The Kansas Department of Revenue is being sued for breach of contract after failing to pay expenses set forth in a lease agreement.
According to court documents filed late last month in Shawnee County District Court, Scott Family Partnership LLC, which owns the building at 120 S.E. 10th Ave. in downtown Topeka, is suing the Kansas Department of Revenue for failing to pay agreed-upon operating expenses set forth in the state’s lease agreement with the building owner.
The court case indicates the Department of Revenue entered into a 25-year lease agreement with Scott Family Partnership in February 2015.
A provision of that lease — called the "Operating Expense Clause" — stated that the Department of Revenue, as the lessee, agreed to pay the building owner for annual operating expenses, including taxes, utilities and insurance. According to the clause, the building owner was also entitled to an increase of 25 cents per square foot per year for the first seven years of the lease.
A copy of the provision included in the recent court case says the building owner agreed to invoice the Department of Revenue yearly for such operating expenses, and the department would then pay those expenses within 60 days of receiving the invoice.
After some state Department of Revenue staff moved into the building in February 2016, things appeared to be going smoothly — at least for the first couple years of the lease.
In early 2018, Scott Family Partnership, through its property management company Kansas Commercial Real Estate Services, invoiced the Kansas Department of Revenue for 2017 operating costs totaling $13,250. The Department of Revenue paid in full.
In 2019, Scott Family Partnership invoiced the department for $26,500 in operating expenses for 2018. The department paid the full amount.
But this year, when Scott Family Partnership invoiced the department for 2019 operating expenses totaling $39,700, the department failed to pay that amount. Instead, it paid $13,250 — the same amount it paid for 2017 operating costs.
In early September, the building owner sent a letter to the department demanding full payment. Still, it didn’t comply, and that noncompliance prompted legal action.
Zachary Fletcher, the Department of Revenue’s public information officer, declined to comment on the case, citing pending litigation.
The case against the department was filed Oct. 23 on behalf of the building owner by attorney Vincent Cox, of Cavanaugh, Biggs & Lemon P.A.
The case indicates multiple amendments were made to the lease agreement between 2015 and 2020, but no significant changes were made to the provision concerning payment of operating expenses.
According to the case, Scott Family Partnership has requested a trial by jury. Scott Family Partnership’s primary claim is for the unpaid amount of 2019 operating expenses, and it is asking the court to enforce the Operating Expense Clause as written.
The building owner’s attorney said it is unclear when this case will go before the court.