IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 97,664
ALBERT H. NELSON, III, and MARKEYTA NELSON DEWEY,
Appellants,
v.
DORIS H. NELSON; OKLAHOMA STATE UNIVERSITY FOUNDATION,
an Oklahoma Non-profit Corporation;
WICHITA STATE UNIVERSITY FOUNDATION, a Kansas Non-profit Corporation;
and MARKEYTA NELSON DEWEY, in her capacity as Successor Trustee of the
ALBERT H. NELSON, JR., IRREVOCABLE TRUST,
Appellees.
SYLLABUS BY THE COURT
1. 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 district 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 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 must be denied.
2. To the extent there is no factual dispute, appellate review of an order granting summary judgment is unlimited.
3. A de novo standard of review applies to an appellate court's examination and interpretation of statutes.
4. The constructive trust is a remedy for unjust enrichment.
5. The constructive trust plaintiff who proves his or her claim by clear and convincing evidence wins an in personam order that requires the defendant to transfer legal rights and title of specific property or intangibles to the plaintiff. When the court decides that the defendant is obliged to make restitution, it first declares him or her to be the constructive trustee and then orders him or her as trustee to make a transfer of the property to the beneficiary of the constructive trust, the plaintiff.
6. Even though an unjust enrichment claim is in personam, a constructive trust remedy is res specific. A constructive trust is essentially a tracing remedy, allowing recovery of the specific asset or assets taken from the plaintiff, any property substituted for it, and any gain in its value.
7. Where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he or she would be unjustly enriched if permitted to retain the property, a constructive trust arises.
8. Unjust enrichment arises when (1) a benefit has been conferred upon the defendant, (2) the defendant retains the benefit, and (3) under the circumstances, the defendant's retention of the benefit is unjust.
9. Where a person holding property in which another has a beneficial interest transfers title to the property in violation of a duty to the other, the transferee holds the property subject to the interest of the other unless the transferee is a bona fide purchaser.
10. Where the owner of property transfers it in fraud of third persons, the transferee holds the property subject to their claims unless the transferee is a bona fide purchaser.
11. The nature of a claim–whether it sounds in tort or contracts–is determined from the pleadings and from the real nature and substance of the facts therein alleged.
12. Actual fraud must be pled with particularity.
13. Constructive fraud is defined as a breach of a legal or equitable duty which, irrespective of moral guilt, the law declares fraudulent because of its tendency to deceive others or violate a confidence, and neither actual dishonesty nor purpose or intent to deceive is necessary. Two additional elements must also be proven in order to establish constructive fraud: (1) a confidential relationship and (2) a betrayal of this confidence or a breach of a duty imposed by the relationship.
14. A pretrial order controls the subsequent course of an action.
15. The view that actual or constructive fraud must be established before the remedy of a constructive trust can be granted is contrary to widely accepted analysis of the remedy and is not justified by Kansas law. To the extent that any case has held that actual or constructive fraud is the exclusive basis for the remedy of a constructive trust, we explicitly disapprove that holding.
16. The Kansas nonclaim statute, K.S.A. 59-2239, broadly encompasses all demands against an estate. In addition, it provides a mechanism for a creditor to petition for administration of a decedent's estate when no estate has been opened in Kansas.
17. The nonclaim statute recognizes that a decedent no longer has the individual capacity to respond in damages to torts, to pay debts, to carry out contracts, or to administer his or her estate; therefore, the estate must meet the decedent's financial obligations. As a result, a person who seeks to recover from the decedent, whether based on tort, contract, the decedent's will, or the statute of intestate succession, must recover, if at all, from the decedent's estate.
18. K.S.A. 59-2239 imposes a special statute of limitations governing claims against a decedent's estate, and it operates as a complete bar to all demands against a decedent's estate that are not timely filed.
19. Generally, equitable remedies are not available if there is an adequate remedy at law.
20. A claim by a third-party beneficiary that a decedent breached a contract by transferring assets and, as a result, that the transfer is void is a claim against the decedent's estate that must be timely made under K.S.A. 59-2239.
Review of the judgment of the Court of Appeals in 38 Kan. App. 2d 64, 162 P.3d 43 (2007). Appeal from Sedgwick district court; JEFFREY E. GOERING, judge. Judgment of the Court of Appeals affirming the district court is affirmed. Judgment of the district court is affirmed. Opinion filed April 17, 2009.
William P. Tretbar, of Fleeson, Gooing, Coulson & Kitch, L.L.C., of Wichita, argued the cause and was on the brief for appellants.
Coy M. Martin, of Moore Martin, L.C., of Wichita, argued the cause, and Ted D. Ayres, of Wichita State University Foundation, Robert W. Coykendall, of Morris Laing Evans Brock & Kennedy, Chtd., of Wichita, and Scott D. Jensen, of Bever Dye, L.C., of Wichita, were with him on the brief for appellees.
The opinion of the court was delivered by
LUCKERT, J.: This appeal raises the question of whether a claim must be made against a decedent's estate when it is alleged the decedent breached a contract to place his entire estate in a testamentary trust for the benefit of his adult children. The district court and the Court of Appeals in Nelson v. Nelson, 38 Kan. App. 2d 64, 162 P.3d 43 (2007), held the decedent's assets were not subject to a constructive trust because a claim had not been made against the decedent's estate within the period of limitations imposed by the Kansas nonclaim statute, K.S.A. 59-2239. Upon review of those decisions, we affirm.
Background
Albert H. Nelson, III, and Markeyta Nelson Dewey (Appellants) are the adult children of Margaret Nelson and Albert H. Nelson, II (Albert). After 33 years of marriage, Margaret and Albert divorced in 1975. Paragraph 9 of their property settlement agreement provided:
"Husband further covenants and agrees with Wife that Husband will execute and maintain, in full force and effect, a Will creating a testamentary trust to be funded by and with Husband's entire estate. Said trust will provide that the two (2) children of the parties hereto shall receive one-half (½) of the income from the trust after deduction of all taxes, debts, costs and expenses of administration; provided, however, that upon the death of either such child, said child's share of income shall be paid to the surviving child; provided, further, that the remaining debt, if any, of Husband to Wife under paragraph 2 hereof shall be deducted from the amount otherwise distributable to said children or child from said trust. The payments to said children or child shall be made not less often than annually."
The property settlement agreement was approved by the district court and incorporated by reference as part of the journal entry and decree of divorce. There is, therefore, no dispute about the existence of the contract. Rather the parties argue over the meaning of the term "entire estate." The Appellees suggest the agreement relates to probate assets only, and the Appellants suggest the parties intended to include probate and nonprobate assets. The Appellants contend their father violated the clear meaning of this term by gifting substantial amounts of property that should have been preserved for the Appellants' benefit and by not including his entire estate in a testamentary trust for their benefit.
Regarding the gifts, Appellants complain about substantial donations their father made to the Oklahoma State University Foundation and gifts he made to his second wife, Doris. Albert and Doris were married approximately 3 years after his divorce from Margaret, and they remained married until his death in 2003. Albert's first substantial gift to Doris was made in May 1987 when Albert deeded to Doris the real estate on which his business, Globe Engineering Co., Inc., operated; the deed stated the consideration as "one dollar and love and affection." Subsequently, Globe paid rent to Doris for its use of the property. In addition, in October 1990, Albert and Doris purchased a residence in Florida, and a warranty deed conveyed the Florida property solely to Doris. Albert also designated Doris as the surviving beneficiary of his pension fund.
In addition to complaining about these "gifts," the Appellants assert their father breached the property settlement agreement and divorce decree by not placing his remaining assets in a testamentary trust for their benefit. At the time of his death, Albert's estate plan consisted of two inter vivos trusts and a pour-over will, as opposed to the will and testamentary trust contemplated by the settlement agreement. The change in form is not the source of the complaint, however. Rather, Appellants complain that Albert made them beneficiaries of only one of the two inter vivos trusts he had funded during his lifetime and, thus, failed to designate them as beneficiaries of one-half of the income of his entire estate or an equivalent value in corpus.
The inter vivos trust that benefits the Appellants is designated the Albert H. Nelson, Jr., Living Trust (living trust). Under the trust agreement, Albert served as trustee during his lifetime and Doris was designated the successor trustee upon Albert's death or disability. Albert had discretion during his lifetime to pay himself all or part of the income or principal of the trust. Upon Albert's death, one-half of the assets were to be held in the Doris H. Nelson Income Trust (income trust) and the other half of the assets were to be held in trust for the Appellants. The Appellants were to receive an annuity equal to six percent of the net fair market value of the assets held in trust for them. The annuity was to be divided in equal shares between the Appellants; if one of the Appellants died, the entire annuity was to be distributed to the survivor. The length of the annuity distribution was capped at 16 years to comply with charitable trust requirements. Upon the death of both Appellants, the remaining assets were to be distributed to Oklahoma State University Foundation and Wichita State University Endowment Association in equal shares. Likewise, upon Doris' death, the remainder of the assets in the income trust were to be distributed equally between Oklahoma State University Foundation and Wichita State University Endowment Association.
The second inter vivos trust was named the Albert H. Nelson Irrevocable Trust (irrevocable trust), with Doris designated as trustee and Albert's daughter, Markeyta Nelson Dewey, designated as successor trustee. All trust income and, if necessary, the principal were to be paid to Doris for the rest of her life. Upon Doris' death, the remaining assets were to be distributed equally between Oklahoma State University Foundation and Wichita State University Endowment Association. The irrevocable trust authorized the trustee to sell, assign, convert, convey, or dispose of assets in the trust.
Several months after establishing the living trust and the irrevocable trust, Albert conveyed all of his stock in Globe to the two trusts in roughly equal shares. Later, all Globe shares owned by both trusts were sold to the Globe employee stock ownership plan.
Albert subsequently died in Florida on June 19, 2003. Although Albert's pour-over will provided for the delivery of any assets owned by Albert at his death to the trustee of the living trust, there were no estate assets subject to the effects of the will because Albert held all of his legal interests in property as a trustee, joint tenant, or beneficiary of a profit sharing plan.
Shortly after Albert's death, Albert's attorney wrote the Appellants, referencing paragraph 9 of the 1975 property settlement agreement and enclosing a copy of Albert's will and the living trust. The letter explained that certain items of personal property and the residence that were referenced in the trust agreement were actually owned by Doris and, therefore, were not part of Albert's estate. The attorney did not inform the Appellants about the irrevocable trust, and they did not learn of its existence until they received the estate's tax return.
Soon after becoming aware of the second trust, the Appellants filed this suit in April 2005. This was the first claim to any assets outside the living trust. The Appellants had not taken any action to file a petition for administration of an estate in Kansas and had not filed a claim against Albert or his estate in Florida.
When this action began, Markeyta was listed as one of the defendants because she was successor trustee of the irrevocable trust. Several months later, Intrust Bank, N.A., was substituted as trustee to the irrevocable trust and became a defendant in the lawsuit. Then, during the pendency of this appeal and upon Doris' death, Carl B. Simonye, her personal representative under letters of administration issued by the Circuit Court of Manatee County, Florida, on July 18, 2008, was substituted as a party.
In proceedings before the district court, the Appellants filed a motion for partial summary judgment, arguing they were entitled to an order imposing a constructive trust on a portion of the assets Albert had transferred to Doris. The Appellants also argued they were entitled to an order requiring Doris to account for income generated since Albert's death by the "gifted assets." Finally, the Appellants seek a money judgment against Doris for the amount they should have received under the 1975 property settlement agreement and any income that would have been produced since Albert's death "but for his substantial gifts to others."
The Appellees, in addition to responding to the Appellants' motion for partial summary judgment, filed a cross-motion in which they argued the Appellants' claims failed as a matter of law for the following reasons: (1) The property settlement agreement did not impose the contractual duties identified by the Appellants, let alone contractual duties that would bind any of the Appellees; (2) the Appellants' claims were barred or limited by the 5-year statute of limitations relating to an action founded on contract; (3) the Appellants' claims, i.e., demands against Albert's estate, were barred for untimeliness under K.S.A. 59-2239; and (4) the Appellants' legal construction of the 1975 property settlement agreement constituted an attempt to modify or vacate a judgment in violation of K.S.A. 60-260.
In an October 2006 memorandum decision, the district court denied the Appellants' motion for partial summary judgment and granted the Appellees' motion for summary judgment. The district court observed that the essence of the Appellants' lawsuit was that Albert breached the 1975 property settlement agreement by failing to execute an estate plan consistent with its terms. The court found that because Albert was the party alleged to have breached the property settlement agreement, the claims should have been brought against Albert's estate, which the Appellants failed to do. Thus, the Appellants failed to meet the temporal requirements of K.S.A. 59-2239, the Kansas nonclaim statute.
The Court of Appeals affirmed, determining that (1) the Appellants' claims based upon Albert's breach of the 1975 property settlement agreement should have been brought against Albert's estate; (2) the tort exception of the Kansas nonclaim statute, K.S.A. 59-2239(2), was inapplicable, and the claims were barred under K.S.A. 59-2239(1); (3) the Appellants were not entitled to a constructive trust; and (4) alternatively, the claim was barred by the statute of limitations applicable to claims for breach of contract. Nelson, 38 Kan. App. 2d at 72-85.
We granted the Appellants' petition for review and a petition seeking review of another Court of Appeals decision, Estate of Draper v. Bank of America, 38 Kan. App. 2d 183, 164 P.3d 827 (2007), which raises similar issues involving the Kansas nonclaim statute and constructive trusts. See Estate of Draper v. Bank of America, No. 96,060, this day decided.
Analysis
Before this court the Appellants argue that "[t]his is not an action for breach of contract against Albert H. Nelson, Jr., deceased, or his estate"; they argue, instead, this is solely an "action for equitable relief" in which they seek the "imposition of a constructive trust" against property held by Doris. Thus, according to the Appellants, it was neither necessary nor appropriate to bring suit against Albert's estate and the nonclaim statute does not apply.
Before addressing the merits of Appellant's arguments, we note that neither party suggests the issues in this case are governed by Florida law, even though Albert died in Florida and his estate was probated there. While there is some citation to Florida law in various briefs, the parties do not address the choice of law issue and, as a result, that issue is waived. See Cooke v. Gillespie, 285 Kan. 748, 758, 176 P.3d 144 (2008) (issue not briefed is deemed waived or abandoned). Consequently, we will limit our consideration to Kansas law.
Standard of Review
Our standard of review is governed by the rules relating to summary judgment and statutory interpretation. The standard applying to an appeal from summary judgment is well settled:
"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 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 must be denied." Miller v. Westport Ins. Corp., 288 Kan. 27, Syl. ¶ 1, ___, 200 P.3d 419 (2009).
To the extent there is no factual dispute, appellate review of an order granting summary judgment is unlimited. Polson v. Farmers Ins. Co., 288 Kan. 165, Syl. ¶ 1, ___, 200 P.3d 1266 (2009).
A de novo standard also applies to an appellate court's examination and interpretation of statutes. Polson, 288 Kan. at ___. This standard governs our analysis of the Kansas nonclaim statute, K.S.A. 59-2239, which was the focus of the district court's and Court of Appeals' rulings.
Remedy of Constructive Trust
We first consider the Appellants' assertion that this is an equitable in rem action seeking a constructive trust, not a breach of contract action or other action against Albert or his estate. The Appellants urge this court to define whether an action to impose a constructive trust is a procedural aid in execution–i.e., a remedy–or a "free-standing" cause of action. Arguing that a request for a constructive trust should be considered a separate claim upon which relief can be granted, the Appellants suggest: "Doris paid nothing for the property she received and is not a bona fide purchaser for value. This is all that need be shown."
We reject the Appellants' argument. Simply put, "[t]he constructive trust, like its counterpart remedies 'at law,' is a remedy for unjust enrichment." 1 Dobbs, Law of Remedies § 4.3(2), p. 597 (2d ed. 1993); see Restatement of Restitution: Quasi Contracts and Constructive Trusts § 160, comment a (1936) (Restatement of Restitution). This view is widely and uniformly accepted. Crosby v. Bowater, Inc. Retirement Plan, 382 F.3d 587, 594 (6th Cir. 2004) (constructive trust is an equitable remedy, not a claim in its own right); Horattas v. Citigroup Financial Markets Inc., 532 F. Supp. 2d 891, 897 (W.D. Mich. 2007) (same); In re Amcast Indus. Corp., 365 B.R. 91, 123 (S.D. Ohio 2007) ("requests for an accounting and imposition of a constructive trust do not describe independent causes of action"); Gulf States Steel, Inc. v. Lipton, 765 F. Supp. 696, 704 (N.D. Ala. 1990) ("the court's research reveals no case in any jurisdiction [holding] that constructive trust constitutes a cause of action"); Fujisawa Pharmaceutical. Co., Ltd. v. Kapoor, 16 F. Supp. 2d 941, 952 (N.D. Ill. 1998) (constructive trust is a remedy, not a claim; remedy may be requested if plaintiff prevails on claims for which constructive trust is appropriate remedy); Radenhausen v. Doss, 819 So. 2d 616, 620 (Ala. 2001) ("The [defendants] correctly assert that a constructive trust is an equitable remedy; and a request to impose such a trust is not a cause of action that will stand independent of some wrongdoing.").
In addition, Professor Dobbs refutes the Appellants' argument that the action is solely an in rem proceeding, explaining:
"[T]he constructive trust plaintiff who proves his claim by clear and convincing evidence wins an in personam order that requires the defendant to transfer legal rights and title of specific property or intangibles to the plaintiff. When the court decides that the defendant is obliged to make restitution, it first declares him to be constructive trustee, then orders him as trustee to make a transfer of the property to the beneficiary of the constructive trust, the plaintiff." 1 Dobbs, Law of Remedies § 4.3(2), pp. 590-91.
The in personam nature of the action is necessary because legal title may be properly vested in a defendant even though the plaintiff may have an equitable claim on the property. "Equity's theory was that it did not decide title but acted in personam. It did not act on title or property but upon the person of the defendant, compelling him to follow good conscience rather than good title." 1 Dobbs, Law of Remedies § 4.3(1), p. 587. There is an in rem component to the remedy, however, because even though the unjust enrichment claim is in personam, the constructive trust remedy is res specific; a constructive trust is essentially a tracing remedy, allowing recovery of the specific asset or assets taken from the plaintiff, any property substituted for it, and any gain in its value. 1 Dobbs, Law of Remedies § 4.3(1), pp. 588-89.
The res specific nature of the remedy does not erase the need to establish an equitable basis in the property. Rather, it is only "[w]here a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it, a constructive trust arises." (Emphasis added.) Restatement of Restitution § 160. Unjust enrichment arises when (1) a benefit has been conferred upon the defendant, (2) the defendant retains the benefit, and (3) under the circumstances, the defendant's retention of the benefit is unjust. In re Estate of Sauder, 283 Kan. 694, 719, 156 P.3d 1204 (2007).
Similarly, the fact that the property is in the hands of a third party does not erase the need to establish an equitable duty to return the property. The Restatement explains:
"(1) Where a person holding property in which another has a beneficial interest transfers title to the property in violation of his duty to the other, the transferee holds the property subject to the interest of the other, unless he is a bona fide purchaser.
"(2) Where the owner of property transfers it in fraud of third persons, the transferee holds the property subject to their claims, unless he is a bona fide purchaser." Restatement of Restitution § 168.
Thus, the Appellants must establish that Albert transferred the property in violation of a duty he owed to the Appellants or by committing fraud.
Remedy Based Upon Fraud
In this case, the Appellees have argued the only way this equitable duty can be established is to prove actual or constructive fraud. They cite several Kansas cases that support this view, including this court's most recent statement in Garrett v. Read, 278 Kan. 662, 673-74, 102 P.3d 436 (2004), where we explained that "[t]o prove a constructive trust, there must be a showing of one of the two types of fraud: actual or constructive." (Emphasis added.) Similar statements can be found in other Kansas cases. E.g., Moore v. State Bank of Burden, 240 Kan. 382, 389, 729 P.2d 1205 (1986), cert. denied 482 U.S. 906 (1987); Cousatte v. Lucas, 35 Kan. App. 2d 858, 870, 136 P.3d 484 (2006); Logan v. Logan, 23 Kan. App. 2d 920, 926, 937 P.2d 967, rev. denied 262 Kan. 962 (1997); Kampschroeder v. Kampschroeder, 20 Kan. App. 2d 361, 364-65, 887 P.2d 1152, rev. denied 257 Kan. 1092 (1995); see also Geer v. Cox, 242 F. Supp. 2d 1009, 1024 (D. Kan. 2003) (recognizing Kansas law requires showing of "'fraud, actual or constructive, some betrayal of confidence reposed or some breach of duty imposed . . . .'"); James M. Caplinger, Chartered v. Lundgren, 905 F. Supp. 876, 891 (D. Kan. 1995) (in Kansas, actual or constructive fraud is essential element of proving constructive trust).
Recognizing this line of cases, the Appellants respond with two alternative arguments. First, they argue that they alleged fraud, both actual and constructive. Second, they cite to Kansas cases that recognize a constructive trust can be imposed when a claim is based upon a theory other than actual or constructive fraud.
Appellants' Claim
In urging us to view their petition as having pled fraud, the Appellants suggest that their having sought a constructive trust enlarges the nature of their claim. To some extent, this argument relates to the Appellants' suggestion that a request for a constructive trust is an independent theory of recovery. As previously discussed, courts uniformly reject this view. See One-O-One Enterprises, Inc. v. Caruso, 668 F. Supp. 693, 696 n.1 (D. D.C. 1987) ("Although plaintiffs pleaded a fifth count of constructive trust, it is a remedy, not a claim upon which relief may be granted."), aff'd 848 F.2d 1283 (D.C. Cir. 1988).
In addition, Appellants' argument fails because a specific claim cannot be inferred simply because of the remedy requested–i.e., it does not necessarily follow that the remedy proceeds a specific claim or that a specific claim gives rise to a specific remedy. See Rheinstein, Critique: Contracts to Make a Will, 30 N.Y.U. L. Rev. 1224, 1231 (1955) (in cases seeking recovery for alleged breach of contract to devise property a wide variety of remedies are available, and "it is neither necessary nor helpful to speak of the imposition of a trust, constructive or otherwise; the common rules on the grant of equitable remedies in the case of inadequacy of the remedy at law suffice for all legitimate purposes.").
Rather, "'[t]he nature of a claim–whether it sounds in tort or contracts–is determined from the pleadings [citations omitted] and from the real nature and substance of the facts therein alleged.' [Citation omitted.]" Bonin v. Vannaman, 261 Kan. 199, 209, 929 P.2d 754 (1996). The Appellants' petition states:
"Mr. Nelson breached the property settlement agreement when he created the irrevocable trust and conveyed assets to said trust, when he conveyed the joint tenancy assets to himself and Doris, when he named Doris the beneficiary of his interest in the profit sharing plan and when he conveyed the real property to Doris for inadequate consideration."
The pretrial order is phrased in similar terms. Based upon these allegations, the district court correctly found, as did the Court of Appeals, that the basis of the Appellants' claim was Albert's alleged breach of the 1975 property settlement agreement, i.e., Albert's failure to carry out an estate plan in accordance with paragraph 9 of the agreement. The language in the petition stating that the property settlement agreement was "breached" supports this view.
Nevertheless, the Appellants assert that by pleading the wrongful actions of Albert they have pled the elements of fraud, both actual and constructive. In response, the Appellees argue actual fraud must be pled with particularity. See K.S.A. 60-209(b); Nichols v. Kansas Political Action Committee, 270 Kan. 37, 52-53, 11 P.3d 1134 (2000). Certainly, the Appellants have failed to meet the particularity requirements with regard to actual fraud. See Kelly v. VinZant, 287 Kan. 509, 515, 197 P.3d 803 (2008) (the elements of actual fraud are [1] a false statement of existing and material fact; [2] known to be false or made recklessly; [3] made intentionally for purpose of inducing another's action; [4] reasonable reliance on the statement; and [5] damage because of reliance).
Additionally, the Appellants did not plead the elements of constructive fraud. We have defined constructive fraud as
"'"a b