BSCR Firm News/Blogs Feed Sep 2021 00:00:00 -0800firmwise Kansas Issues Updated Executive Order Prohibiting Foreclosures and Evictions Mar 2020Kansas Law Blog<p>As we <a href=";anc=369&amp;format=xmldetail&amp;stylesheet=FirmNewsItems_blog&amp;p=5258">previously reported</a>, last week, Kansas Governor Laura Kelly issued Executive Order 20-06 prohibiting evictions, foreclosures and any related judicial proceedings in the State of Kansas through May 1, 2020. Now, Governor Kelly has issued <a href="">Executive Order 20-10,</a> which amends and supersedes the previous order and provides additional clarification on certain points.</p> <p>First, the new order expressly states that pending foreclosures and evictions are not prohibited by the order. This was implicit in the first order but is now clearly stated.</p> <p>Second, the new order restricts the foreclosure moratorium to financial institutions foreclosing on single-family residences, where the default is caused by financial hardship relating to the COVID-19 pandemic. So, if the default under the terms of the mortgage occurred before March, 2020, a financial institution likely still may proceed with foreclosure. The new order does, however, purport to place a new pleading burden on foreclosing entities, during the effective period, to establish that the default was not caused by the COVID-19 pandemic.</p> <p>The new order clarifies that the eviction moratorium applies to any landlord, whether it is an individual, entity, financial institution, nursing or long-term care facility, or other entity. But again, the moratorium only applies where the financial hardship leading up to the eviction was substantially caused by hardship relating to the coronavirus.</p> <p>Excepted from the new order are foreclosures initiated by the United States government. The new order also encourages, but does not require, lenders and landlords to try to work out &ldquo;payment plans or other agreements&rdquo; to address defaults caused by COVID-19.</p> <p>Baker Sterchi will continue to monitor Kansas State policy concerning evictions and foreclosures and will provide updates as they are received.</p> Temporarily Prohibits Foreclosures and Evictions Mar 2020Kansas Law Blog<p>In response to the COVID-19 pandemic, Kansas Governor Laura Kelly issued <a href="">Executive Order 20-06</a> on March 17, 2020, prohibiting evictions, foreclosures and any related judicial proceedings in the State of Kansas through May 1, 2020.</p> <p>Specifically, Executive Order 20-06 directs and orders &ldquo;all financial institutions operating in Kansas to temporarily suspend the initiation of any mortgage foreclosure efforts or judicial proceedings and any commercial or residential eviction efforts or judicial proceedings until May 1, 2020.&rdquo;</p> <p>While this prohibitive language could arguably be read to only apply to financial institutions, Baker Sterchi has confirmed with the Governor&rsquo;s Office that it intends for the prohibition to apply to any landlord, whether a financial institution, other entity, or even individuals. This executive intent is further reflected in the recitals that precede the Executive Order:</p> <p style="margin-left: 40px;"><b>WHEREAS</b>, the adverse economic impacts of COVID-19 include the potential for Kansans to miss mortgage or rent payments as a result of lost wages and now is not the time for creditors or landlords to initiate foreclosure or eviction proceedings; and</p> <p style="margin-left: 40px;"><b>WHEREAS</b>, this Administration will do whatever it can to assist Kansans in these challenging times, and that includes allowing Kansans to retain their homes and businesses to avoid immediate danger to their health, safety, and welfare.</p> <p>Accordingly, unless otherwise directed, all landlords in Kansas should refrain from instituting foreclosure or eviction proceedings until May 1, 2020.</p> <p>While new foreclosure and eviction proceedings are prohibited at this time, it is important to note that Executive Order 20-06 does not suspend any obligation to pay rent. So, tenants are advised to continue paying rent unless they have a written agreement with their landlords to suspend or forbear rent during this time. Moreover, the Executive Order does not impact judicial foreclosure and eviction proceedings that were commenced prior to entry of the Executive Order. Parties to pending eviction or foreclosure proceedings should monitor the policies and dockets of the courts in their respective counties in order to determine the status of each case.</p> <p>Baker Sterchi will continue to monitor Kansas State policy concerning evictions and foreclosures and will provide updates as they are received.</p> Supreme Court Strikes Down Statutory Caps on Noneconomic Damages Jun 2019Kansas Law Blog<p>On June 14, 2019, in the case of <a href=""><i>Hilburn v. Enerpipe, Ltd.</i></a>, the Kansas Supreme Court struck down the state&rsquo;s statutory cap on noneconomic damages in personal injury cases. The court held that the damages cap deprives plaintiffs of the Constitutional right to have a jury decide damages.&nbsp;</p> <p>By eliminating one of the key protections Kansas has traditionally extended to businesses, insurers, and other personal injury defendants, the decision dramatically increases both the unpredictability of civil litigation in the state and the risk of being surprised by a potentially devastating runaway verdict.&nbsp;Furthermore, because the Kansas Supreme Court has ruled the statutory damages cap &ldquo;facially unconstitutional,&rdquo; the ruling will affect not only future claims, but also those currently pending in Kansas courts.</p> <p><b>I.&nbsp;&nbsp;</b><b>The Judicial Invalidation of the Kansas Noneconomic Damages Cap</b></p> <p>The <i>Hilburn</i> case arose out of a motor vehicle accident.&nbsp;Plaintiff Diana Hilburn was a passenger in a car that was rear-ended by a semi-truck owned by Defendant Enerpipe, Ltd.&nbsp;Enerpipe admitted liability but contested damages.&nbsp;After a trial solely on the damages question, the jury awarded Ms. Hilburn $33,490 for medical expenses and $301,510 for noneconomic losses.&nbsp;The trial court reduced the award of noneconomic damages to the noneconomic damages cap of $250,000, pursuant to K.S.A. &sect;60-19a02.</p> <p>Hilburn appealed on several bases, including a challenge to the constitutionality of the damages cap.&nbsp;The Supreme Court held that Section 5 of the Kansas Constitution provides that &ldquo;the right of trial by jury shall be inviolate.&rdquo;&nbsp;Courts have interpreted this language to preserve the right to a jury trial &ldquo;in those causes of action that were triable to a jury under the common law extant in 1859, when the Kanas Constitution was ratified by the people of our state.&rdquo;&nbsp;The plurality opinion emphasized that that &ldquo;the determination of noneconomic damages was a fundamental part of a jury trial at common law&rdquo; and, therefore, ought to be protected as &ldquo;inviolate&rdquo; under Section 5 of the state constitution.&nbsp;</p> <p>&ldquo;The cap&rsquo;s effect,&rdquo; Justice Beier concluded, &ldquo;is to disturb the jury&rsquo;s finding of fact on the amount of the award.&nbsp;Allowing this substitutes the Legislature&rsquo;s nonspecific judgment for the jury&rsquo;s specific judgment.&nbsp;The people deprived the Legislature of that power when they made the right to a trial by jury inviolate.&nbsp;Thus we hold that the cap on damages imposed by K.S.A. &sect;60-19a02 is facially unconstitutional because it violates Section 5 of the Kansas Constitution Bill of Rights.&rdquo;</p> <p>Until recently, the cap on noneconomic damages seemed to be very well entrenched in Kansas law. &nbsp;The limits were codified in the statute books, and judges and practitioners had become familiar with their application and importance in personal injury cases.&nbsp;As recently as 2012, the Kansas Supreme Court, in <i>Miller v. Johnson,</i> affirmed the constitutionality of a very similar cap applicable in medical malpractice cases.&nbsp;The majority held that the legislature&rsquo;s cap on noneconomic damages was &ldquo;an adequate and viable substitute&rdquo; to the common-law right to a jury trial on the question of damages.&nbsp;With its decision in <i>Miller</i>, Kansas had become the eighteenth state to affirm the constitutionality of some type of cap on noneconomic damages.&nbsp;</p> <p>In <i>Hilburn</i>, the Kansas Supreme Court tossed out the same statutory cap that it had affirmed a mere 7 years ago.&nbsp;The recent case illustrates the importance a single judicial appointment can have.&nbsp;Justices Johnson, Beier, Biles, and Luckert remained consistent in their opinions from <i>Miller </i>(2012) to <i>Hilburn</i> (2019).&nbsp;Justices Rosen, who did not participate in the <i>Miller </i>decision, and Stegall, who was not on the Court in 2012, both sided with the plurality in <i>Hilburn</i> to hold the damages cap unconstitutional.</p> <p><b>II.&nbsp;&nbsp;</b><b>Conclusion</b></p> <p>Kansas law still presents advantages to civil defendants.&nbsp;It follows a modified comparative fault rule that precludes any recovery by a plaintiff who bears more than 50% of the fault for an occurrence.&nbsp;It allows the comparison of fault of non-parties and has enacted a &ldquo;one-action rule,&rdquo; requiring that all parties have their fault determined in a single trial.&nbsp;It has abandoned joint and several liability, holding each defendant responsible only for its percentage of the damages awarded.&nbsp;</p> <p>But make no mistake, the cap on noneconomic damages provided by K.S.A. &sect;60-19a02 was one of the more important protections Kansas law offered to defendants in personal injury cases.&nbsp;That protection is now gone, and it seems unlikely to come back with the current court makeup.</p> Filing Deadline Differs by Filing Type May 2018Kansas Law Blog<p>In Kansas, unless you are electronically filing your documents, the last day for filing ends &ldquo;when the clerk&rsquo;s office is scheduled to close.&rdquo; K.S.A. 60-206(a)(4)(B). If you are electronic or fax filing, you have until &ldquo;midnight in the court&rsquo;s time zone.&rdquo; K.S.A. 60-206(a)(4)(A).</p> <p>In <i><a href="">JPMorgan Chase Bank, N.A. v. Taylor</a></i>, No. 117,774 (Kan.App. May 11, 2018), the Court of Appeals refused to consider the homeowner&rsquo;s late-filed opposition to the confirmation of the sale, noting, &ldquo;any response she would have to the motion needed to be filed by the close of business.&rdquo;&nbsp;</p> <p>In this case, JP Morgan initiated foreclosure proceedings and bought the property at the foreclosure auction for the full judgment amount.&nbsp;JP Morgan then filed a motion with the court to confirm the sheriff&rsquo;s sale.&nbsp;The District Court confirmed the sale the same day without waiting for any objection and without notifying the homeowner.&nbsp;The District Court never served the homeowner with the Order.</p> <p>Over one year later, the homeowner realized the District Court confirmed the sale and filed a motion for relief from that Order.&nbsp;The District Court denied the motion, and issued a minute sheet that included no findings of fact or conclusions of law.</p> <p>The Court of Appeals in partially affirming and partially overturning the lower court noted that the rule requires that any &ldquo;person that files a timely response objection to a motion to confirm a sheriff&rsquo;s sale has the right to have that objection read and considered by the district court.&rdquo; Id. at *6.&nbsp;Thus, &ldquo;any procedure that allows for automatic approval of a sheriff&rsquo;s sale without at least waiting to see if someone files an objection is subject to a later ruling that it is void as a violation of due process.&rdquo; Id.</p> <p>In this case, however, the Court of Appeals held that the Homeowner:</p> <p style="margin-left: 40px;">was served the motion by mail on November 13, 2015. She had seven days to respond, plus three days for mail service. K.S.A. 60-206 (a)(1)(d); Supreme Court Rule 133(b) (2018 Kan. S. Ct. R. 199). Accordingly, any response she would have to the motion needed to be filed by the close of business November 23, 2015. [Homeowner] did not file her response until November 24, 2015, so it was untimely. Therefore, even though the district court's order was premature, opening it up for a claim of violation of [Homeowner]'s due process rights, we cannot find error in the district court's failure to consider an untimely objection to confirmation of the sale.</p> <p>Id.&nbsp;Thus, the Court of Appeals did not look at any of the arguments.</p> <p>The Court of Appeals was unable to determine whether the District Court abused its discretion based solely on the minute order and remanded to the district court to make clear the findings of fact and conclusions of law.</p> Saving Statute Only Works Once Jun 2017Kansas Law Blog<p>On May 26, 2017, the Kansas Supreme Court in <i>Lozano v. Alvarez</i>, (No. 113,060) 2017 Kan. LEXIS 287 (May 26, 2017)<a href="file:///C:/Users/LJR/Desktop/Kansas%20blog.docx#_ftn1" name="_ftnref1" title="">[1]</a> tested the Kansas saving statutes, which states:</p> <p style="margin-left: 40px;">If any action be commenced within due time, and the plaintiff fail in such action otherwise than upon the merits, and the time limited for the same shall have expired, the plaintiff, or, if the plaintiff die, and the cause of action survive, his or her representatives may commence a new action within six (6) months after such failure.</p> <p>Kan. Stat. Ann. &sect; 60-518. The statute allows a case that has been dismissed for a reason other than the merits to be refiled within 6 months of the dismissal, notwithstanding that the statute of limitations has expired.</p> <p>The Kansas Supreme Court held that the dismissal of an action that was filed during K.S.A. 60-518's 6-month grace period does not trigger another 6-month grace period.&nbsp; Thus, a third lawsuit does not relate back to the original filing and may be barred by the statute of limitations.</p> <p>Lozano filed a civil action against the Alvarezes alleging injuries as a result of a battery. &nbsp;<i>Lozano I</i> was dismissed without prejudice by the Ford County District Court for lack of prosecution.&nbsp; Lozano refiled his case less than 6 months later using the Kansas savings statute. The district court dismissed <i>Lozano II </i>without prejudice on December 31, 2013, once again for a lack of prosecution.</p> <p>Lozano refiled the action on June 18, 2014, attempting to invoke K.S.A. 60-518 a second time. (<i>Lorenzo III).</i> The Alvarezes moved to dismiss <i>Lorenzao III </i>with prejudice, claiming the savings statute did not permit the refiling.</p> <p>The Kansas Supreme Court affirmed the dismissal of <i>Lorenzo III </i>with prejudice and declined to apply the saving statute in serial fashion, because &ldquo;the 6-month grace period in the savings statute applies only to an action that was commenced during the statute of limitations period.&rdquo; Id. at *12.&nbsp; The Court reasoned,</p> <p style="margin-left: 40px;">the dismissal of an action that was filed during K.S.A. 60-518's 6-month grace period does not trigger another grace period because it is not an &quot;action&quot; to which K.S.A. 60-518 applies. In short, a plaintiff is limited to one 6-month period of grace to get a determination on the merits; refilings beyond that 6-month period are barred by the statute of limitations. Id. at *12-13.</p> <div id="ftn1"> <p><a href="file:///C:/Users/LJR/Desktop/Kansas%20blog.docx#_ftnref1" name="_ftn1" title="">[1]</a> See the full opinion at</p> </div> and it Feels so Good May 2017Kansas Law Blog<p>On April 21, 2017, the Kansas Supreme Court in <i>FV-I, Inc. v. Kallevig</i>, (No. 111,235) 2017 Kan. LEXIS 135 (Apr. 21, 2017)<a href="file:///C:/Users/LJR/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/KVZAYNY0/Blog%20Post.docx#_ftn1" name="_ftnref1" title="">[1]</a> reviewed a mortgage foreclosure. The dispute was between FV-I, the first mortgage holder, and Bank of the Prairie (BOP), the second mortgage holder<a href="file:///C:/Users/LJR/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/KVZAYNY0/Blog%20Post.docx#_ftn2" name="_ftnref2" title="">[2]</a>.&nbsp;</p> <p>One week before the foreclosure, the mortgage was assigned to FV-I. &nbsp;Attached to the petition was a copy of the mortgage and a copy of the note with an undated endorsement to a third-party.&nbsp; At trial, FV-I presented the original note containing an additional two endorsements, ending with an endorsement in blank. &nbsp;BOP undisputedly had three junior mortgages.</p> <p>BOP challenged FV-I&rsquo;s standing to foreclose and the priority of its mortgages.</p> <p>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; FV-I&rsquo;s Standing to Foreclose</p> <p>BPO alleged that FV-I did not have standing to pursue its claim without establishing enforcement rights in the promissory note as of the date of the filing.&nbsp; First, FV-I argued that it need not prove possession of the note and the existence of enforcement rights in it at the time it filed its petition in order to establish standing to pursue mortgage foreclosure. Second, FV-I argued that standing could be established by its undisputed possession of the mortgage prior to filing, even without possession of the note.</p> <p>The Kansas Supreme Court held that:</p> <p style="margin-left: 40px;">standing in a foreclosure action is predicated on the plaintiff's ability to demonstrate&mdash;either in the pleadings, upon motion for summary judgment, or at trial&mdash;that it was in possession of the note with enforcement rights at the time it filed the foreclosure action. Allowing a lack of standing to be cured by a post-petition assignment granting enforcement rights in the note after the foreclosure action has been filed would defeat any incentive for a note holder to ensure that it has enforcement rights prior to filing the action.</p> <p>Id. at *29.</p> <p>The Court further held that &ldquo;possession of the mortgage alone does not establish standing,&rdquo; because &ldquo;a person or entity possessing only the mortgage would never experience the cognizable injury, i.e., the default necessary to foreclose the mortgage.&rdquo; Id. at 46.</p> <p>The Kansas Supreme Court remanded the action to determine whether FV-I had enforcement rights in the promissory note as of the date of the filing such that it had standing to bring a foreclosure action. Id. at *37.</p> <p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; BOP&rsquo;s Priority</p> <p>BOP argued that FV-I&rsquo;s mortgage was unenforceable, because the note and mortgage had been split; thus, BOP&rsquo;s mortgages were superior.&nbsp; The District Court held that FV-I's mortgage and note had split, because the note and mortgage FV-I held had not followed the same path to FV-I, which rendered FV-I's mortgage unenforceable and allowed BOP's mortgages to jump ahead in priority.&nbsp;</p> <p>The Supreme Court, in overturning the holding that BOP&rsquo;s mortgages had priority, noted that the lower court&rsquo;s decision was based on an &ldquo;overreading&rdquo; <i>Landmark Nat. Bank v. Kesler</i><a href=";id=urn:contentItem:4X47-YSS0-TXFT-01PT-00000-00&amp;context=">, 289 Kan. 528, 539-40, 216 P.3d 158 (2009)</a>.&nbsp; <i>Landmark, </i>did not address the effect of a split on the priority of the mortgage or whether a separated note and mortgage could later be reunited. In short, <i>Landmark</i> never held that a currently unenforceable mortgage, in effect, no longer exists. The Kansas Supreme Court held that, &ldquo;[r]egardless of whether a split occurred or the party capable of enforcing the note was not a party to this case, the mortgage itself still exists.&rdquo; Id. at *50.</p> <p>The Court remanded the case with instruction to determine whether FV-I or BOP had priority consistent with the general rules that the first to record a mortgage has priority so long as the mortgage is not released. Id.</p> <div><br clear="all" /> <hr align="left" size="1" width="33%" /> <div id="ftn1"> <p><a href="file:///C:/Users/LJR/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/KVZAYNY0/Blog%20Post.docx#_ftnref1" name="_ftn1" title="">[1]</a> See the full opinion at</p> </div> <div id="ftn2"> <p><a href="file:///C:/Users/LJR/AppData/Local/Microsoft/Windows/INetCache/Content.Outlook/KVZAYNY0/Blog%20Post.docx#_ftnref2" name="_ftn2" title="">[2]</a> The homeowners/debtors were no longer involved in the case, because the parties agreed to sell the property and place the proceeds in escrow pending resolution of the matter. &nbsp;</p> </div> </div> verdicts in the Kansas City area are little changed from last year Feb 2017Kansas Law BlogThe calendars said the years were different, but data from the Greater Kansas City Jury Verdict Service shows that 2016 and 2015 were nearly the same in many respects. Every year, the Greater Kansas City Jury Verdict Service issues a &ldquo;Summary and Statistics of Jury Verdicts&rdquo; for the greater Kansas City area. The report includes verdicts from the U.S. District Courts in the Western District of Missouri as well as Jackson, Clay and Platte counties in Missouri and Johnson and Wyandotte counties in Kansas. The statistics in 2016 were remarkably similar to those in 2015.<br /> <br /> <u><strong>Comparable Number of Trials and Plaintiffs&rsquo; Verdicts</strong></u><br /> <br /> The Jury Verdict Service&rsquo;s annual summary reported on 113 trials in 2016 compared to 110 in 2015. These numbers are down from the preceding two-year period: there were 133 trials in 2014, and 122 trials in 2013. <br /> <br /> Because trials may involve multiple claims and multiple verdicts, the verdict statistics are based on the claims and not the cases. For the 113 trials in 2016, there were 199 verdicts for claims and for the 110 cases in 2015, there were 178 verdicts for claims.<br /> <br /> Although the number of trials has decreased from 2013 and 2014, the percentage of plaintiff verdicts is little changed. In both 2015 and 2016, 42% of the verdicts were for plaintiffs compared to 38% for plaintiffs in 2014 and 40% in 2013. These numbers are down from the 55% of the verdicts for plaintiffs in 2012.<br /> <br /> <u><strong>Comparable Average Monetary Awards</strong></u><br /> <br /> The overall average of the monetary awards for plaintiffs&rsquo; verdicts also remained almost the same in 2016 as they were in 2015. In 2016, the average of plaintiffs&rsquo; verdicts was $1,383,549 while the average in 2015 was $1,376,323. Both of those averages are over $1 million more than the average plaintiffs&rsquo; verdict in 2014, which was $350,730. While each of these figures is far below the $5,577,689 average verdict in 2013 and somewhat lower than the $1,772,469 average in 2012, the 2013 numbers were skewed by a single $400 million verdict that inflated the 2013 average.<br /> <br /> <u><strong>Fluctuating Number of Large Verdicts</strong></u><br /> <br /> Although the average plaintiff&rsquo;s verdict was similar in 2016 compared to 2015, the number of verdicts exceeding $1 million more than doubled in 2016. There were 16 verdicts of $1 million or more in 2016 and only six such verdicts in 2015. The number of million dollar or more verdicts has fluctuated over the last five years. In 2012, there were 19 such verdicts but only five in 2013 and then ten in 2014, the recent year with the lowest average monetary award in plaintiffs&rsquo; verdict matters.<br /> <br /> <img src="" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="550" height="114" /><br /> <br /> Juries in the following venues awarded million dollar or more verdicts over the last five years.<br /> <br /> <img src="" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="550" height="144" /><br /> <br /> <u><strong>Key Observations</strong></u> <ul> <li>Over the last four years, the percentage of defense verdicts on plaintiffs&rsquo; claims has consistently hovered around 60%.</li> <li>When money has been awarded, the average verdict amounts over the last two years were nearly identical.</li> <li>Half of the seven-figure jury awards over the last five years have occurred in Jackson County, Missouri state court .</li> </ul> <br /> <strong><u>Conclusion</u></strong><br /> <br /> Although every case is different, information regarding verdict percentages and jury award amounts in the specific venues can help assess the values of cases and claims. For instance, recent data confirms the received wisdom among experienced practitioners that juries in Jackson County, Missouri, are more likely to assess million dollar or more awards on plaintiffs&rsquo; claims than juries in Platte County, Missouri. As always, clients, as well as national counsel who are working with local counsel, should carefully consider the forum when assessing the value of a case.<br /> <br /> Source: Greater Kansas City Jury Verdict Service Year-End Reports 2012-2016 Reminder: A Motion to Compel Arbitration Does not Alter the Time to Answer Dec 2016Kansas Law Blog<div>During a recent scheduling before the United States District Court for the District of Kansas, the Court <em>sua sponte</em> asked counsel when he intended to answer on behalf of his client. &nbsp;Counsel replied that the defendant had filed a motion to compel arbitration and stay the case. &nbsp; The Court, politely, but firmly, reviewed all of the motions listed under Fed.R.Civ.P. 12(b) and noted that a motion to compel arbitration was not among the motions that would alter the time to answer. &nbsp;The Court gave defendant 10 days to answer.</div> <div>&nbsp;</div> <div>When moving to compel arbitration pre-answer, please remember the rules and either: (1) file a motion to dismiss, under Fed.R.Civ.P. 12(b)(1) or in the alternative, to compel &nbsp;the parties to arbitrate and stay the case, or (2) prepare to answer within the 21-day time period, under Fed.R.Civ.P. 12(a)(1)(A). &nbsp;Either step will assist in avoiding a default judgment while waiting for a ruling on the motion to compel arbitration.</div> <div>&nbsp;</div> in Tackling the "Reptile Theory" of Trucking Accident Litigation With a Motion to Dismiss and Strike May 2016Kansas Law Blog<p class="MsoBodyText" align="left" style="text-indent: 0in;">The so-called &ldquo;reptile theory&rdquo; of plaintiff&rsquo;s litigation, frequently aimed at trucking companies, attempts to put the company on trial rather than litigating the circumstances of a particular accident.&nbsp; In furtherance of a &ldquo;reptile&rdquo; approach to litigation, plaintiffs frequently make broad allegations of alleged company misconduct, and on the bases of these allegations attempt to conduct sweeping discovery into company practices.&nbsp; The foundation for these tactics is allegations in the complaint of negligent hiring, retention, qualification, supervision, and training (usually made without any factual support), as well as claims of violations of the Federal Motor Carrier Safety Act (&ldquo;FMCSA&rdquo;) and the Department of Transportation&rsquo;s regulations implementing the act, the Federal Motor Carrier Safety Regulations (&ldquo;FMCSR&rdquo;) (which do not give rise to causes of private causes of action). &nbsp;Kansas trucking plaintiffs are also in the habit of alleging a right to recover attorneys&rsquo; fees under K.S.A.&nbsp;&sect;66-176 for the company&rsquo;s supposed violations of state laws for the regulation of common carriers.</p> <p class="MsoBodyText" align="left" style="text-indent: 0in;"><o:p></o:p></p> <p>A recent federal opinion dismissing a plaintiff&rsquo;s hiring- and retention-based claims, striking allegations related to the FMCSA and FMCSR, and dismissing plaintiff&rsquo;s claim for attorneys&rsquo; fees, may be of interest to practitioners fighting a &ldquo;reptile&rdquo; approach to litigating trucking cases.&nbsp; In <a href=""><em>Drake v. Old Dominion Freight Line, Inc.</em></a>, the U.S. District Court for the District of Kansas granted the defendant&rsquo;s motion to dismiss and to strike broad claims and allegations aimed at the company, finding that the plaintiff failed the <em>Twombly</em> and <em>Iqbal</em> tests by not including sufficient factual allegations in support of negligent hiring/ retention/ qualification/ supervision theory, and failing to provide either a factual or legal basis for allegations made under the FMCSA and FMCSR and the claim for attorneys&rsquo; fees under K.S.A.&nbsp;&sect;66-176.&nbsp;</p> <p><o:p></o:p></p> <p>In <em>Drake</em>, a Kansas district court applied <em>Twombly</em> and<em> Iqbal</em> to dismiss claims for negligent hiring, retention, supervision, qualification, and training.&nbsp; Under the now-familiar analysis, &ldquo;a complaint must contain sufficient factual matter, accepted as true, to &lsquo;state a claim to relief that is plausible on its face&rsquo;&rdquo; and thereby survive a motion to dismiss.&nbsp; <em>Ashcroft v. Iqbal</em>, 129 S. Ct. 1937, 1949 (2009) (quoting <em>Bell Atlantic Corp. v. Twombly</em>, 550 U.S. 544, 570 (2007)).&nbsp; The <em>Drake</em> court found that &ldquo;[t]he mere metaphysical possibility that <em>some</em> plaintiff could prove <em>some</em> set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that <em>this</em> plaintiff has a reasonable likelihood of mustering factual support for <em>these</em> claims.&rdquo; &nbsp;Memorandum and Order at 2 (quoting <em>Ridge at Red Hawk, LLC v. Schneider,</em> 493 F.3d 1174, 1177 (10th Cir. 2007); emphasis original).&nbsp; This is significant because the allegations in <em>Drake</em> took the form of a boilerplate complaint that was identical, virtually word-for-word, to complaints that we see regularly filed in trucking cases in this jurisdiction.&nbsp; <o:p></o:p></p> <p>Kansas imposes tort liability for damages &ldquo;caused by the negligent hiring and retention of an employee whom the employer knew or should have known to be unfit or incompetent.&rdquo;&nbsp; <em>T</em><em>homas v. Cnty. Comm&rsquo;rs of Shawnee Cnty</em>., 198 P.3d 182, 193 (Kan. Ct. App. 2008).&nbsp; In order for an employer to be liable for negligent hiring and retention, &ldquo;the employer must, by virtue of knowledge of his employee&rsquo;s particular quality or propensity, have reason to believe that undue risk of harm exists to others as a result of the continued employment of that employee; and the harm which results must be within the risk created by the known propensity for the employer to be liable.&rdquo;&nbsp; <em>Hollinger v. Jane C. Stormont Hosp. &amp; Training School for Nurses,</em> 578 P.2d 1121, 1127 (Kan. Ct. App. 1978).&nbsp; Plaintiff in <em>Drake</em>, however, failed to plead any factual allegations supporting the legal conclusion that the defendant hired or retained an &ldquo;unfit&rdquo; or &ldquo;incompetent&rdquo; employee whom it &ldquo;knew or should have known to be unfit or incompetent.&rdquo;&nbsp; <em>Thomas</em>, 198 P.3d at 193.&nbsp; Plaintiff failed to plead any factual allegations setting forth that the defendant had a &ldquo;reason to believe that undue risk of harm exist[ed] to others as a result of the continued employment&rdquo; of the driver.&nbsp; <em>See Hollinger</em>, 578 P.2d at 1127.<o:p></o:p></p> <p>Moreover, although Kansas law recognizes the theories of negligent supervision and negligent training, there were no sufficient allegations in support of these theories. &ldquo;Negligent supervision liability requires that the employer had reason to believe that the employment of the employee would result in an undue risk of harm to others,&rdquo; <em>Wayman v. Accor N. Am., Inc.</em>, 251 P.3d 640, 650 (Kan. App. Ct. 2011), while &ldquo;[a] claim based on negligent training depends upon establishing facts showing that more or better training would have prevented the harm.&rdquo;&nbsp; <em>Estate of Belden v. Brown Cnty.</em>, 261 P.3d 943, 968 (Kan. App. Ct. 2011). &nbsp;Plaintiff&rsquo;s general allegations that the defendant failed to properly train and supervise the driver, by &ldquo;failing to have adequate safety management controls in place that would require and provide that [driver] had the required skills required under this regulation&rdquo; was found insufficient by the court.&nbsp; Plaintiff pled no facts showing that this driver in particular was &ldquo;incompetent&rdquo; or &ldquo;unfit&rdquo; for his job, or that the defendant trucking company knew that this driver was &ldquo;incompetent&rdquo; or &ldquo;unfit&rdquo; for his job.&nbsp; The allegations of conduct by the defendant were not only reproduced verbatim from other complaints in this jurisdiction, they were nothing more than generally pled legal conclusions couched as factual allegations. <o:p></o:p></p> <p>The <em>Drake</em> court also recognized that the FMCSA and FMCSR do not create private causes of action for personal injuries.&nbsp;<em> Id</em>. at 5 (citing <em>Stewart v. Mitchell Transp.</em>, 241 F. Supp. 2d 1216, 1221 (D. Kan. 2002), which holds that &ldquo;Section 14704(a)(2) creates a private right of action for damages in commercial disputes involving violations of the Motor Carrier Act and its regulations, but not for personal injury actions . . . .&rdquo;). &nbsp;The district court, on this basis, struck from the complaint all references to supposed violations of the FMCSA and FMSCR.&nbsp; Memorandum and Order at 8.&nbsp; This includes allegations that the trucking company failed to properly qualify the driver.<o:p></o:p></p> <p>Finally, and critically for Kansas practitioners, the <em>Drake</em> court rejected a claim to recover attorneys&rsquo; fees.&nbsp; While noting that the issue has not been definitively determined by the Kansas Supreme Court, the federal court nevertheless found that supposed violations of the FMCSA and FMCSR would be insufficient to state a claim for recovery under K.S.A.&nbsp;&sect;66-176, and that plaintiff failed to provide &ldquo;any factual allegations&rdquo; as to how the trucking company violated &ldquo;provisions of law for the regulation of . . . common carriers&rdquo;; &ldquo;Plaintiff simply states legal conclusions.&rdquo;&nbsp; Memorandum and Order at 10.</p> <p><o:p></o:p></p> <p>The <em>Drake</em> ruling is encouraging for trucking company defendants defending against the &ldquo;reptile theory.&rdquo;&nbsp; Hopefully, this ruling will help to narrow the scope of discovery and trial, returning focus to the particular circumstances of the trucking accident as opposed to sweeping attempts to indict the company for its general policies and practices.<span style="font-size:11.0pt"><o:p></o:p></span></p> Courts Reluctant to Find Waiver of Arbitration Apr 2016Kansas Law Blog<p class="MsoNormal" style="margin-bottom: 0.0001pt;"><span style="font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">In <a href=""><i>Portfolio Recovery Assocs., LLC v. Dixon,</i></a><i> </i>the Kansas Court of Appeals recently reversed a trial court&rsquo;s holding that a credit card debt collector had waived its right to arbitration by failing to file its motion to compel arbitration until 2 years after the subject litigation was filed against it.&nbsp; Dixon, the consumer, allegedly defaulted under the terms of her credit card agreement.&nbsp; Portfolio Recovery Associates (&ldquo;Portfolio&rdquo;) subsequently purchased the loan, and Portfolio brought suit in Rice County, Kansas, to recover the debt.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt;"><span style="font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">In November 2010, Dixon filed her answer, as well as a class-action counterclaim, whereby she alleged that Portfolio was improperly engaged in debt collection activities in Kansas without an appropriate license to do so.&nbsp; While Portfolio timely filed an answer with affirmative defenses, it did not, at that time, seek to compel arbitration.&nbsp; 2 years later, after protracted discovery had been conducted, Portfolio moved to compel arbitration and sought an order staying the proceedings, pursuant to the arbitration agreement set forth in the terms of the credit card agreement.&nbsp; Of note, the agreement contained a provision which stated:</span><span style="font-family: Arial, sans-serif;">&nbsp;</span></p> <p style="margin-left: 40px;"><span style="font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">&ldquo;If you or we do not elect arbitration or otherwise enforce this Arbitration Provision&nbsp;</span><span style="font-family: Arial, sans-serif;">in connection with any particular claim, you or we will not waive any rights to require arbitration in connection with that or any other claim.&rdquo;</span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt;"><span style="font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">Dixon opposed the motion, and the trial court held found that Portfolio&rsquo;s delay was, essentially, its waiver of the right to arbitrate.&nbsp; Portfolio appealed.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom: 0.0001pt;">Citing the U.S. Supreme Court&nbsp; from&nbsp; <em>BG Group, PLC v. Republic of Argentina, 572 U.S., 134 S. Ct. 1198, 1206, 188 L. Ed. 2d 220 (2014)</em>, the Kansas Court of Appeals reasoned that the courts presume procedural issues concerning arbitration will be decided by the arbitrator, not by the court.&nbsp; Such procedural matters include claims of waiver, delay, or other like defenses to a motion to compel arbitration.&nbsp; Therefore, it would ultimately be the decision of an arbitrator to decide whether or not the debt collector had waived any procedural right to resolve the claims through arbitration, even if the subject credit card agreement had not contained the aforementioned waiver provision.&nbsp;&nbsp; <o:p></o:p></p> <p>The Court&rsquo;s decision to defer this procedural determination to an arbitrator<span class="ssrfcpassagedeactivated"><span style="font-family:&quot;Arial&quot;,&quot;sans-serif&quot;"> in an instance where not only did the party seeking to compel arbitration initiate the litigation, but where that party also delayed its request to arbitrate until after years of litigation had passed, demonstrates the gravity of arbitration provisions in contracts and the need for parties to consider their options before entering into such agreements.</span></span><span style="font-family:&quot;Arial&quot;,&quot;sans-serif&quot;"><o:p></o:p></span></p>