Kost v. Kraft

Jim Kost (plaintiff) and Allen Kraft (defendant) worked together in a custom-combining partnership. They terminated the partnership in 2003 but continued sharing work and equipment. In 2008, Kost sued Kraft to resolve how to divide proceeds from sold equipment and to recover for a planter Kost allegedly converted to his own use. Kraft counterclaimed, asserting that Kost had orally agreed to lease some combining equipment from Kost at fair rental value. Kraft claimed Kost used the equipment, but never paid approximately $150,000 owed under the oral lease. Kraft also claimed that the two had an oral agreement for Kraft to do work for Kost in 2005, but Kost never paid Kraft $10,000 for that work. Meanwhile, Kraft had filed for bankruptcy but did not disclose those counterclaims in his bankruptcy proceedings. The trial court granted summary judgment dismissing Kraft’s counterclaims, reasoning that the statute of frauds barred recovery under the oral agreement, and that the part-performance exception did not apply because the oral agreements between the two mostly involved trading work and equipment. In other words, the court thought the parties’ prior work arrangements could explain their conduct, not just the existence of an oral agreement. The trial court also reasoned that Kraft’s not properly disclosing his counterclaims in his bankruptcy proceedings barred him from pursuing them in this lawsuit. Kraft appealed.