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Myers v. KNS Development, Corp.

United States District Court, W.D. Missouri, Central Division

September 21, 2017

KNS DEVELOPMENT CORP., a Missouri Corporation, and KEVIN SHORT and NATALIE SHORT, Defendants.



         Defendants KNS Development Corp. (“KNS”), Kevin Short, and Natalie Short move pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b) to dismiss the complaint by plaintiffs Robert A. Myers and Kimberly A. Myers for failure to state a claim and for failure to plead with sufficient particularity. For the reasons set forth below, the motion is granted in part and denied in part.

         I. Standard on Motion to Dismiss

         Federal Rule of Civil Procedure 12(b)(6) requires the dismissal of a complaint that fails to plead facts sufficient to state a plausible claim upon which relief may be granted. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In determining whether a complaint alleges sufficient facts to state a plausible claim to relief, the Court accepts all factual allegations as true. See Great Plains Trust Co. v. Union Pac. R.R. Co., 492 F.3d 986, 995 (8th Cir. 2007). If the facts alleged in the complaint are sufficient for the court to draw a reasonable inference that the defendant is liable for the alleged misconduct, the claim has facial plausibility and will not be dismissed. See Iqbal, 556 U.S. at 678.

         II. Alleged Facts

         The Myers, a husband and wife from Nebraska, allege that on June 8, 2015, they entered into a contract for Defendants to construct a vacation home upon the Myers' property in Camden County, Missouri. Work at the site commenced on June 30, 2015.

         The contract states that time is of the essence, and KNS and Kevin Short represented that the vacation home would be completed by June 2016. However, the home was not finished by June 2016 as promised. KNS and Kevin Short then repeatedly promised the Myers that completion was imminent. In late 2016, however, construction of the home materially slowed.

         On January 26, 2017, Kimberly Myers received a call from a subcontractor, Kirk's Custom Woodworking (“Kirk's”), complaining that it had not been paid since November 2016 for services performed and material supplied for construction of the Myers' vacation home. Kimberly Myers replied that the Myers had made multiple payments to KNS and/or Kirk's and that she had received lien waivers in exchange. Kirk's stated that it had never executed or delivered those lien waivers.

         Kimberly Myers immediately notified Central Bank of the Lake of the Ozarks (the “Bank”), which was financing the construction, that she suspected that KNS and Kevin Short were defrauding the Myers. The Bank in turn discussed the Myers' complaints with Kevin Short, who allegedly admitted to forging other persons' names on lien waivers he provided to the Myers.

         That same day, Kevin Short visited the Myers and explained that he was “in big trouble.” He confessed that, although a January 2017 invoice indicated that he had paid certain subcontractors, he in fact had not done so. He admitted that he had forged multiple lien waivers that purported to be from various subcontractors, suppliers, and laborers. He begged the Myers not to prosecute him, promising in exchange to pay back all of the funds that he had obtained under false pretenses from them and from their construction loan account at the Bank.

         The next day, January 27, 2017, Kevin Short met with the Myers and a representative of the Bank. Kevin Short admitted that, in order to improperly withdraw funds from the Myers' construction loan account with the Bank, he (i) had submitted to the Bank completely fabricated requests for payments; (ii) had altered other, legitimate payment requests from third parties in order to line his own pockets; and (iii) had forged lien waivers he provided to the Myers. Kevin Short stated that his wife, Natalie Short, was aware of this conduct. Kevin Short provided the Bank with a list of subcontractors and suppliers whom, despite his prior representations to the contrary, he had not paid.

         After the Myers and CBOLO contacted the various subcontractors and suppliers identified by Kevin Short as having not been paid, they learned that Kevin Short had improperly requested $446, 077.85 in improper payments from the Myers' funds.

         The Myers cancelled the construction contract with KNS and hired a different company to complete their vacation home. The new construction company advised the Myers of numerous construction defects and other problems created by KNS. Constructions permits had expired, and procuring new permits would require new surveys of the property. The home's placement violated setback requirements and would require the Myers to obtain a variance from the Camden County government. The rear deck for the home lacked a structural pier, and KNS had used wood rather than concrete footings for the structure. KNS neglected to arrange inspection of the gas lines by the local fire department before installing flooring, and completing that inspection in the partially-constructed home required removing and then replacing the flooring KNS had installed. The residential elevator shaft was not built to the manufacturer's specifications and would require substantial corrective efforts. Fixing these and other unspecified deficiencies in KNS's construction has cost the Myers over $60, 000 to date.

         The Myers since have learned that the Defendants had been charging the Myers a builder's commission of 10% despite the fact that the construction contract provided for a commission rate of 8%.

         On or about February 1, 2017, the defendants paid $50, 000 to the Myers and promised to repay within a “few days” the remaining amounts due. On or about February 8, 2017, Natalie Short and her father, Phil Short, advised the Myers and a representative of the Bank that they would pay all the amounts due to the Myers and would compensate them for all other damages and losses. On February 9, 2017, Phil Short paid the Myers ...

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