Wheatland Contracting v. Jaco General Contractor, Inc.Wheatland Contracting v. Jaco General Contractor, Inc.
SYLLABUS BY THE COURT
The Kansas Fairness in Private Construction Contract Act,
Neil C. Gosch and Lisa L. Martin, of Triplett Woolf Garretson, LLC, of Wichita, for appellants.
Jody R. Gondring, of Hennessy & Gondring, P.A., of Kansas City, Missouri, and S. Owen Griffin, of Troppito Miller Griffin, LLC, of Kansas City, Missouri, for appellee.
Details provide a context for our decision.
Jaco and Wheatland agreed that Wheatland would perform plumbing and associated trade work on a Kentucky Fried Chicken restaurant in Johnson County. The contract contained a forum and venue selection clause that stated: “[T]o the fullest extent permitted by law, the parties agree and stipulate that the Eighteenth Judicial District, District Court, Sedgwick County, Kansas, is the court of exclusive jurisdiction and venue to determine any dispute between Contractor and Subcontractor arising out of or relating to this Subcontract.”
Wheatland filed a mechanic‘s lien on the project in Johnson County. Jaco later substituted a bond for the mechanic‘s lien, which the court approved, and the court then discharged the lien. Wheatland proceeded to make a claim on that bond.
Wheatland sued in Johnson County District Court, claiming breach of contract, action on bond, violations of the Act, and quantum meruit. Jaco moved to dismiss or, in the alternative, to transfer venue to Sedgwick
We granted Jaco‘s application for interlocutory review.
We review the Act.
Our task in answering this question of law is, as always, to look first at the statutes. We must try to learn legislative intent through the statutory language enacted, giving common words their ordinary meanings. When a statute is plain and unambiguous, an appellate court should not speculate about the legislative intent behind that clear language, and it should refrain from reading something into the statute not readily found in its words. With no ambiguity, the cоurt need not resort to statutory construction. Only if the statute‘s language or text is unclear or ambiguous does the court use canons of construction or legislative history to construe the Legislature‘s intent. Ullery v. Othick, 304 Kan. 405, 409, 372 P.3d 1135 (2016). Because the Act is unambiguous, we need not look at the legislative history to determine legislative intent.
The Kansas Fairness in Private Construction Contract Act is comprised of seven statutes—
We hold the purpose of this Act is to compel prompt payments of undisputed amounts that become due in these types of construction contracts. It covers all tiers in this section of the construction industry—ownеr—contractor—subcontractor. We read the Act with that purpose in mind.
The heart of the Act is
A quick review of those provisions shows how broad this law is. First, it bans certain specific provisions from all contracts. Then it eliminates a defense. It then establishes just what timeliness means for all of these construction contracts at the owner-contractor level and then at the contractor-subcontractor and subcontractor-subcontractor tiers. And then, the Act creates some tools that can be used to enforce the rights and duties created by the law.
K.S.A. 2018 Supp. 16-1803 begins by banning three provisions from all private construction contracts covered by the Act.- No provision of any contract will be enforced that waives the right to resolve disputes in court. (The Act does permit binding arbitration or alternate dispute resolution before litigation.)
- No provision that wаives lien rights for labor or material is enforceable, except as a condition for payment.
- Any provision that tries to waive rights of subrogation for losses covered by liability or workers compensation insurance is not enforceable, except in limited circumstances.
K.S.A. 2018 Supp. 16-1803 provides that making payments to a subcontractor conditional upon payment from someone else, including the owner, is no defense to a claim to enforce a lien or a bond.K.S.A. 2018 Supp. 16-1803 next establishes what timeliness means. If an owner does not pay the contractor within 30 dаys of any undisputed amount, then the owner is liable for 18 percent interest on the unpaid amount. Likewise, if a contractor does not pay a subcontractor within seven business days of any undisputed amount, then the contractor is liable for 18 percent interest on the unpaid amount. And finally, if a subcontractor fails to paywithin seven business days any undisputed amount to another subcontractor, then the subcontractor is liable for 18 percent interest. K.S.A. 2018 Supp. 16-1804 sets the maximum amount that can be retained for these construction contracts at 10 percent. And if that amount is not paid, then the party liable to pay the retainage is liable for 18 percent interest.K.S.A. 16-1805 allows a contractor or subcontractor to suspend performance on the contract if not paid, including accrued interest, after giving notice.
Enforcement procedures are found in
“In any action to enforce
K.S.A. 16-1803 ,16-1804 or16-1805 , and amendments thereto, including аrbitration, the court or arbitrator shall award costs and reasonable attorney fees to the prevailing party. Venue of such an action shall be in the county where the real property is located. The hearing in such an arbitration shall be held in the county where the real property is located.”K.S.A. 16-1806 .
The law,
Jaco contends that by agreeing to the forum selection clause in its contract, Wheatland has waived this statutory venue provision of
We look at Jaco‘s first argument. Jaco‘s reading of
One of these rights is venue. The parties no longer have to chase еach other around for enforcement of their claims. With this law, they come to the county where the work is performed. Through this law, the parties now have a right to rely upon that statutory venue provision. We also view bringing an action in the county where the work is performed as a duty required by this statute. The law says the venue shall be in the county where the real property is located. This is the language of a duty. In contrast, the contract provision here seeks to waive that right and duty. We hold that contract provision is unenforceable. Venue is prescribed in
Turning to Jaco‘s second argument—that there is no specific mention of choice of venue as being unenforceable in
Jaco contends the venue provision in
We do not think so. The entire Act was a change to the common law. The Legislature‘s intent to modify these construction contracts is clear by the Act‘s plain language: “The rights and duties prescribed by this act shall not be waivable or varied under the terms of a contract. The terms of any contract waiving the rights and duties prescribed by this act shall be unеnforceable.”
For support, Jaco cites two United States District Court for the District of Kansas cases as persuasive authority that the Act does not preclude enforcement of contractual forum selection clauses. Bоth do not apply here because the federal courts applied federal rather than state law.
First, in Bowen Engineering Corp. v. Pacific Indem. Co., 83 F. Supp. 3d 1185 (D. Kan. 2015), the defendants sought to transfer venue to Missouri in accordance with a forum selection clause in the contract. The plaintiff argued that the action could only be brought in Kansas under
- Because the рlaintiff was not a Kansas resident, any desire by the Kansas Legislature to protect the state‘s own residents was not implicated;
- there was no Kansas public policy against forum selection clauses generally;
- the Act did not expressly prohibit the type of forum selection clаuse at issue; and
- there was a strong preference under federal law to enforce forum selection clauses. 112 F. Supp. 3d at 1181-82.
We do not see how this case helps Jaco.
Here, Kansas law applies, not federal law. The concerns present in both federal cases are not present here. The federal courts аre concerned that accepting exclusive venue in Kansas would override the strong preference under federal law to enforce forum selection clauses because the Supreme Court decries the “provincial attitude” of the fairness of other tribunals that a state‘s refusal to enforce an out-of-state forum selection clause evokes. See Herr Indus., 112 F. Supp. 3d at 1180-82.
We hold the district court correctly ruled that
Affirmed.