Case Title: LCL, LLC v. Falen

Citation: 

Docket Number: 115434

State: kansas

Court: Kansas Supreme Court

Date: 2018-07-27T00:00:00Z

Document:
1 
 
 
 
IN THE SUPREME COURT OF THE STATE OF KANSAS 
 
No. 115,434 
 
LCL, LLC, 
 
v.  
 
JAMES W. FALEN, in His Capacity as Sole Trustee of the James W. Falen Living Trust 
U/A, dated April 30, 2007; JULIE D. FALEN; GREGORY A. FALEN; and MARYL M. 
WESOLOWSKI, (Defendants/Third-Party Plaintiffs),  
Appellants, 
 
v. 
 
RICE COUNTY ABSTRACT & TITLE CO., INC., (Third-Party Defendant), 
Appellee. 
 
 
SYLLABUS BY THE COURT 
 
1.  
 
 
Filing and recording of a deed omitting a seller's reservation of a mineral interest, 
at a minimum, clouds the seller's title and causes an immediate substantial, actionable 
injury.  
 
2.  
 
 
Whether a substantial injury is "reasonably ascertainable" under K.S.A. 60-513(b) 
is a question of fact, not resolvable as a matter of law under the constructive notice 
provision in K.S.A. 58-2222. The filing and recording of a deed is only one piece of 
relevant evidence to be considered by the fact-finder in deciding whether a substantial 
injury caused by the deed's omission of a seller's reserved mineral interest is "reasonably 
ascertainable." 
2 
 
 
 
Review of the judgment of the Court of Appeals in 53 Kan. App. 2d 651, 390 P.3d 571 (2017). 
Appeal from Rice District Court; STEVEN E. JOHNSON, judge. Opinion filed July 27, 2018. Judgment of 
the Court of Appeals reversing the district court is affirmed. Judgment of the district court is reversed and 
the case remanded for further proceedings. 
 
Gordon B. Stull, of Stull, Beverlin, Nicolay & Haas, LLC, of Pratt, argued the cause, and Joshua 
V.C. Nicolay, was on the briefs for appellants.  
 
William P. Denning, of Sanders Warren Russell & Scheer LLP, of Overland Park, argued the 
cause, and Jeffrey C. Baker, and Kaitlin M. Marsh-Blake, were with him on the briefs for appellee. 
 
The opinion of the court was delivered by 
 
BEIER, J.:  This appeal examines summary judgment granted to a title company on 
negligence and breach of fiduciary duty claims, which arose out of the company's 2008 
omission of a reserved mineral interest in a deed and its handling of a 2014 conveyance. 
The district court judge ruled that the claims were launched too late.  
 
A panel of our Court of Appeals reversed, and we granted the title company's 
petition for review. We now hold that summary judgment was granted in error, although 
our reasoning in support of that conclusion differs somewhat from that of the panel. We 
reverse the judgment in favor of the title company on the negligence and breach of 
fiduciary duty claims and remand the case to the district court for further proceedings.  
 
FACTUAL AND PROCEDURAL BACKGROUND 
 
On its way to summary judgment in district court, third-party defendant Rice 
County Abstract & Title Co., Inc. (RCAT), set forth 22 paragraphs of what it asserted 
were uncontroverted facts. Defendants/third-party plaintiffs (the Falens), successors in 
interest to the Mary Louise Falen-Olsen Trust (the Trust), attempted to contest seven of 
3 
 
 
 
the paragraphs, and the district judge assumed the Falens' versions were true for purposes 
of ruling on the motion. See Drouhard-Nordhus v. Rosenquist, 301 Kan. 618, 622-23, 
345 P.3d 281 (2015) (district court required to resolve all facts and inferences that may 
reasonably be drawn from the evidence in favor of nonmoving party). The Falens also 
listed 56 additional paragraphs of what they asserted were uncontroverted facts. Although 
RCAT, in turn, attempted to challenge certain of those 56 paragraphs, we have carefully 
reviewed all of the parties' pyrotechnic tit for tat, and we perceive no disputes on core 
facts necessary to resolution of this appeal, other than as specifically noted below.  
 
The roots of this case can be traced to November 20, 2007, when the Trust entered 
into a contract to convey approximately 200 acres of Rice County land to Sammy Dean. 
The Trust had owned all of the surface rights and an undivided one-half mineral interest 
in the land. The contents of the listing agreement, an advertising brochure, and the 
eventual sale contract are consistent in reflecting the contemporaneous intention of the 
Trust and Dean that the Trust would sell the surface rights and retain the mineral interest.  
 
RCAT was the closing agent and the title insurer on the sale. It charged half of its 
fee to Dean and the other half to the Trust. It did not include any reference to the mineral 
reservation in the deed it prepared, although it had a copy of the sale contract. 
 
RCAT has asserted that it sent the deed to third-party plaintiffs Gregory A. Falen 
and Julie D. Falen, co-trustees of the Trust, for "review and signature," but Gregory and 
Julie have asserted that the deed was sent to them by RCAT only for signature. Neither 
Gregory nor Julie nor any other representative of the Trust asked RCAT about the 
mineral reservation before Gregory and Julie executed the deed. The deed was filed and 
recorded in Rice County on January 18, 2008.  
 
4 
 
 
 
After the Trust's sale of the land to Dean, the Trust transferred what all concerned 
believed was still its mineral interest to the Trust's beneficiaries. The beneficiaries, in 
turn, made several additional transfers of the interest among themselves, executing and 
recording mineral deeds and quitclaims with the Rice County Register of Deeds. On 
March 6, 2008, Dean conveyed his interest in the property to SDM Properties2, LLC 
(SDM2), evidently an entity owned, at least in part, by Dean. 
 
From January 2008 until August 2014, the Trust and then its successors in interest 
continued to be paid royalties for mineral production from the land sold to Dean. The 
Trust and then its successors in interest also continued to pay all property taxes associated 
with that production. 
 
In April 2014, LCL, LLC, a company formed by Ron Laudick and Cheryl 
Armstrong, agreed to buy the property from SDM2. Before this conveyance was 
finalized, Laudick sent Dean an e-mail acknowledging "that the mineral rights do not go 
with the property."  
 
RCAT again acted as the closing agent and title insurer for the 2014 transaction. 
Again, the deed prepared to record the conveyance did not note the Trust's 2008 mineral 
right reservation.  
 
After the 2014 sale closed, Laudick contacted RCAT about the mineral rights on 
the property. He asked about the discrepancy between Dean's understanding of the 
ownership and RCAT's title commitment. RCAT conducted a title search and discovered 
that the 2008 deed had not included the reservation of the Trust's mineral interest. RCAT 
did not contact the Trust or its successors in interest, but it asked LCL to sign a corrected 
deed to remedy the omission. LCL refused. The Trust's successors in interest first learned 
of the brewing dispute in August 2014, when the company operating the oil and gas lease 
5 
 
 
 
on the property contacted Gregory about LCL's claim of ownership and the right to 
receive royalties. Royalty payments to the Trust's successors in interest were suspended 
by August 21, 2014.  
 
LCL filed a petition to quiet title on the mineral interest on September 22, 2014. It 
named as defendants the Trust's successors in interest—Gregory; Julie; James W. Falen, 
in his capacity as sole trustee of the James W. Falen Living Trust U/A dated April 30, 
2007; and Maryl M. Wesolowski. LCL asserted that its interest in the mineral rights was 
superior to the interest claimed by any defendant. 
 
On December 1, 2014, the Falens filed an answer denying LCL's ownership of the 
mineral interest and a counterclaim to quiet title in their favor, based in part on the 
assertion that LCL did not qualify as a bona fide purchaser because it had actual notice 
that the mineral right was not included with the land. The same day, the Falens also filed 
a third-party petition against RCAT, alleging RCAT had been negligent and had breached 
an implied contract by failing to include the mineral reservation in the deed it prepared 
and recorded for the 2008 sale.  
 
RCAT moved for summary judgment on the Falens' third-party claims. It argued 
that any injury to the Trust and the Falens occurred in January 2008 and thus the 
applicable two-year statute of limitations had expired. See K.S.A. 60-513(a)(4). 
Specifically, RCAT argued that the "the uncontroverted facts establish that the [Trust] 
knew or could have known of the error in the deed in January 2008" because Gregory and 
Julie had received the 2008 deed two days before they executed it and returned it to 
RCAT. In the alternative, RCAT argued that K.S.A. 58-2222 charged the Trust and its 
successors in interest with constructive notice of the contents of the 2008 deed as it was 
filed and recorded.  
 
6 
 
 
 
A few days later, the Falens moved to amend their third-party petition, seeking to 
add allegations regarding the 2014 sale and a claim for breach of fiduciary duty by 
RCAT. Although this motion was never ruled upon, the district judge thereafter treated 
the amended petition as the controlling pleading for the Falens' third-party claims.  
 
In their response to the RCAT motion for summary judgment, the Falens argued 
that the "clear language of K.S.A. §60-513(b) indicates the limitation period is triggered 
by both the act which causes injury and the existence of substantial injury." They also 
argued that "'in a tort action where the evidence is in dispute as to when substantial injury 
first appears or becomes reasonably ascertainable, the issue is for determination by the 
trier of fact.'" They asserted that a genuine issue of material fact exists in this case on 
when their injury from RCAT's omission of the mineral reservation in the 2008 deed 
became reasonably ascertainable.  
  
With respect to RCAT's argument that the Falens had constructive notice under 
K.S.A. 58-2222, the Falens cited Luthi v. Evans, 223 Kan. 622, 629, 576 P.2d 1064 
(1978), for the proposition that the purpose of the recording statute is to "'impart to a 
subsequent purchaser notice of instruments which affect the title to a specific tract of land 
in which the subsequent purchaser is interested at the time.'" Because they did not qualify 
as subsequent purchasers, the Falens argued, they were not in the class of individuals 
whom the Legislature intended to charge with constructive notice under K.S.A. 58-2222.  
 
The district judge bifurcated the quiet title action between LCL and the Falens 
from the Falens' third-party claims against RCAT. LCL and the Falens entered into a 
confidential settlement, and the judge dismissed the quiet title action on November 23, 
2015.  
 
7 
 
 
 
RCAT's reply in support of its motion for summary judgment, filed in December 
2015, repeated its actual and constructive notice claims, adding that any allegation that 
Gregory and Julie were inexperienced with reviewing deeds was irrelevant because the 
standard for whether the Falens' substantial injury was "reasonably ascertainable" is 
objective rather than subjective.  
 
After a hearing, the district judge granted summary judgment to RCAT on all of 
the Falens' claims. His journal entry of judgment and memorandum opinion read in 
pertinent part:  
 
"The Court having reviewed the pleadings filed by the parties, and after hearing 
the argument of counsel, finds that Third Party Defendant Rice County Abstract & Title 
Company Inc. is entitled to summary judgment on the basis that the statute of limitations 
bars all Third Party Plaintiff James Falen et al. claims against Third Party Defendant Rice 
County Abstract & Title Company, Inc."  
 
"The Court wants to make clear it is not considering any of the merits of the 
causes of actions presented by the [Falens] in the Motion for Summary Judgment. This 
decision is based on the application of the appropriate statute of limitations only. . . .  
 
". . . The [Falens] have alleged both [contract and tort causes of action], but 
certainly the statute of limitations for contract would have run. The factual statements are 
clear [that] the event giving rise to the cause of action for contract occurred no later than 
the filing of the defective deed on January 18, 2008. Suit in this matter was filed (through 
the Third Party Petition) on December 1, 2014. This would be a period of 6 years 317 
days. . . . 
 
 
 
"Certainly if this matter was a contract claim, the longest of possible statute of 
limitations would be 5 years on a written contract, though there have been no factual 
allegations made by the [Falens] that there ever was a written contract between the 
parties. An implied contract would have a statute of limitations of 3 years. See K.S.A. 60-
8 
 
 
 
512 and K.S.A. 60-513. . . . Certainly, if the cause of action is for breach of contract that 
existed, the statute of limitations has run.  
 
 
"The [Falens] have argued they have many causes of action in tort including 
breach of fiduciary duty, professional negligence, etc., but none carry any longer statute 
of limitations. Therefore, the longest of statute of limitations available to the [Falens] is 
that found for [tortious] conduct set out in K.S.A. 60-513 which provides that actions for 
injuries to the rights of another, not arising on contract, shall be brought within 2 years, 
subject to the proviso that the cause of action shall not be deemed to have [accrued] until 
the act giving rise to the cause of substantial injury is discovered, or is reasonably 
ascertainable, but no more than 10 years from the initial act. The [Falens] don't argue 
there is any longer statute of limitations available to them, they simply argue that their 
injury did not become reasonably ascertainable until 2014, when they received notice of a 
claim to oil runs they had received before and after the deed of 2008, well within the 2 
year statute of limitations.  
 
 . . . .  
 
 
"At this point the Court needs to note the record and statement of uncontroverted 
facts provided by the [Falens] is overwhelmingly convincing that a factual issue has been 
accreted that they had no actual realization of the injury until this time. Without detailing 
each factual statement, it is clear the [Falens] have alleged they continued to receive oil 
runs, continued to pay taxes, and proceeded to deed the mineral interest they believe they 
had retained which would be consistent with their claim of the time of 'actual' discovery 
of the injury. The Court makes it clear the required decision that the Court believes it 
must make is not based on the actual discovery of the injury but on the strong case law 
indicating the statute of limitation begins to run when the injury 'becomes reasonably 
ascertainable' not the fact the [Falens] failed to do so.  
 
 
"The [Falens] cited in their brief Knight v. Myers 12 Kan. App. 2d 469, at 474 
(1988) the very clear understanding of Kansas law which provides:  
 
9 
 
 
 
'An injury is reasonably ascertainable when the plaintiff knew or 
could reasonably have expected to know of the alleged 
negligence.' 
 
"[The Falens] also cite Gilger v. Lee Const., Inc., 249 Kan. 307 at p. 311 (1991):   
 
'In a tort action where the evidence is in dispute as to when substantial 
injury first appears or becomes reasonably ascertainable, the issue is for 
determination by the trier of fact.' 
 
"Both of these cases are cited in Bi-State Development Co., Inc. v. Shafer, Kline 
& Warren, Inc., 26 Kan. App. 2d 515, 990 P.2d 159 (1999)." 
 
The district judge quoted Bi-State at length and concluded that its application of 
K.S.A. 58-2222 to bar a claim based on a recorded easement would drive his disposition 
of the negligence claim advanced by the Falens here.  
 
In Bi-State, the June 10, 1986, recording of an inconsistent easement imparted 
"'notice to all persons of the contents thereof'" under the statute, and a Court of Appeals 
panel held that it made the plaintiff's injury "reasonably ascertainable."  Although the 
plaintiff filed suit within two years of its discovery of the inconsistency, the claim came 
more than 10 years after the easement was recorded. 26 Kan. App. 2d at 519-20.  
 
The district judge in this case continued:   
 
 
"In the matter, there is no disputed fact that the act giving rise to the cause of 
action [occurred] no later than January 18, 2008 when the Deed in question was filed of 
public record. The question then becomes, under the facts as stated by the [Falens], is 
there a material fact in dispute that must be resolved to determine if the act giving rise to 
the cause of action was not reasonably ascertainable. The Court believes as a matter of 
law, as determined in the Bi State case above, that the injury was reasonably ascertainable 
10 
 
 
 
based upon the undisputed facts on January 18, 2008 simply by reviewing the deed 
placed of public record. Again, the decision of this Court is not based upon the actual 
awareness of the [Falens] that the minerals had not been reserved in the deed. It is based 
on the fact that as a matter of law, it would have been reasonably ascertainable by anyone 
who cared to take a look at the recorded deed that the minerals had not been reserved.  
 
 
"The [Falens] argue they are not experts and should not be required to understand 
the deed conveyed the minerals as written. . . . While they may not have personally 
understood . . . , the Bi State case makes it clear:  'the statute charges notice to "all 
persons," not just experts.' It is certain from the facts viewed in the light most favorable 
to the [Falens] this deed was drawn appropriately to convey the minerals and is 
unambiguous as to that purpose, even if it shouldn't have. This deed conveyed notice to 
all when it was filed even if those reviewing it needed assistance from an expert to 
understand its meaning. If the [Falens] had asked an expert to view the records and 
interpret the deed for them, the expert would have told them so. It was reasonably 
ascertainable when it was filed that the injury occurred." 
 
The district judge also granted judgment to RCAT on the breach of fiduciary duty 
claim, despite the Falens' argument that it arose out of RCAT's behavior in 2014 rather 
than or in addition to RCAT's behavior in 2008.   
 
"The final argument made by the [Falens] is that they have a new cause of action 
that did not accrue until 2014, that is separate and apart from the 2008 alleged acts of 
negligence and therefor this new cause of action is well within the statute of limitations. 
Certainly if that is the case, the matter should proceed on the new cause of action only. 
However, if this new cause of action is nothing more than an extension or a continuing of 
the harm created in the original act, the statutes still commence when the harm, not the 
extent of it, was reasonably ascertainable. . . . . [T]his new cause of action is based on an 
alleged duty of RCAT as a fiduciary of the [Falens] to protect them and look out for their 
best interest far into the future, or at least up until the point that they issued a new title 
insurance policy on the next sale of the same real estate, all because they undertook the 
closing of their real estate sales contract and the drafting of the deed in 2008. Further, 
11 
 
 
 
RCAT owed a duty to the mineral deed holders whose mineral deeds were not in the 
chain of title as a result of the 2008 deed. That duty also relates back to the [Falens] 
pursuant to the fiduciary duty that they have alleged existed[,] all as a result of the 
undertaking to act in a professional capacity at the time of closing and the drawing of the 
ill-fated deed.  
 
"This Court in this opinion is clearly not addressing whether such a cause of 
action can be maintained or whether such a fiduciary duty existed. For the purposes of 
this opinion this Court will draw the inference most favorable to the non-moving party 
and assume such a cause of action does exist. However, this Court must still address the 
application of the statute of limitations to it. It is this Court's opinion that such cause of 
action could arise solely out of the same act that occurred when the deed was prepared 
and filed in 2008. If that error did not occur, there would be no cause of action under this 
new theory of liability. The statute of limitations for a breach of fiduciary duty, 
professional or otherwise, and this new cause of action is the same[.] K.S.A. 60-513 . . . 
is not based on when the injury stops nor even on the last act of negligence alleged, but 
when the act first causes substantial injury or it is reasonably ascertainable. The alleged 
facts, undisputed facts for the purposes of this decision, even when viewed in the light 
most favorable to the [Falens], clearly indicate the first substantial injury was the loss of 
their mineral interest they intended to retain. That is an essential element of this new 
cause of action and the new cause of action would not exist without it. As state[d] 
previously, as a matter of law, this act was reasonably ascertainable when the deed was 
recorded in 2008.  
 
 . . . . 
 
"This Court appreciates, under the alleged facts as drawn in the light most 
favorable to the nonmoving party, that the [Falens] were completely unaware of this until 
someone contested their right to receive oil runs in 2014. The alleged facts demonstrate 
an egregious wrong for which recourse should be available and would be if the statute of 
limitations had not run." 
 
12 
 
 
 
The Falens appealed only the summary judgment on their negligence and breach 
of fiduciary duty claims to the Court of Appeals. See LCL, LLC, v. Falen, 53 Kan. App. 
2d 651, 652, 666, 390 P.3d 571 (2017). 
 
The panel reversed RCAT's summary judgment on the negligence claim because, 
in its view, the Falens did not sustain damages, an essential element of a negligence cause 
of action, until August 2014, when they stopped receiving royalties under the oil and gas 
lease. Although the Falens suffered a legal or "paper" injury when RCAT recorded the 
2008 deed without reserving the mineral right, the Falens had no cognizable monetary 
damages until the royalties stopped. 53 Kan. App. 2d at 660-61. The panel discounted the 
district judge's reliance on constructive notice. Such notice was immaterial because this 
was a case "where a negligent act causes a substantial injury that does not actually occur 
until sometime later." 53 Kan. App. 2d at 663-64.  
 
On the Falens' claim that RCAT undertook a fiduciary duty in 2008 and breached 
or continued to breach it in 2014, the panel also reversed the summary judgment. Again, 
the panel concluded that the breach did not become actionable until the Falens stopped 
receiving royalty payments. 53 Kan. App. 2d at 666. 
 
We granted RCAT's petition for review on what it styled as two issues:  (1) When 
did the statute of limitations begin to run on the Falens' causes of action? and (2) Did 
K.S.A. 58-2222 impart constructive notice to the Falens? We take the liberty of 
examining these two questions after combining them into the only one that matters:  Did 
the Court of Appeals err in reversing the district judge's summary judgment in favor of 
RCAT on the Falens' negligence and breach of fiduciary duty claims?  
 
 
 
13 
 
 
 
DISCUSSION 
 
We take up the Falens' tort claims in the order they were advanced.  
 
Negligence  
 
The standard governing summary judgment is well established: 
 
"'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 when we find reasonable 
minds could differ as to the conclusions drawn from the evidence, summary judgment 
must be denied.' Bank v. Parish, 298 Kan. 755, Syl. ¶ 1, 317 P.3d 750 (2014)." 
Drouhard-Nordhus, 301 Kan. at 622. 
 
Under K.S.A. 60-513(a)(4), an "action for injury to the rights of another, not 
arising on contract, and not herein enumerated," "shall be brought within two years." The 
Falens' negligence claim is governed by this two-year limitations period. See Baska v. 
Scherzer, 283 Kan. 750, 755, 156 P.3d 617 (2007).  
 
The Falens' negligence claim  
 
"shall not be deemed to have accrued until the act giving rise to the cause of action first 
causes substantial injury, or, if the fact of injury is not reasonably ascertainable until 
some time after the initial act, then the period of limitation shall not commence until the 
14 
 
 
 
fact of injury becomes reasonably ascertainable to the injured party." K.S.A. 60-513(b). 
 
This court has defined "substantial injury" to mean "actionable injury."  
 
"'The rule which has developed is:  The statute of limitations starts to run in a tort action 
at the time a negligent act causes injury if both the act and the resulting injury are 
reasonably ascertainable by the injured person. In Hecht [v. First National Bank & Trust 
Co., 208 Kan. 84, 490 P.2d 649 (1971)], neither the negligent act nor the injury were 
ascertainable until a later date. . . . We hold the use of the term "substantial injury" in 
the statute does not require an injured party to have knowledge of the full extent of the 
injury to trigger the statute of limitations. Rather, it means the victim must have sufficient 
ascertainable injury to justify an action for recovery of the damages, regardless of extent. 
An unsubstantial injury as contrasted to a substantial injury is only a difference in degree, 
i.e., the amount of damages. That is not a legal distinction. Both are injuries from which 
the victim is entitled to recover damages if the injury is the fault of another. . . . 
Therefore, we construe the phrase "substantial injury" in K.S.A. 60-513(b) to mean 
"actionable injury."'" Moon v. City of Lawrence, 267 Kan. 720, 727-28, 982 P.2d 388 
(1999) (quoting Roe v. Diefendorf, 236 Kan. 218, 221-23, 689 P.2d 855 [1984]). 
 
In general, "'a cause of action accrues, so as to start the running of the statute of 
limitations, as soon as the right to maintain a legal action arises. . . . [A]n action accrues 
[when] the plaintiff could first have filed and prosecuted his action to a successful 
conclusion.'" Mashaney v. Board of Indigents' Defense Services, 302 Kan. 625, 631, 355 
P.3d 667 (2015) (quoting Pancake House, Inc. v. Redmond, 239 Kan. 83, 87, 716 P.2d 
575 [1986]); see also Garcia v. Ball, 303 Kan. 560, 574, 363 P.3d 399 (2015) (criminal 
defendant's legal malpractice claim accrues when he, she exonerated, i.e., when defendant 
obtains postconviction relief); Brueck v. Krings, 230 Kan. 466, 470-71, 638 P.2d 904 
(1982) (knowledge of fact of injury, not extent of injury triggers statute of limitations); 
Kitchener v. Williams, 171 Kan. 540, 236 P.2d 64 (1951) (statute of limitations ran from 
time of explosion of negligently installed heater, not from time of installation), 
15 
 
 
 
superseded by statute as stated in Tomlinson v. Celotex Corp., 244 Kan. 474, 770 P.2d 
825 (1989).   
 
Based on the governing law reviewed above, there are two inquiries relevant to 
determining when the statute of limitations on the Falens' negligence claim began to run:  
(1) When did the Falens suffer an actionable injury—i.e., when were all the elements of 
the cause of action in place? and (2) When did the existence of that injury become 
reasonably ascertainable to them? The Court of Appeals' decision focused mainly on the 
first question, the district judge on the second. We disagree with the answers arrived at by 
each. 
 
On the first question, the Falens immediately suffered more than a mere paper 
injury on January 18, 2008, when the deed for the Trust-to-Dean sale was filed and 
recorded. As of this date, at a minimum, a cloud on their title to the mineral interest 
arose. Equitable relief may be available when real property has been included in a deed 
by mistake and the parties never intended that it should be conveyed. Schlatter v. Ibarra, 
218 Kan. 67, Syl. ¶¶ 2-3, 542 P.2d 710 (1975).  
 
Moreover, an instrument may be reformed even though the parties did not 
carefully examine the document before executing it. 218 Kan. 67, Syl. ¶ 8. Mere 
negligence is not a bar to reformation when the ground for reformation is mutual mistake. 
218 Kan. 67, Syl. ¶ 9. But the party seeking reformation of a deed must show the mistake 
and the prejudice that will result from failure to reform the instrument. See Unified Gov't 
of Wyandotte Cty./Kansas City v. Trans World Transp. Servs., L.L.C., 43 Kan. App. 2d 
487, 493, 227 P.3d 992 (2010) (When property included in deed because of mutual 
mistake, "the grantor is under no obligation to convey such property, and the grantee has 
no right to retain such property."). 
 
16 
 
 
 
The Falens suffered a substantial injury on January 18, 2008, because 
demonstrating the existence of a mutual mistake justifying reformation of a deed is bound 
to be a costly process. In addition, although there is ample evidence in this case that the 
2008 deed's failure to reserve the mineral right was the product of the mutual mistake of 
the Trust and Dean, the Falens' ability to seek reformation faced a five-year deadline. See 
K.S.A. 60-511(5). Thus the Falens' substantial, actionable 2008 injury was compounded 
on January 18, 2013, when their equitable cause of action for reformation would no doubt 
face a statute of limitations problem of its own, possibly one that would sap its legal 
potency.  
 
This brings us to the second question:  When did the existence of the 2008 
substantial, actionable injury become reasonably ascertainable to the Trust or the Falens? 
This is the question on which the district judge concentrated.  
 
As he noted, Kansas law requires that the Falens' negligence claim have been 
brought within two years unless the fact of injury was not reasonably ascertainable until 
sometime after the act causing the injury. K.S.A. 60-513(b). And, when disputed 
evidence exists about when an injury became reasonably ascertainable, the trier of fact 
makes the determination. See Gilger, 249 Kan. at 311.  
 
Our recent decision in Armstrong v. Bromley Quarry & Asphalt, Inc., 305 Kan. 16, 
378 P.3d 1090 (2016), is instructive on the contours of the "reasonably ascertainable" 
standard. In that case, we examined when the statute of limitations began to run for 
plaintiff Willis L. Armstrong's trespass claim based on unauthorized subsurface mining. 
We noted:   
 
"Because the mining occurred below ground level, [the defendant quarry 
company's] intrusion upon the Armstrong property and theft of the rock would not have 
17 
 
 
 
been immediately apparent to Armstrong, without more. And under these facts, that 
something more must have been the house shaking that Armstrong discerned to be from 
blasting somewhere on the property and the suspicions of unauthorized mining based on 
previous business dealings with [the defendant]." 305 Kan. at 28. 
 
In other words, the shaking was a trigger for further investigation. Once 
Armstrong felt it, we asked:  "[W]hat, if anything, could Armstrong have done next to 
ascertain the fact of this injury?" The answer:   
 
"[I]t is undisputed Willis [Armstrong] obtained maps from the regulatory agencies, some 
of which Bromley Quarry had prepared. Without exception, those maps incorrectly 
showed there had been no mining on the Armstrong property. The [Court of Appeals] 
noted that after inspecting these maps, Willis did not try to get 'his own survey or 
inspection of his property, he never had cores drilled, and did not ask any government 
agency for help during the time when his suspicions arose, although he did consider 
it.' But what would cause a reasonably prudent landowner to take this additional action 
under the circumstances—after reviewing maps on file with regulatory agencies that 
showed no mining had occurred on his or her property? The limited record here does not 
explain that, and neither the panel nor the district court delved further into this to consider 
how that might impact the statute of limitations analysis. And the panel arrived at its 
conclusion [that summary judgment was proper] even though there is nothing in the 
record that informs whether such activities would have been possible, practical, or 
effective. [Citation omitted.]" 305 Kan. at 29. 
 
Because of our inability as an appellate court to do fact-finding on whether further 
followup was necessary for "reasonable" conduct on Armstrong's part and whether any of 
the other avenues for investigation alleged to be available would have disclosed the 
quarry company's wrongful conduct, we could not "conclude as a matter of law that any 
mining was reasonably ascertainable." 305 Kan. at 32. We therefore reversed the district 
court's summary judgment in favor of the quarry company based on the expiration of the 
statute of limitations. 
18 
 
 
 
In this case, RCAT has argued that the Trust and the Falens knew or should have 
known of their substantial injury in January 2008. Its actual notice argument is based on 
its assertions that it sent the 2008 deed to Gregory and Julie for review and signature and 
that they had it in their possession for two days before executing it and returning it to 
RCAT for filing and recording. But Gregory and Julie say the deed was sent to them 
simply for their signatures as co-trustees; they were not expected to and did not review it; 
further, they did not understand that its technical language failed to effect the intended 
mineral right reservation for the Trust. If Gregory and Julie signed the deed without 
reviewing and understanding it, as they insist, then they did not have actual notice of its 
content. This genuine issue of material fact prevented summary judgment on RCAT's 
actual notice theory.   
 
Instead, the district judge relied on RCAT's "should have known" argument that 
substantial injury to the Trust and the Falens was reasonably ascertainable on January 18, 
2008. RCAT persuaded the district judge that the constructive notice provision in K.S.A. 
58-2222 was controlling. That statute provides:   
 
"Every . . . instrument [conveying real estate] in writing, certified and 
recorded . . . shall, from the time of filing the same with the register of deeds for record, 
impart notice to all persons of the contents thereof; and all subsequent purchasers and 
mortgagees shall be deemed to purchase with notice." 
 
Relying in part on Black v. Black, 64 Kan. 689, 68 P. 662 (1902), and Hutto v. 
Knowlton, 82 Kan. 445, 108 P. 825 (1910), RCAT argues that "[t]he rule in Kansas for 
over 100 years has been that the constructive notice imparted by [K.S.A. 58-2222] is 
sufficient for purposes of accrual of the statute of limitations." Although such a broad 
rule might be supported by reading Black alone, the later Hutto decision clarified that 
19 
 
 
 
constructive notice is imparted only to those who have a duty to investigate, a concept 
eventually echoed in our Armstrong decision:    
 
"Where a public record is required by law to be kept as a source of information 
respecting property rights and interests, a duty rests upon anyone to whom the 
information is material to improve with diligence the opportunity of learning that which 
the record discloses. It follows that, if the opportunity be neglected, the interested person 
will be bound to the same extent as if he had in fact examined the record. But the rule is 
no broader than its basis, and if for any reason no obligation exists to consult the record, 
or if the interested person be circumvented from taking advantage of his opportunity, the 
rule does not obtain." (Emphasis added.) Hutto, 82 Kan. at 448-49. 
 
RCAT also relies on the Court of Appeals' more recent decision in Bi-State 
Development, 26 Kan. App. 2d 515.  
 
In that case, defendant Shafer, Kline & Warren, Inc., prepared a real estate plat for 
a business park of plaintiff Bi-State Development Co., Inc. The plat showed an easement, 
and the plat was presented to, and approved by, the city's planning commission. Another 
version of the easement was executed by an agent of Bi-State and recorded. The 
discrepancy between the two versions of the easement went undiscovered until almost 10 
years later, when a portion of the real estate was sold. Relying on caselaw charging a 
landowner with knowledge of zoning ordinances, the Bi-State panel concluded that the 
recording of the easement imparted constructive notice and started the running of the 
limitation period. 26 Kan. App. 2d at 516-17, 519. 
 
The Bi-State panel did not discuss how or when Bi-State's duty to investigate the 
problem arose. 26 Kan. App. 2d at 515, 519. And unquestioning adherence to its holding 
would ignore the lesson from our Hutto and Armstrong decisions about the need for a 
trigger for further inquiry. See Hutto, 82 Kan. at 448-49; Armstrong, 305 Kan. at 28-29. 
20 
 
 
 
If we were to follow the Bi-State panel's lead in this case, we would equate constructive 
notice as a matter of law of the contents of a deed with a factual finding of reasonably 
ascertainable knowledge of a substantial, actionable injury from omission of a mineral 
interest reservation from that deed. We are unwilling to convert a question of fact into a 
question of law in this way.  
 
In this case, the existence of a recorded deed that does not mention the reserved 
mineral interest specifically is one piece of relevant evidence among all the facts and 
circumstances to be considered by the district court fact-finder in answering the 
"reasonably ascertainable" question. Testimony from RCAT and from Gregory and Julie 
about their duties on receipt of the deed RCAT sent to them is additional relevant 
evidence. Certainly, as the Court of Appeals panel recognized, evidence of the Trust's 
and the Falens' continuing receipt of royalties and payment of taxes also will be relevant,   
particularly on the issue of whether the Trust's or the Falens' duty to investigate matters 
further should have been triggered under Hutto and Armstrong. The significance of the 
transfers among the Trust's beneficiaries after the 2008 sale also must be considered. In 
short, the constructive notice of K.S.A. 58-2222—which is about notice to the world, not 
to the parties to the real estate conveyance recorded via the instrument—tells only a part 
of a story still with two competitive sides. The statute is not, as a matter of law, outcome-
determinative on what remains a question of fact.  
 
For these reasons, we reverse the summary judgment granted RCAT by the district 
judge on the Falens' negligence claim. We do so for reasons other than those relied on by 
the Court of Appeals panel. The filing and recording of the 2008 deed did cause the 
Falens substantial, actionable injury, which means the injury occurred long before the 
royalty checks quit arriving. But, if the substantial injury was not, as a matter of fact, 
reasonably ascertainable by the Trust or the Falens before December 1, 2012, the 
21 
 
 
 
negligence claim is timely under K.S.A. 60-513(a)(4) and (b). We must remand to the 
district court for further proceedings. 
 
Breach of Fiduciary Duty  
 
The standard for reviewing summary judgment is the same for the Falens' 
fiduciary duty claim as it is for their negligence claim. The governing statute of 
limitations for a breach of fiduciary duty claim also is the same as that for a negligence 
claim. See K.S.A. 60-513(a)(4). The Trust and the Falens had two years to act on RCAT's 
alleged breach.   
 
It appears that the district judge's summary judgment in favor of RCAT on the 
Falens' breach of fiduciary duty claim was based on a fundamental misunderstanding of 
the breadth of the allegations underlying it. It was not, as the judge apparently believed, 
based only on allegations about RCAT's behavior in 2008 but also on allegations about 
RCAT's behavior in 2014. As recited in the Falens' amended third-party petition, RCAT, 
in 2014,    
 
"failed to appropriately conduct the title search with respect to the Subject Real Property, 
failed to appropriately indicate the condition of title or any exceptions thereto in the 
initial Title Insurance Commitment and Policy, failed to note the interest of the Third 
Party Plaintiffs in the minerals in the Subject Real Property as would have been readily 
available through the records located in the Rice County Courthouse, and failed to detect 
and disclose Third Party Defendants' many previous mistakes in the closing of the 
Sammy Dean Contract. 
 
  
. . . . 
 
22 
 
 
 
". . . The services provided by the Third Party Defendant as to the Sammy Dean 
Contract and the LCL/SDM Contract were incompetently performed and this constituted 
a breach of the Third Party Defendant's fiduciary duties to Third Party Plaintiffs." 
 
 
In other words, whatever breach of fiduciary duty may have begun in 2008 
continued or was repeated, in the Falens' view, in 2014. Although any breach that 
occurred in 2014 may be successfully defensible on other grounds not argued before us 
today, it is simply not excusable from further litigation in this case because of the statute 
of limitations. The Falens moved to amend their third-party petition to add the breach of 
fiduciary duty claim on October 5, 2015; and the district judge treated the amended 
pleading as controlling. Its timing, regardless of whether the amended allegations and 
additional cause of action related back to the filing of the original third-party petition on 
December 1, 2014, mean the claim was brought well within the permitted two years 
following any 2014 breach. We therefore reverse the district judge's summary judgment 
in favor of RCAT on the Falens' breach of fiduciary duty claim. Again, we must remand 
this case to the district court for further proceedings. 
 
CONCLUSION 
 
We reverse the summary judgment granted in favor of RCAT in the district court 
and affirm the decision of the Court of Appeals. We remand this case to district court for 
further proceedings consistent with this opinion.