Security Benefit Life Insurance v. Fleming Companies, Inc.

908 P.2d 1315, 21 Kan. App. 2d 833, 30 U.C.C. Rep. Serv. 2d (West) 676, 1995 Kan. App. LEXIS 179
CourtCourt of Appeals of Kansas
DecidedDecember 22, 1995
DocketNo. 72,869
StatusPublished
Cited by18 cases

This text of 908 P.2d 1315 (Security Benefit Life Insurance v. Fleming Companies, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Security Benefit Life Insurance v. Fleming Companies, Inc., 908 P.2d 1315, 21 Kan. App. 2d 833, 30 U.C.C. Rep. Serv. 2d (West) 676, 1995 Kan. App. LEXIS 179 (kanctapp 1995).

Opinion

Marquardt, J.:

Retail Data Systems, Inc., d/b/a Retail Data Systems of Topeka (RDS), appeals the district court’s summary judgment ruling that RDS’s lien, filed pursuant to K.S.A. 58-201, was limited in recovery to a portion of the amount claimed for services and equipment it provided to Larry’s I.G.A., Inc., (Larry’s I.G.A.). RDS appeals. Fleming Companies, Inc., (Fleming) and Colby Foods, Inc., (Colby Foods) cross-appeal, arguing that RDS was not entitled to any recovery under this lien. We affirm in part and reverse in part.

On August 1, 1989, Fleming extended credit to Larry’s I.G.A. and received a security interest in “[a]ll furniture, fixtures, equipment and machinery now owned and hereafter acquired and proceeds.” The district court found that Fleming’s filing of financing statements with the Thomas County Register of Deeds and the Secretary of State perfected its security interest in the enumerated items.

On March 5,1992, RDS contracted with Larry’s I.G.A. whereby RDS agreed to provide services, material, and equipment to be used for the checkout system at Larry’s I.G.A. On May 12, 1992, RDS installed the new Casio equipment and removed the old Omron equipment, including the cash registers and the master units. In addition to installing the new equipment, RDS converted the existing scanners and scales so that they would function with the new equipment. The work to convert the scales and scanners cost $1,830. The total contract price for equipment, installation, conversion, and training of employees was $46,280.

RDS last performed work on the checkout system at Larry’s I.G.A. on July 8,1992. On October 6,1992, pursuant to K.S.A. 58-201, RDS filed a “MATERIAL AND SERVICES LIEN STATEMENT” with the Thomas County Register of Deeds.

Larry’s I.G.A. suffered financial difficulties. On July 8,1992, the same day RDS completed its work on the checkout system, Flem[835]*835ing and Larry’s I.G.A. entered a written agreement whereby Larjy’s I.G.A. voluntarily surrendered the collateral of the store, including the checkout system, to Fleming. When Fleming took Larry’s I.G.A., it had full knowledge that RDS had never been paid for the equipment and services RDS had provided Larry’s I.G.A.

Fleming then created a corporation, Colby Foods, to operate the store. In the Buy and Sell Agreement between Fleming and Colby Foods, Fleming, knowing that RDS had not been paid, stated:

“[I]n regard to the CASIO front-end scanner equipment, that such equipment was found in the premises at the time SELLER assumed possession. SELLER has no knowledge as to the nature of any agreement between the former operator and the vender of this equipment and therefore BUYER will be required to make arrangements to retain said equipment in the event a valid claim of ownership is sustained by the vender. Vender has heretofore made claim to ownership by letter to SELLER dated August 17, 1992, copy attached as Exhibit B, which claim has been denied by SELLER.” (Emphasis added.)

Colby Foods operated the store until it was sold to Howard Leroy Warren on August 29, 1992. Warren purchased the store with the knowledge that RDS had not been paid.

Security Benefit Life Insurance Company (SBL) had a mortgage on the real estate on which the store was located, and it sued to foreclose the mortgage. RDS and Fleming were parties to this action. On December 7,1992, RDS filed a cross-claim, counterclaim, and third-party petition to foreclose its security interest in the equipment and services it provided to Larry’s I.G.A.

RDS filed a motion for summary judgment claiming a first priority lien, pursuant to K.S.A. 58-201, for $42,785, which covered all of the services, materials, and equipment provided to Larry’s I.G.A. As an alternative theory of recovery, RDS also made a claim for equitable relief based on unjust enrichment. Fleming and Colby Foods each filed a memorandum in opposition to RDS’s motion for summary judgment. Fleming and Colby Foods also filed motions and a supporting memorandum for summary judgment on RDS’s claims against them.

The district court held in its memorandum opinion that RDS had “properly perfected a Mechanic’s Lien for file work, repairs, [836]*836and or improvements made to the scales and scanners owned by Larry’s IGA in the sum of $1,830.00.” The district court also found that “the property subject of the purported lien was so enhanced that it took on a new identity” and was, therefore, not covered by the lien under K.S.A. 58-201. In a supplemental memorandum decision, the district court also denied RDS’s claim for equitable relief under the theory of unjust enrichment. RDS appealed and Fleming and Colby Foods cross-appealed.

RDS argues that it has a first and prior lien under K.S.A. 58-201 on the entire checkout system for the value of all of the repairs, replacements, and improvements made by RDS. Fleming and Colby Foods both argue that the work was not done by RDS on existing personal property, but was rather a sale of new property and, as such, a lien could only be perfected by filing a financing statement for a purchase money security interest under the UCC, which RDS did not do.

A. Standard of Review

Subsequent to the filing of opposing motions for summary judgment, the district court rendered its decision. K.S.A. 60-256(c) governs summary judgment:

“The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

Additionally, in Mitzner v. State Dept. of SRS, 257 Kan. 258, 260-61, 891 P.2d 435 (1995), the court noted:

“The burden on the party seeking summary judgment is a strict one. 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. . . . On appeal we apply the same rule, and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied. [Citations omitted.]”

Summary judgment is a decision made as a matter of law. See K.S.A. 60-256(c). “[Ajppellate review of conclusions of law is unlimited.” Utility Trailers of Wichita, Inc. v. Citizens Nat’l Bank & Tr. Co., 11 Kan. App. 2d 421, 423, 726 P.2d 282 (1986). Thus, the [837]

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908 P.2d 1315, 21 Kan. App. 2d 833, 30 U.C.C. Rep. Serv. 2d (West) 676, 1995 Kan. App. LEXIS 179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/security-benefit-life-insurance-v-fleming-companies-inc-kanctapp-1995.