Robert v. Fleetwood Motorhomes of California, Inc.

Citations: 40 Kan. App. 2d 573; 194 P.3d 38; 2008 Kan. App. LEXIS 158Docket: No. 98,325

Court: Court of Appeals of Kansas; October 17, 2008; Kansas; State Appellate Court

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Robert and Kathleen Knowles sued Fleetwood Motorhomes of California, Inc. due to a crack in the side wall of their motor home. The district court granted summary judgment in favor of Fleetwood, citing the doctrine of res judicata, which prevents re-litigation of claims that have already been judged. However, the court found that Fleetwood's previous actions in the Knowles' earlier lawsuit, particularly its failure to allow litigation over the crack, constituted a waiver of the res judicata defense. The court reversed the summary judgment and remanded the case for trial.

Background details reveal that the Knowles purchased a 2003 Fleetwood "Bounder" motor home and faced numerous issues, notably a persistent leak. They filed their first lawsuit in May 2004, claiming breach of warranty and deceptive practices under the Kansas Consumer Protection Act. The side wall crack emerged after this first lawsuit was filed, with the Knowles noting it during depositions in September 2004. They did not amend their petition to include this new damage but raised it during settlement negotiations. A tentative agreement was reached in November 2004 for Fleetwood to repair the crack, but this was later retracted, leading to further disputes about the proper method of repair.

Fleetwood filed a motion to exclude evidence regarding the crack, arguing that the Knowles had not formally requested repairs under their warranty. They contended that the Knowles had not provided Fleetwood an opportunity to address the issue, which they claimed was necessary under warranty laws.

The court ruled that evidence regarding a crack in the Bounder motor home could be presented only in relation to water infiltration, not as a basis for warranty claims or damages, since the Knowles never requested repairs for it. During the jury trial, this ruling was reinforced, leading the Knowles' expert to refrain from discussing repair costs. Fleetwood challenged the expert’s valuation linked to the crack, and the court sustained Fleetwood’s objection based on prior rulings. The jury ultimately awarded the Knowles $20,363.63 for their breach of warranty claim, which they did not appeal.

In a subsequent lawsuit, the Knowles sought to invoke Fleetwood's warranty after notifying them of the crack six days after the warranty expired. Fleetwood denied the repair request, leading to this lawsuit where they filed for summary judgment, which the court granted based on res judicata. The Knowles argued that res judicata should not apply for three reasons: their claim did not exist at the time of the first lawsuit, Fleetwood waived the defense by previously arguing against the claim, and they believed this claim was separate from the earlier one. They made similar arguments for their Kansas Consumer Protection Act claim. The court’s review of summary judgment and res judicata issues is de novo, with res judicata encompassing both issue and claim preclusion, preventing the relitigation of previously determined issues or claims.

The district court's ruling on res judicata does not differentiate between issue and claim preclusion, indicating an intention to apply claim preclusion. Claim preclusion, synonymous with res judicata in a narrower sense, is essential for ensuring finality in judgments, requiring that the party or a party in privity has had the opportunity to litigate the same matter in a previous competent court action. For claim preclusion to apply, four identities must exist: identity in the things sued for, identity of the cause of action, identity of persons and parties, and identity in the quality of the parties involved. The Knowles raised the claim regarding a crack in their first lawsuit, asserting it stemmed from an original defect related to a leak. The pretrial order, which controls the course of action unless amended, included these claims. Consequently, the claims in the second lawsuit are now subject to claim preclusion since they were already raised. Fleetwood cannot invoke claim preclusion in the second lawsuit due to actions that hindered the Knowles from presenting evidence of damages in the first lawsuit. A federal case, Craig v. County of Maui, illustrates that claim preclusion requires the current claim to have been or could have been asserted in the earlier action, the parties to be the same or in privity, and a final judgment to have been entered in the first action.

Kansas law aligns closely with federal preclusion doctrines, specifically regarding res judicata, which is applicable unless a party lacked a full and fair opportunity to litigate in the prior case. Under Hawaii law, a defendant waives the res judicata defense if they insisted that the first suit did not include the subject matter of the second case. In the case of Craig, the plaintiff attempted to include a termination claim in a first lawsuit but was prevented by the defendants, who argued it was unrelated. The court found that the defendants' actions barred them from asserting res judicata in a subsequent case, emphasizing the inequity of preventing the plaintiff from litigating his claim after being disallowed. 

The Kansas case Harnish v. Barzen illustrates this principle. There, a fraudulent transaction involving Peltzer led to a federal court declaring a defendant as the owner of a farm without the plaintiff being a party to that suit. When the plaintiff sought to challenge the decree, the federal court struck his motion, stating that his rights were unaffected due to his non-party status. The plaintiff later sued in Kansas to recover the farm, and the defendant claimed res judicata. However, the court ruled in favor of the plaintiff, affirming that the defendant could not assert res judicata after previously arguing that the decree did not bind the plaintiff. The court concluded that the defendant's actions to exclude the plaintiff from the federal case negated any claim of res judicata against him.

Claim preclusion hinges on whether a party had the opportunity to litigate a claim in a previous action. In this case, the Knowles did not have that opportunity due to Fleetwood's actions. Initially, Fleetwood convinced the district court to exclude the Knowles' claims regarding a crack, arguing that the Knowles needed to allow Fleetwood the chance to repair it first. After the Knowles complied by requesting repairs under a 3-year structural warranty, Fleetwood then claimed the Knowles waived the right to repairs based on their earlier lawsuit actions. This change effectively barred the Knowles from litigating their claims related to the crack. Legal precedents suggest that the Knowles can still raise these claims despite Fleetwood’s prior success in excluding them. Fleetwood's conduct in the earlier lawsuit waived its defense of res judicata. The Knowles' inability to appeal the prior ruling does not affect their current claims. Fleetwood argues that the Knowles should have appealed to avoid claim preclusion, referencing the case of Ellis v. State Farm. In that matter, the failure to appeal a reimbursement order resulted in the court upholding the prior decision, ultimately barring further claims based on res judicata. The summary highlights the implications of Fleetwood's actions and the legal grounds for the Knowles’ current claims.

Ellis petitioned the Supreme Court to review a Court of Appeals decision, which the Supreme Court affirmed. The Court ruled that Ellis’ failure to challenge the district court’s reimbursement ruling precluded him from splitting the cause of action by filing a second lawsuit for interest on the original judgment, citing the doctrine of res judicata. The Court emphasized that no legal principle allows for an exemption from res judicata based on neglect or other similar circumstances.

In contrast to Ellis, the Knowles’ situation involved claims for damages related to a crack that arose from Fleetwood’s actions, which prevented these claims from being addressed in the initial lawsuit. The Knowles’ circumstances were likened to a previous case (Harnish) where a separate lawsuit was filed due to the defendant's obstruction. Fleetwood contended that the Knowles could not claim damages until after giving Fleetwood a chance to repair the crack, arguing that the Knowles’ notice was insufficient.

Furthermore, the Knowles were unaware of their lost opportunity to present their claims until the jury trial, where the district court’s ruling was unclear. Their misunderstanding was deemed not to be in bad faith. The Knowles properly filed a second lawsuit after Fleetwood denied their request for repairs, and appealing the initial ruling would have been futile as they had not formally requested repairs until after the first lawsuit concluded. 

Additionally, the Knowles’ claim under the Kansas Consumer Protection Act, which arose from Fleetwood’s failure to pick up the Bounder as agreed, occurred after the first lawsuit began. The trial court incorrectly applied res judicata to dismiss both the consumer and warranty claims. Consequently, the Supreme Court reversed the trial court's decision and remanded the case for trial.