Diehl v. Kowalski

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NOT DESIGNATED FOR PUBLICATION

No. 114,706

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

TERRY CHAMBERLAIN DIEHL, Executor
of the Estate of BARBARA A. MOUCHAGUE,
Appellee,

v.

PATRICIA and LEONARD KOWALSKI,
Appellants.


MEMORANDUM OPINION

Appeal from Johnson District Court; MICHAEL P. JOYCE, judge. Opinion filed November 10,
2016. Reversed and vacated.

Mark D. Lewis, of Gardner, for appellants.

Michelle M. Burge, of Kirkland Woods & Martinsen PC, of Overland Park, for appellee.

Before SCHROEDER, P.J., LEBEN and GARDNER, JJ.

Per Curiam: This appeal challenges an award of attorney fees in a civil case.
Because we find no contractual or statutory authority for the award of attorney fees, we
vacate the fee award.

Factual and procedural background

The facts are well known to the parties and will not be set forth in detail. Highly
summarized, the parties were litigants in one probate case and three civil cases. The same
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judge presided over all four cases. After the parties tried the civil cases together, Diehl
prevailed on her fiduciary duty case and her residence case, then filed a petition for fees
in all four cases. The probate case, 13PR336, remains open, but the district court deferred
its determination of fees in that case until the Estate of Barbara Mouchague is ready to be
settled and closed. This appeal is limited to the attorney fees awarded in the residence
case, 14CV430.

In the residence case, Terry Chamberlain Diehl, as executrix of the Estate of
Barbara Mouchague, filed a two-count complaint. Count 1 alleged a breach of contract by
Patricia and Leonard Kowalski, the primary beneficiaries under the decedent's trust.
Count II sought to quiet title on a residence built by Mouchague. Both counts sought to
return the residence to the estate. Diehl did not prevail on the breach of contract claim,
which was based on a "Real Estate Co-ownership and Occupancy Agreement." But Diehl
did prevail on the quiet title action and, as a matter of equity, the trial court rescinded the
conveyance under the Agreement and reformed the deed.

In the residence case, the district court ordered the Kowalskis to pay over $60,000
in attorney fees and expenses incurred by Diehl. The Kowalskis timely appealed this
judgment, challenging the court's authority to award fees against them and the
reasonableness of the fees and expenses awarded.

Standard of Review

Whether a district court has the authority to award attorney fees is a question of
law over which an appellate court has unlimited review. Unruh v. Purina Mills, 289 Kan.
1185, 1200, 221 P.3d 1130 (2009). The party requesting attorney fees and costs bears the
burden of establishing entitlement to such an award. See Estate of Bingham v.
Nationwide Life Ins. Co., 7 Kan. App. 2d 72, 80, 638 P.2d 352 (1981), aff'd as modified
231 Kan. 389, 646 P.2d 1048 (1982).
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The appellate court exercises unlimited review over the interpretation and legal
effect of written instruments and is not bound by the lower court's interpretation of those
instruments. Prairie Land Elec. Co-op v. Kansas Elec. Power Co-op, 299 Kan. 360, 366,
323 P.3d 1270 (2014). Interpretation of a statute is a question of law over which appellate
courts have unlimited review. Born v. Born, 304 Kan. 542, Syl. ¶ 2, 374 P.3d 624 (2016).

Does a contract authorize the trial court's fee award against the defendants?

Kansas follows the "American Rule" in determining whether a litigant is entitled
to recover attorney fees. Robinson v. City of Wichita Employees Retire. Bd. of Trustees,
291 Kan. 266, 279, 241 P.3d 15 (2010). This rule provides that, unless authorized by
statute or specified by contract, litigants are responsible for their own attorney fees. 291
Kan. at 279.

The sole contract which arguably authorized a fee award in this case is the Real
Estate Co-ownership and Occupancy Agreement between Mouchague and the Kowalskis.
That contract authorized attorney fees solely under a mandatory arbitration clause that
provided:

"Any dispute concerning Subject Property or this Agreement shall be submitted
to binding arbitration before the American Arbitration Association. The prevailing party,
if any, in such arbitration shall be entitled to recover reasonable attorney fees and costs."
(Emphasis added.)

The trial court relied on this clause as its basis for assessing fees against the
Kowalskis in this case, stating:

"For case number 14CV4300, paragraph 17 of the Real Estate Co-Ownership and
Occupancy Agreement . . . provides that the prevailing party in any dispute concerning
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the real property at issue shall be entitled to recover reasonable attorney fees and costs."
(Emphasis added.)

In so doing, the trial court misquoted the contract's provision and erred as a matter
of law. The Occupancy Agreement explicitly provided for attorney fees solely in
arbitration proceedings. Where, as here, the language of a contract is clear and
unambiguous, the parties to a lawful contract are entitled to have it enforced as written.
See Endicott v. DeBarbieri, 189 Kan. 301, Syl. ¶ 2, 369 P.2d 241 (1962). We cannot
impart a meaning different from what the parties intended as expressed by the language
they chose to use. Fourth Nat'l. Bank & Trust Co. v. Mobil Oil Corp., 224 Kan. 347, 353,
582 P.2d 236 (1978). Thus the Occupancy Agreement cannot be the basis for an award of
fees in this civil litigation.

Does a statute authorize the district court's fee award against the defendants?

Because the parties point to no other contractual basis for the award of fees, Diehl
bears the burden to identify a statutory basis for the award of attorney fees. See Farm
Bur. Mut. Ins. Co. v. Kurtenbach, 265 Kan. 465, 479-80, 961 P.2d 53 (1998) (American
Rule applies in absence of contract or statute); Bingham, 7 Kan. App. 2d at 80 (burden is
on the party seeking fees to establish a right to fees).

Diehl argues that the district court was right for the wrong reason because K.S.A.
59-1717 supports the award of attorney fees, citing In re Estate of Murdock, 213 Kan.
837, 519 P.2d 108 (1974). However, Murdock does not authorize a court to assess
attorney fees against an individual defendant, but only to charge the fees and expenses
"as costs against a decedent's estate being administered in that court." 213 Kan. at 853-
54, citing K.S.A. 59-1717. In In re Estate of Robinson, the Kansas Supreme Court
directed that K.S.A. 59-1717 should be construed such that

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"'the fiduciary may safely procure the aid of legal advisers, and thus bind the estate for
the payment of what may be found reasonable. The law contemplates that the
representative will himself [pay] the value of such services, and be reimbursed by
receiving credit for the amount paid in settlement of his account. [Citations omitted.]'"
236 Kan. 431, 436, 690 P.2d 1383 (1984) (Emphasis added).

Nothing in Murdock or Robinson suggests that a trial court can assess fees against
an individual party. K.S.A. 59-1717 is not a fee-shifting statute but instead allows a
fiduciary to be reimbursed from the estate for attorney fees and expenses incurred in the
execution of the trust. See Murdock, 213 Kan. at 853-54; Robinson, 236 Kan. at 436. And
the fee award in this civil case is not a fee award in the estate proceedings—the district
court expressly deferred ruling on those fees until the estate was closed.

Does an exception to the American Rule authorize the district court's fee award?

Diehl also contends that an exception to the American Rule permits the court to
award attorney fees to an executor who prevails in a quiet title action brought pursuant to
K.S.A. 60-1002, as she did. Although Diehl concedes that this statute itself does not
provide for attorney fees, she contends that caselaw creates a tacit exception to the
American Rule for certain equitable actions, citing Reese v. Brame, No. 67,131,
unpublished opinion filed April 10, 1992 (Kan. App.). Diehl filed a Rule 6.09(b) (2015
Kan. Ct. R. Annot. 53) letter after oral arguments, providing us a copy of this
unpublished case.

In Reese, the Court of Appeals agreed that attorney fees as damages are available
in at least some quiet title actions. The panel relied on a 1916 Kansas Supreme Court case
which had found a plaintiff entitled to recover attorney fees incurred in removing the
cloud on her title which arose from a fraudulent transaction. Campbell v. Cubbon, 98
Kan. 642, 643-44, 158 P. 1121 (1916). Cubbon had fraudulently acquired a deed that
clouded the plaintiff's title. Reese held:
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"In Cubbon, the Supreme Court has apparently made an exception to the general
rule regarding a bar to attorney fees as damages without statutory authority when quiet
title actions involving wrongdoing by those clouding the title are involved. We are
con[s]trained to follow the rule in Cubbon." Reese v. Brame, No. 67,131, at *7-8.

Reese found wrongdoing based on the defendant title company's typographical error and
its unreasonable delay in correcting that error, and awarded attorney fees.

We are not persuaded that Reese's holding is correct, and we decline to follow it.
First, as Reese noted, the Supreme Court after Cubbon refused to award attorney fees in
another case that originally arose under equity jurisdiction. In Nicholson v. Fawley, 112
Kan. 124, 210 P. 482 (1922), the Supreme Court refused to award attorney fees because
no statute authorized such fees in a lawsuit for specific performance, a cause of action
traditionally found in the equity courts. It found: "[I]n the absence of a statute, a
judgment for the plaintiff cannot include his attorney's fee for services in the action in
which it is obtained, even where fraud is the basis of the recovery." 112 Kan. at 126.

Second, the Kansas Supreme Court has recently and repeatedly held: "A court
may not award attorney fees absent statutory authority or an agreement by the parties.
Without such authority, a trial court's equitable powers do not extend to the awarding of
attorney fees. Idbeis, 285 Kan. at 495." Unruh, 289 Kan. at 1200. See e.g., In re Estate of
Strader, 301 Kan. 50, 61, 339 P.3d 769 (2014); Snider v. American Family Mut. Ins. Co.,
297 Kan. 157, 162, 298 P.3d 1120 (2013). The rule states no general exception for cases
that originally arose in equity and no specific exception for quiet title actions brought by
executors against wrongdoers who cloud a title.

Third, we find it likely that a statute, although not expressly referred to in Cubbon,
provided the basis for its award of attorney fees. Equity may, of course, play a part in the
award of attorney fees authorized by statute. For example, K.S.A. 60-2007(b) (Furse
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1994), repealed in 1997, provided for the assessment of costs and fees that "if the court
finds that a party . . . has asserted a claim or defense . . . without a reasonable basis in fact
and not in good faith." K.S.A. 59-2214 provides for the taxation of the costs in all probate
proceedings against the estate "unless it appears that it would be unjust and inequitable to
do so, in which event the court shall tax such costs or any part thereof against such party
as it appears to the court is just and equitable." Because of Cubbon's references to
wrongdoing, we find it more likely that Cubbon relied on such a statute than that Cubbon
carved out an unstated and thereafter unused exception to the American Rule.

Diehl has shown neither a contractual nor a statutory basis for the fee award
against the Kowalskis in civil case 14CV4300, thus the parties are responsible for their
own attorney fees. Accordingly, we vacate the award.

Reversed and vacated.