Cohen v. Battaglia

293 P.3d 752, 296 Kan. 542, 2013 WL 475862, 2013 Kan. LEXIS 25
CourtSupreme Court of Kansas
DecidedFebruary 8, 2013
DocketNo. 99,793
StatusPublished
Cited by62 cases

This text of 293 P.3d 752 (Cohen v. Battaglia) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cohen v. Battaglia, 293 P.3d 752, 296 Kan. 542, 2013 WL 475862, 2013 Kan. LEXIS 25 (kan 2013).

Opinion

The opinion of the court was delivered by

Nuss, C.J.:

The trial court dismissed the claims of two trustees alleging Marion Battaglia tortiously interfered with their existing contracts and prospective business relationships. A Court of Appeals panel affirmed the dismissal but on a different ground. We [543]*543granted review and now reverse because the panel inappropriately resolved factual issues on a dispositive motion. We therefore remand to the trial court for additional proceedings.

Facts

According to the trustees’ amended petition, the salient facts are as follows:

Defendant Marion Battaglia owned a 20 percent interest in Baron Development Company, LLC (BDC), a Kansas limited liability company. He also owned 2,222 shares of common stock in The Baron Automotive Group, Inc. (BAG). The balance of the BDC membership interest and the BAG common stock shares were owned by A. Baron Cass and the Barton J. Cohen Revocable Trust.

On August 30, 2005, Battaglia sold his BDC stock to Cass and the Cohen Trust. Battaglia also contemporaneously sold his BDC membership interest to BDC via a “Redemption Transaction.” Per its terms, BDC paid Battaglia $419,809 in cash and issued a promissory note for $1,259,434. Under a related “Pledge Agreement,” the note was secured for Battaglia by a first-priority security interest in his 20 percent membership interest in BDC.

Per the “Pledge Agreement,” the BDC promissory note to Bat-taglia became due and payable in full if either BDC or BAG were ever sold to an unrelated party. Per that agreement, BDC further promised not to sell any portion of Battaglia’s security interest in membership with BDC without his consent. But his consent was no longer required once all of the obligations under the note were performed and the “[termination date” of the agreement was reached.

After these transactions with Battaglia were completed, Cass transferred all of his interests in BDC and BAG to the A. Baron Cass Family Trust.

In October 2006, the Cohen and Cass trustees and BAG made an agreement with Group 1 Automotive, Inc. (Group 1). Per the agreement, (1) trustees would sell to Group 1 100 percent of the membership interests in BDC (including Battaglia’s 20 percent se[544]*544curity interest) and (2) BAG would sell to Group 1 all of its assets. The trustees believed Battaglia’s consent was not required because the sale of the BDC interests would occur simultaneously with full payment of the promissory note to him.

Once Battaglia learned of the sale agreements, however, he insisted on knowing the purchase price and other details. The trustees refused the request because Battaglia was not a “seller” under the sale agreements, tire transactions with Group 1 were confidential, and disclosure of such information might jeopardize the agreements. Battaglia responded by arguing that he was entitled to copies of the sale agreements because of his presidency of BAG and his security interest in BDC. Counsel for trustees and BAG countered that Battaglia was not entitled to see the documents because Battaglia was not a shareholder of BAG, a member of BDC, or a director of either. He therefore had no interest except as the holder of a promissoiy note.

Battaglia knew that the sales transaction was supposed to close on January 16, 2007. So 4 days earlier his attorney, Louis C. Ac-curso, filed a civil action in the circuit court of Jackson County, Missouri, naming Cohen, the Cohen Trust, Cass, BAG, and BDC as defendants (the Missouri action). Among other things, the suit alleged that the trustees breached their fiduciary duties to Battaglia by engaging in self-dealing and financially manipulating BAG and BDC in order to dilute Battaglia’s ownership interest. That same day, Accurso faxed to Group 1’s general counsel a copy of the Missouri action along with the following letter: “Please find enclosed a file-stamped copy of a lawsuit filed today on behalf of Marion Battaglia. If you have any questions or comments, please do not hesitate to contact me.”

After receiving the letter and a copy of the Missouri action from Battaglia’s attorney, Group 1 refused to close the transaction without altering the agreements to include a supplemental indemnification agreement from BDC, the Cohen Trust, and the Cass Trust. Group 1 also now required that $2,500,000 be placed in escrow [545]*545for its benefit. Their demands were met, with the trustees allegedly incurring substantial attorney fees as a result.

After closing, the Cohen and Cass trustees filed the instant lawsuit against Battaglia. They alleged claims for tortious interference with a contract, tortious interference with a business expectancy, and also requested specific performance of the “pledge agreement.” Included in their claims was an allegation that Accurso’s conduct in “[s] ending the letter and a copy of the petition for the Missouri action served no purpose except to interfere with the sale transactions.”

The trial court dismissed the specific performance claim for lack of subject matter jurisdiction because the claim was so intertwined with those in Battaglia’s Missouri action. That claim’s dismissal was never appealed and is no longer in issue.

Battaglia filed a motion to dismiss the two remaining tortious interference claims under K.S.A. 60-212(b), which the trial court ultimately granted. The court’s decision was based in part on § 773 of the Restatement (Second) of Torts (1979). The trustees appealed.

The Court of Appeals panel rejected the rationales of the district court. But the panel nevertheless affirmed the dismissal on a different ground, i.e., § 772 of the Restatement (Second) of Torts (1979). See Cohen v. Battaglia, 41 Kan. App. 2d 386, 387-89, 202 P.3d 87 (2009): We granted the trustees’ petition for review and obtain jurisdiction over their § 772 issue under K.S.A. 20-3018(b). But Battaglia did not file a cross-petition for review of the panel’s rejection of the trial court’s various rationales which had favored him.

Analysis

Issue: At the time the instant suit was filed, the Court of Appeals toas not in a position to decide the truth of the claims set out in the Missouri action.

Standard of Review

Whether a district court erred by granting a motion to dismiss for failure to state a claim is a question of law subject to unlimited review. Campbell v. Husky Hogs, 292 Kan. 225, 227, 255 P.3d 1 [546]*546(2011). Additionally, when a district court has granted a motion to dismiss for failure to state a claim, an appellate court must accept the facts alleged by the plaintiff as true, along with any inferences that can reasonably be drawn therefrom. The appellate court then decides whether those facts and inferences state a claim based on plaintiffs theory or any other possible theory. If so, tire dismissal by the district court must be reversed. Zimmerman v. Board of Wabaunsee County Comm’rs, 293 Kan. 332, 356, 264 P.3d 989

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Cite This Page — Counsel Stack

Bluebook (online)
293 P.3d 752, 296 Kan. 542, 2013 WL 475862, 2013 Kan. LEXIS 25, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cohen-v-battaglia-kan-2013.