Curo Enterprises, LLC v. Dunes Residential Services, Inc.

No. 111,191
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
CURO ENTERPRISES, LLC,
Appellant,
v.
DUNES RESIDENTIAL SERVICES, INC.,
Appellee.
SYLLABUS BY THE COURT
1.
The legal effect of a written instrument is a question of law. The written
instrument may be construed and its legal effect determined by the appellate court
regardless of the construction made by the district court.
2.
What constitutes a principal/agent relationship and whether there is competent
evidence reasonably tending to prove such relationship is also a question of law. An
express agency exists if the principal has delegated authority to the agent by words which
expressly authorize the agent to do a delegable act. An implied agency may exist if it
appears from the statements and conduct of the parties and other relevant circumstances
that the intention was to clothe the agent with such an appearance of authority that when
the agency was exercised it would normally and naturally lead others to rely on the
person's acts as being authorized by the principal.
3.
An action must be prosecuted in the name of the real party in interest, but a suit
does not have to be dismissed if the real party in interest is not joined. The purpose of the
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real party in interest rule is to protect a defendant from being repeatedly harassed by a
multiplicity of suits for the same cause of action so that if a judgment be obtained it is a
full, final, and conclusive adjudication of the rights in controversy that may be pleaded in
bar to any further suit instituted by any other party. If the defendant is aware of the real
party in interest, then the suit may proceed.
4.
In Kansas, a court may not award attorney fees absent statutory authority or an
agreement by the parties. Whether a court has the authority to award attorney fees is a
question of law over which appellate review is unlimited.
5.
When a contract provides that either party who brings a claim under the contract is
entitled to its attorney fees when it is the prevailing party, and when that same contract
gives specific authority to a nonsignatory third party to enforce the agreement on behalf
of a signatory, then such nonsignatory third party can collect its attorney fees if it is the
prevailing party.
6.
A prevailing party is the party to a suit who successfully prosecutes the action or
successfully defends against it, prevailing on the main issue, even though not necessarily
to the extent of his or her original contention. The prevailing party is one in whose favor
the decision or verdict is rendered and judgment entered. With respect to the specific
question of attorney fees, it has been stated a prevailing party is the person who has an
affirmative judgment rendered in his or her favor at the conclusion of the entire case.
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7.
When interpreting contractual prevailing party language, a court should employ a
flexible and reasoned approach that allows room for common sense to guide a court's
decision. This is particularly true in the context of a settlement.
8.
A consent decree is essentially a settlement agreement subject to continued
judicial policing, supervision, and enforcement.
Appeal from Johnson District Court; THOMAS M. SUTHERLAND, judge. Opinion filed January 2,
2015. Reversed and remanded with directions.
J. Eugene Balloun and Zach Chaffee-McClure, of Shook, Hardy & Bacon L.L.P., of Kansas City,
Missouri, for appellant.
Robert W. Tormohlen, Scott A. Wissel, and Daniel R. Luppino, of Lewis, Rice & Fingersh, L.C.,
of Kansas City, Missouri, for appellee.
Before POWELL, P.J., LEBEN, J., and HEBERT, S.J.
POWELL, J.: This dispute involves the efforts of the asset manager for the owner
of an apartment complex to terminate the services of the property manager for that
apartment complex. Curo Enterprises, LLC (Curo), the asset manager, brought an action
in Johnson County District Court to remove Dunes Residential Services, Inc. (Dunes) as
the property manager. The parties ultimately settled the case, but Curo appeals from the
district court's order denying its request for attorney fees pursuant to a fee-shifting
provision in the management agreement between the owner of the apartment complex
and Dunes. Curo argues the district court erred by finding Curo was not the owner's agent
under the terms of the management agreement and was neither a "party" nor a "prevailing
party" under the fee-shifting provision. Curo argues it filed suit as the owner's agent and,
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when the district court approved and incorporated the parties' settlement agreement into
an order, the district court qualified Curo as a prevailing party entitled to attorney fees.
Because we agree Curo was acting as the owner's agent when it sought to
terminate Dunes as the apartment complex property manager under the terms of the
management agreement and because we find Curo qualified as both a party and a
prevailing party under the fee-shifting provisions of the management agreement, we
reverse the district court and remand to determine attorney fees and costs to which Curo
is entitled under the management agreement as the prevailing party.
FACTS
The Lenexa, Kansas, apartment complex at issue is owned by Dunes Point West
Associates, L.L.C. (DPW). Originally, three entities—one of which owns 10% and is the
managing member—invested to create DPW. Later, a group of investors acquired the
remaining 90% interest and serve as nonmanaging members. A separate entity, NDC
Capital Partners (NDC), was appointed the asset manager to oversee the financial aspects
of the apartment complex for the benefit of the nonmanaging members.
In 2006, DPW entered into a management agreement with Dunes to manage the
apartment complex. Dunes was in charge of day-to-day functions such as leasing, rent
collection, and property maintenance. Section 6 of the management agreement provided
that either DPW or Dunes could terminate the agreement by giving the other party 30
days advance written notice, with or without cause. Section 14 of the management
agreement stated: "This Agreement shall be enforceable by NDC Capital Partners on
behalf of [DPW] without any action or consent necessary from the Managing Member of
[DPW]." The agreement was signed by the managing member of DPW and by Dunes.
Effective June 30, 2012, NDC assigned its interest as the asset manager to Curo
Properties, LLC, which, in turn, assigned its interest to Curo.
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The dispute began on February 22, 2013, when Curo, as asset manager, notified
Dunes by letter of its intent to terminate the management agreement between DPW and
Dunes. Dunes responded on March 8, 2013, challenging and rejecting Curo's right to
terminate the management agreement. Curo filed suit on March 21, 2013, seeking: (1) a
declaratory judgment that Dunes was no longer manager of the property; (2) an order
compelling Dunes to step down as property manager; and (3) an order awarding Curo
attorney fees and costs pursuant to a fee-shifting provision in the management agreement.
The trial was scheduled to begin September 12, 2013, but on September 7, 2013,
Dunes submitted a notice of termination of the management agreement. According to the
district court, Dunes' notice claimed to terminate the management agreement without
admitting liability or making concessions. Based on this notice, on September 26, 2013,
the court ordered the following: (1) another property manager could enter into a
management agreement to assume the property management functions and obligations;
(2) Dunes must turn over all books, records, files, keys, contracts, agreements, tenant
records, financial data, and any other tangible property required to facilitate the transition
of all property management duties to the new property manager; and (3) the September
12, 2013, trial was moot but both Curo and Dunes reserved the right to seek an award of
legal fees and costs.
On November 13, 2013, Curo filed a motion requesting attorney fees and costs as
the prevailing party under Section 21 of the management agreement. The district court
found Curo was not entitled to attorney fees and costs because it was a third-party
beneficiary to the management agreement and not an agent of DPW. It further found that
even if Curo was the agent, Curo did not qualify as a prevailing party. On January 28,
2014, the district court issued a final judgment dismissing Counts 1 (declaratory
judgment) and 2 (specific performance) of Curo's petition as moot and denying Curo
judgment on Count 3 (attorney fees).
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Curo timely appeals.
DID THE DISTRICT COURT ERR BY FINDING CURO WAS NOT DPW'S AGENT?
Section 21 of the management agreement relating to attorney fees provides:
"In the event that either party hereto brings an action or proceeding for a
declaration of the rights of the parties under this Agreement or for any alleged breach of
or default under this Agreement, or any other action arising out of this Agreement or the
transactions contemplated hereby, the prevailing party in any such action shall recover
from the non-prevailing party its attorneys' fees and any court costs incurred in such
action or proceeding, in addition to any other damages or relief awarded, regardless of
whether such action proceeds to final judgment. The provisions of this Section 21 shall
survive any termination of this Agreement." (Emphasis added.)
The district court denied Curo's motion for attorney fees and court costs pursuant
to Section 21, finding (1) Curo did not qualify as a "party" to the agreement and (2) even
if Curo was entitled to enforce the agreement, it was not the prevailing party. As to the
first point, Curo argues it was DPW's agent under the management agreement, making it
a party entitled to attorney fees. Conversely, Dunes argues Curo's actions in seeking its
removal as property manager were those of a third-party beneficiary, not an agent.
The legal effect of a written instrument is a question of law. It may be construed
and its legal effect determined by the appellate court regardless of the construction made
by the district court. Osterhaus v. Toth, 291 Kan. 759, 768, 249 P.3d 888 (2011). What
constitutes a principal/agent relationship and whether there is competent evidence
reasonably tending to prove such relationship is also a question of law. Barbara Oil Co.
v. Kansas Gas Supply Corp., 250 Kan. 438, 446, 827 P.2d 24 (1992). However,
resolution of conflicting evidence that might establish the existence of a principal/agent
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relationship is a question for the finder of fact. Barbara Oil Co., 250 Kan. at 446.
Inasmuch as the parties have not produced conflicting evidence but, instead, disagree on
whether the undisputed language in the management agreement established an agency
relationship between Curo and DPW, we are therefore confronted with a question of law
in which our review is unlimited. See Bunge Milling, Inc. v. City of Atchison, 49 Kan.
App. 2d 325, 329, 310 P.3d 1064 (2013); Town Center Shopping Center v. Premier
Mortgage Funding, Inc., 37 Kan. App. 2d 1, 6, 148 P.3d 565 (2006), rev. denied 283
Kan. 933 (2007).
A. Was Curo an agent under the management agreement?
While it is true the only signatories to the management agreement were DPW and
Dunes, Curo claims it qualifies as a party to the agreement because Section 14 of the
agreement established Curo, the assignee of NDC (the prior asset manager), as DPW's
agent. The district court rejected this argument and ruled Curo occupied the role of a
third-party beneficiary rather than an agent. Curo concedes that if it were merely a third-
party beneficiary, then it would be unable to enforce the fee-shifting section of the
management agreement. See Intermountain Res., L.L.C. v. Honea, 68 Fed. Appx. 937,
938 (10th Cir. 2003) (under Colorado law, third-party beneficiaries bound by contracts
but not obligated under attorney fee provisions of same contract). But see TST Truck
Insurance, Ltd. v. First National Bank of Wamego, 2014 WL 1047993, at *8 (D. Kan.
2014) (unpublished opinion) (Intermountain Res. does not contain per se rule against
third-party beneficiary's recovery of contractual attorney fees).
Instead, Curo argues the district court erred by finding Curo was merely a third-
party beneficiary rather than a third-party beneficiary and DPW's agent. Curo claims the
roles of a third-party beneficiary and an agent are not mutually exclusive. Curo explains
it was a third-party beneficiary under the management agreement because the
management agreement incorporated DPW's operating agreement which conferred upon
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the asset manager, Curo, third-party beneficiary rights such as the right to receive
payment for executing its duties as asset manager. But Curo also claimed it was an agent
of DPW because Section 14 of the management agreement authorized it to enforce the
management agreement "on behalf of" DPW.
It is well settled that an agency relationship may be expressed or implied.
"'It is an express agency if the principal has delegated authority to the agent by
words which expressly authorize the agent to do a delegable act. It is an implied agency if
it appears from the statements and conduct of the parties and other relevant circumstances
that the intention was to clothe the agent with such an appearance of authority that when
the agency was exercised it would normally and naturally lead others to rely on the
person's acts as being authorized by the principal.'" Golden Rule Ins. Co. v. Tomlinson,
300 Kan. ___, ___, 335 P.3d 1178, 1189 (2014) (quoting Professional Lens Plan, Inc. v.
Polaris Leasing Corp., 238 Kan. 384, 390-91, 710 P.2d 1297 (1985).
Paragraph 14 of the management agreement expressly provides that "[t]his
Agreement shall be enforceable by NDC Capital Partners on behalf of the Company
without any action or consent necessary from the Managing Member of the Owner." The
parties do not dispute that Curo took the place of NDC because NDC’s rights were
assigned to Curo. See Bolz v. State Farm Mut. Ins. Co., 274 Kan. 420, 428, 52 P.3d 898
(2002) ("[An] assignment passes all assignor's title as interest to assignee and divests
assignor of all right of control over subject matter[.]"). Therefore, under the clear
language of the management agreement, Curo had the right to enforce the agreement "on
behalf of" DPW without requiring any action or consent from the managing member of
DPW.
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B. Was Curo acting as an agent when it brought the present suit?
Interestingly, Dunes does not contest Curo's assertion that it could hold both the
role of third-party beneficiary and agent. Rather, Dunes argues Curo mischaracterizes the
district court's ruling. Dunes claims the district court found Curo was acting in its role as
a third-party beneficiary to the management agreement when it sought to terminate Dunes
and subsequently filed this case. Therefore, even if Curo were DPW's agent, it was not
acting within that role when it sought to terminate Dunes. Specifically, Dunes points out
that Curo brought this case in its own name rather than in DPW's name.
Under K.S.A. 2013 Supp. 60-217(a)(1), "[a]n action must be prosecuted in the
name of the real party in interest." Curo counters that K.S.A. 2013 Supp. 60-217(a)(1)(H)
modified the common-law rule that an agent who signed a contract on behalf of the
principal was not a party to the contract and could not sue for breach of the contract
under its own name. K.S.A. 2013 Supp. 60-217(a)(1)(H) allows "a party with whom or in
whose name a contract has been made for another's benefit" to bring an action in its own
name. Curo claims the statute allows an agent who is a party to a contract to sue on
behalf of the principal in the agent's name alone even though the agent is not technically
a party to the contract. See Wolf Creek Nuclear Operating Corp. v. Framatome ANP,
Inc., 416 F. Supp. 2d 1081, 1087 (D. Kan. 2006).
Unfortunately for Curo, the situation addressed by K.S.A. 2013 Supp. 60-
217(a)(1)(H) is not the same as in this case. Curo did not enter into or sign the
management agreement on behalf of DPW and then file suit against Dunes. Dunes
entered into the agreement directly with DPW, but the terms of the agreement authorized
the asset manager, now Curo, to enforce the agreement on behalf of DPW. Dunes argues
that because Curo brought the suit in its own name, it was suing as a third-party
beneficiary and declaring that it was the real party in interest under K.S.A. 2013 Supp.
60-217(a), rather than acting as an agent on behalf of DPW. While this might be a factor
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in determining whether Curo was DPW's agent, it does not definitively show Curo was
not DPW's agent.
Moreover, K.S.A. 2013 Supp. 60-217(a) does not mandate that a suit be dismissed
if the real party in interest is not joined. The purpose of the real party in interest rule is to
protect a
"'defendant from being repeatedly harassed by a multiplicity of suits for the same cause
of action so that if a judgment be obtained it is a full, final and conclusive adjudication of
the rights in controversy that may be pleaded in bar to any further suit instituted by any
other party.'" Larson Operating Co. v. Petroleum, Inc., 32 Kan. App. 2d 460, 465, 84
P.3d 626 (2004) (quoting Torkelson v. Bank of Horton, 208 Kan. 267, 270, 491 P.2d 954
[1971]).
In this case, Curo did not hide that it was suing to enforce the management
agreement on behalf of DPW. The language in Section 14 was very straightforward and
unambiguous. DPW expressly authorized Curo to do a delegable act—enforce the
management agreement—on its behalf. Dunes was aware of this delegation of rights.
Section 15 of the management agreement even required that all notices, demands,
statements, and communications required under the agreement intended for DPW be
mailed to DPW and a copy sent to NDC and later Curo. Everything Dunes sent to DPW
was also sent to Curo. If Curo was an agent, then DPW was not an undisclosed principal.
Dunes could not have thought Curo was suing to enforce its own rights under the
agreement since it had none apart from acting on behalf of DPW.
We conclude Curo acted as DPW's agent when it sued to enforce DPW's right to
terminate the management agreement.
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DID THE DISTRICT COURT ERR BY CONCLUDING CURO WAS NOT A PREVAILING PARTY?
Having decided that Curo was DPW's agent, we must now decide whether acting
as DPW's agent allowed Curo to collect attorney fees under Section 21 of the
management agreement. In Kansas, a court may not award attorney fees absent statutory
authority or an agreement by the parties. See Snider v. American Family Mut. Ins. Co.,
297 Kan. 157, 162, 298 P.3d 1120 (2013). Whether a court has the authority to award
attorney fees is a question of law over which appellate review is unlimited. Snider, 297
Kan. at 162.
A. Was Curo a party under Section 21 of the management agreement?
Dunes argues that the attorney fees provision of the management agreement is
expressly limited to the two parties to the management agreement: Dunes and DPW, who
were the only signatories. See Civix Sunrise, GC, LLC. v. Sunrise Road Maintenance
Assoc., Inc., 997 So. 2d 433, 435 (Fla. App. 2008) ("any party" to agreement doesn't
include third-party beneficiary, only signatories); Parker v. Center for Creative
Leadership, 15 P.3d 297, 299 (Colo. App. 2000) ("any party" to agreement doesn't
include third-party beneficiary). As we have previously noted, Section 21 of the
management agreement provided that if either party to the agreement brought an action
arising out of the agreement, then the prevailing party could recover attorney fees and
costs from the non-prevailing party.
A California appellate court has addressed the meaning of contractual language
allowing a prevailing party to recover attorney fees from "either party." In Real Property
Services Corp. v. City of Pasadena, 25 Cal. App. 4th 375, 30 Cal. Rptr. 2d 536 (1994),
the City of Pasadena entered into a lease agreement with BWC Development Corporation
for the development and construction of a site for use as a multiscreen movie theater and
parking garage. At the time the lease was signed, it was agreed that RPS would actually
11
operate the movie theater, and the lease provisions specifically stated that the City
consented to BWC's subleasing the property to RPS. RPS was not a signatory to the
lease. A dispute arose, and RPS, a nonsignatory, sued the City, a signatory, under the
lease agreement. RPS lost, however, and the City sought attorney fees under the lease
agreement which provided that in the event "either party" brought an action under the
agreement, the prevailing party would be entitled to its attorney fees. 25 Cal. App. 4th at
377-78.
California has a reciprocity rule which forbids unilateral attorney fee provisions in
contracts. West's Ann. Cal. Civ. Code § 1717 (2009). Under this rule, "[w]here a
nonsignatory plaintiff sues a signatory defendant in an action on a contract and the
signatory defendant prevails, the signatory defendant is entitled to attorney fees only if
the nonsignatory plaintiff would have been entitled to its fees if the plaintiff had
prevailed." 25 Cal. App. 4th at 382. The court held that since the lease agreement
provided for the award of attorney fees in an action to enforce the agreement brought by
"either party," and since the lease expressly provided for RPS to be the sublessee, RPS, as
a third-party beneficiary, had the right to sue under the lease agreement and would have
been entitled to attorney fees had it prevailed. Therefore, the City was entitled to its
attorney fees for prevailing against RPS. See 25 Cal. App. 4th at 383-84.
While we disagree with the notion that a third-party beneficiary is included in the
meaning of the words "either party," we do agree with the California Court of Appeals
that the meaning of the words "either party" is not limited to only the signatories to a
contract in every context. It is the language of the contract itself which controls, and
where an entity is expressly referred to in the contact, that evinces some intent to allow
that entity to claim attorney fees. It is even more so where, as here, the contract gives
specific authority to a third party to enforce the agreement on behalf of a signatory. See
Cargill, Inc. v. Souza, 201 Cal. App. 4th 962, 966, 134 Cal. Rptr. 3d 39 (2011)
(nonsignatory party entitled to attorney fees where it "stands in the shoes of the party to
12
the contract"). Given that the management agreement expressly gave Curo the authority
to act on behalf of DPW in terminating the management agreement, we hold that Curo, as
DPW's agent, falls within the "either party" limitation in the management agreement's
language.
B. Did Curo qualify as a prevailing party?
Because Curo, as DPW's agent, qualifies as a "party" under Section 21, the next
step in our analysis is to determine whether Curo was the prevailing party. Dunes claims
Curo did not receive any judgment on the merits in its favor so it cannot qualify as a
prevailing party.
In the 1980s, our court, and later the Kansas Supreme Court, adopted the
definition of "prevailing party" from Black's Law Dictionary 1069 (5th ed. 1979) as:
"'The party to a suit who successfully prosecutes the action or successfully
defends against it, prevailing on the main issue, even though not necessarily to the extent
of his original contention. The one in whose favor the decision or verdict is rendered and
judgment entered. [Citation omitted.] The party ultimately prevailing when the matter is
finally set at rest.'
"'With respect to the specific question of attorney fees, it has been stated a
prevailing party is the person who has an affirmative judgment rendered in his favor at
the conclusion of the entire case.'" Szoboszlay v. Glessner, 233 Kan. 475, 482, 664 P.2d
1327 (1983) (quoting Schuh v. Educational Reading Services of Kansas, 6 Kan. App. 2d
100, 101, 626 P.2d 1219 [1981]).
See also Black's Law Dictionary 1298 (10th ed. 2014) (prevailing party a "party in whose
favor a judgment is rendered, regardless of the amount of damages awarded"). Dunes is
13
correct that the district court never rendered judgment in either party's favor, although
Dunes' actions resulted in a positive outcome for Curo.
However, Section 21 of the management agreement does not require a judgment in
favor of the party seeking attorney fees. The management agreement states the prevailing
party is entitled to its attorney fees, "regardless of whether such action proceeds to final
judgment." Unfortunately, we have not been presented with, nor has our research
discovered, a Kansas case in which the term "prevailing party" from a contractual
attorney fee provision has been defined in the context of a settlement. Broadly speaking,
we agree with the Utah Court of Appeals that "'when interpreting contractual "prevailing
party" language, a court should employ a flexible and reasoned approach' that allows
room for common sense to guide a court's decision." Westmont Mirador LLC v. Shurtliff,
333 P.3d 369, 373 (Utah App. 2014). This is especially true in the context of a settlement.
The 10th Circuit Court of Appeals has provided guidance in how to determine a
prevailing party in the context of a civil rights action when parties reach a settlement. In
Bell v. Board of County Comm'rs of Jefferson County, 451 F.3d 1097 (10th Cir. 2006),
Bell filed suit under 42 U.S.C. § 1983 (2006), challenging his termination of employment
by Jefferson County, Kansas. After considerable wrangling, the parties ultimately settled
the case, prompting Bell to seek attorney fees, claiming that a settlement between the
County and him meant he had been the successful party in the suit. The district court
denied Bell's motion, and Bell appealed.
On appeal, the 10th Circuit ruled the district court correctly denied Bell's motion:
"[B]ecause there was no judicial involvement in approving the settlement agreement, Bell
may not be considered a prevailing party." 451 F.3d at 1101. The Bell court cited
Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human
Services, 532 U.S. 598, 602-04, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001), which held
that "a party is a prevailing party for the purpose of awarding attorneys' fees under § 1988
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only if he has obtained a judgment on the merits, a consent decree, or some other
settlement materially altering the legal relationship of the parties." 451 F.3d at 1102. The
Bell court found:
"[I]f a court does not incorporate a private settlement into an order, does not sign or
otherwise provide written approval of the settlement's terms, and does not retain
jurisdiction to enforce performance of the obligations assumed by the settling parties, the
settlement 'does not bear any of the marks of a consent decree' and does not confer
prevailing party status on the party whose claims have been compromised. [Citations
omitted.] A fee award cannot be based on an order that 'merely recognizes the fact of the
parties' agreement and dismisses the case because there is no longer a dispute before it.'
[Citation omitted.]
....
"The parties' settlement of the claim raised on Bell's prior appeal was neither
approved by this court nor implemented in a consent decree or equivalent order. The
parties simply submitted a stipulation of dismissal ultimately prompting the clerk to
dismiss the appeal 'without judicial action.' Under Buckhannon, such a private settlement
is not cognizable in the fee analysis under § 1988 and consequently would not have
provided a valid legal ground for altering the initial fee award made by the district court."
451 F.3d at 1103-04.
While Bell provides very helpful guidance on this question of determining a
prevailing party in the context of a settlement, because we are bound by the terms of the
management agreement which allow the award of attorney fees "regardless of whether
such action proceeds to final judgment," we must reject the notion that we are foreclosed
in this instance from determining a "prevailing party" even where the parties agree to a
private settlement. See Reuille v. E.E. Brandenberger Const., Inc., 888 N.E.2d 770, 772
(Ind. 2008) (contracting parties can readily agree to fee-shifting arrangements that are
more prescriptive). In fact, common sense dictates that even a cursory review of the
"settlement" in this case reveals that Dunes' voluntary and unilateral resignation as the
property manager, on the eve of trial, appears to make Curo the prevailing party because
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Dunes' action looks more like a capitulation or confession of judgment as it gave Curo
virtually everything it was seeking in this litigation with nothing in return. Dunes' action
materially altered the legal relationship between the parties.
But setting aside the question of whether a prevailing party can be determined
when the parties only enter into a private settlement, even when we utilize the Bell factors
in determining a prevailing party, we conclude that Curo was the prevailing party
principally because we disagree with the district court's characterization of its September
26, 2013, order as a mere private settlement and dismissal. The district court's order was
more in the nature of a consent decree.
In this case, after Dunes chose to exercise its right to terminate the management
agreement, the district court issued its September 26, 2013, order, finding:
• Dunes terminated the management agreement without admitting liability or making
concessions;
• the property's mortgage holder consented to the appointment of a new property
manager;
• the parties had asked the court to issue an order to ensure an orderly transition of the
property management functions and to address the remaining issues of Curo's claim
for attorney fees; and
• the order would be circulated to interested affiliates to afford them the opportunity to
intervene in the litigation;
and ordering:
• A new property manager could enter into a management agreement and assume
property management functions;
• Dunes would immediately turn over all books, records, files, keys, contracts,
agreements, tenant records, financial data, etc, and transition all property
management duties to the new property manager by October 7, 2013;
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• the previously scheduled trial to address Curo's rights to terminate Dunes as property
manager was rendered moot by Dunes' termination of the agreement, but Curo and
Dunes reserved the right to seek attorney fees and costs if they chose to seek such
determination from the court; and
• the order was to be served on various parties within specified timeframes.
The district court's denial of Curo's request for attorney fees followed similar
reasoning as set out in Bell. In its denial, the court found its September 26, 2013, order
outlining the parties' settlement agreement did not represent a judgment or a judicial
ruling in Curo's favor. Instead, the order appeared to simply represent a judicial
recognition that the matter was resolved between the parties and the upcoming trial
setting was no longer needed. Curo argued Dunes chose to terminate the agreement
because it knew it would not prevail at trial, but the district court rejected that argument.
It found Dunes specifically terminated the agreement without admitting liability or
making concessions; therefore, the court could not speculate why Dunes chose to
terminate the agreement.
Curo claims it was the prevailing party because it obtained exactly the relief it
requested in its petition. Curo's first count asked for a declaratory judgment stating it had
the right under the management agreement to terminate the agreement on behalf of DPW.
However, the September 26, 2013, order did not give such a declaration. Curo's second
count was for specific performance, asking Dunes to resign as property manager and to
deliver all books, records, bank accounts, and access to such bank accounts to Curo. The
order did order Dunes to turn over all books, records, files, contracts, etc., to the new
property manager, but it did not specifically order Dunes to resign or step down as asset
manager. However, such an order wasn't necessary since Dunes voluntarily resigned as
the property manager and the order's directives were predicated on that fact.
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A consent decree usually means the parties' agreement is subject to the court's
jurisdiction, continuing supervision, and enforcement. See Beaver v. Kingman, 246 Kan.
145, 148, 785 P.2d 998 (1990) ("'A consent decree is essentially a settlement agreement
subject to continued judicial policing.' Williams v. Vukovich, 720 F.2d 909, 920 [6th Cir.
1983]."). The district court's September 26, 2013, order did specifically order and
authorize tasks which required it to maintain supervision of the transition between the
property management companies, all of which were predicated on Dunes' voluntary
resignation as the property manager, and it provided continuing jurisdiction over the case
despite the fact the trial date became moot. The district court's order was more than a
mere recognition of the parties' settlement and dismissal of the case. Therefore, in
accordance with Bell, we find the September 26, 2013, order was a consent decree
qualifying Curo as a prevailing party.
Reversed and remanded.
18