Opinion ID: 2790598
Heading Depth: 3
Heading Rank: 1

Heading: Consent and Personal Liability

Text: Robl Construction credibly contends Homoly’s words and deeds under the attending circumstances—considered in the light most favorable to Robl Construction—would enable a reasonable jury to find Homoly not only consented to the Robl Construction loan, but also agreed to be personally liable for 40% of the debt. In addition to the 2006 email indicating Homoly “would prefer the money from Robl [Construction] be considered a loan” to be repaid with interest, Robl Construction proposes the following evidence supports its breach-of-contract claim: • Sworn testimony from Steve Robl indicating (1) Homoly requested the loan, (2) Steve requested, on behalf of Robl Construction and the Company, that Homoly personally guarantee the loan, (3) Homoly agreed to do so as required by the buy-sell agreement, and (4) Steve and Homoly frequently discussed the loan and the amount Homoly owed; • Sworn testimony from Vera Robl that Homoly requested Robl Construction make a loan to cover the Company’s shortages, rather than a capital call, and “constant[ly] communicat[ed]” with Robl Construction about the loan; -7- • Sworn testimony from Vera Robl and bookkeeper Sarah Lauffer indicating Homoly agreed to Robl Construction charging interest on the loan, and Homoly thought the interest rate was fair; • Evidence the Company treated the advances from Robl Construction as a loan on its financial statements and attributed 40% of the debt to Homoly as it did with other outstanding loans; • Evidence that for more than four years Homoly received those financial statements indicating he was liable for 40% of the loan at issue yet never objected or denied liability; • Sworn testimony from Lauffer that upon receiving the financial statements, Homoly expressed “panic” about his growing losses; and • Evidence that Homoly benefitted from the loan in that he avoided a capital call and maintained a 40% interest in the Company, and the loan “allowed him to offset the Company’s losses against ordinary income on his individual tax returns.”3 Predictably unswayed by Robl Construction’s evidence, Homoly urges a different interpretation. Having disputed most of Robl Construction’s “Additional Material Facts,” Homoly maintains “nothing in the materials offered” shows the advances were a loan or that the conditions of the parties’ agreements were met, including Homoly’s consent to the loan and his assent to personal liability for the Company’s debt. 3 Homoly’s claim that tax amendments he filed in 2011 “resolve[] any claim as to alleged tax benefits” and moot Robl Construction’s argument that he received a benefit from the loan is without merit. That Homoly amended his taxes after denying liability for the loan does not deprive his prior actions of evidentiary value at trial. See Fed. R. Evid. 401. -8- Homoly, in his appellate brief, claims his intent in agreeing and consenting to personal liability in the buy-sell agreement was limited to a specific loan from a bank. Homoly also disputes the meaning and import of the pivotal 2006 email exchange and challenges Robl Construction’s understanding of the parties’ frequent communications about the loan and Homoly’s personal liability for the debt. For example, in response to Vera Robl’s testimony that Homoly’s periodic requests for Robl Construction to “cover” Company shortages constituted “a loan in every way,” Homoly contends his request to “cover” is “at best, an oral request for money and not a request for a loan”—arguably a distinction without a difference. But questions of intent and whether the parties’ statements and actions satisfied the conditions precedent in their agreements are precisely the type of factual disputes a jury must decide. See, e.g., First Nat’l Bank of Hutchinson v. Kaiser, 564 P.2d 493, 496-97 (Kan. 1977); M West, Inc. v. Oak Park Mall, L.L.C., 234 P.3d 833, 845-46 (Kan. Ct. App. 2010); Cherryvale Grain Co. v. First State Bank of Edna, 971 P.2d 1204, 1209 (Kan. Ct. App. 1999). Further, under Kansas law, Homoly cannot avoid contractual liability “merely by claiming the conditions [precedent] have not been met.” Barbara Oil Co. v. Patrick Petroleum Co., 566 P.2d 389, 393 (Kan. Ct. App. 1977). A party hoping to avoid liability “must affirmatively show that (1) the condition precedent actually failed and (2) because of such failure, the contract will not be performed.” Id. Whether Homoly refused to perform based on “a genuine and good faith claim that a condition precedent failed is a question for the jury.” Id.; accord JDN Dev. Co. v. Terra Venture, Inc., 265 F. Supp. 2d 1239, 1250-51 (D. Kan. 2003) (denying summary judgment where a party flatly asserted conditions precedent were not met). Without addressing Homoly’s burden and the jury’s role in deciding questions of failed conditions under Barbara Oil Co., 566 P.2d at 393, the dissent concludes we -9- should not allow a jury to resolve this contract dispute because, in the dissent’s view, Robl Construction waived any argument that Robl Construction “fulfilled § 6.03(D) and (I) of the operating agreement by loaning money to the Company with Homoly’s prior consent.” Post at 19. Leaving aside the incongruity of Homoly agreeing to guarantee the loan personally without consenting to the loan itself, the dissent’s conclusion that Robl Construction “essentially ignores” § 6.03(D) and (I) is at odds with the record. Post at 18. Rather than ignore the conditions precedent in § 6.03(D) and (I), Robl Construction, challenging the district court’s determination that Homoly expressed a “preference—not request” for a loan, explicitly and repeatedly asserted in its appellate brief that the conditions were met. The dissent acknowledges as much, noting Robl Construction specifically asserted “Homoly consented to” the loan. Post at 20 n.6. Yet the dissent summarily dismisses that assertion because it “addresse[d]” a different argument. Id. The dissent’s belief that this statement is the “only place in which Robl Construction even hints to argue that it fulfilled § 6.03(D),” id., conflicts with the record and the dissent’s own analysis. In framing Robl Construction’s arguments, the dissent admits Robl Construction asserted the loan met the requirements of the parties’ agreements—which would unequivocally include § 6.03(D) and (I)—but concludes such a “general denial” is inadequate to preserve the issue. Post at 17. Drawing a fine distinction between Homoly authorizing the loan and requesting it, the dissent concedes Robl Construction stated Homoly “requested” the loan and presumes Robl Construction was “arguing that such a request constituted the necessary ‘prior consent of a Super-Majority-in-Interest’ to fulfill § 6.03(D).” Post at 17. Yet this presumption apparently is not enough to prevent waiver. In claiming “Robl Construction waive[d]” its arguments, post at 19-20, the dissent overlooks, among other things, Robl Construction’s assertions that (1) “Robl Construction -10- presented direct and circumstantial evidence . . . Homoly consented to the Robl Construction loans,” and (2) the 2006 email exchange indicated “Homoly request[ed] Robl Construction make a loan and Robl Construction ‘would get repaid.[’]” (Emphasis added). We are satisfied Robl Construction did not waive its argument that Homoly consented to the loan as required by § 6.03(D). The same is true for § 6.03(I). Despite claiming Robl Construction “essentially ignore[d]” § 6.03(I), the dissent later explains Robl Construction did not ignore § 6.03(I) at all but instead “argue[d] § 8 of the buy-sell agreement acts as Homoly’s written consent,” which satisfies § 6.03(I). Post at 18, 21. Robl Construction adequately preserved this issue as well.