Southwest & Associates, Inc. v. Steven Enterprises, LLC

Citations: 32 Kan. App. 2d 778; 88 P.3d 1246; 2004 Kan. App. LEXIS 469Docket: No. 90,398

Court: Court of Appeals of Kansas; May 7, 2004; Kansas; State Appellate Court

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Greene, J. Steven Enterprises, LLC (Steven) appeals a district court ruling favoring Southwest and Associates, Inc. (Southwest) regarding a contract for aluminum siding work on Steven's building. Steven contends that no contract existed directly between them and Southwest, asserting that any enforceable contract was solely with Lien Enterprises, Inc. (LEI), Steven's general contractor, who is now bankrupt. The court affirmed the judgment. 

The factual background reveals that Steven intended to remodel facilities for an upscale used car dealership. Southwest was initially contacted by Steven's design consultant, Tony Blake, to bid on the siding work. After discussions, Southwest submitted an initial bid, which Blake deemed too high. Following this, Southwest revised its bid and communicated it to both Steven and Blake via a letter. Brandon Steven subsequently called Southwest to finalize the deal, indicating that the agreed amount of $13,766 would be paid by LEI, while he would pay LEI.

There was no formal written contract beyond the bids, and despite LEI's involvement in the phone conversation, testimony indicated that all negotiations proceeded directly between Brandon Steven and Southwest. The work was completed, and Southwest billed LEI, which later filed for bankruptcy before payment was made. Southwest then filed a lawsuit against Steven for breach of contract and unjust enrichment, and also placed a mechanic’s lien on the property, alongside a claim in LEI's bankruptcy case.

The district court determined that Brandon Steven was negotiating directly with Southwest, establishing his liability. In reviewing the case, the appellate court focused on whether a binding contract existed, based on the parties' intentions, assessing the factual findings for substantial competent evidence while applying unlimited review to legal conclusions.

The District Court determined that an enforceable contract existed between Southwest and Steven Enterprises, necessitating a mutual agreement on essential terms, which was assessed through objective manifestations of intent rather than subjective beliefs. Despite Steven's general contract with LEI, evidence indicated that interactions with Southwest were initiated by Steven’s design consultant and conducted without LEI's involvement, suggesting an independent contractual relationship. Key communications and negotiations were directly between Southwest and Brandon Steven, with no sign that LEI consented to any obligation for payment. Steven's claim that Southwest's bankruptcy filing contradicts a contract with him was noted but deemed a factor for consideration rather than a decisive point. The court found substantial competent evidence supporting its conclusion that the enforceable contract was between Southwest and Steven, which aligns with Kansas law permitting multiple contractors on a project. Steven's argument that this conclusion was contrary to law was acknowledged but rejected, as Kansas law allows for separate contractor relationships in construction projects.

Steven argues that a written contract is necessary between a subcontractor and the owner to create an independent contractual obligation outside of a general contract, referencing the case Stewart. In Stewart, the court examined whether the HVAC contractor had a contractual relationship with the general contractor or directly with the owner on a hotel project. Although the HVAC contractor's bid was accepted by the owner before any general contract existed, payments were subsequently made through the general contractor, with change orders negotiated directly between the contractor and the owner. The Kansas Supreme Court concluded that a contract signed by the owner with a contractor should be recognized under the mechanic lien statute (K.S.A. 60-1102), affirming that the payment structure does not alter the contractual relationship. The court ruled that no notice to the owner was needed to perfect the lien, and thus the trial court's decision was upheld. While Stewart involved a written contract, the current case does not have a written agreement involving Southwest, Steven, or LEI. The absence of a written contract does not automatically imply that all related contracts obligate only the general contractor. Instead, classic contract law principles should be applied to ascertain whether an enforceable contract exists and identify the parties involved. The district court followed this approach, leading to the conclusion that no legal error occurred. The decision was affirmed.