supreme Court didn’t consider the economic-loss doctrine in that case. We conclude that the district court properly applied the economic-loss doctrine to preclude the Albrights’ fraud-in-the-inducement claim, which sought only to turn a standard breach-of-contract claim into a tort claim.
The Albrights also asserted a fraud-in-the-inducement claim against Williams, but this claim is barred by the statute of limitаtions. Common-law-fraud claims have a 2-year statute of limitations, running from the discovery of the fraud. K.S.A. 60-513(a). The key facts now asserted by the Albrights in support of their fraud-in-the-inducement claim — that Williams, on behalf of Louisburg Budding, made misrepresentations to the Albrights — was alleged in support of the Albrights’ original fraud claims. This shows that, at the latest, the Albrights had knowledge of their fraud-in-the-inducement claim against Williams on January 14, 2005, when they filed their original counterclaim. The Albrights did not add Williams to the lawsuit until they filed their second amended counterclaim on April 18, 2007, more than 2 years later. Even if arising out of the same transaction, amendments adding new parties do not relate back to earlier pleadings against different parties.
Schmidt v. Nauman,
Issues Raised by Cross-Appellant Louisburg Building
VII. The Trial Court Did Not Err in Finding that Louisburg Building’s Failure to Notify the Albrights About Cost Overruns Was Unconscionable Under the KCPA.
The trial court found that Louisburg Building’s failure to document change orders resulting in cost overruns was “unconscionable pursuant to K.S.A. 50-627 of the KCPA.” Specifically, the court found that Louisburg Building was aware of the Albrights’ budget concerns and that Louisburg Building, as general contractor, was “in the superior position of knowing when the Albrights’ choices of fixtures and other items exceeded the costs associated with the original plans.” Since construction proceeded from January to September 2004 without any written indication of cost overruns that were occurring, the court found Louisburg Building’s conduct to be unconscionable. The trial court determined that
Louisburg Building does not challenge the district court’s findings of fact with regard to this issue, but it argues that, as a legal matter, the conclusion that the construction contract was unconscionable was prohibited by the court’s own finding that attorneys represented both parties’ interests during the contract’s negotiation. Louisburg Building сontends that the district court abused its discretion by imposing upon Louisburg Building an industry standard regarding change orders that was contrary to the “clear and unambiguous terms of the contract.” Louisburg Building argues that section 10 of the contract — regarding change orders requested by the Albrights — did not require Louisburg Building to advise the Albrights of the financial consequences of change orders. Rather, the contract merely required Louisburg Building to keep full and detailed records and to make those records available to the Alb-rights. Louisburg Building argues it fulfilled this contractual duty because it provided detailed records to the Albrights’ construction lender, and the Albrights received the records at each draw request. Louisburg Building adds that the trial court did not make any findings of fact that could qualify as unconscionable under either the KCPA’s statutoiy examples or any Kansas appellate opinions discussing the KCPA.
As a preliminary matter, it seems that part of Louisburg Building’s argument on appeal regarding this issue focuses on whether the district court erred in interpreting the contract and finding Louisburg Building in breach of that contract. Given Louisburg Building’s argument heading (“The Trial Court Erred in Finding the Contract Was Unconscionable . . . .”) and the fact that most of Louisburg Building’s argument focuses on unconscionability, we conclude that Louisburg Building did not intend to raise these contract issues independently. Issues that are raised only incidentally and not fully argued in appellate briefs are deemed abandoned, and thus the issues of contractual interpretation and breach will not be addressed here. See
Cooke v. Gillespie,
The district court’s unconsсionability finding was based on Louisburg Building’s behavior in failing to notify the Albrights of cost overruns, not the terms of the contract itself. Therefore, Louisburg Building’s argument relating to negotiation by counsel is irrelevant. Moreover, as the Albrights note, the district court did not find, nor did the evidence support a finding, that the Albrights ever made;a change-order request. Thus, the district court’s finding of unconscionability did not contravene the terms of the contract regarding change orders.
Louisburg Building is right when it suggests that its conduct does not fit neatly within the circumstances explicitly set out in the statute. Nor does it fit exactly with a previously published appellate case. But the examples in this statute are just that — examples. Even if Louisburg Building’s conduct does not perfectly align with the statutory examples, it seems to fall squarely within the traditional hallmarks of unconscionability: deceptive conduct coupled with an imbalance of power between the parties. When a party is under a duty to disclose certain information, the omission of that information rises to the level of deception.
Williamson v. Amrani,
Because Louisburg Building’s conduct exhibited elements of both deceptive conduct and abuse of the imbalance of power between the parties, the district court did not err in finding this conduct unconscionable under the KCPA.
VIII. The Trial Court Did Not Err by Awarding the Albrights Both Damages and Civil Penalties Because Damages Were Not Awarded Pursuant to the KCPA.
The district court found that Louisburg Building committed nine KCPA violations and awarded the Albrights $90,000 in civil penalties. The court did not award compensatory damages for these KCPA violations as the Albrights had already received compensatory damages for their breach-of-contract claim.
Louisburg Building argues that the district court erred by awarding the Albrights both contract damages and a civil penalty under the KCPA because, according to K.S.A. 50-634(b), a complainant under the KCPA must choose between damages or a civil penalty, whichever is greater. Essentially, Louisburg Building argues that the KCPA prohibits the award of both damages and penalties for the same culpable conduct, even if that conduct justifies damages under a theory of liability wholly independent from the KCPA. We
In this case, the KCPA limits die consumer s recovery under the statute to a choice between damages and civil penalties: “A consumer who is aggrieved by a violation of this act may recover, but not in a class action, damages or a civil penalty as provided in subsection (a) of K.S.A. 50-636 and amendments thereto, whichever is greater.” K.S.A. 50-634(b). The KCPA also states that die act should be construed liberally “to protect consumers from suppliers who commit deceptive and unconscionable practices.” K.S.A. 50-623(b). And another provision of the KCPA provides: “Nothing in this act shall in any way limit or affect the rights or remedies which are otherwise available to a consumer . . . under this or any other law statutory or otherwise.” K.S.A. 50-646.
Construing these three provisions in harmony, it seems unlikely that the legislature intended the KCPA to limit the recovery of damages under common-law theories of liabiliiy. A more sound interpretation is that the KCPA creates a statutory action for damages that is independent of any common-law claims, and the plaintiff consumer must choose between a civil penalty and damages under the KCPA, not a civil penalty and damages generally. Indeed, as the Albrights point out, the Kansas Supreme Court has specifically stated that a plaintiff s common-law recovery is unaffected by the KCPA: “[T]he legislature, in a 1985 amendment, clearly provided that a plaintiff who decides to proceed under the KCPA does not forfeit any other common-law rights.”
Equitable Life Leasing Corp.,
For the reasons set out in this opinion, the district court’s award of damages for breach of contract is vacated and the case is remanded for determination of the correct amount of damages. In all other respects, the judgment of the district court is affirmed.