GARY HARDY DODGE, INC., ) Plaintiff, ) ) vs. ) Case No. 00C 902 ) WESLEY J. HOLTHOUS, ) Defendant. ) _________________________)
Defendant/counterclaimant Holthous filed a Motion to Dismiss plaintiff's claim under 60-212 (b)(6). Plaintiff Gary Hardy Dodge, Inc. filed its response on January 12, 2001.
The court, after carefully considering the file and the briefs submitted by both counsel, denies the motion to dismiss for the reasons set out below.
On or about the 27th day of April, 2000, the plaintiff and the defendant entered into a contract for the plaintiff to sell a 1998 Dodge Dakota pickup truck to the defendant for the sum of $22,094.01 including sales tax. As part of the agreement defendant traded in a 1995 Honda Civic and the parties agreed that the value of the Honda Civic for trade-in purposes was $6,000.00. Plaintiff and defendants at this point have a different spin on what transpired and why. However, the important fact which does not appear to be controverted by either party is that the title to the vehicle was not delivered by the seller plaintiff to the buyer defendant within 30 days as required by K.S.A. 8-135 (c)(7) nor was the sale reaffirmed in writing by the buyer pursuant to K.S.A. 8-135(c)(11). However, the Dodge truck remained in the possession of the defendant (during which time some damage was incurred) until the court ordered its return on September 6, 2000 (order filed on November 13, 2000).
The standard for granting a motion to dismiss for failure to state a claim is clear in Kansas. A district court may dismiss a petition "under K.S.A. 60-212(b)(6) for failure to state a claim when it appears 'beyond doubt' petitioner can prove no set of facts which would entitle him to relief." Shepherd v. Davies, 14 Kan. App. 2d 333, 335, 789 P.2d 1190 (1990). When a motion to dismiss for failure to state a claim raises an issue regarding the legal suitability of that claim, the issue has to be decided from the well plead facts of plaintiff's petition. Grindsted Products Inc., v. Kansas Corporation Commission, 262 Kan. 294, 937 P.2d 1 (1997). "Dismissal is justified only when the allegations of the petition clearly demonstrate plaintiff does not have a claim." Id. "In considering a motion to dismiss for failure of the petition to state a claim for relief, a court must accept the plaintiff's description of that which occurred along with any inference reasonably to be drawn therefrom. However, this does not mean the court is required to accept conclusory allegations on the legal effects of events the plaintiff has set out if the allegations do not reasonably follow from the description itself." Knight v. Neodesha Police Dept., 5 Kan. App. 2d 472, Syl. ¶3, 620 P.2d 837 (1980). "Disputed issues of fact cannot be resolved or determined on a motion to dismiss for failure to state a claim upon which relief can be granted. The question for determination is whether in the light most favorable to the plaintiff, and with every doubt resolved in plaintiff's favor, the petition states any valid claim for relief." Knight at Syl. ¶2.
Plaintiff in its First Amended Petition prays for return of the 1998 Dodge Dakota pickup truck (which this court granted in an Order for Immediate Possession filed November 13, 2000); for reimbursement for the reasonable use of the vehicle; for determination of the fair market value of defendant's trade-in vehicle; for a rescission of the contract between plaintiff and defendant; and for such other relief the court might deem just and equitable.
Plaintiff argues three common law theories upon which it is relying for judgment in its claims. The plaintiff argues conversion, rescission of the contract, and an implied contract of bailment. While each of these theories are not set out as separate counts in the petition, the court will address each cause of action separately.
Plaintiff alleges in its petition that defendant's actions constitute conversion. Under Kansas law, "conversion" is established by showing unauthorized assumption or exercise of the right of ownership over personal property belonging to another. Farrell v. General Motors Corp., 249 Kan. 231, 245, 815 P.2d 538 (1991). Use of property belonging to another is the "exercise of right of ownership." In re Independent Services Organizations Antitrust Litigation. 964 F. Supp. 1469, on reconsideration in part 964 F. Supp. 1479, reconsideration denied 1997 WL 450028, appeal denied CSU Holdings, Inc. v. Xerox Corp., 129 F. 3rd 132, reconsideration denied 989 F. Supp 1131, modified on reconsideration 989 F. Supp. 1131. If possession of property is lawful at the outset, conversion can only occur when the possessor refuses owners demand for return of property. In re Independent Services Organizations Antitrust Litigation at 1476.
Plaintiff alleges that the defendant's failure to return the truck after plaintiff demanded its return constitutes conversion. The court, under the standards on a Motion to Dismiss, must accept the plaintiff's description of what occurred along with any inferences to be drawn therefrom. Here, this court finds that plaintiff has alleged facts that state a claim upon which relief could be granted.
Plaintiff also prays in its First Amended Petition for a rescission of the contract between the parties.
The Kansas Court of Appeals in Perry vs. Goff Motors, Inc., 12 Kan. App. 2d 139, 736 P.2d 949 (1987), held that "[t]he seller of an automobile must deliver the certificate of title to the purchaser either at the time of the sale, or, if the parties so agree, at a time within thirty days after the sale. If the seller fails to so deliver the title, the sale is fraudulent and void." Perry at Syl. ¶ 1, 139.
Perry furthermore held that "'(r)escission is an equitable remedy designed to afford relief from a contract entered into through mistake, fraud or duress' (citations omitted). The sale of an automobile in violation of K.S.A. 1986 Supp. 8-135 (c)(7) gives rise to an action to set aside or rescind the sale (citation omitted)." Perry at 144.
Defendant argues that plaintiff cannot come to court to seek recovery of its own violation of K.S.A. 8-135 (c)(7). While it is true that in Perry v. Goff Motors, the plaintiff buyer, Mr. Perry sought rescission of the contract due to Goff Motors' failure to comply with K.S.A. 8-135 (c)(7), this court does not find that the cases cited by defendant support defendant's contention that a plaintiff seller who does not comply with K.S.A. 8-135 (c)(7) is barred from bringing an action for rescission of the contract when allegedly the defendant buyer both refused to reaffirm the sale and to return the vehicle.
Plaintiff in its petition merely wants the sale rescinded and to be returned to its status quo ante which is exactly what the Kansas Court of Appeals in Perry instructed in its remand to the district court. "...remanded with instructions to grant judgment in plaintiff's favor on their rescission action and to determine the amount of damages necessary to restore each party to the status quo." Perry at 146. Although the plaintiff in Perry was the buyer, the Appellate Court clearly instructed the trial court to restore both the buyer and the seller to the status quo. This court in the present case finds that plaintiff has alleged facts that state a claim upon which relief could be granted.
Many of defendant's arguments in his Motion to Dismiss would seem to be more applicable if plaintiff was trying to enforce the contract. While enforcement of the contract may have been plaintiff's prefiling position, neither the original petition nor the First Amended Petition include a request for enforcement of the contract. Therefore, defendant's argument that plaintiff cannot recover on a legal theory which requires it to prove its own failure to comply with the civil or criminal law is inapplicable to the present case. While it is clear that the plaintiff Gary Hardy Dodge, Inc. could not sue on a contract that is in violation of the law (Melton v. Prickett, 203 Kan. 501, 510, 456 P.2d 34 (1969)), it is not prohibited from establishing a claim in some other manner. "Where the complaining party can establish his claim without relying on the illegal transaction, it is the general holding of courts that he can recover; but if it requires the aid of the illegal contract or transaction, he cannot. (citations omitted)." Melton at 511.
Finally, as to the damages to the truck while in the defendant's possession, the plaintiff argues that there was an implied bailment contract between the plaintiff and the defendant.
A "bailment" in its ordinary legal signification, imports the delivery of personal property by one person to another in trust for a specific purpose, with a contract, express or implied, that the trust shall be faithfully executed, and the property returned or duly accounted for when the special purpose is accomplished, or kept until the bailor reclaims it.
M. Bruenger & Co., Inc. v. Dodge City Truck Stop, Inc., 234 Kan. 682, 685, 675 P.2d 864 (1984).
Although the petition does not allege any express or implied contract of bailment between plaintiff and defendant, the question for the court is whether in the light most favorable to the plaintiff, and with every doubt resolved in plaintiff's favor, the petition states any valid claim for relief.
This court finds based on the conclusions of law set forth above that the defendant's Motion to Dismiss under K.S.A. 60-212 (b)(6) should be denied. The above is the order of the court and no further journal entry is required.
IT IS SO ORDERED.
Dated this day of March, 2001.
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Nancy Parrish
Judge, Third Judicial District
Division Fourteen
I hereby certify that a copy of the above and foregoing MEMORANDUM DECISION AND ORDER was mailed this day of March , 2001, to the following:
James S. Willard
3301 SW Van Buren
Topeka, Kansas 66611
Robert E. Hiatt
3601 SW 29th Street, Suite 217
Topeka, Kansas 66614
___________________
Norma J. Dunnaway
Administrative Assistant