Employers Mut. Cas. Co. v. Jayhawk Fire Sprinkler Co. ( 2024 )

NOT DESIGNATED FOR PUBLICATION
No. 124,001
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
EMPLOYERS MUTUAL CASUALTY COMPANY,
as Subrogee of CUSTOM WOOD PRODUCTS, INC.,
Appellant,
v.
JAYHAWK FIRE SPRINKLER COMPANY, INC.,
Appellee.
MEMORANDUM OPINION
Appeal from Pottawatomie District Court; JEFFREY R. ELDER, judge. Oral argument held
September 19, 2023. Opinion filed January 12, 2024. Reversed and remanded.
Marc A. Powell, of Powell Law Office, of Wichita, for appellant.
Tracy A. Cole and Cameron S. Bernard, of Goodell Stratton Edmonds & Palmer, LLP, of
Topeka, for appellee.
Before BRUNS, P.J., PICKERING, J., and TIMOTHY G. LAHEY, S.J.
PER CURIAM: In 2013, Jayhawk Fire Sprinkler Company, Inc. (Jayhawk),
installed a fire protection and sprinkler system for Custom Wood Products, Inc. (CWP).
The system failed in 2018, and Employers Mutual Casualty Company (EMC), CWP's
insurer, paid $56,802 for damages caused by the system failure. EMC then filed the
present subrogation action against Jayhawk to recover the amount of damages paid under
the insurance policy. EMC's claim is rooted in the purported negligent 2013 installation
of the fire protection system.
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Relying on facts asserted by Jayhawk, the district court granted Jayhawk's motion
to dismiss on grounds that CWP had waived EMC's subrogation rights. Because the
district court considered facts outside EMC's petition when making its ruling, the court
was obligated to treat Jayhawk's motion as one for summary judgment, and it erred by
declining to do so. Because facts must be established through the summary judgment
process, a ruling on the subrogation waiver issue is not yet ripe. We reverse the ruling of
the district court and remand for further proceedings.
FACTUAL AND PROCEDURAL BACKGROUND
EMC filed a petition against Jayhawk in October 2019 seeking to recover damages
based on a loss caused by Jayhawk to EMC's insured, CWP. According to the petition,
Jayhawk was liable for negligently installing a fire protection system for CWP in 2013,
breaching an implied covenant of good workmanship, and breaching an implied contract.
Jayhawk responded to EMC's petition by filing a motion to dismiss for failure to
state a cause of action, arguing that EMC had no right of subrogation against Jayhawk
because CWP had waived those rights. To establish the factual basis for the waiver,
Jayhawk attached a copy of a 2017 work invoice for an inspection of CWP's fire
protection system, and that invoice contained the waiver language upon which Jayhawk
relies. Notably, EMC's petition does not claim Jayhawk's 2017 work was the source of
the system failure that led to this lawsuit. But Jayhawk made the additional factual
allegation in its motion to dismiss that "all invoices for any work Jayhawk did for CWP"
included the waiver language that appears in the 2017 invoice. If true, this means the
language in the 2017 work invoice would have also been present in any invoice for the
allegedly negligent work done in 2013.
EMC's response characterized Jayhawk's motion as incorporating matters outside
the pleadings. Accordingly, and in reliance on K.S.A. 2022 Supp. 60-212(d), EMC asked
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the district court to treat Jayhawk's motion as one for summary judgment. EMC also
argued that it was not bound by any subrogation waiver by CWP.
The district court ruled that it was not required to treat Jayhawk's motion as a
summary judgment motion. The court concluded that it could consider the additional
materials proffered by Jayhawk because EMC made "specific references to the terms and
conditions included in the invoices for [Jayhawk's] work." On the merits, the court
granted Jayhawk's motion to dismiss, finding that CWP, having released Jayhawk from
liability, could not bring a claim on its own behalf against Jayhawk. The court reasoned
that EMC could not pursue a subrogation claim based on a claim that CWP was
prohibited from bringing.
EMC's motion to alter and vacate the journal entry of dismissal was likewise
denied, and EMC appeals.
ANALYSIS
I. The district court erred by declining to treat Jayhawk's motion to dismiss as a motion
for summary judgment.
Jayhawk moved for dismissal under K.S.A. 2022 Supp. 60-212(b)(6), contending
that EMC's petition fails to state a claim upon which relief can be granted. When a
motion is made under K.S.A. 2022 Supp. 60-212(b)(6) and "matters outside the pleadings
are presented to and not excluded by the court," then "the motion must be treated as one
for summary judgment under K.S.A. 60-256." K.S.A. 2022 Supp. 60-212(d).
Additionally, "[a]ll parties must be given a reasonable opportunity to present all the
material that is pertinent to the motion." K.S.A. 2022 Supp. 60-212(d). K.S.A. 2022
Supp. 60-256 and Supreme Court Rule 141 (2023 Kan. S. Ct. R. at 223) "govern the form
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and manner of presenting these outside matters." Sperry v. McKune, 305 Kan. 469, Syl. ¶
4, 384 P.3d 1003 (2016).
Because motions to dismiss necessarily involve legal questions that must be
resolved on the face of the petition, appellate courts employ these same principles and
give no deference to the district court's evaluation of the case. See Cohen v. Battaglia,
296 Kan. 542, Syl. ¶ 1, 293 P.3d 752 (2013). Our resolution of this issue requires
statutory interpretation, a matter over which this court exercises unlimited review.
Nauheim v. City of Topeka, 309 Kan. 145, 149, 432 P.3d 647 (2019).
A. EMC preserved its claim that the district court considered matters outside of
the petition.
As an initial matter, Jayhawk contends that EMC failed to preserve this issue for
appeal. Generally, arguments cannot be raised for the first time on appeal. State v. Kelly,
298 Kan. 965, 971, 318 P.3d 987 (2014). We find no merit in this contention.
In its response to Jayhawk's motion to dismiss, EMC asserted that Jayhawk's
motion should be treated as a motion for summary judgment because Jayhawk's
statement of facts went "beyond the actual allegations in plaintiff's petition." Jayhawk
complains that EMC was not specific in detailing precisely how Jayhawk's motion went
beyond the pleadings, and EMC did not "challenge the authenticity of the terms and
conditions of the waiver-of-subrogation clause that Jayhawk attached." Instead, because
EMC's argument focused primarily on the substance of the subrogation waiver provision,
Jayhawk claims that EMC's "argument to the District Court accepted such waiver's
existence," and EMC has failed to preserve this issue on appeal. However, EMC's
appellate brief explains in more detail the Jayhawk allegations that go beyond the facts
alleged in the petition. Specifically, EMC asserts that the 2017 work invoice was not
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referenced in the petition, nor did any wording in the petition state that "all invoices for
any work Jayhawk did for CWP" included a waiver of subrogation provision.
Though EMC was not as detailed before the district court as it is on appeal, it
cannot be said that EMC failed to preserve the issue of how the district court should have
treated Jayhawk's motion to dismiss. EMC clearly raised this issue in responding to
Jayhawk's motion to dismiss, and the district court expressly denied EMC's request to
treat the motion to dismiss as a summary judgment motion. Furthermore, this court has
previously considered whether a district court considered matters outside the pleadings,
even when the issue was not raised below, because consideration of the issue is necessary
for this court to determine the correct standard of review. Lehman v. City of Topeka, 50
Kan. App. 2d 115, 117, 323 P.3d 867 (2014). We find that EMC preserved this issue for
appeal.
Relatedly, Jayhawk also argues that any error in considering the 2017 work
invoice was invited by EMC. Whether the doctrine of invited error applies is a question
of law subject to unlimited review. State v. Stoll, 312 Kan. 726, 735, 480 P.3d 158(2021). The doctrine of invited error provides that "[g]enerally, a litigant may not invite
an error and then complain of the error on appeal." 312 Kan. at 735.
Jayhawk's argument is not persuasive. EMC asked the court not to consider the
2017 work invoice. EMC then responded to Jayhawk's argument that the waiver of
subrogation provision in the 2017 work invoice was enforceable. Responding to
Jayhawk's argument does not amount to inviting the district court to consider the waiver
of subrogation clause in the 2017 work invoice nor is it an admission that the provision
applied to EMC's claim—which is based on actions that took place in 2013.
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B. The district court considered facts outside the petition.
When addressing a K.S.A. 2022 Supp. 60-212(b) motion, the district court is
typically limited to considering only the plaintiff's petition. Minjarez-Almeida v. Kansas
Board of Regents, 63 Kan. App. 2d 225, 242, 527 P.3d 931 (2023). If a claim in a
pleading is founded on a written instrument, the instrument can be attached to the
pleading as an exhibit and considered in a motion to dismiss. K.S.A. 2022 Supp. 60-
209(h); 63 Kan. App. 2d at 242. When a written instrument is central to a plaintiff's claim
and is not attached to the petition, "'a defendant may submit—and a court may consider—
an undisputedly authentic copy of the document without transforming the motion to
dismiss into a motion for summary judgment.'" 63 Kan. App. 2d at 242. The reasoning
behind this is that "plaintiffs should not be permitted to circumvent dismissal by failing to
attach or accurately describe a written contract on which a lawsuit is based when no one
disputes a contract's authenticity." Crosby v. ESIS Insurance, No. 121,626, 2020 WL
6372266, at *3 (Kan. App. 2020) (unpublished opinion), rev. denied 314 Kan. 854(2021).
EMC's petition makes no reference to any negligence or contract claim arising
from work done by Jayhawk in 2017. Rather, the petition alleges that Jayhawk's negligent
installation of the fire protection system occurred in 2013, and it alleges that Jayhawk
refused to pay for damages it caused on the basis that EMC's subrogation rights were
waived "in 2013 when Jayhawk's work was invoiced." Yet, the district court's decision
relies on a Jayhawk invoice from 2017 for work which is not part of EMC's claim. The
court also did not exclude, as required by K.S.A. 2022 Supp. 60-212(d), Jayhawk's
unsupported assertion that "all invoices for any work Jayhawk did for CWP" included a
waiver of subrogation clause. The district court declined to treat Jayhawk's motion as a
motion for summary judgment because it determined the 2017 work invoice was
"referenced" in EMC's petition. But the mere reference to a document in a petition does
not make the document "'central to the plaintiff's claim'" or proper for submission by a
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defendant and consideration by the court in a motion to dismiss. See 2020 WL 6372266,
at *3. As our court stated in Minjarez-Almeida, "when a petition refers to an unattached
document central to the plaintiff's claim, a defendant may submit—and a court may
consider—an undisputedly authentic copy of the document without transforming the
motion to dismiss into a motion for summary judgment." (Emphasis added.) 63 Kan.
App. 2d 225, Syl. ¶ 5.
Here, the district court found that Jayhawk "included the invoice with terms and
conditions referred to by [EMC] in its Petition." (Emphasis added.) But the attached
invoice is from 2017, not 2013 when the negligence purportedly occurred. The 2017
work invoice for maintenance on the fire sprinkler system is not—insofar as the
pleadings or the document itself reveal—related, much less central, to the claims in
EMC's petition. The 2017 invoice has no self-apparent impact on EMC's claims arising
from work performed in 2013. Whether a waiver of subrogation clause exists for the
work performed in 2013 is established here only by the unsupported assertion by
Jayhawk that "all invoices for any work Jayhawk did for CWP" included the clause. That
contention, along with the 2017 work invoice, were matters outside the pleadings and
were considered by the district court in its ruling. When considering a motion to dismiss
for failure to state a claim, K.S.A. 2022 Supp. 60-212(d) plainly provides that when
"matters outside the pleadings are presented to and not excluded by the court, the motion
must be treated as one for summary judgment under K.S.A. 60-256." The district court
erred by not granting EMC's request to convert the motion to one for summary judgment.
We reverse the dismissal of EMC's petition by the district court and remand this
matter to the district court for further proceedings.
Reversed and remanded.
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