HM of Topeka v. Indian Country Mini Mart

1

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

No. 100,055

HM OF TOPEKA, LLC, a/k/a HM OF KANSAS, LLC,
A Kansas Limited Liability Company,
Appellant,

v.

INDIAN COUNTRY MINI MART, A Kansas General Partnership,
CARLA D. NISSEN, and ROGER ALDIS,
Appellees.


SYLLABUS BY THE COURT

1.
When a district court considers matters outside the pleadings in granting a motion
to dismiss, the court's decision will be treated as one granting summary judgment rather
than a motion to dismiss.

2.
Summary judgment is appropriate 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.

3.
In order to demonstrate standing to sue, a plaintiff must allege such a personal
stake in the outcome of the controversy as to warrant his or her invocation of jurisdiction
and to justify exercise of the district court's remedial powers on his or her behalf.


2

4.
Misidentification of a contracting party's legal name in a contract does not, in and
of itself, prohibit any party to that contract from enforcing it as long as the entity's true
identity is reasonably clear or can be ascertained by sufficient evidence and other parties
to the contract were not, or were not likely to have been, misled by the identification.

5.
Under the facts of this case, the mistake in identifying "HM of Topeka" as "HM of
Kansas" in the purchase agreement is a misnomer that did not have any material effect on
enforceability of the purchase agreement.

6.
Under the facts of this case, plaintiff is a legal entity with sufficient standing to sue
defendants for specific performance of the underlying purchase agreement and damages
for breach of the underlying contract.

Appeal from Jackson District Court; GARY L. NAFZIGER, judge. Opinion filed July 30, 2010.
Reversed and remanded.

Vernon L. Jarboe, Martha A. Peterson, and Stephen D. Lanterman, of Sloan, Eisenbarth,
Glassman, McEntire & Jarboe, L.L.C., of Topeka, for appellant.

J. Phillip Gragson, of Henson, Clark, Hutton, Mudrick & Gragson, LLP, of Topeka, for
appellees.

Before STANDRIDGE, P.J., GREEN and MARQUARDT, JJ.

STANDRIDGE, J.: HM of Topeka, LLC, appeals from the district court's decision to
dismiss its petition seeking specific performance of a contract to purchase a convenience
3

store. For the reasons set forth below, we reverse the decision of the district court and
remand for further proceedings.

FACTS

Terry Hummer is the sole member of HM of Topeka, LLC, a Kansas limited
liability company. Indian Country Mini Mart (Indian Country) is a convenience store
organized as a Kansas general partnership and owned in equal shares by Roger Aldis and
Carla Nissen.

Hummer had known Aldis for some time and first approached Aldis about
purchasing Indian Country in July 2004. Hummer was unable to purchase Indian Country
himself at the time, so he attempted to put together a transaction by which an unrelated
entity, J & J Development, would purchase Indian Country and then lease the premises to
Hummer Markets, another entity owned by Hummer. Although J & J Development
signed a purchase agreement, the deal fell through prior to closing.

In March 2006, Hummer again approached Aldis about purchasing Indian
Country. Aldis provided Hummer with a purchase agreement document, which still listed
J & J Development as the purchaser. On the first page of the agreement, Hummer whited
out "J & J Development" and handwrote "HM OF KANSAS LLC" (as opposed to HM of
Topeka) in the space designated for the purchaser. On the final page of the purchasing
agreement, Hummer removed J & J Development's signature block and representative's
signature and handwrote "HM of KANSAS, LLC" (as opposed to HM of Topeka) under
his signature. The purchase agreement was executed on March 20, 2006, by Nissen, in
both her individual capacity and on behalf of Indian County, and by Hummer on behalf
of HM of Kansas.

4

Hummer later realized his apparent mistake in writing "HM of Kansas" (which is
not a legal entity) rather than "HM of Topeka" on the purchase agreement. Accordingly,
Hummer's attorney prepared an amended purchase agreement that corrected the error.
Although other closing documents prepared by Hummer and Hummer's counsel correctly
identified the purchaser as HM of Topeka rather than HM of Kansas, there is no evidence
that Aldis or Nissen saw these other documents.

The purchase agreement provided that closing would take place within 45 days.
That date, May 4, came and went. Believing that the purchaser was having trouble
obtaining financing, Aldis testified that he considered the purchase agreement to have
terminated on May 15, 2006. Hummer stated that the delay was due to title insurance
issues and insisted that the deal should still close. A title insurance commitment was
issued on May 22, 2006. HM of Topeka was listed as the proposed insured on a title
insurance commitment issued for Indian Country.

The transaction never closed. On June 15, 2006, HM of Topeka filed suit against
Indian Country seeking specific performance on the purchase agreement and damages for
breach of contract.

In July 2006, Indian Country filed a motion to dismiss the petition arguing (1) HM
of Topeka was a nonparty that did not have standing to enforce the purchase agreement
and (2) HM of Kansas was not a legal entity that could sue to enforce the purchase
agreement. In response, HM of Topeka asserted HM of Kansas was merely a misnomer
for HM of Topeka and should have no impact on the enforceability of the purchase
agreement. The district court held a hearing on the motion to dismiss but did not rule on
the motion. The hearing transcript is not in the record on appeal.

The case proceeded through discovery and in October 2007, Indian Country filed a
motion for summary judgment based on the same arguments presented in its motion to
5

dismiss filed 15 months earlier. In November 2007, the district court held a hearing, the
transcript of which is not in the record on appeal. On February 6, 2008, the district court
granted Indian Country's motion to dismiss. More specifically, the court held that because
HM of Kansas was not a legal entity, it could not enforce the purchase agreement and
that no other entity, ostensibly HM of Topeka, could bring an action on its behalf.

STANDARD OF REVIEW

In granting Indian Country's motion to dismiss, the district court expressly relied
on an exhibit attached to the memorandum filed in support of such motion. This exhibit is
a document signed by the Kansas Secretary of State certifying that, as of July 6, 2006,
HM of Kansas, LLC, had not registered to do business in Kansas as a foreign limited
liability company and that a limited liability company by that name had not been
incorporated in Kansas. Since the district court considered matters outside the pleadings,
we treat the district court's decision as one granting summary judgment rather than a
motion to dismiss. K.S.A. 60-212(b); see Odette Family Ltd. Partnership v. Agco
Finance, 35 Kan. App. 2d 1, 5, 129 P.3d 95 (2005).

We review a district court's decision to grant or deny a motion for summary
judgment as follows:

"'"'"Summary judgment is appropriate 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. 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, we apply the same rules and where we find reasonable
minds could differ as to the conclusions drawn from the evidence, summary judgment
6

must be denied."'" [Citations omitted.]'" Miller v. Westport Ins. Corp., 288 Kan. 27, 32,
200 P.3d 419 (2009).

ANALYSIS

The district court dismissed the lawsuit here because (1) HM of Kansas was not a
legal entity that could bring a lawsuit; and (2) HM of Topeka was not an entity that could
sue for breach of the underlying contract on behalf of HM of Kansas. We agree with the
district court's finding that HM of Kansas was not a legal entity that could bring a
lawsuit. For the reasons stated below, however, we disagree with the district court's
finding that HM of Topeka is not entitled to sue for breach of the underlying contract.

In order to demonstrate standing to sue, a plaintiff must allege "such a personal
stake in the outcome of the controversy as to warrant his invocation of jurisdiction and to
justify exercise of the court's remedial powers on his behalf." Harrison v. Long, 241 Kan.
174, 176, 734 P.2d 1155 (1987). In other words, HM of Topeka must show it suffered
some injury and that there was some causal connection between the claimed injury and
the challenged conduct.

To that end, HM of Topeka maintains that the mistake in identifying "HM of
Topeka" as "HM of Kansas" in the purchase agreement is a misnomer that did not have
any material effect on enforceability of the purchase agreement; thus, Indian Country
breached a valid contractual agreement to sell the convenience store to HM of Topeka
(challenged conduct). HM of Topeka then argues that as a direct result of Indian
Country's breach of contract, HM of Topeka was unjustly deprived from exercising its
contractual right to purchase the convenience store (claimed injury).

The basic doctrine of misnomer and its supporting rationale are stated in 18A Am.
Jur. 2d, Corporations § 238:
7

"The names of individuals and corporations differ in that the alteration of a letter
or transposition of a word usually makes a person's name entirely different, while the
name of a corporation frequently consists of several descriptive words and the
transposition of them or an interpolation, omission, or alteration of some of them may
make no essential difference in their sense. It is the general rule that, where there is a
misnomer of a corporation in a grant, obligation, written contract, notice, or the like, if
there is enough expressed to show that there is such an artificial being, and to distinguish
it from all others, the corporate body is well named, even though there is a variation of
words and syllables."

In his treatise on corporate law, William Meade Fletcher states that "the misnomer
of a corporation generally will not be treated by the courts as material if the identity of
the corporation is reasonably clear or can be ascertained by sufficient evidence."
6 Fletcher Cyclopedia of the Law of Private Corporations § 2444 (2005). According to
Fletcher, the intent of the parties controls. Misnomer has been applied in various contexts
and the same rules appear to apply whether the misnomer occurred in a contract, court
filing, or some other document.

There are no cases in Kansas directly addressing whether a mistake in identifying
the name of a contracting party renders the underlying contract unenforceable. We do,
however, find the case of King v. Wilson, 86 Kan. 227, 120 Pac. 342 (1912), instructive
on the issue. The dispute in King involved a publication notice that identified the name of
the party to be put on notice as "The Farmers' Loan and Trust Co., a Corporation," when
the company's true name was "The Farmers' Loan and Trust Company of Kansas."
Farmers' Loan argued that the notice of suit was insufficient to confer jurisdiction
because it was not made in its true corporate name. 86 Kan. at 229.

Relying on Kansas cases dealing with incorrect designation of individuals (as
opposed to corporations) in notice of process, as well as a treatise on corporations and
persuasive authority from other jurisdictions regarding misidentification of a
8

corporation's legal name, the Kansas Supreme Court concluded as a matter of law that in
those cases where the name assigned to a corporation in a legal notice fairly advises the
intended corporation and others that a proceeding is pending, such notice is sufficient to
withstand collateral attack. Applying the facts of the case to the rule of law, the court held
any deviation in Farmers' Loan's name did not render notice of process insufficient
because it did not appear that anyone was, or likely could have been, misled by the
incorrect designation. 86 Kan. at 229-30.

Although the court's decision to apply the misnomer doctrine in King was based
on misidentification of a corporation's legal name in a published notice of legal
proceedings, we believe the rationale underlying that decision applies equally to the facts
presented in this case. As a matter of law, then, and based on the rationale in King and the
treatises and persuasive authority from other jurisdictions upon which the King case
relied, we hold that misidentification of a contracting party's legal name in a contract
does not, in and of itself, prohibit any party to that contract from enforcing it as long as
the entity's true identity is reasonably clear or can be ascertained by sufficient evidence
and the other parties to the contract were not, or were not likely to have been, misled by
the misidentification.

Applying our holding to the facts presented in this case, we note that there is no
dispute between the parties that Hummer's attorney informed Aldis in March or April
about the typographical mistake in identifying "HM of Topeka" as "HM of Kansas" in the
purchase agreement. We further note that, notwithstanding knowledge of this
typographical mistake, both Hummer and Indian Country continued to actively work
towards closing the deal in April, May, and June 2006. To that end, the record reflects
that during this time period Aldis did not have any reservations about the purchaser's
exact identity, but instead was completely focused on whether the corporate entity
making the purchase could obtain financing and complete the deal.

9

Consistent with the facts in the record, Indian Country has never argued it did not
know HM of Topeka was the true purchaser and that it could not have readily determined
that HM of Topeka was the true purchaser. Nor does Indian Country argue that it was, or
likely could have been, misled by the typographical mistake in identifying "HM of
Topeka" as "HM of Kansas" in the purchase agreement.

Based on the analysis above, we conclude that the mistake in identifying "HM of
Topeka" as "HM of Kansas" in the purchase agreement is a misnomer that did not have
any material effect on enforceability of the purchase agreement. Although only
persuasive authority, we find it significant that the conclusion we reach today is identical
to a case decided by a Missouri appellate court under similar facts. In Blades v. Cinder
Block Co., 10 S.W.2d 319 (Mo. App. 1928), an individual filed a personal injury suit
naming the "Cinder Block Company of St. Louis" as defendant. 10 S.W.2d at 319.
However, there was no "Cinder Block Company of St. Louis"; the actual name of the
defendant was "Cinder Block Company of Kansas City, Mo."

After losing at trial, the defendant appealed on grounds that the court lacked
jurisdiction over Cinder Block Company of Kansas City, Mo., because the defendant had
not been sued under its correct name. In affirming the verdict, the court first noted the
general rules that a misnomer is immaterial when there is "no substantial mistake so as to
indicate a different entity" and "if it appears that the corporation could not have been, or
was not, misled [by]" the misnomer. 10 S.W.2d at 320. The court then noted that "the
customary phrase, 'of a location,' is not to be considered as a part of the corporate name,
but rather as descriptive of the situs of the corporation itself, so that the omission or
addition of such phrase is generally to be regarded as immaterial." 10 S.W.2d at 320. The
court then found that the mistake in naming the defendant was limited to the description
of location and was therefore insubstantial in nature. The court also found that there was
no risk of the defendant being misled because there was no other company that had the
name to which the defendant was erroneously referred. 10 S.W.2d at 320.
10

Like Blades, the identification error in this case was limited to the geographical
description of "HM" as HM of Topeka or HM of Kansas. Also like Blades, the mistake in
naming the purchasing entity was limited to the description of the entity's location and
there was no other company that had the name to which the purchaser was erroneously
referred. Although not explicit, the Blades court implicitly recognized that under the facts
presented, it would be inequitable to allow the defendant to avoid contractual liability
simply because of a slight variance between the defendant's name on the contract and the
defendant's "actual" corporate name. Indeed, the United States Supreme Court has
observed that "a contract is not avoided by misnaming the corporation with which it is
made." County of Moultrie v. Fairfield, 105 U.S. 370, 377, 26 L. Ed. 945 (1881).

As the court concluded in Blades based on the facts presented there, we conclude
based on the facts presented here that the mistake in identifying "HM of Topeka" as "HM
of Kansas" in the purchase agreement is a misnomer that did not have any material effect
on enforceability of the purchase agreement. Given this conclusion and the fact that HM
of Topeka has alleged in this lawsuit that Indian Country's failure to close on the
purchase agreement caused HM of Topeka to be unjustly deprived of its contractual right
to purchase the convenience store, we find HM of Topeka is a legal entity with sufficient
standing to sue Indian Country for specific performance of the underlying purchase
agreement and damages for breach of the underlying contract.

Reversed and remanded.