Midwest Crane and Rigging v. KCC ( 2021 )

NOT DESIGNATED FOR PUBLICATION
No. 122,562
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
MIDWEST CRANE AND RIGGING, LLC,
Appellant,
v.
THE STATE CORPORATION COMMISSION OF THE STATE OF KANSAS,
also Known as KANSAS CORPORATION COMMISSION,
an Agency of the State of Kansas, and MIKE J. HOEME,
Appellees.
MEMORANDUM OPINION
Appeal from Shawnee District Court; MARY E. CHRISTOPHER, judge. Opinion filed August 27,
2021. Affirmed.
Kurt S. Brack, of Brown & Ruprecht, PC, of Kansas City, Missouri, for appellant.
Brian G. Fedotin, general counsel, special assistant attorney general, Kansas Corporation
Commission, for appellee Kansas Corporation Commission.
Stanley R. Parker, assistant attorney general, for appellee Mike J. Hoeme.
Before POWELL, P.J., BRUNS, J., and STEVE LEBEN, Court of Appeals Judge Retired,
assigned.
LEBEN, J.: Midwest Crane and Rigging, LLC appeals the dismissal of its suit
against the Kansas Corporation Commission and the KCC's transportation director, Mike
Hoeme. Midwest Crane claims that the KCC and Hoeme violated Midwest Crane's rights
by arguing in administrative and court proceedings that one of the company's cranes had
to be registered as a commercial vehicle under a federal law administered by the state.
That federal law is the Unified Carrier Registration Act, 49 U.S.C. § 14504a
(2012), which generally requires motor carriers to pay a fee based on the size of its fleet
of commercial motor vehicles. The term commercial motor vehicles includes self-
propelled vehicles used commercially on the highway mostly for the transportation of
passengers or cargo. See Midwest Crane & Rigging, LLC v. Kansas Corporation
Comm'n, 306 Kan. 845, 849-53, 397 P.3d 1205 (2017).
For several years, Midwest Crane and the KCC disagreed about whether
Midwest's cranes were covered by this provision. Midwest Crane argued that since its
cranes were permanently attached to the truck bed, they weren't cargo. But the KCC
contended that a crane was cargo even if permanently affixed.
The sequence of events that led to the case now before us began with a 2013
citation issued by a Kansas Highway Patrol trooper to a Midwest Crane driver. The
trooper cited the driver for driving without proper Kansas vehicle registration; that
citation was dismissed in the Johnson County District Court. The trooper also gave the
driver a "Vehicle Examination Report" citing Midwest Crane for failure to pay the
required fee under the Unified Carrier Registration Act.
The report led the KCC to send a notice of violation alleging failure to pay fees
required by the Act along with an invoice for a $300 fine. Midwest Crane contested that
fine in administrative proceedings before the KCC. And when the KCC persisted in its
position that Midwest Crane's vehicles were covered by the Unified Carrier Registration
Act, Midwest Crane filed the appropriate papers to appeal that administrative-agency
decision to a court.
That appeal led to a full tour of the Kansas court system. Midwest Crane lost in
the district court and again in the Kansas Court of Appeals. See Midwest Crane &
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Rigging, LLC v. Kansas Corporation Comm'n, No. 114,168, 2016 WL 4161384 (Kan.
App. 2016) (unpublished opinion). But the Kansas Supreme Court granted review and
unanimously ruled in Midwest Crane's favor. 306 Kan. 845. Our Supreme Court's ruling
established that Midwest Crane's vehicles weren't commercial motor vehicles under the
Unified Carrier Registration Act, so no fees under that Act were required and no fine
should have been issued. 306 Kan. at 853.
Midwest Crane then sued the KCC and Hoeme. Midwest Crane claimed malicious
prosecution and abuse of process against both defendants, and it claimed that Hoeme had
violated Midwest Crane's civil rights in violation of a federal civil rights statute, 42
U.S.C. § 1983. The district court granted motions by the KCC and Hoeme to dismiss the
lawsuit.
When a lawsuit is dismissed based just on review of the petition, as happened
here, we take as true the specific factual allegations made by the plaintiff. We then
determine whether those facts and the reasonable inferences from them will support a
legal claim against the defendant. Cohen v. Battaglia, 296 Kan. 542, 545-46, 293 P.3d
752 (2013). Midwest Crane has three separate legal claims, so we will next determine
whether any of them might be viable on the facts Midwest Crane has alleged.
Malicious Prosecution
The first claim is for malicious prosecution. In Kansas, that requires (1) that the
defendant started, continued, or procured some civil proceeding against the plaintiff,
(2) acting without probable cause to do so and (3) with malice, (4) that the proceeding
ended in the plaintiff's favor, and (5) that the plaintiff was damaged. Lindenman v.
Umscheid, 255 Kan. 610, 624, 875 P.2d 964 (1994). Two of those elements are the focus
of the parties' arguments on appeal.
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At the outset, it's not clear that the KCC started, continued, or procured a civil
proceeding against Midwest Crane. The KCC notes that the only judicial proceeding it
participated in was an action brought by Midwest Crane to appeal the KCC's
administrative decision. But we need not decide whether the first element of a malicious-
prosecution claim is met because Midwest Crane cannot meet another required element—
that the KCC and Hoeme acted without probable cause.
Midwest Crane alleges that the KCC and Hoeme (and the Kansas Highway Patrol,
which Midwest Crane alleges was acting at the direction of the KCC and Hoeme) did not
have probable cause to claim that Midwest Crane's vehicles were commercial motor
vehicles under the Unified Carrier Registration Act. But probable cause requires only "a
reasonable ground for suspicion . . . to warrant a cautious, or prudent, [person] in the
belief that the party committed the act" complained of. Nelson v. Miller, 227 Kan. 271,
277, 607 P.2d 438 (1980).
Here, the KCC's argument was convincing to the district court and the Court of
Appeals. Their rulings preclude the malicious-prosecution claim because "a decision by a
competent tribunal in favor of the person initiating civil proceedings is conclusive
evidence of probable cause." Restatement (Second) of Torts § 675, comment b (1977).
The United States Court of Appeals for the Tenth Circuit, applying Kansas law, applied
this rule in Vanover v. Cook, 260 F.3d 1182, 1190 (10th Cir. 2001), predicting that the
Kansas Supreme Court would do so if the issue were directly before it. We agree. See
Vaughan v. Hornaman, 195 Kan. 291, 299-300, 403 P.2d 948 (1965) (citing the rule but
not applying it because the original judgment had been entered without jurisdiction).
So the agreement of the district court and the Court of Appeals with the KCC's
position precludes a finding that the KCC lacked probable cause for its position. While
the district court and our court turned out to be wrong on the law, the KCC's position was
not so devoid of logic as to lack probable cause. Nor is there any allegation here that the
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district court decision or that of our court was obtained by fraud or any improper means,
circumstances that can justify an exception to this rule about probable cause and judicial
rulings. See Vaughn, 195 Kan. at 300.
Abuse of Process
The second claim is for abuse of process. In Kansas, that requires (1) a knowingly
illegal or improper use of legal process (2) for the purpose of harassing or causing
hardship (3) that harms the targeted party. Bloom v. Arnold, 45 Kan. App. 2d 225, 230,
248 P.3d 752 (2011).
Midwest Crane alleges that the KCC "knew" Midwest Crane wasn't covered by the
Unified Carrier Registration Act. If true—if the KCC knew that its legal position was
wrong from the start—the KCC's actions would seem to have been improper harassment.
We're not sure that the mere allegation that the opposing party "knew" it was
wrong on a contested legal position creates an abuse-of-process claim when the legal
position is fairly debatable. The essence of an abuse-of-process claim is that a proper
legal process is being used primarily for some improper purpose. See Tappen v. Ager,
599 F.2d 376, 379-81 (10th Cir. 1979) (applying Kansas law); Restatement (Second) of
Torts § 682 (1977). Here, both the KCC's administrative process and the follow-on
judicial proceedings were to settle the legal dispute over whether Midwest Crane's
vehicles were covered by the federal Act. Even if KCC personnel disliked Midwest Crane
for some reason and also wanted to harass Midwest Crane, the legal process was still
being used primarily for its intended purpose—settling a reasonably disputed legal issue.
A more significant problem for Midwest Crane here, though, is that there's no
"legal process" invoked by the KCC. In Bloom, our court said that there must be a
judicial process of some sort, such as one begun with a writ, a warrant, a summons, or
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some other judicial order. 45 Kan. App. 2d at 231. The proceedings initiated here by the
KCC were administrative ones before that agency, not judicial proceedings before a
court. In response to the defendants' argument that this Bloom requirement isn't met,
Midwest Crane cites to only one potential legal process that led to a court proceeding—
the traffic citation issued by the highway patrol trooper. But it can't support Midwest
Crane's abuse-of-process claim against the KCC or Hoeme.
The abuse-of-process claim must relate, of course, to the abuse of some legal
proceeding. Midwest Crane argues that the proceeding abused here "began with the
issuance of a traffic citation, which is a summons." The traffic citation attached to the
petition has a notice to appear, not a summons (usually a formal document issued by a
court), so it's not clear it would qualify. In any case, though, the traffic citation was
dismissed by the district court. So even if we viewed the notice to appear as sufficient
legal process for an abuse-of-process action, the only legal proceeding begun by the
traffic citation was dismissed separately from the main proceedings between Midwest
Crane and the KCC. And that matters here.
First, even if we accept Midwest Crane's allegation that the trooper was acting at
the KCC's behest in issuing the traffic citation, that citation was issued in 2013 and
dismissed that same year, while there's a two-year period within which an abuse-of-
process suit must be brought. See K.S.A. 60-513(a)(4); Lindenman, 255 Kan. at 620. This
suit wasn't filed until 2018, well after the two-year period, and each defendant raised the
statute of limitations in their motions to dismiss.
Further, while the traffic citation relates to the administrative process initiated by
the KCC and the judicial appeal of the KCC's decision pursued by Midwest Crane, it's
not the same proceeding and raised different legal issues. The traffic citation alleged
operation of a vehicle lacking a Kansas registration in violation of a state statute, K.S.A.
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2013 Supp. 8-142; the KCC administrative notice alleged a failure to pay fees under a
federal statute.
In sum, the traffic citation can't be sufficient legal process to support an abuse-of-
process claim against the KCC and Hoeme: It started a different proceeding on a different
legal issue, and it was resolved in Midwest Crane's favor more than two years before this
suit was filed. But that traffic citation is the only legal process Midwest Crane can point
to. The rest of the KCC's proceedings were administrative, not judicial. Our court held in
Bloom that "an abuse of process claim based on improper use of an administrative or
other nonjudicial proceeding is insufficient as a matter of law." 45 Kan. App. 2d at 232.
Midwest Crane's final argument is that the judicial appeal it took from the KCC's
decision took place in court, so the KCC's defense of its decision in court should qualify.
But the only legal process issued in that court case would have been obtained by Midwest
Crane when it filed its appeal of the KCC decision in court. That is not sufficient here to
turn a reasonable dispute over a contested legal issue into a viable abuse-of-process claim
against the KCC or Hoeme.
Civil Rights Claim under 42 U.S.C. § 1983The third claim, only against Hoeme, alleges that Hoeme violated Midwest
Crane's civil rights in violation of a federal statute, 42 U.S.C. § 1983. That statute makes
a person who, under the authority of law, deprives someone of their legal rights liable for
damages.
Hoeme has claimed qualified immunity, and the district court agreed that defense
precluded a section 1983 claim against him. The United States Supreme Court has held
that governmental officials have qualified immunity that protects them from civil liability
when their conduct doesn't violate clearly established statutory or constitutional rights
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that a reasonable person would have known about. Pearson v. Callahan, 555 U.S. 223,
231, 129 S. Ct. 808, 172 L. Ed. 2d 565 (2009).
When a governmental official claims qualified immunity, the plaintiff must show
(1) that the official's actions violated the plaintiff's constitutional or statutory rights and
(2) that the right was clearly established at the time of the alleged misconduct. See Knopf
v. Williams, 884 F.3d 939, 946 (10th Cir. 2018); Estate of Belden v. Brown County, 46
Kan. App. 2d 247, 255, 261 P.3d 943 (2011). For the same reason Midwest Crane
couldn't show a lack of probable cause to support its malicious-prosecution claim, it can't
show a clearly established right to support its section 1983 claim.
After all, before our Supreme Court decided the legal issue in 2017, both a district
court and our court agreed with the position the KCC and Hoeme had taken. When courts
get the issue wrong, it's not the sort of clearly established legal issue that makes a
governmental official liable for civil damages for acting in conflict with it.
The district court properly dismissed Midwest Crane's legal claims against the
KCC and Hoeme. We therefore affirm the district court's judgment.
***
POWELL, J., concurring and dissenting: I join the majority opinion in almost every
respect, except I must depart from my colleagues in their view that an abuse of process
claim cannot arise from the alleged misuse of quasi-judicial administrative proceedings.
Relying on Bloom v. Arnold, 45 Kan. App. 2d 225, 232, 248 P.3d 752 (2011), the
majority concludes that Midwest Crane's allegation that the KCC and Hoeme misused the
administrative process to harass and cause harm to it cannot succeed as a matter of law
because the process that was allegedly misused was outside the judicial process. Slip op.
at 5-7.
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Admittedly, the Bloom panel's holding represents what appears to be the majority
rule. See 45 Kan. App. 2d at 230-31 (majority of jurisdictions decline to recognize abuse
of process in nonjudicial proceedings); Moore v. Western Forge Corp., 192 P.3d 427, 439
(Colo. App. 2007) (same). But I would note that when given an opportunity to adopt the
same rule years ago, our Supreme Court declined and allowed an abuse of process claim
against a state agency to go forward. See Lindenman v. Umscheid, 255 Kan. 610, 623-24,
875 P.2d 964 (1994). Moreover, we are not bound by the panel's holding in Bloom and
are free to go in a different direction when our convictions lead us there. See State v.
Fleming, 308 Kan. 689, 706, 423 P.3d 506 (2018) (one Court of Appeals panel has right
to disagree with another).
I do not disagree that abuse of process claims must arise out of the misuse of the
legal process, as "societies have attached liability—whether deferred or immediate—to
litigation brought with malice and without probable cause." Hillside Associates v.
Stravato, 642 A.2d 664, 667 (R.I. 1994). The essence of the abuse of process claim is to
punish the misuse of the legal process itself. Prosser and Keeton, Law of Torts § 121 (5th
ed. 1984). Thus, abuse of process of claims cannot arise outside of the legal process.
Prosser and Keeton, Law of Torts § 121; see Julian J. Studley, Inc. v. Lefrak, 41 N.Y.2d
881, 884, 362 N.E.2d 611, 393 N.Y.S.2d 980 (1977) (affidavit sent to regulatory
department requesting appropriate discipline not "process").
But at least one federal court has observed that with the expansion of the
administrative state and the creation of numerous administrative tribunals,
"[t]he same harmful consequences may flow from the groundless and malicious
institution of proceedings in them as does from judicial proceedings similarly begun.
When one's livelihood depends upon a public license, it makes little difference to him
whether it is taken away by a court or by an administrative body or official. Nor should
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his right to redress the injury depend upon the technical form of the proceeding by which
it is inflicted. The administrative process is also a legal process, and its abuse in the same
way with the same injury should receive the same penalty." Melvin v. Pence, 130 F.2d
423, 426 (D.C. Cir. 1942).
Indeed, the Restatement (Second) of Torts § 680 (1977), has recognized: "One
who takes an active part in the initiation, continuation or procurement of civil
proceedings against another before an administrative board that has power to take action
adversely affecting the legally protected interests of the other, is subject to liability for
any special harm caused thereby."
We should adopt the rule expressed by the Rhode Island Supreme Court, which
held:
"[T]he misuse of an administrative proceeding may give rise to claims for malicious
prosecution and/or abuse of process. . . . [H]owever, . . . only quasi-judicial contested
administrative determinations or proceedings that establish the legal rights, duties, or
privileges of a party after a hearing and that embody sufficient attributes of judicial
proceedings may generate causes of action for malicious prosecution or for abuse of
process." Hillside Associates, 642 A.2d at 669.
The elements required to prove abuse of process "are a knowingly illegal or
improper use of the process done for the purpose of harassing or causing hardship, which
resulted in damage[s]." McShares, Inc. v. Barry, 266 Kan. 479, 494, 970 P.2d 1005(1998). Here, Midwest Crane's abuse of process claim arises out of its assertion that the
KCC and Hoeme misused the quasi-judicial administrative process to harass and cause
harm to it. Assuming such facts to be true, Midwest Crane has sufficiently pled an abuse
of process claim. Thus, I would reverse the district court's dismissal of Midwest Crane's
abuse of process claim and remand for further proceedings.
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