Associated Wholesale Grocers, Inc. v. Americold Corp. – Kan. – 2011

The Kansas Supreme Court handed down a decision this past Friday that, although it is clearly not a family law case, affects the collection of family law judgments (other than child support) and provides insight into the Kansas statutes on dormancy and revivor of judgments.

The case, Associated Wholesale Grocers, Inc. v. Americold Corp., Docket No. 99506, December 23, 2011, is the third Supreme Court decision arising from an fire that started on December 28, 1991 at the Americold underground storage facilities in Johnson County, Kansas (and burned for several months after it began).

The original plaintiffs in the case against Americold were able to negotiate a settlement that included consent judgments totalling $58,670,754 with various insurors for the resulting damages. Court battles between the plaintiffs, Americold and its insurance companies that did not settle ensued, which resulted in the first two decisions made by the Kansas Supreme Court (Americold I, 261 Kan. 806 (1997); Americold II, 266 Kan. 1047 (1999)). As the Supreme Court explains in the decision:

“The appellant in [this case] is . . . Northwestern Pacific Indemnity Company (NPIC) [the garnishee in an action to collect on the original settlement and subsequent trial assessing responsibility for payment between the insurors]. The appellees/cross-appellants are the plaintiffs in the garnishment action below (hereafter referred to as Plaintiffs). In that garnishment action, Plaintiffs were seeking to collect the consent judgments they had previously obtained in settlement of their tort actions against Americold. The judgment debtor in the settled tort action, Americold, is not a participant in the garnishment action, despite being the eponymous party.”

“NPIC appeals the district court’s adverse rulings on the issues that were remanded by Americold I, which focused principally on two questions: (1) whether NPIC had acted in bad faith toward its insured, Americold; and (2) whether the consent judgments between Plaintiffs and Americold were reasonable and in good faith. However, the parties also raise jurisdictional issues, one of which is NPIC’s contention that the underlying judgments against Americold were extinguished pursuant to K.S.A. 60-2403, thus depriving the district court of subject matter jurisdiction to proceed with this garnishment action.”

Finding that NPIC was correct that the underlying judgment against Americold was extinguished under the Kansas Dormancy Statute, the Kansas Supreme Court reversed, remanding the case to the district court with instructions to dismiss the garnishment proceedings.

Of initial interest to family law practitioners is the contention by plaintiffs that NPIC’s appeal should be dismissed because of alleged flaws in NPIC’s notice of appeal. Specifically, they contended that: “(1) The caption on the notice of appeal only identified the case involving The Fleming Companies, Inc.; and (2) the notice of appeal only purported to seek review of the journal entries of final judgment filed on August 27 and 28, 2007.”

Rejecting the first alleged defect in the notice of appeal, the Supreme Court noted that although Fleming Companies was the only defendant mentioned in the caption, that one defendant’s name was followed with “et al.” and “[t]he abbreviation “et al.” means ‘[a]nd other persons.'” Similarly, although the caption includes the case number assigned only to The Fleming Companies, Inc. case, . . .  it also contains the case number for the consolidated action involving all plaintiffs – and all plaintiffs were named in the body of the notice of appeal. Moreover, the notice was served on all plaintiffs, it was filed in the consolidated case file, and it was accompanied with a single supersedeas bond in favor of all plaintiffs. Thus, the Supreme Court noted, “Plaintiffs cannot credibly claim that they were misled as to the matter being appealed.”

Kansas courts apply a liberal construction to pleadings – whether at the district court or appeals court level – and generally irregularities in the form are usually disregarded unless the appellee was mislead by the substance.

The Court also addressed plaintiffs contentions that the notice of appeal identified only two specific journal entries of final judgment (one original and the other an amended, judgment), asserting that because only these two journal entries were identified, the Supreme Court did not have appellate jurisdiction to review other predecessor journal entries. Moreover, plaintiffs asserted that because the notice of appeal did not contain any “catch-all phrase, such as stating the appeal is ‘from each and every order entered contrary to [appellant],’ the appeal was not properly now before the Court.

Again, the Court easily brushed aside these assertions noting that ‘catch-all phrases’ aren’t required and that an appeal from a final judgment necessarily includes any previously raised issues claiming the district court lacked jurisdiction to render that final judgment.

In addition, the Supreme Court noted that the garnishment action was not the original one. And because it was an attempt to collect on the previous judgment, the previous judgment need not be mentioned in the notice of appeal in order for the Court to have proper jurisdiction to consider whether a later garnishment action was appropriate. “If the consent judgments against Americold were extinguished, then Americold no longer had a legal liability to the Plaintiffs for which NPIC would have been contractually obligated to pay on behalf of Americold. In other words, if the underlying judgment against Americold was extinguished, NPIC was no longer indebted to Americold, and there was no subject matter for Plaintiffs’ garnishment action.”

On the main issue – whether the underlying judgment was extinguished under the Kansas dormancy statute – the Supreme Court determined:

1. The mere fact that a garnishment proceeding is filed and not decided does not toll the time provisions of the Kansas Dormancy and Extinguishment statute (K.S.A. 60-2403).

2. The appeal and remand of a garnishment proceeding during its pendency does not affect the dormancy and revivor time provisions.

3. If a judgment creditor wants to stop and restart the 5-year dormancy time limit while a garnishment proceeding is pending, that judgment creditor must issue another execution or garnishment or must file a renewal affidavit under K.S.A. 60-2403(a).

4. The 5-year period before a judgment becomes dormant is not a statute of limitation.

5. Because the 5-year period before a judgment becomes dormant is not a statute of limitation, it is also not an affirmative defense that must be pled to avoid waiver.

6. The provision tolling dormancy is not stayed by a voluntary agreement not to execute on the judgment.

The lesson for family law practitioners is that a revivor of an existing judgment should regularly – and routinely – be filed before the dormancy period expires. And family law practitioners should notify their clients of this process. Although child support judgments in Kansas are now usually exempt from dormancy, judgments for property division, spousal maintenance, and or decisions in family law cases remain subject to 5-year dormancy. To protect those judgments, family law practitioners should calendar their clients’ judgments noting when a revivor should be filed if the judgment is not satisfied.