Kansas Supreme Court
BREACH OF FIDUCIARY DUTY AND CLEAR AND CONVINCING EVIDENCE
BECKER V. KNOLL
FINNEY DISTRICT COURT – AFFIRMED
COURT OF APPEALS – REVERSED
NO. 105,643 – JANUARY 30, 2015
FACTS: This case involves an action by shareholders in a Kansas irrigation corporation against the president of the corporation (Knoll), alleging breach of a fiduciary duty and seeking removal of the president as an officer and director. The Kansas Supreme Court affirmed the Court of Appeals determination that the plaintiffs had made a prima facie case but reversed on the question of whether the facts supported judgment for the defendant. Holding that the courts below had applied incorrect legal standards, this court remanded the case to the district court so that it could reapply the law to the facts before it on the record. On remand, the district court again ruled for the defendant. The court held that Knoll engaged in no self-dealing, no misfeasance, and no malfeasance to the detriment of the corporation. The plaintiffs again appealed to the Court of Appeals. The Court of Appeals reversed, holding that Knoll's failure to maintain employment records undermined his position to such an extent that, as a matter of law, he acted in bad faith. The Court of Appeals remanded the case to the district court for determination of damages.
ISSUES: (1) Breach of fiduciary duty; and (2) clear and convincing evidence
HELD: Court held the district court applied the correct standards, which were supported by the evidence, and the Court of Appeals erroneously reversed the district court. Court found Knoll provided evidence that a rational fact-finder could apply to overcome the inference that the missing written data would be adverse to him. The Court of Appeals rejected or ignored the explicit testimony that Morehouse, the corporation's ditch rider, worked far more than the required 40 hours a week. In so doing, the Court of Appeals may have implied that the adverse inference rule is an absolute rule: Knoll's failure to keep hourly records constituted per se proof that Morehouse did not work the required number of hours and that Knoll acted in bad faith detrimental to the corporation. Or the Court of Appeals may have reevaluated Knoll's and Morehouse's testimony and concluded that the testimony was inadequate to overcome the inference of bad faith. Either approach is incorrect. The former analysis is wrong because the adverse inference rule establishes a method of supporting a claim, not a form of strict liability. The failure to produce a record under the party's control does not establish a breach of duty in itself. Knoll introduced substantial, credible evidence tending to show that he did not breach his duty. The latter analysis—which would be based on the quality of the evidence—is also wrong because it requires the appellate court to reweigh the evidence. The testimony regarding the number of hours that Morehouse worked was quite explicit, and the district court explained why it found that evidence credible. The district court properly carried out the task assigned to it on remand, and the Court of Appeals applied an incorrect standard of review. The opinion of the Court of Appeals is reversed. The decision of the district court is affirmed.
STATUTES: No statutes cited
CITY OF WICHITA V. MOLITOR
SEDGWICK DISTRICT COURT – REVERSED AND REMANDED
COURT OF APPEALS – REVERSED
NO. 104,940 – JANUARY 30, 2015
FACTS: Officer stopped vehicle driven Molitor and conducted DUI investigation. Molitor failed horizontal gaze nystagmus (HGN) test, passed walk-and-turn and one-leg-stand tests, and then consented to officer’s request for a preliminary breath test (PBT). PBT results led to Molitor’s arrest and conviction for DUI. In appeal to district court, Molitor filed motion to suppress HGN results as inadmissible pursuant to State v. Chastain, 265 Kan. 16 (1998), and State v. Witte, 251 Kan. 313 (1992). District court denied the motion, ruling HGN results could be admitted to establish officer’s reasonable suspicion of DUI even though the results were inadmissible at trial. Waggoner appealed. Court of Appeals affirmed that HGN test could be considered as part of totality of circumstances in determining whether officer had requisite reasonable suspicion to request a PBT, and held the officer had enough other evidence to form a reasonable suspicion of DUI even if HGN test results were excluded. 46 Kan. App. 2d 958 (2012). Supreme Court granted Waggoner’s petition for review in which he argued the Frye reliability test had to be met before HGN test results could be used for any purpose, and sought review of panel’s determination that reasonable suspicion existed without considering the HGN test results.
ISSUES: (1) Admissibility of horizontal gaze nystagmus test results; and (2) harmless error
HELD: The HGN test is based on scientific principles. Before HGN test results may be considered by a Kansas court for any purpose, state must establish the reliability of such a test in district court. Here, district court and Court of Appeals erred in allowing state to rely on scientifically unproved HGN test results to establish reasonable suspicion that permitted officer to request that Molitor submit to a PBT pursuant to K.S.A. 2010 Supp. 8-1012(b).
Reviewing facts other than HGN test results in this case, the consideration of HGN testing was not harmless error. An appellate court should not deviate from criteria and scoring of National Highway Traffic Safety Administration’s standardized testing model to glean reasonable suspicion of driving under the influence from driver’s successful completion of standardized field sobriety tests. Determinations by district court and Court of Appeals, that officer possessed the requisite reasonable suspicion that Molitor was operating vehicle while under influence of alcohol when officer requested that Molitor submit to a PBT, are reversed.
CONCURRENCE AND DISSENT (Biles, J.) (joined by Nuss, C.J., and Rosen, J.): Agrees with majority’s holding that it was error to allow state to rely on HGN test results to establish reasonable suspicion for officer’s request for a PBT because state has not established test’s reliability as required by Witte. Disagrees with majority’s harmless error analysis, and would affirm Court of Appeals on this point and affirm the conviction. Majority is setting reasonable suspicion standard too high. Officer in this case observed evidence indicating impaired driving and intoxication, and was justified under the statute to request the PBT.
STATUTES: K.S.A. 2014 Supp. 60-456(b); K.S.A. 2010 Supp. 8-1012(b), -1567(a)(1), -1567(a)(2), -1567(a)(3); K.S.A. 8-1567(a)(1); K.S.A. 20-3018(b); K.S.A. 60-402, -456, -2101(b); and K.S.A. 8-1012 (Furse)
Kansas Court of Appeals
WORKERS COMPENSATION AND DAY-TO-DAY LIVING
MOORE V. VENTURE CORP. ET AL.
WORKERS COMPENSATION BOARD – AFFIRMED
NO. 110,883 – JANUARY 30, 2015
FACTS: Moore injured his knee at his road-construction job, either when he stepped off a backhoe or shortly thereafter when walking around the backhoe. An administrative law judge denied his request for workers compensation, finding that his injury was the result of walking, which she considered a normal activity of day-to-day living not covered by the Workers Compensation Act. The Workers Compensation Appeals Board reversed, finding that Moore's injury arose out of and in the course of his employment because stepping down and walking around the backhoe were part of a single job task—operating a backhoe—that was not a normal activity of day-to-day living.
ISSUES: (1) Workers compensation and day-to-day living
HELD: Court held the case law interpreting the pre-2011 version of the Kansas Workers Compensation Act remains applicable when determining whether a worker's injury arose out of and in the course of employment or was the result of the normal activities of day-to-day living. Under Bryant v. Midwest Staff Solutions Inc., 292 Kan. 585, 596, 257 P.3d 255 (2011), in determining whether an injury arose out of the course of employment, the primary question is whether the activity that resulted in the injury is connected to, or is inherent in, the performance of the job. Court found that substantial evidence supported the Board's finding. In this case, operating the backhoe was Moore's job duty, stepping down from and walking around the backhoe was part of the work required to operate the backhoe, and no evidence suggested that Moore's injury happened outside the time frame in which he was operating the backhoe. We therefore affirm the Board's decision that Moore's injury was covered under the Workers Compensation Act and not the result of a normal activity of day-to-day living.
STATUTES: K.S.A. 44-508, -556; and K.S.A. 77-621
STATE V. WAGGONER
DOUGLAS DISTRICT COURT – AFFIRMED
NO. 111,548 – JANUARY 30, 2015
FACTS: Waggoner convicted of possession of methamphetamine and marijuana. On appeal he claimed district court erred in classifying an April 1993 Kansas juvenile adjudication as a person felony for criminal history purposes. Waggoner argued the holding in State v. Murdock, 299 Kan. 312 (2014), that out-of-state convictions committed prior to enactment of Kansas Sentencing Guidelines Act (KSGA) must be classified as nonperson offenses, applies to in-state pre-KSGA convictions as well.
ISSUES: (1) Criminal history score and pre-KSGA Kansas convictions
HELD: Murdock and State v. Williams, 291 Kan. 554 (2010), are discussed. As modified by Supreme Court order September 19, 2014, Murdock is limited to classification for criminal history purposes of out-of-state convictions committed prior to enactment of KSGA. Under facts in this case, district court did not err in classifying Waggoner’s prior Kansas juvenile adjudication of attempted aggravated battery as a person felony for criminal history purposes.
STATUTES: K.S.A. 2014 Supp. 21-6804(c), -6809, -6810(d)(6), -6811(e), -6811(g); K.S.A. 21-4710 et seq., -4710(d)(8), -4711(e); and K.S.A. 21-3301(c)(3), -3414 (Ensley 1988)