Opinion ID: 681078
Heading Depth: 2
Heading Rank: 3

Heading: Breach of Fiduciary Duty/Joint Venture

Text: 22 Plaintiffs assert that BMAC had a duty to disclose Boeing's concurrent development of Project Vision and Boeing's illegal receipt of classified information on military procurement, and that the failure to disclose this information during contract negotiations was fraudulent. To establish fraud by concealment under Kansas law, plaintiffs must show the following elements by clear and convincing evidence: (1) that the defendants had factual information plaintiffs did not have and could not have discovered through reasonable diligence; (2) that defendants had a duty to communicate that information to plaintiffs; (3) that the defendants deliberately failed to communicate the information to plaintiffs; (4) that the plaintiffs justifiably relied on defendants to communicate the material information; and (5) that plaintiffs were injured by defendants' failure to communicate the material information. Lesser v. Neosho County Community College, 741 F.Supp. 854, 863 (D.Kan.1990). A material fact is one a reasonable person would consider important in choosing a course of action. Id. Suppression of material information is not fraudulent unless the silent party is under some legal obligation to disclose. DuShane v. Union Nat. Bank, 223 Kan. 755, 759, 576 P.2d 674, 678 (1978). 23 In general, the duty to communicate arises from the relationship between the parties. Id. at 760, 576 P.2d 674. The duty to disclose arises under Kansas law when there is a fiduciary relationship which may be created by contract or may arise from the relationship of the parties. Rajala v. Allied Corp., 919 F.2d 610, 614 (10th Cir.1990), cert. denied, 500 U.S. 905, 111 S.Ct. 1685, 114 L.Ed.2d 80 (1991). A fiduciary relationship imparts a position of peculiar confidence placed by one individual in another. A fiduciary is a person with a duty to act primarily for the benefit of another. Denison State Bank v. Madeira, 230 Kan. 684, 691, 640 P.2d 1235, 1241 (1982). A fiduciary relationship may arise from the facts and circumstances of a relationship, but because the fiduciary assumes additional responsibilities within the relationship, the role cannot be established inadvertently. Rajala at 614. Under Kansas law, one must consciously assume the responsibilities of a fiduciary. Id. at 615. 24 The record contains no evidence that Boeing or BMAC deliberately assumed the responsibilities of fiduciary in their dealings with the Skyfox group. Nor do the facts as alleged by plaintiffs show that BMAC agreed to act for plaintiffs' benefit. We conclude that defendants were not fiduciaries and had no duty to disclose information to plaintiffs by virtue of that relationship. 25 Plaintiffs argue a joint venture was formed by the parties that obligated BMAC to communicate material information. A joint venture is an association between two or more people to carry out a business activity for profit. Modern Air Conditioning, Inc. v. Cinderella Homes, Inc., 226 Kan. 70, 76, 596 P.2d 816, 823 (1979). 26 Among the acts or conduct which are indicative of a joint venture, but no single one of which is controlling in the determination, are: (1) the joint ownership and control of property; (2) the sharing of expenses; (3) a community of control over and active participation in the management and direction of the business enterprise; (4) the intention of the parties, express or implied; and (5) the fixing of salaries by joint agreement. 27 Id. at 76, 596 P.2d 816. After reviewing the Licensing Agreement it is clear that the parties did not jointly own property or share expenses. BMAC exercised control over its activities and the level of its participation in the Skyfox project. There was no mutual responsibility for the fixing of project salaries. Accepting disputed facts in the light most favorable to plaintiffs, there is no evidence of a joint venture which would obligate BMAC to disclose material information. We find BMAC was, as a matter of law, under no obligation to disclose Project Vision or its access to secured information to the Skyfox group during their negotiations. 28 Finally, plaintiffs accuse BMAC of having retained data, spare parts and unspecified materials which should be returned to the Skyfox group. The spare parts consist of test wings, a mock cockpit, and a fuselage. Plaintiffs concede that BMAC initially paid for some of the materials but assert, without citing any evidence or authority, that these matters should be resolved at trial. Having found no fiduciary relationship or joint venture between the parties, we must rely on contract language to determine this question. 29 The Licensing Agreement grants to BMAC any inventions made by BMAC or jointly by BMAC and Licensor or by Licensor when funded by BMAC or patents and know-how resulting from BMAC's and Licensor's or BMAC funded research and/or development work relating to the Licensed Product(s).... Apl.App.Vol. 3 at 526. Under the Proprietary Data Exchange Agreement, proprietary data belongs to the originator. We find no support for plaintiffs' position in any of the agreements before us and agree with the district court's conclusion that the materials were rightly retained by BMAC.