Preview:

No. 102,115 IN THE COURT OF APPEALS OF THE STATE OF KANSAS M WEST, INC., Appellant, v. OAK PARK MALL, L.L.C., and CINGULAR WIRELESS, L.L.C., Appellees.

SYLLABUS BY THE COURT 1. When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence.

2. The statute of frauds applies to all contracts for the assignment of an interest in property for a term of more than 1 year.

1

3. A memorandum, in order to be enforceable under the statute of frauds, may be any document or writing, formal or informal, signed by the party to be charged or by his or her lawfully authorized agent, which states with reasonable certainty (a) each party to the contract either by his or her own name, or by such a description as will serve to identify him or her, or by the name or description of his or her agent, (b) the land or other subject matter to which the contract relates, and (c) the terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made.

4. The statute of frauds requires that only the material terms of a contract are to be stated with reasonable certainty.

5. For the purpose of satisfying the statute of frauds, separate writings may be construed together in order to determine whether there is sufficient written agreement upon which to base an enforceable contract.

6. When the evidence pertaining to the existence of a contract or the content of the contract's terms is conflicting or permits more than one inference, a question of fact is presented. Nevertheless, whether undisputed facts establish the existence and terms of a contract raise a question of law for the court's determination.

7. When all terms of a contract have been agreed upon and a condition precedent to requiring performance is accepted, the condition precedent becomes part of the main contract and the agreement is consummated.

2

8. Conditions precedent to performance under an existing contract arise from the terms of a valid contract and define events that must occur before a right or obligation matures under the contract. In contrast, conditions precedent to the formation of a contract involve issues of offer and acceptance which precede and determine the formation of a contract.

9. Whether conditions are considered prerequisites to formation of a contract or prerequisites to an obligation to perform under an existing agreement is controlled by the intent of the parties.

10. When parties have considered and settled the details of a proposed agreement, a difficult question of fact is presented as to whether the parties have the understanding that neither party is to be bound until they execute a formal written document.

11. Kansas recognizes the duty of good faith and fair dealing in every contract, with the exception of employment-at-will contracts.

12. Generally, good faith and reasonableness in contract matters are factual questions. Summary judgment is appropriate on those matters, however, when the facts are uncontroverted and establish that a defined standard has been met.

3

13. When a contract contains a condition precedent to a party's performance obligation and the occurrence of the condition is within the control of that party, the party must make a good-faith effort to bring about the condition.

14. While a condition precedent must have happened before a contract can be enforced or relief sought in the way of specific performance, the party that has demanded the condition precedent cannot hinder, delay, or prevent its happening for the purpose of avoiding performance of the contract.

15. Tortious interference with a prospective business advantage or relationship seeks to protect future or potential contractual relations and is predicated on malicious conduct by a defendant.

16. The elements of tortious interference with a prospective business relationship are: (1) The existence of a business relationship or expectancy with the probability of future economic benefit to the plaintiff; (2) knowledge of the relationship or expectancy by the defendant; (3) that, except for the conduct of the defendant, plaintiff was reasonably certain to have continued the relationship or realized the expectancy; (4) intentional misconduct by defendant; and (5) damages suffered by plaintiff as a direct or proximate cause of defendant's misconduct.

17. Under the facts of this case, there existed genuine issues of material fact as to whether a binding contract was formed between the parties; whether one of the defendants exercised good faith and fair dealing in regard to the alleged contract; and 4

whether one of the defendants tortiously interfered in a prospective business advantage or relationship by engaging in intentional misconduct which was unjustified and malicious. These genuine issues of material fact preclude the entry of summary judgment against the plaintiff on its claims of breach of contract and tortious interference with a business advantage or relationship.

Appeal from Johnson District Court; JANICE D. RUSSELL and DAVID W. HAUBER, judges. Opinion filed June 18, 2010. Reversed and remanded.

Mark D. Murphy and Jeffrey M. Cook, of The Murphy Law Firm, LLC, of Overland Park, for appellant M West, Inc.

Lynn S. McCreary, of Bryan Cave LLP, of Kansas City, Missouri, and Sarah N. Swatosh, of the same firm, of St. Louis, Missouri, for appellee Cingular Wireless, L.L.C.

Kathryn G. Lee, Amber Van Hauen, and Kara S. Bemboom, of Husch Blackwell Sanders LLP, of Kansas City, Missouri, for appellee Oak Park Mall, L.L.C.

Before LEBEN, P.J., GREEN and CAPLINGER, JJ.

GREEN, J.: M West, Inc. (M West), appeals from the trial court's judgments granting summary judgment to Cingular Wireless, L.L.C. (Cingular), and to Oak Park Mall, L.L.C. (Oak Park). M West and Cingular were both tenants of Oak Park. Cingular and M West entered into a proposed assignment agreement for M West to take over Cingular's lease contingent upon Oak Park's consent of the assignment and the execution of a formal binding written assignment agreement. As required by its lease, Cingular requested Oak Park's approval of the assignment and outlined the consideration that would be paid to M West for the assignment. Despite Oak Park's indications to M West that it liked the idea of Cingular assigning its lease and that it was considering the proposed assignment agreement, Oak Park entered into negotiations with Cingular for 5

termination of its lease in exchange for a cash payment. Oak Park ultimately rejected Cingular's proposed assignment of its lease to M West and allowed Cingular to terminate its lease in exchange for a $400,000 payment.

M West sued both Cingular and Oak Park and raised breach of contract claims. In addition, M West made a claim against Oak Park for tortious interference with a prospective business advantage or relationship. In granting summary judgment to Cingular and Oak Park, the trial court determined that no binding contract existed between Cingular and M West, that the statute of frauds was not satisfied, and that the evidence failed to support M West's tortious interference claim.

We determine that the trial court erred in its decisions. First, in regard to M West's claims against Cingular, the appellate record establishes that the communications between the parties met the statute of frauds. Moreover, in looking at the record in the light most favorable to M West, we determine that there existed a genuine issue of material fact as to whether the communications between M West and Cingular evidenced the existence of a binding contract with conditions precedent to performance under the contract or only preliminary negotiations with conditions that had to be met before formation of the contract. Importantly, if a binding contract existed between Cingular and M West, Cingular could be held liable to M West if it is found that Cingular did not act in good faith with regard to the contract or hindered, delayed, or prevented the happening of the condition precedents for the purpose of avoiding performance of the contract. Because these are issues of fact, we determine that the trial court erred in granting summary judgment to Cingular.

Moreover, based upon the nature of the relationship between Cingular and M West, the viability of M West's tortious interference claim against Oak Park is dependent upon whether there is a binding contract between Cingular and M West. If it is found that a binding contract existed between Cingular and M West, then there is evidence in the 6

present appellate record to create a genuine issue of material fact as to whether Oak Park engaged in intentional misconduct which was unjustified and malicious. As a result, we determine that the trial court improperly granted summary judgment to Oak Park on M West's tortious interference claim. Accordingly, we reverse and remand for further proceedings.

Cingular was a tenant in Oak Park under a 10-year lease agreement signed in April 2004. In early 2006, with approximately 8 years remaining on its lease agreement with Oak Park, Cingular began communicating with M West regarding an assignment of its lease agreement. M West owned Charlotte & Tipit, a fine jewelry store located at Oak Park, and was looking for a larger store space.

Under Cingular's lease agreement with Oak Park, before Cingular could assign its lease to another entity, Cingular had to obtain Oak Parks' consent to the assignment agreement:

"Section 16.01. Consent Required.

"(A) Tenant shall not voluntarily, involuntarily or by operation of law assign or encumber this Lease, in whole or in part, nor sublet all or any part of the Leased Premises without the prior consent of Owner in each instance. . . . As a condition to any assignment of this Lease by Tenant which is permitted under this Lease, the assignee thereof shall be required to execute and deliver to Owner an agreement, in recordable form, whereby such assignee assumes and agrees with Owner to discharge all obligations of Tenant under this Lease. . . .

"(B) If Tenant shall request Owner's consent to any assignment of this Lease or to any subletting of all or any part of the Leased Premises, Tenant shall submit to owner with such request the name of the proposed assignee or subtenant, such information concerning its business, financial responsibility and standing as Owner may reasonably

7

require, and the consideration (and the terms and conditions thereof) to be paid for and the effective date of the proposed assignment or subletting."

M West alleged that in January 2006, David Farmer, a representative of Cingular, contacted Homiri Moshiri, the president of M West, and asked if he was still interested in the Cingular space. According to M West, Farmer and Moshiri discussed the terms of an assignment of the lease to M West, which would include a substantial payment by Cingular to M West and Cingular remaining on the lease as a guarantor. M West further alleged that Farmer told Moshiri that in the Cingular lease there was a provision that if Oak Park did not approve of a proposed assignment, then Cingular would be released from the lease. As a result, Farmer told Moshiri that there would be no problem getting Oak Park to approve of the assignment.

M West further alleged that Moshiri contacted an Oak Park representative and requested Oak Park's approval of M West's assumption of the lease. According to M West, Moshiri was assured that M West was approved to proceed and enter into such an assumption. M West asserted that the negotiations with Farmer continued by telephone through April 2006 when Farmer announced that Cingular and M West had a deal. According to M West, Moshiri then contacted Karla Rocker with Oak Park and told her about the agreement that M West and Cingular had reached. M West alleged that Rocker told Moshiri that was fine and M West could proceed with the agreement with Cingular.

On April 5, 2006, Moshiri emailed Jody House, an Oak Park representative, that M West and Cingular had reached a meeting of the minds, subject to Cingular's real estate department's approval, to assign Cingular's lease to M. West. Moshiri stated that he needed to know whether Oak Park's real estate department liked "this idea or not." Houser responded, "I like the idea."

8

Communications Between Cingular and M West in April and May 2006

On April 7, 2006, Farmer, on behalf of Cingular, sent M West a proposed assignment of Cingular's lease at Oak Park. The document read as follows:

"I have been authorized to offer you an assignment of the above referenced property, in exchange for consideration in the amount of $330,000.00 effective June 30, 2006, whose lease has approximately 89 months remaining on the lease. This represents an assignment fee of $180,000.00 plus $150,000.00 (approximately 14 month's rent and charges).

"This is not a binding proposal and is contingent upon Cingular's Real Estate Committee's final approval, consent of the Landlord's mortgagee, if required, and the full execution of a formal binding written assignment agreement mutually acceptable to the parties. However, if this proposal meets with your satisfaction, please sign below and fax it back to me at 831.464.3961 so that I may get final approval from Cingular. Upon approval I will notify you immediately so we may commence producing the necessary documentation.

"I look forward to your fast and favorable reply, since time is of the essence. This proposal shall expire at the close of business on April 14, 2006. Cingular asks that you please respond in writing."

Moshiri "AGREED TO AND ACCEPTED" the proposed assignment by placing his electronic signature on the signature line below those words at the bottom of the document. Thereafter, Moshiri began lining up contractors, cabinet makers, and sign makers that would be ready to remodel Cingular's store space once the proposed assignment was accepted by Oak Park. On May 2, 2006, Moshiri sent an email to Cingular stating that his plan was to have the space remodeled and open by August 1, 2006. Otherwise, because Moshiri would be out of the country during August and

9

September, he stated that the opening of the new store would "end up in October" which "cuts it close" to the holiday shopping season and the store's fall jewelry events.

In an email dated May 8, 2006, Moshiri expressed frustration at Cingular's delay in preparing the proper documents for Oak Park. Moshiri stated: "If this takes much longer, I will have to move on." Cingular responded on May 10, 2006, by attaching a letter that it intended to forward to Oak Park. That same day, a series of emails was sent between Moshiri and Cingular about the terms of the assignment to be included in the letter to Oak Park. The parties' emails reference the payment of $180,000 by Cingular to M West for assignment of the lease and also a $150,000 payment by Cingular to Oak Park to be credited towards M West's rent and other charges in Cingular's store space.

By letter dated May 11, 2006, Cingular requested Oak Park's consent to the assignment of its lease to M West. Cingular's letter outlined the consideration for the proposed assignment as follows:

"[T]he proposed consideration for the assignment is $150,000.00, which (i) shall be paid directly from Tenant to Owner, for the benefit of Assignee, and (ii) is to be held by Owner in a segregated interest-bearing account for the benefit of Assignee, and from which all future rent and other charges owed by Assignee shall be paid until such amounts are exhausted in full. Tenant shall also make a payment directly to Assignee in the amount of $180,000.00 in connection with this matter."

On May 12, 2006, a Cingular representative sent an email to Moshiri telling him that "[t]he single greatest thing for you in this deal is that Cingular Wireless is the tenant under the lease and will remain primary (financially) under the lease as a de facto guarantor."

On May 17, 2006, Oak Park offered to terminate Cingular's lease in exchange for a $465,000 payment. That same day, Moshiri emailed Oak Park and asked how long it 10

would take to get approval for the proposed assignment of Cingular's lease. Karla Rocker, with Oak Park, responded: "I should have more information for you by the end of the week. We are in the middle of our discussion." On May 23, 2006, Rocker sent a letter to Cingular stating that Oak Park would not consent to the proposed lease assignment.

On June 2, 2006, Cingular sent a letter to Rocker confirming an agreement between Oak Park and Cingular for Oak Park to terminate Cingular's lease on June 15, 2006, in exchange for a $400,000 payment.

In November 2006, M West sued Oak Park and Cingular. M West claimed that Cingular breached its assignment agreement with M West. In addition, M West made claims of breach of contract and tortious interference with a prospective business advantage or relationship against Oak Park.

In December 2007, Cingular moved for summary judgment against M West. Cingular argued that M West could not satisfy the statute of frauds for its breach of contract claim. The trial court determined that the communications between Cingular and M West showed only continuing negotiations and that a meeting of the minds as to the terms of a mutually acceptable lease assignment between Cingular and M West could not be established. The trial court found that because the writings between the parties did not evidence an existing and binding contract, the statute of frauds had not been satisfied. Accordingly, the trial court granted summary judgment to Cingular on M West's breach of contract claim.

In July 2008, Oak Park moved for summary judgment against M West. Oak Park argued that there existed no genuine issues of material fact as to whether an enforceable contract existed between the parties, thereby precluding M West's breach of contract and tortious interference claims against it. On M West's breach of contract claim, the trial court determined that the undisputed facts did not support an inference that Oak Park and 11

M West had entered into an agreement. On M West's tortious interference claim, the trial court determined that Oak Park "had a contractual right to engage in the conduct complained of, and the available evidence, even when resolved in favor of the nonmoving party, is not strong enough to raise a non-speculative inference" that Oak Park "was not justified in acting to terminate its lease for consideration that Cingular agreed to pay." Accordingly, the trial court granted summary judgment to Oak Park on M West's breach of contract and tortious interference claims.

SUMMARY JUDGMENT Standard of Review When the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law, summary judgment is appropriate. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, the same rules apply; summary judgment must be denied if reasonable minds could differ as to the conclusions drawn from the evidence. Miller v. Westport Ins. Corp., 288 Kan. 27, 32, 200 P.3d 419 (2009).

M WEST'S BREACH OF CONTRACT CLAIM AGAINST CINGULAR Statute of Frauds The trial court's primary basis for granting summary judgment to Cingular was that the statute of frauds had not been satisfied in this case. M West argues, however, that

12

the emails and letter exchanged by M West and Cingular constitute memoranda of an agreement that satisfy the statute of frauds.

Neither party disputes that the agreement between Cingular and M West must satisfy the statute of frauds in order to be a valid contract. Indeed, the statute of frauds applies to all contracts for the assignment of an interest in property for a term of more than 1 year. See K.S.A. 33-105 (providing that "[n]o leases, estates or interests of, in or out of lands, exceeding one year in duration, shall at any time hereafter be assigned or granted, unless it be by deed or note, in writing, signed by the party so assigning or granting the same").

Quoting Walton v. Piqua State Bank, 204 Kan. 741, 747, 466 P.2d 316 (1970), this court in Kenby Oil Co. v. Lange, 30 Kan. App. 2d 439, 442, 42 P.3d 201 (2002), outlined the requirements to satisfy the statute of frauds as follows:

"'"A Memorandum, in order to be enforceable under the statute of frauds, may be any document or writing, formal or informal, signed by the party to be charged or by his lawfully authorized agent, which states with reasonable certainty (a) each party to the contract either by his own name, or by such a description as will serve to identify him, or by the name or description of his agent, (b) the land or other subject matter to which the contract relates, and (c) the terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made."' [Citation omitted.]"

See Restatement (Second) of Contracts

Download M West v. Oak Park Mall.pdf

Kansas Law