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No. 103,205 IN THE COURT OF APPEALS OF THE STATE OF KANSAS NEWCASTLE HOMES, LLC, Appellant, v. DENNIS F. THYE and DIANNA L. THYE, Appellees, and THOMAS J. DRESSLER and ALPHA HOMES, LLC, Defendants.

SYLLABUS BY THE COURT 1. An appellate court's review of a trial court's decision on a motion for summary judgment is well established. 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.

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2. An appellant has the burden to designate a record sufficient to establish the claimed error. In the absence of such a record, the claim of error fails.

3. An agreement of rescission is an agreement where each party agrees to discharge all of the other party's remaining duties of performance under an existing contract. Such an agreement discharges all remaining duties of performance of both parties.

4. A contract may be discharged at any time before performance is due by a new agreement which has the effect of altering the terms of the original agreement or rescinding it altogether. The promise of one party to forego any rights under a contract is sufficient consideration for the promise of the other party to forego any contract rights.

5. Notwithstanding the general liberality of notice pleading, a plaintiff alleging fraud as a cause of action must state the circumstances constituting fraud with particularity under K.S.A. 60-209(b).

6. The power of a party to avoid a contract for misrepresentation or mistake is lost if after the party knows of a fraudulent misrepresentation or knows or has reason to know of a nonfraudulent misrepresentation or mistake the party does not within a reasonable time manifest to the other party the intention to avoid it.

7. Based on the circumstances present in this case, the trial court properly granted summary judgment to the defendants where (1) the plaintiff failed to provide the 2

contracts on which its claims centered; (2) the plaintiff and defendants entered into cancellation and mutual release agreements that rescinded the contract on which its causes of action were based and released the parties from any liability and claim for damages arising from the contract; (3) the plaintiff did not properly plead its fraudulent inducement claim with particularity, as required by K.S.A. 60-209(b); (4) the plaintiff's evidence did not establish a genuine issue of material fact as to the elements of fraud; and (5) the plaintiff did not manifest its intention to avoid the cancellation and mutual release agreements to the defendants within a reasonable time.

8. The right to appeal is purely statutory, and if the record shows that the appellate court does not have jurisdiction, the appeal must be dismissed. Whether jurisdiction exists is a question of law over which an appellate court's scope of review is unlimited.

9. An appellate court has a duty to question jurisdiction on its own initiative. When the record discloses a lack of jurisdiction, it is the duty of the appellate court to dismiss the appeal.

10. K.S.A. 2009 Supp. 60-2102(a)(4) gives this court jurisdiction to review a final decision in any action, except in an action where a direct appeal to our Supreme Court is required by law. A final decision generally disposes of the entire merits of the case and leaves no further questions or the possibility of future directions or actions by the court.

11. Under the facts of this case, this court has jurisdiction to decide the present appeal where a notice of appeal was filed within 30 days of the final decision in the case.

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Appeal from Leavenworth District Court; DAVID J. KING, judge. Opinion filed October 15, 2010. Affirmed.

Jeffrey A. Sutton, of Gibbon, Sutton & Sonntag, L.L.C., of Basehor, for appellant.

Michael Crow, of Crow & Associates, of Leavenworth, for appellees.

Before HILL, P.J., GREEN and BUSER, JJ.

GREEN, J.: Newcastle Homes, LLC (Newcastle), appeals from the trial court's decision granting summary judgment to Dennis Thye and Dianna Thye on Newcastle's breach of contract, fraud, and tortious interference claims. For the following reasons, we affirm the trial court's grant of summary judgment to the Thyes: (1) Newcastle failed to provide the May 2005 sales contract and the May 2005 builders contract on which Newcastle's claims centered; (2) Newcastle and the Thyes entered into cancellation and mutual release agreements that rescinded the May 2005 sales contract on which Newcastle's causes of action were based and released the parties from any liability and claims for damages arising from the contract; (3) Newcastle did not properly plead its fraudulent inducement claim with particularity, as required by K.S.A. 60-209(b); (4) Newcastle's evidence did not establish a genuine issue of material fact as to the elements of fraud; and (5) Newcastle did not manifest its intention to avoid the cancellation and mutual release agreements to the Thyes within a reasonable time. Accordingly, we affirm.

On May 17, 2005, the Thyes entered into a residential new construction sale contract with Newcastle for the purchase of land and the construction of a house at 2250 Valley View Drive in Tonganoxie, Kansas, for the price of $215,900. The Thyes put down $5,000 as earnest money towards the purchase price of the home. The initial closing date for the contract was set for September 30, 2005.

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John W. Barnes, Sr., was the principal and owner of Newcastle. Barnes started Newcastle to function as a general contractor for the sales and construction of custombuilt homes. In May 2005, Newcastle entered into a contract with Alpha Homes, LLC (Alpha Homes), to provide and oversee the personnel and manpower necessary to construct custom-built homes, including the construction of the house at 2250 Valley View Drive.

Thomas Dressler was the managing partner and authorized agent of Alpha Homes at all times relevant to the contract with Newcastle. According to Barnes, Dressler drew the construction plans and front elevation drawings for the home at 2250 Valley View Drive. Moreover, Dressler compiled a handwritten materials list and identified and provided quotes for costs and allowances to be included in the agreement for the house at 2250 Valley View Drive. Barnes stated in his affidavit that in Newcastle's contract with Alpha Homes, Alpha Homes reserved for itself the exclusive authority to direct, control, and supervise the working assignments for personnel necessary for construction purposes. In addition, Barnes stated that Dressler made all of the decisions concerning the assignment of the workers for the construction of the house at 2250 Valley View Drive.

According to Barnes, as construction began on the house at 2250 Valley View Drive, questions immediately arose concerning the adequacy of the lot. After testing was done on the property, it was determined that the property was unstable and unsuitable for construction purposes in its present condition. According to Barnes, because a contractor was called in to compact the subsoil to achieve the appropriate structural integrity necessary to support the foundation for the house, the extension of the original closing date became necessary.

According to Barnes, during the second and third week of December 2005, he began noticing that individual and overall phases of construction for the house at 2250 Valley View Drive were taking longer than anticipated and many of them were not being 5

completed. Barnes stated that he discussed this issue repeatedly with Dressler, but that Dressler always made excuses. According to Barnes, he believed that the Thyes had apparently struck an agreement with Dressler for changes in the design and additions to the house. Barnes asserted that there were material changes made, without his knowledge or consent, during the construction period for the house, which required a substantial amount of time and included a new backyard fence, a deck roof, sheet rock and insulation installation in the basement, stereo wiring throughout the house, alteration of the deck design, additional windows installed, and additional bricking of the front elevation of the house.

According to Dressler's affidavit, however, during the construction of the house, Newcastle constantly shifted Alpha Homes' employees from house to house, which led to delayed completion dates for the house at 2250 Valley View Drive. Dressler further stated that Barnes would initiate discussions with him about increasing costs on the property and attempted on several occasions to unnecessarily increase labor costs.

On August 29, 2005, the Thyes and Newcastle agreed to extend the closing date to December 30, 2005. In December 2005, Newcastle requested and obtained an agreement by the Thyes to extend the closing date to January 23, 2006.

According to the Thyes, in November 2005, they started D & D Homes, LLC (D & D Homes), for the purpose of paying for the expenses of construction and improvements on the property at 2250 Valley View Drive. The Thyes paid approximately $21,000 in expenses and improvements on the property out of D & D Homes' checking account and their own personal accounts. The Thyes stated that they painted the inside of the property at 2250 Valley View Drive in order to speed up the completion date. According to Dressler, the Thyes were greatly involved in attempting to complete the property by the closing dates. Dressler stated that the Thyes did not attempt to delay or influence the delays in the completion of the property. 6

According to affidavits filed by the Thyes, in January 2006 they formed the opinion that the property would not be completed by January 23, 2006. The Thyes asserted that Barnes came to the property in January 2006 while they were painting and loudly complained that the property would not be completed by the January 23, 2006, closing date. The Thyes then decided that if the property was not completed by January 23, 2006, they would cancel the contract and find another property.

According to Barnes' affidavit, Dressler approached Barnes around January 17, 2006, and demanded his scheduled payment under his contract with Newcastle, even though the required work had not been completed. Barnes stated that Dressler told him that Alpha Homes did not have the money to pay its employees and that if Barnes did not make the scheduled payment, he would pull all of his employees off the project. According to Barnes, he paid Alpha Homes the requested payment, but Dressler still pulled all of his employees from the construction project on January 18, 2006.

On January 21, 2006, Newcastle requested a third extension of the closing date to February 8, 2006, but the Thyes would not agree to the extension. On January 23, 2006, the property was not completed, and closing did not occur. According to Dianna, Newcastle began to show the property to other buyers in January 2006. Nevertheless, Barnes stated in his affidavit that the realtors, on their own initiative, showed the property and that they had never contacted him or requested permission to show the property. On January 24, 2006, the Thyes entered into a real estate contract with Donal Dominick for the purchase of an unimproved lot in Jarbalo Estates in Tonganoxie.

According to Barnes, around January 19, 2006, the Thyes' realtor contacted him and said that if Newcastle did not let the Thyes out of their contract because of Newcastle's unwillingness or inability to complete the construction of the home, then they would place a lien on the property for the expenses that they had incurred in relation to the construction of the home. Barnes stated that he met with Dennis Thye and the 7

Thyes' realtor around January 20, 2006, and declined to rescind the contract. Instead, Barnes offered the Thyes a $3,000 reduction in the contract price for the house.

On February 13, 2006, Newcastle, Barnes, and the Thyes signed two cancellation and release agreements that cancelled and rescinded the rights, duties, and obligations under the Residential New Construction Contract. Specifically, Newcastle, Barnes, and the Thyes agreed that the contract for the sale and purchase of the property at 2250 Valley View in Tonganoxie, Kansas, "is canceled and the parties release all of their rights and interest in the Contract." The other agreement stated that the Thyes had paid others besides the seller to make upgrades, additions, and improvements to the home that the seller had built at 2250 Valley View Drive in an amount the Thyes claimed to be $21,916.84, including $5,000 in earnest money that was paid when the Residential New Construction Contract was signed.

One of the cancellation and release agreements contained the following provisions relating to the rescission of the Residential New Construction Contract and the payment of $20,000 to the Thyes:

"1. The Residential New Construction Contract and any additions, addendums and extensions thereto are hereby cancelled and rescinded. "2. Each party hereby releases the other from any liability, claim for damages and damages, that they now have or may in the future have against any party to this Agreement arising out of the Residential New Construction Contract dated May 17, 2005, and any additions, addendums or extensions thereto and for any items the Buyers added to said house. .... "4. The Seller will pay to the Buyers the sum of $18,000 $20,000.00 [amended/initialed by parties] upon execution of this Agreement by all parties. All upgrades, additions and other improvements to the home located at 2250 Valley View Drive, Tonganoxie, Leavenworth County, Kansas 66086, shall remain with the real property and become the

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property of the Seller. This includes the wooden fence that fences a portion of the yard at 2250 Valley View Drive, Tonganoxie, Leavenworth County, Kansas 66086."

On February 13, 2006, Newcastle presented a $20,000 check to the Thyes as payment in full for the Thyes' interest in the property.

The construction of the home at 2250 Valley View Drive was completed in March 2006 by C.J. McDaniel. According to Barnes, he did not take any steps to secure the property at 2250 Valley View Drive to the exclusion of Dressler until March 3, 2006, after receiving a letter from an attorney on behalf of Alpha Homes making certain demands against Newcastle. Barnes stated that by the terms of the subcontractor's agreement with Dressler, the agreement did not terminate until completion of the construction by Alpha Homes, a condition that never occurred. Thus, according to Barnes, Alpha Homes never severed its contractual ties with Newcastle because it never completed its obligations under the subcontractor's agreement.

According to Barnes, the Thyes never completed the painting at the house, and the painting that they did complete on the interior of the house was of such a shoddy condition that the entire interior of the house had to be professionally repainted. Newcastle sold the home on March 16, 2006, for $229,950. Barnes alleged that as a result of rescinding the contract, he sustained damages in excess of $63,300 that were used "to pay for the extras that had been improperly included in the construction of the Newcastle home and to pay contractors to come in and finish the work that Alpha [H]omes and/or Thomas Dressler failed to complete."

According to the Thyes, Dressler came to them in February 2006 and stated that he was no longer under contract with Newcastle and that he had been locked out of the property. Dianna stated in her affidavit that Dressler requested that he be allowed to construct another house for them personally. According to both the Thyes and Dressler, 9

although they had many conversations before being released from their contract with Newcastle, they never discussed the construction of a separate house aside from the property at 2250 Valley View Drive.

According to Dominick, however, he had a conversation on January 14, 2006, with Dennis about purchasing the lot in Jarbalo Estates. Dominick stated in his affidavit he told Dennis that in order to purchase the lot, the Thyes needed to be prepared to close on the lot within 30 days from when they entered into a contract. Dominick further stated that Dennis assured him that they would be able to close on the lot within 30 days, that they already had a builder, whom Dennis identified as Dressler, that they had contracted with Dressler to build the house, and that they needed only to contact their mortgage company to finalize the paperwork.

According to affidavits filed by the Thyes, in February 2006, after being released from their contract with Newcastle, they entered into an oral contract with Dressler for the construction of a new house on the lot purchased in Jarbalo Estates. The Thyes closed on the property in Jarbalo Estates on March 3, 2006. Dressler began construction on the house in Jarbalo Estates in March 2006, and the Thyes moved into the house in October 2006.

In June 2007, Newcastle sued the Thyes, Dressler, and Alpha Homes. In an amended petition, Newcastle asserted claims of breach of contract, fraud, tortious interference with a contract, and tortious interference with expected business relations against the Thyes. In addition, Newcastle asserted claims of breach of contract, fraud, tortious interference with a contract, breach of fiduciary duty, and violation of the Kansas Consumer Protection Act against Dressler and Alpha Homes. Although Newcastle moved to file an amended complaint in November 2008, the trial court never granted Newcastle's motion. The Thyes filed an answer to Newcastle's petition and asserted counterclaims of breach of contract and negligent misrepresentation against Newcastle. 10

In October 2008, the Thyes moved for summary judgment on all of Newcastle's claims. The Thyes asserted the following arguments as to why Newcastle had not established a genuine issue of material fact on the claims against them: (1) Newcastle had cancelled the May 2005 contract with the Thyes and released the Thyes from all liability stemming from the contract; (2) Newcastle suffered no damages as a result of the alleged breach of contract by the Thyes and in fact sold the property for $14,050 more than was due under the contract; (3) Newcastle failed to plead its fraud claim with particularity; (4) Newcastle could not prove its fraud claim because the Thyes never made a false representation of material fact or attempted to induce Newcastle to rely upon any of their statements; and (5) the Thyes did not tortiously interfere with any existing or future contracts of Newcastle.

In responding to the Thyes' motion for summary judgment, Newcastle did not respond specifically to each of the Thyes' 43 contentions of uncontroverted facts. Instead, the Newcastle made its own statements of fact, some of which were additional statements of fact and some of which allegedly controverted various paragraphs of the Thyes' uncontroverted facts. Newcastle argued that it had created genuine issues of material fact as to all of its claims against the Thyes.

At the hearing on the Thyes' motion for summary judgment, the trial court inquired and the parties agreed that Newcastle's claims centered on whether there were tortious acts committed by the Thyes, Dressler, and Alpha Homes that caused a breach of the May 2005 contract. The trial court discussed in detail the facts set forth by the Thyes and Newcastle and set forth which facts were uncontroverted and which facts were immaterial. The trial court ultimately determined that there was no evidence to support tortious conduct by the Thyes in their relationship with Newcastle or with Dressler and Alpha Homes and that the parties had settled their issues concerning the breach of contract by the February 2006 cancellation and mutual release agreement. As a result, the trial court granted summary judgment to the Thyes on all of Newcastle's claims against 11

them. In addition, the trial court granted summary judgment to Newcastle on all of the Thyes' counterclaims.

A.

Standard of Review

On appeal, Newcastle argues that the trial court erroneously granted summary judgment to the Thyes. This court's review of a trial court's decision on a motion for summary judgment is well established. 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).

B.

No Contract in the Record

When determining that the Thyes were entitled to summary judgment in this case, the trial court went into a detailed analysis of the facts and circumstances set forth by the parties and determined which facts were uncontroverted and which facts were immaterial. In arguing that the trial court erroneously granted summary judgment to the Thyes, Newcastle similarly goes through the particular facts and circumstances and argues that it has brought forth direct and circumstantial evidence to demonstrate genuine issues of material fact to support its claims against the Thyes. 12

Nevertheless, a review of the appellate record reveals that one of the main problems in this case is that Newcastle has not provided the actual May 2005 contract between it and the Thyes. The contract was not attached to Newcastle's petition, and Newcastle has not quoted any language from the May 2005 contract in its petition. As a result, this court is unaware of the actual provisions of the May 2005 contract.

Newcastle's claims against the Thyes were all based upon the Thyes' alleged breach of the May 2005 contract. For example, Newcastle's attorney conceded at the summary judgment hearing that Newcastle's claims centered on whether there were tortious acts committed by the Thyes, Dressler, and Alpha Homes that caused a breach of the May 2005 contract. Newcastle's attorney agreed that its allegations were that there were delays in completing the construction of the house that prevented the closing on the contract closing date and that the Thyes, Dressler, and Alpha Homes had engaged in a deliberate course of action to delay the completion of the home so that the Thyes could escape from their obligation under the May 2005 contract. Newcastle further agreed that it was alleging that the Thyes had made changes to the construction plans, which caused the delays in constructing the house and a breach of the contract.

In order to determine whether there was a genuine issue of material fact established on any of Newcastle's claims centering on the breach of the May 2005 contract, this court would need to see the actual contract and determine whether a breach did occur under the terms of the contract. Without a contract, it is unknown whether the Thyes were authorized to make changes to the construction plans under the contract or whether they were responsible for certain aspects of the construction and additions to the house. Moreover, it is unknown whether, under the May 2005 contract, the Thyes had an absolute right to obtain rescission of the contract under certain circumstances, such as when the builder failed to meet the second extension of the contract deadline. In short, without the May 2005 contract, it would be sheer speculation to determine that the Thyes'

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actions were not authorized under the contract and that a breach of the May 2005 contract had occurred.

Further, in order to evaluate whether there was a genuine issue of material fact established as to Newcastle's claims against the Thyes of tortious interference with a contract and tortious interference with a business relationship, this court would need to evaluate the May 2005 contract that existed between Newcastle and Alpha Homes. Based on the pleadings and the evidence produced at the summary judgment stage, Dressler's and Alpha Homes' business relationship with Newcastle stemmed from Newcastle's May 2005 contract with Alpha Homes to construct custom built homes, including the house at 2250 Valley View Drive. Without being able to construe the terms of that May 2005 contract, this court is unable to determine whether the Thyes' alleged actions in requesting additions to the construction plans constituted tortious interference with the contract or with Alpha Homes' and Dressler's business relationship with Newcastle.

As an appellant, Newcastle had the burden to designate a record sufficient to establish the claimed errors. In the absence of such a record, the claims of error fail. See Kelly v. VinZant, 287 Kan. 509, 526, 197 P.3d 803 (2008). Here, where Newcastle's claims against the Thyes were based on a breach of the May 2005 sales contract and the May 2005 construction contract between Alpha Homes and Newcastle, the failure of Newcastle to provide those May 2005 contracts at the summary judgment stage was fatal to its claims. Without the May 2005 sales contract between the Thyes and Newcastle and the May 2005 construction contract between Alpha Homes and Newcastle, Newcastle has failed to establish a genuine issue of material fact that there was a breach of the May 2005 sales contract or that the Thyes had tortiously interfered with the May 2005 construction contract or Dressler's and Alpha Homes' business relationship with Newcastle.

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C.

Rescission Agreements

In addition, the undisputed facts in this case establish that Newcastle and the Thyes executed two cancellation and release agreements that cancelled and rescinded the May 2005 contract and any additions, addendums, and extensions. Moreover, under the cancellation and release agreements, the Thyes and Newcastle agreed to release each other from any liability or claims for damages arising out of the May 2005 contract and any additions, addendums, or extensions to that contract.

By rescinding the May 2005 contract and any additions, addendums, and extensions, the Thyes and Newcastle agreed to discharge each other's duties under the contract. An agreement of rescission is an agreement where "each party agrees to discharge all of the other party's remaining duties of performance under an existing contract." Restatement (Second) of Contracts

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