Title: Corvias Military Living, LLC v. Ventamatic, Ltd.

State: kansas

Issuer: Kansas Supreme Court

Document:

1 
 
IN THE SUPREME COURT OF THE STATE OF KANSAS 
 
 
No. 116,307 
 
CORVIAS MILITARY LIVING, LLC, and  
CORVIAS MILITARY CONSTRUCTION, LLC, 
Appellants, 
 
v. 
 
VENTAMATIC, LTD., and JAKEL, INC., 
Appellees. 
 
 
SYLLABUS BY THE COURT 
 
1. 
 
The Kansas Product Liability Act (KPLA), K.S.A. 60-3301 et seq., codifies a 
modified version of the common-law economic loss doctrine. In a product liability cause 
of action, the KPLA excludes recovery of damages for any "direct or consequential 
economic loss" but permits a plaintiff to recover damages for any damage to property. 
K.S.A. 60-3302(d). This includes damage to the product itself.  
 
2. 
 
Because the KPLA excludes from the scope of a product liability cause of action 
any claim to recover direct or consequential economic loss, the KPLA does not subsume 
or extinguish any legally viable alternative cause of action seeking recovery for direct or 
consequential economic loss.  
 
Review of the judgment of the Court of Appeals in 54 Kan. App. 2d 169, 397 P.3d 441 (2017). 
Appeal from Geary District Court; BENJAMIN J. SEXTON, judge. Opinion filed October 25, 2019. 
Judgment of the Court of Appeals reversing the district court is affirmed in part and reversed in part. 
Judgment of the district court is affirmed in part, reversed in part, and remanded with directions. 
 
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Charles L. Philbrick, pro hac vice, of Rathje & Woodward, LLC, of Wheaton, Illinois, argued the 
cause, and William J. Bahr, of Arthur-Green, LLP, of Manhattan, was with him on the briefs for 
appellants.  
 
Seth A. Lowry, of Fisher, Patterson, Sayler & Smith, L.L.P., of Topeka, argued the cause, and 
James P. Nordstrom, of the same firm, was with him on the briefs for appellee Ventamatic, Ltd. 
 
David E. Rogers, of Foulston Siefkin LLP, of Wichita, argued the cause, and Daniel J. Buller, of 
the same firm, was with him on the briefs for appellee Jakel Motors, Inc. 
 
The opinion of the court was delivered by 
 
STEGALL, J.:  The plaintiffs in this lawsuit—Corvias Military Living, LLC, and 
Corvias Military Construction, LLC—collectively form a construction firm specializing 
in building military housing. Corvias built thousands of homes near Fort Riley in Geary 
County. In these homes, Corvias installed bathroom ceiling fans constructed by the 
defendants—Ventamatic, Ltd., and Jakel Motors, Inc. After installation, several of the 
ceiling fans caught fire and damaged several homes. Corvias then sought to mitigate 
further damage by removing and replacing the remaining fans. This lawsuit followed. 
 
The district court entered summary judgment against Corvias, holding that the 
economic loss doctrine barred Corvias from recovery. Corvias appealed, and the Court of 
Appeals reversed. The panel reasoned that the economic loss doctrine did not bar Corvias 
from asserting a product liability claim because the property damage to the homes was 
not economic loss. We granted review. 
 
FACTUAL AND PROCEDURAL BACKGROUND 
 
Corvias is a military housing developer that built and now manages privatized 
family housing at Fort Riley, Kansas. During the construction phase, Corvias, through its 
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subcontractors, purchased and installed approximately 3,785 "NuVent" bathroom ceiling 
fans into the Fort Riley homes. Ventamatic manufactures the NuVent model bathroom 
exhaust fans, and some of these fans were built with electric motors manufactured by 
Jakel.  
 
On June 12, 2012, a fire occurred in one of the homes. A defective electrical motor 
in a NuVent bathroom exhaust fan allegedly caused the fire. Corvias claims the fire 
caused $656.26 in damage. Then, another fire occurred in a different housing unit 
constructed by Corvias. Again, a defective electrical motor in a NuVent bathroom 
exhaust fan allegedly caused the fire. This fire caused extensive damage to the home 
including walls, ceiling, rafters, artwork, and personal property of the tenants. 
Additionally, the fire caused damage to the adjoining townhome. In total, this fire caused 
$88,994 in damages. 
 
But the fires were not the only problem Corvias had with the NuVent fans. Before 
the fires, Corvias allegedly experienced over 100 failed NuVent fans. So, following the 
second fire, Corvias removed the remaining 3,783 NuVent fans from its housing units 
and replaced them with a new brand of bathroom fans. This removal and replacement of 
the fans cost an estimated $459,027. 
 
Corvias filed suit in Geary County District Court against Ventamatic, Jakel, and 
four other defendants. In Corvias' amended petition, Corvias asserted:  (1) a product 
liability claim under the Kansas Product Liability Act; (2) claims for breaches of express 
and implied warranties of merchantability; (3) an unjust enrichment claim; (4) a claim 
under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.; and (5) breach of 
contract. Corvias sought $459,027.26 in damages for the removal and replacement of the 
3,783 NuVent fans and $50,000 for property damage associated with the two fires—the 
amount of its insurance deductible. 
 
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Corvias voluntarily dismissed its claims against the four other defendants—
including all its breach of contract claims—with prejudice. Ventamatic and Jakel filed 
motions for summary judgment arguing the economic loss doctrine barred Corvias' 
product liability claims because the damages incurred were purely economic. Ventamatic 
also argued Corvias' warranty claims were barred because the express one-year warranty 
had lapsed and the parties lacked privity.  
 
The district court granted summary judgment to both Ventamatic and Jakel. The 
district court began by noting that the Kansas Product Liability Act (KPLA) governs all 
product liability claims in Kansas. The district court determined, therefore, that "the only 
claim plaintiffs brought against Ventamatic in this lawsuit is a product liability claim—
regardless of how plaintiffs may have previously denominated their causes of action."  
 
The district court then held that the economic loss doctrine barred Corvias from 
recovering its removal and replacement costs. The district court noted that under 
Northwest Arkansas Masonry, Inc. v. Summit Specialty Products, Inc., 29 Kan. App. 2d 
735, 31 P.3d 982 (2001), removal and replacement costs fell under the economic loss 
doctrine. And because Corvias did not dispute that these costs were economic losses, the 
court held that the economic loss doctrine barred Corvias from recovering.  
 
The district court also held that the economic loss doctrine barred Corvias from 
recovering for any loss caused by the fires. The district court relied on the "integrated 
systems" rule to find the fire damage was likewise an economic loss not recoverable in a 
products liability claim. The integrated systems rule was adopted by the Kansas Court of 
Appeals in Northwest Arkansas Masonry, Inc., and posits that "'[d]amage by a defective 
component of an integrated system to either the system as a whole or other system 
components is not damage to "other property" which precludes the application of the 
economic loss doctrine.'" 29 Kan. App. 2d at 744 (quoting Wausau Tile, Inc. v. County 
Concrete Corp., 226 Wis. 2d 235, 249, 593 N.W.2d 445 [1999]).  
5 
 
 
Applying this rule, the lower court reasoned that the fire damage to the homes was 
actually damage to the product itself and must therefore be considered a nonrecoverable 
economic loss. The district court considered the NuVent fans "integrated" component 
parts of the home—the home itself being the integrated system. Because the district court 
viewed the lawsuit as exclusively sounding in product liability, and because the court 
further found all purported damages to be economic losses, the court granted summary 
judgment in favor of Ventamatic and Jakel. Corvias appealed.  
 
On appeal, the Court of Appeals ably summarized the common-law development 
of the economic loss doctrine in Kansas: 
 
"Economic loss is defined as 'loss of use of the defective product, cost of 
replacing the product, loss of profits to plaintiff's business, or damage to plaintiff's 
business reputation from use of the product.' Elite Professionals, Inc. v. Carrier Corp., 
16 Kan. App. 2d 625, 633, 827 P.2d 1195 (1992). Economic loss includes the 'loss of the 
bargain, repair, and replacement cost, loss of profits, and/or goodwill, including 
diminution in value.' In other words, economic loss is those damages that arise as a 'result 
of the failure of the product to perform to the level expected by the buyer, which is the 
core concern of traditional contract law.' Northwest Arkansas Masonry, Inc. v. Summit 
Specialty Products, Inc., 29 Kan. App. 2d 735, 742, 31 P.3d 982 (2001)." Corvias 
Military Living, LLC v. Ventamatic, Ltd., 54 Kan. App. 2d 169, 173, 397 P.3d 441 
(2017). 
 
The panel went on to discuss how the development of the economic loss doctrine was 
primarily driven by a concern to prevent contract law from "'drown[ing] in a sea of tort.'" 
54 Kan. App. 2d at 174 (quoting East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 
858, 866, 106 S. Ct. 2295, 90 L. Ed. 2d 865 [1986]). In other words, at common law, 
economic loss damages are contract damages, not tort damages. This is because "a 
manufacturer in a commercial relationship has no duty under either a negligence or strict 
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products-liability theory to prevent a product from injuring itself." East River S.S. Corp., 
476 U.S. at 871. Because as a matter of law there is no duty to prevent a product from 
injuring itself, there can be no recovery for such damages under any tort theory, including 
a common-law product liability claim.  
 
Our Court of Appeals had previously explained that the economic loss doctrine is 
a "rule that is straightforward and predictable and that establishes a logical demarcation 
between cases properly pursued as tort actions and those which are warranty claims." 
Koss Construction v. Caterpillar, Inc., 25 Kan. App. 2d 200, 205, 960 P.2d 255 (1998). 
The panel below then noted that this court has refused to apply the economic loss 
doctrine in the context of a tort claim when a duty actually exists as a matter of law. 
Corvias Military Living, LLC, 54 Kan. App. 2d at 176 (discussing Rinehart v. Morton 
Buildings, Inc., 297 Kan. 926, 305 P.3d 622 [2013], and David v. Hett, 293 Kan. 679, 270 
P.3d 1102 [2011]). 
 
With this as background, the Court of Appeals panel then turned to the question of 
the scope of the "product" itself. If Ventamatic and Jakel did not have a legal duty to 
prevent the bathroom fan from damaging itself, did Ventamatic and Jakel have a legal 
duty to prevent the fan from damaging the house? The answer to this question turns on 
the application of the integrated system rule and depends, essentially, on whether the 
"product" is the house as a whole, or only the discrete part of the house manufactured and 
sold by the defendants.  
 
On this score, the Court of Appeals disagreed with the district court's conclusion 
that the fans were an integrated part of the homes—that the homes themselves were the 
products and that Ventamatic and Jakel had no legal duty to prevent damage to the 
"product." Corvias Military Living, LLC, 54 Kan. App. 2d at 179. In reaching its 
conclusion, the panel relied on the Wisconsin Court of Appeals decision in State Farm 
Fire and Cas. Co. v. Hague Quality Water, 345 Wis. 2d 741, 826 N.W.2d 412 (2012). 
7 
 
There, the Wisconsin court held that "a defective product must be integral to the function 
of the damaged property before the defective product and the damaged property may be 
considered part of the same integrated system." 345 Wis. 2d at 748.  
 
The panel highlighted the use of the word "integral" noting that it "means 
'[e]ssential or necessary for completeness; constituent.'" Corvias Military Living, LLC, 
54 Kan. App. 2d at 178 (quoting The American Heritage Dictionary 911 [5th ed. 2016]). 
The panel found that here, the "fans at issue . . . [were] not integral, necessary, essential, 
or indispensable to the functioning of the damaged housing units." 54 Kan. App. 2d 
at 179. As a result, the panel reversed the grant of summary judgment in favor of 
Ventamatic and Jakel with respect to the alleged property damage to the homes.  
 
The Court of Appeals, however, did not expressly address whether the claim for 
removal and replacement damages was still a viable part of Corvias' product liability 
cause of action. And neither did the panel consider Corvias' implied warranty claim 
separately:   
 
"In light of our conclusion, it is unnecessary for us to address the issue of 
whether the bathroom exhaust fans were inherently dangerous. As the district court 
correctly noted, the Kansas Product Liability Act 'consolidates all product liability 
actions, regardless of theory, into one basis for liability.' Accordingly, we will not 
consider the implied warranty claim separately. [Citations omitted.]" 54 Kan. App. 2d 
at 179. 
 
Thus, it is clear to us that the panel's decision left some uncertainty about the ongoing 
viability of Corvias' claim for recovery of the removal and replacement costs under either 
a product liability claim or some other claim. 
 
Ventamatic and Jakel filed a joint petition for review asking us to consider:  
(1) whether Kansas' "economic loss doctrine" and "integrated systems" rule bar Corvias 
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from recovering for the damage to housing units; and—reflecting the above-noted 
ambiguity in the panel's decision—(2) whether Kansas' economic loss doctrine bars 
Corvias from recovering the costs to remove and replace the allegedly defective in-
ceiling bathroom fans.  
 
ANALYSIS 
 
The summary judgment standard is well known and often stated: 
 
"'"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."' [Citation omitted.]" Patterson v. Cowley County, Kansas, 307 Kan. 
616, 621, 413 P.3d 432 (2018). 
 
At this stage of the litigation there are no disputed facts, only disputed questions of law. 
We exercise plenary judgment over such questions and likewise, to the extent we must 
interpret statutory language to resolve this case, our review is unlimited. Nauheim v. City 
of Topeka, 309 Kan. 145, 149, 432 P.3d 647 (2019). 
 
Corvias seeks to recover money from Ventamatic and Jakel to compensate it for 
two different categories of expenses:  (1) fire damage to the homes; and (2) the cost of 
removing and replacing the fans that did not catch on fire. In asserting these claims, 
9 
 
Ventamatic pursued legal theories governed by the KPLA and other theories not 
governed by the KPLA. This accounts for much of the confusion in this case. 
 
In order to decide which categories of damages Ventamatic might be able to 
recover as a matter of law—and under which cause of action—requires us to first 
interpret the KPLA, K.S.A. 60-3301 et seq. Our interpretation is guided by the 
fundamental rule that the intent of the Legislature governs if it can be ascertained. Ullery 
v. Othick, 304 Kan. 405, 409, 372 P.3d 1135 (2016). We attempt to ascertain this intent 
by giving common words their ordinary meanings. 304 Kan. at 409. When a statute is 
plain and unambiguous, an appellate court will not speculate about the legislative intent 
behind that clear language. 304 Kan. at 409. Only when a court discerns an ambiguity in 
the language chosen by the Legislature will the court resort to statutory construction to 
ascertain legislative intent. 304 Kan. at 409. 
 
In Kansas, the KPLA governs all product liability causes of action. The KPLA 
expressly defines both the scope of a product liability cause of action and the remedies 
available to plaintiffs pursuing such a cause of action:   
 
"(c) 'Product liability claim' includes any claim or action brought for harm caused 
by the manufacture, production, making, construction, fabrication, design, formula, 
preparation, assembly, installation, testing, warnings, instructions, marketing, packaging, 
storage or labeling of the relevant product. It includes, but is not limited to, any action 
based on, strict liability in tort, negligence, breach of express or implied warranty, breach 
of, or failure to, discharge a duty to warn or instruct, whether negligent or innocent, 
misrepresentation, concealment or nondisclosure, whether negligent or innocent, or under 
any other substantive legal theory.  
 
"(d) 'Harm' includes:  (1) Damage to property; (2) personal physical injuries, 
illness and death; (3) mental anguish or emotional harm attendant to such personal 
physical injuries, illness or death. The term 'harm' does not include direct or 
consequential economic loss." K.S.A. 60-3302(c)-(d). 
10 
 
 
 
Ventamatic and Jakel argue first that all of Corvias' claims are subsumed 
into one "product liability claim" according to the statute, and that because the 
economic loss doctrine applies to product liability claims, it bars all of Corvias' 
claims. Ventamatic and Jakel argue these provisions codify the common-law 
economic loss doctrine, including the integrated systems rule.  
 
 
While we agree that K.S.A. 60-3302(d) codifies a version of the economic loss 
doctrine, it is a modified version. Because the KPLA crowds both tort-based theories of 
recovery under the same umbrella as warranty-based theories of recovery, the major 
impetus behind the common-law development of the economic loss doctrine—to push 
claims for economic losses out of the tort arena and back into the contract arena—has 
been at least partially rejected by the Legislature. It makes sense, then, that the KPLA 
would include "damage to property" in its definition of damages that are recoverable. 
K.S.A. 60-3302(d)(1). Giving these words their ordinary meaning, it is clear the 
Legislature intended to allow recovery for damage to any property, even damage to the 
product itself.  
 
This simplified statutory approach finds further support in the Model Uniform 
Products Liability Act (MUPLA), upon which the KPLA was modeled. See Gaumer v. 
Rossville Truck & Tractor Co., 292 Kan. 749, 753, 257 P.3d 292 (2011). The MUPLA 
explains that "the term [harm] also includes damage to the product itself." 44 Fed. Reg. 
62,719 (October 31, 1979). In sum, the economic loss doctrine in Kansas does not 
preclude the recovery of property damage—even property damage to the product itself—
within a product liability cause of action. To the extent this is a modification of the 
common-law economic loss doctrine within the scope of a product liability cause of 
action, it is a modification that is within the power of the Legislature to make. See 
Hilburn v. Enterpipe Ltd., 309 Kan. 1127, 1136, 442 P.3d 509 (2019) ("it is within the 
11 
 
power of the Legislature to modify the common law"). In this statutory framework, 
whether the property is part of an integrated system is irrelevant.  
 
 
But within the scope of a product liability cause of action, the KPLA does codify a 
version of the economic loss doctrine by simply excluding from the definition of harm 
"any direct or consequential economic loss." K.S.A. 60-3302(d). Resolving this case does 
not require us to engage in a drawn-out discussion of this statutory phrase because 
Corvias has conceded that its removal and replacement costs are economic losses under 
K.S.A. 60-3302(d). Therefore, they are statutorily excluded from the category of "harm" 
that can be recovered in a product liability action. The question then arises, did Corvias 
assert any claim outside the scope of the KPLA?  
 
 
 
Indeed, there is a logical circularity to the KPLA. First, "direct or consequential 
economic loss" is excluded from the definition of "harm" in the statute. Second, the 
statute expressly defines the scope of a product liability cause of action in terms of the 
harm caused—"'Product liability claim' includes any claim or action brought for harm 
caused by . . . ." K.S.A. 60-3302(c). By definition, then, any cause of action that lawfully 
seeks to recover direct or consequential economic loss is not a product liability claim and 
is not governed by the KPLA.  
 
Thus, the Legislature has not cast the product liability net so wide as to subsume 
and extinguish other legally viable causes of action for the recovery of economic losses. 
A full accounting of legally viable causes of action for the recovery of economic losses is 
beyond the scope of this case. Though certainly, a pure contract claim may be a viable 
path to recovering economic losses. And though Corvias did not assert any pure contract 
claims against these defendants, it did assert a claim for unjust enrichment. 
 
Unjust enrichment is a modern version of the older doctrine of quasi-contract. 
Haz-Mat Response, Inc. v. Certified Waste Services Ltd., 259 Kan. 166, Syl. ¶ 5, 910 P.2d 
12 
 
839 (1996). The basis of an unjust enrichment claim "'lies in a promise implied in law 
that one will restore to the person entitled thereto that which in equity and good 
conscience belongs to that person.'" University of Kansas Hosp. Auth. v. Board of 
Wabaunsee County Comm'rs, 299 Kan. 942, 960, 327 P.3d 430 (2014) (quoting Haz-Mat 
Response, Inc., 259 Kan. 166, Syl. ¶ 5). Like a contract claim, a quasi-contract arises 
when one party has conferred a benefit to the other without just compensation. Rather 
than granting the aggrieved party relief under a contractual obligation, unjust enrichment 
awards compensation out of justice and equity. 299 Kan. at 960.  
  
 
We are unable to discern from the record before us whether some or all of the 
amounts Corvias claims as removal and replacement damages are legally recoverable in 
an unjust enrichment cause of action. If Corvias can prove the elements of its unjust 
enrichment claim with respect to these claimed damages, neither the economic loss 
doctrine nor the KPLA would bar that recovery.  
 
 
Therefore, we affirm the Court of Appeals decision to reverse the lower court's 
grant of summary judgment to the defendants with respect to any property damage, albeit 
for a different reason. See Trear v. Chamberlain, 308 Kan. 932, 933, 425 P.3d 297 (2018) 
(affirming the Court of Appeals as right for the wrong reason). We reverse the implicit 
holding of the Court of Appeals that Corvias' claim for removal and replacement 
damages is subsumed into its product liability claim and barred by the economic loss 
doctrine. And we remand to the district court for further proceedings consistent with this 
judgment. 
 
 
Affirmed in part, reversed in part, and remanded with directions. 
 
 
LUCKERT, BEIER, and JOHNSON, JJ., not participating. 
13 
 
 
J. CHARLES DROEGE, District Judge, assigned.1 
 
JEFFRY J. LARSON, District Judge, assigned.2 
                                                 
 
 
1REPORTER'S NOTE:  District Judge Droege was appointed to hear case No. 116,307 
vice Justice Luckert under the authority vested in the Supreme Court by art. 3, § 6(f) of 
the Kansas Constitution. 
 
2REPORTER'S NOTE:  District Judge Larson was appointed to hear case No. 116,307 
vice Justice Beier under the authority vested in the Supreme Court by art. 3, § 6(f) of the 
Kansas Constitution.